<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 21, 1999
REGISTRATION NO. 333-_____
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
--------------------------
DURA AUTOMOTIVE SYSTEMS, INC.*
(Exact name of registrant as specified in its charter)
--------------------------
<TABLE>
<S> <C> <C>
DELAWARE 3460 38-3185711
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
------------------------
DURA OPERATING CORP.*
(Exact name of registrant as specified in its charter)
--------------------------
<TABLE>
<S> <C> <C>
DELAWARE 3460 38-2961431
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
4508 IDS CENTER, MINNEAPOLIS, MINNESOTA 55402
TELEPHONE: (612) 342-2311
(Address, including zip code, and telephone number, including area code, of
Registrants' principal offices)
STEPHEN E.K. GRAHAM
VICE PRESIDENT CHIEF FINANCIAL OFFICER
DURA AUTOMOTIVE SYSTEMS, INC.
2791 RESEARCH DRIVE, ROCHESTER HILLS, MI 48309
TELEPHONE: (248) 299-7500
(Address, including zip code, and telephone number, including area code, of
Agent for Service)
Copy to:
DENNIS M. MYERS, ESQ.
KIRKLAND & ELLIS
200 EAST RANDOLPH DRIVE, CHICAGO, IL 60601
TELEPHONE: (312) 861-2000
*The companies that are listed on the next page are also included in this Form
S-4 Registration Statement as additional Registrants.
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: The
exchange offer will commence as soon as practicable after the effective date of
this Registration Statement.
------------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, please check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED OFFERING PRICE FEE(1)
<S> <C> <C> <C>
9% Senior Subordinated Notes due 2009, Series B....... $300,000,000 100% $83,400
Guarantees on Senior Subordinated Notes (2)........... -- -- (3)
9% Senior Subordinated Notes due 2009, Series B (4)... $104,000,000 100% $28,912
Guarantees on Senior Subordinated Notes (2)........... -- -- (3)
</TABLE>
(1) Calculated in accordance with Rule 457 under the Securities Act of 1933, as
amended.
(2) All subsidiary guarantors are wholly owned subsidiaries of the Registrant
and have each guaranteed the notes being registered.
(3) Pursuant to Rule 457(n), no separate fee is payable with respect to the
guaranties being registered hereby.
(4) These notes are denominated in Euros. The amount to be registered was
calculated using an exchange rate of [EURO]1.00 = $1.04, the closing
exchange rate as of June 18, 1999.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT BECOMES EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
JURISDICTION I.R.S. EMPLOYER
OF IDENTIFICATION
EXACT NAME OF ADDITIONAL REGISTRANTS* FORMATION NO.
- -------------------------------------------------------------------------------- ------------- ----------------
<S> <C> <C>
Dura Automotive Systems, Inc., Column Shifter Operations........................ Michigan 38-2121748
Universal Tool & Stamping Company Inc........................................... Indiana 35-0797817
Dura Automotive Systems Cable Operations, Inc................................... Delaware 38-3383557
Adwest Electronics, Inc......................................................... Delaware 38-3223055
Adwest Western Automotive, Inc.................................................. Michigan 38-3223054
X.E. Co......................................................................... Michigan 38-3334994
Dura Automotive Systems of Tennessee, L.P....................................... Tennessee 62-1664873
Dura Automotive Systems of Indiana, Inc......................................... Indiana 35-1188181
Anderson Industries, Inc........................................................ Delaware 36-3018445
Hydro Flame Corporation......................................................... Utah 87-0215439
Atwood Industries, Inc.......................................................... Illinois 36-3036330
Atwood Automotive Inc........................................................... Michigan 38-2112709
Mark I Molded Plastics, Inc..................................................... Michigan 38-1874088
Mark I Molded Plastics of Tennessee, Inc........................................ Tennessee 62-1109669
</TABLE>
- ------------------------
* The address for each of the additional Registrants is c/o Dura Automotive
Systems, Inc., 2791 Research Drive, Rochester Hills, Michigan 48309 and the
primary standard industrial classification code number for each of the
additional Registrants is 3460.
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 21, 1999
THIS INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC
IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT AN OFFER TO BUY
THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
<TABLE>
<S> <C>
PROSPECTUS [LOGO]
</TABLE>
DURA OPERATING CORP.
EXCHANGE OFFER FOR
$300,000,000
9% SENIOR SUBORDINATED NOTES DUE 2009
AND
[EURO]100,000,000
9% SENIOR SUBORDINATED NOTES DUE 2009
UNCONDITIONALLY GUARANTEED ON A SENIOR SUBORDINATED BASIS BY
DURA AUTOMOTIVE SYSTEMS, INC.
- ----------------------------------------------------------------
We are offering to exchange an aggregate principal amount of up to:
- - $300,000,000 of our new 9% senior subordinated notes due 2008, Series B, for
a like amount of our outstanding 9% senior subordinated notes; and
- - [EURO]100,000,000 of our new 9% senior subordinated notes due 2008, Series
B, for a like amount of our outstanding 9% senior subordinated notes.
MATERIAL TERMS OF THE EXCHANGE OFFER
- - Expires 5:00 p.m., New York City time, _____________, 1999, unless extended.
- - Not subject to any condition other than the exchange offer not violate
applicable law or any applicable interpretation of the Staff of the SEC.
- - All outstanding notes that are validly tendered and not validly withdrawn will
be exchanged.
- - Tenders of outstanding notes may be withdrawn any time prior to the expiration
of the exchange offer.
- - The exchange of notes will not be a taxable exchange for U.S. federal income
tax purposes.
- - We will not receive any proceeds from the exchange offer.
- - The terms of the notes to be issued in the exchange offer are substantially
identical to the outstanding notes, except for certain transfer restrictions
and registration rights relating to the outstanding notes.
- - We believe that, subject to certain exceptions, the exchange notes may be
offered for resale, resold and otherwise transferred by you without compliance
with the registration and prospectus delivery provisions of the Securities
Act.
- - No public market exists for the outstanding notes. We intend to list the
exchange notes on the Luxembourg Stock Exchange.
- --------------------------------------------------------------------------------
FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER BEFORE
PARTICIPATING IN THIS EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 12 OF
THIS PROSPECTUS.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THE NOTES
TO BE DISTRIBUTED IN THE EXCHANGE OFFER, NOR HAVE ANY OF THESE ORGANIZATIONS
DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
___________________________, 1999
<PAGE>
You should rely on the information contained in or incorporated by reference
in this prospectus. We have not authorized anyone to provide you with
information different from that contained in this prospectus. We are making this
exchange offer only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus. In this
prospectus, unless otherwise noted, Dura Operating Corp. is referred to as the
"Issuer." Dura Operating Corp. is a direct, wholly owned subsidiary of Dura
Automotive Systems, Inc., which is referred to in this prospectus as "DASI."
References to "we," "our," "ours," "us" and "Dura" refer to DASI and its
consolidated subsidiaries, including the Issuer.
We acquired Excel Corporation ("Excel") on March 23, 1999 and Adwest
Automotive Plc ("Adwest") on March 15, 1999. Such acquisitions are referred to
herein as the "Excel Acquisition" and the "Adwest Acquisition," respectively,
and collectively as the "Acquisitions." Unless otherwise indicated, financial
and operating data presented herein for 1998 on a pro forma basis give effect to
the Excel Acquisition, the Adwest Acquisition and each of the other acquisitions
made by Dura and Excel in 1998 as if each occurred on January 1, 1998. See
"Unaudited Pro Forma Financial Statements."
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary............................. 1
Risk Factors................................... 12
Forward-Looking Statements May Prove
Inaccurate................................... 22
The Exchange Offer............................. 22
Use of Proceeds................................ 33
Capitalization................................. 34
Unaudited Pro Forma Financial Statements....... 35
Selected Consolidated Financial Data........... 41
Management's Discussion and Analysis of Results
of Operations and Financial Condition........ 47
Business....................................... 62
Management..................................... 84
<CAPTION>
PAGE
---------
<S> <C>
Security Ownership of Certain Beneficial Owners
and Management............................... 93
Certain Relationships and Related Party
Transactions................................. 95
Description of Capital Stock of DASI........... 95
Description of Other Indebtedness.............. 97
Description of Notes........................... 99
Certain United States Federal Tax
Considerations............................... 144
Plan of Distribution........................... 149
Legal Matters.................................. 150
Experts........................................ 150
Where You Can Find More Information............ 150
Incorporation by Reference..................... 151
Index to Financial Statements.................. F-1
</TABLE>
------------------------
Until , 1999, all dealers that buy, sell or trade the exchange
notes, whether or not participating in this offering, may be required to deliver
a prospectus. This requirement is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
------------------------
CURRENCIES AND EXCHANGE RATES
References in this prospectus to "Dollars," "$" or " CENTS" are to the
currency of the United States and references to "United States" and "U.S." means
the United States of America, its states, territories, possessions and all areas
subject to its jurisdiction. References herein to "Euro" and "[EURO]" are to the
currency that was introduced at the start of the third stage of economic and
monetary union pursuant to the treaty establishing the European Economic
Community, as amended by the Treaty on European Union, signed at Maastricht, the
Netherlands on February 7, 1992. Except as otherwise stated herein,
i
<PAGE>
conversions of non-Dollar currencies to Dollars in the financial statements and
the other information included herein have been calculated, for income statement
purposes, on the basis of average exchange rates over the related periods and,
for balance sheet purposes, on the date thereof. These translations should not
be construed as representations that the non-Dollar currency amounts actually
represent such Dollar amounts or could be converted into Dollars at the rates
indicated or at any other rates.
On May 3, 1998, the Council of the European Union adopted Council Regulation
(EC) No. 974/98, which defines the initial participants in Stage III of European
Monetary Union as Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal and Spain. Such definition of initial
participants does not include the United Kingdom, Denmark and Greece. Thus,
their currencies--the British Pound, the Danish Krone, and the Greek
Drachma--were not among those that were converted to the Euro.
The Euro was introduced on January 1, 1999 at an exchange rate of
[EURO]1.00=$1.17. As of June 18, 1999, the closing rate with respect to the Euro
was [EURO]1.00=$1.04. Unless otherwise indicated, the exchange rate used in this
prospectus is [EURO]1.00=$1.08.
References to "Pounds Sterling," "Pounds," "L," "Pence" or "p" are to the
currency of the United Kingdom (the "U.K."). There are 100 Pence to each Pound.
References in this prospectus to "DM" are to the currency of Germany.
Solely for your convenience, this prospectus contains translations of
certain financial data of Adwest from Pounds to Dollars. The following table
reflects the exchange rates used as well as other information for your benefit.
Dura does not represent that the Pound amounts shown in this prospectus would
have been converted into Dollars at the quoted exchange rates.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
JUNE 30, DECEMBER 31,
------------------------ ------------------------
1997 1998 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating results...................................................... 1.6094 1.6464 1.6433 1.6627
Balance sheet.......................................................... 1.6448 1.6509 1.6607 1.6710
</TABLE>
As of June 18, 1999, the closing rate with respect to the Pound was L1.00 =
$1.5965.
ii
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY CONTAINS THE BASIC INFORMATION ABOUT OUR COMPANY AND
THIS EXCHANGE OFFER. IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU IN DECIDING WHETHER TO PARTICIPATE IN THE EXCHANGE OFFER. WE
ENCOURAGE YOU TO READ THE PROSPECTUS IN ITS ENTIRETY AND ANY DOCUMENTS WE
INCORPORATE BY REFERENCE IN THIS PROSPECTUS.
THE COMPANY
We are the world's largest independent designer and manufacturer of driver
control systems for the global automotive industry. We are also a leading global
supplier of window systems, door systems and engineered mechanical components.
Our products include:
- driver control products--automotive cables, parking brake mechanisms and
transmission shifter mechanisms;
- window system products--encapsulated windows and push out and sliding
windows;
- door system products--window regulators, door latches, frames and hinges;
and
- other products--seating systems, engine control products and engineered
mechanical components, such as underbody tire carriers, jacks, brake,
clutch and accelerator pedals, turn signal and tilt lever assemblies,
injection molded plastic parts, hood hinges, automotive lighting products
and latches.
We sell our products to every major North American, European and Japanese
automotive original equipment manufacturer ("OEM"), including Ford, General
Motors, DaimlerChrysler, Volkswagen, BMW, Toyota, Honda, PSA (Peugeot and
Citroen), Renault and Nissan. We manufacture products for many of the most
popular car, light truck and sport utility models, including all of the top ten
selling vehicles in North America and nine of the top ten selling vehicles in
Europe for 1998. We have over 80 manufacturing and product development
facilities located in the United States, Australia, Brazil, Canada, the Czech
Republic, France, Germany, India, Mexico, Portugal, Spain and the U.K. On a pro
forma basis, we had revenues of $2.5 billion for the year ended December 31,
1998.
In March 1999, we completed both the Excel Acquisition and the Adwest
Acquisition. Excel is a leading supplier of window systems, door systems,
seating systems and injection molded plastic parts for the global automotive
market and appliances, hardware products, window systems, door systems and
seating systems for the recreational vehicle, mass transit and heavy truck
("RV/MT/HT") industries in North America. On a pro forma basis giving effect to
a 1998 acquisition, Excel had net sales of $1.2 billion for the year ended
January 2, 1999. Adwest is a leading European supplier of driver control
products, including transmission shifter mechanisms, parking brake mechanisms,
steering columns and gears, cables and engine control products, such as engine
thermostats, radiator caps and fuel caps, primarily for European automotive
OEMs. Adwest had revenues of $399.7 million for the twelve month period ended
December 31, 1998.
The Acquisitions have significantly increased our product offerings, global
reach and scale. Strategic benefits of the Acquisitions include:
- Diversification of our revenue base and expansion of our product offerings
through the addition of Excel's broad array of products, including such
major product categories as window systems and door systems;
- Global leadership in driver control systems, including parking brake
systems and transmission shifter systems, resulting from the combination
of our operations with Adwest;
- Significant expansion of both our European manufacturing operations and
customer base; and
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<PAGE>
- Substantial opportunities for operational synergies driven by the
similarity of the manufacturing processes and technical capabilities of
Dura, Excel and Adwest and the sharing of best practices among all of our
businesses. Consolidation of design, engineering and administrative
functions, plant restructuring and realignment, coordination of raw
material purchases and other operating improvements are expected to
produce annual cost savings of approximately $35.0 million by 2001.
We believe, based upon our experience in the automotive supply industry,
that we hold the #1 or #2 market position for our principal products in the
following markets. The table below sets forth our estimated pro forma combined
market position in North America and Europe in 1998:
<TABLE>
<CAPTION>
MARKET
PRODUCT CATEGORY REGION POSITION
- ----------------------------------------- ----------------------------------------- -----------
<S> <C> <C>
Automotive cables........................ North America............................ #1
Europe................................... #1
Parking brake mechanisms................. North America............................ #1
Europe................................... #1
Transmission shifter mechanisms.......... North America............................ #1
Europe................................... #2
Window systems........................... North America............................ #1
Europe................................... #2
Window regulators........................ North America............................ #1
</TABLE>
COMPETITIVE STRENGTHS
We believe that we possess a number of competitive strengths that have been
further enhanced by the Acquisitions, including:
- - WELL POSITIONED TO TAKE ADVANTAGE OF MARKET TRENDS: We believe that we are
well positioned to meet the demands of OEMs for fewer, full-service and
globally positioned suppliers. We believe our advanced design capabilities,
broad product lines and ability to supply complete systems, combined with our
global production capabilities, will enable us to take advantage of these
market trends.
- - STRONG OEM PARTNERSHIPS: We have formed strong partnerships with our major
OEM customers due to our high level of product quality, customer service,
product design and engineering capabilities. Our application of innovative
operating techniques, combined with investments in sophisticated capital
equipment, has led to a high level of product quality, industry-low defect
rates and the receipt of numerous supplier awards.
- - WELL POSITIONED ON POPULAR PRODUCT PLATFORMS: We manufacture products for
many of the most popular car, light truck and sport utility vehicle models.
In North America, these include all of the top ten selling vehicles for 1998:
the Ford Taurus, Explorer, Ranger and F-Series pickups, the GM full-size
pickup, the Dodge Caravan and Ram pickup, the Honda Accord and Civic, and the
Toyota Camry. In Europe, these include nine of the top ten selling vehicles
for 1998: the Volkswagen Golf, Passat and Polo, the GM/Opel Astra, Corsa and
Vectra, the Renault Megane and the Ford Escort/Focus and Fiesta. The
Acquisitions increased our 1998 North American content per vehicle from
$36.55 to $97.77 on a pro forma basis.
- - SIGNIFICANT ACQUISITION EXPERIENCE: Our leadership team, the members of which
have an average of 20 years of experience in the automotive supply industry,
has successfully completed eleven acquisitions and two joint ventures over
the last three years. We have been successfully integrating the acquired
operations and generating significant operational efficiencies and cost
savings. In addition, we have generally retained key personnel from acquired
companies, which has enabled us to strengthen our global management team as
we have grown.
2
<PAGE>
BUSINESS STRATEGY
Our primary business objective is to capitalize on the consolidation, system
sourcing and globalization trends in the automotive supply industry in order to
continue to be the leading provider of the component parts and systems that we
supply to OEMs worldwide. The key elements of our operating and growth
strategies are as follows:
OPERATING STRATEGY
- CONTINUOUS OPERATIONAL IMPROVEMENTS: We continuously implement strategic
initiatives designed to improve product quality and reduce manufacturing
costs through, among other things, the introduction of cellular
manufacturing methods, consolidation of manufacturing facilities,
improvement in inventory management and the reduction of scrap.
- CAPITALIZE ON OPPORTUNITIES FOR OPERATING SYNERGIES: The Acquisitions are
expected to provide us with a number of opportunities to reduce costs and
improve operational efficiency. The similarity of the manufacturing
processes and technical capabilities of Dura, Excel and Adwest is expected
to result in significant cost savings and operating synergies.
- FOSTER A DECENTRALIZED, PARTICIPATORY CULTURE: Our decentralized approach
to managing our manufacturing facilities encourages decision making and
employee participation in areas such as manufacturing processes and
customer service. This "team" approach fosters a unified culture and
enhances communication of strategic direction and goals, while
facilitating a greater success rate in reaching and exceeding our
objectives.
GROWTH STRATEGY
- FOCUS ON SYSTEMS: OEMs are increasingly seeking suppliers capable of
providing complete systems rather than suppliers who only provide separate
component parts. A key element of our growth strategy has been to add to
our ability to provide complete systems to our OEM customers.
- INCREASE PLATFORM AND CUSTOMER PENETRATION: A key element of our strategy
is to increase volume by adding new customers and to strengthen our
existing customer relationships by broadening our range of products
through internal development efforts and acquisitions. During 1998,
through the acquisition of Trident, we increased our penetration of
certain foreign OEMs such as Volkswagen, Toyota, Honda, PSA (Peugeot and
Citroen), Renault and Nissan. The Acquisitions have further expanded our
relationships with most of the North American and European OEMs.
- EXTEND GLOBAL MANUFACTURING REACH: In 1998, over 70% of total worldwide
passenger vehicle production occurred outside North America. To meet OEMs'
increasing preference for suppliers with global capabilities, we have
expanded our manufacturing operations into new geographic markets through
strategic acquisitions and two joint ventures.
- PURSUE STRATEGIC ACQUISITIONS: We compete in what we believe to be a $12
to $14 billion, highly fragmented, worldwide automotive market that
provides numerous potential acquisition and joint venture opportunities.
Since 1996, we have successfully completed eleven strategic acquisitions
and formed two joint ventures.
THE ACQUISITIONS
THE EXCEL ACQUISITION
On March 23, 1999, we acquired Excel through a merger of Excel with and into
the Issuer. In the merger, DASI issued an aggregate of approximately 5.1 million
shares of its Class A common stock and
3
<PAGE>
paid $155.5 million in cash to Excel's former shareholders. The Excel
Acquisition had a transaction value of approximately $471.3 million, plus fees
and expenses. The cash consideration and related fees and expenses paid in the
Excel Acquisition (including acquired indebtedness) were financed through
borrowings under our amended and restated $1,150 million senior secured credit
facility, which we refer to in this prospectus as our "new credit facility."
THE ADWEST ACQUISITION
On March 15, 1999, Dura acquired through a cash tender offer approximately
95% of the outstanding ordinary shares of Adwest. The aggregate consideration
(including acquired indebtedness) and related fees and expenses paid in the
Adwest Acquisition were financed through borrowings under our new credit
facility. We intend to acquire all of the remaining ordinary shares within the
next six months. We estimate that the aggregate cost of the Adwest Acquisition,
including the amount necessary to acquire the remaining outstanding shares, will
be approximately $295 million, plus fees and expenses.
The following table summarizes our sources and uses of funds for the
Acquisitions (in millions):
<TABLE>
<CAPTION>
SOURCES OF FUNDS: AMOUNT USES OF FUNDS: AMOUNT
- ------------------------------------------- ---------- ------------------------------------------- ----------
<S> <C> <C> <C>
New credit facility........................ $ 828.1 Purchase of Excel's equity................. $ 334.6
Issuance of Class A common stock(1)........ 170.7 Purchase of Adwest's equity................ 207.2
Cash on hand............................... 49.8 Refinance Excel's existing debt............ 100.0
Refinance Adwest's existing debt........... 106.1
Refinance Dura's existing debt............. 250.7
Prepayment penalties, net.................. 9.5
Fees and expenses.......................... 40.5
---------- ----------
Total...................................... $ 1,048.6 Total...................................... $ 1,048.6
---------- ----------
---------- ----------
</TABLE>
- ------------------------------
(1) Based on a per share price of $33 9/16, which was the closing price of the
Class A common stock on January 15, 1999, the date on which the Excel
Acquisition purchase agreement was signed.
COMPANY BACKGROUND
DASI is a holding company whose predecessor was formed in 1990 by Hidden
Creek Industries, Onex Corporation, J2R Corporation and certain others for the
purpose of acquiring certain operating divisions from the Wickes Manufacturing
Company.
Our principal executive offices are located at 4508 IDS Center, Minneapolis,
Minnesota 55402, and our telephone number is (612) 342-2311.
4
<PAGE>
SUMMARY OF THE EXCHANGE OFFER
<TABLE>
<S> <C>
Registration Rights Agreements.... We sold the outstanding notes on April 22, 1999 to
NationsBanc Montgomery Securities LLC, Bank of America
International Limited, Donaldson, Lufkin & Jenrette
Securities Corporation and Donaldson, Lufkin & Jenrette
International. We collectively refer to these parties in
this prospectus as the "initial purchasers." The initial
purchasers subsequently resold the outstanding notes to
(1) qualified institutional buyers pursuant to Rule 144A
under the Securities Act and (2) qualified buyers
outside the United States in reliance upon Regulation S
under the Securities Act. Simultaneously with the
initial sale of the outstanding notes, we entered into
registration rights agreements, each of which provides
for this exchange offer.
You may exchange your outstanding notes for exchange
notes with substantially identical terms. The exchange
offer is intended to satisfy your rights under the
registration rights agreements. After the exchange offer
is complete, you will no longer be entitled to any
exchange or registration rights with respect to your
outstanding notes.
The Exchange Offer................ We are offering to exchange $300,000,000 principal
amount of 9% senior subordinated notes due 2009 (the
"dollar notes") and [EURO]100,000,000 principal amount
of 9% senior subordinated notes due 2009 (the "euro
notes"), each of which have been registered under the
Securities Act for your 9% senior subordinated notes due
2009, which were issued on April 22, 1999 in a private
offering. In order to be exchanged, an outstanding note
must be properly tendered and accepted. All outstanding
notes that are validly tendered and not validly
withdrawn will be exchanged. We will issue exchange
notes promptly after the expiration of the exchange
offer.
Resales........................... We believe that the exchange notes issued in the
exchange offer may be offered for resale, resold and
otherwise transferred by you without compliance with the
registration and prospectus delivery provisions of the
Securities Act, provided that:
- the exchange notes are being acquired in the ordinary
course of your business;
- you are not participating, do not intend to
participate, and have no arrangement or understanding
with any person to participate, in the distribution of
the exchange notes issued to you in the exchange
offer; and
- you are not an "affiliate" of ours.
If any of these conditions are not satisfied and you
transfer any exchange notes issued to you in the
exchange offer without delivering a prospectus meeting
the requirements of
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
the Securities Act or without an exemption from
registration of your exchange notes from such
requirements, you may incur liability under the
Securities Act. We do not assume or indemnify you
against any such liability.
Each broker-dealer that is issued exchange notes in the
exchange offer for its own account in exchange for
outstanding notes which were acquired by such
broker-dealer as a result of market-making or other
trading activities (a "participating broker-dealer"),
must acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act in
connection with any resale of the exchange notes. A
broker-dealer may use this prospectus for an offer to
resell, resale or other retransfer of the exchange notes
issued to it in the exchange offer.
Record Date....................... We mailed this prospectus and the related exchange offer
documents to registered holders of outstanding notes on
_____________, 1999.
Expiration Date................... The exchange offer will expire at 5:00 p.m., New York
City time, __________, 1999, unless we decide to extend
the expiration date.
Conditions to the Exchange The exchange offer is not subject to any condition other
Offer........................... than that the exchange offer not violate applicable law
or any applicable interpretation of the Staff of the
SEC.
Procedures for Tendering
Outstanding Notes............... We issued the outstanding notes as global securities.
When the outstanding notes were issued, we deposited the
global notes representing the dollar notes and the euro
notes sold to "qualified institutional buyers" pursuant
to Rule 144A with U.S. Bank Trust National Association,
as book-entry depositary, and we deposited a global note
representing the euro notes sold to purchasers under
Regulation S with Industrial Bank of Japan (Luxemborg)
S.A. ("IBJ"), as book-entry depositary. U.S. Bank issued
a certificateless depositary interest in each global
note we deposited with it, which represents a 100%
interest in the notes, to The Depositary Trust Company
("DTC"). IBJ issued a certificateless depositary
interest in the global note we deposited with it, which
represents a 100% interest in such note, to the
Euroclear System. Beneficial interests in the
outstanding notes, which are held by direct or indirect
participants in DTC or Euroclear, as the case may be,
through the certificateless depositary interest, are
shown on records maintained in book-entry form by DTC or
Euroclear.
You may tender your outstanding notes through the book-
entry transfer systems of DTC or Euroclear, as the case
may be. To tender your outstanding notes by a means
other than book-entry transfer, a letter of transmittal
must be completed and signed according to the
instructions contained in the letter. The letter of
transmittal and any other documents
</TABLE>
6
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<TABLE>
<S> <C>
required by the letter of transmittal must be delivered
to the exchange agent by mail, facsimile, hand delivery
or overnight carrier. In addition, you must deliver the
outstanding notes to the exchange agent or comply with
the procedures for guaranteed delivery. See "The
Exchange Offer--Procedures for Tendering Outstanding
Notes" for more information.
Do not send letters of transmittal and certificates
representing outstanding notes to us. Send these
documents only to the exchange agent. See "The Exchange
Offer--Exchange Agent" for more information.
Special Procedures for Beneficial
Owners.......................... If you are the beneficial owner of book-entry interests
and your name does not appear on a security position
listing of DTC or Euroclear as the holder of such
book-entry interests or if you are a beneficial owner of
outstanding notes that are registered in the name of a
broker, dealer, commercial bank, trust company or other
nominee and you wish to tender such book-entry interest
or outstanding notes in the exchange offer, you should
contact such person in whose name your book-entry
interests or outstanding notes are registered promptly
and instruct such person to tender on your behalf.
Withdrawal Rights................. You may withdraw the tender of your outstanding notes at
any time prior to 5:00 p.m., New York City time on
______________, 1999.
Federal Income Tax The exchange of outstanding notes will not be a taxable
Considerations.................. event for United States federal income tax purposes.
Use of Proceeds................... We will not receive any proceeds from the issuance of
exchange notes pursuant to the exchange offer. We will
pay all of our expenses incident to the exchange offer.
Exchange Agent.................... U.S. Bank Trust National Association is serving as the
exchange agent in connection with the exchange offer.
</TABLE>
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SUMMARY OF TERMS OF THE EXCHANGE NOTES
THE FORM AND TERMS OF THE EXCHANGE NOTES ARE THE SAME AS THE FORM AND TERMS
OF THE OUTSTANDING NOTES, EXCEPT THAT THE EXCHANGE NOTES WILL BE REGISTERED
UNDER THE SECURITIES ACT. AS A RESULT, THE EXCHANGE NOTES WILL NOT BEAR LEGENDS
RESTRICTING THEIR TRANSFER AND WILL NOT CONTAIN THE REGISTRATION RIGHTS AND
LIQUIDATED DAMAGE PROVISIONS CONTAINED IN THE OUTSTANDING NOTES. THE EXCHANGE
NOTES REPRESENT THE SAME DEBT AS THE OUTSTANDING NOTES. BOTH THE OUTSTANDING
NOTES AND THE EXCHANGE NOTES ARE GOVERNED BY THE SAME INDENTURES. WE USE THE
TERM "NOTES" IN THIS PROSPECTUS TO COLLECTIVELY REFER TO THE OUTSTANDING NOTES
AND THE EXCHANGE NOTES.
<TABLE>
<S> <C>
Issuer.......................... Dura Operating Corp., a Delaware corporation.
Securities...................... $300.0 million in principal amount of 9% senior
subordinated notes due 2009, Series B, and [EURO]100.0
million in principal amount of 9% senior subordinated
notes due 2009, Series B.
Maturity........................ May 1, 2009
Interest........................ Annual rate: 9%.
Payment frequency--every six months on May 1 and November
1.
First payment November 1, 1999.
Ranking......................... The notes are senior subordinated debt of the Issuer.
Accordingly, they will rank:
- behind all of the senior debt of the Issuer.
- equally with all existing and future subordinated,
unsecured debt of the Issuer that does not expressly
provide that it is subordinated to the notes.
- ahead of all future debt of the Issuer that expressly
provides that it is subordinated to the notes.
- behind all of the liabilities of the Issuer's foreign
subsidiaries.
Assuming the transactions described under the caption
"Unaudited Pro Forma Financial Statements" were completed
on March 31, 1999, the notes would have been subordinated
to approximately $550 million of senior debt of the
Issuer. In addition, the notes would have been effectively
subordinated to all of the liabilities of the Issuer's
foreign subsidiaries.
Guaranties...................... The notes are unconditionally guaranteed on a senior
subordinated basis by DASI and by each material existing
domestic subsidiary of the Issuer. For ease of reference,
in this prospectus we refer to DASI's guaranty as the
"parent guaranty," the subsidiaries' guaranties as the
"subsidiary guaranties" and to the subsidiaries of the
Issuer that have guaranteed the notes as the "subsidiary
guarantors."
Optional Redemption............. On or after May 1, 2004, the Issuer may redeem some or all
of the notes at any time at the redemption prices
described in the section "Description of Notes" under the
heading "Optional Redemption."
</TABLE>
8
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<TABLE>
<S> <C>
Prior to May 1, 2002, the Issuer may redeem up to 35% of
the dollar notes and up to 35% of the euro notes with the
proceeds of certain public offerings of the common equity
of DASI at the price listed in the section "Description of
Notes" under the heading "Optional Redemption."
Mandatory Offer to Repurchase... If the Issuer sells certain assets or if the Issuer or
DASI experience specific kinds of changes in control, the
Issuer must offer to repurchase the notes at the price
listed in the section "Description of Notes."
Basic Covenants of Indentures... The indenture under which the dollar notes were issued
(the "dollar notes indenture") and the indenture under
which the euro notes were issued (the "euro notes
indenture" and, together with the dollar notes indenture,
the "indentures") each contain covenants that, among other
things, restrict the ability of the Issuer and its
restricted subsidiaries to:
-borrow money;
-pay dividends on stock or repurchase stock;
-make investments;
-use assets as security in other transactions; and
-sell certain assets or merge with or into other
companies.
See "Description of Notes--Certain Covenants."
Listing......................... We intend to apply to list the notes on the Luxembourg
Stock Exchange, but there can be no assurance that the
listing will be obtained on terms that are acceptable to
us, in our sole discretion.
</TABLE>
YOU SHOULD REFER TO THE SECTION ENTITLED "RISK FACTORS" FOR AN EXPLANATION OF
CERTAIN RISKS OF PARTICIPATING IN THE EXCHANGE OFFER.
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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
We derived the following historical financial information from the audited
consolidated financial statements of Dura for 1996, 1997 and 1998 and the
unaudited consolidated financial statements of Dura for the three month periods
ended March 31, 1998 and 1999. No separate financial information for the Issuer
has been provided in this prospectus because: (1) DASI does not itself conduct
any operations but rather all operations of Dura are conducted by the Issuer and
its direct and indirect subsidiaries; (2) DASI has no material assets other than
the capital stock of the Issuer; (3) all of the assets and liabilities shown in
the consolidated financial statements for DASI are located at the Issuer and its
direct and indirect subsidiaries; and (4) DASI has unconditionally guaranteed
the notes on an unsecured, senior subordinated basis. The summary pro forma
financial data of Dura for the year ended December 31, 1998 and the three months
ended March 31, 1999 have been derived from the pro forma financial statements
and related notes contained elsewhere in this prospectus. The pro forma
financial statements do not purport to represent what our results of operations
actually would have been if the events assumed therein had occurred as of the
dates indicated or what our results will be for any future period.
You should read the following summary together with the "Management's
Discussion and Analysis of Results of Operations and Financial Condition" for
each of Dura, Excel and Adwest and the audited and unaudited financial
statements and the related notes and the unaudited pro forma financial
statements and related notes contained elsewhere in this prospectus.
DURA AUTOMOTIVE SYSTEMS, INC.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
-------------------------------------------- -----------------------------------
PRO FORMA PRO FORMA
1996(1) 1997(2) 1998(3) 1998(4)(5) 1998 1999 1999(4)
--------- --------- --------- ----------- --------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................... $ 245,329 $ 449,111 $ 739,467 $ 2,525,448 $ 125,746 $ 264,701 $ 653,752
Gross profit................. 37,519 74,025 130,949 354,976 21,275 46,482 97,783
Operating income............. 19,326 37,610 71,256 163,575 10,864 25,900 49,783
Net income................... 10,128 16,642 26,667 31,940 4,576 3,492 13,006
OTHER FINANCIAL DATA:
Depreciation and
amortization............... $ 6,079 $ 12,303 $ 27,571 $ 85,845 $ 3,067 $ 10,507 $ 19,117
Capital expenditures, net.... 6,260 16,242 31,822 106,120 3,733 5,994 21,994
EBITDA(6).................... 25,405 49,913 98,827 249,420 13,931 36,407 68,900
Net cash provided by (used
in):
Operating activities....... 19,792 8,516 7,687 (2,142) 387
Investing activities....... (95,093) (93,386) (167,534) (22,311) (543,900)
Financing activities....... 75,236 87,620 176,620 67,322 564,152
Ratio of earnings to fixed
charges (7)................ 5.7x 3.7x 2.7x 1.6x 3.3x 3.1x 1.9x
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and cash equivalents.... $ 1,667 $ 4,148 $ 20,544 $ 138,309 $ 46,938 $ 39,267 $ 136,181
Working capital.............. 27,528 50,304 63,766 276,587 103,066 265,890 362,804
Total assets................. 246,129 419,264 929,383 2,251,211 500,606 2,260,567 2,368,481
Total debt................... 77,456 180,322 331,906 1,106,185 194,438 1,072,091 1,180,005
Total stockholders'
investment................. 87,367 101,708 238,037 405,823 105,769 393,462 393,462
</TABLE>
- --------------------------
(1) Includes the results of operations of (i) the parking brake business from
Rockwell International Corporation ("Rockwell") from October 1, 1996 and
(ii) KPI Automotive Group ("KPI") from December 5, 1996, their
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respective dates of acquisition. DASI issued an aggregate of 3,795,000
shares of its Class A common stock in August 1996 in connection with its
initial public offering.
(2) Includes the results of operations of (i) VOFA Group ("VOFA") from January
1, 1997, (ii) the parking brake business of Excel from May 5, 1997, (iii) GT
Automotive Systems, Inc. ("GT Automotive") from August 29, 1997, and (iv)
REOM Industries (Aust) Pty Ltd. ("REOM Industries") from December 12, 1997,
which represent their respective dates of acquisition.
(3) Includes the results of operations of (i) Universal Tool & Stamping Co.,
Inc. ("Universal") from March 8, 1998, (ii) Trident Automotive plc
("Trident") from April 30, 1998, and (iii) the hinge business of Tower
Automotive, Inc. (the "Hinge Business") from September 8, 1998, which
represent their respective dates of acquisition. In March 1998, Dura
Automotive Systems Capital Trust (the "Dura Trust") issued 7 1/2%
Convertible Trust Preferred Securities (the "Trust Preferred Securities")
with an aggregate liquidation preference of $55.3 million. In June 1998,
DASI issued 3,500,000 shares of its Class A common stock, giving effect to
the exercise of the underwriters' over-allotment option (the "June 1998
Offering").
(4) The pro forma statement of operations data for the year ended December 31,
1998 give effect to: (i) the acquisitions of Universal, Trident, the Hinge
Business, Excel and Adwest by Dura, (ii) Excel's acquisition, effective July
1, 1998, of 70% of Schade, (iii) the March 1998 offering of the Trust
Preferred Securities, (iv) the June 1998 Offering, and (v) the completion of
the initial offering of the outstanding notes and the application of the net
proceeds therefrom, as if each had been consummated on January 1, 1998. The
pro forma statement of operations data for the three months ended March 31,
1999 give effect to: (i) the acquisitions of Excel and Adwest and (ii) the
initial offering and the application of the net proceeds therefrom, as if
each had been consummated on January 1, 1998. The related pro forma balance
sheet data as of March 31, 1999 give effect to the completion of the initial
offering and the application of the net proceeds therefrom, as if that
transaction had been consummated on March 31, 1999.
(5) Amounts for Adwest have been translated from Pounds into Dollars using the
exchange rates set forth herein for convenience purposes only. In addition,
certain amounts of Adwest have been adjusted to conform to U.S. GAAP. See
Note 31 to the Consolidated Financial Statements of Adwest, Note 5 to the
Unaudited Interim Consolidated Financial Statements of Adwest and
"Currencies and Exchange Rates" included elsewhere herein.
(6) "EBITDA" is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles, and our calculation thereof may not be comparable to that
reported by other companies. We believe that it is widely accepted that
EBITDA provides useful information regarding a company's ability to service
and/or incur indebtedness. This belief is based, in part, on our
negotiations with our lenders who have required that the interest payable
under the our new credit facility be based, in part, on our ratio of
consolidated senior funded indebtedness to EBITDA. EBITDA does not take into
account our working capital requirements, debt service requirements and
other commitments and, accordingly, is not necessarily indicative of amounts
that may be available for discretionary use. We estimate that Trident, a
wholly owned subsidiary of the Issuer, contributed approximately $32.6
million and $38.0 million to our EBITDA for 1998 on an actual and pro forma
basis, respectively. Trident's ability to dividend or otherwise transfer
cash to the Issuer is restricted by the indenture relating to its 10% senior
subordinated notes due 2005. For 1998, Trident would have been permitted
under that indenture to transfer approximately $2.6 million to the Issuer.
(7) In calculating the ratio of earnings to fixed charges, earnings consist of
income before income taxes plus fixed charges. Fixed charges consist of
interest expense (which includes amortization of deferred financing costs
and debt issuance costs) and one-third of rental expense, deemed
representative of that portion of rental expense estimated to be
attributable to interest.
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RISK FACTORS
YOU SHOULD READ AND CONSIDER CAREFULLY EACH OF THE FOLLOWING FACTORS, AS
WELL AS THE OTHER INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE INTO
THIS PROSPECTUS, BEFORE MAKING A DECISION TO PARTICIPATE IN THE EXCHANGE OFFER.
RISKS RELATED TO THE NOTES
OUR BUSINESS MAY BE ADVERSELY IMPACTED AS A RESULT OF OUR SUBSTANTIAL LEVERAGE
We have a significant amount of indebtedness. As of March 31, 1999, on a pro
forma basis giving effect to the initial offering, we would have had
approximately $1,180 million of outstanding debt, $55.3 million of outstanding
Trust Preferred Securities and approximately $393.5 million of stockholders'
investment, and our pro forma ratio of earnings to fixed charges for the
quarterly period ended March 31, 1999 would have been 1.9 to 1. In addition,
both the Issuer and DASI are able to incur substantial additional indebtedness
in the future. The terms of the indentures do not fully prohibit them from doing
so. Our new credit facility provides for revolving credit borrowings of up to
$400 million, subject to certain financial covenants set forth therein.
Our indebtedness could have several important consequences to you, including
but not limited to the following:
- it may be difficult for the Issuer to satisfy its obligations with respect
to the notes;
- our ability to obtain additional financing in the future for working
capital, capital expenditures, potential acquisition opportunities,
general corporate purposes or other purposes may be impaired;
- a substantial portion of our cash flow from operations must be dedicated
to the payment of principal and interest on our indebtedness;
- we may be more vulnerable to economic downturns, may be limited in our
ability to withstand competitive pressures and may have reduced
flexibility in responding to changing business, regulatory and economic
conditions; and
- fluctuations in market interest rates will affect the cost of our
borrowings to the extent not covered by interest rate hedge agreements
because a portion of our indebtedness is payable at variable rates.
Our ability to service our indebtedness will depend on our future
performance, which will be affected by prevailing economic conditions and
financial, business, regulatory and other factors. Certain of these factors are
beyond our control. We believe that, based upon current levels of operations, we
will be able to meet our debt service obligations when due. Significant
assumptions underlie this belief, including, among other things, that we will
continue to be successful in implementing our business strategy and that there
will be no material adverse developments in our business, liquidity or capital
requirements. If we cannot generate sufficient cash flow from operations to
service our indebtedness and to meet our other obligations and commitments, we
might be required to refinance our debt or to dispose of assets to obtain funds
for such purpose. There is no assurance that refinancings or asset dispositions
could be effected on a timely basis or on satisfactory terms, if at all, or
would be permitted by the terms of the indentures or the new credit facility. In
the event that we are unable to refinance the new credit facility or raise funds
through asset sales, sales of equity or otherwise, the Issuer's ability to pay
principal of, and interest on, the notes would be impaired.
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<PAGE>
WE ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS AND COVENANTS UNDER THE INDENTURES
AND NEW CREDIT FACILITY
The indentures and the new credit facility contain numerous restrictive
covenants, including, but not limited to, covenants that restrict the Issuer's
ability to incur indebtedness, pay dividends, create liens, sell assets and
engage in certain mergers and acquisitions. In addition, the new credit facility
also requires Dura to maintain certain financial ratios. Our ability to comply
with the covenants and other terms of the new credit facility and the indentures
and to satisfy our other respective debt obligations (including, without
limitation, borrowings and other obligations under the new credit facility) and
the Issuer's ability to make cash payments with respect to the notes will depend
on our future operating performance. In the event that we fail to comply with
the various covenants contained in the new credit facility or the indentures, as
applicable, we would be in default thereunder, and in any such case, the
maturity of substantially all of our long-term indebtedness could be
accelerated.
A default under the indentures would also constitute an event of default
under the new credit facility. In addition, the lenders under the new credit
facility could elect to declare all amounts borrowed thereunder, together with
accrued interest, to be due and payable. If we were unable to repay such
borrowings, such lenders could proceed against the assets of the Issuer, which
secure its borrowings under the new credit facility. If the indebtedness under
the new credit facility were to be accelerated, there can be no assurance that
the assets of the Issuer would be sufficient to repay such indebtedness and the
notes in full. The new credit facility prohibits the repayment, purchase,
redemption, defeasance or other payment of any of the principal of the notes at
any time prior to their stated maturity other than as described herein. See
"Description of Other Indebtedness--New Credit Facility" and "Description of
Notes."
THE NOTES AND GUARANTIES ARE UNSECURED SENIOR SUBORDINATED OBLIGATIONS
The indebtedness evidenced by the notes is an unsecured obligation of the
Issuer and the indebtedness evidenced by the parent guaranty and the subsidiary
guaranties are unsecured obligations of DASI and the subsidiary guarantors, as
the case may be. The payment of principal of, premium (if any), and interest on
the notes is subordinated in right of payment to all senior indebtedness of the
Issuer, including the payment of the new credit facility, and the payment of the
parent guaranty and the subsidiary guaranties are subordinated in right of
payment to all senior indebtedness of DASI and the subsidiary guarantors, as the
case may be, including DASI's and the subsidiary guarantors' respective
guarantees of the new credit facility. As of March 31, 1999, on a pro forma
basis and giving effect to the initial offering, senior indebtedness of the
Issuer would have been approximately $550.0 million and, as a result of their
respective guaranties of the new credit facility, senior indebtedness of DASI
and the subsidiary guarantors would have been approximately $550.0 million.
By reason of the subordination provisions of the indentures, in the event of
insolvency, liquidation, reorganization, dissolution or other winding-up of the
Issuer, DASI or any of the subsidiary guarantors, holders of senior indebtedness
of the Issuer, DASI or any of the subsidiary guarantors, as the case may be,
will have to be paid in full before the Issuer makes payments in respect of the
notes, before DASI makes payments in respect of the parent guaranty or any of
the subsidiary guarantors makes payment in respect of the subsidiary guaranties.
In addition, no payment will be able to be made in respect of the notes during
the continuance of a payment default under any "designated senior indebtedness"
(as defined in the indentures). As a result, if certain non-payment defaults
exist with respect to designated senior indebtedness, the holders of such
designated senior indebtedness will be able to prevent payments on the notes for
certain periods of time. See "Description of Notes--Subordination."
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DASI'S SOLE SOURCE OF OPERATING INCOME IS DERIVED FROM THE ISSUER; YOU SHOULD
NOT RELY ON THE
PARENT GUARANTY IN EVALUATING AN INVESTMENT IN THE NOTES
DASI has unconditionally guaranteed the notes on an unsecured, senior
subordinated basis. DASI is a holding company whose sole source of operating
income and cash flow is derived from the Issuer and whose only material asset is
the Issuer's capital stock. Accordingly, DASI is dependent upon the earnings and
cash flow of, and dividends and distributions from, the Issuer to perform on the
parent guaranty. As a result, the parent guaranty provides little, if any,
additional credit support for the notes and investors should not rely on the
parent guaranty in evaluating whether to participate in the exchange offer.
THE ISSUER CONDUCTS CERTAIN OF ITS OPERATIONS THROUGH SUBSIDIARIES AND NOT ALL
OF THE ISSUER'S SUBSIDIARIES ARE SUBSIDIARY GUARANTORS
The Issuer conducts certain of its domestic and substantially all of its
international operations through subsidiaries. Distributions and intercompany
transfers from the Issuer's subsidiaries to the Issuer may be restricted by
covenants contained in debt agreements and other agreements to which such
subsidiaries may be subject and may be restricted by other agreements entered
into in the future and by applicable law. For example, Trident currently is
restricted under the indenture relating to its 10% senior subordinated notes due
2005 (the "Trident notes") from dividending or otherwise transferring cash to
the Issuer. For 1998, Trident would have been permitted under that indenture to
transfer approximately $2.6 million to the Issuer. Trident contributed
approximately $32.6 million and $38.0 million to our EBITDA for 1998 on an
actual and pro forma basis, respectively. There can be no assurance that the
operating results of the Issuer's subsidiaries at any given time will be
sufficient to make distributions to the Issuer. In addition, the Issuer does not
own all of the equity interests of certain of its foreign subsidiaries, and
consequently must share profits with certain minority shareholders.
The subsidiary guarantors will include only the Issuer's material domestic
subsidiaries. However, our historical consolidated financial information and the
pro forma consolidated financial information included in this prospectus are
presented on a consolidated basis, including both our domestic and foreign
subsidiaries. On a pro forma basis, the aggregate revenues and EBITDA of our
subsidiaries that are not subsidiary guarantors for the year ended December 31,
1998 would have been approximately $1,100 million and approximately $123
million, respectively, and their consolidated tangible assets at December 31,
1998 would have been approximately $576 million. In addition, the notes will be
effectively subordinated to all existing and future liabilities (including trade
payables) of our foreign subsidiaries. As a result, any right of the Issuer to
participate in any distribution of assets of its foreign subsidiaries upon the
liquidation, reorganization or insolvency of any such subsidiary (and the
consequential right of the holders of the notes to participate in the
distribution of those assets) will be subject to the prior claims of such
subsidiary's creditors.
THERE IS NO ASSURANCE THAT THE ISSUER WILL BE ABLE TO PURCHASE THE NOTES UPON A
CHANGE OF CONTROL
If either the Issuer or DASI undergoes a "change of control" (as defined in
the indentures), we may need to refinance large amounts of our debt, including
the debt under the notes and under the new credit facility. If a change of
control occurs, we must offer to buy back the notes for a price equal to 101% of
the notes' principal amount, plus any interest which has accrued and remains
unpaid as of the repurchase date. We would fund any repurchase obligation with
our available cash, cash generated from other sources such as borrowings, sales
of equity, or funds provided by a new controlling person. However, we cannot
assure you that there will be sufficient funds available for any required
repurchases of the notes if a change of control occurs. In addition, the new
credit facility prohibits us from repurchasing the notes after a change of
control until we first repay our debt to the new credit facility in full. If we
fail to repurchase the notes in that circumstance, we will go into default under
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both the notes and the new credit facility. Any future debt which we incur may
also contain restrictions on repayment which come into effect upon a change of
control. If a change of control occurs, we cannot assure you that we will have
sufficient funds to satisfy all of our debt obligations. These buyback
requirements may also delay or make it harder for others to obtain control of
Dura. In addition, certain important corporate events, such as leveraged
recapitalizations, that would increase the level of our indebtedness, would not
constitute a change of control under the indentures. See "Description of
Notes--Repurchase at the Option of Holders--Change of Control."
IF A COURT WERE TO FIND THAT THE ISSUANCE OF THE NOTES OR THE SUBSIDIARY
GUARANTIES CONSTITUTED A FRAUDULENT CONVEYANCE, SUCH COURT COULD AVOID THE
ISSUER'S OBLIGATIONS UNDER THE NOTES OR THE SUBSIDIARY GUARANTORS' OBLIGATIONS
UNDER THE SUBSIDIARY GUARANTIES
A significant portion of the net proceeds of the initial offering were used
to repay indebtedness incurred in connection with the Acquisitions. If a
bankruptcy case or lawsuit is initiated by our unpaid creditors, the debt which
we incurred to finance the Acquisitions and the debt represented by the notes
may be reviewed under federal bankruptcy law and comparable provisions of state
fraudulent transfer laws. Under these laws, the debt could be voided, or claims
in respect of the debt could be subordinated to all other debts of the Issuer or
the subsidiary guarantors if, among other things, the Issuer or the subsidiary
guarantors, at the time they incurred the indebtedness:
- received less than reasonably equivalent value or fair consideration for
the incurrence of such debt; and
- was insolvent or rendered insolvent by reason of such incurrence; or
- was engaged in a business or transaction for which its remaining assets
constituted unreasonably small capital; or
- intended to incur, or believed that they would incur, debts beyond their
ability to pay such debts as they mature.
In addition, any payment by the Issuer or subsidiary guarantor could be voided
and required to be returned to the Issuer or the subsidiary guarantor, as the
case may be, or to a fund for the benefit of the creditors of the Issuer or the
subsidiary guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a debtor would be
considered insolvent if:
- the sum of its debts, including allowance for contingent liabilities, were
greater than the fair saleable value of all of its assets; or
- if the present fair saleable value of its assets were less than the amount
that would be required to pay the probable liability on its existing
debts, including allowance for contingent liabilities, as they become
absolute and mature; or
- it could not pay its debts as they became due.
We believe that we received fair market value for the indebtedness incurred
in connection with the Acquisitions and in exchange for issuance of the notes.
On the basis of historical financial information, recent operating history and
other factors, we believe that, after giving effect to the Acquisitions and the
initial offering, we were not insolvent, did not have unreasonably small capital
for the business in which we are engaged and have not have incurred debts beyond
our ability to pay such debts as they mature. There can be no assurance,
however, as to what standard a court would apply in making such determinations
or that a court would agree with our conclusions in this regard.
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RISKS RELATING TO DURA AND THE AUTOMOTIVE SUPPLY INDUSTRY
WE ARE DEPENDENT ON FORD, GM AND DAIMLERCHRYSLER AS OUR LARGEST CUSTOMERS
Our revenues from Ford, GM and DaimlerChrysler represented approximately
32%, 12% and 10%, respectively, of our revenues in 1998 on a pro forma basis and
approximately 36%, 23% and 15%, respectively, of our actual revenues in 1998.
The loss of Ford, GM, DaimlerChrysler or any other significant customer could
have a material adverse effect on us. The contracts we have entered into with
many of our customers provide for supplying the customers' requirements for a
particular model, rather than for manufacturing a specific quantity of products.
Such contracts range from one year to the life of the model, usually three to
seven years, and do not require the purchase by the customer of any minimum
number of parts. Therefore, the loss of any one of such customers or a
significant decrease in demand for certain key models or group of related models
sold by any of our major customers could have a material adverse effect on us.
We are involved in claims relating to our products with certain of our
significant customers. As a result of these claims, it is possible that our
relationship with these customers could be adversely affected. See
"Business--Legal Proceedings."
WE MAY EXPERIENCE DIFFICULTIES IN INTEGRATING EXCEL AND ADWEST
We believe that the Acquisitions will provide us with significant
opportunities to achieve operating synergies and cost savings. There can be no
assurance, however, that such benefits will be realized, that the combination of
Dura, Excel and Adwest will be successful, or that we will not experience
difficulties in integrating the operations of Excel and Adwest with our
operations. For example, the integration of Excel and Adwest will require the
experience and expertise of certain former key managers of Excel and Adwest,
respectively, who have been retained by Dura. There can be no assurance,
however, that these managers will remain with Dura for the time period necessary
to successfully integrate Excel's and Adwest's operations with our operations.
In addition, the Acquisitions may present significant challenges for our
management due to the increased time and resources required to properly
integrate management, employees, information systems, accounting controls,
personnel and administrative functions of Excel and Adwest with those of Dura
and to manage the combined company on a going forward basis. We cannot assure
you that we will be able to successfully integrate and streamline overlapping
functions or, if successfully accomplished, that such integration will not be
more costly to accomplish than presently contemplated or that we will not
encounter difficulties in managing the combined company due to its increased
size and scope.
In addition, we cannot assure you that we will achieve the operating
synergies and annual cost savings that we expect to result from the
Acquisitions, which we discuss under "Prospectus Summary," and "Unaudited Pro
Forma Financial Statements," and elsewhere in this prospectus. These estimates
constitute forward-looking information and involve known and unknown risks,
uncertainties and other factors that may cause the actual cost savings or cash
generated to be materially different from our estimates or result in these
savings not being realized in the time frame expected. In addition to the
general factors discussed above, such estimates are based on a variety of other
factors and were derived utilizing numerous important assumptions, including:
- achieving estimated reductions in personnel at currently projected
severance cost levels, while maintaining historical sales levels;
- achieving a sufficient level of sales necessary to yield planned
production efficiencies and absorption of fixed costs;
- eliminating certain components of fixed overhead without affecting our
ability to manage our restructured operations;
- not disrupting planned production schedules; and
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- achieving operating improvements at certain of Excel's and Adwest's
facilities.
WE MAY BE UNABLE TO COMPLETE ADDITIONAL STRATEGIC ACQUISITIONS
The automotive component supply industry has undergone, and is likely to
continue to experience, consolidation as OEMs seek to reduce costs and reduce
their supplier base. We intend to actively pursue acquisition targets that will
allow us to continue to expand into new geographic markets, add new customers,
provide new product, manufacturing and service capabilities or increase model
penetration with existing customers. There can be no assurance that we will find
attractive acquisition candidates or successfully integrate acquired businesses
into our existing business. If the expected synergies from such acquisitions do
not materialize or we fail to successfully integrate new businesses into our
existing businesses, our results of operations could be adversely affected. To
the extent that we may be considered as an acquisition candidate by a third
party, certain provisions in our restated certificate of incorporation and our
amended and restated by-laws may inhibit a change in control.
WE ARE SUBJECT TO CERTAIN RISKS ASSOCIATED WITH OUR FOREIGN OPERATIONS
We have significant international operations, specifically in Europe, Canada
and Latin America and the Acquisitions have further increased our international
operations. Excel has significant operations in Europe and substantially all of
Adwest's operations are located in Europe. Certain risks are inherent in
international operations, including:
- the difficulty of enforcing agreements and collecting receivables through
certain foreign legal systems;
- foreign customers may have longer payment cycles than customers in the
United States;
- tax rates in certain foreign countries may exceed those in the United
States and foreign earnings may be subject to withholding requirements or
the imposition of tariffs, exchange controls or other restrictions;
- general economic and political conditions in countries where Dura, Excel
and Adwest operate may have an adverse effect on their operations in those
countries;
- the difficulties associated with managing a large organization spread
throughout various countries; and
- required compliance with a variety of foreign laws and regulations.
As we continue to expand our business globally, our success will be
dependent, in part, on our ability to anticipate and effectively manage these
and other risks. We cannot assure you that these and other factors will not have
a material adverse effect on our international operations or our business as a
whole. In addition, we generate a significant portion of our revenues and incur
a significant portion of our expenses in currencies other than Dollars. To the
extent that we are unable to match revenues received in foreign currencies with
costs paid in the same currency, exchange rate fluctuations in any such currency
could have an adverse effect on our financial results.
WE MAY BE ADVERSELY IMPACTED BY WORK STOPPAGES AND OTHER LABOR MATTERS
Approximately 8,300 of our employees are unionized, which represents
approximately 39% of our employees at March 31, 1999. We cannot assure you that
we will not encounter strikes, further unionization efforts or other types of
conflicts with labor unions or our employees. Any of these factors may have an
adverse effect on us or may limit our flexibility in dealing with our workforce.
In addition, many OEMs and their suppliers have unionized work forces. Work
stoppages or slow-downs experienced by OEMs or their suppliers could result in
slow-downs or closures of assembly
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plants where our products are included in assembled vehicles. For example,
strikes by the United Auto Workers led to the shut down of most of GM's North
American assembly plants in June and July 1998. We estimate that this work
stoppage at GM's facilities had an unfavorable impact of approximately $16.7
million on our 1998 revenues. In the event that one or more of our customers
experiences a material work stoppage, such work stoppage could have a material
adverse effect on our business.
WE MAY BE ADVERSELY AFFECTED BY ENVIRONMENTAL AND SAFETY REGULATIONS TO WHICH WE
ARE SUBJECT
We are subject to the requirements of federal, state, local and foreign
environmental and occupational health and safety laws and regulations. We cannot
assure you that we operate at all times in complete compliance with all such
requirements. We could be subject to potentially significant fines and penalties
for any noncompliance that may occur. We have made and will continue to make
capital and other expenditures to comply with environmental requirements. We are
also subject to laws requiring the cleanup of contamination. Some of our
operations generate hazardous substances. If a release of hazardous substances
occurs at or from any of our current or former properties or at a landfill or
another location where we have disposed of wastes, we may be held liable for the
contamination, and the amount of such liability could be material. We are
currently addressing environmental contamination matters at certain facilities,
including facilities in Mancelona, Michigan, Butler, Indiana, and Rotenberg,
Einbeck and Dusseldorf, Germany, which could result in material expenditures.
See "Business--Environmental Matters."
CERTAIN STOCKHOLDERS CURRENTLY CONTROL ALL MATTERS SUBMITTED TO A STOCKHOLDER
VOTE
Onex Corporation, Alkin Co. and certain other stockholders associated with
Dura or Hidden Creek Industries beneficially own all of our outstanding shares
of Class B common stock, representing approximately 70% of the combined voting
power of our outstanding common stock as of March 31, 1999. Each share of Class
B common stock has ten votes, as compared to one vote for each share of Class A
common stock. As a result of such stock ownership, these stockholders are able
to control the vote on all matters submitted to a vote of the holders of our
common stock, including the election of directors, amendments to our restated
certificate of incorporation and by-laws and approval of significant corporate
mergers. Such consolidation of voting power could also have the effect of
delaying, deterring or preventing a change in control of Dura that might be
otherwise beneficial to Dura. See "Description of Capital Stock of DASI."
CYCLICALITY AND SEASONALITY COULD ADVERSELY AFFECT US
The automotive and recreational vehicle markets are highly cyclical and both
markets are dependent on consumer spending. Economic factors adversely affecting
automotive production and consumer spending could adversely impact us. In
addition, our business is somewhat seasonal. We typically experience decreased
revenues and operating income during the third calendar quarter of each year due
to the impact of scheduled OEM plant shutdowns in July and August for vacations
and new model changeovers.
WE MAY BE ADVERSELY AFFECTED BY PRODUCT LIABILITY EXPOSURE CLAIMS
We face an inherent business risk of exposure to product liability claims in
the event that the failure of our products results in personal injury or death,
and there can be no assurance that we will not experience any material product
liability losses in the future. In addition, if any of our products prove to be
defective, we may be required to participate in a recall involving such
products. In late 1994, Ford issued a recall of a series of manual-transmission
Ford F-Series pickups to repair the self-adjust parking brakes originally
manufactured by the brake and cable business of Alkin Co. (the "Brake and Cable
Business"). Our share of such costs, which was fully reserved at the time of the
acquisition of the Brake and Cable Business has reached the full $6.0 million
limit agreed to between
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us and Ford. We are also involved in a product recall relating to the same issue
with respect to the Mondeo in Europe. We have agreed to pay 50% of the costs of
that recall not to exceed $1.0 million, which payments totaled $0.4 million at
December 31, 1998. The types of alleged failures that prompted the F-Series
recall have also led to a number of claims and lawsuits filed against Ford, one
of which culminated in a July 1998 award of punitive damages against Ford of
more than $151 million (which has subsequently been reduced to $69 million) and
Ford is appealing the decision. To date, two cases have been instituted directly
against Dura or Alkin Co. relating to personal injury claims, and, at last
report, Ford has indicated that it has received over 400 claims (generally for
property damage) relating to alleged defects in the self-adjust parking brakes.
Ford has maintained that Dura or Alkin Co. is responsible for all damages or
liabilities incurred by Ford as a result of these claims, and as of December 31,
1998, Ford had tendered its defense of approximately 30 such claims to Dura and
Alkin Co. Dura and Alkin Co. have submitted these claims to their insurance
carriers. We maintain insurance against product liability claims, but there can
be no assurance that such coverage will be adequate for liabilities ultimately
incurred or that it will continue to be available on terms acceptable to us. In
November 1996, one of our insurance carriers brought a declaratory judgment that
its policy did not provide coverage for an allegedly defective parking brake
manufactured prior to August 31, 1994.
A successful claim brought against us in excess of available insurance
coverage or a requirement to participate in any product recall may have a
material adverse effect on our results of operations or financial condition. See
"Business--Legal Proceedings."
WE OPERATE IN THE HIGHLY COMPETITIVE AUTOMOTIVE SUPPLY INDUSTRY
The automotive component supply industry is highly competitive. Some of our
competitors are companies, or divisions or subsidiaries of companies, that are
larger and have greater financial and other resources than we do. In addition,
with respect to certain of our products, some of our competitors are divisions
of our OEM customers. There can be no assurance that our products will be able
to compete successfully with the products of these other companies.
We principally compete for new business both at the beginning of the
development of new models and upon the redesign of existing models by our major
customers. New model development generally begins two to five years prior to the
marketing of such models to the public. The failure to obtain new business on
new models or to retain or increase business on redesigned existing models could
adversely affect our business.
In addition, there is substantial and continuing pressure from the major
OEMs to reduce costs, including the cost of products purchased from outside
suppliers such as Dura. If we are unable to generate sufficient production cost
savings in the future to offset price reductions, our gross margin could be
adversely affected.
TECHNOLOGICAL AND REGULATORY CHANGES MAY ADVERSELY AFFECT US
Changes in legislative, regulatory or industry requirements or competitive
technologies may render certain of our products obsolete. Our ability to
anticipate changes in technology and regulatory standards and to develop and
introduce new and enhanced products successfully on a timely basis will be a
significant factor in our ability to grow and to remain competitive. There can
be no assurance that we will be able to achieve the technological advances that
may be necessary for us to remain competitive or that certain of our products
will not become obsolete. We are also subject to the risks generally associated
with new product introductions and applications, including lack of market
acceptance, delays in product development and failure of products to operate
properly.
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WE MAY BE ADVERSELY IMPACTED BY THE YEAR 2000 ISSUE
We are currently working to resolve the potential impact of the year 2000 on
the processing of time-sensitive information by our computerized information
systems. Any of our programs that have time-sensitive software may recognize
"00" as the year 1900 rather than the year 2000. This could result in
miscalculations, classification errors or system failures.
While our various operations are at different stages of Year 2000 readiness,
we have nearly completed our global compliance review. Based on the information
available to date, we do not anticipate any significant readiness problems with
respect to our systems.
The most reasonably likely worst case scenario that we currently anticipate
with respect to Year 2000 is the failure of some of our suppliers, including
utilities suppliers, to be ready. This could cause a temporary interruption of
materials or services that we need to make our products, which could result in
delayed shipments to customers and lost sales and profits for us. We have
completed an assessment of our critical suppliers and have developed contingency
plans to address the risks which were identified. These plans include resourcing
materials or building inventory banks.
The outcome of our Year 2000 program is subject to a number of risks and
uncertainties, some of which (such as the availability of qualified computer
personnel and the Year 2000 responses of third parties) are beyond our control.
Therefore, there can be no assurances that we will not incur material
remediation costs beyond the above anticipated future costs, or that our
business, financial condition, or results of operations will not be
significantly impacted if Year 2000 problems with our systems, or with the
products or systems of other parties with whom we do business, are not resolved
in a timely manner.
RISKS ASSOCIATED WITH THE EXCHANGE OFFER
LACK OF PUBLIC MARKET FOR THE NOTES--YOU MAY NOT BE ABLE TO SELL YOUR NOTES
The outstanding notes were not registered under the Securities Act or under
the securities laws of any state and may not be resold unless they are
subsequently registered or an exemption from the registration requirements of
the Securities Act and applicable state securities laws is available. The
exchange notes will be registered under the Securities Act, but will constitute
a new issue of securities with no established trading market, and there can be
no assurance as to:
- the liquidity of any such market that may develop;
- the ability of holders to sell their exchange notes; or
- the price at which the holders would be able to sell their exchange notes.
If such a market were to exist, the exchange notes may trade at higher or lower
prices than their principal amount or purchase price, depending on many factors,
including prevailing interest rates, the market for similar debentures and the
financial performance of Dura.
We understand that the initial purchasers presently intend to make a market
in the notes. However, they are not obligated to do so, and any market-making
activity with respect to the notes may be discontinued at any time without
notice. In addition, such market-making activity will be subject to the limits
imposed by the Securities Act and the Exchange Act, and may be limited during
the exchange offer or the pendency of an applicable shelf registration
statement. There can be no assurance that an active trading market will exist
for the notes or that such trading market will be liquid.
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CONSEQUENCES OF A FAILURE TO EXCHANGE THE OUTSTANDING NOTES
Outstanding notes that are not tendered or are tendered but not accepted
will, following the consummation of the exchange offer, continue to be subject
to the existing restrictions upon transfer thereof, and, upon consummation of
the exchange offer, certain registration rights with respect to the outstanding
notes will terminate. In addition, any outstanding note holder who tenders in
the exchange offer for the purpose of participating in a distribution of the
exchange notes may be deemed to have received restricted securities, and if so,
will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction. To
the extent that outstanding notes are tendered and accepted in the exchange
offer, the trading market for untendered and tendered but unaccepted outstanding
notes could be adversely affected.
NO OBLIGATION TO NOTIFY--WE ARE NOT OBLIGATED TO NOTIFY YOU OF UNTIMELY OR
DEFECTIVE TENDERS OF OUTSTANDING NOTES.
We will issue exchange notes pursuant to this exchange offer only after a
timely receipt of your outstanding notes, a properly completed and duly executed
letter of transmittal and all other required documents. Therefore, if you want
to tender your outstanding notes, please allow sufficient time to ensure timely
delivery. We are under no duty to give notification of defects or irregularities
with respect to the tenders of outstanding notes for exchange.
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FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This prospectus (including information we have incorporated into this
prospectus by reference) contains forward-looking statements that are subject to
risks and uncertainties. You should not place undue reliance on those statements
because they only speak as of the date of this prospectus. Forward-looking
statements include information concerning the possible or assumed future results
of operations of Dura, including forecasts, projections and descriptions of
expected cost savings or other anticipated synergies related to the acquisitions
of Excel and Adwest. These statements often include words such as "believe,"
"expect," "anticipate," "intend," "plan," "estimate," or similar expressions.
These statements are based on certain assumptions that we have made in light of
our experience in the industry as well as our perceptions of historical trends,
current conditions, expected future developments and other factors we believe
are appropriate in these circumstances. As you read and consider this
prospectus, you should understand that these statements are not guarantees of
performance or results. They involve risks, uncertainties and assumptions.
Although we believe that these forward-looking statements are based on
reasonable assumptions, you should be aware that many factors could affect our
actual financial results or results of operations and could cause actual results
to differ materially from those in the forward-looking statements. These factors
include:
- general economic or business conditions affecting the automotive industry
(which is dependent on consumer spending), either nationally or
regionally, being less favorable than expected;
- expected synergies, economies of scale and cost savings from the
acquisitions of Excel and Adwest not being fully realized or realized
within the expected time frames;
- costs or operational difficulties related to integrating the operations of
Excel and Adwest with our operations being greater than expected;
- our failure to develop or successfully introduce new products;
- increased competition in the automotive components supply market;
- unforseen problems associated with international sales, including gains
and losses from foreign currency exchange;
- implementation of or changes in the laws, regulations or policies
governing the automotive industry that could negatively affect the
automotive components supply industry;
- changes in general economic conditions in the United States and Europe;
and
- various other factors beyond our control.
All future written and oral forward-looking statements by us or persons
acting on our behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to above. Except for our ongoing obligations to
disclose material information as required by the federal securities laws, we do
not have any obligation or intention to release publicly any revisions to any
forward-looking statements to reflect events or circumstances in the future or
to reflect the occurrence of unanticipated events. YOU SHOULD ALSO READ
CAREFULLY THE FACTORS DESCRIBED IN THE "RISK FACTORS" SECTION OF THIS
PROSPECTUS.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
We originally sold the outstanding notes on April 22, 1999 to the initial
purchasers. The initial purchasers subsequently placed the outstanding notes
with (1) qualified institutional buyers in reliance on Rule 144A under the
Securities Act and (2) qualified buyers outside the United States in reliance
upon Registration S under the Securities Act.
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As a condition to such sale, we entered into registration rights agreements
with the initial purchasers. The registration rights agreements provide that:
(1) we will file an exchange offer registration statement with the SEC on or
prior to 60 days after the closing date of the initial offering;
(2) we will use our reasonable best efforts to have the exchange offer
registration statement declared effective by the SEC on or prior to 150
days after the closing date;
(3) unless the exchange offer would not be permitted by applicable law or
SEC policy, we will commence the exchange offer and use our reasonable
best efforts to issue on or prior to 30 business days after the date on
which the exchange offer registration statement was declared effective by
the SEC, exchange notes in exchange for all outstanding notes tendered
prior thereto in the exchange offer; and
(4) if obligated to file the shelf registration statement, we will use our
reasonable best efforts to file the shelf registration statement with the
SEC on or prior to 30 days after such filing obligation arises and to
cause the shelf registration statement to be declared effective by the
SEC on or prior to 120 days after such obligation arises.
For each outstanding note surrendered to us pursuant to the exchange offer, the
holder of such outstanding note will receive an exchange note having a principal
amount equal to that of the surrendered note. Interest on each outstanding note
will accrue from the last interest payment date on which interest was paid on
the outstanding note surrendered in exchange therefor or, if no interest has
been paid on such outstanding note, from the date of its original issue.
Interest on each exchange note will accrue from the date of its original issue.
Under existing interpretations of the Staff of the SEC contained in several
no-action letters to third parties, the exchange notes will in general be freely
tradeable after the exchange offer without further registration under the
Securities Act. However, any purchaser of outstanding notes who is our
"affiliate" or who intends to participate in the exchange offer for the purpose
of distributing the exchange notes:
(1) will not be able to rely on the interpretation of the Staff of the SEC;
(2) will not be able to tender its outstanding notes in the exchange offer;
and
(3) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any sale or transfer of the
exchange notes, unless such sale or transfer is made pursuant to an
exemption from such requirements.
As contemplated by these no-action letters and the registration rights
agreements, each holder accepting the exchange offer is required to represent to
us in the letter of transmittal or agent's message that:
(1) the exchange notes are to be acquired by the holder or the person
receiving such exchange notes, whether or not such person is the holder,
in the ordinary course of business;
(2) the holder or any such other person (other than a broker-dealer referred
to in the next sentence) is not engaging and does not intend to engage,
in distribution of the exchange notes;
(3) the holder or any such other person has no arrangement or understanding
with any person to participate in the distribution of the exchange notes;
(4) neither the holder nor any such other person is our "affiliate" within
the meaning of Rule 405 under the Securities Act; and
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(5) the holder or any such other person acknowledges that if such holder or
any other person participates in the exchange offer for the purpose of
distributing the exchange notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with
any resale of the exchange notes and cannot rely on those no-action
letters.
As indicated above, each participating broker-dealer that receives an exchange
note for its own account in exchange for outstanding notes must acknowledge that
it (A) acquired the outstanding notes for its own account as a result of
market-making activities or other trading activities, (B) has not entered into
any arrangement or understanding with us or any of our "affiliates" (within the
meaning of Rule 405 under the Securities Act) to distribute the exchange notes
to be received in the exchange offer and (C) will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
exchange notes. For a description of the procedures for resales by participating
broker-dealers, see "Plan of Distribution."
In the event that changes in the law or the applicable interpretations of
the Staff of the SEC do not permit us to effect such an exchange offer, or if
for any other reason we do not meet the time periods set forth in the second
paragraph of this section, we will:
(1) file a shelf registration statement covering resales of the outstanding
notes;
(2) use our reasonable best efforts to cause the shelf registration
statement to be declared effective under the Securities Act; and
(3) use our reasonable best efforts to keep effective the shelf registration
statement until two years after the closing date of the initial offering.
We will, in the event of the filing of the shelf registration statement, provide
to each applicable holder of the outstanding notes copies of the prospectus
which is a part of the shelf registration statement, notify each such holder
when the shelf registration statement has become effective and take certain
other actions as are required to permit unrestricted resale of the outstanding
notes. A holder of the outstanding notes that sells such outstanding notes
pursuant to the shelf registration statements generally will be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the registration rights agreement which are
applicable to such a holder (including certain indemnification obligations). In
addition, each holder of the outstanding notes will be required to deliver
information to be used in connection with the shelf registration statement and
to provide comments on the shelf registration statement within the time periods
set forth in the registration rights agreement in order to have its outstanding
notes included in the shelf registration statement and to benefit from the
provisions set forth in the following paragraph.
If:
(a) we fail to file any of the registration statements required by the
registration rights agreements on or before the date specified for such
filing;
(b) any of such registration statements is not declared effective by the SEC
on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"); or
(c) we fail to consummate the exchange offer within 30 business days of the
Effectiveness Target Date with respect to the exchange offer registration
statement; or
(d) the shelf registration statement or the exchange offer registration
statement is declared effective but thereafter ceases to be effective or
usable in connection with resales of transfer restricted securities
during the periods specified in the registration rights agreements (each
such event referred to in clauses (a) through (d) above a "Registration
Default"),
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then we will pay additional interest, to each holder of notes, with respect to
the first 90-day period immediately following the occurrence of the first
Registration Default in an amount equal to .50% per annum over the stated rate
for the notes held by such holder. The amount of the additional interest will
increase by an additional .50% over the stated rate for the notes per annum with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of additional interest, if any, for all
Registration Defaults of 1.0% per annum over the stated rate of the notes. We
will pay all accrued additional interest on each interest payment date to the
global note holder by wire transfer of immediately available funds or by federal
funds check and to holders of certificated securities by wire transfer to the
accounts specified by them or by mailing checks to their registered addresses if
no such accounts have been specified. Following the cure of all Registration
Defaults, the accrual of additional interest will cease.
Following the consummation of the exchange offer, holders of the outstanding
notes who were eligible to participate in the exchange offer but who did not
tender its outstanding notes will not have any further registration rights and
such outstanding notes will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for such outstanding notes
could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all outstanding notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the expiration date. We will issue $1,000 or [EURO]1,000, as applicable,
principal amount of exchange notes in exchange for each $1,000 or [EURO]1,000
principal amount of outstanding notes accepted in the exchange offer. Holders
may tender some or all of its outstanding notes pursuant to the exchange offer.
However, outstanding notes may be tendered only in integral multiples of $1,000
or [EURO]1,000, as applicable.
The form and terms of the exchange notes are the same as the form and terms
of the outstanding notes except that:
(1) the exchange notes bear a Series B designation and a different CUSIP
Number from the outstanding notes;
(2) the exchange notes have been registered under the Securities Act and
hence will not bear legends restricting the transfer thereof; and
(3) the holders of the exchange notes will not be entitled to certain rights
under the registration rights agreements, including the provisions
providing for an increase in the interest rate on the outstanding notes
in certain circumstances relating to the timing of the exchange offer,
all of which rights will terminate when the exchange offer is terminated.
The exchange notes will evidence the same debt as the outstanding notes and will
be entitled to the benefits of the indentures.
As of the date of this prospectus, $300,000,000 aggregate principal amount
of the dollar notes and [EURO]100,000,000 aggregate principal amount of the euro
notes were outstanding. We have fixed the close of business on _______________,
1999 as the record date for the exchange offer for purposes of determining the
persons to whom this prospectus and the letter of transmittal will be mailed
initially.
Holders of outstanding notes do not have any appraisal or dissenters' rights
under the General Corporation Law of Delaware, or the indentures in connection
with the exchange offer. We intend to conduct the exchange offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the SEC thereunder.
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We will be deemed to have accepted validly tendered outstanding notes when,
as and if we have given oral or written notice thereof to the exchange agent.
The exchange agent will act as agent for the tendering holders for the purpose
of receiving the exchange notes from us.
If any tendered outstanding notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth in this
prospectus or otherwise, the certificates for any such unaccepted outstanding
notes will be returned, without expense, to the tendering holder thereof as
promptly as practicable after the expiration date.
Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
outstanding notes pursuant to the exchange offer. We will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection with
the exchange offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" will mean 5:00 p.m., New York City time, on
____________, 1999, unless we, in our sole discretion, extend the exchange
offer, in which case the term "expiration date" will mean the latest date and
time to which the exchange offer is extended.
In order to extend the exchange offer, we will notify the exchange agent of
any extension by oral or written notice and will mail to the registered holders
an announcement thereof, each prior to 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration date.
We reserve the right, in our sole discretion, (1) to delay accepting any
outstanding notes, to extend the exchange offer or to terminate the exchange
offer if any of the conditions set forth below under "--Conditions" will not
have been satisfied, by giving oral or written notice of such delay, extension
or termination to the exchange agent or (2) to amend the terms of the exchange
offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the registered holders.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest from their date of issuance. Holders
of outstanding notes that are accepted for exchange will receive, in cash,
accrued interest thereon to, but not including, the date of issuance of the
exchange notes. Such interest will be paid with the first interest payment on
the exchange notes on November 1, 1999. Interest on the outstanding notes
accepted for exchange will cease to accrue upon issuance of the exchange notes.
Interest on the exchange notes is payable semi-annually on each May 1 and
November 1, commencing on November 1, 1999.
PROCEDURES FOR TENDERING
PROCEDURES FOR TENDERING THE EURO NOTES DEPOSITED WITH EUROCLEAR
To tender in the exchange offer, a holder of outstanding notes that are
deposited with Euroclear must: (i) read this prospectus and the accompanying
letter of transmittal and (ii) comply with the procedures established by
Euroclear for transfer of book-entry interests through the electronic transfer
systems of Euroclear prior to 5:00 p.m. New York Time, on the expiration date.
For tender of these outstanding notes to be effective, book-entry interests in
the outstanding notes must be transferred through Euroclear's electronic
transfer system prior to 5:00 p.m., New York Time, on the expiration date.
Delivery of these outstanding notes must be made by book-entry transfer in
accordance with the
26
<PAGE>
procedures communicated to the holders of these outstanding notes through the
electronic transfer systems of Euroclear. Confirmation of such book-entry
transfer must be received by the exchange agent prior to the expiration date.
The tender by a holder of these outstanding notes and the acceptance thereof
by the Issuer will constitute agreement between such holder and the Issuer in
accordance with the terms and subject to the conditions set forth herein and in
the letter of transmittal, including the representations and warranties set
forth in the letter of transmittal. In addition, by tendering these notes, the
tendering holder acknowledges that Euroclear will disclose the identity of such
tendering holder to the exchange agent and the Issuer.
Any beneficial owner whose outstanding notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered notes and withdrawal of tendered notes will be
determined by the Issuer in its sole discretion, which determination will be
final and binding. The Issuer reserves the absolute right to reject any and all
notes not properly tendered or any notes the Issuer's acceptance of which would,
in the opinion of counsel for the Issuer, be unlawful. The Issuer also reserves
the right in its sole discretion to waive any defects, irregularities or
conditions of tender as to particular notes. The Issuer's interpretation of the
terms and conditions of the exchange offer (including the instructions in the
letter of transmittal) will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of notes must be cured
within such time as the Issuer shall determine. Although the Issuer intends to
notify holders of defects or irregularities with respect to tenders of notes,
neither the Issuer, the exchange agent nor any other person shall incur any
liability for failure to give such notification. Tenders of notes will not be
deemed to have been made until such defects or irregularities have been cured or
waived.
WITHDRAWAL OF TENDERS OF EURO NOTES DEPOSITED WITH EUROCLEAR
Except as otherwise provided herein, tenders of outstanding notes may be
withdrawn at any time prior to 5:00 p.m. New York Time, on the expiration date.
To withdraw a tender of outstanding notes in the exchange offer, a tested
telex of SWIFT message relating to such withdrawal must be received by Euroclear
prior to 5:00 p.m., New York Time, on the expiration date. Any such notice of
withdrawal must comply with the procedures for withdrawal of tenders established
by Euroclear. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Issuer, whose
determination shall be final and binding on all parties. Any notes so withdrawn
will be deemed not to have been validly tendered for purposes of the exchange
offer and not exchange notes will be issued with respect thereto unless the
notes so withdrawn are validly retendered. Any notes which have been tendered
but which are not accepted for exchange will be returned to the holder thereof
without cost to such holder as soon as practicable after withdrawal, rejection
of tender or termination of the exchange offer. Properly withdrawn notes may be
retendered by following one of the procedures described above under
"--Procedures for Tendering the Euro Notes Deposited with Euroclear" at any time
prior to the expiration date.
PROCEDURES FOR TENDERING OUTSTANDING NOTES DEPOSITED WITH DTC
To tender in the exchange offer, a holder must complete, sign and date the
letter of transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the letter of transmittal or transmit an agent's
message in connection with a book-entry transfer, and mail or otherwise deliver
27
<PAGE>
such letter of transmittal or such facsimile, together with the outstanding
notes and any other required documents, to the exchange agent prior to 5:00
p.m., New York City time, on the expiration date. To be tendered effectively,
the outstanding notes, letter of transmittal or an agent's message and other
required documents must be completed and received by the exchange agent at the
address set forth below under "Exchange Agent" prior to 5:00 p.m., New York City
time, on the expiration date. Delivery of the outstanding notes may be made by
book-entry transfer in accordance with the procedures described below.
Confirmation of such book-entry transfer must be received by the exchange agent
prior to the expiration date.
The term "agent's message" means a message, transmitted by a book-entry
transfer facility to, and received by, the exchange agent forming a part of a
confirmation of a book-entry, which states that such book-entry transfer
facility has received an express acknowledgment from the participant in such
book-entry transfer facility tendering the outstanding notes that such
participant has received and agrees: (1) to participate in the Automated Tender
Option Program ("ATOP"); (2) to be bound by the terms of the letter of
transmittal; and (3) that we may enforce such agreement against such
participant.
By executing the letter of transmittal, each holder will make to us the
representations set forth above in the third paragraph under the heading
"--Purpose and Effect of the Exchange Offer."
The tender by a holder and our acceptance thereof will constitute agreement
between such holder and us in accordance with the terms and subject to the
conditions set forth in this prospectus and in the letter of transmittal or
agent's message.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES AND THE LETTER OF TRANSMITTAL OR
AGENT'S MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD
BE SENT TO US. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.
Any beneficial owner whose outstanding notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the letter of transmittal.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an eligible institution (as defined below) unless
the outstanding notes tendered pursuant thereto are tendered (1) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the letter of transmittal or
(2) for the account of an eligible institution. In the event that signatures on
a letter of transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System (an "eligible institution").
If the letter of transmittal is signed by a person other than the registered
holder of any outstanding notes listed in this prospectus, such outstanding
notes must be endorsed or accompanied by a properly completed bond power, signed
by such registered holder as such registered holder's name appears on such
outstanding notes with the signature thereon guaranteed by an eligible
institution.
If the letter of transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
offices of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence
satisfactory to us of its authority to so act must be submitted with the letter
of transmittal.
28
<PAGE>
We understand that the exchange agent will make a request promptly after the
date of this prospectus to establish accounts with respect to the outstanding
notes at the book-entry transfer facility, DTC (the "Book-Entry Transfer
Facility"), for the purpose of facilitating the exchange offer, and subject to
the establishment thereof, any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of
outstanding notes by causing such Book-Entry Transfer Facility to transfer such
outstanding notes into the exchange agent's account with respect to the
outstanding notes in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. Although delivery of the outstanding notes may be
effected through book-entry transfer into the exchange agent's account at the
Book-Entry Transfer Facility, unless an Agent's Message is received by the
exchange agent in compliance with ATOP, an appropriate letter of transmittal
properly completed and duly executed with any required signature guarantee and
all other required documents must in each case be transmitted to and received or
confirmed by the exchange agent at its address set forth below on or prior to
the expiration date, or, if the guaranteed delivery procedures described below
are complied with, within the time period provided under such procedures.
Delivery of documents to the Book-Entry Transfer Facility does not constitute
delivery to the exchange agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered outstanding notes and withdrawal of tendered
outstanding notes will be determined by us in our sole discretion, which
determination will be final and binding. We reserve the absolute right to reject
any and all outstanding notes not properly tendered or any outstanding notes our
acceptance of which would, in the opinion of our counsel, be unlawful. We also
reserves the right in our sole discretion to waive any defects, irregularities
or conditions of tender as to particular outstanding notes. Our interpretation
of the terms and conditions of the exchange offer (including the instructions in
the letter of transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of outstanding
notes must be cured within such time as the Issuer will determine. Although we
intend to notify holders of defects or irregularities with respect to tenders of
outstanding notes, neither the Issuer, the exchange agent nor any other person
will incur any liability for failure to give such notification. Tenders of
outstanding notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any outstanding notes received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the exchange
agent to the tendering holders, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration date.
GUARANTEED DELIVERY PROCEDURES FOR NOTES DEPOSITED WITH DTC
Holders who wish to tender their outstanding notes and (1) whose outstanding
notes are not immediately available, (2) who cannot deliver their outstanding
notes, the letter of transmittal or any other required documents to the exchange
agent or (3) who cannot complete the procedures for book-entry transfer, prior
to the expiration date, may effect a tender if:
(A) the tender is made through an eligible institution;
(B) prior to the expiration date, the exchange agent receives from such
eligible institution a properly completed and duly executed notice of
guaranteed delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate
number(s) of such outstanding notes and the principal amount of
outstanding notes tendered, stating that the tender is being made thereby
and guaranteeing that, within three New York Stock Exchange trading days
after the expiration date, the letter of transmittal (or facsimile
thereof) together with the certificate(s) representing the outstanding
notes (or a confirmation of book-entry transfer of such outstanding notes
into the exchange agent's account at the Book-Entry Transfer Facility),
and any other documents required by the letter of transmittal will be
deposited by the eligible institution with the exchange agent; and
29
<PAGE>
(C) such properly completed and executed letter of transmittal (of facsimile
thereof), as well as the certificate(s) representing all tendered
outstanding notes in proper form for transfer (or a confirmation of
book-entry transfer of such outstanding notes into the exchange agent's
account at the Book-Entry Transfer Facility), and all other documents
required by the letter of transmittal are received by the exchange agent
upon five New York Stock Exchange trading days after the expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS OF NOTES DEPOSITED WITH DTC
Except as otherwise provided in this prospectus, tenders of outstanding
notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the expiration date.
To withdraw a tender of outstanding notes in the exchange offer, a telegram,
telex, letter or facsimile transmission notice of withdrawal must be received by
the exchange agent at its address set forth in this prospectus prior to 5:00
p.m., New York City time, on the expiration date. Any such notice of withdrawal
must:
(1) specify the name of the person having deposited the outstanding notes to
be withdrawn;
(2) identify the outstanding notes to be withdrawn, including the
certificate number(s) and principal amount of such outstanding notes, or,
in the case of outstanding notes transferred by book-entry transfer, the
name and number of the account at the Book-Entry Transfer Facility to be
credited;
(3) be signed by the holder in the same manner as the original signature on
the letter of transmittal by which such outstanding notes were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the
outstanding notes register the transfer of such outstanding notes into
the name of the person withdrawing the tender; and
(4) specify the name in which any such outstanding notes are to be
registered, if different from that of the person who deposited the
outstanding notes.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by us, whose determination will be
final and binding on all parties. Any outstanding notes so withdrawn will be
deemed not to have been validly tendered for purposes of the exchange offer and
no exchange notes will be issued with respect thereto unless the outstanding
notes so withdrawn are validly retendered. Any outstanding notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the exchange offer. Properly withdrawn
outstanding notes may be retendered by following one of the procedures described
above under "--Procedures for Tendering" at any time prior to the expiration
date.
CONDITIONS
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or exchange notes for, any outstanding notes,
and may terminate or amend the exchange offer as provided in this prospectus
before the acceptance of such outstanding notes, if:
(1) any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the exchange offer
which, in our sole judgment, might materially impair our ability to
proceed with the exchange offer or any material adverse development has
occurred in any existing action or proceeding with respect to us or any
of our subsidiaries; or
30
<PAGE>
(2) any law, statute, rule, regulation or interpretation by the Staff of the
SEC is proposed, adopted or enacted, which, in our sole judgment, might
materially impair our ability to proceed with the exchange offer or
materially impair the contemplated benefits of the exchange offer to us;
or
(3) any governmental approval has not been obtained, which approval we will,
in our sole discretion, deem necessary for the consummation of the
exchange offer as contemplated hereby.
If we determine in our sole discretion that any of the conditions are not
satisfied, we may (1) refuse to accept any outstanding notes and return all
tendered outstanding notes to the tendering holders, (2) extend the exchange
offer and retain all outstanding notes tendered prior to the expiration of the
exchange offer, subject, however, to the rights of holders to withdraw such
outstanding notes (see "--Withdrawal of Tenders") or (3) waive such unsatisfied
conditions with respect to the exchange offer and accept all properly tendered
outstanding notes which have not been withdrawn.
EXCHANGE AGENT
U.S. Bank Trust National Association has been appointed as exchange agent
for the exchange offer. Questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for notice of guaranteed delivery should be directed to the exchange
agent addressed as follows:
U.S. BANK NATIONAL ASSOCIATION
180 EAST FIFTH STREET
ST. PAUL, MINNESOTA 55101
ATTENTION: SPECIALIZED FINANCE DEPARTMENT
BY FACSIMILE:
(ELIGIBLE INSTITUTIONS ONLY)
(651) 244-1537
FOR INFORMATION OR
CONFIRMATION BY TELEPHONE:
(651) 244-5011
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
31
<PAGE>
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, additional solicitation may be made by
telegraph, telecopy, telephone or in person our and our affiliates' officers and
regular employees.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers, or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith.
We will pay the cash expenses to be incurred in connection with the exchange
offer. Such expenses include fees and expenses of the exchange agent and
Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
outstanding notes, which is face value, as reflected in our accounting records
on the date of exchange. Accordingly, we will not recognize any gain or loss for
accounting purposes as a result of the exchange offer. The expenses of the
exchange offer will be deferred and charged to expense over the term of the
exchange notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The outstanding notes that are not exchanged for exchange notes pursuant to
the exchange offer will remain restricted securities. Accordingly, such
outstanding notes may be resold only (1) to us (upon redemption thereof or
otherwise), (2) so long as the outstanding notes are eligible for resale
pursuant to Rule 144A, to a person inside the United States whom the seller
reasonably believes is a qualified institutional buyer within the meaning of
Rule 144A under the Securities Act in a transaction meeting the requirements of
Rule 144A, in accordance with Rule 144 under the Securities Act, or pursuant to
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel reasonably acceptable to us), (3) outside the
United States to a foreign person in a transaction meeting the requirements of
Rule 904 under the Securities Act, or (4) pursuant to an effective registration
statement under the Securities Act, in each case in accordance with any
applicable securities laws of any state of the United States.
RESALE OF THE EXCHANGE NOTES
With respect to resales of exchange notes, based on interpretations by the
Staff of the SEC set forth in no-action letters issued to third parties, we
believe that a holder or other person who receives exchange notes, whether or
not such person is the holder (other than a person that is our "affiliate"
within the meaning of Rule 405 under the Securities Act) in exchange for
outstanding notes in the ordinary course of business and who is not
participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of the
exchange notes, will be allowed to resell the exchange notes to the public
without further registration under the Securities Act and without delivering to
the purchasers of the exchange notes a prospectus that satisfies the
requirements of Section 10 of the Securities Act. However, if any holder
acquires exchange notes in the exchange offer for the purpose of distributing or
participating in a distribution of the exchange notes, such holder cannot rely
on the position of the Staff of the SEC expressed in such no-action letters or
any similar interpretive letters, and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction, unless an exemption from registration is otherwise
available. Further, each participating broker-dealer that receives exchange
notes for its own account in exchange for outstanding notes, where such
outstanding notes were acquired by such participating 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 exchange
notes.
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<PAGE>
USE OF PROCEEDS
This exchange offer is intended to satisfy certain of our obligations under
the registration rights agreements. We will not receive any cash proceeds from
the issuance of the exchange notes. In consideration for issuing the exchange
notes contemplated in this prospectus, we will receive outstanding notes in like
principal amount, the form and terms of which are the same as the form and terms
of the exchange notes (which replace the outstanding notes), except as otherwise
described in this prospectus.
The Issuer received approximately $397.0 million in net proceeds from the
sale of the outstanding notes in the initial offering. The Issuer used
approximately $300.1 million of the net proceeds to repay a portion of the
indebtedness outstanding under its new credit facility and will use the balance
for general corporate purposes.
We used borrowings under the new credit facility: (1) to pay $207.2 million
to the former Adwest shareholders, (2) to pay $334.6 million to the former Excel
shareholders, (3) to refinance an aggregate of approximately $456.9 million of
outstanding indebtedness of Dura, Excel and Adwest and (4) to pay approximately
$50.0 million in fees and expenses and prepayment penalties related to the
Acquisitions. As of March 31, 1999, interest rates on borrowings under the new
credit facility ranged from 5.28% to 10.00%. The term loan repaid out of the net
proceeds of the initial offering was due and payable in September 2000 and the
revolving credit facility is available until March 2005. See "Capitalization"
and "Description of Other Indebtedness--New Credit Facility."
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<PAGE>
CAPITALIZATION
The following table sets forth as of March 31, 1999: (1) the actual
consolidated capitalization of Dura, and (2) the as adjusted capitalization of
Dura giving effect to the initial offering and the application of the net
proceeds therefrom. This exchange offer will not generate any net cash proceeds
to the Issuer. This table should be read in conjunction with the audited and
unaudited consolidated financial statements and related notes and the unaudited
pro forma financial statements and related notes appearing elsewhere in this
prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
----------------------------
ACTUAL AS ADJUSTED(1)
------------ --------------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
Cash and cash equivalents........................................................... $ 39,267 $ 136,181
------------ --------------
------------ --------------
Long-term debt, including current maturities:
New credit facility:
Revolving credit facility..................................................... $ 100,086 $ --
Tranche A term loan........................................................... 250,740 250,740
Tranche B term loan........................................................... 275,000 275,000
Interim term loan............................................................. 200,000 --
Other senior indebtedness......................................................... 165,331 165,331
------------ --------------
Total senior debt............................................................... 991,157 691,071
------------ --------------
Trident notes (2)................................................................. 80,934 80,934
9% senior subordinated notes...................................................... -- 408,000
------------ --------------
Total subordinated debt......................................................... 80,934 488,934
------------ --------------
Total debt.................................................................... 1,072,091 1,180,005
------------ --------------
Trust Preferred Securities (3)...................................................... 55,250 55,250
Stockholders' investment:
Preferred Stock, $1.00 par value per share; 5,000,000 shares authorized; none
issued or outstanding........................................................... -- --
Class A Common Stock, $0.01 par value per share; 30,000,000 shares authorized;
9,029,085 shares issued and outstanding on an actual basis...................... 140 140
Class B Common Stock, $0.01 par value per share; 10,000,000 shares authorized;
3,325,303 shares issued and outstanding on an actual basis...................... 33 33
Additional paid-in capital........................................................ 335,884 335,884
Retained earnings................................................................. 70,544 70,544
Accumulated other comprehensive loss.............................................. (13,139) (13,139)
------------ --------------
Total stockholders' investment.................................................. 393,462 393,462
------------ --------------
Total capitalization.......................................................... $ 1,465,553 $ 1,628,717
------------ --------------
------------ --------------
</TABLE>
- ------------------------
(1) As adjusted to give effect to the initial offering. Proceeds are net of
discounts and commissions and the expenses of the initial offering.
(2) Represents the Trident notes, which were issued in December 1997. Neither
DASI nor the Issuer has guaranteed any of the obligations of Trident under
the Trident notes.
(3) Represents the Trust Preferred Securities issued by the Dura Trust in March
1998. The sole assets of the Dura Trust are approximately $57.0 million
principal amount of DASI's 7 1/2% convertible subordinated debentures due
March 31, 2028, such amount being the sum of the stated liquidation
preference of the Trust Preferred Securities and the capital contributed by
DASI in exchange for the common securities of the Dura Trust. DASI has
guaranteed, on a subordinated basis, certain obligations of the Dura Trust
under the Trust Preferred Securities.
34
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The Unaudited Pro Forma Statement of Operations for the year ended December
31, 1998 gives effect to: (1) the acquisitions of Universal, Trident, the Hinge
Business, Excel and Adwest by Dura, (2) Excel's July 1 acquisition of 70% of
Schade, (3) the March 1998 issuance of the Trust Preferred Securities, (4) the
June 1998 Offering, (5) the borrowings under the new credit facility and (6) the
initial offering and the application of the net proceeds therefrom, as if such
transactions had occurred on January 1, 1998. The results of operations of
Adwest represent Adwest's results of operations for the twelve month period
ended December 31, 1998.
The Unaudited Pro Forma Statement of Operations for the three months ended
March 31, 1999 gives effect to: (1) the acquisitions of Excel and Adwest, (2)
the borrowings under the new credit facility and (3) the initial offering and
the application of the net proceeds therefrom, as if such transactions had
occurred on January 1, 1999.
The unaudited pro forma financial data presented in this prospectus are
based on the assumptions and adjustments described in the accompanying notes.
The Unaudited Pro Forma Statements of Operations do not purport to represent
what our results of operations actually would have been if the events described
above had occurred as of the dates indicated or what our results will be for any
future periods. The Unaudited Pro Forma Financial Statements are based upon
assumptions and adjustments that we believe are reasonable. You should read the
Unaudited Pro Forma Financial Statements and the accompanying notes in
conjunction with the historical financial statements, including the related
notes, included elsewhere in this prospectus.
The acquisitions of Trident, the Hinge Business, Excel, Schade and Adwest
have been accounted for using the purchase method of accounting and,
accordingly, the assets acquired and liabilities assumed have been recorded at
their fair values as of the dates of their respective acquisitions. These
amounts have been recorded based upon preliminary estimates as of such dates.
Further adjustments to the acquired assets and assumed liabilities will be
reflected as a change in goodwill.
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<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
DURA(1) EXCEL(5) ADWEST(7) ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 264,701 $ 308,705 $ 80,346 $ -- $ 653,752
Cost of sales................................... 218,219 272,716 69,840 (4,806)(8) 555,969
---------- ---------- ----------- ----------- -----------
Gross profit.................................. 46,482 35,989 10,506 4,806 97,783
Selling, general & administrative expenses...... 16,897 17,991 7,027 -- 41,915
Amortization expense............................ 3,685 358 655 1,387(10) 6,085
---------- ---------- ----------- ----------- -----------
Operating income.............................. 25,900 17,640 2,824 3,419 49,783
Interest expense, net........................... 6,895 2,704 2,035 13,912(11) 25,546
Other income.................................... -- (582) -- -- (582)
---------- ---------- ----------- ----------- -----------
Income before provision for income taxes and
minority interest........................... 19,005 15,518 789 (10,493) 24,819
Provision for income taxes...................... 7,711 7,991 433 (6,083) 12) 10,052
Minority interest-trust preferred securities.... 611 -- -- -- 611
Minority interest in subsidiaries............... 1,342 (177) (15) -- 1,150
---------- ---------- ----------- ----------- -----------
Income before extraordinary item and
accounting change........................... 9,341 7,704 371 (4,410) 13,006
Extraordinary item--loss on early extinguishment
of debt, net.................................. (2,702) -- -- -- (2,702)
Cumulative effect of change in accounting,
net........................................... (3,147) -- -- -- (3,147)
---------- ---------- ----------- ----------- -----------
Net income (loss)............................. $ 3,492 $ 7,704 $ 371 $ (4,410) $ 7,157
---------- ---------- ----------- ----------- -----------
---------- ---------- ----------- ----------- -----------
Diluted shares outstanding(15).................. 14,253 4,599 18,852
---------- ----------- -----------
---------- ----------- -----------
Diluted earnings per share(15).................. $ 0.27 $ 0.38
---------- -----------
---------- -----------
Basic shares outstanding(15).................... 12,877 4,599 17,476
---------- ----------- -----------
---------- ----------- -----------
Basic earnings per share........................ $ 0.29 $ 0.41
---------- -----------
---------- -----------
</TABLE>
36
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC.
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HINGE
DURA(1) UNIVERSAL(2) TRIDENT(3) BUSINESS(4)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues.......................................................... $ 739,467 $ 7,836 $ 104,555 $ 34,991
Cost of sales..................................................... 608,518 6,593 86,858 31,632
----------- ----------- ----------- -----------
Gross profit.................................................... 130,949 1,243 17,697 3,359
Selling, general and administrative expenses...................... 49,825 318 15,278 1,400
Amortization expense.............................................. 9,868 -- 1,303 --
----------- ----------- ----------- -----------
Operating income................................................ 71,256 925 1,116 1,959
Interest expense, net............................................. 20,267 -- 4,402 --
Other (income) expense............................................ -- -- 369 --
----------- ----------- ----------- -----------
Income before provision for income taxes and minority
interest...................................................... 50,989 925 (3,655) 1,959
Provision for income taxes........................................ 20,933 370 (1,033) 784
Minority interest-trust preferred securities...................... 1,908 -- -- --
Minority interest in subsidiaries................................. 1,481 -- -- --
----------- ----------- ----------- -----------
Income before extraordinary item................................ 26,667 555 (2,622) 1,175
Extraordinary item--loss on early extinguishment of debt, net..... 643 -- -- --
----------- ----------- ----------- -----------
Net income (loss)............................................... $ 26,024 $ 555 $ (2,622) $ 1,175
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Diluted shares outstanding(15).................................... 11,795
-----------
-----------
Diluted earnings per share(15).................................... $ 2.37
-----------
-----------
Basic shares outstanding(15)...................................... 10,708
-----------
-----------
Basic earnings per share.......................................... $ 2.43
-----------
-----------
<CAPTION>
PRO FORMA
EXCEL(5) SCHADE(6) ADWEST(7) ADJUSTMENTS
------------- ----------- ----------- -----------
<S> <C>
Revenues.......................................................... $ 1,106,103 $ 132,779 $ 399,717 $ --
Cost of sales..................................................... 995,982 117,593 346,972 (23,676)(8)
------------- ----------- ----------- -----------
Gross profit.................................................... 110,121 15,186 52,745 23,676
Selling, general and administrative expenses...................... 76,507 7,494 23,974 (6,000)(9)
Amortization expense.............................................. 2,108 -- 2,927 6,399(10)
------------- ----------- ----------- -----------
Operating income................................................ 31,506 7,692 25,844 23,277
Interest expense, net............................................. 9,623 2,669 9,823 49,882(11)
Other (income) expense............................................ (69) -- -- --
------------- ----------- ----------- -----------
Income before provision for income taxes and minority
interest...................................................... 21,952 5,023 16,021 (26,605)
Provision for income taxes........................................ 3,632 1,419 6,094 (5,223)(12)
Minority interest-trust preferred securities...................... -- -- -- 580(13)
Minority interest in subsidiaries................................. 1,367 -- 633 1,081(14)
------------- ----------- ----------- -----------
Income before extraordinary item................................ 16,953 3,604 9,294 (23,043)
Extraordinary item--loss on early extinguishment of debt, net..... -- -- -- --
------------- ----------- ----------- -----------
Net income (loss)............................................... $ 16,953 $ 3,604 $ 9,294 $ (23,043)
------------- ----------- ----------- -----------
------------- ----------- ----------- -----------
Diluted shares outstanding(15).................................... 5,723
-----------
-----------
Diluted earnings per share(15)....................................
Basic shares outstanding(15)...................................... 6,729
-----------
-----------
Basic earnings per share..........................................
<CAPTION>
PRO FORMA
-------------
Revenues.......................................................... $ 2,525,448
Cost of sales..................................................... 2,170,472
-------------
Gross profit.................................................... 354,976
Selling, general and administrative expenses...................... 168,796
Amortization expense.............................................. 22,605
-------------
Operating income................................................ 163,575
Interest expense, net............................................. 96,666
Other (income) expense............................................ 300
-------------
Income before provision for income taxes and minority
interest...................................................... 66,609
Provision for income taxes........................................ 26,976
Minority interest-trust preferred securities...................... 2,488
Minority interest in subsidiaries................................. 4,562
-------------
Income before extraordinary item................................ 32,583
Extraordinary item--loss on early extinguishment of debt, net..... 643
-------------
Net income (loss)............................................... $ 31,940
-------------
-------------
Diluted shares outstanding(15).................................... 17,518
-------------
-------------
Diluted earnings per share(15).................................... $ 1.82
-------------
-------------
Basic shares outstanding(15)...................................... 17,437
-------------
-------------
Basic earnings per share.......................................... $ 1.83
-------------
-------------
</TABLE>
37
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(1) Represents the results of operations of Dura for the year ended December 31,
1998, including the results of operations of Universal, Trident and the
Hinge Business from their respective dates of acquisition and for the three
months ended March 31, 1999, including the results of operations of Excel
and Adwest from their respective dates of acquisition.
(2) Represents the results of operations of Universal from January 1, 1998
through the date of acquisition, March 8, 1998.
(3) Represents the results of operations of Trident from January 1, 1998 through
the date of acquisition, April 30, 1998.
(4) Represents the results of operations for the Hinge Business from January 1,
1998 through the date of acquisition, August 31, 1998.
(5) Represents the results of operations for Excel for the year ended December
31, 1998 and from January 1, 1999 through the date of acquisition, March 23,
1999. The results of operations for the year ended December 31, 1998 include
the results of operations of Schade from July 1, 1998, the date of its
acquisition, through December 31, 1998.
(6) Represents the results of operations of Schade from January 1, 1998 through
the date of its acquisition by Excel, July 1, 1998.
(7) Represents the results of operations for Adwest for the twelve months ended
December 31, 1998 and from January 1, 1999 through the date of acquisition,
March 15, 1999.
(8) Reflects the change in depreciation expense resulting from adjustments to
the depreciable lives of property, plant and equipment of Universal,
Trident, the Hinge Business, Excel, Schade and Adwest to their estimated
useful lives at the time of their acquisition and from adjustments to value
such property, plant and equipment at fair value as of the date of
acquisition as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1998 1999
------------ -------------
<S> <C> <C>
Universal....................................................... $ 33 $ --
Trident......................................................... 1,543 --
Hinge Business.................................................. 474 --
Excel........................................................... 12,886 2,962
Schade.......................................................... 5,740 1,282
Adwest.......................................................... 3,000 562
------------ -------------
Total......................................................... $ 23,676 $ 4,806
------------ -------------
------------ -------------
</TABLE>
(9) Reflects the elimination of certain corporate payroll and related costs and
duplicate public company expenses arising from the acquisitions of Excel and
Adwest for the year ended December 31, 1998 as set forth below:
<TABLE>
<S> <C>
Executive management payroll costs.................................. $ 3,500
Public company costs................................................ 1,700
Other............................................................... 800
---------
Total............................................................. $ 6,000
---------
---------
</TABLE>
38
<PAGE>
(10) Represents the additional amortization of goodwill and other intangible
assets arising from the acquisitions of Universal, Trident, the Hinge
Business, Excel, Adwest, net of amortization of goodwill and other
intangible assets previously recorded by Trident, Excel and Adwest:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1998 1999
------------ -------------
<S> <C> <C>
Amortization of goodwill and other intangible assets:
Universal..................................................... $ 87 $ --
Trident....................................................... 2,019 --
Hinge Business................................................ 345 --
Excel/Schade.................................................. 4,966 1,159
Adwest........................................................ 5,320 1,241
------------ -------------
12,737 2,400
Amortization previously recorded by:
Trident....................................................... (1,303) --
Excel......................................................... (2,108) (358)
Adwest........................................................ (2,927) (655)
------------ -------------
(6,338) (1,013)
------------ -------------
Net increase................................................ $ 6,399 $ 1,387
------------ -------------
------------ -------------
</TABLE>
Goodwill is amortized on a straight-line basis over a forty-year period.
Other intangible assets are amortized over the useful life of the related
asset.
(11) Represents the change in interest expense arising from:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1998 1999
------------ -------------
<S> <C> <C>
Interest expense on Term Loan A................................. $ 21,313 $ 5,328
Interest expense on Term Loan B................................. 22,000 5,500
Interest expense on Subordinated Notes.......................... 36,720 9,180
Interest expense on Trident notes, net.......................... 6,600 1,650
Interest expense on other senior indebtedness................... 6,033 2,888
Amortization of capitalized financing fees...................... 4,000 1,000
------------ -------------
Total adjustments....................................... 96,666 25,546
------------ -------------
Interest expense, net previously recorded by:
Dura............................................................ (20,267) (6,895)
Trident......................................................... (4,402) --
Excel........................................................... (9,623) (2,704)
Schade.......................................................... (2,669) --
Adwest.......................................................... (9,823) (2,035)
------------ -------------
(46,784) (11,634)
------------ -------------
Net increase............................................ $ 49,882 $ 13,912
------------ -------------
------------ -------------
</TABLE>
(12) Adjusts the provision for income taxes on a pro forma basis to reflect
Dura's incremental tax rate of 40.5%.
(13) Represents dividends, net of income taxes, on the Trust Preferred
Securities for the period prior to their issuance in March 1998.
39
<PAGE>
(14) Represents the minority interest in the earnings of Schade for the period
prior to July 1, 1998, the date of its acquisition by Excel.
(15) Basic earnings per share were computed by dividing net income by the
weighted average number of shares of Class A common stock and Class B common
stock outstanding during the year. Diluted earnings per share for the three
months ended March 31, 1999 include the dilutive effects of outstanding
stock options using the treasury stock method and assumes the conversion of
the Trust Preferred Securities into shares of Class A common stock. Diluted
earnings per share for the year ended December 31, 1998 excludes the
conversion of the Trust Preferred Securities (into approximately 1,289,000
shares of Class A common stock), as their effect is anti-dilutive. Pro forma
weighted average shares outstanding include the effects of the shares that
were issued in connection with the acquisition of Excel.
40
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
DURA
The following table sets forth selected consolidated financial data with
respect to Dura for each of the periods indicated. The selected historical
financial data for Dura for the years ended December 31, 1994 through 1998 have
been derived from Dura's consolidated financial statements which have been
audited by Arthur Andersen LLP, independent public accountants. The selected
historical consolidated financial data of Dura for the three months ended March
31, 1998 and 1999 have been derived from unaudited financial statements of Dura
and reflect all adjustments which, in the opinion of management, are necessary
for a fair presentation of the consolidated financial statements for an interim
period. All such adjustments are of a normal, recurring nature. Results of
operations for an interim period are not necessarily indicative of results for
the full year. No separate financial information for the Issuer has been
provided in this prospectus because: (1) DASI does not itself conduct any
operations but rather all operations of Dura are conducted by the Issuer and its
direct and indirect subsidiaries; (2) DASI has no material assets other than the
capital stock of the Issuer; (3) all of the assets and liabilities shown in the
consolidated financial statements for DASI are located at the Issuer and its
direct and indirect subsidiaries; and (4) DASI has unconditionally guaranteed
the notes on an unsecured, senior subordinated basis. The selected historical
consolidated financial data should be read in conjunction with "Management's
Discussion and Analysis of Results of Operations and Financial Condition" and
the consolidated financial statements and notes thereto all included elsewhere
herein.
DURA AUTOMOTIVE SYSTEMS, INC.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1994(1) 1995(2) 1996(3) 1997(4) 1998(5) 1998 1999
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................... $ 189,675 $ 253,726 $ 245,329 $ 449,111 $ 739,467 $ 125,746 $ 264,701
Cost of sales.......................... 170,625 219,559 207,810 375,086 608,518 104,471 218,219
--------- --------- --------- --------- --------- --------- ---------
Gross profit......................... 19,050 34,167 37,519 74,025 130,949 21,275 46,482
Selling, general and administrative
expenses............................. 10,485 15,513 17,157 32,815 49,825 9,160 16,897
Amortization expense................... 690 1,094 1,036 3,600 9,868 1,251 3,685
--------- --------- --------- --------- --------- --------- ---------
Operating income..................... 7,875 17,560 19,326 37,610 71,256 10,864 25,900
Interest expense, net.................. 3,473 4,822 2,589 9,298 20,267 2,938 6,895
Other income (2)....................... -- (4,240) -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes........... 4,402 16,978 16,737 28,312 50,989 7,926 19,005
Provision for income taxes............. 1,822 6,852 6,609 11,670 20,933 3,274 7,711
Equity in losses of affiliate, net..... -- -- -- -- 1,481 -- 1,342
Minority interest (6).................. -- -- -- -- 1,908 76 611
--------- --------- --------- --------- --------- --------- ---------
Income before extraordinary item and
accounting change.................. 2,580 10,126 10,128 16,642 26,667 4,576 9,341
Extraordinary item, net................ -- -- -- -- 643 -- (2,702)
Cumulative effect of change in
accounting, net...................... -- -- -- -- -- -- (3,147)
--------- --------- --------- --------- --------- --------- ---------
Net income............................. $ 2,580 $ 10,126 $ 10,128 $ 16,642 $ 26,024 $ 4,576 $ 3,492
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Basic earnings per share (7)........... $ 0.75 $ 2.04 $ 1.57 $ 1.89 $ 2.43 $ 0.52 $ 0.27
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Diluted earnings per share (7)......... $ 0.75 $ 2.03 $ 1.57 $ 1.88 $ 2.37 $ 0.52 $ 0.29
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1994(1) 1995(2) 1996(3) 1997(4) 1998(5) 1998 1999
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
Depreciation and amortization.......... $ 3,725 $ 5,578 $ 6,079 $ 12,303 $ 27,571 $ 3,067 $ 10,507
Capital expenditures, net.............. 5,406 6,116 6,260 16,242 31,822 3,733 5,994
EBITDA (8)............................. 11,600 23,138 25,405 49,913 98,827 13,931 36,407
Net cash provided by (used in):
Operating activities................. (6,156) 13,138 19,792 8,516 7,687 (2,142) 387
Investing activities................. (46,878) 11,428 (95,093) (93,386) (167,534) (22,311) (543,900)
Financing activities................. 53,037 (22,851) 75,236 87,620 176,620 67,322 564,152
Ratio of earnings to fixed charges
(9).................................. 2.2x 3.4x 5.7x 3.7x 2.7x 3.3x 3.1x
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents.............. $ 17 $ 1,732 $ 1,667 $ 4,148 $ 20,544 $ 46,938 $ 39,267
Working capital........................ 18,631 13,701 27,528 50,304 63,766 103,066 265,890
Total assets........................... 166,133 140,531 246,129 419,264 929,383 500,606 2,260,567
Total debt............................. 74,766 51,776 77,456 180,322 331,906 194,438 1,072,091
Total stockholders' investment......... 17,418 27,683 87,367 101,708 238,037 105,769 393,462
</TABLE>
- ------------------------------
(1) In August 1994, Dura acquired the Brake and Cable Business of Alkin Co. The
results of operations of this acquired business have been included in the
consolidated financial statements of Dura from August 31, 1994, the date of
acquisition.
(2) In April 1995, Dura sold the net assets of its window regulator business to
Rockwell, realizing a pretax gain of approximately $4.2 million. The results
of operations of the window regulator business have been included in the
consolidated financial statements of Dura through April 2, 1995, the date of
divestiture.
(3) Includes the results of operations of (i) the parking brake business from
Rockwell from October 1, 1996 and (ii) KPI from December 5, 1996, their
respective dates of acquisition. Dura issued an aggregate of 3,795,000
shares of its Class A common stock in August 1996 in connection with its
initial public offering.
(4) Includes the results of operations of (i) VOFA from January 1, 1997, (ii)
the parking brake business of Excel from May 5, 1997, (iii) GT Automotive
from August 29, 1997 and (iv) REOM Industries from December 12, 1997, which
represent their respective dates of acquisition.
(5) Includes the results of operations of (i) Universal from March 8, 1998, (ii)
Trident from April 30, 1998, and (iii) the Hinge Business from September 8,
1998, which represent their respective dates of acquisition. In March 1998,
the Dura Trust issued the Trust Preferred Securities. In June 1998, DASI
issued 3,500,000 shares of its Class A common stock, giving effect to the
exercise of the underwriters' over-allotment option.
(6) Represents dividends, net of income taxes, on the Trust Preferred
Securities.
(7) Basic earnings per share were computed by dividing net income by the
weighted average number of shares of Class A common stock and Class B common
stock outstanding during the year. Diluted earnings per share include the
dilutive effects of outstanding stock options using the treasury stock
method and the Trust Preferred Securities.
(8) "EBITDA" is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles, and our calculation thereof may not be comparable to that
reported by other companies. We believe that it is widely accepted that
EBITDA provides useful information regarding a company's ability to service
and/or incur indebtedness. This belief is based, in part, on our
negotiations with our lenders who have required that the interest payable
under our new credit facility be based, in part, on our ratio of
consolidated senior debt to EBITDA. EBITDA does not take into account our
working capital requirements, debt service requirements and other
commitments and, accordingly, is not necessarily indicative of amounts that
may be available for discretionary use. We estimate that Trident, a wholly
owned subsidiary of the Issuer, contributed approximately $32.6 million and
$38.0 million to our EBITDA for 1998 on an actual and pro forma basis,
respectively. Trident's ability to dividend or otherwise transfer cash to
the Issuer is restricted by the indenture relating to its 10% senior
subordinated notes due 2005. For 1998, Trident would have been permitted
under that indenture to transfer approximately $2.6 million to the Issuer.
(9) In calculating the ratio of earnings to fixed charges, earnings consist of
income before income taxes plus fixed charges. Fixed charges consist of
interest expense (which includes amortization of deferred financing costs
and debt issuance costs) and one-third of rental expense, deemed
representative of that portion of rental expense estimated to be
attributable to interest.
42
<PAGE>
EXCEL
The following table sets forth selected consolidated financial data with
respect to Excel for each of the periods indicated. The selected historical
financial data for Excel for the fiscal years ended December 28, 1996, December
27, 1997 and January 2, 1999 have been derived from Excel's consolidated
financial statements, which have been audited by Arthur Andersen LLP,
independent accountants. The selected historical consolidated financial data
should be read in conjunction with "Management's Discussion and Analysis of
Results of Operations and Financial Condition" and the consolidated financial
statements and notes thereto all included elsewhere herein.
EXCEL INDUSTRIES, INC.
<TABLE>
<CAPTION>
YEAR ENDED,
------------------------------------------------------------
JANUARY 2, 1999
DECEMBER 28, 1996 (1) DECEMBER 27, 1997 (2)
--------------------- ----------------- ------------------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net sales........................................... $ 887,741 $ 962,333 $1,106,103
Cost of goods sold.................................. 783,375 846,990 995,982
-------- -------- ------------------
Gross profit.................................. 104,366 115,343 110,121
Selling, administrative and engineering expenses.... 65,652 79,267 78,615
-------- -------- ------------------
Operating income.............................. 38,714 36,076 31,506
Interest expense.................................... 9,784 10,984 11,628
Other income, net................................... (1,736) (1,930) (2,074)
-------- -------- ------------------
Income before income taxes and minority
interest.................................... 30,666 27,022 21,952
Provision for income taxes.......................... 11,550 9,458 3,632
Minority interest................................... -- -- 1,367
-------- -------- ------------------
Net income.................................... $ 19,116 $ 17,564 $ 16,953
-------- -------- ------------------
-------- -------- ------------------
OTHER FINANCIAL DATA:
Depreciation and amortization....................... $ 26,246 $ 33,382 $ 39,679
Capital expenditures, net........................... 29,209 39,287 45,958
EBITDA (3).......................................... 64,960 69,458 71,185
Net cash provided by (used in):
Operating activities.......................... 69,849 40,477 76,002
Investing activities.......................... (78,974) (37,181) (43,925)
Financing activities.......................... 15,314 (7,559) (18,104)
Ratio of earnings to fixed charges (4).............. 3.7x 3.1x 2.7x
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and short-term investments..................... $ 6,580 $ 2,317 $ 16,290
Working capital..................................... 114,140 116,550 118,796
Total assets........................................ 443,234 457,797 594,384
Total debt.......................................... 133,006 108,615 167,035
Shareholders' equity................................ 150,725 185,315 194,258
</TABLE>
- ------------------------------
(1) On April 3, 1996, Excel acquired Anderson Industries, Inc. ("Anderson"),
whose primary asset was Atwood Industries, Inc. ("Atwood"). The results of
operations of Atwood have been included in the consolidated financial
statements of Excel from April 3, 1996.
(2) The results of operations of Schade have been included in the consolidated
financial statements of Excel since July 1, 1998.
(3) "EBITDA" is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles, and our calculation thereof may not be comparable to that
reported by other companies. We believe that it is widely accepted that
EBITDA provides useful information regarding a company's ability to service
and/or incur indebtedness. EBITDA does not take into account a company's
working capital requirements, debt service requirements and other
commitments and, accordingly, is not necessarily indicative of amounts that
may be available for discretionary use.
(4) In calculating the ratio of earnings to fixed charges, earnings consist of
income before income taxes plus fixed charges. Fixed charges consist of
interest expense (which includes amortization of deferred financing costs
and debt issuance costs) and one-third of rental expense, deemed
representative of that portion of rental expense estimated to be
attributable to interest.
43
<PAGE>
ADWEST
The following table sets forth selected consolidated financial data with
respect to Adwest for each of the periods indicated. The selected historical
financial data for Adwest for the fiscal years ended June 30, 1997 and 1998, set
forth in U.K. GAAP in Pounds, have been derived from Adwest's consolidated
financial statements, which have been audited by KPMG Audit Plc, independent
public accountants. The data as of and for the six months ended December 31,
1997 and 1998, set forth in U.K. GAAP in Pounds, have been derived from Adwest's
unaudited consolidated financial statements which, in the opinion of Adwest's
management, contain all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of the financial condition and results of
operations for these periods. The results of operations for the six months ended
December 31, 1998 are not necessarily indicative of the results that may be
expected for the entire fiscal year. The consolidated financial statements of
Adwest for the periods presented have been prepared in accordance with U.K.
GAAP, which differs in certain significant respects from U.S. GAAP. See Note 31
to the Consolidated Financial Statements of Adwest and Note 5 to the Unaudited
Interim Consolidated Financial Statements of Adwest included elsewhere herein.
The selected financial data for the fiscal years ended June 30, 1997 and 1998,
and the six months ended December 31, 1998, set forth in U.S. GAAP in Dollars,
has been derived from the audited and unaudited consolidated financial
statements of Adwest and adjusted for differences between U.K. GAAP and U.S.
GAAP. The selected historical consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Results of Operations
and Financial Condition" and the consolidated financial statements and notes
thereto all included elsewhere herein.
ADWEST AUTOMOTIVE PLC
<TABLE>
<CAPTION>
U.K. GAAP IN POUNDS
------------------------------------------------
FISCAL YEAR ENDED JUNE
SIX MONTHS ENDED
30, DECEMBER 31,
---------------------- ------------------------
1998 (1) 1997 (1)
1997 (1) (2) (2) 1998 (2)
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
<CAPTION>
(POUNDS IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF PROFIT AND LOSS DATA:
TURNOVER...................................................... L191,412 L249,853 L112,190 L118,155
Net operating costs........................................... 173,399 228,495 102,736 109,829
--------- ----------- ----------- -----------
OPERATING PROFIT.............................................. 18,013 21,358 9,454 8,326
Associated undertakings....................................... 21 21 -- --
Net interest.................................................. (2,892) (5,199) (2,196) (2,924)
Loss on disposal of businesses................................ (791) (13,501) -- --
--------- ----------- ----------- -----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAX...................... 14,351 2,679 7,258 5,402
Taxation on ordinary activities............................... 4,527 4,529 2,249 1,536
--------- ----------- ----------- -----------
(LOSS)/PROFIT FOR THE FINANCIAL YEAR AFTER TAX................ 9,824 (1,850) 5,009 3,866
Minority interests............................................ 400 505 246 133
--------- ----------- ----------- -----------
(LOSS)/PROFIT FOR THE FINANCIAL YEAR.......................... 9,424 (2,355) 4,763 3,733
Dividends..................................................... 6,428 6,442 1,897 --
--------- ----------- ----------- -----------
RETAINED (LOSS)/PROFIT FOR THE FINANCIAL YEAR................. L2,996 L(8,797) L2,866 L3,733
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital............................................... L 34,876 L 11,758 L 13,482 L (2,289)
Total assets.................................................. 121,640 160,647 157,041 158,110
Borrowings due after more than one year....................... 38,767 61,093 66,680 53,724
Shareholders' funds--equity................................... 29,451 8,246 4,371 11,577
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
U.S. GAAP IN DOLLARS (3)(4)
--------------------------------------------------
FISCAL YEAR ENDED JUNE SIX MONTHS ENDED
30, DECEMBER 31,
------------------------ ------------------------
1997 (1) 1998 (1)(2) 1997 (1)(2) 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................................................... $ 242,765 $ 365,814 $ 163,020 $ 196,456
Cost of sales............................................... 202,876 313,450 137,681 170,792
----------- ----------- ----------- -----------
Gross profit.............................................. 39,889 52,364 25,339 25,664
Selling, general and administrative expenses................ 14,543 23,084 13,168 14,058
Amortization expense........................................ 1,704 2,267 853 1,510
----------- ----------- ----------- -----------
Operating income.......................................... 23,642 27,013 11,318 10,096
Interest expense............................................ 4,654 8,560 3,609 4,860
----------- ----------- ----------- -----------
Income from continuing operations before provision for
income taxes and minority interest...................... 18,988 18,453 7,709 5,236
Provision for income taxes.................................. 6,370 6,182 2,829 2,779
Minority interest........................................... 651 831 408 208
----------- ----------- ----------- -----------
Net income from continuing operations..................... $ 11,967 $ 11,440 $ 4,472 $ 2,249
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
OTHER FINANCIAL DATA:
Depreciation and amortization............................... $ 13,939 $ 16,515 $ 7,671 $ 9,625
Capital expenditures, net................................... 9,521 27,556 12,479 13,263
EBITDA from continuing operations(5)........................ 37,581 43,528 18,989 19,721
Net cash provided by (used in):
Operating activities...................................... 29,978 25,730 21,044 7,263
Investing activities...................................... 9,397 (49,278) (65,221) (8,488)
Financing activities...................................... (23,367) 17,253 28,334 (15,639)
Ratio of earnings to fixed charges.......................... 5.1x 1.3x 3.6x 1.8x
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital............................................. $ 47,079 $ 11,976 $ 12,545 $ (22,446)
Total assets................................................ 291,014 374,066 398,869 376,476
Long-term debt (less current portion)....................... 63,764 100,858 110,735 89,773
Shareholders' equity........................................ 137,288 122,316 139,192 121,721
</TABLE>
- ------------------------------
(1) In May 1998 Adwest disposed of its U.S. electronics division for $38.0
million. Adwest realized a pre-tax loss of approximately $9.7 million
related to the sale. The results of operations of the electronics division
have been included in the consolidated financial statements of Adwest
through the date of divestiture.
During the year ended June 30, 1997, Adwest finalized the disposal of the
U.K. power systems division and property portfolio. The loss from the
disposal of these entities was $1.3 million for the year ended June 30,
1997. The results of operations of these entities have been included in the
consolidated financial statements of Adwest through the dates of
divestiture.
(2) On September 11, 1997, Adwest acquired Heidemann Verwaltungs GmbH
("Heidemann") and its subsidiary undertakings for DM132.0 million. The
results of operations of Heidemann have been included in the consolidated
financial statements of Adwest from September 11, 1997.
45
<PAGE>
(3) The Adwest historical financial statements were prepared in accordance with
U.K. GAAP, which differs in certain significant respects from U.S. GAAP. The
following table reconciles the Adwest profit/loss as reported under U.K.
GAAP to net income as stated under U.S. GAAP:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
JUNE 30, DECEMBER 31,
-------------------- --------------------
1997 1998 1997 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
(Loss)/profit attributable to shareholders as reported
under U.K. GAAP....................................... L 9,424 L(2,355) L4,763 L3,733
Converted to U.S. Dollars............................... $ 15,167 $ (3,877) $ 7,827 $ 6,207
U.S. GAAP adjustments (in U.S. Dollars):
Goodwill amortization................................. (2,361) (2,267) (853) (1,510)
Impact of goodwill previously amortized on sale of
subsidiary.......................................... -- 4,783 -- --
Cumulative exchange loss on sale of foreign
subsidiaries........................................ -- (1,946) -- --
Pension costs......................................... 533 26 15 (414)
Deferred taxation--full provision..................... (270) (235) (150) (219)
Tax effect of U.S. GAAP reconciling items............. (428) (49) (10) 90
Fixed asset revaluations.............................. 818 165 82 83
Deferred profit on sale of property................... 488 499 250 253
Pre-production costs.................................. -- (1,976) (629) (2,097)
Other................................................. (26) 34 (13) (60)
Minority interests.................................... (8) -- (3) 12
Reverse prior year adjustment......................... -- -- -- (978)
--------- --------- --------- ---------
Net (loss)/income under U.S. GAAP....................... $ 13,913 $ (4,843) $ 6,516 $ 1,367
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
(4) Operating results and balance sheet data of Adwest have been translated from
Pounds to Dollars using the following ratios:
<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS
ENDED JUNE 30, ENDED DECEMBER 31,
-------------------- --------------------
1997 1998 1997 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating results.................................. 1.6094 1.6464 1.6433 1.6627
Balance sheet...................................... 1.6448 1.6509 1.6607 1.6710
</TABLE>
(5) "EBITDA" is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles, and our calculation thereof may not be comparable to that
reported by other companies. We believe that it is widely accepted that
EBITDA provides useful information regarding a company's ability to service
and/or incur indebtedness. EBITDA does not take into account Adwest's
working capital requirements, debt service requirements and other
commitments and, accordingly, is not necessarily indicative of amounts that
may be available for discretionary use.
46
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
We ordinarily begin working on products awarded for new or redesigned models
two to five years prior to the marketing of such models to the public. During
such period, we incur (1) costs related to the design and engineering of such
products, (2) costs related to the production of the tools and dies used to
manufacture the new product and (3) start-up costs associated with the initial
production of such product. In general, design and engineering costs are
expensed in the period incurred unless they are reimbursed by the customer, in
which case they are capitalized and amortized over the life of such product as
they are recovered from the customer. Costs incurred in the production of the
tools and dies are generally capitalized and reimbursed by the customer prior to
production. Start-up costs, which are generally incurred 30 to 60 days
immediately prior to and immediately after initial production, are expensed as
incurred.
RESULTS OF OPERATIONS
DURA
The following table sets forth the percentage relationship of certain items
to revenues for Dura for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
Revenues......................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................................................... 84.7 83.5 82.3 83.1 82.4
--------- --------- --------- --------- ---------
Gross profit................................................. 15.3 16.5 17.7 16.9 17.6
Selling, general and administrative expenses..................... 7.0 7.3 6.7 7.3 6.4
Amortization expense............................................. 0.4 0.8 1.3 1.0 1.4
--------- --------- --------- --------- ---------
Operating income............................................. 7.9 8.4 9.7 8.6 9.8
Interest expense, net............................................ 1.1 2.1 2.7 2.3 2.6
--------- --------- --------- --------- ---------
Income before provision for income taxes, equity in losses of
affiliates and minority interest........................... 6.8 6.3 7.0 6.3 7.2
Provision for income taxes....................................... 2.7 2.6 2.9 2.6 2.9
Equity in losses of affiliates, net.............................. -- -- 0.2 -- 0.5
Minority interest-dividends on Trust Preferred Securities, net... -- -- 0.3 0.1 0.3
--------- --------- --------- --------- ---------
Income before extraordinary item and accounting change....... 4.1% 3.7% 3.6% 3.6% 3.5%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1999 TO THE THREE MONTHS
ENDED MARCH 31, 1998
REVENUES. Revenues of $264.7 million for the three months ended March 31,
1999 increased substantially over $125.7 million for the three months ended
March 31, 1998. The increase in revenues is primarily the result of the
acquisitions of Universal in March 1998, Trident in April 1998, the Hinge
Business in September 1998, Excel in March 1999 and Adwest in March 1999.
COST OF SALES. Cost of sales for the three months ended March 31, 1999
increased by $113.7 million to $218.2 million from $104.5 million for the three
months ended March 31, 1998. Cost of sales as a percentage of revenues for the
three months ended March 31, 1999 was 82.4% compared
47
<PAGE>
to 83.1% for the three months ended March 31, 1998. The corresponding
improvement in gross margins is primarily the result of lower costs of purchased
materials and higher margins from efficiency improvements and plant
rationalizations in acquired operations.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $16.9 million for the three months ended March 31,
1999 compared to $9.2 million for the three months ended March 31, 1998. The
increase was due primarily to incremental costs from the acquisitions discussed
above. As a percentage of revenues, selling, general and administrative expenses
were 6.4% for the three months ended March 31, 1999 compared to 7.3% for the
three months ended March 31, 1998.
INTEREST EXPENSE. Interest expense for the three months ended March 31,
1999 was $6.9 million compared to $2.9 million for the three months ended March
31, 1998. The increase was due principally to borrowings incurred related to the
acquisitions discussed above.
INCOME TAXES. The effective income tax rate was 40.6% for the three months
ended March 31, 1999 and 41.3% for the three months ended March 31, 1998. The
effective rates differed from the statutory rates as a result of higher foreign
tax rates and the effects of state taxes and non-deductible goodwill
amortization.
COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997
REVENUES. Revenues for the year ended December 31, 1998 increased by $290.4
million, or 64.7%, to $739.5 million from $449.1 million for 1997. The increase
in revenues relates primarily to the acquisitions of GT Automotive in August
1997, REOM Industries in December 1997, Universal in March 1998, Trident in
April 1998 and the Hinge Business in September 1998. These increases were
partially offset by the effects of a strike at GM. We estimate the strike at GM
decreased our revenues by approximately $16.7 million for the year ended
December 31, 1998.
COST OF SALES. Cost of sales for the year ended December 31, 1998 increased
by $233.4 million, or 62.2%, to $608.5 million from $375.1 million for 1997.
Cost of sales as a percentage of revenues for the year ended December 31, 1998
was 82.3% compared to 83.5% for 1997. The corresponding improvement in gross
margin is primarily the result of lower costs of purchased materials and higher
margins from efficiency improvements and plant rationalizations in acquired
operations.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $17.0 million, or 51.8%, to $49.8 million
for the year ended December 31, 1998 from $32.8 million for 1997. The increase
is due primarily to incremental costs from the acquisitions discussed above. As
a percentage of revenues, selling, general and administrative expenses were 6.7%
for 1998 compared to 7.3% for 1997.
AMORTIZATION EXPENSE. Amortization expense increased from $3.6 million for
the year ended December 31, 1997 to $9.9 million for 1998. The increase is the
result of goodwill amortization arising from the acquisitions discussed above.
INTEREST EXPENSE. Interest expense for the year ended December 31, 1998 was
$20.3 million compared to $9.3 million for 1997. The increase was due
principally to borrowings incurred related to the acquisitions discussed above.
INCOME TAXES. The effective income tax rate was 41.1% for 1998 compared to
41.2% for 1997. The effective rates differed from the statutory rates primarily
as a result of higher foreign tax rates, state taxes and non-deductible goodwill
amortization.
EQUITY IN LOSSES OF AFFILIATE. In January 1998, Dura and Excel, then its
joint venture partner, exercised an option to increase their joint venture's
ownership interest in Pollone to 51%, and as of
48
<PAGE>
such date, began consolidating the results of Pollone into the results of their
joint venture. Equity in losses of affiliate for the year ended December 31,
1998 represents Dura's share of the loss of the joint venture's operations in
1998.
MINORITY INTEREST. Minority interest for the year ended December 31, 1998
represents dividends, net of income tax benefits, on the Trust Preferred
Securities which were issued by the Dura Trust on March 20, 1998.
EXTRAORDINARY ITEM. The extraordinary loss for the year ended December 31,
1998 represents the write-off, net of income taxes, of deferred financing costs
related to former credit facilities.
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996
REVENUES. Revenues for 1997 increased by $203.8 million, or 83.1%, to
$449.1 million from $245.3 million for 1996. Approximately $179.0 million of the
increase relates to the acquisitions of KPI in December 1996, VOFA in January
1997 and GT Automotive in August 1997. The remaining increase is due to
increased production on models served by Dura and new program awards.
COST OF SALES. Cost of sales for 1997 increased by $167.3 million, or
80.5%, to $375.1 million from $207.8 million for 1996. As a percentage of
revenues, cost of sales decreased to 83.5% for 1997 from 84.7% for 1996,
resulting in an improved gross margin of 16.5% from 15.3% in the preceding year.
The higher gross margin is a result of continued cost reduction efforts,
including manufacturing process improvements such as cellular manufacturing,
mistake proofing, improved capacity utilization through rationalization and
consolidation of facilities and the effects of material cost reductions achieved
through the centralization of purchasing efforts and the resulting greater
purchasing power.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $15.7 million, or 91.3%, to $32.8 million
for 1997 from $17.2 million for 1996. This increase is due to incremental costs
from the acquisitions of KPI, VOFA and GT Automotive, engineering costs related
to new business and costs associated with the greater involvement in the design,
engineering and prototyping of systems for customers. As a percentage of
revenues, selling, general and administrative expenses were 7.3% for 1997
compared to 7.0% for 1996.
INTEREST EXPENSE. Interest expense for 1997 increased by $6.7 million to
$9.3 million from $2.6 million for 1996. The increase was due principally to
borrowings incurred related to the acquisitions of KPI, VOFA and GT Automotive.
INCOME TAXES. The effective income tax rate for 1997 was 41.2% for 1997
compared to 39.5% for 1996. The effective rates differed from the statutory
rates primarily as a result of an increased proportion of Dura's earnings being
derived in higher tax rate jurisdictions, such as Germany and Canada, state
taxes and an increase in non-deductible goodwill amortization.
EXCEL
Excel was founded in 1928 and became a public company in April 1984.
Effective July 1, 1998, Excel acquired 70% of Schade. Schade has sales and
manufacturing operations in the Czech Republic, Germany, Portugal, Spain and the
U.K. Schade and its affiliated companies are engaged in the manufacture and
distribution of modular windows, decorative trims, body components and injection
molded plastic components for the automotive industry. In April 1996, Excel
acquired all of the outstanding common shares of Anderson, located in Rockford,
Illinois. Anderson is a holding company whose main asset is Atwood. Atwood
manufactures seating systems, including seat and height adjusters, recliner
mechanisms, transmission selectors and hood and deck hinges, all for the
automotive industry. In addition, Atwood produces appliances such as water
heaters, furnaces, stoves and ranges, hardware, such as jacks, couplers and
surge brake actuators, seating frames, seat adjusters and recliner
49
<PAGE>
mechanisms for the recreational vehicle industry, and window systems and door
systems for the mass transit and heavy truck industries. The comparability of
Excel's results on a period-to-period basis is significantly affected by these
acquisitions.
Historically, Excel's operating units were aggregated into two segments for
financial reporting purposes: (1) light vehicle products, which included plastic
and metal framed window and door assemblies, manual and power window regulator
systems, manual seating systems, decorative trims and injection molded plastic
parts and (2) RV/MT/HT products, which included appliances (water heaters,
furnaces, stoves and ranges), jacks, couplers, seating frames and seat
adjusters, preassembled doors and windows for motor homes and window assemblies
for mass transit systems and heavy trucks.
The following table sets forth the percentage relationship of certain items
to revenues for Excel for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED,
---------------------------------------------
<S> <C> <C> <C>
DECEMBER 28, DECEMBER 27, JANUARY 2,
1996 1997 1999
--------------- --------------- -----------
Net sales................................................................ 100.0% 100.0% 100.0%
Cost of good sold........................................................ 88.2 88.0 90.0
----- ----- -----
Gross profit....................................................... 11.8 12.0 10.0
Selling, administrative and engineering expenses......................... 7.4 8.2 7.1
----- ----- -----
Operating income................................................... 4.4 3.8 2.9
Interest expense......................................................... 1.1 1.1 1.1
Other income, net........................................................ (0.2) (0.2) (0.2)
----- ----- -----
Income before income taxes and minority interest................... 3.5 2.8 2.0
Provision for income taxes............................................... 1.3 1.0 0.3
Minority interest........................................................ -- -- 0.1
----- ----- -----
Net income......................................................... 2.2% 1.8% 1.5%
----- ----- -----
----- ----- -----
</TABLE>
COMPARISON OF YEAR ENDED JANUARY 2, 1999 TO YEAR ENDED DECEMBER 27, 1997
Sales for the year ended January 2, 1999 totaled $1,106 million, an increase
of $144.0 million or 15% from 1997. The light vehicle products segment accounted
for $126.0 million of the increase, with RV/MT/HT making up the difference.
Sales in the light vehicle products segment totaled $885.0 million as compared
to $759.6 million in 1997. The acquisition of Schade added $165.0 million in
sales in the second half of 1998, while sales in North America declined $39.0
million. The decline in North America light vehicle product sales results from
programs that were discontinued or canceled amounting to approximately $76.6
million offset by sales of new programs of $59.2 million, with the remainder of
the sales decline due to a decline in passenger car production.
Sales of the RV/MT/HT products segment increased $18.0 million, as the
recreational vehicle industry production volumes were up approximately 15% and
mass transit production was also strong.
Gross profit totaled $110.1 million or 10% of sales, which compares with
$115.3 million or 12% of sales in 1997. This decrease in gross profit of $5
million and in profit percentage results from losses incurred in the seating
systems area amounting to approximately $18.0 million arising from excessive
launch costs, tooling costs, pricing and other issues. In addition, a reserve to
cover estimated losses on long-term production contracts was established in the
fourth quarter in the amount of $4.5 million. Gross profit of 19% in 1998 in the
RV/MT/HT products segment was identical with that in 1997.
Selling, administrative and engineering expenses totaled $78.6 million or
7.1% of sales for 1998, down from $79.3 million or 8.2% of sales in 1997.
Excluding Schade's expenses of approximately
50
<PAGE>
$8.8 million in 1998, total expenses would have been lower by $9.5 million.
Approximately $5.5 million of the decrease was due to a reduction in product
development expenses, $2.3 million was due to the administrative costs of the
North American facilities closed in late 1997, $1.2 million was due to costs
associated with the closure of the Italian operation recorded in 1997, and
$500,000 results from a reduction in compensation.
Other income, net, consists primarily of interest income of $2.0 million and
royalty income of $.7 million, less losses on a Brazilian joint venture of $1.5
million in 1998, which compares to interest income of $2.0 million in 1997.
Interest costs of $11.6 million for 1998 increased slightly from $11.0
million in 1997, as the interest on Schade's bank loans were partially offset by
the elimination of interest on convertible subordinated notes that were
converted into common shares of Excel in 1997.
Provision for taxes on income in 1998 includes the benefit of tax credits
related to prior years. In 1998, Excel completed a review of qualified research
and development expenditures for the years 1994 to 1997 and recorded tax credits
totaling $4.0 million. The effective rate for U.S. taxes was lowered to 16.5%
for 1998, down from 35.0% in 1997 due to the current year's effect of these
credits.
COMPARISON OF YEAR ENDED DECEMBER 27, 1997 TO YEAR ENDED DECEMBER 28, 1996
Sales for the year ended December 27, 1997 totaled $962.3 million, up $74.6
million or 8% from the preceding year. The Anderson acquisition added $98.2
million in sales in the first quarter of 1997. This increase was offset by
reductions in parts shipped for passenger cars and selling price reductions on
products under long-term pricing agreements. Specifically, passenger car
production in 1997 for Excel's largest customer, Ford, was 10% lower than the
previous year. Also, discontinued programs such as Aerostar, Thunderbird and
Cougar adversely affected sales by $10.7 million. These items, including the
Anderson acquisition, accounted for the change in sales for 1997 to $759.6
million for the light vehicle segment from $730.3 million in 1996. Sales for
1997 for the RV/MT/HT segment were $202.8 million, up from $157.5 million in
1996, due primarily to the Anderson acquisition.
Gross profit totaled $115.3 million, or 12.0% of sales, as compared with
$104.4 million, or 11.8% of sales for the prior year. The increase was due to
the addition of the Anderson locations offsetting approximately $4.1 million in
start-up costs on new programs and approximately $4.7 million in costs
associated with the closure of two domestic plants. Gross profit for 1997 was
$76.8 million or 10.1% of sales for the light vehicle segment compared to $73.8
million or 10.1% of sales in 1996. Gross profit for the RV/MT/HT segment was
$38.5 million or 19.0% of sales in 1997 compared to $30.5 million or 19.4% of
sales in 1996.
Selling, administrative and engineering expenses totaled $79.3 million or
8.2% of sales for 1997, up from $65.7 million or 7.4% of sales in 1996. The
increase was due to the addition of Anderson locations, increases in product
development expenses and $1.2 million in costs associated with the closure of
the Italian operation.
Interest costs of $11.0 million for 1997 increased from $9.8 million in 1996
due to the senior notes issued in connection with the Anderson acquisition in
1996. Interest income of $2.0 million in 1997, recorded in other income, was up
slightly from $1.8 million in 1996.
The income tax provision was 35% of pre-tax income in 1997, down from 37.7%
in the preceding year. The decrease was due to lower estimated state income
taxes and favorable benefits of Excel's foreign sales corporation.
ADWEST
The following discussion is based upon the Consolidated Financial Statements
of Adwest included in this prospectus, which have been prepared in conformity
with U.K. GAAP which differs in certain
51
<PAGE>
significant respects from U.S. GAAP. The significant differences between U.S.
GAAP and U.K. GAAP as they relate to Adwest are summarized in Note 31 to the
Consolidated Financial Statements of Adwest.
The following table sets forth the percentage relationship of certain items
to turnover for Adwest for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Turnover.............................................................................. 100.0% 100.0% 100.0%
Net operating costs................................................................... 93.3 90.6 91.5
Operating profit...................................................................... 6.7 9.4 8.5
Exceptional items..................................................................... (2.2) -- --
Associated undertakings............................................................... -- -- --
Net interest.......................................................................... (1.7) (1.5) (2.1)
--------- --------- ---------
Loss on disposal of business.......................................................... (13.1) (.4) (5.4)
(Loss)/profit on ordinary activities before tax....................................... (10.3) 7.5 1.0
Tax on profit on ordinary activities.................................................. 0.9 2.4 1.8
--------- --------- ---------
(Loss)/profit for financial year...................................................... (11.2) 5.1 (0.8)
Minority interests.................................................................... 0.1 0.2 0.2
--------- --------- ---------
Retained (loss)/profit for financial year............................................. (11.3)% 4.9% (1.0)%
--------- --------- ---------
--------- --------- ---------
</TABLE>
COMPARISON OF YEAR ENDED JUNE 30, 1998 WITH YEAR ENDED JUNE 30, 1997
TURNOVER--Total group turnover for the year ended June 30, 1998 increased by
L58.4 million or 30.5% to L249.9 million from L191.4 million for the year ended
June 30, 1997. These results include the U.S. electronics division for all of
fiscal 1997 and the first ten months of fiscal 1998. Total turnover from the
automotive division (continuing operations) for the year ended June 30, 1998
increased by L71.3 million, or 47.3%, to L222.2 million from L150.8 million for
the year ended June 30, 1997. The increase in turnover is primarily the result
of the acquisition of Heidemann in September 1997.
OPERATING COSTS--Total group operating costs for the year ended June 30,
1998 increased by L55.1 million or 31.8% to L228.5 million from L173.4 million
for the year ended June 30, 1997. Operating costs from continuing operations for
the year ended June 30, 1998 increased by L67.4 million, or 49.5%, to L203.7
million from L136.2 million for the year ended June 30, 1997. Operating costs
from continuing operations, as a percentage of turnover from continuing
operations was 91.7% for the year ended June 30, 1998 compared to 90.3% for the
year ended June 30, 1997. The decline in gross margins is due to the short-term
reversal of profits in U.S. operations and relatively lower margins at some of
the newly acquired Heidemann facilities.
Selling, general and administrative expenses are included as a component of
operating costs in accordance with U.K. accounting requirements. Selling,
general and administrative expenses from continuing operations increased by L4.7
million to L14.4 million for the year ended June 30, 1998 from L9.7 million for
the year ended June 30, 1997. This increase is due primarily to incremental
costs related to the acquisition of Heidemann. As a percent of revenues,
selling, general and administrative expenses from continuing operations were
6.5% for the year ended June 30, 1998 and 6.4% for the year ended June 30, 1997.
INTEREST EXPENSE--Interest expense for the year ended June 30, 1998 was L5.2
million compared to L2.9 million for the year ended June 30, 1997. The increase
was due principally to borrowings incurred related to the acquisition of
Heidemann.
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INCOME TAXES--The effective income tax rate was 28.0% for the year ended
June 30, 1998 and 31.5% for the year ended June 30, 1997. The reduction in the
effective income tax rate is primarily related to offsetting the impact of high
tax rates in France and Germany with structuring the Heidemann acquisition and
low effective tax rates in Spain and the U.S.
DISCONTINUED OPERATIONS--The loss from discontinued operations for the year
ended June 30, 1998 was L13.5 million and L791,000 for the year ended June 30,
1997. During fiscal 1998, Adwest disposed of three business units. In May 1998,
Adwest announced the disposal of their U.S. electronics division for $38.0
million. Of that amount, $3.0 million has been retained in an escrow account,
with $1.0 million to be released annually upon expiration of certain warranties
and indemnities. In accordance with U.K. accounting requirements, the original
goodwill on the acquisition of these businesses totaling L17.6 million has been
included in discontinued operations in the consolidated profit and loss account
for the year ended June 30, 1998. In addition, Adwest disposed of the Heidemann
galvanizing business for DM6.3 million in aggregate consideration and the last
significant investment portfolio property for L900,000 in aggregate
consideration. The loss in fiscal 1998 is net of a gain on the disposal of these
divisions of L4.1 million offset by the write-off of the original goodwill of
L17.6 million in accordance with U.K. accounting requirements.
COMPARISON OF YEAR ENDED JUNE 30, 1997 WITH YEAR ENDED JUNE 30, 1996
TURNOVER--Total group turnover for the year ended June 30, 1997 decreased by
L32.2 million or 14.4% to L191.4 million from L223.7 million for the year ended
June 30, 1996. These results include the U.K. power systems division and the
property portfolio, which were substantially disposed of during 1996. Total
turnover from the automotive division (continuing operations) for the year ended
June 30, 1997 increased by L23.5 million, or 18.5%, to L150.8 million from
L127.3 million for the year ended June 30, 1996. The increase in turnover is
primarily the result of the acquisition of Adwest Rearsby in June of fiscal 1996
offset by an L8.2 million reduction in turnover at overseas entities caused by
the movement in average exchange rates between the two years.
OPERATING COSTS--Total group operating costs for the year ended June 30,
1997 decreased by L35.3 million or 16.9% to L173.4 million from L208.7 million
for the year ended June 30, 1996. Operating costs from continuing operations for
the year ended June 30, 1997 increased by L19.5 million, or 16.7%, to L136.2
million from L116.7 million for the year ended June 30, 1996. Operating costs
from continuing operations, as a percentage of turnover from continuing
operations was 90.3% for the year ended June 30, 1997 compared to 91.6% for the
year ended June 30, 1996. The increase in gross margins is primarily due to cost
reductions from improved design and technology within the automotive division.
Selling, general and administrative expenses are included as a component of
operating costs in accordance with U.K. accounting requirements. Selling,
general and administrative expenses from continuing operations increased by L2.5
million to L9.7 million for the year ended June 30, 1997 from L7.2 million for
the year ended June 30, 1996. This increase is due primarily to incremental
costs related to the acquisition of Rearsby. As a percent of revenues selling,
general and administrative expenses were 6.4% for the year ended June 30, 1997
and 5.7% for the year ended June 30, 1996.
EXCEPTIONAL ITEMS--During fiscal 1996, Adwest recorded a charge of L5.0
million related to a reorganization of the automotive division and redundancy
and disruption costs within the electronics division following cancellation of a
customer order.
INTEREST EXPENSE--Interest expense for the year ended June 30, 1997 was L2.9
million compared to L3.9 million for the year ended June 30, 1996. The decrease
was due principally to retirement of debt from increased operating cash flows
and the proceeds of the disposal of the U.K. power systems divisions and the
property portfolio.
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INCOME TAXES--The effective income tax rate was 31.5% for the year ended
June 30, 1997 and 33.2% for the year ended June 30, 1996. The reduction in the
effective income tax rate is primarily related to a reduction in the U.K.
corporate tax rate partially offset by the impact of a temporary increase in
corporate tax rates in France.
DISCONTINUED OPERATIONS--The loss from discontinued operations for the year
ended June 30, 1997 was L791,000 compared to a loss of L29.3 million for the
year ended June 30, 1996. The loss in fiscal 1997 represents loss from the
finalization of the disposal of the U.K. power systems entities and the property
portfolio. During fiscal 1996, Adwest disposed of its U.K. power systems
division and property portfolio. The loss on disposal of these divisions was
L9.1 million before goodwill. The write off of the original goodwill of L20.2
million in accordance with U.K. accounting requirements increased the overall
loss to L29.3 million.
LIQUIDITY AND CAPITAL RESOURCES
DURA
In connection with the Acquisitions, the Issuer and certain of its direct
and indirect subsidiaries entered into the new credit facility. The new credit
facility provides for borrowings aggregating up to approximately $1,150 million,
including (1) a $275.0 million tranche A term loan; (2) a $275.0 million tranche
B term loan; (3) a $400.0 million revolving credit facility; and (4) a $200.0
million interim term loan facility. As of March 31, 1999, there was
approximately $825.0 million of outstanding indebtedness under the new credit
facility and approximately $250.0 million of available borrowings under the
revolving credit facility for working capital and other corporate purposes. The
Issuer used approximately $300.1 million of the net proceeds of the initial
offering to repay a portion of its indebtedness under the new credit facility.
As of March 31, 1999, rates on borrowings under the new credit facility
ranged from 5.28% to 10.00%. Borrowings under the tranche A term loan are due
and payable in March 2005 and borrowings under the tranche B term loan are due
and payable in March 2006. The revolving credit facility is available until
March 2005. Borrowings under the interim term loan are due and payable in
September 2000. The new credit facility is secured by all of the assets of DASI,
the Issuer and certain of their material subsidiaries and is guaranteed by DASI
and all of the Issuer's material subsidiaries, in each case with exceptions for
certain foreign subsidiaries.
We financed the Acquisitions primarily through borrowings under the new
credit facility and the issuance of Class A common stock. The following table
summarizes our sources and uses of funds for the Acquisitions (in millions):
<TABLE>
<CAPTION>
SOURCES OF FUNDS: AMOUNT
- -------------------------------------------- ---------
<S> <C>
New credit facility......................... $ 828.1
Issuance of Class A common stock(1)......... 170.7
Cash on hand................................ 49.8
---------
Total....................................... $ 1,048.6
---------
---------
<CAPTION>
USES OF FUNDS: AMOUNT
- -------------------------------------------- ---------
<S> <C>
Purchase of Excel's equity.................. $ 334.6
Purchase of Adwest's equity................. 207.2
Refinance Excel's existing debt............. 100.0
Refinance Adwest's existing debt............ 106.1
Refinance Dura's existing debt.............. 250.7
Prepayment penalties, net................... 9.5
Fees and expenses........................... 40.5
---------
Total................................. $ 1,048.6
---------
---------
</TABLE>
- ------------------------
(1) Based on a per share price of $33 9/16, which was the closing price of the
Class A common stock on January 15, 1999, the date on which the Excel
Acquisition purchase agreement was signed.
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Following the Acquisitions, our principle source of liquidity will be cash
flow generated from operations and borrowings under our $400 million revolving
credit facility. We believe that such funds will be sufficient to meet our
liquidity needs for at least the next twelve months. Our principle use of
liquidity will be to meet debt service requirements, finance our capital
expenditures and to provide working capital availability. We expect that capital
expenditures in 1999 will be approximately $105.0 million. These capital
expenditures will be used primarily for equipment and dedicated tooling
purchases and facility improvements.
Our ability to service our indebtedness will depend on our future
performance, which will be affected by prevailing economic conditions and
financial, business, regulatory and other factors. Certain of these factors are
beyond our control. We believe that, based upon current levels of operations, we
will be able to meet our debt service obligations when due. Significant
assumptions underlie this belief, including, among other things, that we will
continue to be successful in implementing our business strategy and that there
will be no material adverse developments in our business, liquidity or capital
requirements. If we cannot generate sufficient cash flow from operations to
service our indebtedness and to meet our other obligations and commitments, we
might be required to refinance our debt or to dispose of assets to obtain funds
for such purpose. There is no assurance that refinancings or asset dispositions
could be effected on a timely basis or on satisfactory terms, if at all, or
would be permitted by the terms of the Indenture or the new credit facility. In
the event that we are unable to refinance the new credit facility or raise funds
through asset sales, sales of equity or otherwise, our ability to pay principal
of, and interest on, the notes would be impaired.
During the first quarter of 1999, we generated cash from operations of
$387,000, compared to a $2.1 million use of cash in 1998. Cash generated from
operations before changes in working capital items was $18.1 million for 1999
compared to $7.6 million for 1998. Increases in working capital used cash of
$17.7 million in 1999 compared to $9.8 million in 1998. The increases in working
capital is primarily the result of the timing of cash receipts and cash
payments.
During 1998, we generated cash from operations of $7.7 million, compared to
$8.5 million in 1997. Cash generated from operations before changes in working
capital items was $63.2 million for 1998 compared to $30.5 million for 1997.
Increases in working capital used cash of $55.5 million in 1998 compared to
$22.0 million in 1997. The increases in working capital are primarily the result
of the timing of cash receipts and cash payments.
Net cash used in investing activities was $543.9 million for the first
quarter of 1999 as compared to $22.3 million in 1998. Net capital expenditures
totaled $6.0 million for the first quarter of 1999 primarily for equipment and
dedicated tooling purchases related to new or replacement programs with an
additional $540.1 million used for the acquisitions of Adwest and Excel. This
compares with net capital expenditures of $3.7 million in 1998 and $18.6 million
spent on the acquisition of Universal.
Net cash used in investing activities was $167.5 million for 1998 as
compared to $93.4 million in 1997. Net capital expenditures totaled $31.8
million for 1998 primarily for equipment and dedicated tooling purchases related
to new or replacement programs with an additional $135.7 million used for the
acquisitions of Universal, Trident and the Hinge Business. This compares with
net capital expenditures of $16.2 million in 1997 and $70.5 million spent on the
acquisitions of VOFA, GT Automotive and REOM Industries.
Net cash provided by financing activities totaled $564.2 million for the
first quarter of 1999 compared with $67.3 million in 1998. Approximately $582.9
million of cash was provided through net borrowings.
Net cash provided by financing activities totaled $176.6 million for 1998
compared with $87.6 million in 1997. Approximately $16.1 million of cash was
provided through net borrowings. In
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addition, we received $52.5 million of net proceeds from the issuance of the
Trust Preferred Securities in March 1998 and $107.8 million of net proceeds from
the June 1998 Offering.
On March 20, 1998, the Dura Trust completed the offering of $55.3 million of
its Trust Preferred Securities, resulting in net proceeds of approximately $52.5
million. The Trust Preferred Securities are redeemable, in whole or part, on or
after March 31, 2001 and all Trust Preferred Securities must be redeemed no
later than March 31, 2028. The Trust Preferred Securities are convertible, at
the option of the holder, into Class A common stock at a rate of 0.5831 shares
of Class A common stock for each Trust Preferred Security, which is equivalent
to a conversion price of $42 7/8 per share. The net proceeds of the offering
were used to repay outstanding indebtedness. Dividends on the Trust Preferred
Securities, net of the related income tax benefit, are reflected as minority
interest in the condensed consolidated statement of operations.
On June 17, 1998, DASI completed a public offering of 3,100,000 shares of
Class A common stock at an offering price of $32.75 per share. Net proceeds to
Dura, after underwriting discounts and offering expenses, were approximately $95
million and were used to retire outstanding indebtedness. Certain stockholders
of Dura converted 1,308,000 shares of Class B common stock of Dura into Class A
common stock and sold such shares concurrent with the June 1998 Offering. In
addition, an employee of Dura exercised an option to acquire 5,000 shares of
Class A common stock at an exercise price of $14.50 per share, and sold such
shares concurrent with the June 1998 Offering. On July 1, 1998, the
underwriters, pursuant to their over-allotment option, purchased an additional
400,000 shares of Class A common stock, resulting in net proceeds of
approximately $12.4 million.
EXCEL--HISTORICAL
Effective July 1, 1998, Excel purchased through its wholly owned subsidiary,
Excel Industries Germany GmbH, a 70% interest in Schade. The aggregate purchase
price for Schade was DM 17,036,400, or approximately $9,689,000 plus transaction
costs. Excel also assumed approximately $68.0 million of Schade's debt. The
amount of Excel's contribution to the capital of Schade was DM 27,340,000, or
approximately $15,548,000. Funds for the purchase price for the interests and
the contribution came from Excel's cash on hand.
The remaining 30% of Schade is owned by Hella KG Hueck & Co., another
international OEM supplier. The acquisition of Schade was accounted for as a
purchase. The excess of the purchase price over the estimated fair value of net
assets acquired, approximately $4.0 million, has been accounted for as goodwill
and is being amortized over 40 years using the straight-line method.
Working capital totaled $119.0 million as of January 2, 1999, and the
current ratio was 1.6 to 1. Cash and marketable securities totaled $30.3 million
as of January 2, 1999, an increase of $3.6 million from the prior year.
In 1998, cash flow from operations totaled $76.0 million, compared to $40.5
million in 1997. The increase, after considering the effect of the Schade
acquisition, was due to reductions in accounts receivable and tooling billed to
customers. Dividends increased to $6.2 million from $5.6 million due to the
additional common shares issued for the conversion of Excel's 10% convertible
subordinated notes in October 1997.
Long-term debt of $149.9 million as of January 2, 1999, or 43% of total
capitalization, is up from $105.9 million at the beginning of the year due to
the inclusion of Schade's debt at January 2, 1999. New borrowings consisted of
bank loans to Schade. Excel acquired treasury shares during 1998 to be used for
the issuance of shares under Excel's stock compensation and incentive plans and
for the exercise of outstanding warrants.
Expenditures for capital equipment in 1998 were $46.0 million up from $39.3
million in 1997 and $29.2 million in 1996. The increase in 1998 was mainly due
to capital expenditures in Schade in the last
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half of 1998. Capital additions consisting mainly of machinery and equipment
totaled $40.8 million in the light vehicle segment and $4.8 million in the
RV/MT/HT segment. Capital expenditures for 1999 are budgeted at $50.0 million.
Starting in 1998, Excel changed the method of depreciating new capital
expenditures from accelerated methods to the straight-line method. The favorable
effect of the change on net income for the year ending January 2, 1999 was
approximately $1.1 million or $.09 per share.
There are claims and pending legal proceedings against Excel and its
subsidiaries with respect to taxes, workers' compensation, warranties and other
matters arising out of the ordinary conduct of the business. The ultimate
results of these claims and proceedings at January 2, 1999 is not determinable,
but, in the opinion of management, adequate provision for anticipated costs has
been made or insurance coverage exists to cover such costs.
ADWEST--HISTORICAL
During fiscal 1998, Adwest provided cash flow from operations of L26.4
million, compared to L25.2 million for the year ended June 30, 1997. Cash
generated from operations before changes in working capital items was L31.2
million in fiscal 1998 compared to L25.6 million for the year ended June 30,
1997. The increase in working capital items is primarily the result of new
program ramp-ups in a number of subsidiaries.
Net cash used for capital expenditure was L16.8 million in fiscal 1998
compared to L5.9 million in fiscal 1997. The increase in capital expenditure
during 1998 is related to plant expansion at Adwest Driver Systems and Adwest
Heidemann Einbeck and additional equipment and dedicated tooling purchases
related to new or replacement programs.
Net cash used for acquisitions and disposals was L11.4 million in fiscal
1998 compared to cash provided from acquisitions and disposals of L11.8 million
in fiscal 1997. The 1998 cash used for acquisitions can be summarized as follows
(in thousands):
<TABLE>
<CAPTION>
AMOUNT
-----------
<S> <C>
Heidemann acquisition............................................ L46.8
Disposal of U.S. Electronics..................................... (21.2)
-----------
Total...................................................... 25.6
Less Heidemann debt assumption................................... (14.2)
-----------
Total cash used for acquisitions........................... L11.4
-----------
-----------
</TABLE>
Net cash provided from financing activities was L10.2 million for the year
ended June 30, 1998 compared to cash used for financing activities of L10.0
million for the year ended June 30, 1997. During 1998, approximately L34.8
million of cash was provided through additional borrowings primarily related to
the acquisition and refinancing of Heidemann. This amount was partially offset
by debt repayments of L24.8 million. The net cash used for financing activities
for the year ended June 30, 1997 relates exclusively to debt repayments.
Adwest paid dividends of L6.4 million for each of the years ended June 30,
1998 and 1997.
Adwest acquired Heidemann and its subsidiary undertakings on September 11,
1997 for DM132.0 million of consideration including the assumption of DM40.0
million of Heidemann indebtedness. Heidemann manufactures gearshifts, steering
columns and fuel caps in Germany and Spain.
SEASONALITY
Dura typically experiences decreased revenues and operating income during
the third calendar quarter of each year due to production shutdowns at OEMs for
model changeovers and vacations.
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Excel's automotive operations normally experience reduced sales volume in the
months of July, August and December as vacation periods, model changeover and
startups and, in the case of December, holidays which commence prior to
Christmas and run through New Year's Day, affect the number of production days.
Adwest experiences decreased revenues during August and December, as it shuts
down operations during these months due to vacation periods and holidays. The
RV/MT/HT segment is seasonal in that sales in the quarter October through
December are normally at reduced levels.
EFFECTS OF INFLATION
Inflation potentially affects us in two principal ways. First, a portion of
our debt is tied to prevailing short-term interest rates which may change as a
result of inflation rates, translating into changes in interest expense. Second,
general inflation can impact material purchases, labor and other costs. In many
cases, we have limited ability to pass through inflation-related cost increases
due to the competitive nature of the markets that we serve. In the past few
years, however, inflation has not been a significant factor.
MARKET RISK
We are exposed to various market risks, including changes in foreign
currency exchange rates and interest rates. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as foreign
currency exchange and interest rates. We do not enter into derivatives or other
financial instruments for trading or speculative purposes. We enter into
financial instruments to manage and reduce the impact of changes in foreign
currency exchange rates and interest rates. The counterparties are major
financial institutions.
We manage our interest rate risk by balancing the amount of our fixed and
variable debt. For fixed rate debt, interest rate changes affect the fair market
value of such debt but do not impact earnings or cash flows. Conversely for
variable rate debt, interest rate changes generally do not affect the fair
market value of such debt but do impact future earnings and cash flows, assuming
other factors are held constant. At December 31, 1998, we had fixed rate debt of
$81.1 million and variable rate debt of $250.8 million. Holding other variables
constant (such as foreign exchange rates and debt levels) a one percentage point
increase in interest rates would have decreased the unrealized fair market value
of the fixed rate debt at December 31, 1998 by approximately $4.0 million and
would be expected to have an estimated impact on pre-tax earnings and cash flows
for next year of approximately $2.5 million.
FOREIGN CURRENCY TRANSACTIONS
A significant portion of our revenues during the year ended December 31,
1998 were derived from manufacturing operations in Europe, Latin America and
Canada. The results of operations and the financial position of our operations
in these countries are principally measured in their respective currency and
translated into Dollars. The effects of foreign currency fluctuations in such
countries are somewhat mitigated by the fact that expenses are generally
incurred in the same currencies in which revenues are generated. The reported
income of these subsidiaries will be higher or lower depending on a weakening or
strengthening of the Dollar against the respective foreign currency.
A significant portion of our assets at December 31, 1998 are based in our
foreign operations and are translated into Dollars at foreign currency exchange
rates in effect as of the end of each period, with the effect of such
translation reflected as a separate component of stockholders' investment.
Accordingly, our consolidated stockholders' investment will fluctuate depending
upon the weakening or strengthening of the Dollar against the respective foreign
currency.
Our strategy for management of currency risk relies primarily upon
conducting our operations in such countries' respective currency and we may,
from time to time, engage in hedging programs intended to reduce our exposure to
currency fluctuations.
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INTRODUCTION OF THE EURO
Eleven of the fifteen member countries of the European Union (the
"participating countries") adopted the Euro as their common legal currency on
January 1, 1999, based on fixed conversion rates between their existing
sovereign currencies (the "legacy currencies") and the Euro. Following
introduction of the Euro, the legacy currencies are scheduled to remain legal
tender in the participating countries as denominations of the Euro between
January 1, 1999 and January 1, 2002 (the "transition period"). During the
transition period, public and private parties may pay for goods and services
using either the Euro or the participating country's legacy currency. The Euro
will then trade on currency exchanges and be available for non-cash
transactions. We do not expect this conversion to have a material impact on our
operating results, financial condition or cash flows.
YEAR 2000
DURA
We are currently working to resolve the potential impact of the year 2000 on
the processing of time-sensitive information by our computerized information
systems. Any of our programs that have time-sensitive software may recognize
"00" as the year 1900 rather than the year 2000. This could result in
miscalculations, classification errors or system failures.
While our various operations are at different stages of Year 2000 readiness,
we have completed our global compliance review. Based on the information
available to date, we do not anticipate any significant readiness problems with
respect to our systems.
Our facilities have completed the inventory and assessment of their internal
information technology ("IT") and non-IT systems (including business, operating
and factory floor systems) and are working on remediation, as appropriate, for
these systems. The remediation may include repair, replacement, or upgrading, of
specific systems and components, with priorities based on a business risk
assessment. We expect that remediation activities for our internal systems will
be completed during the second quarter of 1999, and contingency plans, as
needed, before the end of the year.
The most reasonably likely worst case scenario that we currently anticipate
with respect to Year 2000 is the failure of some of our suppliers, including
utilities suppliers, to be ready. This could cause a temporary interruption of
materials or services that we need to make our products, which could result in
delayed shipments to customers and lost sales and profits to us. We have
completed an assessment of our critical suppliers and have developed contingency
plans to address the risks that we have identified. These plans include
resourcing materials or building inventory banks. We have aggressively addressed
this issue with all major suppliers and believe that contingency plans are in
place.
We have spent approximately $2.1 million on Year 2000 activities to date and
anticipate that we will incur additional future costs not to exceed $3.0 million
in total in addressing Year 2000 issues.
The outcome of our Year 2000 program is subject to a number of risks and
uncertainties, some of which (such as the availability of qualified computer
personnel and the Year 2000 responses of third parties) are beyond our control.
Therefore, there can be no assurances that we will not incur material
remediation costs beyond the above anticipated future costs, or that our
business, financial condition, or results of operations will not be
significantly impacted if Year 2000 problems with our systems, or with the
products or systems of other parties with whom we do business, are not resolved
in a timely manner.
EXCEL
In 1997, Excel began a program to insure that Year 2000 compliance issues
would be addressed. This program addresses IT, computer controlled manufacturing
processes and non-IT systems, as well
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as obtaining assurances from vendors supplying services and materials that they
will be Year 2000 compliant. This program has been chaired by an internal
committee made up of corporate personnel who have been using guidelines issued
by the Automotive Industry Action Group.
Excel's program consists of five phases: Inventory, Risk Evaluation,
Contingency Plan, Remediation and Testing. Excel has completed the Inventory and
Risk Evaluation portions of the program. Remediation, Contingency Planning and
Testing will be completed by the end of the second quarter of 1999. Excel's
program has been evaluated by independent third parties and has received overall
ratings of Low to Moderate Risk.
Each of Excel's plant facilities has assigned a Year 2000 program
coordinator to be a part of the committee to enable changes to made efficiently.
Status reports, action plans and timeliness are reported to Excel's executive
officers on a regular basis.
All critical informational systems software, manufacturing processes and
non-IT systems, including those of Schade, have been deemed Year 2000 compliant.
Any additions or changes made to existing applications, which have already been
tested, are also reviewed for Year 2000 compliance. Excel continues to review
vendors and suppliers as they complete their respective compliance programs.
Costs for the reviews and changes to date have been minimal. Future costs are
not expected to exceed $500,000.
Excel has yet to identify the most reasonably likely worst case scenario.
This will be done in conjunction with the contingency planning and testing
phases of Excel's program.
ADWEST
In 1997, Adwest began a program to insure that Year 2000 compliance issues
would be addressed. This program addresses IT, computer controlled manufacturing
processes and non-IT systems, as well as obtaining assurances from vendors
supplying services and materials that they will be Year 2000 compliant. This
program has been chaired by an internal committee made up of corporate personnel
who have been using guidelines issued by the Automotive Industry Action Group.
Adwest's program consists of five phases: Inventory, Risk Evaluation,
Contingency Plan, Remediation and Testing. Adwest has completed the Inventory
and Risk Evaluation portions of the program. Remediation, Contingency Planning
and Testing will be completed by the end of the second quarter of 1999. Adwest's
program has been evaluated by independent third parties and has received overall
ratings of Low to Moderate Risk.
Each of Adwest's plant facilities has assigned a Year 2000 program
coordinator to be a part of the committee to enable changes to made efficiently.
Status reports, action plans and timeliness are reported to Adwest's executive
officers on a regular basis.
The most reasonably likely worst case scenario that Adwest currently
anticipates with respect to Year 2000 is the failure of some of its suppliers,
including utilities suppliers, to be ready. This could cause a temporary
interruption of materials or services that it needs to make its products, which
could result in delayed shipments to customers and lost sales and profits.
Adwest has completed an assessment of its critical suppliers and has developed
contingency plans to address the risks that it has identified. These plans
include resourcing materials or building inventory banks. Adwest has
aggressively addressed this issue with all major suppliers and believes that
contingency plans are in place. Adwest estimates it will spend approximately
$8.3 million in addressing Year 2000 issues. The outcome of Adwest's Year 2000
program is subject to a number of risks and uncertainties, some of which (such
as the availability of qualified computer personnel and the Year 2000 responses
of third parties) are beyond its control. Therefore, there can be no assurances
that Adwest will not incur material remediation costs beyond the above
anticipated future costs, or that its business, financial condition, or results
of operations will not be significantly impacted if Year 2000 problems with its
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systems, or with the products or systems of other parties with whom it does
business, are not resolved in a timely manner.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," effective for
years beginning after June 15, 1999. SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument, including
certain derivative instruments embedded in other contracts be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
No. 133 requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge criteria are met. "Special
accounting for qualifying hedges allow a derivative's gains or losses to offset
related results on the hedged item in the income statement and requires that a
company must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting. We have not yet quantified the
impact of adopting SFAS No. 133 and have not yet determined the timing or method
of adoption.
In April 1998, the Financial Accounting Standards Board issued Statement of
Position ("SOP") No. 98-5, "Reporting on the Costs of Start-Up Activities,"
effective for fiscal years beginning after December 15, 1998. SOP 98-5 requires
the expensing of start-up activities as incurred, versus capitalizing and
expensing them over a period of time. We are currently in the process of
assessing the impact of adopting SOP 98-5 and will adopt this new pronouncement
during 1999.
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BUSINESS
GENERAL
We are the world's largest independent designer and manufacturer of driver
control systems for the global automotive industry. We are also a leading global
supplier of window systems, door systems and engineered mechanical components.
Our products include:
- driver control products--automotive cables, parking brake mechanisms and
transmission shifter mechanisms;
- window system products--encapsulated windows and push out and sliding
windows;
- door system products--window regulators, door latches, frames and hinges;
and
- other products--seating systems, engine control products and engineered
mechanical components, such as underbody tire carriers, jacks, brake,
clutch and accelerator pedals, turn signal and tilt lever assemblies,
injection molded plastic parts, hood hinges, automotive lighting products
and latches.
We sell our products to every major North American, European and Japanese
automotive OEM, including Ford, General Motors, DaimlerChrysler, Volkswagen,
BMW, Toyota, Honda, PSA (Peugeot and Citroen), Renault and Nissan. We
manufacture products for many of the most popular car, light truck and sport
utility models, including all of the top ten selling vehicles in North America
and nine of the top ten selling vehicles in Europe for 1998. We have over 80
manufacturing and product development facilities located in the United States,
Australia, Brazil, Canada, the Czech Republic, France, Germany, India, Mexico,
Portugal, Spain and the U.K. On a pro forma basis, we had revenues of $2.5
billion for the year ended December 31, 1998.
In March 1999, we completed both the Excel Acquisition and the Adwest
Acquisition. Excel is a leading supplier of window systems, door systems,
seating systems and injection molded plastic parts for the global automotive
market and appliances, hardware products, window systems, door systems and
seating systems for the RV/MT/HT industries in North America. On a pro forma
basis giving effect to a 1998 acquisition, Excel had net sales of $1.2 billion
for the year ended January 2, 1999. Adwest is a leading European supplier of
driver control products, including transmission shifter mechanisms, parking
brake mechanisms, steering columns and gears, cables and engine control
products, such as engine thermostats, radiator caps and fuel caps, primarily for
European automotive OEMs. Adwest had revenues of $399.7 million for the twelve
month period ended December 31, 1998.
INDUSTRY TRENDS
Our performance and growth is directly related to certain trends within the
automotive market, including the consolidation of the component supply industry,
the growth of system sourcing and the increase in global sourcing.
SUPPLIER CONSOLIDATION. During the 1990s, OEMs have continued to reduce
their supplier base in certain product segments, awarding sole-source contracts
to full-service suppliers. As a result, OEMs currently work with a smaller
number of full-service suppliers each of which supplies a greater proportion of
the total vehicle. These requirements can best be met by suppliers with
sufficient size, geographic scope and financial resources to meet such demands.
For full-service suppliers such as us, this environment provides an opportunity
to grow by obtaining business previously provided by other non full-service
suppliers and by acquiring suppliers that further enhance product, manufacturing
and service capabilities. OEMs rigorously evaluate suppliers on the basis of
product quality, cost control, reliability of delivery, product design
capability, financial strength, new technology implementation, quality and
condition of facilities and overall management. Suppliers that obtain superior
ratings are considered for sourcing new business; those that do not generally
continue their existing contracts, but
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normally do not receive additional business. Although these supplier policies
have already resulted in significant consolidation of component suppliers in
certain segments, we believe that opportunities exist for further consolidation
within our segment. This is particularly true in Europe, which has many
suppliers in this segment, many with relatively small market shares.
SYSTEM SOURCING. OEMs increasingly seek suppliers capable of manufacturing
complete systems of a vehicle rather than suppliers who only produce the
separate parts that comprise a system. By outsourcing complete systems, OEMs are
able to reduce their costs associated with the design and integration of
different components and improve quality by enabling their suppliers to assemble
and test major portions of the vehicle prior to beginning production. We have
capitalized on this trend by designing our mechanisms and cable systems to
function together and by providing mechanism and cable designs that are
integrated into the design of the entire vehicle.
GLOBAL SOURCING. Regions such as Asia, Latin America and Eastern Europe are
expected to experience significant growth in vehicle demand over the next ten
years. OEMs are positioning themselves to reach these emerging markets in a
cost-effective manner by seeking to design and produce "world cars" which can be
designed in one vehicle center but produced and sold in many different
geographic markets, thereby allowing OEMs to reduce design costs and take full
advantage of low-cost manufacturing locations. OEMs increasingly are requiring
their suppliers to have the capability to design and manufacture their products
in multiple geographic markets.
We have over 40 manufacturing facilities located in Australia, Brazil,
Canada, the Czech Republic, France, Mexico, Germany, India, Spain, Portugal and
the U.K. In addition, we have formed, or are in the process of forming,
strategic alliances with other suppliers throughout the world. These strategic
alliances, which range from investments in other manufacturers to informal
understandings, should not only give us access to new geographic markets and
customers, but also the capability of offering complementary products. We also
have nine technical centers located at our facilities in Europe and we have
relocated technical personnel resources to locations in which OEMs will develop
"world cars." By participating in the design of these vehicles and through
implementation of manufacturing processes near the international facilities of
the OEMs, we believe we can continue to expand on our international presence.
COMPETITIVE STRENGTHS
We believe that we possess a number of competitive strengths that have been
further enhanced by the Acquisitions, including:
- - WELL POSITIONED TO TAKE ADVANTAGE OF MARKET TRENDS: We believe that we are
well positioned to meet the demands of OEMs for fewer, full-service and
globally positioned suppliers. As further described below, we believe our
advanced design capabilities, broad product lines and ability to supply
complete systems, combined with our global production capabilities, will
enable us to take advantage of these market trends.
Advanced Design Capabilities: We seek to maintain a technological
advantage through our investment in product development and advanced
engineering. Our design and engineering staff works in partnership with
OEMs throughout the design, prototype development and manufacturing
implementation of our products. This partnership approach generates
cost-saving ideas that reduce product development cycle time and improve
vehicle quality by assuring better integration of components into the
assembled vehicle. Our CAD systems are compatible with those of our major
customers, enabling us to communicate design developments with customer
engineers throughout the design and development stage.
Broad Product Lines and Complete Systems Capabilities: We believe that
the breadth of our product capabilities in the markets in which we
compete is unmatched by any competitor and
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has been further enhanced by the Acquisitions. As a result of the
Acquisitions, we are one of a limited number of suppliers that can
develop and produce complete driver control systems globally, which
include the mechanical assembly as well as the actuating cables. OEMs
favor suppliers that can provide entire systems versus individual
components due to the improved quality and lower cost of installing a
system.
Global Presence: Adwest's operations and technical capabilities in
France, Germany, India, Spain and the U.K., combined with Excel's
operations and technical capabilities in the Czech Republic, Germany,
Mexico, Portugal, Spain and the U.K., complement our existing global
operations to provide expanded global production capabilities for both
North American and international OEMs. As a result of the Acquisitions,
we have global leadership positions in several key products, including
automotive cables, parking brake mechanisms, transmission shifter
mechanisms, window systems and door systems. On a pro forma basis,
approximately 36% of our 1998 revenues were generated from sales in
Europe. We believe that this global production capability provides us
with a competitive advantage in obtaining business on the OEMs' "world
car" platforms.
- - STRONG OEM PARTNERSHIPS: We have formed strong partnerships with our major
OEM customers due to our high level of product quality, customer service,
product design and engineering capabilities. Our application of innovative
operating techniques, combined with investments in sophisticated capital
equipment, has led to a high level of product quality, industry-low defect
rates and the receipt of numerous supplier awards including the Ford Q-1
Certification, DaimlerChrysler Gold Pentastar Award, GM Target for
Excellence, Nummi Delivery Performance Award and the Isuzu Quality
Achievement Award. Stringent internal controls, including strong inventory
and project management systems, enable us to provide high customer service
levels. OEMs are demanding increasingly more from their suppliers in regard
to just-in-time inventory management, particularly during the critical launch
period of a model. Our strong performance in this area has substantially
strengthened our relationships with our OEM customers.
- - WELL POSITIONED ON POPULAR PRODUCT PLATFORMS: We manufacture products for
many of the most popular car, light truck and sport utility vehicle models.
In North America, these include all of the top ten selling vehicles for 1998:
the Ford Taurus, Explorer, Ranger and F-Series pickups, the GM full-size
pickup, the Dodge Caravan and Ram pickup, the Honda Accord and Civic, and the
Toyota Camry. In Europe, these include nine of the top ten selling vehicles
for 1998: the Volkswagen Golf, Passat and Polo, the GM/Opel Astra, Corsa and
Vectra, the Renault Megane and the Ford Escort/Focus and Fiesta. The Excel
Acquisition increased our content per vehicle on key light trucks and SUVs,
such as the Ford Explorer and Windstar, Dodge Durango and GM full size
pickup, as well as on high volume passenger cars such as the Chrysler
Concorde, Dodge Intrepid and Ford Taurus and Escort. Pro forma for the
Acquisitions, over half of our North American automotive sales in 1999 were
to the light truck and SUV segment, the fastest growing segment of the light
vehicle market. The Adwest Acquisition increased our content per vehicle on
high volume European passenger cars such as the Ford Mondeo, Volkswagen Golf
and Polo, BMW 3 Series and the GM Epsilon. The Acquisitions have increased
our 1998 North American content per vehicle from $36.55 to $97.77 on a pro
forma basis.
- - SIGNIFICANT ACQUISITION EXPERIENCE: Our leadership team, the members of which
have an average of 20 years of experience in the automotive supply industry,
has successfully completed eleven acquisitions and two joint ventures over
the last three years, including the Acquisitions and the acquisition of
Trident in April 1998, an acquisition which more than doubled our size in
terms of revenues at that time. We have been successfully integrating the
acquired operations and generating significant operational efficiencies and
cost savings. In addition, we have generally retained key personnel from
acquired companies, which has enabled us to strengthen our global management
team as we have grown.
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BUSINESS STRATEGY
Our primary business objective is to capitalize on the consolidation, system
sourcing and globalization trends in the automotive supply industry in order to
continue to be the leading provider of the component parts and systems that we
supply to OEMs worldwide. The key elements of our operating and growth
strategies are as follows:
OPERATING STRATEGY
- CONTINUOUS OPERATIONAL IMPROVEMENTS: We continuously implement strategic
initiatives designed to improve product quality and reduce manufacturing
costs through, among other things, the introduction of cellular
manufacturing methods, consolidation of manufacturing facilities,
improvement in inventory management and the reduction of scrap.
Manufacturing flexibility enables our facilities to produce systems in a
cost-effective manner and strengthens our ability to meet the just-in-time
and in-line sequence delivery schedules of many of our customers. In
addition, we utilize a common set of key metrics used to measure actual
performance in comparison to standards and goals.
- CAPITALIZE ON OPPORTUNITIES FOR OPERATING SYNERGIES: The Acquisitions are
expected to provide us with a number of opportunities to reduce costs and
improve operational efficiency. The similarity of the manufacturing
processes and technical capabilities of Dura, Excel and Adwest is expected
to result in significant cost savings and operating synergies. Immediately
following the execution of acquisition agreements, we established
cross-functional teams comprised of representatives from Dura, Excel and
Adwest, which identified synergies expected to be realized from
consolidation of our design, engineering and administrative functions,
plant restructuring and realignment and coordination of raw material
purchases. In addition, the cross-functional teams formulated an
integration plan, which is currently being implemented.
- FOSTER A DECENTRALIZED, PARTICIPATORY CULTURE: Our decentralized approach
to managing our manufacturing facilities encourages decision making and
employee participation in areas such as manufacturing processes and
customer service. This "team" approach fosters a unified culture and
enhances communication of strategic direction and goals, while
facilitating a greater success rate in reaching and exceeding our
objectives. We provide ownership-related incentives to not only our
managers, but also to our salaried and hourly employees, through grants
under Dura's 1998 Stock Incentive Plan and participation in the Dura
Employee Stock Discount Purchase Plan.
GROWTH STRATEGY
- FOCUS ON SYSTEMS: OEMs are increasingly seeking suppliers capable of
providing complete systems rather than suppliers who only provide separate
component parts. A key element of our growth strategy has been to add to
our ability to provide complete systems to our OEM customers. The Adwest
Acquisition significantly enhanced our ability to provide transmission
shifter systems and parking brake systems on a global basis while the
Excel Acquisition expanded our product offerings by adding new product
systems including window systems and door systems.
- INCREASE PLATFORM AND CUSTOMER PENETRATION: A key element of our strategy
is to increase volume by adding new customers and to strengthen our
existing customer relationships by broadening our range of products
through internal development efforts and acquisitions. During 1998,
through the acquisition of Trident, we increased our penetration of
certain foreign OEMs such as Volkswagen, Toyota, Honda, PSA (Peugeot and
Citroen), Renault and Nissan. The Acquisitions have further expanded our
relationships with most of the North American and European OEMs. We have
also obtained significant firm orders on a number of new platforms
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for the years 1999 through 2001 for incremental new business in North
America and Europe. We believe that our geographic diversity and product
depth strengthen our ability to pursue new vehicle platform contracts in
the future.
- EXTEND GLOBAL MANUFACTURING REACH: In 1998, over 70% of total worldwide
passenger vehicle production occurred outside North America. To meet OEMs'
increasing preference for suppliers with global capabilities, we have
expanded our manufacturing operations into new geographic markets through
strategic acquisitions and two joint ventures. Consistent with this
strategy, the acquisitions of the VOFA Group (Germany, Spain), REOM
Industries (Aust) Pty Ltd. (Australia), Trident (Brazil, Canada, France,
Germany, U.K.), Pollone, S.A. (Brazil), Excel (Czech Republic, Germany,
Mexico, Portugal, Spain, U.K.) and Adwest (France, Germany, India, Spain,
U.K.) enhanced our ability to serve our customers globally. Increased
international sales will also allow us to mitigate the effects of cyclical
downturns in a given geographic region and further diversify our OEM
customer base.
- PURSUE STRATEGIC ACQUISITIONS: We compete in what we believe to be a $12
to $14 billion, highly fragmented, worldwide automotive market that
provides numerous potential acquisition and joint venture opportunities.
Since 1996, we have successfully completed eleven strategic acquisitions
and formed two joint ventures. Our management has substantial experience
in completing and integrating acquisitions within the automobile parts
industry and believes that this experience will help us select and pursue
acquisition opportunities that meet our criteria of: (1) providing
additional and complementary product, manufacturing and technical
capabilities; (2) broadening our geographic coverage and strengthening our
ability to supply products on a global basis; (3) increasing both the
number of models for which we supply products and the content level on
existing models; and (4) increasing our customer penetration.
THE ACQUISITIONS
EXCEL ACQUISITION
On March 23, 1999, we acquired Excel through a merger of Excel with and into
the Issuer. In the merger, DASI issued an aggregate of approximately 5.1 million
shares of its Class A common stock and paid $155.5 million in cash to Excel's
former shareholders. The Excel Acquisition had a transaction value of
approximately $471.3 million, plus fees and expenses. The cash consideration and
related fees and expenses paid in the Excel Acquisition (including acquired
indebtedness) were financed through borrowings under the new credit facility.
Excel is a leading tier-one and tier-two supplier to the automotive and
RV/MT/HT industries. Excel produces window systems, door systems and seating
systems and injection molded plastic parts for North American OEMs, which
accounted for approximately 75% of Excel's 1998 North American net sales. The
balance of Excel's net sales in North America relate to the design and
manufacture of appliances, hardware products, window systems, door systems and
seating systems for the RV/MT/HT industries. Excel is the leading independent
supplier of window systems to the combined automotive, light truck and van, bus
and recreational vehicle markets in North America.
On July 1, 1998, Excel acquired 70% of Schade, a designer and manufacturer
of window systems, ornament and roof moldings, door frames, plastic body
components (wind deflectors, air intakes and ventilation covers) and plastic
interior fittings or equipment (center consoles, roof covers and panels and
sliding roof covers) for European OEMs.
Excel and Schade supply products primarily to Ford/Jaguar, DaimlerChrysler,
GM, Volkswagen, BMW, Lear Corporation, Johnson Controls and Fleetwood
Enterprises through 31 facilities located in the Czech Republic, Germany,
Mexico, Portugal, Spain, the U.K. and the United States. For the year
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ended January 2, 1999, Excel generated net sales of $1.1 billion and, on a pro
forma basis giving effect to the acquisition of Schade, net sales of $1.2
billion.
ADWEST ACQUISITION
On March 15, 1999, Dura acquired through a cash tender offer approximately
95% of the outstanding ordinary shares of Adwest. The aggregate consideration
(including acquired indebtedness) and related fees and expenses paid in the
Adwest Acquisition were financed through borrowings under the new credit
facility. We intend to acquire all of the remaining ordinary shares within the
next six months. We estimate that the aggregate cost of the Adwest Acquisition,
including the amount necessary to acquire the remaining outstanding shares, will
be approximately $295 million, plus fees and expenses.
Adwest is a leading European supplier of driver control products, including
transmission shifter mechanisms, parking brake mechanisms, steering columns and
gears, cables and engine control products, such as engine thermostats, radiator
caps and fuel caps. Prior to the Adwest Acquisition, our primary strength in
Europe was the design and manufacture of automotive cables. Following the Adwest
Acquisition, we have the capability to supply complete driver control systems in
Europe. Adwest supplies its products primarily to Volkswagen, BMW, PSA (Peugeot
and Citroen), Ford, Renault, GM, Nissan, Volvo and other European OEMs. Adwest's
operations consist of 17 facilities in France, Germany, India, Spain, the U.K.
and the United States. Adwest had revenues of $399.7 million for the twelve
month period ended December 31, 1998.
STRATEGIC BENEFITS OF THE ACQUISITIONS
As a result of the Acquisitions, we have significantly increased our product
offerings, scale and global reach. We believe that we are now able to provide
greater value to our customers due to the addition of several new and
complementary product lines, as well as our ability to provide complete
transmission shifter systems and parking brake systems on a global basis. The
Acquisitions represent our two largest acquisitions to date and have increased
our 1998 revenues from $739.5 million to over $2.5 billion on a pro forma basis.
We believe that the strategic benefits of the Acquisitions include the
following:
ENHANCED SYSTEMS CAPABILITIES AND PRODUCT OFFERINGS. OEMs are increasingly
seeking suppliers capable of providing complete systems rather than suppliers
who only provide separate component parts. A key element of our acquisition
strategy has been to add to our ability to provide complete systems to our OEM
customers. The Excel Acquisition further diversifies our revenue base by
bringing complete product systems, including window systems and door systems.
Adwest is a leading provider of transmission shifter mechanisms in Europe and
provides us with needed mechanism manufacturing capability and established
transmission shifter contracts. Adwest's parking brake systems and broad array
of cable assembly products complement our existing product lines and enhance our
ability to deliver more complete systems to the OEMs at a lower overall cost.
INCREASED CUSTOMER PENETRATION. As a result of the Acquisitions, we are a
supplier to almost every major automotive OEM on a worldwide basis. The Excel
Acquisition significantly expanded our penetration within each of the three
major North American OEMs (GM, Ford and DaimlerChrysler), which were the top
three customers of both Dura and Excel for 1998. Adwest's strong relationship
with a broad customer base, specifically with Volkswagen (currently Adwest's and
Schade's largest customer and the highest volume producer of automobiles in
Europe) and BMW, further strengthens and diversifies our global position. Adwest
currently supplies Ford Europe with its engine thermostats and has been
appointed the sole supplier worldwide of transmission shifters to Volkswagen for
their new generation of Polo, Golf and Audi models.
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INCREASED MODEL PENETRATION. The Excel Acquisition increases our content
per vehicle on key light trucks and sport utility vehicles, such as the Ford
Explorer, Ford Windstar, Dodge Durango and GM full size pickup, as well as on
high volume passenger cars such as the Chrysler Concorde, Dodge Intrepid and
Ford Taurus and Escort. The Adwest Acquisition increases our content per vehicle
on high volume European passenger cars such as the Ford Mondeo, Volkswagen Golf
and Polo, BMW 3 Series and GM Epsilon.
EXPANDED GLOBAL CAPABILITIES. OEMs are increasingly demanding that their
suppliers have global production capabilities. Adwest's operations and technical
capabilities in France, Germany, India, Spain and the U.K., combined with
Excel's operations and technical capabilities in the Czech Republic, Germany,
Mexico, Portugal, Spain and the U.K., complement Dura's current European
initiatives to provide expanded global production capabilities for both North
American and international OEMs. On a combined basis, we have global leadership
positions in several key products, including cables, transmission shifter
mechanisms, parking brake mechanisms, window systems and door systems. On a pro
forma basis, approximately 36% of our 1998 revenues were generated from sales in
Europe.
CRITICAL MASS. On a pro forma basis, Dura would have had revenues of $2.5
billion for the year ended December 31, 1998 and an equity market capitalization
of over $575.0 million at December 31, 1998. Size is a critical factor in the
automotive industry where increasing scale is necessary for long-term success as
OEMs continue to reduce suppliers, focusing only on those with quality products,
leading edge design and engineering capabilities, service and long term
sustainability.
OPERATIONAL EFFICIENCIES. The Acquisitions are expected to provide us with
a number of opportunities to reduce costs and improve operational efficiency.
The similarity of the manufacturing processes and technical capabilities of
Dura, Excel and Adwest is expected to result in significant cost savings and
operating synergies. We have established cross-functional teams, which have
identified synergies expected to be realized from our consolidation of design,
engineering and administrative functions, plant restructuring and realignment,
coordination of raw material purchases and other operating improvements. We
expect to realize aggregate annual cost savings from the Acquisitions of
approximately $15.0 million in 1999 (which represents only partial year credit
given the timing of the Acquisitions), $25.0-$30.0 million in 2000 and $35.0
million thereafter.
OTHER RECENT ACQUISITIONS
In addition to the Acquisitions, we have completed the following recent
acquisitions:
TRIDENT. In April 1998, we acquired Trident, a leading global designer and
manufacturer of automotive cables. Trident's products include parking brake and
manual transmission shifter cables, clutch, accelerator and speed control cables
and lighting products. At the time of the acquisition, Trident had annual
revenues of approximately $300 million and held a substantial share of the North
American and European automotive cable markets. The acquisition of Trident
significantly expanded our penetration with North American OEMs, making us the
largest supplier of driver control systems and cable-related systems to Ford, GM
and DaimlerChrysler. This acquisition also doubled sales to Honda, Volkswagen
and PSA (Peugeot and Citroen), substantially increased sales to BMW, Mercedes
and Renault and added new customers such as Fiat and Porsche. This acquisition
also added 12 major design and manufacturing facilities located in the United
States, Brazil, Canada, France, Germany and the U.K. and a strategic alliance in
Japan, enhancing our strategic geographic position.
GT AUTOMOTIVE. In August 1997, we acquired GT Automotive Systems, a
designer and manufacturer of column-mounted transmission shifter mechanisms and
turn signal and tilt lever assemblies. At the time of the acquisition, GT
Automotive had annual revenues of approximately $70.0 million and a substantial
share of the North American column-mounted transmission shifter mechanisms
market. GT Automotive's strong position in this market, combined with our
existing
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position in console-based transmission shifter mechanisms, increased our share
of the North American transmission shifter market. In addition, the acquisition
added Nissan as a customer.
VOFA. In January 1997, we acquired the VOFA Group, a manufacturer of
transmission shifter cables, brake cables and other light duty cables for the
European automotive and industrial markets. At the time of the acquisition, VOFA
had annual revenues of approximately $85.0 million. The acquisition provided us
with additional technical and manufacturing expertise in cables and a strong
presence in Europe. In addition, the acquisition added new customers, such as
Mercedes, Volkswagen and BMW.
In addition, we have successfully completed six other strategic acquisitions
and two joint ventures since the initial public offering of our Class A common
stock in August 1996.
PRODUCTS
We are the world's largest independent designer and manufacturer of driver
control systems for the global automotive industry. We are also a leading global
supplier of window systems and door systems. We believe, based upon our
experience in the automotive supply industry, that we hold the #1 or #2 market
position for our principal products in the following markets. The table below
sets forth our estimated pro forma combined market position in North America and
Europe in 1998:
<TABLE>
<CAPTION>
MARKET
PRODUCT CATEGORY REGION POSITION
- ------------------------------------ ---------------------------------------------- ---------
<S> <C> <C>
Automotive cables North America................................. #1
Europe........................................ #1
Parking brake mechanisms North America................................. #1
Europe........................................ #1
Transmission shifter mechanisms North America................................. #1
Europe........................................ #2
Window systems North America................................. #1
Europe........................................ #2
Window regulators North America................................. #1
</TABLE>
We also hold the #1 market position in Europe for engine thermostats and
ornamentation products, the #2 market position in Europe for body components and
the #1 position in North America for tire carriers.
Although a portion of our products are sold directly to OEMs as finished
components, we use most of our products to produce "systems" or "subsystems,"
which are groups of component parts located throughout the vehicle which operate
together to provide a specific vehicle function. Systems currently produced by
us include parking brake, transmission shifter and latch systems. As a result of
the Acquisitions, we significantly expanded our ability to supply OEMs with
additional systems, such as window, door, seating and engine control systems.
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A brief summary of each of our principal product categories is set forth
below:
<TABLE>
<CAPTION>
PRODUCT CATEGORY DESCRIPTION
- ------------------------------------- --------------------------------------------------------------------------
<S> <C>
Driver Control Systems:
AUTOMOTIVE CABLES.................. cables used for parking brakes, transmission shifters (manual and
automatic), throttles and light duty cables (such as cables used for oil
level gauges, hood releases and fuel doors)
PARKING BRAKE MECHANISMS........... components used for both foot and hand operated parking brakes
TRANSMISSION SHIFTER
MECHANISMS....................... manual and automatic console-based and column-mounted transmission
shifters
Window Systems....................... various types of automotive windshields and rear, vent, quarter, pushout
and sliding windows
Door Systems......................... window regulators (both manual and automatic), door latches, door frames,
door hinges and related components
Seating Systems...................... seat and height adjuster systems and recliner mechanisms
RV/MT/HT Products.................... appliances (such as water heaters, furnaces, stoves and ranges), seating
components, door and window assemblies, wing ventilator, fixed and
moveable windows
Other Products....................... engineered mechanical components (such as underbody tire carriers, jacks,
brake, clutch and accelerator pedals and turn signal and tilt lever
assemblies), hood hinges, injection molded plastic parts (including door,
window and body components), steering gears, rack and pinion gears,
headlamps, latches (primary, secondary and combination hood, deck lid and
tailgate) and engine control products (engine thermostats, radiator caps
and fuel caps)
</TABLE>
The following table sets forth the approximate composition by product
category of the revenues for Dura, Excel and Adwest for each of their respective
latest fiscal years and for Dura for 1998 on a pro forma basis:
<TABLE>
<CAPTION>
LAST FISCAL YEAR
--------------------------------------------
<S> <C> <C> <C> <C>
PRO
PRODUCT CATEGORY DURA EXCEL ADWEST FORMA
- ------------------------------------------------------------------------------ --------- --------- ----------- ---------
Driver Control Systems:
Automotive cables........................................................... 38% -- 8% 14%
Parking brake mechanisms.................................................... 18% -- 4% 7%
Transmission shifter mechanisms............................................. 17% -- 38% 12%
Window Systems................................................................ -- 32% -- 16%
Door Systems.................................................................. -- 19% -- 9%
Seating Systems............................................................... -- 11% -- 5%
RV/MT/HT Products............................................................. -- 21% -- 10%
Other Products................................................................ 27% 17% 50% 27%
--------- --------- ----- ---------
Total................................................................... 100% 100% 100% 100%
--------- --------- ----- ---------
--------- --------- ----- ---------
</TABLE>
For additional financial information regarding the revenues of Dura and
Excel by product segment for each of their last three years, see Note 8 to the
audited consolidated financial statements of Dura and Note 11 to the audited
consolidated statements of Excel, respectively, included elsewhere in this
prospectus.
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CUSTOMERS AND MARKETING
The North American automotive market is dominated by GM, Ford and
DaimlerChrysler, with Japanese and foreign manufacturers accounting for
approximately 20% of the market. In North America, we supply our products
primarily to Ford, GM, DaimlerChrysler and Toyota. As a result of the
Acquisitions, we have further expanded our global presence and have added new
customers and increased penetration into certain existing customers such as
Volkswagen and BMW. As a result of our acquisition of Excel, we also sell
certain of our automotive products to other tier 1 suppliers, such as Lear
Corporation, Johnson Controls Inc. and Fleetwood Enterprises, Inc.
In 1998, approximately 70% of total worldwide passenger vehicle production
occurred outside of North America. As a result of our recent acquisitions, we
derive a significant amount of our revenues from sales to OEMs located outside
of North America. Set forth below is a summary of our sales by geographic region
for 1997 and 1998 and 1998 on a pro forma basis:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
PRO FORMA
REGION 1997 1998 1998
- ------------------------------------------------------------------------------------ --------- --------- -----------
<S> <C> <C> <C>
North America....................................................................... 79% 77% 61%
Europe.............................................................................. 20% 20% 36%
Other............................................................................... 1% 3% 3%
--------- --------- -----
Total............................................................................... 100% 100% 100%
--------- --------- -----
--------- --------- -----
</TABLE>
Our foreign operations in 1996 were not material.
The following is a summary of the significant customers of Dura, Excel and
Adwest for each of their respective latest fiscal years and for Dura for 1998 on
a pro forma basis:
<TABLE>
<CAPTION>
LAST FISCAL YEAR
--------------------------------------------
PRO
CUSTOMER DURA EXCEL ADWEST FORMA
- ------------------------------------------------------------------------------ --------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Ford/Jaguar................................................................... 36% 36% 12% 32%
GM............................................................................ 23% 5% 8% 12%
DaimlerChrysler............................................................... 15% 9% 2% 10%
Volkswagen.................................................................... 4% 4% 18% 7%
BMW........................................................................... 2% 3% 17% 5%
PSA (Peugeot and Citroen)..................................................... 3% -- 14% 4%
Toyota........................................................................ 4% -- 2% 2%
Honda......................................................................... 2% -- 2% 1%
Renault....................................................................... 1% -- 11% 2%
Other......................................................................... 10% 43% 14% 25%
--------- --------- ----- ---------
Total................................................................... 100% 100% 100% 100%
--------- --------- ----- ---------
--------- --------- ----- ---------
</TABLE>
For additional financial information regarding the principal geographic
areas of operations and the major customers of Dura, Excel and Adwest for each
of the last three years, see Note 8 to the audited consolidated financial
statements of Dura, Note 11 to the audited consolidated financial statements of
Excel and Note 2 to the audited consolidated financial statements of Adwest,
respectively, included elsewhere in this prospectus.
Our customers award contracts for a particular car platform, which may
include more than one car model. Such contracts range from one year to the life
of the models, which is generally three to seven years, and do not require the
purchase by the customer of any minimum number of parts. We also compete for new
business to supply parts for successor models. Because we supply parts for a
broad
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<PAGE>
cross-section of both new and mature models, our reliance on any particular
model is minimized. We manufacture products for many of the most popular car,
light truck, sport utility and mini-van models in North America and Europe.
Although not comprehensive, the following table presents an overview of the
major models for which we have orders to supply products on current or new model
vehicles:
<TABLE>
<CAPTION>
CUSTOMER CAR MODELS* TRUCK AND VAN MODELS*
- ---------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Ford.............................. Continental/Town Car, Contour/ AUTOEUROPA MPV, Econoline, ESCORT VAN,
Mystique/MONDEO, Cougar, Crown Expedition/Navigator, F-Series,
Victoria/ Grand Marquis, Explorer/ Mountaineer, PAMPA, Ranger,
Escort/Tracer, FIESTA, Mazda 626, TRANSIT, Villager/ Quest, Windstar,
Mustang, Ka, Taurus/ Sable Mazda Pickup
GM................................ Cutlass/Malibu/Grand Am, ASTRA, Blazer/Jimmy/Bravada, C/K
Aurora/Park Avenue/Bonneville/ Pickup/Tahoe/Sierra/Yukon/
LeSabre, Century, CORSA, Corvette, Escalade/Denali, GMT 800,
Deville/Seville/ Eldorado, Silhouette/TransSport/Venture/
Firebird/Camaro, KADETT, Lumina/Monte Montana, CORSA PICKUP, D-20, D-40,
Carlo/ Regal/Intrigue/Grand Prix, D-60, Express, Postal, S-10
Alero, Saturn, Innovate, Sunfire/ Pickup/Sonoma, Safari/Astro, Savana,
Cavalier, VECTRA, Silverado, Suburban, UPS
DaimlerChrysler................... Breeze, Cirrus, Intrepid/ Caravan/Voyager/Town & Country,
Concorde/300M, Neon, Prowler, Sebring, Cherokee/Grand Cherokee,
Viper, Stratus, A, C, E, M AND S Dakota/Durango, Eurostar, RamVan &
CLASS, CABRIO Pickup, Wrangler, L-608 D, L709E, LS
1935, SKN, SPRINTER
Toyota............................ Avalon, Camry, Carina, COROLLA, LEXUS, Sienna, Toyota Pickup
PRIZM, SOLARA
Volkswagen........................ BEETLE, A4, A8, GOL, GOLF, LUPO, BUS, KOMBI, SAVEIRO, TRANSPORTER
PARATI, PASSAT, POLO, QUANTUM,
SANTANA, SUB-POLO, VW SYNCHRO, AUDI
A3, TT, SKODA, MPV GP, ROLLS ROYCE
BMW............................... Z5 COUPE, Z3(B16), 3, 5, 7 AND 8 --
SERIES
Citroen........................... EVASION, SAXO, XSARA, XANTIA, XM, ZX BERLINGO, JUMPER
Fiat S.P.A........................ ULYSSE --
Honda............................. Accord, Acura, Civic --
Nissan............................ SENTRA, MICRA, PRIMERA --
Peugeot........................... 106, 306, 406, 605, 806 EXPERT, PARTNER
Porsche AG........................ 968, 986, 996 --
Renault........................... CLIO, ESPACE, LAGUNA, MEGANE, SAFRANE, KANGOO, MASTER
TWINGO
Rover Group Limited............... METRO, ROVER 800 DISCOVERY, ROVER
SEAT, S.A......................... AROTA, CORDOBA, IBIZA, TOLEDO, S5 --
</TABLE>
- ------------------------
* Models manufactured outside of North America are italicized.
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<PAGE>
Most of the parts we produce have a lead time of two to five years from
product development to production. Although not comprehensive, the following
table presents an overview of the major models for which we have been awarded
new business (i.e., parts not currently supplied by us):
<TABLE>
<CAPTION>
MODEL YEAR OEM MODEL(1) TYPE OF BUSINESS
- ---------- ------------------------------- ---------------------------------- -------------------------------
<S> <C> <C> <C>
2000...... GM............................. Impala/Monte Carlo Transmission shifter mechanisms
Deville, Bonneville/LeSabre/ Hood latch
Antares
ASTRA, VECTRA Transmission shifter cable
Corsa Door cables, manual
transmission cables and parking
brake cables
Ford........................... TRANSIT Parking brake system
T-Bird Hood and deck hinge
Equator Hood hinge
Explorer Hood hinge and transmission
shifter mechanisms
SUV Hood hinge
P-207 Parking brake mechanisms, door,
door glass and rear slide glass
CD 132 B-pillar cappings
CT 170 Door
UW-137 Seats
DaimlerChrysler................ Mid Size Hood hinge, transmission
shifter mechanisms, parking
brake mechanisms
Ram Van, Dakota Transmission shifter mechanisms
PT44 Door
Peugeot........................ Z8 Parking brake mechanisms
306NF Roof moldings
406 Front brake cable
Toyota......................... Avalon Accelerator pedal
120N SUV Door hinge
Mercedes....................... SPRINTER Transmission shifter cables
Volkswagen..................... POLO Transmission shifter cables
T5 Sliding window
Golf, Audi A3 Transmission shifter mechanisms
Audi B6 Cross beam
BMW............................ E46/5 Roof moldings, climate control
cable, door cable
2001...... Ford........................... Explorer Transmission shifter
mechanisms, glass
Lincoln LS Seat release cable, parking
brake and hood latch systems
U231 Glass
</TABLE>
73
<PAGE>
<TABLE>
<CAPTION>
MODEL YEAR OEM MODEL(1) TYPE OF BUSINESS
- ---------- ------------------------------- ---------------------------------- -------------------------------
<S> <C> <C> <C>
Mondeo Transmission shifter mechanisms
and cables
Jaguar, X350, X400 Quarter windshield, back lite,
trim
Mustang Hood hinge
T-Bird Parking brake mechanisms
C212 B-pillar cappings
Navigator Transmission shifter
mechanisms, door
U204 SUV Window latch and hood release
cables
PN96 Glass
GM............................. GMX-320 Parking brake mechanisms
GMX-240 Jack and tire carrier
GMT-560 Clutch
GMT-360 Parking brake mechanisms,
transmission shifter mechanisms
A Quarter panel glass and remote
access door glass
DaimlerChrysler................ Ram Truck Hood hinge
PT-74 Door
S203 C-pillar caps/molding, side
window
Toyota......................... 887T SUV Accelerator pedal
Honda.......................... SUV Tire carrier
Nissan......................... Altima Jack
Almera Brake, accelerator, hood lock,
fuel filler cables
Volkswagen..................... MPV GP Transmission shifter mechanism
2002...... Ford........................... Ranger Rear slide glass
Transit Climate control cables
Windstar Liftgate glass
Mondeo Transmission shifter system
DaimlerChrysler................ C Class Parking brake cable
GM............................. GMT-355, Saturn Glass
Corsa, Epsilon Transmission shifter mechanisms
Gamma Parking brake and door release
cables
Citroen........................ Xsara Parking brake cables
Peugeot........................ 206 Clutch cable
Honda.......................... Civic Glass
Volkswagen..................... Beetle, Synchro Transmission shifter mechanisms
Sharan, Passat Climate control cables
BMW............................ 7 series Parking brake cables
</TABLE>
74
<PAGE>
<TABLE>
<CAPTION>
MODEL YEAR OEM MODEL(1) TYPE OF BUSINESS
- ---------- ------------------------------- ---------------------------------- -------------------------------
<S> <C> <C> <C>
Volvo.......................... 850 Door cables
</TABLE>
- ------------------------
(1) Models manufactured outside of North America are italicized.
Major customers for our RV/MT/HT products include Fleetwood Enterprises,
Winnebago, Damon, Jayco, Thor, Coachmen, Motor Coach Industries and Navistar
International Corporation. Separate sales and engineering groups are located in
Rockford, Illinois and Elkhart, Indiana to service customers in this business
segment. Similar to the automotive industry, customers in the RV/MT/HT segment
generally issue purchase orders for products on an annual basis and periodically
issue releases against those purchase orders. Accordingly, this segment does not
have a significant backlog of orders at any particular time.
Our sales and marketing efforts are designed to create overall awareness of
our engineering, design and manufacturing capabilities and to have us considered
and selected to supply our products for new and redesigned models of our OEM
customers. Our sales and marketing staff works closely with our design and
engineering personnel to prepare the materials used for bidding on new business
as well as to provide a consistent interface between us and our key customers.
Most of our sales and marketing personnel have engineering backgrounds which
enable them to understand and participate in the design and engineering aspects
of acquiring new business as well as ongoing customer service. Our sales and
marketing personnel are organized, together with our design and engineering
personnel, into customer-dedicated program teams. Each program team is under the
leadership of a program manager, who, in turn, reports to our vice president of
sales and marketing. Each of our major customers has its own dedicated program
manager. We currently have sales and marketing personnel located in every major
region in which we operate. From time to time, we also participate in industry
trade shows and advertise in industry publications.
DESIGN AND ENGINEERING SUPPORT
We believe that engineering service and support are key factors in
successfully obtaining new business. We utilize program management with
customer-dedicated program teams, which have full design, development, test and
commercial issues under the operational control of a single manager. In
addition, we establish cross-functional teams for each new program to ensure
efficient product development from program conception through product launch.
We have technical centers located in Australia, France, Germany, the U.K.
and the United States. We have established a separate advanced technology group
to help maintain our position as a technology leader. The advanced technology
group has developed many innovative features in our products, including many
features which were developed in conjunction with our customers. In recent
years, we have introduced plastics into many traditionally metal products, such
as transmission shifter mechanisms and parking brake mechanisms. In other
material alternatives, we are investigating the potential use of injection
molded magnesium through a process known as Thixomolding and we are looking into
overmolding of metallic and structural materials. Our advanced technology group
developed a combination transmission shifter and transfer case 4x4 shifter
mechanism, which is now in production on the Chrysler Grand Cherokee. We also
utilize CAD in the design process, which enables us to share data files with our
customers via compatible systems during the design stage, thereby improving
function, fit and performance within the total vehicle. We also utilize CAD
links with our manufacturing engineers to enhance manufacturability and quality
of the designs early in the development process.
We have more than 360 patents granted or in the application process. The
patents granted expire over several years beginning in 1999. Although we believe
that, taken together, the patents are significant, the loss or expiration of any
particular patent would not be material to us.
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<PAGE>
MANUFACTURING
We employ a number of different manufacturing processes. We utilize flexible
manufacturing cells in both the mechanism and cable assembly processes.
Manufacturing cells are clusters of individual manufacturing operations and work
stations grouped in a cylindrical configuration, with the operators placed
centrally within the configuration. This provides flexibility by allowing
efficient changes to the number of operations each operator performs. When
compared to the more traditional, less flexible assembly line process, cell
manufacturing allows us to maintain our product output consistent with our
customers' requirements and reduce our level of inventory. In addition, we
utilize high volume production lines for final assembly of our automotive
lighting and door handle products.
Mechanical assemblies consist of between five and 50 individual components,
which are attached to form an integrated mechanism. Our assembly operations are
performed on either dedicated, high-volume, automated assembly machines or on
low capital-intensive, flexible, cell-oriented assembly units capable of low or
high volume production runs. The assembly operations construct the final product
through hot or cold forging machines, plastic injection molding, welding,
staking and riveting the component parts. A large portion of the component parts
are purchased from our outside suppliers. However, we manufacture our own
stampings, a process which consists of passing sheet metal through dies in a
stamping press to form the metal into three-dimensional parts. We produce
stamped parts using single-stage and progressive dies in presses, which range in
size from 150 to 600 tons. Through cell teams, which stress employee
involvement, our processes are continuously upgraded to increase flexibility,
improve operating safety and minimize changeover times of the dies.
Our door systems and body components use similar processes coupled with roll
forming and stretch bending. Roll forming is a continuous process in which
coiled steel is passed through a series of rollers which progressively form the
metal into a consistently shaped section. When viewed from one end, the profile
may be u-shaped or v-shaped for glass channels and roof rails. More complex
shapes are processed for upper door profiles. Stretch bending involves clamping
a length of the rolled profile at numerous points and then twisting or bending
the metal to form contoured surfaces, such as door frames. Door and body
components also require welding, grinding and polishing operations to provide a
smooth finish.
Cables are manufactured using a variety of processes, including plastic
injection molding, extrusion, wire flattening, spring making and zinc
diecasting. Wire is purchased from outside suppliers and then formed into
contra-twisted layers on tubular stranders and bunching machines to produce up
to 19-wire stranded cable. Corrosion resistance is provided by a proprietary,
ceramic coating applied during the stranding process. The cable then is
plastic-coated by an extrusion process to provide a smooth, low coefficient
surface that results in high efficiency and durability. Conduit is then produced
by flattening and coiling wire, which is then extruded with a protective
coating. Proprietary strand and conduit cutting machines enable efficient
processing. Assembly operations are arranged in cells to minimize inventory,
improve quality, reduce scrap, improve productivity and enhance employee
involvement. The cables are assembled with various attachments and end fittings
that allow the customer to install the cables to the appropriate mating
mechanisms.
Our window systems broadly include two categories of products: mechanically
framed glass products and molded framed glass. Mechanically framed glass
products are produced by putting glass panes through a series of value-added
processes, which include adding handles, hinges, aluminum and steel based edge
frame assemblies, electrical connectors and fasteners. The production of molded
framed glass products involves two primary molding media: RIM (Reaction
Injection Molding: Polyurethane) and PVC (Poly Vinyl Chloride). Both media
provide a "surround" to the glass panes that incorporates the styling, sealing
and mechanical attachment features of the product. Our ability to utilize either
media provides OEMs with the maximum advantage in terms of cost, styling
imperatives and robustness. The glass panes used in the production of our window
systems are purchased from outside suppliers.
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<PAGE>
Our injection molded plastic parts are manufactured through injection
molding of a variety of resins on molding machines of various sizes and types.
Headlamp and taillamp housings are also manufactured through the injection
molding process. The interior of the housings are then coated and at times
vacuum metalized to obtain the proper reflective qualities. Lenses are added to
the housings on a semi-automated production line.
We utilize frequent communication meetings at all levels of manufacturing to
provide training and instruction as well as to assure a cohesive, focused effort
toward common goals. We encourage employee involvement in all production
activity and view such involvement as a key element in our success. We also
aggressively pursue involvement from our suppliers, which is necessary to assure
a consistent flow of raw materials and components on a timely basis with
consistently high quality. We utilize our component suppliers where practical in
the design and prototype stages of new product development to facilitate the
most comprehensive, state-of-the-art designs available. We have made substantial
investments in manufacturing technology and product design capability to support
our products, including modern manufacturing equipment, fineblanking,
sophisticated CAD systems and highly-trained engineering personnel. These
advanced capabilities have helped to further reduce scrap rates, ensure superior
product quality and increase efficiency.
The automotive industry has adopted a quality rating system known as
QS-9000, a rigorous inspection of a supplier's facilities and operating systems
performed by independent certified auditors. Certification and on-going
maintenance of certification is mandatory for future supply consideration. Dura
has received QS-9000 certification at all of its facilities, except its
operations in France, which is scheduled for certification in 1999. Excel has
received QS-9000 certification at all of its automotive facilities, except
Stockton, IL, while all of its non-automotive facilities have an ISO 9001 or ISO
9002 certification, and Adwest has received QS-9000 certification at all of its
facilities except Rearsby, U.K., Cauvigny and Boynes, France and Lippstadt,
Germany.
Our plants have been recognized by our customers with various awards, such
as the Daimler/ Chrysler Gold Pentastar Award, GM Target for Excellence, Nummi
Delivery Performance Award and the Isuzu Quality Achievement Award. We have also
received an "A" rating at Peugeot and Renault. We have received Ford Q-1
certification at all facilities shipping current model Ford products.
COMPETITION
We operate in a highly competitive environment. We principally compete for
new business at the beginning of the development of new models and upon the
redesign of existing models. New model development generally begins two to five
years before marketing of such models to the public. Once a producer has been
designated to supply parts for a new program, an OEM usually will continue to
purchase those parts from the designated producer for the life of the program,
although not necessarily for a redesign. Competitive factors in the market for
our products include product quality and reliability, cost, timely delivery,
technical expertise and development capability, new product innovation and
customer service. The number of our competitors has decreased due to the
supplier consolidation resulting from changing OEM policies. Some of our
competitors have substantial size, scale and financial resources.
In addition, there is substantial and continuing pressure from the major
OEMs to reduce costs, including the cost of products purchased from outside
suppliers such as Dura. If we are unable to generate sufficient production cost
savings in the future to offset price reductions, our gross margin could be
adversely affected.
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<PAGE>
Set forth below is a brief summary of our most significant competitors in
each of our principal product categories:
AUTOMOTIVE CABLES. Our primary competitors in automotive cables are
Teleflex Incorporated ("Teleflex") and Hi-Lex Corporation ("Hi-Lex") in North
America and Kuester & Co. GmbH, Ficosa International, S.A. ("Ficosa") and Sila
Holding Industriale ("Sila") in Europe.
PARKING BRAKES. Our primary competitors in parking brakes are Ventra Group,
Inc. and Magna International Inc. ("Magna") in North America and Scharwaechter
GmbH & Co. ("Edscha"), Ficosa and Aries Industries in Europe.
TRANSMISSION SHIFTERS. Our primary competitors in transmission shifter
mechanisms is Grand Haven Stamped Products in North America and Teleflex,
Ficosa, and Sila in Europe.
WINDOW SYSTEMS. Our primary competitors in window systems are Donnelly
Corporation, Libbey-Owens Ford Co., PPG Inc. and Guardian Industries, Inc. in
North America and Sekurit and Pilkington in Europe.
DOOR SYSTEMS. Our primary competitors in door systems are Meritor
Automotive, Inc. ("Meritor"), Peregrine Inc. and Hi-Lex in North America and
Brose Fahrzeagteile Glaswerke GmbH & Co. ("Brose"), Meritor and Magna in Europe.
SEATING SYSTEMS. Our primary competitors in seating systems are Lear
Corporation and Johnson Controls, Inc. in North America and Bertraud Faure,
Brose, C. Rob Hammerstein GmbH & Co. KG, Lear Corporation and Keiper Recaro GmbH
& Co. in Europe.
RV/MT/HT PRODUCTS. Our primary competitors in RV/MT/HT products include
Suburban Manufacturing Company, Maytag Appliances/Magic Chef RV Products, The
Hammerblow Corporation and Hehr International, Inc.
SUPPLIERS AND RAW MATERIALS
Our principal raw materials include: (1) coil steel and resin in mechanism
production, (2) glass in window systems, (3) metal wire and resin in cable
production, and (4) resins and lighting components in automotive lighting
production. We do not manufacture or sell primary glass. The types of steel we
purchase include hot and cold rolled, galvanized, organically coated and
aluminized steel. In general, the wire used by us is produced from steel with
many of the same characteristics with the exception that it has a higher carbon
content. We utilize plastic resin to produce the protective coating for our
cables and to produce transmission shifter components, as well as our automotive
lighting and injection molded plastic parts. We employ just-in-time
manufacturing and sourcing systems enabling us to meet customer requirements for
faster deliveries while minimizing our need to carry significant inventory
levels. We have not experienced any significant shortages of raw materials and
normally do not carry inventories of raw materials or finished products in
excess of those reasonably required to meet production and shipping schedules.
We typically negotiate blanket purchase orders or 12-month supply agreements
with integrated steel suppliers, mini-mills and service centers that have
demonstrated timely delivery, quality steel and competitive prices. These
relationships allow us to order precise quantities and types of steel for
delivery on short notice, thereby permitting us to maintain low inventories. In
addition, we occasionally "spot buy" steel from service centers to meet customer
demand, engineering changes or new part tool trials.
Other raw materials purchased by us include dies, motors, fasteners,
springs, rivets and rubber products, all of which are available from numerous
sources.
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<PAGE>
EMPLOYEES
As of March 31, 1999, Dura had approximately 21,000 employees. Overall,
approximately 24% of our employees on a combined basis are salaried and the
balance are hourly.
Approximately 39% of our employees are currently covered by collective
bargaining agreements as follows:
<TABLE>
<CAPTION>
LOCATION COLLECTIVE BARGAINING AGREEMENT EXPIRATION
- --------------------------- --------------------------------------------------------------- ------------------
<S> <C> <C>
Australia.................. Australian Metals Workers No term
Brazil..................... Sindicato dos Metalugicos do ABC No term
Canada..................... CAW June 1999
September 1999
June 2000
Czech Republic............. KOVO December 1999
France..................... Confederation Francaise de L' Encadrement December 1999
Confederation Francaise Democratique du Travail December 1999
Germany.................... IG-Metall February 2000
March 2000
Mexico..................... Confederation Travajadores Mexico Annually
Portugal................... Sindicato dos trabalhadores da Industria Metalurgica e June 1999
Metalomecanica do distrito da Guarda
Spain...................... Comisiones Oberera December 1999
United Kingdom............. Managerial Scientific & Financial June 1999
March 2000
AEEU July 2000
December 2000
AUEW June 1999
TGWU June 1999
United States.............. UAW May 1999*
April 2000
June 2000
December 2000
June 2001
September 2002
Universal Employees December 2000
United Paper Workers June 1999
Teamsters December 2000
Independent April 2001
</TABLE>
- ------------------------
* Tentative agreement reached
Although we believe that our relationship with our unionized employees is
good, there can be no assurance that we will be able to negotiate new agreements
on favorable terms. In the event that we are unsuccessful in negotiating new
agreements, these facilities could be subject to work stoppages, which would
have a material adverse effect on our operations.
PROPERTIES
Our corporate office is located in Minneapolis, Minnesota and occupies
approximately 5,700 square feet. Our operating headquarters is located in
Rochester Hills, Michigan and occupies approximately 65,000 square feet, a
portion of which is used for product development activities. Both of these
facilities are leased.
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<PAGE>
We believe that the productive capacity and utilization of our facilities is
sufficient to allow us to conduct our operations in accordance with our business
strategy. All of our owned facilities are subject to liens under the new credit
facility. The following table shows the principal facilities of Dura, Excel and
Adwest as of December 31, 1998, as well as the total number of facilities on a
combined basis:
<TABLE>
<CAPTION>
NUMBER OF SITES
--------------------------------------------------
<S> <C> <C> <C> <C>
COUNTRY DURA EXCEL ADWEST TOTAL
- --------------------------------------------------------------- ----- ----- ----------- -----
United States.................................................. 19 22 1 42
Canada......................................................... 4 -- -- 4
United Kingdom (1)............................................. 3 1 5 9
Germany........................................................ 4 3 3 10
France......................................................... 4 -- 4 8
Portugal....................................................... -- 2 -- 2
Spain.......................................................... 1 1 3 5
Mexico......................................................... 1 1 -- 2
Australia...................................................... 1 -- -- 1
Brazil (2)..................................................... 2 -- -- 2
India (3)...................................................... -- -- 1 1
Czech Republic................................................. -- 1 -- 1
-- -- -- --
Total.......................................................... 39 31 17 87
-- -- -- --
-- -- -- --
</TABLE>
- ------------------------
(1) One of Adwest's facilities located in the U.K. is owned by a corporation in
which Nippon Cable Systems Inc. (TSK) owns a 35% equity interest.
(2) As a result of the Excel Acquisition, Dura will hold a 51% equity interest
of Pollone, S.A., a Brazilian auto supplier that operates through one
facility located in Sao Paulo, Brazil.
(3) Facility is owned by a joint venture in which we hold a 49% ownership
interest.
Our manufacturing facilities have a combined square footage in excess of
9,600,000, approximately 72% of which is owned and approximately 28% is leased.
Nine of our U.S. facilities, which encompass 630,000 square feet on a combined
basis, are dedicated to producing our RV/MT/HT products. To increase efficiency,
we expect to consolidate the operations of certain of our manufacturing
facilities and technical centers over the next twelve months.
In some cases, several of our manufacturing sites, technical centers and/or
product development centers and sales activity offices are located at a single
multiple-purpose site. As of December 31, 1998, on a combined basis, we had an
aggregate of 15 technical centers, with 6 located in the United States, 8
located in Europe and 1 in Australia.
We believe that substantially all of our property and equipment is in good
condition and that we have sufficient capacity to meet our current manufacturing
needs. Utilization of our facilities varies with North American and European
light vehicle production and general economic conditions in such regions.
LEGAL PROCEEDINGS
We face an inherent business risk of exposure to product liability claims in
the event that the failure of our products results in personal injury or death,
and there can be no assurance that we will not experience any material product
liability losses in the future. In addition, if any of the products we have
designed prove to be defective, we may be required to participate in a recall
involving such products.
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<PAGE>
In late 1994, Ford issued a recall of a series of manual transmission Ford
F-Series pickups to repair the self-adjust parking brakes originally
manufactured by the Brake and Cable Business. Ford had received several reports
that the brakes failed. Pursuant to a letter agreement entered into in
connection with our acquisition of the Brake and Cable Business in August 1994,
we agreed to reimburse Ford for up to $6.0 million of Ford's costs of the
recall. We have reimbursed Ford for the full amount under this agreement. We are
also involved in a product recall relating to the same issue with respect to the
Ford Mondeo in Europe. We have agreed to pay 50% of the costs of that recall not
to exceed $1.0 million, which payments totaled $0.4 million as of December 31,
1998.
The type of alleged failures that prompted the F-Series recalls have also
led to a number of claims and lawsuits filed against Ford, one of which
culminated in a July 1998 award of punitive damages against Ford of more than
$151 million (which has subsequently been reduced on appeal to $69 million) and
Ford is appealing the decision. We may be subject to claims brought directly
against us by injured occupants of Ford vehicles and to claims for contribution
or indemnification asserted by Ford. The agreement relating to the acquisition
of the Brake and Cable Business provided that we are liable for claims arising
out of accidents that take place on or after August 31, 1994 and that we will be
liable for other claims only to the extent any losses by Alkin relating to such
claims are not paid by Alkin's insurance policies (either because they are not
over the deductible amount, because Alkin's policy limits have been exceeded or
because they are not covered by Alkin's insurance policies for other reasons).
To date, two cases have been brought directly against us or Alkin relating to
personal injury claims, and Ford has received over 400 claims (generally for
property damage) relating to alleged defects in the self-adjust parking brakes.
The claims that purport to seek recovery for personal injury allegedly as a
result of the recall condition, with several exceptions, have generally involved
relatively minor injuries, suffered principally while occupants were trying to
stop or jump out of rolling vehicles. Ford has maintained that Dura or Alkin is
responsible for all damages or liabilities arising out of these claims. We
dispute this position. As of December 31, 1998, Ford had tendered its defense of
approximately 30 such claims to Dura and Alkin, and indicated that it would look
to Dura and Alkin for indemnification were Ford ultimately found to be liable
and required to make any payments relating to such claims. Dura and Alkin have
submitted these claims to their insurance carriers. We have attempted to work
with Ford to address the claims arising from the self-adjust parking brakes
originally manufactured by the Brake and Cable Business and do not believe that
these claims have adversely affected our business relationship with Ford.
From time to time, in the ordinary course of our business, we receive notice
from a customer that a product may not be properly functioning. For example, in
November 1998, we were notified by Ford of an alleged failure of one of Dura's
cables used to control the speed control on certain of Ford's vehicles. In March
1999, we were notified by Ford of its decision to institute a recall of certain
of its vehicles, including Explorers, Mountaineers, Rangers, Mustangs and
F-Series pickups, relating to the speed control cable. Ford has reported that
certain of such vehicles could be equipped with a speed control cable that could
interfere with the speed control pulley and thus result in a "stuck" throttle.
In June 1999, Ford notified us that as many as 987,839 vehicles could be
affected at an alleged cost of up to $60 per vehicle. Based upon our tests and
investigations to date, we do not believe that our product is responsible for
the problems associated with the speed control unit. To date, we have not been
provided with any documents from Ford that support its allegations.
We have also received notices from GM, Renault and Audi with respect to
alleged failures of products that we have supplied to them. In all of these
cases, it is possible that such manufacturers will seek contribution from us
with respect to the costs they incur if recalls are undertaken or for costs
associated with possible repairs. Based upon the information available to us, we
do not expect any of these matters either individually or collectively to result
in payments that will have a material effect on our results of operations and
financial position.
In early November 1996, we were served with a lawsuit brought by affiliates
of AIG, our excess insurance carrier, in Toronto, Canada seeking a declaratory
judgment that the umbrella and excess
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liability policies that it had issued to Onex do not provide coverage in
connection with allegedly defective self-adjust parking brakes manufactured by
Alkin prior to August 31, 1994. The AIG policies at issue provided (a) the first
layer of excess coverage (beyond our $3 million primary policy per year) for
claims arising from August 31, 1994 to April 1, 1996 in the amount of $20
million per year, and (b) an additional layer of excess coverage at $33 to $53
million per year. In principal part, the AIG affiliates claim that the policies
do not provide coverage with respect to products manufactured prior to August
31, 1994 or liabilities assumed by us pursuant to purchase agreements. The AIG
affiliates also claim that the policies should be voided with respect to
self-adjust parking brake claims for inadequate disclosure at the time the
policies were applied for. Dura and Onex dispute the allegations of the Ontario
lawsuit and have filed a counterclaim against the AIG affiliates for breach of
contract.
We believe that we maintain adequate insurance, including product liability
coverage, to cover the claims described above. We have also established reserves
in amounts we believe adequate to cover any adverse judgments. However, any
adverse judgment in excess of our insurance coverage and such reserves could
result in a material adverse effect to our results of operations and financial
condition.
In February 1998, we were contacted by an attorney for the Lemelson Medical,
Education & Research Foundation Limited Partnership (the "Foundation"), alleging
that our operations implicate the fields of machine vision, gauging, location
analysis, flaw detection, verification and recognition in a manner that
allegedly infringes the Foundation's patents. Attorneys for the Foundation have
threatened to initiate litigation against us unless we agree to pay royalty fees
pursuant to a negotiated license agreement. Our investigation of this matter is
still in its preliminary stages. In mid 1998, Excel received a similar notice.
We have received notice from an attorney representing Teleflex alleging that
a transmission shifter cable manufactured by us in Europe infringes a U.S.
patent held by Teleflex. We are currently in the process of investigating this
matter and believe, based on the information available at this time, that this
matter will not have a material adverse effect on our operations.
ENVIRONMENTAL MATTERS
We are subject to federal, state, local and foreign environmental and
occupational health and safety laws and regulations. While we devote resources
designed to maintaining compliance with these requirements, we cannot assure you
that we operate at all times in complete compliance with all such requirements.
We could be subject to potentially significant fines and penalties for any
noncompliance that may occur. Although we have made and will continue to make
capital and other expenditures to comply with environmental requirements, we do
not expect to incur material capital expenditures for environmental controls in
1999 or 2000.
Some of our operations generate hazardous substances. Like all
manufacturers, if a release of hazardous substances occurs or has occurred at or
from any of our current or former properties or at a landfill or another
location where we have disposed of wastes, we may be held liable for the
contamination, and the amount of such liability could be material.
In 1995, the Michigan Department of Environmental Quality ("MDEQ"),
requested that we and Wickes conduct an environmental investigation at and
around our Mancelona, Michigan facility, which we acquired from Wickes in 1990.
The investigation detected trichloroethylene ("TCE") in groundwater at the
facility and offsite locations. We do not believe we used TCE since we acquired
the Mancelona facility, although TCE may have been used by prior operators. We
have arranged and paid for the sampling of several residential drinking water
wells in the area and for the replacement of drinking water wells found to
contain TCE above drinking water standards. Sampling of residential wells, and
replacement of such wells, when necessary, will continue. We will likely incur
additional costs to further investigate, monitor or remediate the contamination,
and possibly to provide additional alternative drinking water supplies. Such
costs may be material. In 1998, a ski resort in the vicinity wrote to us and
asserted that we are liable for the cost it will incur to install a water supply
system, which the ski resort
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claims is necessitated by the presence of TCE in groundwater in the area. We
responded with a letter denying all liability. We are seeking a negotiated
resolution of the ski resort's potential claims.
The Mancelona groundwater contamination matter is subject to an indemnity
from Wickes. In connection with our acquisition of certain assets from Wickes in
1990, Wickes agreed to indemnify us with respect to certain environmental
liabilities associated with Wickes' operation of the subject facilities subject
to a $750,000 basket (which has been reached), up to a $2.5 million cap. We will
be obligated to indemnify Wickes with respect to any liabilities above such cap.
Wickes has acknowledged that we made a timely and adequate claim for
indemnification with respect to the Mancelona matter, and has been paying
indemnification claims relating to the Mancelona matter, subject to a
reservation of rights.
In 1998, we acquired Universal. The seller in the Universal transaction
agreed to indemnify us for environmental liabilities arising from the operation
of the acquired facilities prior to the acquisition. Following the acquisition,
pursuant to the indemnity, the seller continued to address certain environmental
matters, including the cleanup of TCE-contaminated soil at our Butler, Indiana
facility. In 1998, the seller filed for reorganization under the federal
bankruptcy laws and appears to have ceased performing its obligations under the
indemnity. In March 1999, the sellers requested bankruptcy court approval to
reject their contractual indemnity obligations to us. Subject to our right to
seek repayment in the bankruptcy proceeding, it is likely that we will be
responsible for completing the cleanup at our Butler facility. Although we
cannot assure you, based on estimates provided by the environmental consultant
that has been performing the cleanup, we do not expect the cost to complete the
cleanup to be material.
In 1998, Excel entered into a partial consent decree to settle its liability
for past costs at the Main Street Well Field Site in Elkhart, Indiana, where TCE
was found in a municipal well field near Excel's Elkhart facility. Excel is one
of several potentially responsible parties involved at the site. Under the
settlement, Excel has a continuing payment obligation for operation and
maintenance of a groundwater treatment system and for a soil vapor extraction
system. These obligations will likely continue for several years. The annual
cost to operate these systems is not material. In addition, Excel expects to
receive certain payments from other parties involved at the site.
We are involved as a potentially responsible party at several waste disposal
sites. Although the environmental laws provide for joint and several liability
at such sites, liability is typically allocated among the viable parties
involved. We believe that we have no liability at some of these sites, and that
adequate reserves are in place for current estimates of our share of liability
at the other sites. We cannot assure you, however, that our liability at these
sites will not materially exceed the current amount of our reserves.
In 1997, Adwest acquired Heidemann. Areas of contamination from historical
operations exist at the Heidemann facilities located in Rotenburg, Einbeck, and
Kohler, Germany. We are currently operating treatment systems to clean up
contamination at the Rotenburg and the two Einbeck facilities and are monitoring
groundwater contamination at the Kohler facility. When Adwest acquired these
facilities, the seller posted a DM 5 million escrow, in part, to cover
environmental claims filed during an 18-month period following the acquisition.
Adwest filed environmental claims totaling DM 2 million against the escrow for
expenses to remediate contamination at the Rotenburg and Einbeck facilities and
upgrade the wastewater treatment system at the Rotenburg facility. We expect to
negotiate with the seller in the near future regarding the amount of recovery
for these environmental claims. We may incur costs beyond the amount recovered
from the escrow to continue to operate and maintain the treatment systems, and
to perform additional investigation and clean up, if necessary. Based on current
information, such costs are not expected to be material. However, should
additional or more extensive contamination be discovered, we may incur material
expenditures to address such contamination.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to our
Directors and executive officers as of June 15, 1999:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL POSITION(S)
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
S. A. Johnson........................................ 59 Chairman and Director
James O. Futterknecht, Jr............................ 52 Vice Chairman and Director
J. Richard Jones..................................... 57 Vice Chairman and Director
Karl F. Storrie...................................... 61 President, Chief Executive Officer and Director
David R. Bovee....................................... 49 Vice President
Joe A. Bubenzer...................................... 47 Senior Vice President
Mervyn J. Edgar...................................... 50 Vice President
Stephen E. K. Graham................................. 41 Vice President and Chief Financial Officer
Robert R. Hibbs...................................... 37 Vice President and Director
John J. Knappenberger................................ 52 Vice President
Milton D. Kniss...................................... 51 Vice President
Michael C. Paquette.................................. 57 Vice President
Robert A. Pickering.................................. 56 Vice President
Scott D. Rued........................................ 42 Vice President
Robert E. Brooker, Jr................................ 62 Director
W. H. Clement........................................ 71 Director
Jack K. Edwards...................................... 55 Director
John C. Jorgensen.................................... 61 Director
William L. (Barry) Orscheln.......................... 48 Director
Eric J. Rosen........................................ 38 Director
Ralph R. Whitney, Jr................................. 64 Director
</TABLE>
S. A. JOHNSON has served as Chairman and a Director of Dura since November
1990. Mr. Johnson is the founder, Chief Executive Officer and President of
Hidden Creek. Mr. Johnson is also the President of J2R. Prior to forming Hidden
Creek, Mr. Johnson served from 1985 to 1989 as Chief Operating Officer of
Pentair, Inc., a diversified industrial company. From 1981 to 1985, Mr. Johnson
was President and Chief Executive Officer of Onan Corp., a diversified
manufacturer of electrical generating equipment and engines for commercial,
defense and industrial markets. Mr. Johnson served as Chairman and a director of
Automotive Industries Holding, Inc., a supplier of interior trim components to
the automotive industry, from May 1990 to August 1995. Mr. Johnson is also
Chairman and a director of Tower Automotive, Inc., a manufacturer of engineered
metal stampings and assemblies for the automotive industry.
JAMES O. FUTTERKNECHT, JR., has served as Director of Dura since May 1999.
Mr. Futterknecht joined Excel in 1970, was Vice President--Corporate Sales from
1976 until 1984, was Vice President-- Automotive Products from 1984 until 1987,
was Vice President--Automotive Sales and Engineering from 1987 to 1990 and was
Executive Vice President from 1990 to 1992. He was elected as President and
Chief Operating Officer and was appointed as an Excel director in 1992. In 1995,
he was elected to the additional offices of Chairman of the Board and Chief
Executive Officer. Mr. Futterknecht is also a director of Control Devices, Inc.
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J. RICHARD JONES has served as Vice Chairman and a Director of Dura since
May 1998. Prior to the acquisition of Trident, Mr. Jones served as Group
President and Chief Executive Officer of Trident's predecessor from June 1992
until December 1997 and as Chairman, Chief Executive Officer and Director of
Trident from December 1997 until April 1998. From 1988 to June 1992, he served
as President and Chief Operating Officer of the Process Automation Group of FKI
(formerly known as the Process Control Group of FKI). In 1990, while serving in
such capacity, he assumed the responsibility for the reorganization of the FKI
Automotive Group. Prior thereto, Mr. Jones was Division President of Bristol
Babcock, Inc., a process control company involved in the design and manufacture
of telemetry equipment for the gas and water industry, and held a variety of
positions in engineering, vehicular systems and operational management for the
Varity Corporation.
KARL F. STORRIE has served as President, Chief Executive Officer and a
Director of Dura since March 1991. Prior to joining Dura and from 1986, Mr.
Storrie was Group President of a number of aerospace manufacturing companies
owned by Coltec Industries, a multi-divisional public corporation. Prior to
becoming a Group President, Mr. Storrie was a Division President of two
aerospace design and manufacturing companies for Coltec Industries from 1981 to
1986. During his thirty-five year career, Mr. Storrie has held a variety of
positions in technical and operations management. Mr. Storrie is also a director
of Argo-Tech Corporation, a manufacturer of aircraft fuel, boost and transfer
pumps.
DAVID R. BOVEE has served as Vice President of Dura since November 1990 and
Chief Financial Officer of Dura from November 1990 to May 1997. Mr. Bovee also
serves as Assistant Secretary for Dura. Prior to joining Dura, Mr. Bovee served
as Vice President at Wickes in its Automotive Group from 1987 to 1990.
JOE A. BUBENZER has had responsibility for European operations since June
1997. From October 1993 to May 1997, Mr. Bubenzer served as Vice President
Sales/Engineering since joining Dura in October 1993 and was named Senior Vice
President in 1995. Prior to joining Dura in October 1993, Mr. Bubenzer filled
various executive positions with ITT Automotive, a supplier of components to the
automotive industry, where he worked for six years, and, prior to such time, at
GM, where he worked for 14 years.
MERVYN J. EDGAR has served as Vice President of Dura since May 1998. Prior
to the acquisition of Trident, Mr. Edgar served as General Manager of Trident
from 1990 to May 1998 and as Manufacturing Manager of FKI Dominion Controls
Division in Stratford, Ontario and Milan, Tennessee from 1989 to 1990.
STEPHEN E. K. GRAHAM has served as Vice President and Chief Financial
Officer since joining Dura in June 1997. From 1996 to May 1997, Mr. Graham was
Chief Financial Officer of Cambridge Industries, Inc., a North American supplier
of components to the automotive industry. From 1994 to 1996, Mr. Graham was
Chief Financial Officer of Truck Components, Inc., a supplier of components to
the automotive and heavy truck industry. From 1989 to 1994, Mr. Graham held
several positions with Magna International, Inc., an automotive components
supplier.
ROBERT R. HIBBS has served as a Director of Dura since August 1994 and as
Vice President since November 1990. Mr. Hibbs, a stockholder of J2R, has also
served as Vice President-Corporate Development of Hidden Creek since January
1994 and as its Director from April 1990 through December 1993. Prior thereto,
Mr. Hibbs worked in the corporate finance area with Drexel Burnham Lambert, an
investment banking firm, in New York from 1988 to 1990.
JOHN J. KNAPPENBERGER has served as Vice President of Quality and Materials
of Dura since December 1995. Mr. Knappenberger assumed the responsibility for
sales and engineering in June 1997. Prior to joining Dura, Mr. Knappenberger was
Director of Quality for Carrier Corporation's North American Operations,
manufacturers of heating and air conditioning systems, from February 1992. From
1985 to 1991, Mr. Knappenberger was employed by TRW Inc., a supplier of
components to the
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automotive industry, beginning as Director of Quality in 1985 for the Steering
and Suspension Division and becoming Vice President, Quality for the Automotive
Sector in 1990.
MILTON D. KNISS has served as Vice President of Operations of Dura since
January 1994. From April 1991 until January 1994, Mr. Kniss served as Director
of Michigan Operations for Dura. Mr. Kniss joined the predecessor in 1981 as a
Divisional Purchasing Manager, served as Plant Manager of East Jordan, Michigan
from 1982 until 1986, and Plant Manager of Gordonsville, Tennessee until 1991.
MICHAEL C. PAQUETTE has served as Vice President of Human Resources of Dura
since March 1999. From 1995 to February 1999, Mr. Paquette was Vice President of
Corporate Human Resources of Excel. From 1983 to 1995, Mr. Paquette was Vice
President of Human Resources for the Power Generation Group of Cummins Engine
Company, a manufacturer of diesel engines and related components.
ROBERT A. PICKERING has served as Vice President of Dura since March 1999,
with responsibility for recreational and heavy vehicle and mass transit
operations. From December 1996 to March 1999, Mr. Pickering was Vice President
of Excel. From 1989 to 1996, Mr. Pickering was employed by Atwood Industries,
serving as Vice President of Manufacturing of Atwood Automotive Division from
1989 to 1991 and President of Atwood Mobile Products from 1991 to 1996. Prior to
joining Atwood Industries, Mr. Pickering's employment included seven years with
Tech Form Industries, an automotive OEM supplier, six years with Volkswagen of
America, and ten years with the Chevrolet Division of General Motors.
SCOTT D. RUED has served as Vice President of Dura since November 1990. Mr.
Rued, a stockholder of J2R, has also served as Executive Vice President and
Chief Financial Officer of Hidden Creek since January 1994 and served as its
Vice President Finance and Corporate Development from June 1989 through 1993.
Mr. Rued has served as Vice President, Corporate Development and a director of
Tower Automotive, Inc. since April 1993. Mr. Rued served as Vice President,
Chief Financial Officer and a director of Automotive Industries Holding, Inc.
from April 1990 to August 1995. Mr. Rued is also a director of The Rottlund
Company, Inc., a corporation engaged in the development and sale of residential
real estate.
ROBERT E. BROOKER, JR. has served as a Director of Dura since September
1996. From 1993 to 1995, Mr. Brooker was President and Chief Operating Officer
of Connell Limited Partnership. Prior thereto, Mr. Brooker served six years as
President and Chief Executive Officer at Lord Corporation. Mr. Brooker is also a
director of Full Circle Investments, a private investment company.
W. H. CLEMENT has served as a Director of Dura since 1993. Mr. Clement
serves as a consultant to Hidden Creek. From 1975 until May 1994, Mr. Clement
served as Chief Executive Officer or as President of Automotive Industries
Holding, Inc. and its predecessor. Mr. Clement is also a director of F&M
National Corporation, a bank holding company, and Tower Automotive, Inc.
JACK K. EDWARDS has served as a Director of Dura since December 1996. Mr.
Edwards joined Cummins Engine Co., Inc. in 1972 and has served as Executive Vice
President and Group President-- Power Generation and International since March
1996. Mr. Edwards is also a director of David J. Joseph Co., a processor and
trader of steel scrap.
JOHN C. JORGENSEN has served as a director of Dura since May 1998. Mr.
Jorgensen has served as President of ORTECH CO. since March 1992, Senior Vice
President of Manufacturing for Orscheln Management Co. since April 1996 and
Executive Vice President of Orscheln Products L.L.C. since March 1992. Prior to
1992, Mr. Jorgensen was responsible for the operations at Orscheln Co.
Manufacturing.
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WILLIAM L. (BARRY) ORSCHELN has served as a Director of Dura since August
1994. Mr. Orscheln has also served as President of Alkin Co. (and its
predecessors) since March 1994, as President of Orscheln Farm and Home since
September 1995, as President of Orscheln Properties Co., L.L.C., since October
1994 and as President of Orscheln Management Co. since December 1987. Mr.
Orscheln has served as a director of UMB Bank, a bank holding company, since
July 1989 and as a director of Orscheln Management Co. since 1987.
ERIC J. ROSEN has served as a Director of Dura since January 1995. Mr. Rosen
is Managing Director of Onex Investment Corp., a diversified industrial
corporation and an affiliate of Onex, and served as a Vice President of Onex
Investment Corp. from 1989 to February 1994. Prior thereto, Mr. Rosen worked in
the merchant banking group at Kidder, Peabody & Co. Incorporated from 1987 to
1989. Mr. Rosen is also a director of Tower Automotive, Inc.
RALPH R. WHITNEY, JR. has served as a Director of Dura since May 1999. Mr.
Whitney was a director of Excel from 1983 to March 1999 and was Chairman of the
Board from 1983 to 1985. Mr. Whitney has been a principal of Hammond, Kennedy,
Whitney & Company, Inc., a New York, New York financial intermediary and private
investment banking firm, since 1971. Mr. Whitney is also a director of Adage,
Inc., Control Devices, Inc., IFR Systems, Inc., Selas Corporation of America and
Baldwin Technologies, Inc.
The Dura board currently has twelve directors. Each director is elected to
serve until the next annual meeting of stockholders or until a successor is duly
elected and qualified. Executive officers of Dura are duly elected by the board
to serve until their respective successors are elected and qualified. There are
no family relationships between any of the directors or executive officers of
Dura.
There are three committees of the board: the executive committee, the
compensation committee and the audit committee. The executive committee, which
is currently composed of Messrs. Johnson, Storrie and Orscheln, exercises the
powers of the board during intervals between board meetings and acts as an
advisory body to the board by reviewing various matters prior to their
submission to the board. The compensation committee, which is currently composed
of Messrs. Clement, Brooker and Edwards, reviews and makes recommendations to
the board regarding salaries, compensation and benefits of executive officers
and key employees of Dura and grants all options to purchase DASI's Class A
common stock. The audit committee is currently composed of Messrs. Hibbs, Rosen
and Whitney. Among other duties, the audit committee reviews the internal and
external financial reporting of Dura, reviews the scope of the independent audit
and considers comments by the auditors regarding internal controls and
accounting procedures and management's response to these comments. Dura does not
have a nominating committee.
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EXECUTIVE COMPENSATION
The following table sets forth compensation packages for the years ended
December 31, 1998, 1997 and 1996 for Dura's chief executive officer and the four
other executive officers of Dura who were the most highly compensated officers
of Dura for the year ended December 31, 1998. We refer to these five individuals
as our "named executive officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- -------------
NAME AND SALARY BONUS OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR ($)(1) ($)(1) COMPENSATION GRANTED (#) COMPENSATION ($) (3)
- ------------------------------------ --------- ---------- ---------- ------------- ------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Karl F. Storrie..................... 1998 $ 400,000 $ 550,000 (2) 90,000 $ 6,906
President and Chief Executive 1997 345,833 425,000 (2) 30,000 6,856
Officer 1996 294,168 400,000 (2) 80,000 3,725
Joe A. Bubenzer..................... 1998 239,000 160,000 -- 30,000 5,322
Senior Vice President 1997 187,083 150,000 (2) 12,500 5,322
1996 168,000 140,000 (2) 10,000 2,637
Milton D. Kniss..................... 1998 200,000 190,000 (2) 37,500 5,724
Vice President 1997 167,917 150,000 (2) 12,500 5,724
1996 144,000 135,000 (2) 10,000 4,512
John J. Knappenberger............... 1998 175,000 130,000 (2) 30,000 5,664
Vice President (4) 1997 147,500 120,000 (2) 10,000 5,614
1996 135,000 110,000 47,156(4) 27,373 3,375
Stephen E. K. Graham................ 1998 175,000 125,000 (2) 30,000 5,082
Vice President and Chief Financial 1997 92,548 40,000 (2) 25,000 5,082
Officer(5)
</TABLE>
- ------------------------------
(1) Includes amounts deferred by employees under Dura's 401(k) employee savings
plan, pursuant to Section 401(k) of the Internal Revenue Code.
(2) None of the benefits and perquisites paid to each of the named executive
officers exceeded the lesser of $50,000 or 10% of the total annual salary
and bonus received by such named executive officers.
(3) The amounts disclosed in this column include amounts contributed by Dura to
its 401(k) employees savings plan and profit sharing plan and dollar value
of premiums paid by Dura for term life insurance on behalf of the named
executive officers.
(4) Includes $39,263 for reimbursement of relocation costs.
(5) Mr. Graham became an employee of Dura in June 1997.
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<PAGE>
OPTION GRANT TABLE
The following table shows all grants of options to acquire shares of DASI
Class A common stock granted to the named executive officers under the 1996 Key
Employee Stock Option Plan (the "1996 Plan") and the 1998 Stock Incentive (the
"1998 Plan").
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM (2)
OPTIONS TO EMPLOYEES PRICE EXPIRATION --------------------------
NAME GRANTED (#) (1) IN FISCAL YEAR (PER SHARE) DATE 5% 10%
- ---------------------------------- --------------- ------------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
K.F. Storrie...................... 90,000 14.3% $ 29.00 12/17/08 $ 1,641,415 $ 4,159,668
J.A. Bubenzer..................... 30,000 4.8% 29.00 12/17/08 547,138 1,386,556
S.E.K. Graham..................... 30,000 4.8% 29.00 12/17/08 547,138 1,386,556
M.D. Kniss........................ 37,500 5.9% 29.00 12/17/08 683,923 1,733,195
J.J. Knappenberger................ 30,000 4.8% 29.00 12/17/08 547,138 1,386,556
</TABLE>
- ------------------------------
(1) These options vest ratably over four years commencing one year from the date
of grant.
(2) Amounts reflect certain assumed rates of appreciation set forth in the
executive compensation disclosure rules of the SEC. Actual gains, if any, on
stock option exercises depend on future performance of DASI's Class A common
stock and overall stock market conditions. No assurances can be made that
the amounts reflected in these columns will be achieved.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table shows aggregate exercise of options in the year ended
December 31, 1998 by the named executive officers and the aggregate value of
unexercised options held by each named executive officer as of December 31,
1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
YEAR-END(#) YEAR-END($)
VALUE ---------------- ----------------------
SHARES ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------- ------------------- ------------- ---------------- ----------------------
<S> <C> <C> <C> <C>
K.F. Storrie....................... 5,000 $ 83,063 82,500/112,500 $ 1,544,063/$677,813
J.A. Bubenzer...................... -- -- 8,125/44,375 96,953/310,859
S.E.K. Graham...................... -- -- 6,250/48,750 42,656/281,719
M.D. Kniss......................... -- -- 8,125/51,875 96,953/349,297
J.J. Knappenberger................. -- -- 27,373/40,000 496,570/259,375
</TABLE>
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STOCK PLANS
1998 STOCK INCENTIVE PLAN
The 1998 Stock Incentive Plan was adopted by the board of directors in
December 1998 and was approved by our stockholders in March 1999. As of the date
of this prospectus, options for an aggregate of 589,600 shares of Class A common
stock have been granted under the 1998 Plan.
The 1998 Plan provides for the grant of incentive stock options to our
employees (including officers and employee directors) and for the grant of
nonstatutory stock options and stock purchase rights ("SPRs") to our employees,
directors and consultants. A total of (1) 1,000,000 shares of Class A common
stock, (2) any shares returned to the 1996 Plan as a result of termination of
options and (3) annual increases to be added on the date of each annual meeting
of stockholders of Dura commencing in 1999 equal to the lesser of 500,000 shares
of Class A common stock, 5% of the outstanding shares of Class A common stock,
or such lesser amount as may be determined by the board of directors, are
currently reserved for issuance pursuant to the 1998 Plan.
The administrator of the 1998 Plan (the "Administrator") has the power to
determine the terms of the options or SPRs granted, including the exercise price
of the option or SPR, the number of shares subject to each option or SPR, the
exercisability thereof, and the form of consideration payable upon such
exercise. In addition, the Dura board has the authority to amend, suspend or
terminate the 1998 Plan, provided that no such action may affect any share of
DASI common stock previously issued and sold or any option or SPR previously
granted under the 1998 Plan.
Options and SPRs granted under the 1998 Plan are generally not transferable
by the optionee, and each option and SPR is exercisable during the lifetime of
the optionee and only by such optionee. Options granted under the 1998 Plan must
generally be exercised within three months after the end of an optionee's status
as an employee, director or consultant of Dura, or within twelve months after
such optionee's termination by death or disability, but in no event later than
the expiration of the option term.
In the case of SPRs, unless the Administrator determines otherwise, the
restricted stock purchase agreement shall grant DASI a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment or consulting relationship with Dura for any reason (including death
or disability). The purchase price for shares repurchased pursuant to the
restricted stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to Dura. The purchase option shall lapse at a rate determined by the
Administrator.
The exercise price of all incentive stock options granted under the 1998
Plan must be at least equal to the fair market value of the Class A common stock
on the date of grant. The exercise price of nonstatutory stock options and SPRs
granted under the 1998 Plan is determined by the Administrator, but with respect
to nonstatutory stock options intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the exercise
price must be at least equal to the fair market value of the Class A common
stock on the date of grant. With respect to any participant who owns stock
possessing more than 10% of the voting power of all classes of the outstanding
capital stock of Dura, the exercise price of any incentive stock option granted
must be at least equal to 110% of the fair market value on the grant date and
the term of such incentive stock option must not exceed five years. The term of
all other options granted under the 1998 Plan may not exceed ten years.
The 1998 Plan provides that in the event of a merger of Dura with or into
another corporation, or a sale of substantially all of Dura's assets, each
option and SPR shall be assumed or an equivalent option substituted for by the
successor corporation. If the outstanding options and SPRs are not assumed or
substituted for by the successor corporation, the Administrator shall provide
for the
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optionee to have the right to exercise the option or SPR as to all of the
optioned stock, including shares as to which it would not otherwise be
exercisable. If the Administrator makes an option or SPR exercisable in full in
the event of a merger or sale of assets, the Administrator shall notify the
optionee that the option or SPR shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the option or SPR will
terminate upon the expiration of such period.
EMPLOYEE STOCK DISCOUNT PURCHASE PLAN
The Dura Employee Stock Discount Purchase Plan (the "Employee Stock Purchase
Plan") was approved by our board of directors and stockholders in August 1996.
The Employee Stock Purchase Plan was established to give employees desiring to
do so a convenient means of purchasing shares of Class A common stock through
payroll deductions.
Subject to certain restrictions, each of our employees who is a U.S.
resident or a U.S. citizen temporarily on location at a facility outside of the
U.S. is eligible to participate in the Employee Stock Purchase Plan if he or she
has been employed by Dura for more than six months. Participation is
discretionary with each eligible employee. We have reserved 500,000 shares of
Class A common stock for issuance in connection with the Employee Stock Purchase
Plan. As of March 31, 1999, 77,076 shares had been purchased under the Employee
Stock Purchase Plan. Each eligible employee is entitled to purchase a maximum of
200 shares per year. Elections to participate and purchases of stock are made on
a quarterly basis. Each participating employee contributes to the Employee Stock
Purchase Plan by choosing a payroll deduction in any specified amount, with a
minimum deduction of $10 per payroll period. A participating employee may
increase or decrease the amount of his/her payroll deduction, including a change
to a zero deduction as of the beginning of any calendar quarter. Elected
contributions are credited to participants' accounts at the end of each calendar
quarter. In addition, employees may make lump sum contributions at the end of
the year to enable them to purchase the maximum number of shares available for
purchase during the plan year.
Each participating employee's contributions are used to purchase shares for
the employee's share account within 15 days after the last day of each calendar
quarter. The cost per share is 85% of the lower of the closing price of the
Class A common stock on the Nasdaq National Market on the first or the last day
of the calendar quarter. Shares purchased under the Employee Stock Purchase Plan
carry full rights to receive dividends declared from time to time, and any
dividends attributable to shares in the employee's share account are
automatically used to purchase additional shares for such employee's share
account. A participating employee has full ownership of all shares in his/her
share account and may withdraw them for sale or otherwise by written request to
the compensation committee of the Dura board following the close of each
calendar quarter. Subject to applicable federal securities and tax laws, the
Dura board has the right to amend or to terminate the Employee Stock Purchase
Plan. Amendments to the Employee Stock Purchase Plan do not affect a
participating employee's right to the benefit of the contributions made by such
employee prior to the date of any such amendment. In the event the Employee
Stock Purchase Plan is terminated, the compensation committee is required to
distribute all shares held in each participating employee's share account plus
an amount of cash equal to the balance in each participating employee's cash
account.
INDEPENDENT DIRECTOR STOCK OPTION PLAN
The Director Option Plan was approved by our board of directors and
stockholders in August 1996 to encourage stock ownership by certain directors of
Dura and to provide those individuals with an additional incentive to manage
Dura and to provide a form of compensation that would attract and retain highly
qualified individuals as members of Dura's board. The Director Option Plan
provides for the issuance of options to independent Directors, as defined,
covering 100,000 shares of Class A common stock, subject to certain adjustments
reflecting changes in Dura's capitalization.
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The terms of each option granted under the Director Option Plan may not
exceed ten years from the date of grant. The option price for each option must
equal 100% of the fair market value of the Class A common stock on the date the
option is granted. In general, no option may be exercised in whole or in part
prior to the expiration of at least six months from the date of grant of the
option. In consideration of the grant of an option, an optionee is required to
agree to continue to serve as a director of Dura for the lesser of 12 months
from the date the option is granted or for the remainder of the optionee's term
as a director of Dura. Notwithstanding this requirement, nothing contained in
the Director Option Plan or any agreement to be executed pursuant to the
Director Option Plan obligates Dura, its board or its stockholders to retain an
optionee as a director of Dura. As of March 31, 1999, options to purchase an
aggregate of 21,000 shares of Class A common stock have been granted under the
Director Option Plan.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information regarding the equity
ownership of Dura as of March 31, 1999 by:
- each person or entity known to Dura who beneficially owns five percent or
more of a class of common stock of DASI,
- each director and named executive officer and
- all directors and executive officers of Dura as a group.
Unless otherwise stated, each of the persons named in the table has sole
voting and investment power with respect to the securities beneficially owned by
it or him as set forth opposite its or his name. Beneficial ownership of the
common stock listed in the table has been determined in accordance with the
applicable rules and regulations promulgated under the Exchange Act.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
------------------------ -----------------------
<S> <C> <C> <C> <C>
DIRECTORS, OFFICERS AND NUMBER OF PERCENT OF NUMBER OF PERCENT OF
5% STOCKHOLDERS SHARES CLASS(+) SHARES CLASS(+)
- --------------------------------------------------------------------- ----------- ----------- ---------- -----------
ONEX DHC LLC(1)(2)................................................... -- -- 1,972,913 59.3%
Alkin Co.(2)(3)...................................................... -- -- 1,366,810 40.9%
J2R Corporation(2)(4)................................................ -- -- 308,211 9.3%
S. A. Johnson(2)(4).................................................. -- -- 317,879 9.6%
Karl F. Storrie(2)(5)................................................ 86,900 * 115,531 3.5%
David R. Bovee(2).................................................... 7,500 * 31,308 *
Joe A. Bubenzer(2)................................................... 9,525 * 23,814 *
Mervyn J. Edgar...................................................... 5,000 * -- --
Stephen E. K. Graham................................................. 6,250 * -- --
Robert R. Hibbs(2)(6)................................................ -- -- 316,160 9.5%
John J. Knappenberger................................................ 34,709 * -- --
Milton D. Kniss(2)................................................... 8,175 * 8,961 *
Robert E. Brooker, Jr................................................ 26,545 * -- --
W. H. Clement(2)..................................................... 2,000 * -- --
Jack K. Edwards...................................................... 6,512 * -- --
James O. Futterknecht................................................ -- -- -- --
J. Richard Jones..................................................... 16,667 * -- --
John C. Jorgensen(2)(3).............................................. -- -- 1,366,810 40.9%
William L. Orscheln(2)(3)............................................ -- -- 1,366,810 40.9%
Eric J. Rosen(1)(2).................................................. 5,000 * 1,972,913 59.3%
Scott D. Rued(2)(7).................................................. -- -- 308,211 9.3%
Ralph R. Whitney, Jr................................................. -- -- -- --
American Express Company(8).......................................... 950,114 6.7% -- --
Dresdner RCM Global Investors LLC(9)................................. 676,400 4.8% -- --
All directors and officers as a group (19 persons)................... 215,483 1.5% 3,267,165 97.8%
</TABLE>
- ------------------------
* Less than one percent.
(+) Based on 14,151,898 shares of Class A common stock outstanding as of March
31, 1999 and 3,325,303 shares of Class B common stock outstanding as of
March 31, 1999.
(1) Reflects shares of Class B common stock held by Onex DHC LLC, which has
shared voting power over 1,972,913 shares of Class B common stock (see
footnote (2)) and sole dispositive power over
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1,394,913 shares of Class B common stock. Mr. Rosen, a Director of Dura, is
Managing Director of Onex Investment Corp. and disclaims beneficial
ownership of all shares of Class B Common Stock owned by Onex DHC LLC. Onex
DHC LLC and Onex Investment Corp. are both wholly owned subsidiaries of Onex
Corporation. The address for Onex DHC LLC and Mr. Rosen is c/o Onex
Investment Corp., 712 Fifth Avenue, 40th Floor, New York, New York 10019.
(2) Onex, J2R, Messrs. Johnson, Storrie, Bovee, Bubenzer, Hibbs, Kniss, Clement,
Rosen and Rued and certain of Dura's other existing stockholders have
entered into agreements pursuant to which such stockholders agreed to vote
their shares of Class B common stock in the same manner as Onex votes its
shares on all matters presented to Dura's stockholders for a vote and, to
the extent permitted by law, granted to Onex DHC LLC a proxy to effectuate
such agreement. As a result, Onex has voting control of approximately 59.3%
of the common stock.
(3) Includes 14,420 shares issuable upon the exercise of currently exercisable
options issued to Alkin Co. in connection with Dura's acquisition of the
Brake and Cable Business. Messrs. Jorgensen and Orscheln are officers of
Alkin Co. and, other than Mr. Orscheln, each disclaims beneficial ownership
of the shares owned by Alkin Co. other than the shares subject to each of
their outstanding options. The address for Alkin Co. is 2000 U.S. Highway 63
South, Moberly, Missouri 65270, and the address of each such individual is
c/o Alkin Co. at the same address.
(4) Includes 308,211 shares owned by J2R, of which Mr. Johnson is President, and
9,668 shares owned by Mr. Johnson. The address for Mr. Johnson and J2R is
c/o Dura Automotive Systems, Inc., 4508 IDS Center, Minneapolis, Minnesota
55402.
(5) Includes 1,400 shares owned by Mr. Storrie's wife. Mr. Storrie disclaims
beneficial ownership of such shares.
(6) Includes 308,211 shares owned by J2R, of which Mr. Hibbs is a stockholder,
and 7,949 shares owned by Mr. Hibbs. Mr. Hibbs disclaims beneficial
ownership of the shares owned by J2R. The address for Mr. Hibbs is c/o Dura
Automotive Systems, Inc., 4508 IDS Center, Minneapolis, Minnesota 55402.
(7) Includes 308,211 shares owned by J2R, of which Mr. Rued is a stockholder.
Mr. Rued disclaims beneficial ownership of the shares owned by J2R. The
address for Mr. Rued is c/o Dura Automotive Systems, Inc., 4508 IDS Center,
Minneapolis, Minnesota 55402.
(8) American Express Company ("AEC") and American Express Financial Corporation
("AEFC") each reported as of December 31, 1998 shared dispositive power with
respect to 950,114 shares of Class A common stock and shared voting power
with respect to 400,114 shares of Class A common stock. IDS Discovery Fund
Inc. reported as of December 31, 1998 sole voting power and shared
dispositive power with respect to 550,000 shares of Class A common stock,
representing 11.4% of the outstanding shares of Class A common stock. The
address for AEC is American Express Tower, 200 Vesey Street, New York, New
York 10285 and the address for AEFC and IDS Discovery Fund Inc. is IDS Tower
10, Minneapolis, Minnesota 55440.
(9) Dresdner RCM Global Investors LLC, RCM Limited L.P. and RCM General
Corporation each reported as of December 31, 1998 sole voting power with
respect to 609,900 shares of Class A common stock and sole dispositive power
with respect to 676,400 shares of Class A common stock. The address for
these entities is Four Embarcadero Center, Suite 2900, San Francisco,
California 94111. Dresdner Bank AG also reported beneficial ownership of
680,200 shares of Class A common stock as a result of its being the parent
corporation of Dresdner RCM US Holdings LLC. The address for Dresdner Bank
AG is Jurgen-Ponto-Platz 1, 60301 Frankfurt, Germany.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Dura, Onex, J2R, Alkin Co. and S.A. Johnson and Robert R. Hibbs and certain
other investors are parties to a stockholders agreement pursuant to which each
party has agreed to vote his or its shares in the same manner that Onex votes
its shares of Dura's common stock.
Dura, Onex and certain stockholders including J2R, Alkin Co., S.A. Johnson
and Karl F. Storrie are parties to a registration agreement pursuant to which
Dura has granted certain of its stockholders rights to register shares of Dura's
common stock.
Dura paid fees to Hidden Creek of approximately $3.7 million in 1998 in
connection with the acquisitions of Universal, Trident and the Hinge Business,
the June 1998 Offering and the March 1998 sale of the Trust Preferred
Securities. In addition, Hidden Creek received a fee of $2.0 million for
services rendered in connection with the Excel Acquisition and a fee of $2.0
million for services rendered in connection with the Adwest Acquisition. S.A.
Johnson, the Chairman of the Dura board, is the founder, Chief Executive Officer
and President of Hidden Creek and Messrs. Robert R. Hibbs, a Vice President and
Director of Dura, and Scott D. Rued, a Vice President of Dura, are executive
officers of Hidden Creek. Certain officers and employees of Hidden Creek
continue to provide services to Dura. A portion of the salaries and expenses of
such Hidden Creek officers and employees, approximately $200,000, is allocated
to Dura annually.
In connection with the December 1991 private placement of common stock, Mr.
Storrie acquired 139,531 shares of Class B common stock, of which 115,531 shares
are still held by Mr. Storrie. Dura loaned Mr. Storrie $75,000 in connection
with such purchase. Mr. Storrie has repaid $12,900 of the outstanding balance as
of March 31, 1999. The loan bears interest at 1% above the prime rate, matures
on December 31, 2000 and is secured by a pledge of the shares.
DESCRIPTION OF CAPITAL STOCK OF DASI
GENERAL MATTERS
The total amount of authorized capital stock of DASI consists of 60,000,000
shares of Class A common stock, par value $0.01 per share, 10,000,000 shares of
Class B common stock, par value $0.01 per share and 5,000,000 shares of
preferred stock, par value $1.00 per share. As of March 31, 1999, 14,151,898
shares of Class A common stock, 3,325,303 shares of Class B common stock and no
shares of preferred stock were issued and outstanding. As of March 31, 1999,
there were: (1) 2,200,000 shares of Class A common stock reserved for issuance
under Dura's stock option plans and Employee Stock Purchase Plan, of which
options to purchase 1,068,904 shares of Class A common stock were outstanding;
(2) 3,325,303 shares of Class A common stock reserved for issuance upon the
conversion of the Class B common stock and (3) 1,289,000 shares of Class A
common stock reserved for issuance upon the conversion of the Trust Preferred
Securities.
The following summary of certain provisions of DASI's capital stock
describes all material provisions of, but does not purport to be complete and is
subject to, and qualified in its entirety by, our restated certificate of
incorporation and by-laws, which are filed with the SEC. See "Where You Can Find
More Information."
CLASS A COMMON STOCK
All of the outstanding shares of Class A common stock are validly issued,
fully paid and nonassessable. Subject to the prior rights of the holders of any
preferred stock, the holders of outstanding shares of Class A common stock are
entitled to receive dividends out of assets legally available therefor at such
time and in such amounts as the Board may from time to time determine. The
shares of Class A common stock are not convertible and the holders thereof have
no preemptive or subscription rights to purchase any securities of Dura. Upon
liquidation, dissolution or winding up of
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Dura, the holders of Class A common stock are entitled to receive pro rata the
assets of Dura which are legally available for distribution, after payment of
all debts and other liabilities and subject to the prior rights of any holders
of preferred stock then outstanding. Each outstanding share of Class A common
stock is entitled to one vote on all matters submitted to a vote of
stockholders. Except as otherwise required by law or our restated certificate,
the Class A common stock and Class B common stock vote together on all matters
submitted to a vote of the stockholders, including the election of directors.
The Class A common stock is traded on the Nasdaq National Market under the
symbol "DRRA."
CLASS B COMMON STOCK
The issued and outstanding shares of Class B common stock generally have
identical rights to those of the Class A common stock except with respect to
voting power and conversion rights. Each share of Class B common stock is
entitled to ten votes on all matters submitted to a vote of stockholders, as
compared to one vote for each share of Class A common stock. The Class B common
stock automatically ceases to have any voting rights, other than as required by
law, at any time that Onex Corporation, J2R Corporation and certain stockholders
affiliated with Hidden Creek Industries, in the aggregate, do not beneficially
own at least 10% of the total outstanding shares of common stock. The Class B
common stock is convertible at the option of the holder, and mandatorily
convertible upon any transfer of the Class B common stock while it still has ten
votes per share (except to affiliates), into Class A common stock on a
share-for-share basis. As of March 31, 1999, these stockholders collectively
owned approximately 19% of the total outstanding shares of common stock. The
Class B common stock is not registered under the Exchange Act and is not listed
for trading on any national securities exchange or on the Nasdaq National
Market.
PREFERRED STOCK
The Dura board may, without further action by Dura's stockholders, from time
to time, direct the issuance of shares of preferred stock in series and may, at
the time of issuance, determine the rights, preferences and limitations of each
series. Satisfaction of any dividend preferences of outstanding shares of
preferred stock would reduce the amount of funds available for the payment of
dividends on shares of Class A common stock. Holders of shares of preferred
stock may be entitled to receive a preference payment in the event of any
liquidation, dissolution or winding-up of Dura before any payment is made to the
holders of shares of Class A common stock. Under certain circumstances, the
issuance of shares of preferred stock may render more difficult or tend to
discourage a merger, tender offer or proxy contest, the assumption of control by
a holder of a large block of Dura's securities or the removal of incumbent
management. Upon the affirmative vote of a majority of the total number of
directors then in office, the Dura board, without stockholder approval, may
issue shares of preferred stock with voting and conversion rights which could
adversely affect the holders of shares of Class A common stock. There are no
shares of preferred stock outstanding, and Dura has no present intention to
issue any shares of preferred stock. The affirmative vote of two-thirds of the
Dura board is required to issue any preferred stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Class A common stock is Firstar
Bank Milwaukee, N.A.
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DESCRIPTION OF OTHER INDEBTEDNESS
NEW CREDIT FACILITY
GENERAL. In connection with the Acquisitions, the Issuer, DASI and various
direct and indirect wholly owned subsidiaries of DASI (the "Borrowers"), entered
into the new credit facility with Bank of America National Trust and Savings
Association ("Bank of America") and certain other lenders. The new credit
facility provides for aggregate borrowings by Dura of approximately $1,150
million. As of March 31, 1999, there was $825.0 million of outstanding
indebtedness under the new credit facility and $250.0 million available under
the new credit facility for working capital and other corporate purposes.
The new credit facility includes (a) a $200.0 million interim term loan, (b)
a $275.0 million tranche A term loan, (c) a $275.0 million tranche B term loan
and (d) a $400.0 million revolving credit facility.
INTEREST. Amounts outstanding under the new credit facility bear interest,
at Dura's option, at a rate per annum equal to either: (1) the Eurocurrency
interbank offered rate (the "Eurocurrency Rate") or (2) the alternate base rate,
in each case, plus an applicable margin. The "alternate base rate" is defined as
the higher of (x) Bank of America's reference rate, and (y) 0.50% per annum over
the federal funds rate. The applicable margin for the tranche A term loan and
the revolving credit facility is initially 2.25% for Eurocurrency Rate loans and
0.75% for alternate base rate loans. The applicable margin for tranche A term
loans and the revolving credit facility adjusts according to a performance
pricing grid based on Dura's ratio of senior indebtedness to EBITDA, ranging
from (1) for Eurocurrency loans, 2.25% to 1.50% and (2) for alternate base rate
loans, 0.75% to 0.00%. The applicable margin for the interim term loan is fixed
at 2.25% for Eurocurrency loans and 0.75% for alternate base rate loans. The
applicable margin for the tranche B term loan is fixed at 2.50% for Eurocurrency
loans and 1.00% for alternate base rate loans. As of March 31, 1999, Dura's
borrowings under the new credit facility bore interest at rates ranging from
5.28% to 10.00%.
MATURITY. Borrowings under the interim term loan are due and payable in
September 2000. Borrowings under the tranche A term loan are due and payable in
March 2005 and borrowings under the tranche B term loan are due and payable in
March 2006. The revolving credit facility is available until March 2005.
SECURITY AND GUARANTIES. The new credit facility is secured by a first
priority security interest in all existing and after-acquired tangible and
intangible assets of the Borrowers and their material subsidiaries, including,
without limitation, intellectual property, real property, all of the capital
stock owned by the Borrowers and each of their material subsidiaries and any
inter-company debt obligations (with exceptions for certain foreign
subsidiaries). All of the Borrowers' obligations under the new credit facility
are fully and unconditionally guaranteed by DASI and all of the Issuer's
material subsidiaries (with exceptions for certain foreign subsidiaries).
COVENANTS. The new credit facility requires Dura to meet certain financial
tests, including, without limitation, maximum levels of senior debt as a ratio
to EBITDA, minimum interest coverage, total debt as a ratio of EBITDA and net
worth. The new credit facility contains certain covenants which, among other
things, limit the incurrence of additional indebtedness, investments, dividends,
transactions with affiliates, asset sales, acquisitions, mergers and
consolidations, payments of certain other indebtedness, liens and encumbrances.
EVENTS OF DEFAULT. The new credit facility contains customary events of
default, including, without limitation, payment defaults, breaches of
representations and warranties, covenant defaults, cross-defaults to certain
other indebtedness (including the notes), certain events of bankruptcy and
insolvency, judgment defaults, failure of any guaranty or security document
supporting the new credit facility to be in full force and effect and a change
of control of Dura.
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TRIDENT NOTES
We acquired Trident in April 1998. In December 1997, Trident issued $75.0
million in aggregate principal amount of 10% senior subordinated notes due 2005.
The Trident notes mature on December 15, 2005. The Trident notes are guaranteed
on a senior subordinated basis by certain of Trident's subsidiaries. Neither
DASI nor the Issuer has guaranteed any of the obligations under the Trident
notes.
The indenture under which the Trident notes were issued contains covenants
restricting Trident's ability to take certain actions, including its ability to
declare or pay any dividend or make any other payment or distribution on its or
any of its restricted subsidiaries equity interests. As of December 31, 1998,
Trident was permitted to distribute to the Issuer an aggregate of $2.6 million
under the Trident indenture.
At any time prior to June 15, 2000, Trident may redeem up to 35% of the
aggregate principal amount of the Trident notes ever issued under the Trident
indenture at a redemption price in cash equal to 110% of the principal amount
thereof, plus accrued and unpaid interest to the redemption date with the net
proceeds of one or more public equity offerings, provided that at least $50.0
million in aggregate principal amount of the Trident notes remains outstanding.
At any time prior to December 15, 2001, the Trident notes may also be redeemed
in whole, but not in part, at Trident's option upon the occurrence of a change
of control (as defined in the Trident indenture), at a redemption price in cash
equal to 100% of the aggregate principal amount thereof, plus the applicable
premium (as defined in the Trident indenture) and accrued and unpaid interest
thereon to the redemption date.
Upon the occurrence of a change in control, each holder of the Trident notes
may require Trident to repurchase all or any part of the Trident notes held by
such holder at an offer price in cash equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon to the date of
repurchase.
After December 15, 2001, the Trident notes will be subject to redemption at
any time at our option at the redemption prices set forth in the Trident
indenture, plus accrued and unpaid interest thereon through the redemption date.
Neither Trident nor any of its subsidiaries have guaranteed the outstanding
notes or the exchange notes.
On May 26, 1999, Trident commenced a cash tender offer and consent
solicitation relating to the Trident notes. The purchase price to be paid for
the Trident notes will be based upon a fixed spread of 75 basis points over the
yield to maturity on the 5 7/8% U.S. Treasury Note due November 30, 2001, plus
accrued and unpaid interest on the Trident notes to, but not including the
payment date, less a consent payment equal to $25.00 per $1,000 principal amount
of the Trident notes. On June 9, 1999, Trident received the requisite consents
to amend the indenture relating to the Trident notes to eliminate substantially
all of the indenture's restrictive covenants. The tender offer is scheduled to
close on June 23, 1999. The repurchase price for the Trident notes will be paid
using cash on hand or borrowings under the new credit facility.
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DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description under
the subheading "Certain Definitions." In this description, the word "Issuer"
refers only to Dura Operating Corp. and not to any of its subsidiaries and the
word "notes" refers to both to the outstanding notes and the exchange notes.
The Issuer will issue the exchange notes relating to the dollar notes under
the dollar notes indenture and the exchange notes relating to euro notes under
the euro notes indenture. The terms of the notes include those stated in the
indentures and those made part of the indentures by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
The following description is a summary of the material provisions of the
indentures and the registration rights agreements. It does not restate those
agreements in their entirety. We urge you to read the applicable indenture and
registration rights agreement because they, and not this description, define
your rights as holders of the notes. Certain defined terms used in this
description but not defined below under "--Certain Definitions" have the
meanings assigned to them in the Indentures.
As of the date of the indentures, all of the Issuer's subsidiaries were
"Restricted Subsidiaries." However, under the circumstances described below
under the subheading "--Certain Covenants-- Designation of Restricted and
Unrestricted Subsidiaries," the Issuer is permitted to designate certain of its
subsidiaries as "Unrestricted Subsidiaries." The Unrestricted Subsidiaries will
not be subject to many of the restrictive covenants in the indentures. The
Unrestricted Subsidiaries will not guarantee the notes.
BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTIES
THE NOTES
- are general unsecured obligations of the Issuer;
- are subordinated in right of payment to all existing and future Senior
Debt of the Issuer;
- are PARI PASSU with all existing and future subordinated, unsecured
Indebtedness of the Issuer that does not expressly provide that it is
subordinated to the notes; and
- are unconditionally guaranteed by the Guarantors.
THE GUARANTIES
The notes are guaranteed by all of the material Domestic Restricted
Subsidiaries of the Issuer.
Each Guaranty of the notes:
- is a general unsecured obligation of the Guarantor;
- is subordinated in right of payment to all existing and future Senior Debt
of the Guarantor; and
- is PARI PASSU in right of payment with any future senior subordinated
Indebtedness of the Guarantor.
Not all of our Subsidiaries guaranteed the notes. In the event of a
bankruptcy, liquidation or reorganization of any of these non-guarantor
Subsidiaries, these non-guarantor Subsidiaries will pay the holders of their
debts and their trade creditors before they will be able to distribute any of
their assets to us. See "Risk Factors--The Issuer Conducts Certain of its
Operations Through Subsidiaries and Not All of the Issuer's Subsidiaries Are
Subsidiary Guarantors."
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PRINCIPAL, MATURITY AND INTEREST
The dollar indenture provides for the issuance by the Issuer of dollar notes
with a maximum aggregate principal amount of $350.0 million, of which $300.0
million was issued in the initial offering, and the euro indenture provides for
the issuance by the Issuer of euro notes with a maximum aggregate principal
amount of [EURO]150.0 million, of which [EURO]100.0 million was issued in the
initial offering. The Issuer may issue additional dollar notes and euro notes
(collectively, the "additional notes") from time to time. Any offering of
additional notes is subject to the covenant described below under the caption
"--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock." The notes and any additional notes subsequently issued under the
indentures would be treated as a single class for all purposes under the
applicable indenture, including, without limitation, waivers, amendments,
redemptions and offers to purchase. The dollar notes were issued in fully
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. The euro notes were issued in fully registered form, without
coupons, in denominations of [EURO]1,000 and integral multiples thereof. In each
case, the notes will mature on May 1, 2009.
Interest on the notes accrues at the rate of 9% per annum and will be
payable semi-annually in arrears on May 1 and November 1, commencing on November
1, 1999. The Issuer will make each interest payment to the holders of record on
the immediately preceding April 15 and October 15.
Interest on the notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
With respect to the dollar notes, payments of principal, premium and
Liquidated Damages, if any, and interest will be made at the corporate trust
office of the Paying Agent in New York City or, subject to any applicable laws
and regulations, at the office of the Paying Agent in Luxembourg or the Paying
Agent in London by United States dollar check drawn on, or, if a holder has
given wire instructions to the Issuer, by wire transfer to a United States
dollar account maintained by the holder with a bank located in New York City.
With respect to the euro notes, payments of principal, premium and
Liquidated Damages, if any, and interest will be made by credit or transfer to a
Euro account maintained by the holder in the place of payment specified by the
holder. Holders of euro notes who wish to receive payment in any currency other
than Euros must make arrangements at their own expense.
For so long as the notes are listed on the Luxembourg Stock Exchange and the
rules of such stock exchange so require, the Issuer will maintain a Paying Agent
in Luxembourg. If a payment date is not a Business Day (as defined in the
indentures) at a place of payment, payment may be made at that place on the next
succeeding Business Day and no interest shall accrue for the intervening period.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The Trustee will initially act as principal Paying Agent and Registrar at
its corporate trust offices in the City of New York, State of New York and in
London. Industrial Bank of Japan (Luxembourg) S.A. will initially act as
co-registrar and as an additional paying agent in Luxembourg. The Issuer may
change the Paying Agent or Registrar without prior notice to the Holders, and
the Issuer or any of its Subsidiaries may act as Paying Agent or Registrar;
provided, however, that for so long as the notes are listed on the Luxembourg
Stock Exchange and the rules of such exchange so require, the Issuer will
publish notice of the change in the Transfer Agent in Luxembourg in a daily
newspaper with general circulation in Luxembourg (which is expected to be the
LUXEMBOURG WORT).
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TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the applicable
indenture. The Registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Issuer may require a holder to pay any taxes and fees required by law or
permitted by the applicable indenture. The Issuer is not required to transfer or
exchange any Note selected for redemption. Also, the Issuer is not required to
transfer or exchange any note for a period of 15 days before a selection of
notes to be redeemed.
The registered holder of a note will be treated as the owner of it for all
purposes.
SUBSIDIARY GUARANTIES
The Guarantors have jointly and severally guarantee the Issuer's obligations
under the notes. Each Subsidiary Guaranty is subordinated to the prior payment
in full of all Senior Debt of that Guarantor. The obligations of each Guarantor
under its Subsidiary Guaranty are limited as necessary to prevent that
Subsidiary Guaranty from constituting a fraudulent conveyance under applicable
law. See "Risk Factors--If a Court Were to Find that the Issuance of the Notes
or the Subsidiary Guaranties Constituted a Fraudulent Conveyance, such Court
Could Avoid the Issuer's Obligations Under the Notes or the Subsidiary
Guarantors' Obligations under the Subsidiary Guaranties."
A Guarantor may not sell or otherwise dispose of all or substantially all of
its assets to, or consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person), another Person, other than the Issuer or
another Guarantor, unless:
(1) immediately after giving effect to that transaction, no Default or Event of
Default exists; and
(2) either:
(a) the Person acquiring the property in any such sale or disposition or the
Person formed by or surviving any such consolidation or merger assumes
all the obligations of that Guarantor under the indentures, its
Subsidiary Guaranty and the registration rights agreements pursuant to
supplemental indentures and appropriate collateral documents satisfactory
to the Trustee; or
(b) the Net Proceeds of such sale or other disposition are applied in
accordance with the "Asset Sale" provisions of the Indentures.
The Subsidiary Guaranty of a Guarantor will be released:
(1) in connection with any sale or other disposition of all or substantially all
of the assets of that Guarantor (including by way of merger or
consolidation) to a Person that is not (either before or after giving effect
to such transaction) a Restricted Subsidiary of the Issuer, if the Guarantor
applies the Net Proceeds of that sale or other disposition in accordance
with the "Asset Sale" provisions of the indentures;
(2) in connection with any sale of all of the Capital Stock of a Guarantor to a
Person that is not (either before or after giving effect to such
transaction) a Restricted Subsidiary of the Issuer, if the Issuer applies
the Net Proceeds of that sale in accordance with the "Asset Sale" provisions
of the Indentures; or
(3) if the Issuer properly designates any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary.
See "--Repurchase at the Option of Holders--Asset Sales."
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PARENT GUARANTY
The notes are unconditionally guaranteed by DASI (the "Parent Guaranty").
The Parent Guaranty is subordinated to the prior payment in full of all Senior
Debt of DASI. DASI may not sell or otherwise dispose of all or substantially all
of its assets to, or consolidate or merge with or into (whether or not DASI is
the Surviving Person) another Person unless immediately after giving effect to
that transaction, no Default or Event of Default exists and the Person acquiring
the property in any such sale or disposition or the person formed by or
surviving any such consolidation or merger assumes all obligations of DASI under
the indentures and the registration rights agreements pursuant to supplemental
indentures and appropriate collateral documents satisfactory to the Trustee.
SUBORDINATION
The payment of principal, interest and premium and Liquidated Damages, if
any, on the notes is subordinated to the prior payment in full of all Senior
Debt of the Issuer, including Senior Debt incurred after the date of the
indentures.
The holders of Senior Debt will be entitled to receive payment in full of
all Obligations due in respect of Senior Debt (including interest after the
commencement of any bankruptcy proceeding at the rate specified in the
applicable Senior Debt) before the holders of notes will be entitled to receive
any payment with respect to the notes (except that holders of notes may receive
and retain Permitted Junior Securities and payments made from the trust
described under "--Legal Defeasance and Covenant Defeasance"), in the event of
any distribution to creditors of the Issuer:
(1) in a liquidation or dissolution of the Issuer;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Issuer or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of the Issuer's assets and liabilities.
The Issuer also may not make any payment in respect of the notes (except in
Permitted Junior Securities or from the trust described under "--Legal
Defeasance and Covenant Defeasance") if:
(1) a payment default on Designated Senior Debt occurs and is continuing beyond
any applicable grace period; or
(2) any other default occurs and is continuing on any series of Designated
Senior Debt that permits holders of that series of Designated Senior Debt to
accelerate its maturity and the Trustee receives a notice of such default (a
"Payment Blockage Notice") from the Issuer or the holders of any Designated
Senior Debt.
Payments on the notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which such default is
cured or waived; and
(2) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which
the applicable Payment Blockage Notice is received, unless the maturity of
any Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until:
(1) 360 days have elapsed since the delivery of the immediately prior Payment
Blockage Notice; and
(2) all scheduled payments of principal, interest and premium and Liquidated
Damages, if any, on the notes that have come due have been paid in full in
cash.
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No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice unless such default shall have been
cured or waived for a period of not less than 90 days.
If the Trustee or any holder of the notes receives a payment in respect of
the notes (except in Permitted Junior Securities or from the trust described
under "--Legal Defeasance and Covenant Defeasance") when:
(1) the payment is prohibited by these subordination provisions; and
(2) the Trustee or the holder has actual knowledge that the payment is
prohibited;
the Trustee or the holder, as the case may be, shall hold the payment in
trust for the benefit of the holders of Senior Debt. Upon the proper written
request of the holders of Senior Debt, the Trustee or the holder, as the case
may be, shall deliver the amounts in trust to the holders of Senior Debt or
their proper representative.
The Issuer must promptly notify holders of Senior Debt if payment of the
notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event of
a bankruptcy, liquidation or reorganization of the Issuer, holders of notes may
recover less ratably than creditors of the Issuer who are holders of Senior
Debt. See "Risk Factors--The Notes and Guaranties are Unsecured Senior
Subordinated Obligations."
"DESIGNATED SENIOR DEBT" means:
(1) any Indebtedness outstanding under the Credit Agreement; and
(2) after payment in full of all Obligations under the Credit Agreement, any
other Senior Debt of the Issuer permitted under the Indentures the principal
amount of which is $20.0 million or more and which has been designated by
the Issuer as "Designated Senior Debt."
"PERMITTED JUNIOR SECURITIES" means:
(1) Equity Interests in the Issuer, DASI or any Guarantor; or
(2) debt securities that are subordinated to all Senior Debt and any debt
securities issued in exchange for Senior Debt to substantially the same
extent as, or to a greater extent than, the Notes, the Parent Guaranty and
the Subsidiary Guaranties are subordinated to Senior Debt under the
Indentures.
"SENIOR DEBT" means:
(1) all Indebtedness of the Issuer, any Guarantor, or DASI outstanding under
Credit Facilities and all Hedging Obligations with respect thereto;
(2) any other Indebtedness of the Issuer or any Guarantor permitted to be
incurred under the terms of the Indentures, unless the instrument under
which such Indebtedness is incurred expressly provides that it is on a
parity with or subordinated in right of payment to the Notes or any of the
Guaranties; and
(3) all Obligations with respect to the items listed in the preceding clauses
(1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior Debt will
not include:
(1) any liability for federal, state, local or other taxes owed or owing by the
Issuer;
(2) any Indebtedness of the Issuer or DASI to any of its Subsidiaries or other
Affiliates;
(3) any trade payables; or
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(4) the portion of any Indebtedness that is incurred in violation of the
indentures.
OPTIONAL REDEMPTION
At any time prior to May 1, 2002, the Issuer may redeem up to 35% of the
aggregate principal amount of the dollar notes issued under the dollar notes
indenture (calculated after giving effect to any issuance of additional notes
that are dollar notes) and up to 35% of the aggregate principal amount of the
euro notes issued under the euro notes indenture (calculated after giving effect
to any issuance of additional notes that are euro notes), in each case at a
redemption price of 109% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, to the redemption date, with the
net cash proceeds of one or more Equity Offerings; PROVIDED that:
(1) at least 65% of the aggregate principal amount of the dollar notes issued
under the dollar note indenture remains outstanding and at least 65% of the
aggregate principal amount of the euro notes issued under the euro notes
indenture remains outstanding, in each case immediately after the occurrence
of each such redemption (excluding notes held by DASI, the Issuer and their
respective Subsidiaries); and
(2) the redemptions must occur within 90 days of the date of the closing of any
such Equity Offering.
Except pursuant to the preceding paragraph, the notes will not be redeemable
at the Issuer's option prior to May 1, 2004. The Issuer is not prohibited,
however, from acquiring the notes by means other than a redemption, whether
pursuant to an issuer tender or otherwise, assuming such acquisition does not
otherwise violate the terms of the indentures.
After May 1, 2004, the Issuer may redeem all or a part of the notes upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages, if any, thereon, to the applicable redemption
date, if redeemed during the twelve-month period beginning on May 1 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2004.............................................................................. 104.50%
2005.............................................................................. 103.00%
2006.............................................................................. 101.50%
-----------
2007 and thereafter............................................................... 100.00%
-----------
-----------
</TABLE>
For so long as the notes are listed on the Luxembourg Stock Exchange and the
rules of such exchange so require, the Issuer will cause a notice of redemption
of the notes to be published in a daily newspaper with general circulation in
Luxembourg (which is expected to be the LUXEMBOURG WORT).
MANDATORY REDEMPTION
The Issuer is not required to make mandatory redemption or sinking fund
payments with respect to the notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each holder of notes will have the right to
require the Issuer to repurchase all or any part (equal to $1,000 or an integral
multiple thereof or [EURO]1,000 or an integral multiple thereof) of that
holder's notes pursuant to a Change of Control Offer on the terms set forth in
the indentures. In the Change of Control Offer, the Issuer will offer a Change
of Control Payment
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in cash equal to 101% of the aggregate principal amount of Notes repurchased
plus accrued and unpaid interest and Liquidated Damages, if any, thereon, to the
date of purchase. Within 30 days following any Change of Control, unless the
Issuer has exercised its right to redeem the notes as described under
"--Optional Redemption," the Issuer will mail a notice to each holder describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase Notes on the Change of Control Payment Date specified in
such notice, which date shall be no earlier than 30 days and no later than 60
days from the date such notice is mailed, pursuant to the procedures required by
the Indentures and described in such notice. The Issuer will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with the Change of Control provisions of the Indentures,
the Issuer will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under the Change of Control
provisions of the Indentures by virtue of such conflict.
On the Change of Control Payment Date, the Issuer will, to the extent
lawful:
(1) accept for payment all Notes or portions thereof properly tendered pursuant
to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Notes or portions thereof so tendered; and
(3) deliver or cause to be delivered to the Trustee the notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of notes or portions thereof being purchased by the Issuer.
The Paying Agent will promptly mail to each holder of notes so tendered the
Change of Control Payment for such notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new note equal in principal amount to any unpurchased portion of the notes
surrendered, if any; PROVIDED that each such new dollar note will be in a
principal amount of $1,000 or an integral multiple thereof and each such new
euro note will be in a principal amount of [EURO]1,000 or an integral multiple
thereof.
Prior to complying with any of the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, the
Issuer will either repay all outstanding Senior Debt or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Debt to
permit the repurchase of notes required by this covenant. If the Issuer does not
obtain such consents or repay such borrowings, the Issuer will be prohibited
from purchasing the notes. The Issuer will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
The provisions described above that require the Issuer to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether any other provisions of the Indentures are applicable. Except as
described above with respect to a Change of Control, the Indentures do not
contain provisions that permit the holders of the notes to require that the
Issuer repurchase or redeem the notes in the event of a takeover,
recapitalization or similar transaction.
The Issuer will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the indentures applicable to a Change of Control Offer made by the Issuer and
purchases all notes validly tendered and not withdrawn under such Change of
Control Offer.
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The definition of Change of Control includes a phrase relating to the direct
or indirect sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the properties or assets of the Issuer and its
Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
holder of notes to require the Issuer to repurchase such notes as a result of a
sale, lease, transfer, conveyance or other disposition of less than all of the
assets of the Issuer and its Subsidiaries taken as a whole to another Person or
group may be uncertain.
ASSET SALES
The Issuer will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless:
(1) the Issuer (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or otherwise
disposed of (as determined in good faith by the Issuer);
(2) such fair market value is determined by the Issuer's Board of Directors and
evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee; and
(3) at least 75% of the consideration therefor received by the Issuer or such
Restricted Subsidiary is in the form of cash or Cash Equivalents. For
purposes of this provision, each of the following shall be deemed to be
cash:
(a) any liabilities (as shown on the Issuer's or such Restricted
Subsidiary's most recent balance sheet) of the Issuer or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the Notes or any Subsidiary Guaranty) that
are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Issuer or such Restricted Subsidiary
from further liability;
(b) any securities, notes or other obligations received by the Issuer or any
such Restricted Subsidiary from such transferee that are converted by the
Issuer or such Restricted Subsidiary into cash within 180 days after the
consummation of such Asset Sale (to the extent of the cash received in
that conversion); and
(c) any Designated Noncash Consideration received by the Issuer or any of
its Restricted Subsidiaries in such Asset Sale; PROVIDED that the
aggregate fair market value (as determined above) of such Designated
Noncash Consideration, taken together with the fair market value at the
time of receipt of all other Designated Noncash Consideration received
pursuant to this clause (c) less the amount of Net Proceeds previously
realized in cash from prior Designated Noncash Consideration is less than
5.0% of Total Assets at the time of the receipt of such Designated
Noncash Consideration (with the fair market value of each item of
Designated Noncash Consideration being measured at the time received and
without giving effect to subsequent changes in value).
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Issuer may apply such Net Proceeds at its option:
(1) to repay Senior Debt and, if such Senior Debt repaid is revolving credit
Indebtedness, to correspondingly reduce commitments with respect thereto;
(2) to acquire all or substantially all of the assets of, or a majority of the
Voting Stock of, another Permitted Business;
(3) to make a capital expenditure; and/or
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(4) to acquire other long-term assets that are used or useful in a Permitted
Business.
Pending the final application of any such Net Proceeds, the Issuer may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Indentures.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $20.0 million, the Issuer will make
an Asset Sale Offer to all holders of notes and all holders of other
Indebtedness that is PARI PASSU with the notes containing provisions similar to
those set forth in the Indentures with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
notes and such other PARI PASSU Indebtedness that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100%
of principal amount plus accrued and unpaid interest and Liquidated Damages, if
any, to the date of purchase, and will be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Issuer may use
such Excess Proceeds for any purpose not otherwise prohibited by the Indentures.
If the aggregate principal amount of notes and such other PARI PASSU
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the notes and such other PARI PASSU
Indebtedness to be purchased on a pro rata basis based on the principal amount
of notes and such other PARI PASSU Indebtedness tendered. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
The Issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sales
provisions of the Indentures, the Issuer will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of the indentures by virtue of such
conflict.
The agreements governing the Issuer's outstanding Senior Debt currently
prohibit the Issuer from purchasing any notes, and also provide that certain
change of control or asset sale events with respect to the Issuer would
constitute a default under these agreements. Any future credit agreements or
other agreements relating to Senior Debt to which the Issuer becomes a party may
contain similar restrictions and provisions. In the event a Change of Control or
Asset Sale occurs at a time when the Issuer is prohibited from purchasing notes,
the Issuer could seek the consent of its senior lenders to the purchase of notes
or could attempt to refinance the borrowings that contain such prohibition. If
the Issuer does not obtain such a consent or repay such borrowings, the Issuer
will remain prohibited from purchasing notes. In such case, the Issuer's failure
to purchase tendered notes would constitute an Event of Default under the
Indentures which would, in turn, constitute a default under such Senior Debt. In
such circumstances, the subordination provisions in the indentures would likely
restrict payments to the holders of notes.
SELECTION AND NOTICE
If less than all of the applicable notes are to be redeemed at any time, the
Trustee will select notes for redemption as follows:
(1) if the Notes are listed, in compliance with the requirements of the
principal national securities exchange on which the notes are listed; or
(2) if the notes are not so listed, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate.
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No notes of $1,000 or [EURO]1,000, as the case may be, or less shall be
redeemed in part. Notices of redemption shall be mailed by first class mail at
least 30 but not more than 60 days before the redemption date to each holder of
notes to be redeemed at its registered address. For so long as the notes are
listed on the Luxembourg Stock Exchange and the rules of such exchange so
require, the Issuer will cause a notice of redemption of the notes to be
published in a daily newspaper with general circulation in Luxembourg (which is
expected to be the LUXEMBOURG WORT). Notices of redemption may not be
conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to that note shall state the portion of the principal amount thereof to
be redeemed. A new note in principal amount equal to the unredeemed portion of
the original note will be issued in the name of the Holder thereof upon
cancellation of the original note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on notes or portions of them called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Issuer will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution on
account of the Issuer's or any of its Restricted Subsidiaries' Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving the Issuer or any of its Restricted
Subsidiaries) or to the direct or indirect holders of the Issuer's or any of
its Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable in Equity Interests (other
than Disqualified Stock) of the Issuer or to the Issuer or a Restricted
Subsidiary of the Issuer);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation involving
the Issuer) any Equity Interests of the Issuer or any direct or indirect
parent of the Issuer;
(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated
to the notes or the Subsidiary Guaranties, except a payment of interest or
principal at the Stated Maturity thereof; or
(4) make any Restricted Investment (all such payments and other actions set
forth in clauses (1) through (4) above being collectively referred to as
"Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(2) the Issuer would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "--Incurrence of Indebtedness and Issuance
of Preferred Stock;" and
(3) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by the Issuer and its Restricted Subsidiaries after
the date of the indentures (excluding
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Restricted Payments permitted by clauses (2), (3) and (4) of the next
succeeding paragraph), is less than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of the Issuer for the period (taken
as one accounting period) from March 31, 1999 to the end of the Issuer's
most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if
such Consolidated Net Income for such period is a deficit, less 100% of
such deficit), PLUS
(b) 100% of the aggregate net cash proceeds or fair market value of
Productive Assets received by the Issuer since the date of the Indentures
as a contribution to its common equity capital or from the issue or sale
of Equity Interests of the Issuer (other than Disqualified Stock) or from
the issue or sale of convertible or exchangeable Disqualified Stock or
convertible or exchangeable debt securities of the Issuer that have been
converted into or exchanged for such Equity Interests (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a Subsidiary
of the Issuer), PLUS
(c) to the extent that any Restricted Investment that was made after the
dates of the indentures is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (i) the cash return of capital with
respect to such Restricted Investment (less the cost of disposition, if
any) and (ii) the initial amount of such Restricted Investment; PLUS
(d) without duplication of any amounts included in clause (b) above, 100% of
the aggregate Net Cash Proceeds or the fair market value of Productive
Assets received by the Issuer as common equity contributions by a holder
of the Equity Interests of the Issuer (excluding any net cash proceeds
from an equity contribution which has been financed, directly or
indirectly using funds (1) borrowed from the Issuer or any of its
Subsidiaries, unless and until and to the extent such borrowing is repaid
or (2) contributed, extended, guaranteed or advanced by the Issuer or by
any of its Subsidiaries); PLUS
(e) any dividends paid in cash or Productive Assets received by the Issuer
or a Restricted Subsidiary of the Issuer after the date of the Indenture
from any Unrestricted Subsidiary to the extent that such dividends were
not otherwise included in Consolidated Net Income; PLUS
(f) to the extent that any Unrestricted Subsidiary is redesignated as a
Restricted Subsidiary after the date of the Indentures, the fair market
value of the Issuer's Investment in such Subsidiary (which consists of
cash or Productive Assets) as of the date of such redesignation.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration, such payment would have complied
with the provisions of the indentures;
(2) the redemption, repurchase, retirement, defeasance or other acquisition of
any subordinated Indebtedness of DASI the Issuer or any Guarantor or of any
Equity Interests of DASI, the Issuer or any Restricted Subsidiary in
exchange for, or out of the net cash proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Issuer) of, Equity
Interests of the Issuer (other than Disqualified Stock); PROVIDED that the
amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (3) (b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of subordinated
Indebtedness of the Issuer or any Guarantor with the net cash proceeds from
an incurrence of Permitted Refinancing Indebtedness;
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(4) the payment of any dividend by a Restricted Subsidiary of the Issuer to the
holders of its Equity Interests on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for value of
any Equity Interests of DASI, the Issuer or any Restricted Subsidiary of
the Issuer held by any employee, officer or director (in each case either
current or former) of the Issuer (or any of its Restricted Subsidiaries')
pursuant to any management equity subscription agreement or stock plan;
PROVIDED that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $5.0 million in any
twelve-month period;
(6) cash dividends or loans from the Issuer to DASI for the purpose of
permitting DASI to pay its ordinary operating expenses (including, without
limitation, directors' fees, indemnification obligations, professional fees
and expenses, etc.) in an aggregate amount not to exceed $5.0 million in
any twelve-month period;
(7) payments to DASI not to exceed $100,000 in any fiscal year, solely to
enable DASI to make payments to holders of its Capital Stock in lieu of
issuance of fractional shares of its Capital Stock;
(8) repurchases of Capital Stock deemed to occur upon the exercise of stock
options if such Capital Stock represents a portion of the exercise price
thereof;
(9) the declaration and payment of dividends to holders of any class or series
of Designated Preferred Stock (other than Disqualified Capital Stock)
issued after the issue date; PROVIDED that, at the time of such issuance,
the Issuer, after giving effect to such issuance on a pro forma basis,
would have had a Fixed Charge Coverage Ratio of at least 2.0 to 1.0;
(10) other Restricted Payments in an aggregate amount not to exceed $10.0
million since the date of the Indentures;
(11) the distribution, as a dividend or otherwise, of shares of Capital Stock
of any Unrestricted Subsidiary of the Issuer;
(12) cash dividends or loans from the Issuer to DASI in amounts equal to
amounts required for DASI to pay franchise taxes and Federal, state and
local taxes to the extent such income taxes are attributable to the income
of the Issuer and its Restricted Subsidiaries; and
(13) dividends from the Issuer to DASI in an amount sufficient to pay dividends
on DASI's 7 1/2% Convertible Trust Preferred Securities Due 2028, that are
outstanding on the issue date of the Notes.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued to or by the Issuer or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
covenant shall be determined by the Board of Directors whose resolution with
respect thereto shall be delivered to the Trustee. The Board of Directors'
determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $10.0 million. Not later than the date of making any
Restricted Payment, the Issuer shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this "Restricted Payments"
covenant were computed, together with a copy of any fairness opinion or
appraisal required by the indentures.
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INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Issuer will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and the
Issuer will not issue any Disqualified Stock and will not permit any of its
Subsidiaries to issue any shares of preferred stock; PROVIDED, HOWEVER, that the
Issuer may incur Indebtedness (including Acquired Debt) or issue Disqualified
Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or
issue preferred stock, if, in each case, the Fixed Charge Coverage Ratio for the
Issuer's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock or preferred
stock is issued would have been at least 2.0 to 1.0, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred or the preferred stock or
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The first paragraph of this covenant will not prohibit the incurrence of any
of the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by the Issuer and any Restricted Subsidiary of Indebtedness
and letters of credit under Credit Facilities in an aggregate principal
amount at any one time outstanding under this clause (1)(with letters of
credit being deemed to have a principal amount equal to the maximum
potential liability of the Issuer and its Restricted Subsidiaries
thereunder) not to exceed $950.0 million LESS any mandatory prepayments
actually made thereunder (to the extent, in the
case of payments of revolving credit Indebtedness, that the corresponding
commitments have been permanently reduced) or scheduled payments actually
made thereunder (other than the repayment of the Interim Term Loan using
the net proceeds of the initial offering);
(2) the incurrence by the Issuer and its Restricted Subsidiaries of the
Existing Indebtedness;
(3) the incurrence by the Issuer and the Guarantors of Indebtedness represented
by the notes and the related Guaranties to be issued on the date of the
indentures and the exchange notes and the related Guaranties to be issued
pursuant to the registration rights agreements;
(4) the incurrence by the Issuer or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case, incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the
Issuer or such Restricted Subsidiary, in an aggregate principal amount,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause (4),
not to exceed 5% of Total Assets at any time outstanding;
(5) the incurrence by the Issuer or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted by the Indenture to be
incurred under the first paragraph of this covenant or clauses (2), (3),
(4), (5), or (10) of this paragraph;
(6) the incurrence by the Issuer or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among the Issuer and any of its
Restricted Subsidiaries; PROVIDED, HOWEVER, that:
(a) if the Issuer or any Guarantor is the obligor on such Indebtedness,
such Indebtedness must be expressly subordinated to the prior payment
in full in cash of all Obligations with respect to the Notes, in the
case of the Issuer, or the Guaranty of such Guarantor, in the case of a
Guarantor; and
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(b) (i) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the
Issuer or a Restricted Subsidiary thereof and (ii) any sale or other
transfer of any such Indebtedness to a Person that is not either the
Issuer or a Restricted Subsidiary thereof; shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Issuer or
such Subsidiary, as the case may be, that was not permitted by this
clause (6);
(7) the incurrence by the Issuer or any of its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of the indentures to be outstanding or to hedge
exposure to foreign currency fluctuations or commodity price risk with
respect to any commodity purchases;
(8) (a) the guarantee by the Issuer or any of the Guarantors of Indebtedness of
the Issuer or a Guarantor that was permitted to be incurred by another
provision of this covenant; and
(b) the guarantee by any Restricted Subsidiary of the Issuer that is not a
Guarantor of Indebtedness of another Restricted Subsidiary of the
Issuer that is not a Guarantor that was permitted to be incurred by
another provision of this covenant;
(9) the accrual of interest, the accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends
on Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock: PROVIDED, in each such case, that the amount thereof is
included in Fixed Charges of the Issuer as accrued;
(10) the incurrence by the Issuer or any of the Restricted Subsidiaries of
additional Indebtedness or Disqualified Stock in an aggregate principal
amount (or accreted value, as applicable) at any time outstanding,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause
(10), not to exceed $50.0 million;
(11) the incurrence by the Issuer's Unrestricted Subsidiaries of Non-Recourse
Debt, PROVIDED, HOWEVER, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Issuer that was not permitted by this clause (11);
(12) the incurrence of Indebtedness (including letters of credit) in respect of
workers' compensation claims, self-insurance obligations, performance,
surety, bid or similar bonds and completion guarantees provided by the
Issuer or one of its Restricted Subsidiaries in the ordinary course of
business and consistent with past practices;
(13) Indebtedness arising from agreements of the Issuer or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price,
earn out or other similar obligations, in each case, incurred or assumed
in connection with the disposition of any business, assets or a Restricted
Subsidiary, other than guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition; PROVIDED that
the maximum assumable liability in respect of all such Indebtedness shall
at no time exceed the gross proceeds actually received by the Issuer and
its Restricted Subsidiaries in connection with such disposition;
(14) the incurrence by a Securitization Entity of Indebtedness in a Qualified
Securitization Transaction that is Non-Recourse Debt (except for Standard
Securitization Undertakings) with respect to the Issuer and its other
Restricted Subsidiaries;
(15) Indebtedness of the Issuer evidenced by promissory notes subordinated to
the Notes and the Exchange Notes issued to employees of the Issuer and its
Subsidiaries in lieu of cash payment for
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at any time Equity Interest of DASI being repurchased from such employees;
PROVIDED; that the aggregate amount of such Indebtedness does not exceed
$5.0 million at any one time outstanding;
(16) guaranties of Indebtedness of any other person incurred by the Issuer or a
Restricted Subsidiary in the ordinary course of business in an aggregate
principal amount not to exceed $5.0 million at any one time outstanding;
and
(17) Indebtedness consisting of take-or-pay obligations contained in supply
agreements entered into by the Issuer or its Subsidiaries in the ordinary
course.
LIMITATION ON FOREIGN INDEBTEDNESS
The Issuer will not permit any Restricted Subsidiary of the Issuer that is
not a Guarantor to, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness) unless:
(1) after giving effect to the incurrence of such Indebtedness and the receipt
of the application of the proceeds thereof;
(a) if, as a result of the incurrence of such Indebtedness such Restricted
Subsidiary will become subject to any restriction or limitation on the
payment of dividends or the making of other distributions,
(i) the Fixed Charge Coverage Ratio of Restricted Subsidiaries that are
not Guarantors (determined on a pro forma basis for the last four
fiscal quarters for which financial statements are available at the
date of determination) is greater than 2.5 to 1; and
(ii) the Issuer's Fixed Charge Coverage Ratio (determined on a pro
forma basis for the last four fiscal quarters of the Issuer for
which financial statements are available at the date of
determination) is greater than 2.0 to 1; and
(b) in any other case, the Issuer's Fixed Charge Coverage Ratio (determined
on a pro forma basis for the last four fiscal quarters of the Issuer
for which financial statements are available at the date of
determination) is greater than 2.0 to 1; and
(2) no Default or Event of Default shall have occurred and be continuing at the
time or as a consequence of the incurrence of such Indebtedness.
In the event that any Indebtedness incurred pursuant to clause (1)(b) of the
foregoing paragraph is proposed to be amended, modified or otherwise
supplemented such that the payment of dividends or the making of other
distributions becomes subject in any manner to any restriction or limitation,
the Issuer will not permit the Restricted Subsidiary to so amend, modify or
supplement such Indebtedness unless such Indebtedness could be incurred pursuant
to the terms of clause (1)(a) of the foregoing paragraph.
All calculations required under the prior two paragraphs hereof shall be
made in a manner consistent with the calculations required under the covenant
described under "Incurrence of Indebtedness and Issuance of Preferred Stock."
LIENS
The Issuer will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien of
any kind on any asset now owned or hereafter acquired, except Permitted Liens.
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DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
The Issuer will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to the
Issuer or any of its Restricted Subsidiaries, or with respect to any other
interest or participation in, or measured by, its profits, or pay any
indebtedness owed to the Issuer or any of its Restricted Subsidiaries;
(2) make loans or advances to the Issuer or any of its Restricted Subsidiaries;
or
(3) transfer any of its properties or assets to the Issuer or any of its
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of the indentures;
(2) the indentures, the notes and the Guaranties;
(3) Indebtedness incurred by a Restricted Subsidiary that is not a Guarantor in
compliance with the provisions set forth under the caption "--Limitation on
Foreign Indebtedness."
(4) applicable law, regulation or order;
(5) any instrument governing Indebtedness or Capital Stock of a Person acquired
by the Issuer or any of its Restricted Subsidiaries as in effect at the
time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired, PROVIDED that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the
indentures to be incurred;
(6) customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices;
(7) purchase money obligations for property acquired in the ordinary course of
business that impose restrictions on the property so acquired of the nature
described in clause (3) of the preceding paragraph;
(8) any agreement for the sale or other disposition of a Restricted Subsidiary
that restricts distributions by that Restricted Subsidiary pending its sale
or other disposition;
(9) Liens securing Indebtedness that limit the right of the debtor to dispose
of the assets subject to such Lien;
(10) provisions with respect to the disposition or distribution of assets or
property in joint venture agreements, assets sale agreements, stock sale
agreements and other similar agreements entered into in the ordinary
course of business;
(11) restrictions on cash or other deposits or net worth imposed by customers
under contracts entered into in the ordinary course of business;
(12) customary provisions in agreements with respect to Permitted Joint
Ventures;
(13) Indebtedness incurred after the date of the indentures in accordance with
the terms of the Indenture; provided; that the restrictions contained in
the agreements governing such new Indebtedness are, in the good faith
judgment of the Board of Directors of the Issuer, not
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materially less favorable, taken as a whole, to the holders of the notes
than those contained in the agreements governing Indebtedness outstanding
on the date of the indentures;
(14) any encumbrance or restriction of a Securitization Entity effected in
connection with a Qualified Securitization Transaction; and
(15) any encumbrances or restrictions imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements
or refinancings of the contracts, instruments or obligations referred to
in clauses (1) through (14) above; provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Board
of Directors, no more restrictive with respect to such dividend and other
payment restrictions prior to such amendment, modification, restatement,
renewal, increase, supplement, refunding, replacement or refinancing.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Issuer may not, directly or indirectly: (1) consolidate or merge with or
into another Person (whether or not the Issuer is the surviving corporation); or
(2) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Issuer and its Restricted Subsidiaries
taken as a whole, in one or more related transactions, to another Person;
unless:
(1) either: (a) the Issuer is the surviving corporation; or (b) the Person
formed by or surviving any such consolidation or merger (if other than the
Issuer) or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation, partnership, limited
liability company or trust organized or existing under the laws of the
United States, any state thereof or the District of Columbia;
(2) the Person formed by or surviving any such consolidation or merger (if other
than the Issuer) or the Person to which such sale, assignment, transfer,
conveyance or other disposition shall have been made assumes all the
obligations of the Issuer under the notes, the Indentures and the
registration rights agreements pursuant to agreements reasonably
satisfactory to the Trustee;
(3) immediately after such transaction no Default or Event of Default exists;
and
(4) the Issuer or the Person formed by or surviving any such consolidation or
merger (if other than the Issuer), or to which such sale, assignment,
transfer, conveyance or other disposition shall have been made will, on the
date of such transaction after giving pro forma effect thereto and any
related financing transactions as if the same had occurred at the beginning
of the applicable four-quarter period, be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test
set forth in the first paragraph of the covenant described above under the
caption "--Incurrence of Indebtedness and Issuance of Preferred Stock."
In addition, the Issuer may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. This "Merger, Consolidation or Sale of
Assets" covenant will not apply to a sale, assignment, transfer, conveyance or
other disposition of assets between or among the Issuer and any of its
Restricted Subsidiaries.
TRANSACTIONS WITH AFFILIATES
The Issuer will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement,
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understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to the
Issuer or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Issuer or such Restricted
Subsidiary with an unrelated Person; and
(2) the Issuer delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million,
a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with this
covenant and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors; and
(b) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $15.0
million, an opinion as to the fairness to the Issuer or the relevant
Restricted Subsidiary of such Affiliate Transaction from a financial
point of view issued by an accounting, appraisal or investment banking
firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by the Issuer or any of its
Restricted Subsidiaries in the ordinary course of business and consistent
with the past practice of the Issuer or such Restricted Subsidiary;
(2) transactions between or among the Issuer and/or its Restricted
Subsidiaries;
(3) payment of reasonable directors fees to Persons who are not otherwise
Affiliates of the Issuer;
(4) sales of Equity Interests (other than Disqualified Stock) to Affiliates of
the Issuer; and
(5) Restricted Payments that are permitted by the provisions of the indentures
described above under the caption "--Restricted Payments;"
(6) providing indemnity to officers, directors, or employees of the Issuer or
any of its Subsidiaries as determined in good faith by the Board of
Directors of the Issuer;
(7) the payment of customary management, consulting and advisory fees and
related expenses to Hidden Creek Industries or its affiliates consistent
with past practices, including, without limitation, in connection with
acquisitions, divestitures or financings by DASI, the Issuer or any of the
Issuer's Restricted Subsidiaries;
(8) the existence of, or the performance by the Issuer or any of its Restricted
Subsidiaries of its obligations under the terms of, any agreement to which
it is a party as of the date of the Indentures, and any similar agreements
which it may enter into thereafter; provided, however, that the existence
of, or the performance by the Issuer or any of its Restricted Subsidiaries
of obligations under, any future amendment to any such existing agreement
or under any similar agreement entered into after the date of the
indentures shall only be permitted by this clause to the extent that the
terms of any such amendment or similar agreement are not disadvantageous to
the holders in any material respect;
(9) transactions effected as part of a Qualified Securitization Transaction;
(10) transactions with customers, joint venture partners, clients and
suppliers, in each case in the ordinary course of business and otherwise
in compliance with the terms of the Indentures which
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are fair to the Issuer or its Restricted Subsidiaries, in the reasonable
determination of the Board of Directors of the Issuer;
(11) the grant of stock options, restricted stock or similar rights to the
Issuer's employees, directors and consultants pursuant to plans approved
by the Board of Directors of the Issuer; and
(12) loans or advances to employees or consultants in the ordinary course of
business and consistent with past practices, which are approved by a
majority of the Board of Directors of the Issuer in good faith.
ADDITIONAL SUBSIDIARY GUARANTIES
If the Issuer or any of its Restricted Subsidiaries acquires or creates
another material Domestic Restricted Subsidiary after the dates of the
indentures and the newly acquired or created material Domestic Restricted
Subsidiary guarantees any obligations under any Credit Facility, then that newly
acquired or created Domestic Restricted Subsidiary must become a Guarantor and
execute supplemental indentures and deliver an Opinion of Counsel to the Trustee
within 10 Business Days of the date on which it guaranteed any obligation under
any of the Credit Facilities. If any Subsidiary that is not a Guarantor at any
time guaranties Indebtedness of the Issuer or a Guarantor, the Issuer will cause
such Subsidiary to simultaneously execute and deliver supplemental indentures
providing for the guaranty of the payment of the notes by such Subsidiary.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by the Issuer and its
Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an
Investment made as of the time of such designation and will either reduce the
amount available for Restricted Payments under the first paragraph of the
covenant described above under the caption "--Restricted Payments" or reduce the
amount available for future Investments under one or more clauses of the
definition of Permitted Investments, as the Issuer shall determine. That
designation will only be permitted if such Investment would be permitted at that
time and if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a
Default.
NO SENIOR SUBORDINATED DEBT
The Issuer shall not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Indebtedness of the Issuer and senior in any respect in right of
payment to the notes. No Guarantor shall incur, create, issue, assume, guarantee
or otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Indebtedness of such Guarantor and senior in any respect
in right of payment to such Guarantor's Guaranty.
PAYMENTS FOR CONSENT
The Issuer and DASI will not, and will not permit any of their Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration to or for
the benefit of any holder of notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the indentures or the
notes issued thereunder unless such consideration is offered to be paid and is
paid to all holders of such notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
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REPORTS
Whether or not required by the SEC, so long as any notes are outstanding,
the Issuer will furnish to the holders of notes, within five days of filing such
reports with the SEC:
(1) all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Issuer were
required to file such Forms, including a "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and, with respect
to the annual information only, a report on the annual financial statements
by the Issuer's certified independent accountants; and
(2) all current reports that would be required to be filed with the SEC on Form
8-K if the Issuer were required to file such reports.
In addition, following the consummation of the exchange offer contemplated
by the registration rights agreements, whether or not required by the SEC, the
Issuer will file a copy of all of the information and reports referred to in
clauses (1) and (2) above with the SEC for public availability within the time
periods specified in the SEC's rules and regulations (unless the SEC will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. In addition, the Issuer and the
Guarantors have agreed that, for so long as any notes remain outstanding, they
will furnish to the holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act. Reports and other filings made by
DASI that include all of the information referred to in clauses (1) and (2)
above with respect to DASI and its consolidated subsidiaries shall be deemed to
satisfy the obligations of the Issuer and/or the Guarantors set forth above as
long as such reports and filings include the information required by the Staff
of the SEC under its interpretations of SAB 53; PROVIDED that DASI does not have
any business operations other than those conducted through the Issuer.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or Liquidated
Damages with respect to, any notes whether or not prohibited by the
subordination provisions of the indentures;
(2) default in payment when due of the principal of, or premium, if any, on the
notes whether or not prohibited by the subordination provisions of the
indentures;
(3) failure by the Issuer or any of its Restricted Subsidiaries to comply with
the provisions described under the caption "--Certain Covenants--Merger,
Consolidation or Sale of Assets;"
(4) failure by the Issuer or any of its Restricted Subsidiaries for 60 days
after notice to comply with any of the other agreements in the indentures;
(5) default under any mortgage, indenture or instrument under which there is
issued and outstanding any Indebtedness for money borrowed by the Issuer or
any of its Restricted Subsidiaries (or the payment of which is guaranteed by
the Issuer or any of its Restricted Subsidiaries) whether such Indebtedness
or guarantee now exists, or is created after the dates of the indentures, if
that default:
(a) is caused by a failure to pay principal of, or interest or premium, if
any, on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment
Default"); or
(b) results in the acceleration of such Indebtedness prior to its express
maturity,
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and, in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness the maturity of
which has been so accelerated, aggregates $20.0 million or more;
(6) failure by the Issuer or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $20.0 million, which judgments are not
paid, vacated, discharged, stayed or non-appealable for a period of 60 days,
and in the event such judgment is covered by insurance, an enforcement
proceeding has been commenced by any creditor upon such judgment or decree
which is not promptly stayed;
(7) except as permitted by the indentures, any Guaranty shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person acting
on behalf of any Guarantor, shall deny or disaffirm its obligations under
its Subsidiary Guaranty or DASI, or any Person acting on behalf of DASI,
shall deny or disaffirm its obligations under the Parent Guaranty; and
(8) certain events of bankruptcy or insolvency with respect to DASI, the Issuer
or any of its Significant Subsidiaries.
In the case of an Event of Default arising from certain events of bankruptcy
or insolvency, with respect to the Issuer, any Subsidiary that is a Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding notes will become due and payable
immediately without further action or notice. If any other Event of Default
occurs and is continuing, the Trustee or the holders of at least 25% in
principal amount of the then outstanding dollar notes or at least 25% in
principal amount of the then outstanding euro notes, as the case may be, may
declare all the dollar notes or the euro notes, as the case may be, to be due
and payable immediately.
Holders of the notes may not enforce the indentures or the notes except as
provided in the indentures. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding dollar notes or euro notes,
as the case may be, may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from holders of the notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest or Liquidated Damages) if it
determines that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the applicable
notes then outstanding by notice to the Trustee may on behalf of the holders of
all of the applicable Notes waive any existing Default or Event of Default and
its consequences under the applicable Indenture except a continuing Default or
Event of Default in the payment of interest or Liquidated Damages on, or the
principal of, the applicable notes.
The Issuer is required to deliver to the Trustee annually a statement
regarding compliance with the Indentures. Upon becoming aware of any Default or
Event of Default, the Issuer is required to deliver to the Trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of DASI, the
Issuer or any Guarantor, as such, shall have any liability for any obligations
of the Issuer or the Guarantors under the notes, the Indentures, the Subsidiary
Guaranties, the Parent Guaranty or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each holder of notes by accepting
a note waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the notes. The waiver may not be effective
to waive liabilities under the federal securities laws.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Under each indenture, the Issuer may, at its option and at any time, elect
to have all of its obligations discharged with respect to any outstanding notes
under such Indenture and all obligations of the Guarantors discharged with
respect to their Guaranties ("Legal Defeasance") except for:
(1) the rights of holders of outstanding notes to receive payments in respect of
the principal of, or interest or premium and Liquidated Damages, if any, on
such notes when such payments are due from the trust referred to below;
(2) the Issuer's obligations with respect to the notes concerning issuing
temporary Notes, registration of notes, mutilated, destroyed, lost or stolen
notes and the maintenance of an office or agency for payment and money for
security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee, and the
Issuer's and the Guarantor's obligations in connection therewith; and
(4) the Legal Defeasance provisions of applicable indenture.
In addition, the Issuer may, at its option and at any time, elect to have
the obligations of the Issuer and the Guarantors released with respect to
certain covenants that are described in the indentures ("Covenant Defeasance")
and thereafter any omission to comply with those covenants shall not constitute
a Default or Event of Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Issuer must irrevocably deposit with the Trustee, in trust, for the
benefit of the applicable holders of the notes, cash in U.S. Dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, or interest
and premium and Liquidated Damages, if any, on such outstanding notes on the
stated maturity or on the applicable redemption date, as the case may be,
and the Issuer must specify whether the notes are being defeased to maturity
or to a particular redemption date;
(2) in the case of Legal Defeasance, the Issuer shall have delivered to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that (a) the Issuer has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the date of
the applicable Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the holders of the outstanding notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Issuer shall have delivered to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the holders of such outstanding notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing either:
(a) on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be
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applied to such deposit); or (b) or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under any material agreement or
instrument (other than the applicable Indenture) to which the Issuer or any
of its Subsidiaries is a party or by which the Issuer or any of its
Subsidiaries is bound;
(6) the Issuer must have delivered to the Trustee an Opinion of Counsel to the
effect that, assuming no intervening bankruptcy of the Issuer or any
Guarantor between the date of deposit and the 91st day following the deposit
and assuming that no holder is an "insider" of the Issuer under applicable
bankruptcy law, after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(7) the Issuer must deliver to the Trustee an Officers' Certificate stating that
the deposit was not made by the Issuer with the intent of preferring the
holders of such notes over the other creditors of the Issuer with the intent
of defeating, hindering, delaying or defrauding creditors of the Issuer or
others; and
(8) the Issuer must deliver to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, neither the
indentures nor the notes issued thereunder may be amended or supplemented
without the consent of the holders of at least a majority in principal amount of
the applicable notes then outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, notes), and any existing default or compliance with any provision of the
applicable Indenture or the applicable notes may be waived with the consent of
the holders of a majority in principal amount of the then outstanding applicable
notes (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes).
Without the consent of each applicable holder affected, an amendment or
waiver may not (with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note or alter
the provisions with respect to the redemption of the notes (other than
provisions relating to the covenants described above under the caption
"--Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of interest on any note;
(4) waive a Default or Event of Default in the payment of principal of, or
interest or premium, or Liquidated Damages, if any, on the applicable notes
(except a rescission of acceleration of the notes by the holders of at least
a majority in aggregate principal amount of the applicable notes and a
waiver of the payment default that resulted from such acceleration);
(5) make any note payable in money other than that stated in the notes;
(6) make any change in the provisions of the applicable Indenture relating to
waivers of past Defaults or the rights of holders of notes to receive
payments of principal of, or interest or premium or Liquidated Damages, if
any, on the notes;
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(7) waive a redemption payment with respect to any note (other than a payment
required by one of the covenants described above under the caption
"--Repurchase at the Option of Holders");
(8) release any Guarantor from any of its obligations under its Guaranty or the
applicable indenture, except in accordance with the terms of such indenture;
or
(9) make any change in the preceding amendment and waiver provisions.
In addition, any amendment to, or waiver of, the provisions of either
indenture relating to subordination that adversely affects the rights of the
holders of the applicable notes will require the consent of the holders of at
least 75% in aggregate principal amount of applicable notes then outstanding.
Notwithstanding the preceding, without the consent of any holder of
applicable notes, the Issuer, the Guarantors and the Trustee may amend or
supplement either indenture or the notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of the Issuer's obligations to holders of
notes in the case of a merger or consolidation or sale of all or
substantially all of the Issuer's assets;
(4) to make any change that would provide any additional rights or benefits to
the holders of notes or that does not adversely affect the legal rights
under the indenture of any such holder; or
(5) to comply with requirements of the SEC in order to effect or maintain the
qualification of the indenture under the Trust Indenture Act.
SATISFACTION AND DISCHARGE
Each indenture will be discharged and will cease to be of further effect as
to all notes issued thereunder, when:
(1) either:
(a) all applicable notes that have been authenticated (except lost, stolen
or destroyed notes that have been replaced or paid and notes for whose
payment money has theretofore been deposited in trust and thereafter
repaid to the Issuer) have been delivered to the Trustee for
cancellation; or
(b) all applicable notes that have not been delivered to the Trustee for
cancellation have become due and payable by reason of the making of a
notice of redemption or otherwise or will become due and payable within
one year and the Issuer or any Guarantor has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in trust solely
for the benefit of such holders, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will
be sufficient without consideration of any reinvestment of interest, to
pay and discharge the entire indebtedness on such notes not delivered to
the Trustee for cancellation for principal, premium and Liquidated
Damages, if any, and accrued interest to the date of maturity or
redemption;
(2) no applicable Default or Event of Default shall have occurred and be
continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the Issuer or any
Guarantor is a party or by which the Issuer or any Guarantor is bound;
(3) the Issuer or any Guarantor has paid or caused to be paid all sums payable
by it under the applicable indenture; and
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(4) the Issuer has delivered irrevocable instructions to the Trustee under the
applicable Indenture to apply the deposited money toward the payment of the
applicable notes at maturity or the redemption date, as the case may be.
In addition, the Issuer must deliver an Officers' Certificate and an Opinion
of Counsel to the Trustee stating that all applicable conditions precedent to
satisfaction and discharge have been satisfied.
CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of the Issuer or any Guarantor, the
indentures limit its right to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. The Trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the SEC for permission to continue or resign.
The holders of a majority in principal amount of the then outstanding dollar
notes or euro notes, as the case may be, will have the right to direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Trustee, subject to certain exceptions. The Indentures provide
that in case an Event of Default shall occur and be continuing, the Trustee will
be required, in the exercise of its power, to use the degree of care of a
prudent man in the conduct of his own affairs. Subject to such provisions, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indentures at the request of any holder of notes, unless such holder
shall have offered to the Trustee security and indemnity satisfactory to it
against any loss, liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
The outstanding dollar notes are represented by one or more notes in
registered, global form ("dollar global notes') deposited with the Trustee as
custodian for DTC and registered in the name of Cede & Co., as nominee of DTC,
in each case for credit to the accounts of DTC Participants and indirect
participants (each as defined below) including, without limitation, Morgan
Guaranty Trust Company of New York, Brussels office, as operator (the "Euroclear
Operator") of the Euroclear System ("Euroclear") and Cedelbank ("Cedelbank").
The euro notes sold to "qualified institutional buyers" pursuant to Rule 144A
(the "Rule 144A euro notes") are represented by one or more notes in registered
global form deposited with the Trustee as custodian in DTC and registered in the
name of Cede & Co., as nominee of DTC, in each case for credit to the accounts
of DTC Participants and indirect participants. The euro notes sold to purchasers
under Regulation S are represented by a note in registered, global form (the
"Reg. S euro global note") deposited with the Industrial Bank of Japan
(Luxembourg) S.A. in Luxembourg as depositary (such capacity, the "Depositary")
for Euroclear. The Reg. S euro notes are not eligible for clearance through DTC,
except indirectly through DTC's participation in Euroclear. The exchange notes
will also be represented by one or more global notes.
Except in the limited circumstances set forth below, notes in certificated
form will not be issued.
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DEPOSITARY PROCEDURES
DTC. DTC has advised the Issuer as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for persons who have accounts with it ("DTC Participants") and to
facilitate the clearance and settlement of securities transactions between DTC
Participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. DTC Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a DTC Participant, either directly or indirectly
("indirect participants").
EUROCLEAR AND CEDELBANK. The Issuer understands as follows with respect to
Euroclear and Cedelbank: Euroclear and Cedelbank each hold securities for their
account holders and facilitate the clearance and settlement of securities
transactions by electronic book-entry transfer between their respective account
holders, thereby eliminating the need for physical movements of certificates and
any risk from lack of simultaneous transfers of securities. Euroclear and
Cedelbank each provide various services including safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Each of Euroclear and Cedelbank can settle securities
transactions in any of more than 30 currencies, including Euros. Euroclear and
Cedelbank each also deal with domestic securities markets in several countries
through established depository and custodial relationships. The respective
systems of Euroclear and Cedelbank have established an electronic bridge between
their two systems across which their respective account holders may settle
trades with each other. Account holders in both Euroclear and Cedelbank are
world-wide financial institutions including underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations. Indirect access to
both Euroclear and Cedelbank is available to other institutions that clear
through or maintain a custodial relationship with an account holder of either
system. An account holder's overall contractual relations with either Euroclear
or Cedelbank are governed by the respective rules and operating procedures of
Euroclear or Cedelbank and any applicable laws. Both Euroclear and Cedelbank act
under such rules and operating procedures only on behalf of their respective
account holders and have no record of or relationship with any persons who are
not direct account holders.
Except as described below, owners of interests in the dollar global notes
and the euro global notes will not have notes registered in their names, will
not receive physical delivery of notes in certificated form and will not be
considered the registered owners or holders of notes for any purpose. So long as
DTC (or its nominee) or the Depositary, as the case may be, is the registered
owner or holder of a global note, such party will be considered the sole owner
or holder of the notes represented by such global note for all purposes under
the indentures and the notes. Accordingly, each person owning a beneficial
interest in a global note must rely on the procedures of DTC, Euroclear and
Cedelbank, as the case may be, and their participants or account holders to
exercise any rights and remedies of a holder of notes under the indentures.
Payments of principal and interest on the global notes will be made to DTC or
its nominee, or to the Depositary on behalf of Euroclear and Cedelbank, as the
case may be, as the registered owners thereof.
The laws of some countries and some states in the United States require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer beneficial interests in a global
note to such persons may be limited to that extent. Because DTC, Euroclear and
Cedelbank can act only on behalf of their respective participants or account
holders, as the case may be, the ability of a person having beneficial interests
in a global note to pledge such interests to persons or entities that do not
participate in the relevant clearing system, or otherwise take
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actions in respect of such interests, may be affected by the lack of a physical
certificate evidencing such interests.
PAYMENTS ON THE GLOBAL NOTES
Payments in respect of the principal of, premium, if any, and interest on a
global note will be made through a payment agent appointed pursuant to the
applicable indenture and will be payable to DTC (or its nominee) or the
Depositary on behalf of Euroclear, as the case may be, each in its capacity as
the registered holder of such notes under such indentures. Under the terms of
the indentures, the Issuer and the Trustee will treat the persons in whose names
notes, including the global notes, are registered as the owners thereof for the
purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, none of the Issuer, the initial purchasers, the
Trustee, or any agent of the Issuer, the initial purchasers or the Trustee has
or will have any responsibility or liability for (i) any aspect or accuracy of
the records of the relevant clearing system, the participants therein or the
account holders thereof, as the case may be, relating to payments made on
account of beneficial ownership interests in the global notes, or for
maintaining, supervising or reviewing any records of such clearing system,
participant or account holder relating to beneficial ownership interests in the
global notes, or (ii) any other matter relating to the actions and practices of
the relevant clearing system or the participants therein or the account holders
thereof.
DTC or Euroclear, as the case may be, upon receipt of any such payment, will
immediately credit the accounts of their relevant participants or account
holders, as the case may be, with payments in amounts proportionate to their
respective holdings in principal amount of beneficial interests in the relevant
global note, as shown on the records of DTC or Euroclear, as the case may be.
The Issuer expects that payments by such participants or account holders, as the
case may be, to the beneficial owners of global notes will be governed by
standing instructions and customary practices and will be the responsibility of
such participants or account holders. Neither the Issuer nor the Trustee will
have responsibility or liability for the payment of amounts owing in respect of
beneficial interests in the global notes held by DTC or by the Depositary for
Euroclear.
TRANSFERS OF GLOBAL SECURITIES AND INTERESTS THEREIN
Unless definitive securities are issued, (i) the dollar global notes and the
Rule 144A euro notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee, and (ii) the
Reg. S euro global notes may be transferred, in whole and not in part, only by
Euroclear to the Depositary or by the Depositary to Euroclear, or to another
nominee or successor thereof or a nominee of such successor.
Transfers of beneficial interests in the dollar global notes and the Rule
144A euro notes will be subject to the applicable rules and procedures of DTC
and its direct and indirect participants (including, if applicable, those of
Euroclear and Cedelbank), which are subject to change from time to time.
Transfers of beneficial interests in the Reg. S euro global note will be subject
to the applicable rules and procedures of Euroclear and its account holders and
intermediaries. Any secondary market trading activity in beneficial interests in
the global notes is expected to occur through the participants or account
holders and intermediaries, as the case may be, of DTC, Euroclear and Cedelbank,
and the securities custody accounts of investors will be credited with their
holdings against payment in same-day funds on the settlement date.
No service charge will be made for any registration of transfer or exchange
of notes, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Although DTC, Euroclear and Cedelbank have agreed to certain procedures to
facilitate transfers of interests in the global notes among participants in DTC
and account holders in Euroclear and
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Cedelbank, they are under no obligation to perform or to continue to perform
such procedures, and such procedures may be discontinued at any time. None of
the Issuer, the initial purchasers, the Trustee, nor any agent of the Issuer,
the initial purchasers or the Trustee will have any responsibility for the
nonperformance or misperformance (as a result of insolvency, mistake, misconduct
or otherwise) by DTC, Euroclear or Cedelbank or their respective participants,
indirect participants, account holders or intermediaries of their respective
obligations under the rules and procedures governing their operations.
The Issuer understands that under existing industry practices, if either the
Issuer or the Trustee requests any action of holders of notes, or if an owner of
a beneficial interest in a global note desires to give instructions or take an
action that a holder is entitled to give or take under the indentures, DTC,
Euroclear or Cedelbank, as the case may be, would authorize their respective
participants or account holders, as the case may be, owning the relevant
beneficial interest to give instructions to take such action, and such
participants or account holders would authorize indirect participants or
intermediaries to give instructions or take such action, or would otherwise act
upon the instructions of such indirect participants or intermediaries.
The Issuer understands that under existing practices of DTC or Euroclear if
less than all of the respective class of notes are to be redeemed at any time,
DTC or Euroclear, as the case may be, will credit their participants' or account
holders' accounts on a proportionate basis (with adjustments to prevent
fractions) or by lot or on such other basis as DTC or Euroclear, as the case may
be, deems fair and appropriate, provided that no beneficial interests of less
than $1,000 or [EURO]1,000, as the case may be, may be redeemed in part.
CERTIFICATED NOTES
Beneficial interests in a global note are exchangeable for definitive notes
in registered certificated form only if: (i) in the case of the dollar global
notes, DTC (x) notifies the Issuer that it is unwilling or unable to continue as
depositary for such on the Rule 144A euro notes global notes or (y) has ceased
to be a "clearing agency" registered under the Exchange Act and, in each case,
the Issuer thereupon fails to appoint a successor depositary within 90 days;
(ii) in the case of the Reg. S euro global note, Euroclear is unwilling or
unable to continue as depositary for such global note and the Issuer thereupon
fails to appoint a successor depositary within 90 days; or (iii) there shall
have occurred and be continuing a Default or an Event of Default with respect to
the applicable notes. In all cases, certificated notes delivered in exchange for
any global note or beneficial interest therein will be registered in the names,
and issued in any approved denominations, requested by or on behalf of DTC or
Euroclear, as the case may be, in accordance with their customary procedures.
The notes may not be issued in bearer form.
In the case of the issuance of certificated notes in the limited
circumstances set forth above, the holder of any such certificated note may
transfer such note by surrendering it at the offices or agencies of the Issuer
maintained for such purpose within the City and State of New York, and at the
office of the transfer agent in Luxembourg. Until otherwise designated by the
Issuer, the Issuer's office or agency in the City and State of New York and
London, England, respectively, will be the offices of the Trustee maintained for
such purpose. In the event of a partial transfer of a holding of notes
represented by one certificate, or partial redemption of such a holding
represented by one certificate, a new certificate shall be issued to the
transferee in respect of the part transferred or redeemed and a further new
certificate in respect of the balance of the holding not transferred or redeemed
shall be issued to the transferor, provided that no certificate in denominations
less than $1,000 or [EURO]1,000 as the case may be, shall be issued. Each new
certificate to be issued shall be available for delivery within ten business
days at the office of the Trustee or the transfer agent in Luxembourg. The cost
of preparing, printing, packaging and delivering the certificated notes shall be
borne by the Issuer.
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The Issuer shall not be required to register the transfer or exchange of
certificated notes for a period of 15 days preceding (a) the due date for any
payment of principal of or interest on the notes or (b) a selection of notes to
be redeemed. Also, the Issuer is not required to register the transfer or
exchange of any notes selected for redemption. In the event of the transfer of
any certificated note, the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents, and the Issuer may
require a holder to pay any taxes and fees required by law and permitted by the
indentures and the notes.
If certificated notes are issued and a holder of a certificated note claims
that the note has been lost, destroyed or wrongfully taken or if such note is
mutilated and is surrendered to the Trustee, the Issuer shall issue and the
Trustee shall authenticate a replacement note if the Trustee's and the Issuer's
requirements are met. If required by the Trustee or the Issuer, an indemnity
bond sufficient in the judgment of both to protect the Issuer, the Trustee or
any paying agent or authenticating agent appointed pursuant to the indentures
from any loss which any of them may suffer if a note is replaced must be posted.
The Issuer may charge for its expenses in replacing a note.
In case any such mutilated, destroyed, lost or stolen note has become or is
about to become due and payable, or is about to be redeemed or purchased by the
Issuer pursuant to the provisions of the indentures, the Issuer in its
discretion may, instead of issuing a new note, pay, redeem or purchase such
note, as the case may be.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The following description is a summary of the material provisions of the
registration rights agreements. It does not restate those agreements in their
entirety. We urge you to read the registration rights agreements in their
entirety because they, and not this description, define your registration rights
as holders of these notes. See "Where You Can Find More Information."
The Issuer, the Guarantors and the Initial Purchasers entered into the
registration rights agreement pertaining to the dollar notes and another
registration rights agreement pertaining to the euro notes. Pursuant to each
registration rights agreement, the Issuer and the Guarantors agreed to file with
the SEC a registration statement on the appropriate form under the Securities
Act with respect to the exchange notes (the "Exchange Offer Registration
Statement"). Upon the effectiveness of the Exchange Offer Registration
Statement, the Issuer and the Guarantors will offer to the holders of transfer
restricted securities pursuant to the exchange offer who are able to make
certain representations the opportunity to exchange their transfer restricted
securities for exchange notes which will have terms substantially identical in
all material respects to the dollar notes or the euro notes, as the case may be.
If:
(1) the Issuer and the Guarantors are not
(a) required to file the Exchange Offer Registration Statement; or
(b) permitted to consummate the exchange offer because the exchange offer is
not permitted by applicable law or SEC policy; or
(2) any holder of transfer restricted securities notifies the Issuer in writing
prior to the 20th business day following consummation of the exchange offer
that:
(a) it is prohibited by law or SEC policy from participating in the exchange
offer; or
(b) that it may not resell the exchange notes acquired by it in the exchange
offer to the public without delivering a prospectus and the prospectus
contained in the Exchange Offer Registration Statement is not appropriate
or available for such resales; or
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(c) that it is a broker-dealer and owns notes acquired directly from the
Issuer or an affiliate of the Issuer,
the Issuer and the Guarantors will file with the SEC a shelf registration
statement to cover resales of the notes by the holders thereof who satisfy
certain conditions relating to the provision of information in connection with
the shelf registration statement.
The Issuer and the Guarantors will use their reasonable best efforts to
cause the applicable registration statement to be declared effective as promptly
as possible by the SEC.
For purposes of the preceding, "transfer restricted securities" means each
note until:
(1) the date on which such note has been exchanged by a Person other than a
broker-dealer for an exchange note in the exchange offer;
(2) following the exchange by a broker-dealer in the exchange offer of a note
for an exchange note, the date on which such exchange note is sold to a
purchaser who receives from such broker-dealer on or prior to the date of
such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement;
(3) the date on which such note has been effectively registered under the
Securities Act and disposed of in accordance with the shelf registration
statement; or
(4) the date on which such note is eligible for distribution to the public
pursuant to Rule 144 under the Securities Act.
The registration rights agreement also provide that:
(1) the Issuer and the Guarantors will use their reasonable best efforts to file
an Exchange Offer Registration Statement with the SEC on or prior to 60 days
after the closing of the initial offering;
(2) the Issuer and the Guarantors will use their reasonable best efforts to have
the Exchange Offer Registration Statement declared effective by the SEC on
or prior to 150 days after the issue date of the notes;
(3) unless the exchange offer would not be permitted by applicable law or SEC
policy, the Issuer and the Guarantors will
(a) commence the exchange offer; and
(b) use their reasonable best efforts to issue on or prior to 30 business
days, or longer, if required by the federal securities laws, after the
date on which the Exchange Offer Registration Statement was declared
effective by the SEC, exchange notes in exchange for all notes tendered
prior thereto in the exchange offer; and
(4) if obligated to file the shelf registration statement, the Issuer and the
Guarantors shall use their reasonable best efforts to file the shelf
registration statement with the SEC on or prior to 30 days after such filing
obligation arises and to cause the shelf registration statement to be
declared effective by the SEC on or prior to 90 days after such filing is
made (but in no event earlier that the Issuer's obligation with respect to
the Exchange Offer Registration Statement).
If:
(1) the Issuer and the Guarantors fail to file any of the registration
statements required by the registration rights agreement on or before the
date specified for such filing; or
(2) any of such registration statements is not declared effective by the SEC on
or prior to the date specified for such effectiveness (the "Effectiveness
Target Date"); or
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(3) the Issuer and the Guarantors fail to consummate the exchange offer within
30 business days of the Effectiveness Target Date with respect to the
Exchange Offer Registration Statement; or
(4) the shelf registration statement or the Exchange Offer Registration
Statement is declared effective but thereafter ceases to be effective or
usable in connection with resales of transfer restricted securities during
the periods specified in the registration rights agreement (each such event
referred to in clauses (1) through (4) above, a "Registration Default"),
then the Issuer and the Guarantors will pay Liquidated Damages to each
holder of notes, with respect to the first 90-day period immediately following
the occurrence of the first Registration Default in an amount equal to .50% per
annum over the stated rate for the notes.
The amount of the Liquidated Damages will increase by an additional .50%
over the stated rate for the notes per annum at the beginning of each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of Liquidated Damages for all Registration Defaults of 1.0% per annum
over the stated rate for the notes.
All accrued Liquidated Damages will be paid by the Issuer and the Guarantors
on each Damages Payment Date to the global note holder by wire transfer of
immediately available funds or by federal funds check and to holders of
certificated notes by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified.
Following the cure of all Registration Defaults, the accrual of Liquidated
Damages will cease.
Holders of notes will be required to make certain representations to the
Issuer (as described in the registration rights agreements) in order to
participate in the exchange offer and will be required to deliver certain
information to be used in connection with the shelf registration statement and
to provide comments on the shelf registration statement within the time periods
set forth in the registration rights agreements in order to have their notes
included in the shelf registration statement and benefit from the provisions
regarding Liquidated Damages set forth above. By acquiring transfer restricted
securities, a holder will be deemed to have agreed to indemnify the Issuer and
the Guarantors against certain losses arising out of information furnished by
such holder in writing for inclusion in any shelf registration statement.
Holders of notes will also be required to suspend their use of the prospectus
included in the shelf registration statement under certain circumstances upon
receipt of written notice to that effect from the Issuer.
While the Issuer intends to apply to list the notes on the Luxembourg Stock
Exchange, there can be no assurance that the listing will be obtained or that it
will be obtained on terms that are acceptable to the Issuer in its sole
discretion. The Issuer intends to comply with the rules and regulations of the
Luxembourg Stock Exchange in connection therewith. For so long as the notes are
listed on the Luxembourg Stock Exchange and the rules of such exchange so
require, the Luxembourg Stock Exchange will be notified in the case of any
increase in the rate of interest on the notes, and such notice will be published
in a daily newspaper of general circulation in Luxembourg (which is expected to
the LUXEMBURGER WORT).
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indentures. Reference
is made to the indentures for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"ACQUIRED DEBT" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, whether
or not such Indebtedness is incurred in
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connection with, or in contemplation of, such other Person merging with or
into, or becoming a Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; PROVIDED that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
"ASSET SALE" means:
(1) the sale, lease, conveyance or other disposition of any assets or rights,
other than sales or leases in the ordinary course of business consistent
with past practices; PROVIDED that the sale, conveyance or other disposition
of all or substantially all of the assets of the Issuer and its Subsidiaries
taken as a whole will be governed by the provisions of the Indenture
described above under the caption "--Repurchase at the Option of
Holders--Change of Control" and/or the provisions described above under the
caption "--Certain Covenants--Merger, Consolidation or Sale of Assets" and
not by the provisions of the Asset Sale covenant; and
(2) the issuance of Equity Interests by any of the Issuer's Restricted
Subsidiaries or the sale of Equity Interests in any of its Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) any single transaction or series of related transactions that involves
assets having a fair market value of less than $5.0 million;
(2) a transfer of assets between or among the Issuer and its Restricted
Subsidiaries;
(3) an issuance of Equity Interests by a Restricted Subsidiary to the Issuer or
to another Restricted Subsidiary;
(4) the sale, lease or license of property, plant, equipment, inventory,
accounts receivable or other assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents;
(6) a Restricted Payment or Permitted Investment that is permitted by the
covenant described above under the caption "--Certain Covenants--Restricted
Payments;"
(7) the licensing of intellectual property; and
(8) sales of receivables and related assets (including contract rights) of the
type specified in the definition of "Qualified Securitization Transaction"
to a Securitization Entity for the fair market value thereof, including
consideration in the amount specified in the proviso to the definition of
Qualified Securitization Transaction.
"BENEFICIAL OWNER" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the
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occurrence of a subsequent condition. The terms "Beneficially Owns" and
"Beneficially Owned" shall have a corresponding meaning.
"BOARD OF DIRECTORS" means:
(1) with respect to a corporation, the board of directors of the corporation;
(2) with respect to a partnership, the Board of Directors of the general partner
of the partnership; and
(3) with respect to any other Person, the board or committee of such Person
serving a similar function.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of corporate stock;
(3) in the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"CASH EQUIVALENTS" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (PROVIDED that
the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than twelve months from the date of
acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of
twelve months or less from the date of acquisition, bankers' acceptances
with maturities not exceeding six months and overnight bank deposits, in
each case, with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of $500.0
million and a Thompson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Rating Service and in each case maturing
within twelve months after the date of acquisition;
(6) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (5) of this
definition; and
(7) Indebtedness with a rating of "A" or higher from Standard & Poor's Rating
Service or "A-2" or higher from Moody's Investors Service, Inc.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the
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properties or assets of the Issuer and its Restricted Subsidiaries taken as
a whole to any "person" (as that term is used in Section 13(d)(3) of the
Exchange Act) other than a Principal or a Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or dissolution of the
Issuer;
(3) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as
defined above), other than the Principals and their Related Parties, becomes
the Beneficial Owner, directly or indirectly, of more than 50% of the Voting
Stock of the Issuer, measured by voting power rather than number of shares;
(4) the first day on which a majority of the members of the Board of Directors
of the Issuer are not Continuing Directors;
(5) the first day on which DASI ceases to own 100% of the outstanding Equity
Interests of the Issuer; or
(6) the Issuer consolidates with, or merges with or into, any Person, or any
Person consolidates with, or merges with or into, the Issuer, in any such
event pursuant to a transaction in which any of the outstanding Voting Stock
of the Issuer or such other Person is converted into or exchanged for cash,
securities or other property, other than any such transaction where the
Voting Stock of the Issuer outstanding immediately prior to such transaction
is converted into or exchanged for Voting Stock (other than Disqualified
Stock) of the surviving or transferee Person constituting a majority of the
outstanding shares of such Voting Stock of such surviving or transferee
Person (immediately after giving effect to such issuance).
"CONSOLIDATED CASH FLOW" means, with respect to any specified Person for any
period, the Consolidated Net Income of such Person for such period PLUS:
(1) an amount equal to any extraordinary loss plus any net loss realized by such
Person or any of its Subsidiaries in connection with an Asset Sale, to the
extent such losses were deducted in computing such Consolidated Net Income;
PLUS
(2) provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent that such provision for taxes
was deducted in computing such Consolidated Net Income; PLUS
(3) consolidated interest expense of such Person and its Subsidiaries for such
period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings,
and net of the effect of all payments made or received pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing
such Consolidated Net Income; PLUS
(4) depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or reserve
for cash expenses in any future period or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its Subsidiaries
for such period to the extent that such depreciation, amortization and other
non-cash expenses were deducted in computing such Consolidated Net Income;
MINUS
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(5) non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business, in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash expenses
of, a Subsidiary of the Issuer shall be added to Consolidated Net Income to
compute Consolidated Cash Flow of the Issuer only to the extent that a
corresponding amount would be permitted at the date of determination to be
dividended to the Issuer by such Subsidiary without prior governmental approval
(that has not been obtained), and without direct or indirect restriction
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; PROVIDED that:
(1) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting shall
be included only to the extent of the amount of dividends or distributions
paid in cash to the specified Person or a Wholly Owned Restricted Subsidiary
thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar distributions by
that Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has
not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary or
its stockholders;
(3) the Net Income of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition shall be excluded;
(4) the cumulative effect of a change in accounting principles shall be
excluded; and
(5) the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Specified Person or one of its
Subsidiaries.
"CONTINUING DIRECTORS" means, as of any date of determination, any member of
the Board of Directors of the Issuer who:
(1) was a member of such Board of Directors on the dates of the Indentures; or
(2) was nominated for election or elected to such Board of Directors with the
approval of a majority of the Continuing Directors who were members of such
Board at the time of such nomination or election.
"CREDIT AGREEMENT" means that certain Amended and Restated Credit Agreement,
dated as of March 19, 1999, by and among the Issuer, DASI and various direct and
indirect wholly owned Subsidiaries of DASI and Bank of America National Trust
and Savings Association as a lender and as agent, and certain other lenders,
providing for up to $1,150 million of aggregate borrowings, including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time.
"CREDIT FACILITIES" means, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of
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receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
"DEFAULT" means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
"DESIGNATED NONCASH CONSIDERATION" means any non-cash consideration (other
than non-cash consideration that would constitute a Restricted Investment)
received by the Issuer or one of its Restricted Subsidiaries in connection with
an Asset Disposition that is so designated as Designated Noncash Consideration
pursuant to an Officers' Certificate executed by the principal executive officer
and the principal financial officer of the Issuer or such Restricted Subsidiary.
Such Officers' Certificate shall state the basis of such valuation, which shall
be a report of a nationally recognized investment banking firm with respect to
the receipt in one or a series of related transactions of Designated Noncash
Consideration with a fair market value in excess of $5.0 million.
"DESIGNATED PREFERRED STOCK" means preferred stock that is so designated as
Designated Preferred Stock, pursuant to an Officers' Certificate executed by the
principal executive officer and the principal financial officer of the Issuer,
on the issuance date thereof, the cash proceeds of which are excluded from the
calculation set forth in clause 3(b) of the first paragraph of the covenant
described under the caption "--Restricted Payments."
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Issuer to repurchase such Capital
Stock upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Issuer may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with the covenant
described above under the caption "--Certain Covenants--Restricted Payments."
"DOMESTIC RESTRICTED SUBSIDIARY" means any Restricted Subsidiary that was
formed under the laws of the United States or any state thereof or the District
of Columbia.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EQUITY OFFERING" means an offering by the Issuer or DASI of shares of its
Common Stock (however designated and whether voting or non-voting) and any and
all rights, warrants or options to acquire such Common Stock; PROVIDED that, in
the event of any Equity Offering by DASI, DASI contributes to the common equity
capital of the Company (other than as Disqualified Stock) the net cash proceeds
of such Equity Offering.
"EXISTING INDEBTEDNESS" means the aggregate principal amount of Indebtedness
of the Issuer and its Subsidiaries (other than Indebtedness under the Credit
Agreement) in existence on the date of the Indenture, until such amounts are
repaid.
"FIXED CHARGES" means, with respect to any specified Person for any period,
the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, including, without
limitation, original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest
component of
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all payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of credit
or bankers' acceptance financings, and net of the effect of all payments
made or received pursuant to Hedging Obligations; PLUS
(2) the consolidated interest of such Person and its Restricted Subsidiaries
that was capitalized during such period; PLUS
(3) any interest expense on Indebtedness of another Person that is guaranteed by
such Person or any one of its Restricted Subsidiaries or secured by a Lien
on assets of such Person or any one of its Restricted Subsidiaries, whether
or not such guaranty or Lien is called upon; PLUS
(4) the product of (a) all dividends, whether paid or accrued and whether or not
in cash, on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, other than dividends on Equity Interests payable
solely in Equity Interests of the Issuer (other than Disqualified Stock) or
to the Issuer or a Restricted Subsidiary of the Issuer, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate
of such Person, expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any specified Person and
its Restricted Subsidiaries for any period, the ratio of the Consolidated Cash
Flow of such Person for such period to the Fixed Charges of such Person for such
period. In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, guarantees, repays, repurchases or redeems any
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee, repayment, repurchase or redemption of Indebtedness, or
such issuance, repurchase or redemption of preferred stock, and the use of the
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified Person or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to
the Calculation Date shall be given pro forma effect as if they had occurred
on the first day of the four-quarter reference period and Consolidated Cash
Flow for such reference period shall be calculated on a pro forma basis in
accordance with Regulation S-X under the Securities Act (giving effect to
any Pro Forma Cost Savings), but without giving effect to clause (3) of the
proviso set forth in the definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded; and
(3) the Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations of the
specified Person or any of its Restricted Subsidiaries following the
Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in
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such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect as of the
dates of the Indentures.
"GUARANTY" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"GUARANTORS" means each of:
(1) DASI; Dura Automotive Systems, Inc. Column Shifter Operations; Universal
Tool & Stamping Company Inc.; Dura Automotive Systems Cable Operations,
Inc.; Adwest Electronics, Inc.; Adwest Western Automotive, Inc.; X.E. Co.;
Dura Automotive Systems of Tennessee, L.P.; Dura Automotive Systems of
Indiana, Inc.; Dura Industries of Michigan, Inc.; Anderson Industries, Inc.;
Hydro Flame Corporation; Atwood Industries, Inc.; Atwood Automotive Inc.;
Mark I Molded Plastics, Inc.; and Mark I Molded Plastics of Tennessee, Inc.;
and
(2) any other subsidiary that executes a Guaranty in accordance with the
provisions of the Indenture;
and their respective successors and assigns.
"HEDGING OBLIGATIONS" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates and currency values.
"INDEBTEDNESS" means, with respect to any specified Person, any indebtedness
of such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade
payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of the specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the guarantee
by the specified Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount; and
(2) the principal amount thereof, together with any interest thereon that is
more than 30 days past due, in the case of any other Indebtedness.
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"INVESTMENTS" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including guaranties or other obligations), advances or capital
contributions (excluding commissions, travel and similar advances to officers
and employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Issuer
or any Restricted Subsidiary of the Issuer sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Issuer
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of the Issuer, the Issuer shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of in an amount determined as provided in the final paragraph of the
covenant described above under the caption "--Certain Covenants-- Restricted
Payments." The acquisition by the Issuer or any Restricted Subsidiary of the
Issuer of a Person that holds an Investment in a third Person shall be deemed to
be an Investment by the Issuer or such Restricted Subsidiary in such third
Person in an amount equal to the fair market value of the Investment held by the
acquired Person in such third Person in an amount determined as provided in the
final paragraph of the covenant described above under the caption "--Certain
Covenants-- Restricted Payments."
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction.
"LIQUIDATED DAMAGES" means all liquidated damages owing pursuant to the
registration rights agreements entered into on April 22, 1999 between the Issuer
and the Initial Purchasers.
"NET INCOME" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(1) any gain or loss, together with any related provision for taxes on such gain
or loss, realized in connection with: (a) any Asset Sale; or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any
of its Restricted Subsidiaries; and
(2) any extraordinary gain or loss, together with any related provision for
taxes on such extraordinary gain or loss.
"NET PROCEEDS" means the aggregate cash proceeds received by the Issuer or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof, in each
case, after taking into account any available tax credits or deductions and any
tax sharing arrangements, and amounts required to be applied to the repayment of
Indebtedness, other than under the Credit Agreement, secured by a Lien on the
asset or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
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"NON-RECOURSE DEBT" means Indebtedness:
(1) as to which neither the Issuer nor any of its Restricted Subsidiaries (a)
provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (b) is directly or
indirectly liable as a guarantor or otherwise, or (c) constitutes the
lender;
(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of
any other Indebtedness of the Issuer or any of its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the payment thereof
to be accelerated or payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Issuer or any of its
Restricted Subsidiaries.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"PERMITTED BUSINESS" means the business conducted by the Issuer and its
Restricted Subsidiaries on the date hereof and businesses reasonably related
thereto.
"PERMITTED INVESTMENTS" means:
(1) any Investment in the Issuer or in a Restricted Subsidiary;
(2) any Investment in Cash Equivalents;
(3) any Investment by the Issuer or any Restricted Subsidiary of the Issuer in
a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of the Issuer; or
(b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated
into, the Issuer or a Restricted Subsidiary of the Issuer;
(4) any Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with the
covenant described above under the caption "--Repurchase at the Option of
Holders--Asset Sales";
(5) any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Issuer or DASI;
(6) Hedging Obligations;
(7) other Investments in any Person having an aggregate fair market value
(measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (7) that are at the time
outstanding not to exceed the greater of (x) $50.0 million and (y) 5.0% of
Total Assets;
(8) Investments existing on the date of the Indenture and any amendment,
modification, restatement, supplement, extension, renewal, refunding,
replacement, refinancing, in whole or in part, thereof;
(9) any Investment by the Issuer or a Subsidiary of the Issuer in a
Securitization Entity or any Investment by a Securitization Entity in any
other Person in connection with a Qualified Securitization Transaction;
PROVIDED that any Investment in a Securitization Entity is in the form of a
Purchase Money Note or any equity interest;
(10) Investments in Permitted Joint Ventures of up to $25.0 million outstanding
at any one time;
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(11) Investments in Unrestricted Subsidiaries an amount at any one time
outstanding not to exceed $10.0 million; and
(12) Investments in securities of trade creditors or customers received
pursuant to a plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers.
"PERMITTED JOINT VENTURE" means an entity characterized as a joint venture
(however structured) engaged in a Permitted Business and in which the Issuer or
a Restricted Subsidiary (a) owns at least 20% of the ownership interest or (b)
has the right to receive at least 20% of the profits or distributions; provided
that such joint venture is not a Subsidiary.
"PERMITTED LIENS" means:
(1) Liens of the Issuer and any Guarantor securing Indebtedness and other
Obligations under Credit Facilities that were securing Senior Debt that was
permitted by the terms of the Indenture to be incurred;
(2) Liens in favor of the Issuer or the Guarantors;
(3) Liens on property of a Person existing at the time such Person is merged
with or into or consolidated with the Issuer or any Subsidiary of the
Issuer; PROVIDED that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Issuer or the Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by the Issuer
or any Subsidiary of the Issuer, PROVIDED that such Liens were in existence
prior to the contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in
the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (4) of the second paragraph of the covenant entitled
"--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock" covering only the assets acquired with such Indebtedness;
(7) Liens existing on the date of the Indentures;
(8) Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, PROVIDED that any
reserve or other appropriate provision as shall be required in conformity
with GAAP shall have been made therefor;
(9) Liens incurred in the ordinary course of business of the Issuer or any
Subsidiary of the Issuer with respect to obligations that do not exceed
$5.0 million at any one time outstanding;
(10) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt
of Unrestricted Subsidiaries;
(11) Liens on assets of a Restricted Subsidiary that is not a Guarantor that
secures Indebtedness (including Acquired Indebtedness) incurred in
compliance with the covenant described under "--Limitation on Foreign
Indebtedness."
(12) judgment Liens not giving rise to an Event of Default;
(13) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Issuer
or any of its Restricted Subsidiaries, including rights of offset and
set-off;
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(14) Liens in favor of customs and revenue authorities arising as a matter of
law to secure payment of customer duties in connection with the
importation of goods;
(15) Liens on assets transferred to a Securitization Entity or on assets of a
Securitization Entity, in either case incurred in connection with a
Qualified Securitization Transaction;
(16) leases or subleases granted to others that do not materially interfere
with the ordinary course of business of the Issuer and its Restricted
Subsidiaries;
(17) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security, including any Lien securing letters of credit
issued in the ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money).
(18) Liens imposed by law, such as carriers', warehouseman's and mechanics'
Liens in each case for sums not yet due or being contested in good faith;
(19) Liens securing Indebtedness or other obligations of a Restricted
Subsidiary owing to the Issuer or any Guarantor to the extent such
Indebtedness is permitted to be incurred in accordance with the covenant
described under "--Incurrence of Indebtedness and Issuance of Preferred
Stock";
(20) Liens securing Hedging Obligations as long as the related Indebtedness is,
and is permitted to be, under the Indentures to be secured by a Lien on
the same property securing the Hedging Obligations;
(21) Liens on specific items of inventory or other goods and proceeds of any
Person securing such Person's obligations with respect to bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods; and
(22) Liens arising from Uniform Commercial Code financing statement filings
regarding operating leases entered into by the Issuer and its Restricted
Subsidiaries in the ordinary course of business.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Issuer or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Issuer or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); PROVIDED that:
(1) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus all accrued interest thereon and the
amount of all expenses and premiums incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in
the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and
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(4) such Indebtedness is incurred either by the Issuer or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"PRINCIPALS" means Onex DHC LLC, Alkin Co. and J2R Corporation.
"PRO FORMA COST SAVINGS" means, with respect to any period, the reduction in
costs that occurred during the four-quarter period or after the end of the
four-quarter period and on or prior to the Transaction Date that were directly
attributable to an asset acquisition and calculated on a basis that is
consistent with Article 11 of Regulation S-X under the Securities Act as in
effect on the date of the Indenture.
"PRODUCTIVE ASSETS" means assets that are used or useful in, or Capital
Stock of any person engaged in, a Permitted Business.
"QUALIFIED SECURITIZATION TRANSACTION" means any transaction or series of
transactions pursuant to which the Issuer or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to (a) a Securitization Entity (in the
case of a transfer by the Issuer or any of its Restricted Subsidiaries) and (b)
any other Person (in case of a transfer by a Securitization Entity), or may
grant a security interest in, any accounts receivable or equipment (whether now
existing or arising or acquired in the future) of the Issuer or any of its
Restricted Subsidiaries, and any assets related thereto including, without
limitation, all collateral securing such accounts receivable and equipment and
other assets (including contract rights and all guarantees or other obligations
in respect to such accounts receivable and equipment, proceeds of such accounts
receivable and equipment and other assets (including contract rights) which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable and equipment, all of the foregoing for the
purpose of providing working capital financing on terms that are more favorable
to the Issuer and its Restricted Subsidiary than would otherwise be available at
that time.
"RELATED PARTY" means:
(1) any controlling stockholder, 80% (or more) owned Subsidiary, or immediate
family member (in the case of an individual) of any Principal; or
(2) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or
more controlling interest of which consist of any one or more Principals
and/or such other Persons referred to in the immediately preceding clause
(1).
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"SECURITIZATION ENTITY" means a Wholly Owned Subsidiary of the Issuer (or
another Person in which the Issuer or any Subsidiary of the Issuer makes an
Investment and to which the Issuer or any Subsidiary of the Issuer transfers
accounts receivable or equipment and related assets) that engages in no
activities other than in connection with the financing of accounts receivable or
equipment and that is designated by the Board of Directors of the Issuer (as
provided below) as a Securitization Entity (a) no portion of the Indebtedness or
any other obligations (contingent or otherwise) of which (i) is guaranteed by
the Issuer or any other Restricted Subsidiary (excluding guarantees of
Obligations (other than the principal of, and interest on, Indebtedness))
pursuant to Standard Securitization Undertakings, (ii) is recourse to or
obligates the Issuer or any Restricted Subsidiary in any way other than pursuant
to Standard Securitization Undertakings, (b) with which neither the Issuer nor
any Restricted Subsidiary
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has any material contract, agreement, arrangement or understanding other than on
terms no less favorable to the Issuer or such Restricted Subsidiary than those
that might be obtained at the time from Persons that are not Affiliates of the
Issuer, other than fees payable in the ordinary course of business in connection
with servicing receivables of such entity, and (c) to which neither the Issuer
nor any Restricted Subsidiary has any obligation to maintain or preserve such
entity's financial condition or cause such entity to achieve certain levels of
operating results. Any such designation by the Board of Directors shall be
evidenced to each of the Trustees by filing with the Trustees a certified copy
of the resolution of the Board of Directors giving effect to such designation
and an Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"STANDARD SECURITIZATION UNDERTAKINGS" means representations, warranties,
covenants and indemnities entered into by the Issuer or any Subsidiary of the
Issuer that are reasonably customary in an accounts receivable or equipment
transactions.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"SUBSIDIARY" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which more than 50%
of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing general partner
of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or one or more Subsidiaries of
such Person (or any combination thereof).
"TOTAL ASSETS" means the total assets of the Issuer and its Restricted
Subsidiaries on a consolidated basis determined in accordance with GAAP, as
shown on the most recently available consolidated balance sheet of the Issuer
and its Restricted Subsidiaries.
"TREASURY RATE" means, as of any Redemption Date, the yield to maturity as
of such Redemption Date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
Business Days prior to the Redemption Date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data)) most
nearly equal to the period from the Redemption Date to May 1, 2004; PROVIDED,
HOWEVER, that if the period from the Redemption Date to May 1, 2004 is less than
one year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Issuer (other than
Dura UK Limited or any successor thereto) that is designated by the Board of
Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only
to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt:
(2) is not party to any agreement, contract, arrangement or understanding with
the Issuer or any Restricted Subsidiary of the Issuer unless the terms of
any such agreement, contract, arrangement
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or understanding are no less favorable to the Issuer or such Restricted
Subsidiary than those that might be obtained at the time from Persons who
are not Affiliates of the Issuer;
(3) is a Person with respect to which neither the Issuer nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Issuer or any of its Restricted
Subsidiaries.
Any designation of a Subsidiary of the Issuer as an Unrestricted Subsidiary
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the preceding
conditions and was permitted by the covenant described above under the caption
"--Certain Covenants--Restricted Payments." If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indentures and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Issuer as of such date
and, if such Indebtedness is not permitted to be incurred as of such date under
the covenant described under the caption "--Certain Covenants-Incurrence of
Indebtedness and Issuance of Preferred Stock," the Issuer shall be in default of
such covenant. The Board of Directors of the Issuer may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Issuer of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (1) such Indebtedness
is permitted under the covenant described under the caption "--Certain
Covenants-Incurrence of Indebtedness and Issuance of Preferred Stock,"
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period; and (2) no Default or Event of
Default would be in existence following such designation.
"VOTING STOCK" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a discussion of certain material U.S. Federal income tax
consequences of the acquisition, ownership and disposition of the notes. Unless
otherwise stated, this discussion is limited to the tax consequences to those
persons who are original owners of the notes (those persons who purchased them
from the initial purchasers) and who hold such notes as capital assets. The
discussion does not purport to address specific tax consequences that may be
relevant to particular persons (including, for example, financial institutions,
broker-dealers, insurance companies, tax-exempt organizations, and persons in
special situations, such as those who hold notes as part of a straddle, hedge,
conversion transaction, or other integrated investment). In addition, this
discussion does not address U.S. Federal alternative minimum tax consequences or
any aspect of state, local or foreign taxation. This discussion is based upon
the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury
Department regulations promulgated thereunder (the "Treasury Regulations"), and
administrative and judicial interpretations thereof, all of which are subject to
change, possibly with retroactive effect. The Issuer will treat the notes as
indebtedness for Federal income tax purposes, and the following discussion
assumes that such treatment is correct.
For purposes of this discussion, a "U.S. Holder" is a holder of a note who
is a United States citizen or resident, a corporation, partnership or other
entity created or organized in or under the laws of the United States or of any
political subdivison thereof, an estate or certain electing trusts in existence
as of August 28, 1996, the income of which is subject to U.S. Federal income
taxation regardless of its source, or a trust if a United States court is able
to exercise primary supervision over its administration and one or more United
States persons have the authority to control all of its substantial decisions. A
"Non-U.S. Holder" is a holder of a note who is not a U.S. Holder.
PROSPECTIVE PURCHASERS OF THE NOTES ARE URGED TO CONSULT THEIR TAX ADVISORS
CONCERNING THE UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO THEM
OF ACQUIRING, OWNING AND DISPOSING OF THE NOTES, AS WELL AS THE APPLICATION OF
STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
TAX CONSEQUENCES TO U.S. HOLDERS
TAXATION OF INTEREST
Interest on the notes generally will be taxable to a U.S. Holder as ordinary
interest income at the time such payments are accrued or are received in
accordance with the U.S. Holder's regular method of accounting for federal
income tax purposes.
Under certain circumstances described above the Issuer will be required to
pay liquidated damages on the notes if it fails to comply with its obligations
under the registration rights agreements. See "Description of
Notes--Registration Rights; Liquidated Damages." Although not free from doubt,
such liquidated damages should be taxable to a U.S. Holder as ordinary income at
the time it is accrued or received in accordance with such holder's regular
method of accounting for federal income tax purposes. It is possible, however,
that the Internal Revenue Service may take a different position, in which case,
the timing and amount of income on the notes may be different.
A U.S. Holder who uses the cash method of accounting for federal income tax
purposes and who receives interest on a euro note in Euros will be required to
include in income the U.S. dollar value of such Euros, determined using the spot
rate in effect on the date such payment is received, regardless of whether the
payment is in fact converted to U.S. dollars at that time. No exchange gain or
loss will be recognized by such holder if the Euros are converted into U.S.
dollars on the date received. The U.S. federal income tax consequences of the
conversion of Euros into U.S. dollars are described below. See "--Exchange of
Foreign Currencies."
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A U.S. Holder who uses the accrual method of accounting for federal income
tax purposes, or who is otherwise required to accrue interest prior to receipt,
will be required to include in income the U.S. dollar value of the amount of
interest income accrued with respect to a euro note in a taxable year. The U.S.
dollar value of such accrued income will be determined by translating such
income at the average rate of exchange for the relevant interest accrual period,
or with respect to an accrual period that spans two taxable years, at the
average rate for the portion of such accrual period within the taxable year. The
average rate of exchange for an interest accrual period (or portion thereof) is
the simple average of the spot rates for each business day of such period (or
such other average that is reasonably derived and consistently applied). An
accrual basis U.S. Holder may elect, however, to translate such accrued interest
income using the spot rate in effect on the last day of the accrual period or,
with respect to an accrual period that spans two taxable years, using the spot
rate in effect on the last day of the taxable year. If the last day of an
accrual period is within five business days of the receipt of the accrued
interest, a U.S. Holder may translate such interest using the spot rate in
effect on the date of receipt. The above described election must be made in a
statement filed with the U.S. Holder's U.S. tax return and will apply to all
other debt obligations held by the U.S. Holder and may not be changed without
the consent of the Internal Revenue Service. Whether or not such election is
made, a U.S. Holder may recognize exchange gain or loss (which will be treated
as ordinary income or loss) with respect to accrued interest income on the date
such interest income is received. The amount of ordinary income or loss
recognized will equal the difference, if any, between the U.S. dollar value of
the Euros received (determined using the spot rate in effect on the date such
payment is received) in respect of such accrued interest and the U.S. dollar
value of the interest income that accrued during such interest accrual period
(as determined above). No additional exchange gain or loss will be recognized by
such holder if the Euros are converted to U.S. dollars on the date received. The
U.S. federal tax consequences of the conversion of Euros into U.S. dollars are
described below. See "-- Exchange of Foreign Currencies."
EXCHANGE OF FOREIGN CURRENCIES
A U.S. Holder will have a tax basis in any Euros received as interest or on
the sale, exchange, retirement or other disposition of a note equal to their
U.S. dollar value at the time the interest is received or at the time payment is
received in consideration of the sale, exchange, retirement or other
disposition. Any gain or loss realized by a U.S. Holder on a sale or other
disposition of Euros (including their exchange for U.S. dollars or their use to
purchase notes) will be ordinary income or loss.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Upon the sale, exchange or retirement of the notes, a U.S. Holder will
recognize gain or loss equal to the difference between the amount realized upon
the sale, exchange or retirement (less any portion allocable to accrued and
unpaid interest) and the U.S. Holder's adjusted tax basis in the notes. A U.S.
Holder's adjusted tax basis in dollar notes generally will be the U.S. Holder's
cost therefor, less any principal payments received by such Holder. If a U.S.
Holder receives foreign currency on a sale, exchange or retirement of euro
notes, the amount realized will be based on the U.S. dollar value of the foreign
currency on the date of disposition, assuming the notes are not traded on an
established securities market. A U.S. Holder's adjusted tax basis in a euro note
will equal the U.S. dollar cost of the euro note to such holder on the date of
purchase, assuming the notes are not traded on an established securities market.
If the euro notes are traded on an established securities market, a special
rule applies for the determination of the amount realized and the basis of euro
notes held by a cash basis taxpayer. Pursuant to this rule, units of foreign
currency paid or received are translated into U.S. dollars at the spot rate on
the settlement date of the purchase or sale. In that case, no exchange gain or
loss will
145
<PAGE>
result from currency fluctuations between the trade date and the settlement date
of such a purchase or sale. An accrual basis taxpayer may elect the same
treatment required of cash basis taxpayers with respect to purchases and sales
of euro notes, provided the election is applied consistently. Such election may
not be changed without the consent of the Internal Revenue Service.
Gain or loss recognized by a U.S. Holder on the sale, exchange or retirement
of the notes will be capital gain or loss (except with respect to gains or
losses attributable to fluctuations in currency exchange rates, as described
below). Such gain or loss will be long-term capital gain or loss if the notes
have been held by the U.S. Holder for more than twelve months. Long-term capital
gain is subject to a maximum federal tax rate of 20%. The deductibility of
capital losses by U.S. Holders is subject to limitation.
To the extent that the amount realized represents accrued but unpaid
interest, such amount must be taken into account as interest income, if it was
not previously included in income, and exchange gain or loss may be realized as
described above in the case of euro notes. See "--Taxation of Interest."
Gain or loss realized by a U.S. Holder upon the sale, exchange or retirement
of a euro note that is attributable to fluctuations in the rate of exchange
between the U.S. dollar and the Euro will be ordinary income or loss and
generally will not be treated as interest income or expense. Gain or loss
attributable to fluctuations in exchange rates will equal the difference between
the U.S. dollar value of the foreign currency principal amount of the euro note,
determined on the date such payment is received or the euro note is disposed of,
and the U.S. dollar value of the principal amount of the euro note, determined
on the date the U.S. Holder acquired the euro note. Such foreign currency gain
or loss will be recognized only to the extent of the total gain or loss realized
by the U.S. Holder on the sale, exchange or retirement of the note.
EXCHANGE OFFER
A U.S. Holder will not recognize any taxable gain or loss on the exchange of
the notes for exchange notes pursuant to the exchange offer, and a U.S. Holder's
tax basis and holding period in the exchange notes will be the same as in the
notes.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
TAXATION OF INTEREST
A Non-U.S. Holder generally will not be subject to U.S. Federal income or
withholding tax on interest paid on the notes so long as such interest is not
effectively connected with the Non-U.S. Holder's conduct of a trade or business
within the United States, and the Non-U.S. Holder (i) does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of Dura, (ii) is not a "controlled foreign corporation" with respect to
which Dura is a "related person" within the meaning of the Code, (iii) is not a
bank within the meaning of Section 881(c)(3)(A) of the Code, and (iv) satisfies
the requirements of Sections 871(h) or 881(c) of the Code, as set forth below
under "OWNER STATEMENT REQUIREMENT." If the foregoing conditions (i) through
(iv) are not satisfied, then interest paid on the notes will be subject to U.S.
withholding tax at a rate of 30%, unless such rate is reduced or eliminated
pursuant to an applicable tax treaty.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
Any capital gain a Non-U.S. Holder recognizes on the sale, exchange,
retirement or other taxable disposition of a note will be exempt from U.S.
Federal income and withholding tax, provided that (i) the gain is not
effectively connected with the Non-U.S. Holder's conduct of a trade or business
within the United States, and (ii) in the case of a Non-U.S. Holder that is an
individual, the Non-U.S. Holder is not present in the United States for 183 days
or more during the taxable year.
146
<PAGE>
EFFECTIVELY CONNECTED INCOME
If the interest, gain or other income a Non-U.S. Holder recognized on a note
is effectively connected with the Non-U.S. Holder's conduct of a trade or
business within the United States, the Non-U.S. Holder (although exempt from the
withholding tax previously discussed if an appropriate statement is furnished)
generally will be subject to U.S. Federal income tax on the interest, gain or
other income at regular Federal income tax rates. In addition, if the Non-U.S.
Holder is a corporation, it may be subject to a branch profits tax equal to 30%
of its effectively connected earnings and profits, as adjusted for certain
items, unless it qualifies for a lower rate under an applicable tax treaty.
FEDERAL ESTATE TAXES
A note held by an individual who at the time of death is not a citizen or
resident of the United States will not be subject to United States Federal
estate tax as a result of such individual's death, provided that the individual
does not actually or constructively own 10% or more of the total combined voting
power of all classes of stock of Dura entitled to vote and that the interest
accrued on such notes was not effectively connected with the Non-U.S. Holder's
conduct of a trade or business within the United States.
OWNER STATEMENT REQUIREMENT
Sections 871(h) and 881(c) of the Code require that either the beneficial
owner of a note or a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "Financial Institution") and that holds a note on behalf of such
owner files a statement with Dura or its agent to the effect that the beneficial
owner is not a United States person in order to avoid withholding of United
States Federal income tax. Under current regulations, this requirement will be
satisfied if Dura or its agent receives
- a statement (an "Owner Statement") from the beneficial owner of a note in
which such owner certifies, under penalties of perjury, that such owner is
not a United States person and provides such owner's name and address, or
- a statement from the Financial Institution holding the note on behalf of
the beneficial owner in which the Financial Institution certifies, under
penalties of perjury, that it has received the Owner Statement together
with a copy of the Owner Statement.
The beneficial owner must inform Dura or its agent (or, in the case of a
statement described in the second bullet point of the immediately preceding
sentence, the Financial Institution) within 30 days of any change in information
on the Owner Statement. The Internal Revenue Service has amended the transition
period relating to recently issued Treasury Regulations governing withholding.
Withholding certificates or statements that are valid on December 31, 1999, may
be treated as valid until the earlier of their expiration or December 31, 2000.
Certificates or statements received under the currently effective rules will
fail to be effective after December 31, 2000.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Dura will, where required, report to the holders of notes and the Internal
Revenue Service the amount of any interest paid on the notes in each calendar
year and the amounts of tax withheld, if any, with respect to such payments. A
noncorporate U.S. Holder may be subject to information reporting and to backup
withholding at a rate of 31% with respect to payments of principal and interest
made on a note, or on proceeds of the disposition of a note before maturity,
unless such U.S. Holder provides a correct taxpayer identification number or
proof of an applicable exemption, and otherwise complies with applicable
requirements of the information reporting and backup withholding rules.
147
<PAGE>
In the case of payments of interest to Non-U.S. Holders, current Treasury
Regulations provide that the 31% backup withholding tax and certain information
reporting requirements will not apply to such payments with respect to which
either the requisite certification, as described above, has been received or an
exemption has otherwise been established, provided that neither Dura nor its
payment agent has actual knowledge that the holder is a United States person or
that the conditions of any other exemption are not in fact satisfied. Under
current Treasury Regulations, these information reporting and backup withholding
requirements will apply, however, to the gross proceeds paid to a Non-U.S.
Holder on the disposition of the notes by or through a United States office of a
United States or foreign broker, unless the Non-U.S. Holder otherwise
establishes an exemption. Information reporting requirements, but not backup
withholding, will also apply to payment of the proceeds of a disposition of the
notes by or through a foreign office of a United States broker or foreign
brokers with certain types of relationships to the United States unless such
broker has documentary evidence in its file that the holder of the notes is not
a United States person and such broker has no actual knowledge to the contrary,
or the holder establishes an exemption. Neither information reporting nor backup
withholding generally will apply to payment of the proceeds of a disposition of
the notes by or through a foreign office of a foreign broker not subject to the
preceding sentence.
The Treasury Department has released new Treasury Regulations governing the
backup withholding and information reporting requirements. The new regulations
would not generally alter the treatment of a Non-U.S. Holder who furnishes an
Owner Statement to the payor. The new regulations may change certain procedures
applicable to the foreign office of a United States broker or foreign brokers
with certain types of relationships to the United States. The new regulations
are generally effective for payments made after December 31, 1999. Non U.S.
Holders should consult their own tax advisors with respect to the impact, if
any, of the new final regulations.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the holder's United
States Federal income tax liability, provided that the required information is
furnished to the Internal Revenue Service.
148
<PAGE>
PLAN OF DISTRIBUTION
Each participating broker-dealer that receives exchange notes for its own
account pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a participating broker-dealer in connection with resales of exchange notes
received in exchange for outstanding notes where such outstanding notes were
acquired as a result of market-making activities or other trading activities.
Dura has agreed that for a period of one year after the expiration date, we will
make this prospectus, as amended or supplemented, available to any participating
broker-dealer for use in connection with any such resale.
We will not receive any proceeds from any sales of the exchange notes by
participating broker-dealers. Exchange notes received by participating
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 exchange notes 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 participating broker-dealer and/or the purchasers of
any such exchange notes. Any participating broker-dealer that resells the
exchange notes 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 exchange notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of exchange notes 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 participating 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 we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any participating broker-dealer that requests such documents in
the letter of transmittal.
Prior to the exchange offer, there has not been any public market for the
outstanding notes. The outstanding notes have not been registered under the
Securities Act and will be subject to restrictions on transferability to the
extent that they are not exchanged for exchange notes by holders who are
entitled to participate in this exchange offer. The holders of outstanding notes
(other than any such holder that is an "affiliate" of Dura within the meaning of
Rule 405 under the Securities Act) who are not eligible to participate in the
exchange offer are entitled to certain registration rights, and we are required
to file a shelf registration statement with respect to such outstanding notes.
The exchange notes will constitute a new issue of securities with no established
trading market. We intend to apply to list the notes on the Luxembourg Stock
Exchange, but there can be no assurance that the listing will be obtained on
terms that are acceptable to the Issuer, in its sole discretion. Except for the
foregoing, we do not intend to list the exchange notes on any national
securities exchange or to seek the admission thereof to trading in the National
Association of Securities Dealers Automated Quotation System. In addition, any
market making activity undertaken by the initial purchasers will be subject to
the limits imposed by the Securities Act and the Exchange Act and may be limited
during the exchange offer and the pendency of the shelf registration statement.
Accordingly, no assurance can be given that an active public or other market
will develop for the exchange notes or as to the liquidity of the trading market
for the exchange notes. If a trading market does not develop or is not
maintained, holders of the exchange notes may experience difficulty in reselling
the exchange notes or may be unable to sell them at all. If a market for the
exchange notes develops, any such market may be discontinued at any time.
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<PAGE>
LEGAL MATTERS
The validity of the exchange notes offered hereby will be passed upon on
behalf of the Issuer by Kirkland & Ellis (a partnership that includes
professional corporations), Chicago, Illinois.
EXPERTS
The consolidated financial statements of Dura as of December 31, 1997 and
1998 and for each of the three years in the period ended December 31, 1998
included in this prospectus, the consolidated financial statements of Excel as
of December 27, 1997 and January 2, 1999 and for each of the three years in the
period ended January 2, 1999 included in this prospectus and the consolidated
financial statements of Trident as of March 31, 1998 and for the period from
inception (September 19, 1997) to March 31, 1998 and FKI Automotive Group for
the period from April 1, 1997 to December 12, 1997, each incorporated by
reference in this prospectus, were audited by Arthur Andersen LLP, independent
public accountants, as set forth in its reports thereon, included herein or
incorporated herein by reference, and are included herein or incorporated herein
by reference in reliance upon the authority of said firm as an expert in
auditing and accounting.
The consolidated financial statements of Adwest as of June 30, 1997 and 1998
and for each of the three years in the period ended June 30, 1998 included in
this prospectus have been audited by KPMG Audit Plc, independent certified
public accountants. Such financial statements have been included in reliance
upon the report of KPMG Audit Plc.
WHERE YOU CAN FIND MORE INFORMATION
Dura has filed a registration statement on Form S-4 regarding the exchange
offer with the SEC. This prospectus does not contain all of the information
included in the registration statement. Any statement made in this prospectus
concerning the contents of any other document is not necessarily complete. If we
have filed any other document as an exhibit to the registration statement, you
should read the exhibit for a more complete understanding of the document or
matter. Each statement regarding any other document does not necessarily contain
all of the information important to you.
Dura is subject to the information requirements of the Exchange Act (SEC
File No. 0-21139), and in accordance therewith files periodic reports, proxy
statements and other information with the SEC relating to its business,
financial statements and other matters. Prior to its acquisition by Dura, Excel
was also subject to the information requirements of the Exchange Act (SEC File
No. 1-8684). The reports, proxy statements and other information filed by Dura
and Excel may be inspected and copied at prescribed rates at the public
reference facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and should be available for inspection and copying at the
regional offices of the SEC located at 7 World Trade Center, Suite 1375, New
York, New York 10048 and at Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can be obtained at prescribed rates by
writing to the SEC Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549 (telephone number: 1-800-SEC-0330). The SEC also maintains a Web site
that contains reports, proxy statements and other information regarding
registrants that file electronically with the SEC. The address of such site is
http://www.sec.gov. Such material relating to Dura can also be inspected at the
reading room of the library of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., 2(nd) Floor, Washington, D.C. 20006.
150
<PAGE>
INCORPORATION BY REFERENCE
We have elected to "incorporate by reference" certain information into this
prospectus. By incorporating by reference we can disclose important information
to you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus,
except for any information superseded by information in this prospectus. This
prospectus incorporates by reference the documents set forth below that Dura
previously filed with the SEC. These documents contain important information
about Dura and its finances.
<TABLE>
<CAPTION>
DURA SEC FILINGS (FILE NO. 0-21139) PERIOD
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Current Report on Form 8-K Filed on May 14, 1998
Current Report on Form 8-K/A Filed on August 31, 1998 (amending the May 14, 1998 Form
8-K)
Prospectus, dated June 11, 1998, filed under Rule 424(b) Filed on June 12, 1998
(Registration Statement No. 333-53661)
</TABLE>
We are also incorporating by reference additional documents that we file
with the SEC between the dates of this prospectus and the date of the completion
of the exchange offer.
Documents incorporated by reference are available from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this prospectus. You may obtain documents incorporated by reference
in this prospectus by writing to us at Dura Automotive Systems, Inc., 4508 IDS
Center, Minneapolis, Minnesota 55402, or calling us at (612) 342-2311.
151
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
DURA AUTOMOTIVE SYSTEMS, INC.
Report of Independent Public Accountants............................................................... F-2
Consolidated Balance Sheets as of December 31, 1997 and 1998........................................... F-3
Consolidated Statements of Operations for the Years Ended December 31,
1996, 1997 and 1998.................................................................................. F-4
Consolidated Statements of Stockholders' Investment for the Years Ended December 31,
1996, 1997 and 1998.................................................................................. F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1996, 1997 and 1998............. F-6
Notes to Consolidated Financial Statements............................................................. F-7
Condensed Consolidated Balance Sheets at December 31, 1998 and March 31, 1999 (unaudited).............. F-35
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 1998 and 1999
(unaudited).......................................................................................... F-36
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1999
(unaudited).......................................................................................... F-37
Notes to Condensed Consolidated Financial Statements (unaudited)....................................... F-38
EXCEL INDUSTRIES, INC.
Report of Independent Public Accountants............................................................... F-49
Consolidated Balance Sheet as of December 27, 1997 and January 2, 1999................................. F-50
Consolidated Statement of Income for the Years Ended December 28, 1996,
December 27, 1997 and January 2, 1999................................................................ F-51
Consolidated Statements of Cash Flows for the Years Ended December 28, 1996, December 27, 1997 and
January 2, 1999...................................................................................... F-52
Consolidated Statements of Shareholders' Equity for the Years Ended December 28, 1996, December 27,
1997 and January 2, 1999............................................................................. F-53
Notes to Consolidated Financial Statements............................................................. F-54
ADWEST AUTOMOTIVE PLC
Independent Auditors' Report........................................................................... F-81
Consolidated Profit and Loss Account for the Years Ended June 30, 1996, 1997 and 1998.................. F-82
Consolidated Balance Sheet as of June 30, 1997 and 1998................................................ F-83
Consolidated Cash Flow Statement for the Years Ended June 30, 1996, 1997 and 1998...................... F-84
Statements of Consolidated Recognised Gains and Losses for the Years Ended June 30,
1996, 1997 and 1998.................................................................................. F-86
Reconciliation of Movements in Shareholders' Funds..................................................... F-86
Notes to the Accounts.................................................................................. F-87
Unaudited Interim Consolidated Profit and Loss Account for the Six Month Periods Ending December 31,
1997 and 1998........................................................................................ F-113
Unaudited Interim Consolidated Balance Sheet as of December 31, 1998................................... F-114
Unaudited Interim Consolidated Cash Flow Statement for the Six Month Periods Ending December 31, 1997
and 1998............................................................................................. F-115
Unaudited Interim Reconciliation of Movements in Shareholders' Funds for the Six Month Period Ending
December 31, 1997 and 1998........................................................................... F-116
Unaudited Interim Analysis of Net Debt at July 1, 1998 and December 31, 1998........................... F-117
Unaudited Interim Segmental Information for the Six Month Period Ending December 31, 1997 and 1998..... F-118
Notes to the Accounts (Unaudited)...................................................................... F-119
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Dura Automotive Systems, Inc.:
We have audited the accompanying consolidated balance sheets of Dura
Automotive Systems, Inc. (a Delaware corporation) and Subsidiaries as of
December 31, 1997 and 1998 and the related consolidated statements of
operations, stockholders' investment and cash flows for each of the three years
in the period ended December 31, 1998. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Dura Automotive Systems,
Inc. and Subsidiaries as of December 31, 1997 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
January 29, 1999
F-2
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C>
1997 1998
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents............................................................... $ 4,148 $ 20,544
Accounts receivable, net of reserve for doubtful accounts of $1,953 and $4,150.......... 79,032 158,465
Inventories............................................................................. 30,301 50,498
Other current assets.................................................................... 24,800 45,924
---------- ----------
Total current assets.................................................................. 138,281 275,431
---------- ----------
Property, Plant and Equipment:
Land and buildings...................................................................... 44,553 71,489
Machinery and equipment................................................................. 73,892 144,931
Construction in progress................................................................ 6,616 10,899
Less--accumulated depreciation.......................................................... (23,523) (38,587)
---------- ----------
Net property, plant and equipment..................................................... 101,538 188,732
---------- ----------
Goodwill, net of accumulated amortization of $5,653 and $13,926........................... 160,063 435,960
Other Assets, net of accumulated amortization of $918 and $2,419.......................... 19,382 29,260
---------- ----------
$ 419,264 $ 929,383
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable........................................................................ $ 49,153 $ 99,512
Accrued liabilities..................................................................... 36,583 96,664
Current maturities of long-term debt.................................................... 2,241 15,489
---------- ----------
Total current liabilities............................................................. 87,977 211,665
---------- ----------
Long-Term Debt, net of current maturities................................................. 178,081 316,417
Other Noncurrent Liabilities.............................................................. 51,498 108,014
---------- ----------
Total liabilities..................................................................... 317,556 636,096
---------- ----------
Commitments and Contingencies (Notes 3, 9 and 10)
Mandatorily Redeemable Convertible Trust Preferred Securities............................. -- 55,250
Stockholders' Investment:
Preferred stock, par value $1; 5,000,000 shares authorized; none issued or
outstanding........................................................................... -- --
Common stock, Class A; par value $.01; 30,000,000 shares authorized; 4,161,657 and
9,029,085 shares issued and outstanding............................................... 42 90
Common stock, Class B; par value $.01; 10,000,000 shares authorized; 4,654,380 and
3,325,303 shares issued and outstanding............................................... 46 33
Additional paid-in capital.............................................................. 63,402 171,377
Retained earnings....................................................................... 41,028 67,052
Accumulated other comprehensive loss--cumulative translation adjustment................. (2,810) (515)
---------- ----------
Total stockholders' investment........................................................ 101,708 238,037
---------- ----------
$ 419,264 $ 929,383
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
<S> <C> <C> <C>
1996 1997 1998
---------- ---------- ----------
Revenues..................................................................... $ 245,329 $ 449,111 $ 739,467
Cost of sales................................................................ 207,810 375,086 608,518
---------- ---------- ----------
Gross profit............................................................... 37,519 74,025 130,949
Selling, general and administrative expenses................................. 17,157 32,815 49,825
Amortization expense......................................................... 1,036 3,600 9,868
---------- ---------- ----------
Operating income........................................................... 19,326 37,610 71,256
Interest expense, net........................................................ 2,589 9,298 20,267
---------- ---------- ----------
Income before provision for income taxes, equity in losses of affiliate and
minority interest........................................................ 16,737 28,312 50,989
Provision for income taxes................................................... 6,609 11,670 20,933
Equity in losses of affiliate................................................ -- -- 1,481
Minority interest--dividend on trust preferred securities, net............... -- -- 1,908
---------- ---------- ----------
Income before extraordinary item........................................... 10,128 16,642 26,667
Extraordinary item--loss on early extinguishment of debt, net................ -- -- 643
---------- ---------- ----------
Net income............................................................... $ 10,128 $ 16,642 $ 26,024
---------- ---------- ----------
---------- ---------- ----------
Basic earnings per share:
Income before extraordinary item........................................... $ 1.57 $ 1.89 $ 2.49
Extraordinary item......................................................... -- -- (0.06)
---------- ---------- ----------
Net income............................................................... $ 1.57 $ 1.89 $ 2.43
---------- ---------- ----------
---------- ---------- ----------
Diluted earnings per share:
Income before extraordinary item........................................... $ 1.57 $ 1.88 $ 2.42
Extraordinary item......................................................... -- -- (0.05)
---------- ---------- ----------
Net income............................................................... $ 1.57 $ 1.88 $ 2.37
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------------------------
CLASS A CLASS B ADDITIONAL
---------------------- ----------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS
--------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995............................. -- $ -- 5,007,307 $ 50 $ 13,375 $ 14,258
Initial public offering of common stock, net......... 3,795,000 38 -- -- 49,537 --
Repurchase of common stock, net...................... -- -- (9,053) -- (19) --
Net income........................................... -- -- -- -- -- 10,128
--------- --- ---------- --- ----------- -----------
BALANCE, December 31, 1996............................. 3,795,000 38 4,998,254 50 62,893 24,386
Sale of stock under Employee Stock Discount Purchase
Plan............................................... 16,922 -- -- -- 383 --
Exercise of options.................................. 5,861 -- -- -- 85 --
Collection of common stock subscriptions receivable.. -- -- -- -- 41 --
Conversion from Class B to Class A................... 343,874 4 (343,874) (4) -- --
Net income........................................... -- -- -- -- -- 16,642
Other comprehensive income--foreign currency
translation adjustment............................. -- -- -- -- -- --
Total comprehensive income...........................
--------- --- ---------- --- ----------- -----------
BALANCE, December 31, 1997............................. 4,161,657 42 4,654,380 46 63,402 41,028
Sale of stock under Employee Stock Discount Purchase
Plan............................................... 25,651 -- -- -- 512 --
Exercise of options.................................. 5,700 -- 7,000 -- 97 --
Collection of common stock subscriptions receivable.. -- -- -- -- 45 --
Public offering of Class A common stock, net......... 3,500,000 35 -- -- 107,321 --
Conversion from Class B to Class A................... 1,336,077 13 (1,336,077) (13) -- --
Net income........................................... -- -- -- -- -- 26,024
Other comprehensive income--foreign currency
translation adjustment............................. -- -- -- -- -- --
Total comprehensive income...........................
--------- --- ---------- --- ----------- -----------
BALANCE, December 31, 1998............................. 9,029,085 $ 90 3,325,303 $ 33 $ 171,377 $ 67,052
--------- --- ---------- --- ----------- -----------
--------- --- ---------- --- ----------- -----------
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMPREHENSIVE STOCKHOLDERS'
LOSS INVESTMENT
--------------- ------------
<S> <C> <C>
BALANCE, December 31, 1995............................. $ -- $ 27,683
Initial public offering of common stock, net......... -- 49,575
Repurchase of common stock, net...................... -- (19)
Net income........................................... -- 10,128
------ ------------
BALANCE, December 31, 1996............................. -- 87,367
Sale of stock under Employee Stock Discount Purchase
Plan............................................... -- 383
Exercise of options.................................. -- 85
Collection of common stock subscriptions receivable.. -- 41
Conversion from Class B to Class A................... -- --
Net income........................................... --
Other comprehensive income--foreign currency
translation adjustment............................. (2,810)
Total comprehensive income........................... 13,832
------ ------------
BALANCE, December 31, 1997............................. (2,810) 101,708
Sale of stock under Employee Stock Discount Purchase
Plan............................................... -- 512
Exercise of options.................................. -- 97
Collection of common stock subscriptions receivable.. -- 45
Public offering of Class A common stock, net......... -- 107,356
Conversion from Class B to Class A................... -- --
Net income........................................... --
Other comprehensive income--foreign currency
translation adjustment............................. 2,295
Total comprehensive income........................... 28,319
------ ------------
BALANCE, December 31, 1998............................. $ (515) $ 238,037
------ ------------
------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
<S> <C> <C> <C>
1996 1997 1998
---------- ----------- -----------
OPERATING ACTIVITIES:
Net income................................................................ $ 10,128 $ 16,642 $ 26,024
Adjustments required to reconcile net income to net cash provided by
operating activities--
Depreciation and amortization........................................... 6,079 12,303 27,571
Deferred income tax provision........................................... 3,331 1,521 7,833
Extraordinary loss on extinguishment of debt............................ -- -- 643
Other................................................................... -- -- (315)
Equity in losses of affiliates.......................................... -- -- 1,481
Change in other operating items:
Accounts receivable................................................... (2,248) (12,841) (13,536)
Inventories........................................................... 458 2,512 (905)
Other current assets.................................................. 3,038 (7,803) (7,631)
Accounts payable and accrued liabilities.............................. (994) 3,479 8,203
Other assets and liabilities.......................................... -- (7,297) (41,681)
---------- ----------- -----------
Net cash provided by operating activities........................... 19,792 8,516 7,687
---------- ----------- -----------
INVESTING ACTIVITIES:
Capital expenditures, net................................................. (6,260) (16,242) (31,822)
Acquisitions, net......................................................... (83,850) (70,481) (135,712)
Investments in joint ventures and other................................... (4,983) (6,663) --
---------- ----------- -----------
Net cash used in investing activities............................... (95,093) (93,386) (167,534)
---------- ----------- -----------
FINANCING ACTIVITIES:
Borrowings under revolving credit facilities.............................. 145,500 267,987 417,267
Repayments of revolving credit facilities................................. (68,500) (174,869) (385,052)
Long-term borrowings...................................................... -- -- 100,265
Repayments of long-term borrowings........................................ (51,320) (6,008) (116,351)
Proceeds from stock offering, net......................................... 49,575 -- 107,848
Proceeds from issuance of preferred securities............................ -- -- 52,525
Sale (repurchase) of common stock, net.................................... (19) 510 118
---------- ----------- -----------
Net cash provided by financing activities........................... 75,236 87,620 176,620
---------- ----------- -----------
EFFECT OF EXCHANGE RATES ON CASH............................................ -- (269) (377)
---------- ----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS..................................... (65) 2,481 16,396
CASH AND CASH EQUIVALENTS, beginning of period.............................. 1,732 1,667 4,148
---------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period.................................... $ 1,667 $ 4,148 $ 20,544
---------- ----------- -----------
---------- ----------- -----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for--
Interest................................................................ $ 3,195 $ 8,715 $ 24,941
---------- ----------- -----------
---------- ----------- -----------
Income taxes............................................................ $ 2,087 $ 5,589 $ 11,446
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
Dura Automotive Systems, Inc. (the "Company") and subsidiaries designs and
manufactures engineered mechanisms for the global automotive industry. The
Company has manufacturing facilities located in Indiana, Michigan, Missouri,
Tennessee, Australia, Brazil, Canada, France, Germany, Mexico, Spain, and the
United Kingdom.
2. SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
FISCAL YEAR:
The Company reports its operating results based on a 52-/53-week fiscal
year. For presentation purposes, the Company uses December 31 as its fiscal
year-end.
CASH EQUIVALENTS:
Cash equivalents consist of money market instruments with original
maturities of three months or less and are stated at cost which approximates
fair value.
INVENTORIES:
Inventories are valued at the lower of first-in, first-out ("FIFO") cost or
market.
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1997 1998
--------- ---------
Raw materials........................................................... $ 15,562 $ 23,067
Work-in-process......................................................... 9,126 11,155
Finished goods.......................................................... 5,613 16,276
--------- ---------
$ 30,301 $ 50,498
--------- ---------
--------- ---------
</TABLE>
OTHER CURRENT ASSETS:
Other current assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1997 1998
--------- ---------
Excess of cost over billings on uncompleted tooling projects............ $ 12,603 $ 20,640
Deferred income taxes................................................... 9,350 14,023
Prepaid expenses........................................................ 2,847 11,261
--------- ---------
$ 24,800 $ 45,924
--------- ---------
--------- ---------
</TABLE>
F-7
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Excess of cost over billings on uncompleted tooling projects represents
costs incurred by the Company in the production of customer-owned tooling to be
used by the Company in the manufacture of its products. The Company receives a
specific purchase order for this tooling and is reimbursed by the customer
within one operating cycle. Costs are deferred until reimbursed by the customer.
Forecasted losses on incomplete projects are recognized currently.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment are stated at cost. For financial reporting
purposes, depreciation is provided on the straight-line method over the
following estimated useful lives:
<TABLE>
<S> <C>
20 to 30
Buildings.................................................... years
Machinery and equipment...................................... 3 to 20 years
</TABLE>
Accelerated depreciation methods are used for tax reporting purposes.
Maintenance and repairs are charged to expense as incurred. Major
betterments and improvements which extend the useful life of the item are
capitalized and depreciated. The cost and accumulated depreciation of property,
plant and equipment retired or otherwise disposed of are removed from the
related accounts, and any residual values are charged or credited to income.
GOODWILL AND OTHER ASSETS:
Goodwill represents the excess of the purchase price over the fair value of
the net assets acquired and is being amortized on a straight-line basis over 40
years. Other assets principally consist of debt financing costs which are being
amortized over the term of the applicable agreement, and the Company's net
investment in its joint ventures.
The Company periodically evaluates whether events and circumstances have
occurred which may affect the estimated useful life or the recoverability of the
remaining balance of its goodwill and other long-lived assets. If such events or
circumstances were to indicate that the carrying amount of these assets would
not be recoverable, the Company would estimate the future cash flows expected to
result from the use of the assets and their eventual disposition. If the sum of
the expected future cash flows (undiscounted and without interest charges) were
less than the carrying amount of goodwill and other long-lived assets, the
Company would recognize an impairment loss.
Certain tooling and design costs related to previously proven product
designs are reimbursed by the Company's customers as the related product is sold
through an incremental increase in each product's unit selling price. Such costs
are capitalized and amortized using the unit of production method over the
estimated life of the related tool. Amounts capitalized and included in other
assets were $4.2 million at December 31, 1997 and $5.1 million at December 31,
1998. If the Company forecasts that the amount of capitalized tooling and design
costs exceeds the amount to be realized through the sale of product, a loss is
recognized currently. Research and development and start-up costs, which are not
material, are expensed as incurred.
F-8
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
ACCRUED LIABILITIES:
Accrued liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1997 1998
--------- ---------
Plant closure and consolidation costs................................... $ 4,210 $ 34,801
Compensation and benefits............................................... 11,284 21,557
Medical insurance....................................................... 8,036 11,057
Legal and environmental................................................. 2,265 4,752
Interest................................................................ 957 3,785
Loss contracts.......................................................... 1,951 2,721
Other................................................................... 7,880 17,991
--------- ---------
$ 36,583 $ 96,664
--------- ---------
--------- ---------
</TABLE>
OTHER NONCURRENT LIABILITIES:
Other noncurrent liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
<S> <C> <C>
1997 1998
--------- ----------
Plant closure and consolidation costs.................................. $ 23,724 $ 46,154
Loss contracts......................................................... 11,371 16,557
Post-retirement medical benefits....................................... 7,188 16,533
Legal and environmental................................................ 7,496 14,673
Deferred income taxes.................................................. -- 8,652
Other.................................................................. 1,719 5,445
--------- ----------
$ 51,498 $ 108,014
--------- ----------
--------- ----------
</TABLE>
REVENUE RECOGNITION AND SALES COMMITMENTS:
The Company recognizes revenue as its products are shipped to its customers.
The Company enters into agreements with its customers at the beginning of a
given vehicle's life to produce products. Once such agreements are entered into
by the Company, fulfillment of the customers' purchasing requirements is the
obligation of the Company for the entire production life of the vehicle, with
terms of up to 7 years, and the Company has no provisions to terminate such
contracts. In certain instances, the Company may be committed under existing
agreements to supply product to its customers at selling prices which are not
sufficient to cover the direct cost to produce such product. In such situations,
the Company records a liability for the estimated future amount of such losses.
Such losses are recognized at the time that the loss is probable and reasonably
estimable and is recorded at the minimum amount necessary to fulfill the
Company's obligations to its customers.
F-9
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INCOME TAXES:
The Company accounts for income taxes following the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 109, which requires recognition
of deferred tax assets and liabilities for the expected future tax consequences
of events that have been included in the financial statements or tax returns.
Under this method, deferred tax assets and liabilities are determined based on
the difference between the financial statement and tax bases of assets and
liabilities using currently enacted tax rates.
COMPREHENSIVE INCOME:
Effective January 1, 1998, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income." This statement established standards for
reporting and display of comprehensive income and its components. Comprehensive
income reflects the change in equity of a business enterprise during a period
from transactions and other events and circumstances from non-owner sources. For
the Company, comprehensive income represents net income adjusted for foreign
currency translation adjustments. In accordance with SFAS No. 130, the Company
has chosen to disclose comprehensive income in the consolidated statements of
stockholders' investment. Prior years have been restated to conform to SFAS No.
130 requirements.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying amount of cash and cash equivalents, accounts receivable,
accounts payable and revolving credit facilities approximates fair value because
of the short maturity of these instruments. The carrying amount of the Company's
long-term debt approximates fair value because of the variability of the
interest cost associated with these instruments. The Notes were recorded at fair
value in connection with the acquisition of Trident Automotive plc in April 1998
(see Note 5) and the Company believes there has been no material change in the
estimated fair value since such date. The fair value of the Company's Preferred
Securities (see Note 4), based on Nasdaq market quote activity as of yearend,
approximated carrying value.
SEGMENT REPORTING:
In 1998, the Company adopted SFAS No. 131, "Disclosure About Segments of an
Enterprise and Related Information." SFAS No. 131 supersedes SFAS No. 14
replacing the "industry segment" approach with the "management" approach. The
management approach designates the internal organization that is used by
management for making operating decisions and assessing performance as the
source of the Company's reportable segments. SFAS No. 131 also requires
disclosures about products and services, geographic areas, and major customers.
The adoption of SFAS No. 131 did not affect results of operations or financial
position but did affect the disclosure of segment information (see Note 8).
COMMON STOCK:
The holder of each share of Class A common stock outstanding is entitled to
one vote per share and the holder of each share of Class B common stock
outstanding is entitled to ten votes per share.
F-10
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
STOCK OPTIONS:
The Company accounts for stock options under the provisions of Accounting
Principles Board Opinion ("APB") No. 25, under which no compensation expense is
recognized when the stock options are granted. The pro forma effects had the
Company followed the provisions of SFAS No. 123 are included in Note 3.
USE OF ESTIMATES:
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The ultimate results could differ from those estimates.
FOREIGN CURRENCY TRANSLATION:
Assets and liabilities of the Company's foreign operations are translated
using the year-end rates of exchange. Results of operations are translated using
the average rates prevailing throughout the period. Translation gains or losses
are accumulated as a separate component of stockholders' investment.
RECLASSIFICATIONS:
Certain amounts previously reported in the 1996 and 1997 consolidated
financial statements have been reclassified to conform to the 1998 presentation.
The reclassifications had no effect on previously reported net income or
stockholders' investment.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
In June 1998 the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," effective for
years beginning after June 15, 1999. SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument, including
certain derivative instruments embedded in other contracts, be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
No. 133 requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge criteria are met. Special accounting
for qualifying hedges allow a derivative's gains or losses to offset related
results on the hedged item in the statement of operations and requires that a
company must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting. The Company has not yet quantified
the impacts of adopting SFAS No. 133 and has not yet determined the timing of
adoption.
In April 1998, the Financial Accounting Standards Board issued Statement of
Position ("SOP") No. 98-5, "Reporting on the Costs of Start-Up Activities,"
effective for fiscal years beginning after December 15, 1998. SOP 98-5 requires
the expensing of start-up activities as incurred, versus capitalizing and
expensing them over a period of time. The Company is currently in the process of
assessing the impact of adopting SOP 98-5 and will adopt this new pronouncement
during 1999.
F-11
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. STOCKHOLDERS' INVESTMENT:
PUBLIC OFFERING OF COMMON STOCK:
On August 14, 1996, the Company completed an initial public offering of
3,795,000 shares of its Class A common stock at $14.50 per share (the "1996
Offering"). The Company received net proceeds of approximately $49.6 million
from the 1996 Offering. Net proceeds from the 1996 Offering were used to repay
certain outstanding indebtedness. Immediately prior to the completion of the
1996 Offering, the Company's board of directors and stockholders approved an
Amended and Restated Certificate of Incorporation and a recapitalization
pursuant to which the outstanding shares of the Company's Class A, B and C
common stock were exchanged for 4,998,254 shares in the aggregate of the
Company's new Class B common stock (out of a total of 10,000,000 shares of Class
B common stock authorized for issuance under the Amended and Restated
Certificate of Incorporation). Immediately after the consummation of the
recapitalization and the 1996 Offering, the Company had 8,793,254 shares of
common stock outstanding. In addition, the Company has options outstanding to
purchase 25,045 shares of Class B common stock at an exercise price of $1.45 per
share. The accompanying consolidated financial statements have been
retroactively restated to give effect to the recapitalization as if it had
occurred at the beginning of the earliest period presented.
On June 17, 1998, the Company completed a secondary offering of 3,100,000
shares of its Class A common stock at an offering price of $32.75 per share
("Offering"). Net proceeds to the Company, after underwriting discounts and
offering expenses, were approximately $95.0 million. Proceeds from the Offering
were used to retire outstanding indebtedness. Certain stockholders of the
Company converted 1,308,000 shares of Class B common stock of the Company into
Class A common stock and sold such Class A common stock concurrent with the
Offering. In addition, an employee of the Company exercised an option to acquire
5,000 shares of Class A common stock at an exercise price of $14.50 per share,
and sold such Class A shares concurrent with the Offering. On July 1, 1998, the
underwriters, pursuant to their over-allotment option, purchased an additional
400,000 Class A shares resulting in additional net proceeds of approximately
$12.4 million to the Company.
F-12
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. STOCKHOLDERS' INVESTMENT: (CONTINUED)
EARNINGS PER SHARE:
Basic earnings per share were computed by dividing net income by the
weighted average number of Class A and Class B common shares outstanding during
the year. Diluted earnings per share include (i) the effects of outstanding
stock options using the treasury stock method and (ii) the conversion of the
Preferred Securities from their date of issuance on March 20, 1998 as follows
(in thousands, except per share data):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Net income............................................................. $ 10,128 $ 16,642 $ 26,024
Dividends on mandatorily redeemable convertible preferred securities,
net of tax........................................................... -- -- 1,908
--------- --------- ---------
Net income applicable to common stockholders........................... $ 10,128 $ 16,642 $ 27,932
--------- --------- ---------
--------- --------- ---------
Weighted average number of Class A common shares outstanding........... 1,434 3,907 6,763
Weighted average number of Class B common shares outstanding........... 5,000 4,901 3,945
--------- --------- ---------
6,434 8,808 10,708
Dilutive effect of outstanding stock options after application of the
treasury stock method................................................ 28 61 81
Dilutive effect of mandatorily redeemable convertible preferred
securities, assuming conversion...................................... -- -- 1,006
--------- --------- ---------
Diluted shares outstanding............................................. 6,462 8,869 11,795
--------- --------- ---------
--------- --------- ---------
Basic earnings per share............................................... $ 1.57 $ 1.89 $ 2.43
--------- --------- ---------
--------- --------- ---------
Diluted earnings per share............................................. $ 1.57 $ 1.88 $ 2.37
--------- --------- ---------
--------- --------- ---------
</TABLE>
STOCK OPTION PLAN:
During 1998, the board of directors approved the 1998 Stock Incentive Plan
(the "1998 Plan") subject to stockholder approval. Prior to consummation of the
1996 Offering, the board of directors and stockholders of the Company approved
the 1996 Key Employee Stock Option Plan (the "Stock Option Plan"). Certain
people who are full-time, salaried employees of the Company are eligible to
participate in the 1998 Plan and the Stock Option Plan (an "Employee
Participant"). A committee of the board of directors selects the Employee
Participants and determines the terms and conditions of the options. The 1998
Plan provides for the issuance of options at exercise prices equal to the stock
market price on the date of grant to Employee Participants covering up to
1,000,000 shares of Class A common stock of the Company plus any shares carried
over from the Stock Option Plan plus an annual
F-13
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. STOCKHOLDERS' INVESTMENT: (CONTINUED)
increase, as defined in the 1998 Plan, subject to certain adjustments reflecting
changes in the Company's capitalization. Information regarding the option plans
is as follows:
<TABLE>
<CAPTION>
WEIGHTED
SHARES AVERAGE
UNDER EXERCISE EXERCISE
OPTION PRICE PRICE
---------- -------------- -----------
<S> <C> <C> <C>
Outstanding, December 31, 1995.................................. -- $ -- $ --
Granted....................................................... 108,134 14.50 14.50
Granted....................................................... 76,100 20.75 20.75
Granted....................................................... 3,500 23.50 23.50
---------- -------------- -----------
Outstanding, December 31, 1996.................................. 187,734 14.50-23.50 17.20
Granted....................................................... 20,000 28.00 28.00
Granted....................................................... 80,000 24.50 24.50
Granted....................................................... 44,300 25.75 25.75
Exercised..................................................... (5,861) 14.50-20.75 14.61
Forfeited..................................................... (9,500) 20.75 20.75
---------- -------------- -----------
Outstanding, December 31, 1997.................................. 316,673 14.50-28.00 20.86
Granted....................................................... 151,100 38.63 38.63
Granted....................................................... 589,600 29.00 29.00
Exercised..................................................... (5,700) 14.50-20.75 15.27
Forfeited..................................................... (46,875) 20.75-38.63 37.40
---------- -------------- -----------
Outstanding, December 31, 1998.................................. 1,004,798 $ 14.50-38.63 $ 27.57
---------- -------------- -----------
---------- -------------- -----------
</TABLE>
Of the outstanding options at December 31, 1998, options covering 179,623
shares are currently exercisable with a weighted average exercise price of
$18.39 per share.
The weighted average fair value of options granted was $8.92 during 1996,
$14.05 during 1997, and $16.61 during 1998.
As of December 31, 1998, the outstanding stock options granted in 1997 have
a remaining contractual life of 9 years and the outstanding stock options
granted in 1998 have a remaining contractual life of 10 years.
INDEPENDENT DIRECTOR STOCK OPTION PLAN:
Prior to consummation of the 1996 Offering, the board of directors and
stockholders of the Company approved the Dura Automotive Systems, Inc.
Independent Director Stock Option Plan (the "Director Option Plan") that
provides for the issuance of options to Independent Directors, as defined, to
acquire up to 100,000 shares of the Company's Class A common stock, subject to
certain adjustments reflecting changes in the Company's capitalization. The
option exercise price must be at least 100 percent of the fair value of the
Class A common stock at the time the option is issued. Such option grants vest
six months from the date of grant. As of December 31, 1998, the Company had
granted options under the Director Option Plan to acquire 21,000 shares of the
Company's Class A common stock at an exercise price of $24.50 to $25.50 per
share. As of December 31, 1998, 12,000 of these options were exercisable.
F-14
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. STOCKHOLDERS' INVESTMENT: (CONTINUED)
EMPLOYEE STOCK DISCOUNT PURCHASE PLAN:
Prior to consummation of the 1996 Offering, the board of directors and
stockholders of the Company approved the Dura Automotive Systems, Inc. Employee
Stock Discount Purchase Plan (the "Employee Stock Purchase Plan") which provides
for the sale of up to 500,000 shares of the Company's Class A common stock at
discounted purchase prices, subject to certain limitations. The cost per share
under this plan is 85% of the market value of the Company's Class A common stock
at the date of purchase, as defined. Pursuant to this plan, 16,922 and 25,651
shares of Class A common stock were issued to employees during the years ended
December 31, 1997 and 1998, respectively. No shares were issued to employees
pursuant to this plan during 1996. The weighted average fair value of shares
sold in 1997 and 1998 was $22.63 and $25.94, respectively.
STOCK-BASED COMPENSATION PLANS:
As discussed above, the Company has two stock option plans, the Stock Option
Plan and the Director Option Plan, and the Employee Stock Purchase Plan. The
Company has elected to continue to account for these plans under APB No. 25,
under which no compensation cost has been recognized. Had compensation cost for
these plans been determined under SFAS No. 123, the Company's pro forma net
income and pro forma earnings per share would have been as follows (in
thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Net income........................ As Reported--Basic $ 10,128 $ 16,642 $ 26,024
Pro Forma 10,093 16,504 25,530
As Reported--Diluted $ 10,128 $ 16,642 $ 27,932
Pro Forma 10,093 16,504 27,438
Basic earnings per share.......... As Reported $ 1.57 $ 1.89 $ 2.43
Pro Forma 1.57 1.87 2.38
Diluted earnings per share........ As Reported $ 1.57 $ 1.88 $ 2.37
Pro Forma 1.56 1.86 2.33
</TABLE>
The effect of the stock offered under the Employee Stock Purchase Plan was
not material for 1997 and 1998.
The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option pricing model with the following weighted average
assumptions: risk free interest rates of 6.1% to 6.6% in 1996, 5.7% to 6.5% in
1997 and 4.6% to 5.7% in 1998; expected life of seven years for 1996, 1997 and
1998; an average expected volatility of 50% in 1996, 39% in 1997 and 46% in
1998.
DIVIDENDS:
The Company has not declared or paid any cash dividends in the past. As
discussed in Note 6, the Company's debt agreement restricts the amount of
dividends the Company can declare or pay. As of December 31, 1998, under the
most restrictive debt covenants, the Company could not have paid any cash
dividends.
F-15
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. MANDATORILY REDEEMABLE CONVERTIBLE TRUST PREFERRED SECURITIES:
On March 20, 1998, Dura Automotive Systems Capital Trust (the "Issuer"), a
wholly owned statutory business trust of the Company, completed the offering of
$55.3 million of its 7 1/2% Convertible Trust Preferred Securities ("Preferred
Securities"), resulting in net proceeds to the Company of approximately $52.6
million. The Preferred Securities are redeemable, in whole or part, on or after
March 31, 2001 and all Preferred Securities must be redeemed no later than March
31, 2028. The Preferred Securities are convertible, at the option of the holder,
into Class A common stock of the Company at a rate of 0.5831 shares of Class A
common stock for each Preferred Security, which is equivalent to a conversion
price of $42 7/8 per share. The net proceeds of the offering were used to repay
outstanding indebtedness. Dividends on the Preferred Securities, net of the
related income tax benefit, are reflected as minority interest in the
accompanying consolidated statements of operations.
No separate financial statements of the Issuer have been included herein.
The Company does not consider that such financial statements would be material
to holders of Preferred Securities because (i) all of the voting securities of
the Issuer are owned, directly or indirectly, by the Company, a reporting
company under the Exchange Act, (ii) the Issuer has no independent operations
and exists for the sole purpose of issuing securities representing undivided
beneficial interests in the assets of the Issuer and investing the proceeds
thereof in 7 1/2% Convertible Subordinated Debentures due March 31, 2028 issued
by the Company, and (iii) the obligations of the Issuer under the Preferred
Securities are fully and unconditionally guaranteed by the Company.
5. ACQUISITIONS:
In August 1996, the Company formed a joint venture with Excel Industries
Inc. ("Excel") to participate equally in the acquisition of a 26% interest in
Pollone S.A. ("Pollone"), a manufacturer of automotive components and mechanical
assemblies headquartered in Brazil for $5 million in total, and has made
additional loans to Pollone of $10 million in total pursuant to notes which bear
interest at approximately 7% and mature from January 1999 through December 2001.
Certain of these notes are convertible into equity of Pollone, at the joint
venture's option. In January 1998, the joint venture exercised its option to
convert an additional $5 million of notes to common equity of Pollone,
increasing the joint venture's ownership to 51%, and as of such date, began
consolidating the results of Pollone into the results of the joint venture. The
Company accounts for its investment in the joint venture under the equity method
of accounting and recorded a charge for its share of the loss of the joint
venture's operations in 1998 of approximately $1.5 million. The joint venture
has an option to purchase an additional 19% of common equity of Pollone for
approximately $1.5 million. In addition, the joint venture partners have
guaranteed $6 million of outstanding debt of Pollone. The Company's total
investment in the joint venture of approximately $8.5 million as of December 31,
1998 is included in other assets in the accompanying consolidated balance sheet.
In January 1997, the Company acquired all of the outstanding common stock of
the VOFA Group ("VOFA") for approximately $38.0 million in cash and assumed
indebtedness. The cash portion of the purchase price was financed with
borrowings under the Company's bank credit agreement. In December 1998, the
Company made a final payment of approximately $6.0 million to the former owners
of VOFA for the achievement of certain operating targets by VOFA following the
acquisition. VOFA manufactures shifter cables, brake cables and other light duty
cables for the European automotive and industrial markets from facilities in
Dusseldorf, Gehren and Daun, Germany and Barcelona, Spain.
F-16
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. ACQUISITIONS: (CONTINUED)
In August 1997, the Company acquired GT Automotive Systems, Inc. ("GT
Automotive"), headquartered in Livonia, Michigan. GT Automotive has
manufacturing facilities in Livonia and Warren, Michigan and Windsor and
Brantford, Ontario, Canada, with annual revenues of approximately $70.0 million.
Initial consideration for the acquisition of GT Automotive was $45.0 million in
cash and assumed indebtedness. In 1999, the Company will make a final payment of
approximately $11.0 million for the achievement of certain operating targets by
GT Automotive following the acquisition. The acquisition was financed with
proceeds from borrowings under the Company's bank credit agreement, as amended.
In December 1997, the Company purchased approximately 19% of the outstanding
common stock of Thixotech Inc. ("Thixotech") for approximately $0.5 million. The
Company also loaned Thixotech an additional $2.8 million pursuant to notes which
are convertible into additional common stock of Thixotech at the Company's
option. Thixotech is currently pursuing the development of an alternative
manufacturing technology for component parts.
In December 1997, the Company acquired REOM Industries (Aust) Pty Ltd.
("REOM"), an Australian designer and manufacturer of jacks and parking brakes,
for approximately $3.7 million. The acquisition added market penetration in
parking brakes, added a new product (jacks) and established a presence in the
Pacific Rim.
In March 1998, the Company acquired Universal Tool & Stamping Co., Inc.
("Universal"), a manufacturer of jacks for the North American automotive
industry, for approximately $19.5 million. The acquisition provided the Company
with a market presence for jacks in North America and added Honda as a
significant new customer.
In April 1998, the Company acquired all of the outstanding equity interests
of Trident Automotive plc ("Trident"). Trident had revenues of approximately
$300.0 million in 1997, of which 69 percent was derived from sales of cable
assemblies, principally to the automotive OEM market, and the balance from door
handle assemblies, lighting and other products. Approximately 68 percent of
Trident's revenues were generated in North America, 27 percent in Europe and the
remainder in Latin America. Trident has manufacturing and technical facilities
in Michigan, Tennessee, Canada, the United Kingdom, Germany, France and Brazil.
Pursuant to the terms of the agreement, the Company acquired all of the
outstanding equity interests of Trident for total consideration of $93.2 million
in cash. In addition, the Company assumed $75.0 million of Trident's outstanding
10% Senior Subordinated Notes (the "Notes") due 2005. The Company also repaid
Trident's outstanding senior indebtedness of approximately $53.0 million. The
acquisition of Trident was financed with borrowings under a new credit facility
which is further described in Note 6.
In August 1998, the Company acquired the hinge business ("Hinge") of Tower
Automotive, Inc. for approximately $37.3 million. Hinge had annual revenues of
approximately $50.0 million and manufactures automotive hood and deck lid
hinges.
The acquisitions of the VOFA, GT Automotive, REOM, Universal, Trident, and
Hinge have been accounted for using the purchase method of accounting and,
accordingly, the assets acquired and liabilities assumed have been recorded at
their fair values as of the dates of the acquisitions. The excess of the
purchase price over the fair value of the assets acquired and liabilities
assumed has been recorded as goodwill. The assets acquired and liabilities
assumed of Universal, Trident and Hinge have been recorded based upon
preliminary estimates of fair value as of the dates of acquisition. The
F-17
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. ACQUISITIONS: (CONTINUED)
Company does not believe the final allocation of purchase price will be
materially different from preliminary allocations. Any changes to the
preliminary estimates will be reflected as an adjustment to goodwill. Additional
purchase liabilities recorded in conjunction with the 1998 acquisitions included
approximately $45.4 million for costs associated with the shutdown and
consolidation of certain acquired facilities and $20.6 million for associated
severance and other related costs. At December 31, 1998 liabilities for
approximately $48.6 million for costs associated with the shutdown and
consolidation of certain acquired facilities and $32.4 million in severance
costs are recorded on the consolidated balance sheet. Results of operations for
these acquisitions have been included in the accompanying consolidated financial
statements since the dates of acquisition.
The accompanying unaudited consolidated pro forma results of operations for
the years ended December 31, 1997 and 1998 give effect to (i) the acquisitions
of GT Automotive, Universal, Trident and Hinge, (ii) the Offering, and (iii) the
offering of the Preferred Securities as if such transactions had occurred at the
beginning of the period and exclude the effects of the extraordinary loss (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
PRO FORMA
FOR YEARS ENDED
DECEMBER 31,
----------------------
<S> <C> <C>
1997 1998
---------- ----------
Revenues............................................................. $ 876,840 $ 886,849
Operating income..................................................... 63,811 75,830
Net income before extraordinary item................................. 21,806 26,996
Basic earnings per share............................................. $ 1.77 $ 2.19
Diluted earnings per share........................................... 1.77 2.15
</TABLE>
The unaudited pro forma consolidated financial information does not purport
to represent what the Company's financial position or results of operations
would actually have been if these transactions had occurred at such dates or to
project the Company's future results of operations.
6. DEBT:
Debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C>
1997 1998
---------- ----------
Bank Credit Agreement:
Term loans............................................................ $ -- $ 90,077
Revolving credit facilities........................................... -- 153,433
Trident 10% senior subordinated notes................................. -- 81,150
Revolving credit facility, due August 2002, interest at 3.94% to 8.50%
at December 31, 1997................................................ 165,158 --
Other................................................................. 15,164 7,246
---------- ----------
180,322 331,906
Less--Current maturities.............................................. (2,241) (15,489)
---------- ----------
$ 178,081 $ 316,417
---------- ----------
---------- ----------
</TABLE>
F-18
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. DEBT: (CONTINUED)
Future maturities of long-term debt as of December 31, 1998 are as follows
(in thousands):
<TABLE>
<S> <C>
1999.............................................................. $ 15,489
2000.............................................................. 16,324
2001.............................................................. 23,647
2002.............................................................. 26,289
2003.............................................................. 154,729
Thereafter........................................................ 95,428
---------
$ 331,906
---------
---------
</TABLE>
On April 30, 1998 in connection with the acquisition of Trident, the Company
entered into a new $402.5 million credit agreement ("Credit Agreement"). The
Credit Agreement provided for revolving credit facilities of $225.0 million,
term loans of $100.0 million, an acquisition facility of $30.0 million and a
twelve month interim loan of $47.5 million. Proceeds from the Offering were
partially used to retire the interim loan and $3.6 million of the term loans.
The Credit Agreement has a term of five years and borrowings bear interest at
the lenders reference rate or the Eurocurrency rate. The interest rate on
borrowings outstanding under the Credit Agreement ranged from 3.9% to 7.9% as of
December 31, 1998. The Credit Agreement contains various restrictive covenants
which limit indebtedness, investments, rental obligations and cash dividends.
The Credit Agreement also requires the Company to maintain certain financial
ratios including minimum liquidity and interest coverage. The Company was in
compliance with the covenants as of December 31, 1998. Borrowings under the
Credit Agreement are collateralized by the assets of the Company. In addition,
the Company has outstanding letters of credit in the amount of approximately
$1.9 million expiring through July 2000.
The Credit Agreement provides the Company with the ability to denominate a
portion of its revolving credit borrowings in foreign currencies up to an amount
equal to $100.0 million. As of December 31, 1998, $121.0 million of borrowings
were denominated in U.S. dollars, $7.1 million of borrowings were denominated in
Canadian dollars, $2.8 million of borrowings were denominated in Australian
dollars, $13.1 million of borrowings were denominated in Deutsche Marks, $4.7
million of borrowings were denominated in French francs, and $4.7 million in
British pound sterling.
The Notes, with a face value of $75 million, were issued by Trident on
December 12, 1997 and are due in December 2005. Interest is payable semiannually
on June 15 and December 15 of each year. The Notes are guaranteed by certain
subsidiaries of Trident. Each Guarantor is a direct or indirect wholly-owned
subsidiary of Trident and has fully and unconditionally guaranteed the Notes on
a joint and several basis. In connection with the acquisition of Trident, the
Notes were recorded at their fair value of $81.2 million. The premium in excess
of face value will be amortized over the life of the Notes using the effective
interest method. The Notes contain various restrictive covenants which the
Company was in compliance with as of December 31, 1998.
In connection with the termination of the Company's former credit facility,
the Company wrote-off deferred financing costs of approximately $643,000, net of
income taxes, in 1998. This charge is reflected as an extraordinary item in the
accompanying consolidated statement of operations.
F-19
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. INCOME TAXES:
The provision for income taxes consisted of the following (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Current....................................................... $ 3,278 $ 10,149 $ 13,100
Deferred...................................................... 3,331 1,521 7,833
--------- --------- ---------
Total....................................................... $ 6,609 $ 11,670 $ 20,933
--------- --------- ---------
--------- --------- ---------
</TABLE>
A reconciliation of the provision for income taxes at the statutory rates to
the reported income tax provision is as follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Federal provision at statutory rates.......................... $ 5,858 $ 9,909 $ 17,846
State taxes, net of federal benefit........................... 652 990 900
Foreign provision in excess of U.S. tax rate.................. -- 444 1,830
Amortization of non-deductible goodwill....................... 224 440 943
Foreign sales corporation benefit............................. (192) (260) (570)
Other, net.................................................... 67 147 (16)
--------- --------- ---------
Total....................................................... $ 6,609 $ 11,670 $ 20,933
--------- --------- ---------
--------- --------- ---------
</TABLE>
A summary of deferred tax assets (liabilities) is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1997 1998
--------- ---------
Depreciation and property basis differences.............................. $ (4,100) $ (6,001)
Net operating loss carryforwards......................................... 1,475 5,620
Accrued compensation costs............................................... 1,230 3,077
Accrued plant closure and consolidation costs............................ 5,560 1,818
Tooling and design costs................................................. (1,480) (1,802)
Post-retirement benefit obligations...................................... 1,280 1,282
Inventory valuation adjustments.......................................... 1,330 1,025
Accrued legal and insurance costs........................................ 6,150 597
Other reserves and accruals not deductible for tax purposes.............. 568 1,671
Valuation allowance...................................................... (1,475) (1,916)
--------- ---------
$ 10,538 $ 5,371
--------- ---------
--------- ---------
</TABLE>
The valuation allowance was established for net operating losses acquired or
incurred in connection principally with foreign subsidiaries where realization
is not assured.
8. GEOGRAPHIC AND PRODUCT LINE INFORMATION:
In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Company manufactures engineered
mechanisms for the global automotive
F-20
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. GEOGRAPHIC AND PRODUCT LINE INFORMATION: (CONTINUED)
industry and operates in a single reportable business segment, automotive
products. The Company internally evaluates its business principally by product
category; however, because of the similar economic characteristics of the
operations, including the nature of products, production processes and
customers, those operations have been aggregated following the provisions of
SFAS No. 131 for segment reporting purposes.
The following is a summary of revenues and long-lived assets by geographic
location (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------
<S> <C> <C> <C> <C>
1997 1998
----------------------- -----------------------
<CAPTION>
LONG-LIVED LONG-LIVED
REVENUES ASSETS REVENUES ASSETS
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
North America............................... $ 356,249 $ 68,257 $ 570,464 $ 126,368
Europe...................................... 87,800 32,131 149,914 57,803
Other foreign countries..................... 5,062 1,150 19,089 4,561
---------- ----------- ---------- -----------
$ 449,111 $ 101,538 $ 739,467 $ 188,732
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
Revenues are attributed to geographic locations based on the location of
product production.
The following is a summary of the approximate composition by product
category of the Company's revenues:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
----------------------
<S> <C> <C>
1997 1998
---------- ----------
Parking brake mechanisms........................................... $ 124,683 $ 134,856
Automotive cables.................................................. 170,988 282,616
Transmission shifter mechanisms.................................... 70,191 124,004
Other products..................................................... 83,249 197,991
---------- ----------
Revenues from external customers................................... $ 449,111 $ 739,467
---------- ----------
---------- ----------
</TABLE>
The Company sells its products directly to automobile manufacturers.
Customers that accounted for a significant portion of consolidated revenues for
each of the three years in the period ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
<S> <C> <C> <C>
1996 1997 1998
----- ----- -----
Ford............................................................... 49% 42% 36%
GM................................................................. 36% 25% 23%
DaimlerChrysler.................................................... 8% 7% 15%
</TABLE>
As of December 31, 1997 and 1998, receivables from these customers
represented 71 percent and 70 percent of total accounts receivable.
F-21
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. EMPLOYEE BENEFIT PLANS:
PENSION PLANS AND POST-RETIREMENT BENEFITS:
The Company sponsors six defined benefit pension plans which cover certain
hourly and salary employees. The Company's policy is to make annual
contributions to the plans to fund the normal cost and the unfunded frozen
initial liability over 11.5 years. In addition, the Company has various
postretirement medical benefit plans for certain employee groups and has
recorded a liability for its estimated obligation under these plans. The change
in benefit obligation and plan assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
POST-RETIREMENT
BENEFITS
OTHER THAN PENSIONS
PENSION BENEFITS
DECEMBER 31, DECEMBER 31,
-------------------- --------------------
<S> <C> <C> <C> <C>
1997 1998 1997 1998
--------- --------- --------- ---------
Change in Benefit Obligation:
Benefit obligation at beginning of year............. $ 3,393 $ 4,157 $ 5,761 $ 5,755
Service cost........................................ 185 1,371 97 243
Interest cost....................................... 252 1,412 429 825
Plan participants' contributions.................... -- -- 167 131
Actuarial (gain) loss............................... 531 4,977 (92) 2,471
Acquisition of Trident.............................. -- 23,720 -- 9,394
Benefits paid....................................... (204) (195) (607) (1,134)
--------- --------- --------- ---------
Benefit obligation at end of year................... $ 4,157 $ 35,442 $ 5,755 $ 17,685
--------- --------- --------- ---------
--------- --------- --------- ---------
Change in Plan Assets:
Fair value at plan assets at beginning
of year............................................. $ 2,732 $ 3,206 $ -- $ --
Actual return on plan assets........................ 271 1,544 -- --
Acquisition of Trident.............................. -- 20,870 -- --
Employer contributions.............................. 407 1,064 459 401
Plan participants' contributions.................... -- -- 167 131
Benefits paid....................................... (204) (195) (626) (532)
--------- --------- --------- ---------
Fair value of plan assets at end of year............ $ 3,206 $ 26,489 $ -- $ --
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
F-22
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. EMPLOYEE BENEFIT PLANS: (CONTINUED)
All of the Company's plans have benefit obligations in excess of their
respective plan assets. The funded status of the Company's plans is as follows
(amounts in thousands):
<TABLE>
<CAPTION>
POST-RETIREMENT
BENEFITS
PENSION BENEFITS OTHER THAN PENSIONS
DECEMBER 31, DECEMBER 31,
-------------------- ---------------------
<S> <C> <C> <C> <C>
1997 1998 1997 1998
--------- --------- --------- ----------
Funded status....................................... $ (951) $ (8,953) $ (5,755) $ (17,685)
Unrecognized actuarial (gain) loss.................. 527 5,532 (1,344) 1,233
Unrecognized prior service cost..................... 347 301 (89) (81)
Adjustment to recognize minimum liability........... (874) (1,008) -- --
--------- --------- --------- ----------
Accrued benefit cost................................ $ (951) $ (4,128) $ (7,188) $ (16,533)
--------- --------- --------- ----------
--------- --------- --------- ----------
</TABLE>
The following weighted-average assumptions were used to account for the
plans:
<TABLE>
<CAPTION>
POST-RETIREMENT
BENEFITS
PENSION BENEFITS OTHER THAN PENSIONS
DECEMBER 31, DECEMBER 31,
--------------------- ---------------------
<S> <C> <C> <C> <C>
1997 1998 1997 1998
--------- ---------- ---------- ---------
Discount rate.................................... 7.50% 5.75-6.75% 7.00-7.25% 6.75%
Expected return on plan assets................... 8.00% 8.00-9.50% N/A N/A
Rate of compensation increase.................... N/A 4.00-6.00% N/A N/A
</TABLE>
For measurement purposes, a 7 percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1998. The rate was
assumed to decrease 2 percent in 1999 to 5 percent and remain level thereafter.
The components of net periodic benefit costs are as follows (amounts in
thousands):
<TABLE>
<CAPTION>
POST-RETIREMENT BENEFITS
PENSION BENEFITS OTHER THAN PENSION
------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31,
------------------------------- -------------------------------
<CAPTION>
1996 1997 1998 1996 1997 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Service cost....................... $ 236 $ 185 $ 1,377 $ 84 $ 101 $ 246
Interest cost...................... 243 252 1,424 558 433 830
Expected return on plan assets..... (237) (232) (1,600) -- -- --
Amortization of prior service
cost............................. 26 45 46 -- (8) (8)
Recognized actuarial (gain) loss... 39 (3) 15 127 (89) (72)
--------- --------- --------- --------- --------- ---------
Net periodic benefit cost.......... $ 307 $ 247 $ 1,262 $ 769 $ 437 $ 996
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
F-23
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. EMPLOYEE BENEFIT PLANS: (CONTINUED)
Assumed health care cost trend rates have a significant effect on the
amounts reported for the post-retirement medical benefit plans. A one
percentage-point change in assumed health care cost trend rates would have the
following effects (in thousands):
<TABLE>
<CAPTION>
1-PERCENTAGE-POINT 1-PERCENTAGE-POINT
INCREASE DECREASE
------------------- -------------------
<S> <C> <C>
Effect on total of service and interest cost
components............................................ $ 66 $ (66)
----- -----
----- -----
Effect on the post-retirement benefit obligation........ $ 735 $ (658)
----- -----
----- -----
</TABLE>
RETIREMENT SAVINGS PLANS:
The Company sponsors employee retirement savings plans which allow qualified
employees to provide for their retirement on a tax-deferred basis. In accordance
with the terms of the retirement savings plans, the Company is required to match
certain of the participants' contributions and/or provide employer contributions
based on the Company's performance and other factors. Such employer
contributions totaled $1.6 million, $2.2 million and $2.8 million during fiscal
1996, 1997 and 1998.
10. COMMITMENTS AND CONTINGENCIES:
LEASES:
The Company leases office and manufacturing space and certain equipment
under operating lease agreements which require it to pay maintenance, insurance,
taxes and other expenses in addition to annual rentals. Future annual rental
commitments at December 31, 1998 under these operating leases are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
- --------------------------------------------------------------------------- ---------
<S> <C>
1999....................................................................... $ 6,741
2000....................................................................... 5,975
2001....................................................................... 5,194
2002....................................................................... 4,634
2003....................................................................... 3,952
Thereafter................................................................. 2,396
</TABLE>
LITIGATION:
The Company is from time to time subject to various legal actions and claims
incidental to its business, including those arising out of alleged defects,
product warranties, employment-related matters and environmental matters.
Litigation is subject to many uncertainties, and the outcome of individual
litigated matters is not predictable with assurance. After discussions with
counsel, it is the opinion of management that the Company has provided adequate
reserves to cover these matters and the ultimate outcome of such matters will
not have a material adverse impact on the consolidated financial position,
results of operations or cash flows of the Company.
F-24
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. RELATED PARTY TRANSACTIONS:
The Company paid fees to Hidden Creek Industries ("HCI"), an affiliate of
the Company, of approximately $750,000 in 1996 in connection with the
acquisitions and the 1996 Offering, $850,000 in 1997 in connection with the
acquisitions of VOFA and GT Automotive and $3.7 million in 1998 in connection
with the acquisition of Universal, Hinge and Trident, the Offering and the
Preferred Securities Offering. In addition, under the terms of a management
agreement, which was terminated in August 1996, the Company paid HCI monthly
management fees for certain administrative services. Total management fees of
approximately $881,000 for the year ended December 31, 1996 are included in
selling, general and administrative expenses in the accompanying consolidated
statements of operations. See Note 5 for discussion of acquisitions and
divestiture.
12. SUBSEQUENT EVENTS (UNAUDITED):
On March 23, 1999, the Company completed its merger with Excel Industries,
Inc. ("Excel"). In the aggregate, the stockholders of Excel received
consideration of approximately $155.5 million in cash and approximately 5.1
million shares of Dura Class A common stock. Upon completing of this
transaction, Excel became a wholly owned subsidiary of the Company.
Excel has annual revenues of approximately $1.1 billion of which 75 percent
is derived from the automotive/light truck market and the remainder from the
recreational vehicle, mass transit and heavy truck markets. Approximately 78
percent of Excel's revenues is generated in North America with the remainder in
Europe.
Excel has headquarters in Indiana and has manufacturing facilities in the
United States and Germany. Excel's products for the light vehicle segment
include plastic and metal encapsulated window assemblies, door systems, seat
systems and injection molded plastic products. In addition, Excel is a supplier
to the recreational vehicle, mass transit and heavy truck markets and its
products include appliances such as water heaters, furnaces, stoves and ranges,
mechanical components and systems, modular doors and a variety of window
assemblies. Excel's customers include Ford, DaimlerChrysler and General Motors
in the light vehicle segment and Fleetwood, Winnebago, Coachmen and Navistar in
the recreational vehicle, mass transit and heavy truck segments.
On March 15, 1999, the Company acquired through a cash tender offer
approximately 95% of the outstanding ordinary shares of Adwest Automotive plc
("Adwest"). Adwest has annual revenues of approximately $400 million and is a
supplier of driver control products primarily for European OEMs. The Company
paid approximately $320 million to acquire all of the outstanding shares of
Adwest, including the assumption of approximately $106.1 million in indebtedness
in connection with the acquisition of Adwest.
Adwest's products include driver control mechanisms such as gearshifters,
park brakes, pedal boxes and jacks, as well as engine control products, which
includes engine thermostats and fuel filler caps. Engine control products
represent approximately 20% of Adwest's total revenues. Adwest's customers
include Volkswagen, BMW, Ford, General Motors, Peugeot, and Renault. The Company
has manufacturing facilities in the United Kingdom, Germany, France, Spain and
the United States.
In connection with the acquisitions of Adwest and Excel, the Company entered
into an amended and restated $1.15 billion credit agreement ("Credit
Agreement"). The Credit Agreement provides for revolving credit facilities of
$400.0 million, a $275.0 million tranche A term loan, a $275.0 million tranche B
term loan and a $200.0 million interim term loan facility. As of March 31, 1999,
rates on
F-25
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. SUBSEQUENT EVENTS (UNAUDITED): (CONTINUED)
borrowings under the Credit Agreement ranged from 5.28% to 10.0%. Borrowings
under the tranche A term loan are due and payable in March 2005 and borrowings
under the tranche B term loan are due and payable in March 2006. The revolving
credit facility is available until March 2005. Borrowings under the interim loan
were due and payable in September 2000 and, as further discussed below, were
repaid in April 1999. The Credit Agreement contains various restrictive
covenants which limit indebtedness, investments, rental obligations and cash
dividends. The Credit Agreement also requires the Company to maintain certain
financial ratios including minimum liquidity and interest coverage. Borrowings
under the Credit Agreement are collateralized by the assets of the Company. In
connection with the termination of the Company's former credit facility, the
Company wrote-off deferred financing costs of approximately $2.7 million, net of
income taxes.
On April 23, 1999, the Company completed the offering of $300 million and
Euro 100 million of senior subordinated notes ("Subordinated Notes"). The
Subordinated Notes mature in May 2009 and bear interest at 9% per year, which is
payable semi-annually. Net proceeds from this offering of approximately $397.0
million were used to repay the $200.0 million interim term loan, approximately
$100.1 million to retire other indebtedness and approximately $96.9 million will
be used for general corporate purposes.
13. QUARTERLY FINANCIAL DATA (UNAUDITED):
The following is a condensed summary of actual quarterly results of
operations for 1997 and 1998 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
BASIC DILUTED
GROSS OPERATING NET EARNINGS EARNINGS
REVENUES PROFIT INCOME INCOME PER SHARE PER SHARE
---------- ---------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1997:
First................ $ 107,367 $ 16,582 $ 7,803 $ 3,544 $ 0.40 $ 0.40
Second............... 115,350 19,239 10,769 5,100 0.58 0.58
Third................ 101,862 15,449 6,920 2,657 0.30 0.30
Fourth............... 124,532 22,755 12,118 5,341 0.61 0.60
---------- ---------- ----------- ---------
$ 449,111 $ 74,025 $ 37,610 $ 16,642 $ 1.89 $ 1.88
---------- ---------- ----------- ---------
---------- ---------- ----------- ---------
1998:
First................ $ 125,746 $ 21,275 $ 10,864 $ 4,576 $ 0.52 $ 0.52
Second............... 187,433 32,019 17,951 5,902 0.63 0.61
Third................ 185,204 31,859 15,628 5,249 0.43 0.43
Fourth............... 241,084 45,796 26,813 10,297 0.83 0.80
---------- ---------- ----------- ---------
$ 739,467 $ 130,949 $ 71,256 $ 26,024 $ 2.43 $ 2.37
---------- ---------- ----------- ---------
---------- ---------- ----------- ---------
</TABLE>
The sum of per share amounts for the quarters does not equal the total for
the year due to the timing of the Offering and its effects on the computation of
weighted average number of shares outstanding.
F-26
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
The following consolidating financial information presents balance sheet,
statement of operations and cash flow information related to the Company's
businesses. Each Guarantor is a direct or indirect wholly owned subsidiary of
the Company and has fully and unconditionally guaranteed the 9% senior
subordinated notes issued by Dura Operating Corp., on a joint and several basis.
Separate financial statements and other disclosures concerning the Guarantors
have not been presented because management believes that such information is not
material.
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
---------- ------------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 243,757 $ -- $ 1,572 $ -- $ 245,329
Cost of sales................................... 206,414 -- 1,396 -- 207,810
---------- --- ----------- --- ------------
Gross profit.................................. 37,343 -- 176 -- 37,519
Selling, general and administrative expenses.... 17,072 -- 85 -- 17,157
Amortization expense............................ 1,007 -- 29 -- 1,036
---------- --- ----------- --- ------------
Operating income.............................. 19,264 -- 62 -- 19,326
Interest expense, net........................... 2,589 -- -- -- 2,589
---------- --- ----------- --- ------------
Income before provision for income taxes and
equity in earnings of subsidiaries.......... 16,675 -- 62 -- 16,737
Provision for income taxes...................... 6,609 -- -- -- 6,609
Equity (loss) in earnings of subsidiaries....... 62 -- -- (62) --
---------- --- ----------- --- ------------
Net income (loss)........................... $ 10,128 $ -- $ 62 $ (62) $ 10,128
---------- --- ----------- --- ------------
---------- --- ----------- --- ------------
</TABLE>
F-27
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)................................ $ 10,128 $ -- $ 62 $ (62) $ 10,128
Adjustments required to reconcile net income to
net cash provided by operating activities --
Depreciation and amortization.................. 6,038 -- 41 -- 6,079
Deferred income tax provision.................. 3,331 -- -- -- 3,331
(Income)/loss from investment in
subsidiaries................................. (62) -- -- 62 --
Due (to)/from affiliates....................... (48) -- 48 -- --
Changes in other operating items............... 354 -- (100) -- 254
----------- --- ----------- ------ ------------
Net cash provided by operating activities.... 19,741 -- 51 -- 19,792
----------- --- ----------- ------ ------------
INVESTING ACTIVITIES:
Capital expenditures, net........................ (6,260) -- -- -- (6,260)
Acquisitions, net................................ (83,850) -- -- -- (83,850)
Investments in joint ventures and other.......... (4,983) -- -- -- (4,983)
----------- --- ----------- ------ ------------
Net cash used in investing activities........ (95,093) -- -- -- (95,093)
----------- --- ----------- ------ ------------
FINANCING ACTIVITIES:
Borrowings under revolving credit facilities..... 145,500 -- -- -- 145,500
Repayments of revolving credit facilities........ (68,500) -- -- -- (68,500)
Repayments of long-term borrowings............... (51,320) -- -- -- (51,320)
Proceeds from stock offering, net................ 49,575 -- -- -- 49,575
Repurchase of common stock, net.................. (19) -- -- -- (19)
----------- --- ----------- ------ ------------
Net cash provided by financing activities.... 75,236 -- -- -- 75,236
----------- --- ----------- ------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS.......... (116) -- 51 -- (65)
CASH AND CASH EQUIVALENTS, beginning of period... 1,732 -- -- -- 1,732
----------- --- ----------- ------ ------------
CASH AND CASH EQUIVALENTS, end of period......... $ 1,616 $ -- $ 51 $ -- $ 1,667
----------- --- ----------- ------ ------------
----------- --- ----------- ------ ------------
</TABLE>
F-28
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................... $ 1,292 $ 134 $ 2,722 $ -- $ 4,148
Accounts receivable, net...................... 57,506 6,486 15,040 -- 79,032
Inventories................................... 15,702 2,499 12,100 -- 30,301
Other current assets.......................... 23,180 1,366 254 -- 24,800
Due from affiliates........................... 4,237 5,661 294 (10,192) --
---------- ----------- ----------- ------------ ------------
Total current assets........................ 101,917 16,146 30,410 (10,192) 138,281
---------- ----------- ----------- ------------ ------------
Property, Plant & Equipment, net................ 54,851 9,197 37,490 -- 101,538
Investment in subsidiaries...................... 61,858 3,345 3,478 (65,671) 3,010
Notes Receivable from Affiliates................ 20,406 -- -- (20,406) --
Goodwill, net................................... 104,011 37,697 18,355 -- 160,063
Other Assets, net............................... 15,799 -- 573 -- 16,372
---------- ----------- ----------- ------------ ------------
$ 358,842 $ 66,385 $ 90,306 $ (96,269) $ 419,264
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable.............................. $ 34,332 $ 3,778 $ 11,043 $ -- $ 49,153
Due to affiliates............................. -- 3,584 6,608 (10,192) --
Accrued liabilities........................... 25,988 1,711 8,884 -- 36,583
Current maturities of long-term debt.......... 61 -- 2,180 -- 2,241
---------- ----------- ----------- ------------ ------------
Total current liabilities................... 60,381 9,073 28,715 (10,192) 87,977
---------- ----------- ----------- ------------ ------------
Long-Term Debt, net of current maturities....... 161,859 -- 16,222 -- 178,081
Other Noncurrent Liabilities.................... 24,261 6,867 20,370 -- 51,498
Notes Payable to Affiliates..................... -- -- 20,406 (20,406) --
---------- ----------- ----------- ------------ ------------
Total liabilities........................... 246,501 15,940 85,713 (30,598) 317,556
---------- ----------- ----------- ------------ ------------
Stockholders' Investment........................ 112,341 50,445 4,593 (65,671) 101,708
---------- ----------- ----------- ------------ ------------
$ 358,842 $ 66,385 $ 90,306 $ (96,269) $ 419,264
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-29
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 345,641 $ 15,824 $ 89,074 $ (1,428) $ 449,111
Cost of sales................................... 291,219 11,837 73,458 (1,428) 375,086
---------- ----------- ----------- ------------ ------------
Gross profit.................................. 54,422 3,987 15,616 -- 74,025
Selling, general and administrative expenses.... 25,062 1,048 6,705 -- 32,815
Amortization expense............................ 3,037 303 260 -- 3,600
---------- ----------- ----------- ------------ ------------
Operating income.............................. 26,323 2,636 8,651 -- 37,610
Interest expense, net........................... 6,479 18 2,801 -- 9,298
---------- ----------- ----------- ------------ ------------
Income before provision for income taxes,
equity in earnings (losses) of
subsidiaries................................ 19,844 2,618 5,850 -- 28,312
Provision for income taxes...................... 7,665 1,181 2,824 -- 11,670
Equity in earnings (losses) of subsidiaries..... 4,463 -- -- (4,463) --
---------- ----------- ----------- ------------ ------------
Net income (loss)............................. $ 16,642 $ 1,437 $ 3,026 $ (4,463) $ 16,642
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-30
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income..................................... $ 16,642 $ 1,437 $ 3,026 $ (4,463) $ 16,642
Adjustments required to reconcile net income to
net cash provided by (used for) operating
activities--
Depreciation and amortization................ 9,910 606 1,787 -- 12,303
Deferred income tax provision................ 1,521 -- -- -- 1,521
(Income)/loss from investment in
subsidiaries............................... (4,463) -- -- 4,463 --
Due (to)/from affiliates..................... (4,189) (2,077) 6,266 -- --
Changes in other operating items............. (1,791) 924 (21,083) -- (21,950)
---------- ----------- ----------- ------------ ------------
Net cash provided by (used for) operating
activities............................... 17,630 890 (10,004) -- 8,516
---------- ----------- ----------- ------------ ------------
INVESTING ACTIVITIES:
Capital expenditures, net...................... (13,952) (756) (1,534) -- (16,242)
Acquisitions, net.............................. (70,481) -- -- -- (70,481)
Investments in joint ventures and other........ (6,663) -- -- -- (6,663)
---------- ----------- ----------- ------------ ------------
Net cash used for investing activities....... (91,096) (756) (1,534) -- (93,386)
---------- ----------- ----------- ------------ ------------
FINANCING ACTIVITIES:
Borrowings under revolving credit facilities... 267,987 -- -- -- 267,987
Repayments of revolving credit facilities...... (174,869) -- -- -- (174,869)
Repayments of long-term borrowings............. (80) -- (5,928) -- (6,008)
Debt financing (to)/from affiliates (20,406) -- 20,406 -- --
Sale of common stock, net...................... 510 -- -- -- 510
---------- ----------- ----------- ------------ ------------
Net cash provided by financing activities.... 73,142 -- 14,478 -- 87,620
---------- ----------- ----------- ------------ ------------
EFFECT OF EXCHANGE RATES ON CASH................. -- -- (269) -- (269)
---------- ----------- ----------- ------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS.......... (324) 134 2,671 -- 2,481
CASH AND CASH EQUIVALENTS, beginning of period... 1,616 -- 51 -- 1,667
---------- ----------- ----------- ------------ ------------
CASH AND CASH EQUIVALENTS, end of period......... $ 1,292 $ 134 $ 2,722 $ -- $ 4,148
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-31
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................... $ 1,247 $ (557) $ 19,854 $ -- $ 20,544
Accounts receivable, net...................... 70,332 41,863 46,270 -- 158,465
Inventories................................... 19,134 10,454 20,910 -- 50,498
Other current assets.......................... 12,576 25,780 7,568 -- 45,924
Due from affiliates........................... 8,878 16,822 5,421 (31,121) --
---------- ----------- ----------- ------------ ------------
Total current assets........................ 112,167 94,362 100,023 (31,121) 275,431
---------- ----------- ----------- ------------ ------------
Property, Plant & Equipment, net................ 62,464 48,546 77,722 -- 188,732
Investment in Subsidiaries...................... 202,697 27,736 40,238 (266,747) 3,924
Notes Receivable from Affiliates................ 47,329 -- 29,911 (77,240) --
Goodwill, net................................... 107,469 150,740 177,751 -- 435,960
Other Assets, net............................... 13,564 2,102 9,670 -- 25,336
---------- ----------- ----------- ------------ ------------
$ 545,690 $ 323,486 $ 435,315 $ (375,108) $ 929,383
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable.............................. $ 39,019 $ 22,638 $ 37,855 $ -- $ 99,512
Due to affiliates............................. 8,793 7,806 14,522 (31,121) --
Accrued liabilities........................... 28,167 46,131 22,366 -- 96,664
Current maturities of long-term debt.......... 7,064 16 8,409 -- 15,489
---------- ----------- ----------- ------------ ------------
Total current liabilities................... 83,043 76,591 83,152 (31,121) 211,665
---------- ----------- ----------- ------------ ------------
Long-Term Debt, net of current maturities....... 155,408 8,010 152,999 -- 316,417
Other Noncurrent Liabilities.................... 13,437 61,538 33,039 -- 108,014
Notes Payable to Affiliates..................... -- 27,668 49,572 (77,240) --
---------- ----------- ----------- ------------ ------------
Total liabilities........................... 251,888 173,807 318,762 (108,361) 636,096
---------- ----------- ----------- ------------ ------------
Mandatorily Redeemable Convertible
Trust Preferred Securities.................... 55,250 -- -- -- 55,250
Stockholders' Investment........................ 238,552 149,679 116,553 (266,747) 238,037
---------- ----------- ----------- ------------ ------------
$ 545,690 $ 323,486 $ 435,315 $ (375,108) $ 929,383
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-32
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 356,683 $ 184,956 $ 210,449 $ (12,621) $ 739,467
Cost of sales................................... 296,863 151,546 172,730 (12,621) 608,518
---------- ----------- ----------- ------------ ------------
Gross profit.................................. 59,820 33,410 37,719 -- 130,949
Selling, general and administrative expenses.... 21,445 11,183 17,197 -- 49,825
Amortization expense............................ 3,522 2,864 3,482 -- 9,868
---------- ----------- ----------- ------------ ------------
Operating income.............................. 34,853 19,363 17,040 -- 71,256
Interest expense, net........................... 7,970 2,808 9,489 -- 20,267
---------- ----------- ----------- ------------ ------------
Income before provision for income taxes,
equity in earnings (losses) of subsidiaries
and minority interest....................... 26,883 16,555 7,551 -- 50,989
Provision for income taxes...................... 10,030 6,176 4,727 -- 20,933
Equity in earnings (losses) of subsidiaries..... 11,722 -- 4,259 (17,462) (1,481)
Minority interest--dividend on trust preferred
securities, net............................... 1,908 -- -- -- 1,908
---------- ----------- ----------- ------------ ------------
Income (loss) before extraordinary item....... 26,667 10,379 7,083 (17,462) 26,667
Extraordinary item--loss on early extinguishment
of debt, net.................................. 643 -- -- -- 643
---------- ----------- ----------- ------------ ------------
Net income (loss)........................... $ 26,024 $ 10,379 $ 7,083 $ (17,462) $ 26,024
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-33
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income..................................... $ 26,024 $ 10,379 $ 7,083 $ (17,462) $ 26,024
Adjustments required to reconcile net income to
net cash provided by (used for) operating
activities--
Depreciation and amortization................ 11,587 6,466 9,518 -- 27,571
Deferred income tax provision................ 7,833 -- -- -- 7,833
Extraordinary loss on extinguishment of
debt....................................... 643 -- -- -- 643
Other........................................ (315) -- -- -- (315)
(Income)/loss from investment in
subsidiaries............................... (13,203) -- (4,259) 17,462 --
Due (to)/from affiliates..................... 4,152 (6,939) 2,787 -- --
Equity in losses of affiliates............... 1,481 -- -- -- 1,481
Changes in other operating items............. (21,127) (40,084) 5,661 -- (55,550)
----------- ----------- ----------- ------------ -------------
Net cash provided by (used for) operating
activities............................... 17,075 (30,178) 20,790 -- 7,687
----------- ----------- ----------- ------------ -------------
INVESTING ACTIVITIES:
Capital expenditures, net...................... (15,742) (6,181) (9,899) -- (31,822)
Acquisitions, net.............................. (135,712) -- -- -- (135,712)
----------- ----------- ----------- ------------ -------------
Net cash used for investing activities..... (151,454) (6,181) (9,899) -- (167,534)
----------- ----------- ----------- ------------ -------------
FINANCING ACTIVITIES:
Borrowings under revolving credit facilities... 352,296 8,000 56,971 -- 417,267
Repayments of revolving credit facilities...... (350,546) -- (34,506) -- (385,052)
Long-term borrowings........................... 50,000 -- 50,265 -- 100,265
Repayments of long-term borrowings............. (50,984) -- (65,367) -- (116,351)
Debt financing (to)/from affiliates (26,923) 27,668 (745) -- --
Proceeds from stock offering, net.............. 107,848 -- -- -- 107,848
Proceeds from issuance of preferred
securities................................... 52,525 -- -- -- 52,525
Sale of common stock, net...................... 118 -- -- -- 118
----------- ----------- ----------- ------------ -------------
Net cash provided by financing
activities............................... 134,334 35,668 6,618 -- 176,620
----------- ----------- ----------- ------------ -------------
EFFECT OF EXCHANGE RATES ON CASH................. -- -- (377) -- (377)
----------- ----------- ----------- ------------ -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS.......... (45) (691) 17,132 -- 16,396
CASH AND CASH EQUIVALENTS, beginning of period... 1,292 134 2,722 -- 4,148
----------- ----------- ----------- ------------ -------------
CASH AND CASH EQUIVALENTS, end of period......... $ 1,247 $ (557) $ 19,854 $ -- $ 20,544
----------- ----------- ----------- ------------ -------------
----------- ----------- ----------- ------------ -------------
</TABLE>
F-34
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
1998
MARCH 31, ------------
1999
------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................................... $ 39,267 $ 20,544
Accounts receivable, net....................................................... 471,282 158,465
Inventories.................................................................... 150,471 50,498
Other current assets........................................................... 129,082 45,924
------------ ------------
Total current assets..................................................... 790,102 275,431
------------ ------------
Property, plant and equipment, net................................................... 523,287 188,732
Goodwill, net........................................................................ 898,342 435,960
Deferred income taxes and other assets, net.......................................... 48,836 29,260
------------ ------------
$ 2,260,567 $ 929,383
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt........................................... $ 14,945 $ 15,489
Accounts payable............................................................... 283,125 99,512
Accrued liabilities............................................................ 226,142 96,664
------------ ------------
Total current liabilities................................................ 524,212 211,665
------------ ------------
Long-term debt, net of current maturities............................................ 1,057,146 316,417
Other noncurrent liabilities......................................................... 230,497 108,014
Mandatorily redeemable convertible trust preferred securities........................ 55,250 55,250
------------ ------------
Stockholders' investment:
Preferred stock................................................................ -- --
Common stock--Class A.......................................................... 140 90
Common stock--Class B.......................................................... 33 33
Additional paid-in capital..................................................... 335,884 171,377
Retained earnings.............................................................. 70,544 67,052
Accumulated other comprehensive loss--cumulative translation adjustment........ (13,139) (515)
------------ ------------
Total stockholders' investment........................................... 393,462 238,037
------------ ------------
$ 2,260,567 $ 929,383
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
balance sheets.
F-35
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS--UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1999 1998
---------- ----------
<S> <C> <C>
Revenues.................................................................................. $ 264,701 $ 125,746
Cost of sales............................................................................. 218,219 104,471
---------- ----------
Gross profit...................................................................... 46,482 21,275
Selling, general and administrative expenses.............................................. 16,897 9,160
Amortization expense...................................................................... 3,685 1,251
---------- ----------
Operating income.................................................................. 25,900 10,864
Interest expense, net..................................................................... 6,895 2,938
---------- ----------
Income before provision for income taxes, equity in losses of affiliate and
minority interests.............................................................. 19,005 7,926
Provision for income taxes................................................................ 7,711 3,274
Equity in losses of affiliate and minority interests...................................... 1,342 --
Minority interest--dividends on trust preferred securities, net........................... 611 76
---------- ----------
Income before extraordinary item and accounting change.......................... 9,341 4,576
Extraordinary item--loss on early extinguishment of debt, net............................. (2,702) --
Cumulative effect of change in accounting, net............................................ (3,147) --
---------- ----------
Net income........................................................................ $ 3,492 $ 4,576
---------- ----------
---------- ----------
Basic earnings per common share:
Income before extraordinary item and accounting change.................................. $ 0.73 $ 0.52
Extraordinary item...................................................................... (0.21) --
Cumulative effect of change in accounting............................................... (0.25) --
---------- ----------
---------- ----------
Net income........................................................................ $ 0.27 $ 0.52
---------- ----------
---------- ----------
Basic shares outstanding................................................................ 12,877 8,826
---------- ----------
---------- ----------
Diluted earnings per common share:
Income before extraordinary item and accounting change.................................. $ 0.70 $ 0.52
Extraordinary item...................................................................... (0.19) --
Cumulative effect of change in accounting............................................... (0.22) --
---------- ----------
Net income.......................................................................... $ 0.29 $ 0.52
---------- ----------
---------- ----------
Diluted shares outstanding................................................................ 14,253 9,012
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
F-36
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS--UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1999 1998
----------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income.......................................................................... $ 3,492 $ 4,576
Adjustments to reconcile net income to net cash provided by (used in) operating
activities--
Depreciation and amortization..................................................... 10,507 3,067
Deferred income taxes............................................................. (3,057) --
Equity in losses of affiliates and minority interest.............................. 1,342 --
Extraordinary loss on extinguishment of debt...................................... 2,702 --
Cumulative effect of change in accounting, net.................................... 3,147 --
Changes in other operating items.................................................. (17,746) (9,785)
----------- ---------
Net cash provided by (used in) operating activities............................... 387 (2,142)
----------- ---------
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired.................................................. (540,133) (18,578)
Capital expenditures, net........................................................... (5,994) (3,733)
Other............................................................................... 2,227 --
----------- ---------
Net cash used in investing activities............................................. (543,900) (22,311)
----------- ---------
FINANCING ACTIVITIES:
Proceeds from borrowings............................................................ 904,680 67,903
Repayment of debt................................................................... (321,761) (53,403)
Debt issuance costs................................................................. (19,537) --
Proceeds from issuance of common stock and exercise of stock options................ 770 256
Proceeds from issuance of preferred securities...................................... -- 52,566
----------- ---------
Net cash provided by financing activities......................................... 564,152 67,322
----------- ---------
EFFECT OF EXCHANGE RATE ON CASH........................................................... (1,916) (79)
----------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS................................................. 18,723 42,790
CASH AND CASH EQUIVALENTS:
Beginning of period................................................................. 20,544 4,148
----------- ---------
End of period....................................................................... $ 39,267 $ 46,938
----------- ---------
----------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
F-37
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1.
The accompanying condensed consolidated financial statements have been
prepared by Dura Automotive Systems, Inc. (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. The information furnished in the condensed consolidated
financial statements includes normal recurring adjustments and reflects all
adjustments which are, in the opinion of management, necessary for a fair
presentation of such financial statements. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Although the Company believes that
the disclosures are adequate to make the information presented not
misleading, it is suggested that these condensed consolidated financial
statements be read in conjunction with the audited financial statements and
the notes thereto included in the Company's 1998 Annual Report to
Stockholders.
Revenues and operating results for the three months ended March 31, 1999 are
not necessarily indicative of the results to be expected for the full year.
2.
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
MAR. 31, DEC. 31,
1999 1998
------------ ------------
<S> <C> <C>
Raw materials.................................................... $ 73,375 $ 23,067
Work-in-process.................................................. 41,087 11,155
Finished goods................................................... 36,009 16,276
------------ ------------
$ 150,471 $ 50,498
------------ ------------
------------ ------------
</TABLE>
F-38
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3.
Basic earnings per share were computed by dividing net income by the
weighted average number of Class A and Class B common shares outstanding
during the quarter. Diluted earnings per share include (i) the effects of
outstanding stock options using the treasury stock method and (ii) the
conversion of the Preferred Securities from their date of issuance on March
20, 1998 as follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1999 1998
--------- ---------
<S> <C> <C>
Net income............................................................... $ 3,492 $ 4,576
Interest expense on mandatorily redeemable convertible preferred
securities, net of tax................................................. 611 76
--------- ---------
Net income applicable to common stockholders--diluted.................... $ 4,103 $ 4,652
--------- ---------
--------- ---------
Weighted average number of Class A common shares outstanding............. 9,552 4,172
Weighted average number of Class B common shares outstanding............. 3,325 4,654
--------- ---------
12,877 8,826
Dilutive effect of outstanding stock options after application of the
treasury stock method.................................................. 87 28
Dilutive effect of mandatorily redeemable convertible preferred
securities, assuming conversion........................................ 1,289 158
--------- ---------
Diluted shares outstanding............................................... 14,253 9,012
--------- ---------
--------- ---------
Basic earnings per share................................................. $ 0.27 $ 0.52
--------- ---------
--------- ---------
Diluted earnings per share............................................... $ 0.29 $ 0.52
--------- ---------
--------- ---------
</TABLE>
4.
In March 1998, the Company acquired Universal Tool & Stamping Co., Inc.
("Universal"), a manufacturer of jacks for the North American automotive
industry, for approximately $18.0 million. The acquisition provided the
Company with a market presence for jacks in North America and added Honda as
a significant new customer.
In April 1998, the Company acquired all of the outstanding equity interests
of Trident Automotive plc ("Trident"). Trident had revenues of approximately
$300 million in 1997, of which 69 percent was derived from sales of cable
assemblies, principally to the automotive OEM market, and the balance from
door handle assemblies, lighting and other products. Approximately 68
percent of Trident's revenues were generated in North America, 27 percent in
Europe and the remainder in Latin America. Trident's operations are
headquartered in Michigan with manufacturing and technical facilities in
Michigan, Tennessee, Arkansas, Canada, the United Kingdom, Germany, France
and Brazil. Pursuant to the terms of the agreement, the Company acquired all
of the outstanding equity interests of Trident for total consideration of
$87.5 million in cash. In addition, the Company assumed $75.0 million of
Trident's outstanding 10% Senior Subordinated Notes due 2005. The Company
also repaid Trident's outstanding senior indebtedness of approximately $53.0
million. The acquisition of Trident was financed with borrowings under the
Company's credit facility.
F-39
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. (CONTINUED)
In August 1998, the Company acquired the hinge business ("Hinge") of Tower
Automotive, Inc. for approximately $37.0 million. Hinge, which has annual
revenues of approximately $50.0 million, manufactures automotive hood and
deck lid hinges.
On March 15, 1999, Dura acquired through a cash tender offer approximately
95% of the outstanding ordinary shares of Adwest Automotive plc ("Adwest").
Adwest has annual revenues of approximately $400 million and is a supplier
of driver control products primarily for European OEMs. The Company paid
approximately $320 million to acquire all of the outstanding shares of
Adwest, including the assumption of approximately $106.1 million in
indebtedness in connection with the acquisition of Adwest.
On March 23, 1999, the Company completed its merger with Excel Industries,
Inc. ("Excel"). Excel has annual revenues of approximately $1.1 billion of
which 75 percent is derived from the automotive/light truck market and the
remainder from the recreational vehicle, mass transit and heavy truck
markets. Approximately 78 percent of Excel's revenues is generated in North
America with the remainder in Europe. The Company issued an aggregate of
approximately 5.1 million shares of its Class A Common Stock and paid $155.5
million in cash to Excel's former shareholders. The Company also assumed
approximately $100.0 million of indebtedness in connection with the merger
with Excel.
The cash consideration related to the acquisitions of Adwest and Excel was
financed with Borrowings under a new credit facility which is further
described in Note 5.
The acquisitions of Universal, Trident, Hinge, Excel and Adwest have been
accounted for using the purchase method of accounting and, accordingly, the
assets acquired and liabilities assumed have been recorded at fair value as
of the dates of acquisition, with the excess purchase price recorded as
goodwill. With respect to the acquisitions of Trident, Hinge, Excel and
Adwest, the assets and liabilities have been recorded based upon preliminary
estimates of fair value. At March 31, 1999, liabilities for approximately
$44.5 million for costs associated with the shutdown and consolidation of
certain acquired facilities and $30.9 million in severance costs are
recorded on the condensed consolidated balance sheet. No additional reserves
were recorded during the first quarter of 1999. The Company is further
evaluating the fair value of certain assets acquired and liabilities
assumed. As a result, the final evaluation will likely result in adjustments
to the preliminary allocations which may result in changes to goodwill.
The accompanying unaudited pro forma condensed results of operations for the
three months ended March 31, 1999 give effect to the acquisitions of Adwest
and Excel and the offering of the Senior Subordinated Notes, which is
further described in Note 5, as if such transactions had occurred at the
beginning of the period and exclude the effects of the extraordinary loss.
The accompanying unaudited pro forma condensed results of operations for the
three months ended March 31, 1998 give effect to the transactions described
above, the acquisitions of Universal, Trident and Hinge, the offering of
Class A common stock, which is further described in Note 7, and the offering
of the Convertible Trust Preferred Securities, which is further described in
Note 6, as if such transactions had occurred at the beginning of the period
and exclude the effects of the extraordinary loss. The 1998 results of
operations of Trident for the period prior to its acquisition date, which
are included in the unaudited pro forma financial information, reflect
pretax charges
F-40
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. (CONTINUED)
of approximately $3.6 million relating to the recognition of obligations to
certain Trident customers. The unaudited pro forma information does not
purport to represent what the Company's results of operations would actually
have been if such transactions in fact had occurred at such date or to
project the Company' results of future operations (in thousands, except per
share data):
<TABLE>
<CAPTION>
PRO FORMA FOR THE
THREE MONTHS ENDED
MARCH 31,
----------------------
1999 1998
---------- ----------
<S> <C> <C>
Revenues............................................................ $ 653,752 $ 627,033
Operating income.................................................... 49,285 40,028
Net income.......................................................... 13,540 10,921
Basic earnings per share............................................ $ 0.77 $ 0.63
Diluted earnings per share.......................................... 0.75 0.62
</TABLE>
5.
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
Bank Credit Facility:
Tranche A and B term loans..................................... $ 525,740 $ --
Interim term loan.............................................. 200,000 --
Revolving credit facility...................................... 100,086 --
Trident 10% senior subordinated notes, due 2005.................. 80,934 81,150
Old Bank Credit Agreement........................................ -- 243,510
Other............................................................ 165,331 7,246
------------ ------------
1,072,091 331,906
Less--current maturities......................................... (14,945) (15,489)
------------ ------------
Total long-term debt............................................. $ 1,057,146 $ 316,417
------------ ------------
------------ ------------
</TABLE>
In connection with the acquisitions of Adwest and Excel, the Company entered
into an amended and restated $1.15 billion credit agreement ("Credit
Agreement"). The Credit Agreement provides for revolving credit facilities
of $400.0 million, a $275.0 million tranche A term loan, a $275.0 million
tranche B term loan and a $200.0 million interim term loan facility. As of
March 31, 1999, rates on borrowings under the Credit Agreement ranged from
5.28% to 10.0%. Borrowings under the tranche A term loan are due and payable
in March 2005 and borrowings under the tranche B term loan are due and
payable in March 2006. The revolving credit facility is available until
March 2005. Borrowings under the interim loan were due and payable in
September 2000, and, as further discussed below, were repaid in April 1999.
The Credit Agreement contains various restrictive covenants which limit
indebtedness, investments, rental obligations and cash dividends. The Credit
Agreement also requires the Company to maintain certain financial ratios
including minimum liquidity and interest coverage. The Company was in
compliance with the covenants as of
F-41
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. (CONTINUED)
March 31, 1999. Borrowings under the Credit Agreement are collateralized by
the assets of the Company.
The Credit Agreement provides the Company with the ability to denominate a
portion of its revolving credit borrowings in foreign currencies up to an
amount equal to $100.0 million. As of March 31, 1999, $84.0 million of
borrowings were denominated in US dollars, $3.4 million of borrowings were
denominated in Canadian dollars, $2.5 million of borrowings were denominated
in Australian dollars, $4.5 million of borrowings were denominated in Euros,
and $5.7 million in British pound sterling.
In connection with the termination of the Company's former credit facility,
the Company wrote-off deferred financing costs of approximately $2.7
million, net of income taxes. This charge is reflected as an extraordinary
item in the accompanying statement of operations for the three months ended
March 31, 1999.
On April 23, 1999, the Company completed the offering of $300 million and
Euro 100 million of senior subordinated notes ("Subordinated Notes"). The
Subordinated Notes mature in May 2009 and bear interest at 9% per year,
which is payable semi-annually. Net proceeds from this offering of
approximately $397.0 million were used to repay the $200.0 million interim
term loan, approximately $100.1 million to retire other indebtedness and
approximately $96.9 million will be used for general corporate purposes.
In December 1997, Trident issued senior subordinated notes with a face value
of $75 million. The notes bear interest at 10%, payable semiannually, and
are due in December 2005. The notes were recorded at their fair value of
$81.2 million. The premium in excess of face value will be amortized over
the life of the notes using the effective interest method.
6.
On March 20, 1998, Dura Automotive Systems Capital Trust (the "Issuer"), a
wholly owned statutory business trust of the Company, completed the offering of
$55.3 million of its 7 1/2% Convertible Trust Preferred Securities ("Preferred
Securities"), resulting in net proceeds to the Company of approximately $52.6
million. The Preferred Securities are redeemable, in whole or part, on or after
March 31, 2001 and all Preferred Securities must be redeemed no later than March
31, 2028. The Preferred Securities are convertible, at the option of the holder,
into Class A common stock of the Company at a rate of 0.5831 shares of Class A
common stock for each Preferred Security, which is equivalent to a conversion
price of $42 7/8 per share. The net proceeds of the offering were used to repay
outstanding indebtedness. Dividends on the Preferred Securities, net of the
related income tax benefit, are reflected as minority interest in the
accompanying condensed consolidated statements of operation.
No separate financial statements of the Issuer have been included herein.
The Company does not consider that such financial statements would be
material to holders of Preferred Securities because (i) all of the voting
securities of the Issuer will be owned, directly or indirectly, by the
Company, a reporting company under the Exchange Act, (ii) the Issuer has no
independent operations and exists for the sole purpose of issuing securities
representing undivided beneficial interests in the assets of the Issuer and
investing the proceeds thereof in 7 1/2% Convertible
F-42
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
6. (CONTINUED)
Subordinated Debentures due March 31, 2028 issued by the Company and (iii)
the obligations of the Issuer under the Preferred Securities are fully and
unconditionally guaranteed by the Company.
7.
On June 17, 1998, the Company completed a public offering of 3,100,000
shares of its Class A common stock at an offering price of $32.75 per share
("Offering"). Net proceeds to the Company, after underwriting discounts and
offering expenses, were approximately $95.0 million. Proceeds from the
Offering were used to retire outstanding indebtedness. Certain stockholders
of the Company converted 1,308,000 shares of Class B common stock of the
Company into Class A stock and sold such Class A stock concurrent with the
Offering. In addition, an employee of the Company exercised an option to
acquire 5,000 shares of Class A common stock at an exercise price of $14.50
per share, and sold such Class A shares concurrent with the Offering. On
July 1, 1998 the underwriters, pursuant to their over-allotment option,
purchased an additional 400,000 Class A shares resulting in additional net
proceeds of approximately $12.4 million to the Company.
8.
Comprehensive income reflects the change in equity of a business enterprise
during a period from transactions and other events and circumstances from
non-owner sources. For the Company, comprehensive income represents net
income adjusted for foreign currency translation adjustments. The Company
had a comprehensive loss of approximately $9.1 million for the three months
ended March 31, 1999 and comprehensive income of approximately $3.7 million
for the three months ended March 31, 1998.
9.
Effective January 1, 1999, the Company adopted the provisions of the
Financial Accounting Standards Board Statement of Position ("SOP") No. 98-5,
"Reporting on the Costs of Start-Up Activities." SOP 98-5 requires costs
associated with certain start-up activities be expensed as incurred versus
capitalizing and expensing them over a period of time. Previously, the
Company capitalized certain design and engineering costs which related to
future programs and amortized these costs over the life of the program once
production began. Pursuant to the provisions of SOP 98-5, the Company wrote
off the unamortized balance of such capitalized costs, net of income tax
benefits, of approximately $3.1 million. The write-off is reflected as a
cumulative effect of change in accounting in the accompanying condensed
consolidated statement of operations for the three months ended March 31,
1999.
In June 1998 the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities" effective for years beginning after June
15, 1999. SFAS No. 133 establishes accounting and reporting standards
requiring that every derivative instrument, including certain derivative
instruments embedded in other contracts, be recorded in the balance sheet as
either an asset or liability measured at its fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized currently
in earnings unless specific hedge criteria are met. Special accounting for
qualifying hedges allow a derivative's gains or losses to offset related
results on the hedged item in the income statement and requires that a
company must formally document, designate and assess
F-43
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
9. (CONTINUED)
the effectiveness of transactions that receive hedge accounting. The Company
has not yet quantified the impacts of adopting SFAS No. 133.
10.
Supplemental cash flow information (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash paid for--
Interest............................................................... $ 7,637 $ 3,032
Income taxes........................................................... 3,731 2,410
</TABLE>
11. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION:
The following consolidating financial information presents balance sheet,
statement of operations and cash flow information related to the Company's
businesses. Each Guarantor is a direct or indirect wholly owned subsidiary
of the Company and has fully and unconditionally guaranteed the 9% senior
subordinated notes issued by Dura Operating Corp., on a joint and several
basis. Separate financial statements and other disclosures concerning the
Guarantors have not been presented because management believes that such
information is not material.
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues......................................... $ 84,006 $ 14,584 $ 27,451 $ (295) $ 125,746
Cost of sales.................................... 70,985 11,428 22,353 (295) 104,471
----------- ----------- ----------- ------------ ------------
Gross profit................................... 13,021 3,156 5,098 -- 21,275
Selling, general and administrative expenses..... 5,685 613 2,862 -- 9,160
Amortization expense............................. 846 240 165 -- 1,251
----------- ----------- ----------- ------------ ------------
Operating income............................... 6,490 2,303 2,071 -- 10,864
Interest expense, net............................ 2,589 139 210 -- 2,938
----------- ----------- ----------- ------------ ------------
Income before provision for income taxes,
equity in earnings (losses) of subsidiaries
and minority interest........................ 3,901 2,164 1,861 -- 7,926
Provision for income taxes....................... 1,527 847 900 -- 3,274
Equity in earnings (losses) of subsidiaries...... 2,278 -- -- (2,278) --
Minority interest--dividend on trust preferred
securities, net................................ 76 -- -- -- 76
----------- ----------- ----------- ------------ ------------
Net income (loss).............................. $ 4,576 $ 1,317 $ 961 $ (2,278) $ 4,576
----------- ----------- ----------- ------------ ------------
----------- ----------- ----------- ------------ ------------
</TABLE>
F-44
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
11. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income....................................... $ 4,576 $ 1,317 $ 961 $ (2,278) $ 4,576
Adjustments to reconcile net income to net cash
provided by (used for) operating activities --
Depreciation and amortization.................. 1,666 538 863 -- 3,067
(Income)/loss from investment in
subsidiaries................................. (2,278) -- -- 2,278 --
Due (to)/from affiliates....................... (8,828) 9,533 (705) -- --
Changes in other operating items............... (192) (9,216) (377) -- (9,785)
----------- ------ ----------- ------------- -------------
Net cash provided by (used for) operating
activities................................. (5,056) 2,172 742 -- (2,142)
----------- ------ ----------- ------------- -------------
INVESTING ACTIVITIES:
Capital expenditures, net........................ (1,821) (634) (1,278) -- (3,733)
Acquisitions, net................................ (18,578) -- -- -- (18,578)
----------- ------ ----------- ------------- -------------
Net cash used in investing activities........ (20,399) (634) (1,278) -- (22,311)
----------- ------ ----------- ------------- -------------
FINANCING ACTIVITIES:
Proceeds from borrowings......................... 65,750 -- 2,153 -- 67,903
Repayments of debt............................... (52,500) -- (903) -- (53,403)
Debt financing (to)/from affiliates.............. (18) -- 18 -- --
Proceeds from issuance of common stock and
exercise of stock options...................... 256 -- -- -- 256
Proceeds from issuance of preferred securities... 52,566 -- -- -- 52,566
----------- ------ ----------- ------------- -------------
Net cash provided by financing activities.... 66,054 -- 1,268 -- 67,322
----------- ------ ----------- ------------- -------------
EFFECT OF EXCHANGE RATES ON CASH................. -- -- (79) -- (79)
----------- ------ ----------- ------------- -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS.......... 40,599 1,538 653 -- 42,790
CASH AND CASH EQUIVALENTS, beginning of period... 1,292 134 2,722 -- 4,148
----------- ------ ----------- ------------- -------------
CASH AND CASH EQUIVALENTS, end of period......... $ 41,891 $ 1,672 $ 3,375 $ -- $ 46,938
----------- ------ ----------- ------------- -------------
----------- ------ ----------- ------------- -------------
</TABLE>
F-45
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
11. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING BALANCE SHEETS AS OF MARCH 31, 1999
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
------------ ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................ $ 7,104 $ (13) $ 32,176 $ -- $ 39,267
Accounts receivable, net................. 187,667 96,506 187,109 -- 471,282
Inventories.............................. 41,600 35,621 73,250 -- 150,471
Other current assets..................... 38,788 28,715 61,579 -- 129,082
Due from affiliates...................... 21,537 41,416 505 (63,458) --
------------ ----------- ------------ ------------- ------------
Total current assets................... 296,696 202,245 354,619 (63,458) 790,102
------------ ----------- ------------ ------------- ------------
Property, Plant & Equipment, net........... 138,646 130,950 253,691 -- 523,287
Investment in Subsidiaries................. 476,194 48,177 382,652 (903,865) 3,158
Notes Receivable from Affiliates........... 198,009 -- 27,689 (225,698) --
Goodwill, net.............................. 292,066 175,908 430,368 -- 898,342
Other Assets, net.......................... 27,716 3,494 14,468 -- 45,678
------------ ----------- ------------ ------------- ------------
$ 1,429,327 $ 560,774 $ 1,463,487 $ (1,193,021) $2,260,567
------------ ----------- ------------ ------------- ------------
------------ ----------- ------------ ------------- ------------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable......................... $ 106,491 $ 46,655 $ 129,979 $ -- $ 283,125
Due to affiliates........................ 25,146 21,481 16,831 (63,458) --
Accrued liabilities...................... 64,183 65,319 96,640 -- 226,142
Current maturities of long-term debt..... 397 1,347 13,201 -- 14,945
------------ ----------- ------------ ------------- ------------
Total current liabilities.............. 196,217 134,802 256,651 (63,458) 524,212
------------ ----------- ------------ ------------- ------------
Long-Term Debt, net of current
maturities............................... 701,391 11,597 344,158 -- 1,057,146
Other Noncurrent Liabilities............... 45,411 71,184 113,902 -- 230,497
Notes Payable to Affiliates................ 24,457 27,523 173,718 (225,698) --
------------ ----------- ------------ ------------- ------------
Total liabilities...................... 967,476 245,106 888,429 (289,156) 1,811,855
------------ ----------- ------------ ------------- ------------
Mandatorily Redeemable Convertible Trust
Preferred Securities..................... 55,250 -- -- -- 55,250
Stockholders' Investment................... 406,601 315,668 575,058 (903,865) 393,462
------------ ----------- ------------ ------------- ------------
$ 1,429,327 $ 560,774 $ 1,463,487 $ (1,193,021) $2,260,567
------------ ----------- ------------ ------------- ------------
------------ ----------- ------------ ------------- ------------
</TABLE>
F-46
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
11. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 108,955 $ 69,448 $ 90,848 $ (4,550) $ 264,701
Cost of sales................................... 88,609 57,634 76,526 (4,550) 218,219
---------- ----------- ----------- ------------ ------------
Gross profit.................................. 20,346 11,814 14,322 -- 46,482
Selling, general and administrative expenses.... 8,034 1,929 6,934 -- 16,897
Amortization expense............................ 1,125 1,111 1,449 -- 3,685
---------- ----------- ----------- ------------ ------------
Operating income.............................. 11,187 8,774 5,939 -- 25,900
Interest expense, net........................... 2,540 711 3,644 -- 6,895
---------- ----------- ----------- ------------ ------------
Income before provision for income taxes,
equity in earnings (losses) of subsidiaries
and minority interest....................... 8,647 8,063 2,295 -- 19,005
Provision for income taxes...................... 3,079 2,872 1,760 -- 7,711
Equity in earnings (losses) of subsidiaries..... 3,693 -- 1,633 (6,668) (1,342)
Minority interest--dividend on trust preferred
securities, net............................... 611 -- -- -- 611
---------- ----------- ----------- ------------ ------------
Income (loss) before extraordinary item....... 8,650 5,191 2,168 (6,668) 9,341
Extraordinary item--loss on early extinguishment
of debt, net.................................. 2,011 -- 691 -- 2,702
Cumulative effect of change in accounting,
net........................................... (3,147) -- -- -- (3,147)
---------- ----------- ----------- ------------ ------------
Net income (loss)............................. $ 3,492 $ 5,191 $ 1,477 $ (6,668) $ 3,492
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-47
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
11. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION: (CONTINUED)
DURA AUTOMOTIVE SYSTEMS, INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1999
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DURA NON-
OPERATING GUARANTOR GUARANTOR
CORP. COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income..................................... $ 3,492 $ 5,191 $ 1,477 $ (6,668) $ 3,492
Adjustments required to reconcile net income to
net cash provided by (used for) operating
activities--
Depreciation and amortization................ 3,364 2,669 4,474 -- 10,507
Deferred income tax provision................ (2,187) (82) (788) -- (3,057)
Extraordinary loss on extinguishment of
debt....................................... 2,011 -- 691 -- 2,702
Cumulative effect of change in accounting,
net........................................ 3,147 -- -- -- 3,147
(Income)/loss from investment in
subsidiaries............................... (4,854) -- (1,814) 6,668 --
Due (to)/from affiliates..................... 12,522 (20,452) 7,930 -- --
Equity in losses of affiliates............... 1,161 -- 181 -- 1,342
Changes in other operating items............. 36,934 9,588 (64,268) -- (17,746)
----------- ----------- ----------- ------------- -------------
Net cash provided by (used for) operating
activities............................... 55,590 (3,086) (52,117) -- 387
----------- ----------- ----------- ------------- -------------
INVESTING ACTIVITIES:
Capital expenditures, net...................... (1,215) (2,202) (2,577) -- (5,994)
Acquisitions, net.............................. (442,501) -- (97,632) -- (540,133)
Other.......................................... -- 2,227 -- -- 2,227
----------- ----------- ----------- ------------- -------------
Net cash provided by (used for) investing
activities................................. (443,716) 25 (100,209) -- (543,900)
----------- ----------- ----------- ------------- -------------
FINANCING ACTIVITIES:
Proceeds from borrowings....................... 772,550 21,522 110,608 -- 904,680
Repayments of debt............................. (233,577) (17,772) (70,412) -- (321,761)
Debt financing (to)/from affiliates............ (126,223) (145) 126,368 -- --
Debt issuance costs............................ (19,537) -- -- -- (19,537)
Proceeds from issuance of common stock and
exercise of stock options.................... 770 -- -- -- 770
----------- ----------- ----------- ------------- -------------
Net cash provided by financing activities.... 393,983 3,605 166,564 -- 564,152
----------- ----------- ----------- ------------- -------------
EFFECT OF EXCHANGE RATES ON CASH................. -- -- (1,916) -- (1,916)
----------- ----------- ----------- ------------- -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS.......... 5,857 544 12,322 -- 18,723
CASH AND CASH EQUIVALENTS, beginning of period... 1,247 (557) 19,854 -- 20,544
----------- ----------- ----------- ------------- -------------
CASH AND CASH EQUIVALENTS, end of period......... $ 7,104 $ (13) $ 32,176 $ -- $ 39,267
----------- ----------- ----------- ------------- -------------
----------- ----------- ----------- ------------- -------------
</TABLE>
F-48
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To: Excel Industries, Inc.
We have audited the accompanying consolidated balance sheets of Excel
Industries, Inc. (an Indiana corporation) and Subsidiaries as of December 27,
1997 and January 2, 1999 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended January 2, 1999. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Excel Industries, Inc. and
Subsidiaries as of December 27, 1997 and January 2, 1999, and the results of
their operations and their cash flows for each of the three years in the period
ended January 2, 1999 in conformity with generally accepted accounting
principles.
As explained in Note 2 to the financial statements, effective December 28,
1997, the Company changed its method of computing depreciation.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
June 16, 1999
F-49
<PAGE>
EXCEL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DEC. 27, JAN. 2,
1997 1999
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments....................................................... $ 2,317 $ 16,290
Marketable securities................................................................. 24,420 14,000
Accounts receivable--trade, less allowances of $1,318 in 1997 and $1,810
in 1998............................................................................. 140,910 167,400
Customer tooling to be billed......................................................... 22,356 30,649
Inventories........................................................................... 40,929 59,402
Prepaid expenses...................................................................... 14,929 15,640
----------- -----------
Total current assets................................................................ 245,861 303,381
Property, plant and equipment:
Land.................................................................................. 3,227 5,153
Buildings and improvements............................................................ 52,056 77,101
Machinery and equipment............................................................... 225,046 302,691
Accumulated depreciation.............................................................. (119,361) (152,276)
----------- -----------
160,968 232,669
Goodwill, net of accumulated amortization of $5,387 in 1997 and $7,012
in 1998............................................................................... 35,960 41,865
Other assets............................................................................ 15,008 16,469
----------- -----------
$ 457,797 $ 594,384
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable...................................................................... $ 85,469 $ 107,052
Accrued liabilities:
Salaries and wages.................................................................. 9,249 16,875
Employee benefits................................................................... 11,136 14,464
Other............................................................................... 20,785 25,439
Income taxes payable.................................................................. -- 3,599
Current maturities of long-term debt.................................................. 2,672 17,156
----------- -----------
Total current liabilities........................................................... 129,311 184,585
Long-term debt.......................................................................... 105,943 149,879
Long-term employee benefits............................................................. 32,934 44,469
Other long-term liabilities............................................................. 4,294 9,085
Minority interest....................................................................... -- 12,108
Commitments and contingent liabilities.................................................. -- --
Shareholders' equity:
Preferred shares--no par value, authorized 1,000 shares; none issued.................. -- --
Common shares--no par value, authorized 20,000 shares; issued and outstanding in 1997,
12,414; issued in 1998, 12,468...................................................... 114,730 115,646
Retained earnings..................................................................... 70,585 81,373
Accumulated other comprehensive income................................................ -- 1,045
Treasury shares at cost, 289 shares................................................... -- (3,806)
----------- -----------
Total shareholders' equity.......................................................... 185,315 194,258
----------- -----------
$ 457,797 $ 594,384
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-50
<PAGE>
EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------
<S> <C> <C> <C>
DEC. 28, DEC. 27, JAN. 2,
1996 1997 1999
---------- ---------- ------------
Net sales.................................................................. $ 887,741 $ 962,333 $ 1,106,103
Cost of goods sold......................................................... 783,375 846,990 995,982
---------- ---------- ------------
Gross profit............................................................. 104,366 115,343 110,121
Selling, administrative and engineering expenses........................... 65,652 79,267 78,615
---------- ---------- ------------
Operating income......................................................... 38,714 36,076 31,506
Interest expense........................................................... 9,784 10,984 11,628
Other income, net.......................................................... (1,736) (1,930) (2,074)
---------- ---------- ------------
Income before income taxes and minority interest......................... 30,666 27,022 21,952
Provision for income taxes................................................. 11,550 9,458 3,632
Minority interest.......................................................... -- -- 1,367
---------- ---------- ------------
Net income............................................................... $ 19,116 $ 17,564 $ 16,953
---------- ---------- ------------
---------- ---------- ------------
Net income per share:
Basic.................................................................... $ 1.79 $ 1.59 $ 1.37
Diluted.................................................................. 1.62 1.48 1.36
Cash dividends per share................................................... $ .455 $ .50 $ .50
---------- ---------- ------------
---------- ---------- ------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-51
<PAGE>
EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------
<S> <C> <C> <C>
DEC. 28, DEC. 27, JAN. 2,
1996 1997 1999
---------- ---------- ----------
Cash flows from operating activities:
Net income.................................................................. $ 19,116 $ 17,564 $ 16,953
---------- ---------- ----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization............................................. 26,246 33,382 39,679
Deferred income taxes..................................................... (1,613) 3,093 782
Other..................................................................... 348 2,093 2,121
Changes in assets and liabilities, excluding effect of acquisitions:
Accounts receivable and prepaid expenses................................ 19,206 (12,396) 14,769
Inventories and customer tooling........................................ 25,955 (3,180) 5,119
Accounts payable and accrued liabilities................................ (19,409) (79) (3,421)
---------- ---------- ----------
Total adjustments..................................................... 50,733 22,913 59,049
---------- ---------- ----------
Net cash provided by operating activities............................. 69,849 40,477 76,002
---------- ---------- ----------
Cash flows from investing activities:
Purchase of property, plant and equipment................................... (29,209) (39,287) (45,958)
Businesses acquired......................................................... (58,984) (2,415) (10,080)
Sale (purchase) of investments, net......................................... 8,290 (2,471) 10,420
Proceeds from disposal of business.......................................... -- 6,793 --
Other....................................................................... 929 199 1,693
---------- ---------- ----------
Net cash used for investing activities................................ (78,974) (37,181) (43,925)
---------- ---------- ----------
Cash flows from financing activities:
Issuance of common shares................................................... 278 543 916
Payments of long-term debt.................................................. (79,934) (2,470) (15,905)
Dividends................................................................... (4,875) (5,632) (6,165)
Purchase of treasury shares................................................. (155) -- (3,806)
Issuance of long-term debt.................................................. 100,000 -- 3,359
Other....................................................................... -- -- 3,497
---------- ---------- ----------
Net cash provided by (used for) financing activities.................. 15,314 (7,559) (18,104)
---------- ---------- ----------
Net change in cash and short-term investments................................. 6,189 (4,263) 13,973
Cash and short-term investments at beginning of period........................ 391 6,580 2,317
---------- ---------- ----------
Cash and short-term investments at end of period.............................. $ 6,580 $ 2,317 $ 16,290
---------- ---------- ----------
---------- ---------- ----------
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest.................................................................... $ 9,288 $ 11,182 $ 11,504
Income taxes, net of refunds................................................ 10,524 8,895 3,594
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-52
<PAGE>
EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON OTHER
SHARES COMMON RETAINED COMPREHENSIVE TREASURY
OUTSTANDING SHARES EARNINGS INCOME SHARES TOTAL
----------- ---------- --------- --------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 30, 1995................. 10,703 $ 95,157 $ 44,412 $ (659) $ (4,593) $ 134,317
Comprehensive income:
Net income................................. 19,116 19,116
Cumulative translation adjustment.......... 45 45
Minimum pension liability adjustment....... 499 499
----------
Total comprehensive income................... 19,660
----------
Dividends.................................... -- -- (4,875) -- -- (4,875)
Share options exercised...................... 12 86 -- -- -- 86
Shares issued under employee stock purchase
plan....................................... 15 192 -- -- -- 192
Warrants issued.............................. 1,500 -- -- -- 1,500
Treasury shares purchased.................... (12) -- -- -- (155) (155)
Treasury shares canceled..................... -- (4,748) -- -- 4,748 --
----------- ---------- --------- ------ --------- ----------
BALANCE AT DECEMBER 28, 1996................. 10,718 92,187 58,653 (115) -- 150,725
Comprehensive income:
Net income................................. 17,564 17,564
Cumulative translation adjustment.......... (45) (45)
Minimum pension liability adjustment....... 160 160
----------
Total comprehensive income................... 17,679
----------
Dividends.................................... -- -- (5,632) -- -- (5,632)
Share options exercised...................... 9 116 -- -- -- 116
Shares issued under employee stock purchase
plan....................................... 22 427 -- -- -- 427
Conversion of 10% subordinated notes......... 1,665 22,000 -- -- -- 22,000
----------- ---------- --------- ------ --------- ----------
BALANCE AT DECEMBER 27, 1997................. 12,414 114,730 70,585 -- -- 185,315
Comprehensive income:
Net income................................. 16,953 16,953
Cumulative translation adjustment.......... 2,042 2,042
Minimum pension liability adjustment....... (997) (997)
----------
Total comprehensive income................... 17,998
----------
Dividends.................................... -- -- (6,165) -- -- (6,165)
Share options exercised...................... 13 162 -- -- -- 162
Shares issued under employee stock purchase
plan....................................... 41 754 -- -- -- 754
Treasury shares purchased.................... (289) -- -- -- (3,806) (3,806)
----------- ---------- --------- ------ --------- ----------
BALANCE AT JANUARY 2, 1999................... 12,179 $ 115,646 $ 81,373 $ 1,045 $ (3,806) $ 194,258
----------- ---------- --------- ------ --------- ----------
----------- ---------- --------- ------ --------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-53
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
The Company designs, manufactures and sells automotive window, door and
seating systems and decorative trims for original equipment manufacturers (OEMs)
and Tier I suppliers. It also manufactures and sells appliances, jacks and
couplers, and window and door systems for the recreational vehicle industry and
windows for the mass transit and heavy truck industries. The Company has
manufacturing facilities located in the United States, Mexico, Germany, United
Kingdom, Spain, Portugal, and the Czech Republic.
Effective July 1, 1998, the Company acquired 70 percent of Schade GmbH & Co.
KG, headquartered in Plettenberg, Germany as described in note 3.
2. SIGNIFICANT ACCOUNTING PRINCIPLES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its majority-owned subsidiaries. All significant intercompany transactions,
profits and balances are eliminated. The Company has a 25% interest in a
Brazilian joint venture, which is accounted for on the equity method and
resulted in losses of $1.5 million in 1998.
FISCAL YEAR
The Company's fiscal year consists of 52 or 53 weeks ending on the Saturday
nearest the calendar year end.
NET INCOME PER SHARE
In 1997, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings Per Share." All net income per share amounts reported
herein are in accordance with this Statement.
Basic net income per share is computed using the weighted average number of
shares outstanding during the period. Shares used to compute basic net income
per share were 10,709,000 for 1996, 11,079,000 for 1997 and 12,370,000 for 1998.
Diluted earnings per share assumes, when dilutive, the exercise of common
share options and warrants outstanding and the conversion of the 10% convertible
subordinated notes until their conversion into common shares in October, 1997.
Shares used to compute diluted earnings per share included the number of shares
used for basic net income per share plus 56,000 in 1996, 187,000 in 1997 and
118,000 in 1998 for the exercise of options and warrants and 2,220,000 in 1996
and 1,370,000 in 1997 for the assumed conversion of the notes. Net income used
to compute diluted earnings per share included an add-back of $1,907,000 in 1996
and $1,192,000 in 1997 for interest, net of taxes, on the notes.
SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES
Short-term investments amounting to $2,000,000 at December 27, 1997 and
$3,770,000 at January 2, 1999 consist of investments generally held in money
market funds.
Marketable securities represent investments with maturities generally longer
than 90 days. All securities mature prior to December, 1999 and are considered
available for sale. Interest and dividends
F-54
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
on marketable securities are included in income as earned. Realized gains or
losses are determined on the specific identification method.
Marketable securities are carried at cost, which approximates market value,
and consist of the following (in thousands):
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Government securities................................................... $ 10,885 $ --
Tax-free municipal securities........................................... 5,335 --
Municipal fund par value preferred shares............................... 2,200 --
Other tax-free securities............................................... 6,000 14,000
--------- ---------
$ 24,420 $ 14,000
--------- ---------
--------- ---------
</TABLE>
Other income includes interest income of $1,772,000 in 1996, $1,957,000 in
1997 and $2,005,000 in 1998.
INVENTORIES
Inventories are valued at the lower of cost or market. At December 27, 1997,
the LIFO method was used to value 84% of inventories. At January 2, 1999, the
last-in, first-out (LIFO) method was used to determine cost for approximately
60% of inventories while the first-in, first-out (FIFO) method was used for the
remaining inventories primarily related to foreign inventories.
CUSTOMER TOOLING TO BE BILLED
Excess of cost over billings on uncompleted tooling projects represents
costs incurred by the Company in the production of customer-owned tooling to be
used by the Company in the manufacture of its products. The Company receives a
specific purchase order for this tooling and is reimbursed by the customer
within one operating cycle. Costs are deferred until reimbursed by the customer.
Forecasted losses on incomplete projects are recognized currently.
PROPERTIES
Property, plant and equipment are carried at cost and include expenditures
for new facilities and those which substantially increase the useful lives of
existing plant and equipment. Expenditures for repairs and maintenance are
expensed as incurred.
DEPRECIATION
The Company provides for depreciation of property, plant and equipment using
methods and rates designed to amortize the cost of such equipment over its
useful life. The estimated useful lives range from 10 to 40 years for buildings
and improvements and 2 to 20 years for machinery and equipment. Prior to 1998,
depreciation was computed using accelerated methods of depreciation for new
plant and equipment. A survey conducted by the Company confirmed that the
straight-line method of depreciation as the predominant method used throughout
the automotive supply industry. Accordingly, for new capital expenditures for
the 1998 fiscal year and thereafter, the Company adopted the straight-line
method of depreciation for financial reporting purposes. The favorable effect of
the change on net income for the year ending January 2, 1999 was approximately
$1.1 million or $.09 per share.
F-55
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
GOODWILL
The excess of purchase price over the fair value of net assets of acquired
businesses (goodwill) is amortized on a straight-line basis over 15 to 40 years.
The Company periodically evaluates whether events and circumstances have
occurred which may affect the estimated useful life or the recoverability of the
remaining balance of its goodwill and other long-lived assets. If such events or
circumstances were to indicate that the carrying amount of these assets would
not be recoverable, the Company would estimate the future cash flows expected to
result from the use of the assets and their eventual disposition. If the sum of
the expected future cash flows (undiscounted and without interest charges) were
less than the carrying amount of goodwill, the Company would recognize an
impairment loss.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company estimates the fair value of all financial instruments where the
face value differs from the fair value, primarily long-term debt, based upon
quoted amounts or the current rates available for similar financial instruments.
If fair value accounting had been used at January 2, 1999, long-term debt would
exceed the reported level by approximately $9 million.
REVENUE RECOGNITION AND SALES COMMITMENTS
The Company recognizes revenue as its products are shipped to its customers.
The Company enters into agreements with its customers at the beginning of a
given vehicle's life to produce products. Once such agreements are entered into
by the Company, fulfillment of the customers' purchasing requirements is
generally the obligation of the Company for the entire production life of the
vehicle, generally with terms of up to seven years. In certain instances, the
Company may be committed under existing agreements to supply product to its
customers at selling prices which are not sufficient to cover the direct cost to
produce such product. In such situations, the Company records a liability for
the estimated future amount of such losses. Such losses are recognized at the
time that the loss is probable and reasonably estimable. The Company recorded a
$4.5 million reserve for these losses in 1998.
INCOME TAXES
Deferred income taxes are provided using the liability method in accordance
with SFAS No. 109, "Accounting for Income Taxes".
FOREIGN CURRENCY TRANSLATION
For operations outside the United States that prepare financial statements
in currencies other than the United States dollar, the balance sheet, income,
expense and cash flow amounts are translated in accordance with SFAS No. 52
"Foreign Currency Translation".
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
disclosure 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.
F-56
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998 the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," effective for
years beginning after June 15, 1999. SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument, including
certain derivative instruments embedded in other contracts, be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
No. 133 requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge criteria are met. Special accounting
for qualifying hedges allow a derivative's gains or losses to offset related
results on the hedged item in the statement of operations and requires that a
company must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting. The Company has not yet quantified
the impacts of adopting SFAS No. 133 and has not yet determined the timing of
adoption.
3. ACQUISITIONS AND DISPOSALS
Effective July 1, 1998, the Company purchased through its wholly-owned
subsidiary, Excel Industries Germany GmbH, a 70% interest in Schade GmbH & Co.
K.G. (Schade) a German limited partnership. The aggregate purchase price for
Schade was DM 17,036,400, or approximately $9,689,000 plus transaction costs.
The Company also assumed approximately $68 million of Schade's debt. The amount
of the Company's contribution to the capital of Schade was DM 27,340,000, or
approximately $15,548,000. Funds for the purchase price for the interests and
the contribution came from the Company's cash on hand.
The remaining 30 percent of Schade is owned by Hella KG Hueck & Co., another
international OEM supplier. Schade has sales and manufacturing operations in
Germany, Portugal, Spain, United Kingdom and the Czech Republic with annual
sales of more than $300 million. Schade and its affiliated companies are engaged
in the manufacture and distribution of decorative trims, body components,
injected molded plastic components and modular windows for the automotive
industry.
The acquisition of Schade was accounted for as a purchase. The assets
acquired and liabilities assumed have been recorded based on preliminary
estimates of fair value as of the date of acquisition. The Company does not
believe the final allocation of purchase price will be materially different from
preliminary allocations. Any changes to the preliminary estimates will be
reflected as an adjustment to goodwill. The excess of the purchase price over
the estimated fair value of net assets acquired has been accounted for as
goodwill and is being amortized over 40 years using the straight-line method.
The accompanying consolidated statements of income include the operating
results of Schade since July 1, 1998. Pro forma unaudited consolidated operating
results of the Company and Schade for the year ended December 27, 1997 and
January 2, 1999, assuming the acquisition had been made as of the beginning of
1997 and 1998, are summarized below (in thousands, except per share amounts):
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------
<S> <C> <C>
1997 1998
------------ ------------
Net sales......................................................... $ 1,243,541 $ 1,264,654
Net income........................................................ 21,116 18,919
Net income per share, basic....................................... 1.91 1.53
Net income per share, diluted..................................... 1.77 1.52
</TABLE>
F-57
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. ACQUISITIONS AND DISPOSALS (CONTINUED)
On April 3, 1996, the Company completed the purchase of all of the
outstanding common shares of Anderson Industries, Inc. (Anderson) for
approximately $62,562,000 including five-year warrants for 381,000 shares of
Excel common stock exercisable at $13.25 per share (valued at $1.5 million) and
expenses of the transaction.
The acquisition of Anderson, a holding company whose main asset was Atwood
Industries, Inc. (Atwood), was accounted for as a purchase. Accordingly, the
purchase price was allocated to the net assets acquired based upon their
estimated fair market values. The excess of the purchase price over the
estimated fair value of net assets acquired, $26,482,000, was accounted for as
goodwill and is being amortized over 35 years using the straight-line method.
The accompanying consolidated statements of income include the operating
results of Anderson since April 3, 1996. Pro forma unaudited consolidated
operating results of the Company and Anderson, assuming the acquisition had been
made as of the beginning of 1996, are summarized below (in thousands except per
share amounts):
<TABLE>
<CAPTION>
YEAR ENDED
1996
-----------
<S> <C>
Net sales........................................................................ $ 985,555
Net income....................................................................... 20,745
Net income per share, basic...................................................... 1.94
Net income per share, diluted.................................................... 1.74
</TABLE>
The unaudited pro forma financial information presented for both
acquisitions is not necessarily indicative either of the results of operations
that would have occurred had the transactions been completed on the indicated
dates or of future results of operations of the combined companies.
In the first quarter of 1997 the Company recorded an $8.7 million pre-tax
restructuring reserve for the closure of manufacturing facilities in 1997 at
Rockford, Illinois and Battle Creek, Michigan which had been acquired as part of
the acquisition of Anderson. The reserve consists of personnel related costs
(mainly severance pay and fringe benefits) and costs related to the disposals of
buildings and equipment. The reserve increased the associated goodwill by $5.4
million (which is net of income taxes) and was not a charge to earnings. Total
charges to the reserve (personnel related costs and costs related to the
disposals of buildings and equipment) through January 2, 1999 were $7.8 million.
Any excess reserves remaining at the completion of the restructuring activities
will be recorded as a reduction in goodwill.
In January, 1997, the Company completed the purchase of the assets of The
Compliance Group located in Greendale, Wisconsin for approximately $2.4 million
in cash. The excess of the purchase price over the estimated fair value of
assets acquired ($2.5 million) has been accounted for as goodwill and is being
amortized over 15 years using the straight-line method.
In May, 1997, the Company completed the sale of the automotive parking brake
product line for $2.9 million, which was acquired when the Company purchased
Anderson. Sales were approximately $6 million in 1997 and $12 million in 1996 or
less than 2% of total sales. At the date of the Anderson acquisition, this asset
was held for sale and the gain on the sale was recorded as an adjustment to
goodwill.
In September, 1997, the Company announced the closure of its Italian
manufacturing division. Closing expenses recorded in the third quarter of 1997
were approximately $1,242,000. Historically, this
F-58
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. ACQUISITIONS AND DISPOSALS (CONTINUED)
division had annual sales of approximately $2.5 million and losses in excess of
$1 million. Losses in 1997 were approximately $900,000.
4. RESEARCH, ENGINEERING AND DEVELOPMENT
Research, engineering and development expenditures charged to operations
approximated $17,237,000 in 1996, $25,245,000 in 1997 and $28,900,000 in 1998.
5. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Raw materials........................................................... $ 23,591 $ 32,515
Work in process and finished goods...................................... 18,674 28,553
LIFO reserve............................................................ (1,336) (1,666)
--------- ---------
$ 40,929 $ 59,402
--------- ---------
--------- ---------
</TABLE>
6. PENSION AND OTHER EMPLOYEE BENEFIT PLANS
PENSION AND PROFIT SHARING PLANS
The Company and its subsidiaries provide retirement benefits to
substantially all employees through various pension, savings and profit sharing
plans. Defined benefit plans provide pension benefits that are based on the
employee's final average salary for salaried employees and stated amounts for
each year of credited service for hourly employees.
It is the Company's policy to fund the ERISA minimum contribution
requirement. Plan assets are invested primarily in corporate equity securities,
fixed income bonds and insurance annuity contracts.
Contributions and costs for the Company's various other benefit plans are
generally determined based on the employee's annual salary. The Company also
provides supplemental retirement benefits for certain executives. Total expense
relating to the Company's retirement plans, including the defined contribution
and defined benefit pension plans, aggregated $7,577,000 in 1996, $8,153,000 in
1997, and $8,541,000 in 1998.
SUPPLEMENTAL AND OTHER POSTRETIREMENT BENEFITS
In addition to providing pension benefits, the Company provides certain
health care benefits to substantially all active employees and postretirement
health care benefits to certain salaried employees. In addition, certain hourly
and salary employees are eligible for postretirement medical coverage until age
65. The Company is primarily self-insured for such benefits.
F-59
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. PENSION AND OTHER EMPLOYEE BENEFIT PLANS (CONTINUED)
The following provides a reconciliation of benefit obligations, plan assets
and funded status of the Company's pension and other postretirement benefit
plans (in thousands):
<TABLE>
<CAPTION>
OTHER
POSTRETIREMENT
PENSION BENEFITS BENEFITS
--------------------- ----------------------
<S> <C> <C> <C> <C>
1997 1998 1997 1998
--------- ---------- ---------- ----------
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year......................... $ 43,613 $ 46,320 $ 12,656 $ 11,285
Acquired company................................................ -- 11,607 -- --
Service cost.................................................... 2,687 3,221 1,060 952
Interest cost................................................... 3,207 3,779 913 922
Plan amendments................................................. 215 -- (1,804) --
Actuarial (gain) loss........................................... 320 2,802 (698) 2,476
Curtailments.................................................... (254) -- -- --
Benefits paid................................................... (3,468) (2,648) (842) (943)
--------- ---------- ---------- ----------
Benefit obligation at end of year............................... 46,320 65,081 11,285 14,692
--------- ---------- ---------- ----------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year.................. 34,451 40,117 -- --
Acquired company................................................ -- 2,614 -- --
Actual return on plan assets.................................... 6,139 4,943 -- --
Company contributions........................................... 2,995 3,367 842 943
Benefits paid................................................... (3,468) (2,648) (842) (943)
--------- ---------- ---------- ----------
Fair value of plan assets at end of year........................ 40,117 48,393 -- --
--------- ---------- ---------- ----------
Funded status................................................... (6,203) (16,688) (11,285) (14,692)
Unrecognized actuarial (gain) loss.............................. 36 1,124 (4,524) (1,847)
Unrecognized prior service cost................................. 187 170 (2,556) (2,452)
Unrecognized transition obligation.............................. (52) (41) -- --
--------- ---------- ---------- ----------
Net amount recognized........................................... $ (6,032) $ (15,435) $ (18,365) $ (18,991)
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
Amounts recognized in the balance sheet consist of:
Accrued benefit liability..................................... $ (6,260) $ (16,907) $ (18,365) $ (18,991)
Intangible asset.............................................. 228 475 -- --
Accumulated other comprehensive income........................ -- 997 -- --
--------- ---------- ---------- ----------
Net amount recognized........................................... $ (6,032) $ (15,435) $ (18,365) $ (18,991)
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
Weighted-average assumptions as of year end:
Discount rate................................................... 7.5% 5.5%-7.0% 7.5% 7.0%
Expected return on plan assets.................................. 8.0% 8.0% N/A N/A
Rate of compensation increase................................... 5.0% 2.5%-4.0% N/A N/A
</TABLE>
The weighted average assumed health care cost trend rate used in measuring
the accumulated postretirement benefit obligation was 8.3% in 1997 and 7.7% in
1998, declining by .5% per year to a weighted average rate of 6.3%.
F-60
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. PENSION AND OTHER EMPLOYEE BENEFIT PLANS (CONTINUED)
The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were $14,200,000, $14,151,000, and $12,117,000 at 1997
and $39,659,000, $37,479,000, and $24,927,000 at 1998 respectively.
The projected benefit obligation for pension plans outside of the U.S. are
$11,728,000 at January 2, 1999.
Components of net pension expense for qualified defined benefit pension
plans are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Service cost..................................................... $ 2,470 $ 2,687 $ 3,221
Interest cost.................................................... 2,711 3,207 3,779
Expected return on plan assets................................... (2,248) (2,770) (3,086)
Net amortization of deferrals.................................... 53 48 28
--------- --------- ---------
Net periodic benefit cost........................................ $ 2,986 $ 3,172 $ 3,942
--------- --------- ---------
--------- --------- ---------
</TABLE>
The components of net periodic postretirement benefit cost are as follows
(in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Service cost..................................................... $ 868 $ 1,060 $ 952
Interest cost.................................................... 780 913 922
Amortization of prior service cost............................... (57) (56) (174)
Recognized actuarial gain........................................ (143) (147) (131)
--------- --------- ---------
Net periodic benefit cost........................................ $ 1,448 $ 1,770 $ 1,569
--------- --------- ---------
--------- --------- ---------
</TABLE>
Assumed health care cost trend rates have a significant effect on the
amounts reported for the other postretirement benefit plans. A
one-percentage-point change in assumed health care cost trend rates would have
the following effects (in thousands):
<TABLE>
<CAPTION>
1-PERCENTAGE
POINT 1-PERCENTAGE
INCREASE POINT DECREASE
------------- --------------
<S> <C> <C>
Effect on total of service and interest cost................... $ 348 $ (283)
Effect on postretirement benefit obligation.................... 2,306 (1,920)
</TABLE>
F-61
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. LONG-TERM DEBT
Following is a summary of long-term debt of the Company (in thousands):
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
7.78% Senior notes.................................................... $ 100,000 $ 100,000
German bank loans..................................................... -- 51,261
Other................................................................. 8,615 15,774
---------- ----------
108,615 167,035
Current maturities.................................................... (2,672) (17,156)
---------- ----------
$ 105,943 $ 149,879
---------- ----------
---------- ----------
</TABLE>
The Senior notes are due April 30, 2011. Interest only is payable in
quarterly installments until 2000 at which time annual payments will commence
ranging from $3.9 million to $12.2 million. The debt agreements contain certain
restrictive covenants which, among other things, require that the Company
maintain certain financial ratios at specified levels, restrict the amount of
additional borrowings and limit the amount of dividends that can be paid.
The German bank loans consist of various loans that are payable periodically
through 2008 with interest rates ranging from 4% to 9%.
The other debt consists primarily of loans from previous Schade
shareholders, mortgages and equipment loans with interest rates ranging from
5.5% to 10.1%. Certain plant and equipment purchased with the proceeds of the
debt collateralize these obligations.
The Company had available unused unsecured lines of credit of approximately
$56,000,000 at January 2, 1999 under terms of an agreement executed in April,
1996. Funds are available under this agreement through April, 2000 at an
interest rate equal to the London Interbank rate plus 75 basis points.
Long-term debt maturities are $17,156,000 in 1999, $17,081,000 in 2000,
$11,904,000 in 2001, $11,020,000 in 2002, $21,243,000 in 2003 and $88,631,000
thereafter.
8. LEASES
The Company leases certain of its manufacturing facilities, sales offices,
transportation and other equipment. Total rental expense was approximately
$4,471,000 in 1996, $5,037,000 in 1997 and $4,505,000 in 1998. Future minimum
lease payments under noncancellable operating leases are $3,691,000 in 1999,
$2,811,000 in 2000, $2,180,000 in 2001, $1,638,000 in 2002, $1,188,000 in 2003
and $713,000 thereafter.
F-62
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. INCOME TAXES
Pre-tax income reported by U.S. and foreign subsidiaries was as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
United States................................................ $ 31,531 $ 29,070 $ 16,715
Foreign...................................................... (865) (2,048) 5,237
--------- --------- ---------
$ 30,666 $ 27,022 $ 21,952
--------- --------- ---------
--------- --------- ---------
</TABLE>
The provision (benefit) for income taxes is summarized below (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Current:
U.S. federal.................................................. $ 11,070 $ 5,187 $ 236
Foreign....................................................... -- -- 1,479
State......................................................... 2,093 1,178 1,078
--------- --------- ---------
13,163 6,365 2,793
--------- --------- ---------
Deferred:
U.S. federal.................................................. (1,720) 3,022 (96)
Foreign....................................................... -- -- 1,124
State......................................................... 107 71 (189)
--------- --------- ---------
(1,613) 3,093 839
--------- --------- ---------
$ 11,550 $ 9,458 $ 3,632
--------- --------- ---------
--------- --------- ---------
</TABLE>
Deferred income taxes are provided for the temporary differences between the
financial reporting basis and tax basis of the Company's assets and liabilities.
Current deferred income tax assets of $11,076,000 and $10,608,000 are classified
as prepaid expenses at December 27, 1997 and January 2, 1999, respectively.
Long-term deferred income tax liabilities of $2,051,000 and $4,510,000 are
classified as other long-term liabilities at December 27, 1997 and January 2,
1999 respectively.
F-63
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. INCOME TAXES (CONTINUED)
Deferred income taxes are comprised of the following at December 27, 1997
and January 2, 1999 (in thousands):
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Gross deferred tax liabilities
Property, plant and equipment......................................... $ 16,457 $ 19,427
Other................................................................. 607 590
--------- ---------
17,064 20,017
--------- ---------
Gross deferred tax assets
Pension and postretirement benefit obligations........................ 14,036 16,486
Other accrued liabilities............................................. 11,898 9,629
Inventories........................................................... 155 --
Tax credit and net operating loss carryforwards....................... 1,355 1,162
--------- ---------
27,444 27,277
Valuation allowance..................................................... (1,355) (1,162)
--------- ---------
Net deferred tax assets................................................. $ 9,025 $ 6,098
--------- ---------
--------- ---------
</TABLE>
At December 27, 1997 and January 2, 1999 the Company maintained a valuation
allowance for foreign tax credit and foreign net operating loss carryforwards,
which expire in 1999-2004. Based upon past operating results, the Company
estimates that it is more likely than not that these carryforwards cannot be
utilized before they expire. The Company does not provide U.S. income taxes on
earnings of foreign subsidiaries ($3.2 million) since it is intended that these
earnings be indefinitely reinvested.
Provision for taxes on income in 1998 includes the benefit of tax credits
related to prior years. In 1998, the Company completed a review of qualified
research and development expenditures for the years 1994-1997 and recorded tax
credits totaling $4 million. The provision for income taxes computed by applying
the Federal statutory rate to income before income taxes is reconciled to the
recorded provision as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Tax at United States statutory rate............................. $ 10,733 $ 9,458 $ 7,683
State income taxes, net of federal benefit...................... 1,430 812 578
Research and development tax credits............................ (80) (187) (5,472)
Foreign income taxed at rates different than U.S................ 303 (186) 770
Foreign Sales Corporation....................................... (494) (682) (684)
Non-taxable interest income (340) (382) (235)
Amortization of goodwill........................................ 346 479 561
Other........................................................... (348) 146 431
--------- --------- ---------
$ 11,550 $ 9,458 $ 3,632
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-64
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. COMMON SHARES
In 1997, the Company reserved 500,000 common shares for the Excel
Industries, Inc. 1997 Long-Term Incentive Plan (LTIP). Under the LTIP,
performance shares awarded to key executives of the Company are earned based on
the attainment of one or more pre-established performance goals over a specified
performance period. Through January 2, 1999, 135,000 performance shares had been
awarded.
The Company has 473,550 common shares reserved for issuance to officers,
other key employees and non-employee directors for the 1994 Stock Compensation
Plan (the Plan). The Plan provides that options may be granted at not less than
fair market value and are exercisable for ten years from the date of grant.
Generally, the options become exercisable at the rate of 25% per year commencing
one year from the date of grant.
The following table sets forth stock option activity.
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996 1997 1998
---------------------- ---------------------- ----------------------
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Stock options outstanding at beginning of year........... 263,750 $ 12.23 250,900 $ 12.45 352,250 $ 14.73
Options granted.......................................... 15,000 12.25 127,000 19.19 9,000 17.17
Options exercised........................................ (12,200) 7.54 (9,400) 12.38 (13,100) 12.38
Options canceled......................................... (15,650) 12.38 (16,250) 15.73 (26,250) 16.53
--------- ----------- --------- ----------- --------- -----------
Stock options outstanding at end of year................. 250,900 $ 12.45 352,250 $ 14.73 321,900 $ 14.75
--------- ----------- --------- ----------- --------- -----------
--------- ----------- --------- ----------- --------- -----------
Options exerciseable at year end......................... 57,300 $ 12.56 110,000 $ 12.51 177,275 $ 13.48
--------- ----------- --------- ----------- --------- -----------
--------- ----------- --------- ----------- --------- -----------
</TABLE>
<TABLE>
<CAPTION>
EXERCISE PRICE RANGE
--------------------------
<S> <C> <C> <C>
$12.25-$13.81 $16.13-$21.38 TOTAL
------------ ------------ ----------
Options outstanding.................................. 210,900 111,000 321,900
Weighted average exercise price...................... $12.40 $19.21 $14.75
Remaining contractual life........................... 6.2 years 8.2 years 6.9 years
Options exercisable.................................. 147,525 29,750 177,275
Weighted average exercise price...................... $12.37 $18.98 $13.48
</TABLE>
The Company has adopted the disclosure only provisions of SFAS No. 123,
"Accounting for Stock Based Compensation." Accordingly, the element of
compensation cost applicable to the granting of stock options has not been
recognized for financial statement purposes. Had compensation cost for the
options granted been recognized for financial statement purposes using the
Black-Scholes option
F-65
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. COMMON SHARES (CONTINUED)
pricing model, the Company's net earnings and basic earnings per share would
have been reduced to the pro-forma amounts indicated below (in thousands except
per share amounts):
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996 1997 1998
---------------------- ---------------------- ----------------------
<CAPTION>
REPORTED PRO-FORMA REPORTED PRO-FORMA REPORTED PRO-FORMA
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net earnings..................... $ 19,116 $ 18,882 $ 17,564 $ 17,191 $ 16,953 $ 16,523
Per share........................ 1.79 1.77 1.59 1.55 1.37 1.34
</TABLE>
The fair value of the option grant is estimated on the date of grant with
the following assumptions:
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Dividend yield................................................. 3.2% 2.8% 2.86%
Expected volatility............................................ 33% 31% 33%
Risk-free interest rate 6.5% 5.75% 4.5%
Expected life.................................................. 5 years 5 years 5 years
</TABLE>
The Company has an employee stock purchase plan and has reserved 251,659
common shares for this purpose. The plan allows eligible employees to authorize
payroll withholdings which are used to purchase common shares from the Company
at ninety percent (90%) of the closing price of the common shares on the date of
purchase. Through January 2, 1999, 198,341 shares had been issued under the
plan.
The Company has outstanding warrants for the purchase of 381,000 common
shares at a price of $13.25. These warrants were issued in connection with the
acquisition of Anderson Industries and if not exercised, expire April 2001.
The Company has a shareholder rights plan to protect shareholders against
unsolicited attempts to acquire control of the Company that do not offer what
the Company believes to be an adequate price to all shareholders. The rights
were issued to shareholders of record on January 22, 1996 and will expire on
January 22, 2006. The plan provides for the issuance of one right for each
outstanding share of the Company's Common Stock. The rights will become
exercisable only if a person or group acquires or announces a tender offer to
acquire 20% or more of the Company's outstanding voting stock. Each right
entitles the holder to buy one one-hundredth share of a newly authorized series
of preferred stock from the Company. Also, after such acquisition all rights
holders except the acquirer will be entitled to purchase common shares at
one-half of the then current market price of the common shares. Any activity
regarding this plan would have a dilutive effect on earnings per share
calculations.
11. SEGMENT INFORMATION AND MAJOR CUSTOMERS
The Company adopted SFAS No 131, "Disclosures About Segments of an
Enterprise and Related Information," in 1998 and restated prior year disclosures
for certain minor differences. The Company's operating segments are aggregated
for reporting purposes into two reportable segments based on similarities of the
nature of products and production processes, the types of customers, the method
of distribution of products, and economic characteristics.
F-66
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. SEGMENT INFORMATION AND MAJOR CUSTOMERS (CONTINUED)
The light vehicle products segment designs, manufactures and sells products
for passenger cars and pick-up trucks for OEMs and Tier I suppliers. Products
include plastic and metal framed window and door assemblies, manual and power
window regulator systems, manual seat systems, decorative trims and injection
molded plastic parts. Principal markets are in North America, Europe, and
Mexico.
The recreational vehicles, mass transit and heavy truck products segment
(RV/MT/HT) manufactures and sells products for recreational vehicles, mass
transit and heavy trucks. Products include appliances such as water heaters,
furnaces, stoves and ranges, hardware such as jacks and couplers, seating frames
and seat adjusters, preassembled doors and windows for motor homes and window
assembles for mass transit systems and heavy trucks. Principal markets are in
the United States. Segment information is summarized in the following tables
with years prior to 1998 restated (in thousands):
<TABLE>
<CAPTION>
LIGHT
VEHICLE RV/MT/HT
PRODUCTS PRODUCTS CORPORATE TOTAL
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
DECEMBER 28, 1996
Sales.................................... $ 730,255 $ 157,486 $ -- $ 887,741
Operating income (expense)............... 34,140 13,337 (8,763) 38,714
Assets................................... 301,197 87,643 54,394 443,234
Capital expenditures..................... 23,816 3,768 1,625 29,209
Depreciation and amortization expense.... 20,626 4,283 1,337 26,246
DECEMBER 27, 1997
Sales.................................... $ 759,569 $ 202,764 $ -- $ 962,333
Operating income (expense)............... 28,546 15,392 (7,862) 36,076
Assets................................... 319,284 84,156 54,357 457,797
Capital expenditures..................... 32,932 5,916 439 39,287
Depreciation and amortization expense.... 24,348 7,481 1,553 33,382
JANUARY 2, 1999
Sales.................................... $ 885,383 $ 220,720 $ -- $ 1,106,103
Operating income (expense)............... 18,051 19,737 (6,282) 31,506
Assets................................... 484,126 81,198 29,060 594,384
Capital expenditures..................... 40,824 4,779 355 45,958
Depreciation and amortization expense.... 31,725 6,905 1,049 39,679
</TABLE>
F-67
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. SEGMENT INFORMATION AND MAJOR CUSTOMERS (CONTINUED)
The following table presents revenues by country (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---------- ---------- ------------
<S> <C> <C> <C>
United States.......................................... $ 742,047 $ 788,952 $ 786,672
Canada................................................. 106,640 134,801 125,376
Germany................................................ -- -- 111,180
Mexico................................................. 29,863 24,062 23,411
Other.................................................. 9,191 14,518 59,464
---------- ---------- ------------
$ 887,741 $ 962,333 $ 1,106,103
---------- ---------- ------------
---------- ---------- ------------
</TABLE>
The following table presents long-lived assets by country (in thousands):
<TABLE>
<CAPTION>
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
United States............................................ $ 201,253 $ 209,012 $ 216,230
Germany.................................................. -- -- 39,539
Other.................................................... 3,031 2,924 35,234
---------- ---------- ----------
$ 204,284 $ 211,936 $ 291,003
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Sales to three major customers, Ford Motor Company, DaimlerChrysler, and
General Motors Corporation, were approximately 47%, 12% and 6%, respectively, of
the Company's net sales in 1996 as compared to 41%, 11% and 7% in 1997 and 36%,
9% and 5% in 1998.
Accounts receivable from Ford Motor Company, DaimlerChrysler, and General
Motors Corporation approximated 60% of trade accounts receivable at December 27,
1997 and 46% at January 2, 1999.
12. CONTINGENCIES
A chemical cleaning compound, trichloroethylene (TCE), was found in the soil
and groundwater on the Company's property in Elkhart, Indiana, and in 1981 TCE
was found in a well field of the City of Elkhart in close proximity to the
Company's facility. On June 9, 1998, the United States District Court for the
Northern District of Indiana accepted a consent decree specifying a payment of
Federal Past Response Costs. Together with amounts due the Indiana Department of
Environmental Management, the Company paid approximately $3.4 million in 1998 to
complete its obligation for the remedial clean-up.
The Company has been named a potentially responsible party for costs at six
disposal sites. The remedial investigations and feasibility studies have been
completed, and the results of those studies have been provided to the
appropriate agencies. The studies indicated a range of viable remedial
approaches, but agreement has not yet been reached with the authorities on the
final remediation approach. Furthermore, the PRPs for these sites have not
reached an agreement on the allocation of costs between the PRPs. The Company
believes it either has no liability as a responsible party or that adequate
provisions have been recorded for current estimates of the Company's liability
and estimated legal costs associated with the settlement of these claims. It is
reasonably possible that the Company's recorded estimate of its obligation may
change in the near term.
F-68
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. CONTINGENCIES (CONTINUED)
There are claims and pending legal proceedings against the Company and its
subsidiaries with respect to taxes, workers' compensation, warranties and other
matters arising out of the ordinary conduct of the business. The ultimate result
of these claims and proceedings at January 2, 1999 is not determinable, but, in
the opinion of management, adequate provision for anticipated costs has been
made or insurance coverage exists to cover such costs.
13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table sets forth in summary form the quarterly results of
operations for the fiscal years ended December 27, 1997 and January 2, 1999 (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
1997
----------------------------------------------
<S> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
---------- ---------- ---------- ----------
Net sales.................................... $ 251,216 $ 264,474 $ 213,548 $ 233,095
Gross profit................................. 30,998 37,099 21,659 25,587
Net income................................... 6,302 9,067 297 1,898
Net income per share:
Basic...................................... $ .59 $ .85 $ .03 $ .16
Diluted.................................... .53 .75 .03 .16
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
1998
----------------------------------------------
<S> <C> <C> <C> <C>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
---------- ---------- ---------- ----------
Net sales.................................... $ 230,994 $ 247,237 $ 280,231 $ 347,641
Gross profit................................. 27,580 28,650 20,648 33,243
Net income................................... 5,379 5,756 1,589 4,229
Net income per share:
Basic...................................... $ .43 $ .46 $ .13 $ .35
Diluted.................................... .43 .46 .13 .35
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
14. SUBSEQUENT EVENT
On March 23, 1999, all of the Company's outstanding stock was acquired by
Dura Automotive Systems, Inc. (Dura). In the aggregate, the stockholders of
Excel received consideration of approximately $155.5 million in cash and
approximately 5.1 million shares of Dura's Class A common stock. Upon completion
of this transaction, the Company became a wholly owned subsidiary of Dura.
Dura is a leading designer and manufacturer of driver control systems,
engineered mechanisms and cable-related systems for the global automotive
industry. Their products include parking brake systems, automotive cables,
transmission shifter systems, latches, underbody tire carriers, jacks, brake,
clutch and accelerator pedals and other mechanical assemblies. Their products
are sold to major North American OEMs, including Ford, General Motors and
DaimlerChrysler, as well as Japanese OEMs including Toyota and Honda. Dura's
European and Latin American facilities support Ford, GM, Volkswagen, Mercedes,
BMW, PSA (Peugeot and Citroen) and various other OEMs. Dura's operating
headquarters are in Rochester Hills, MI, and its corporate office is in
Minneapolis, MN.
F-69
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (CONTINUED)
The following consolidating financial information presents balance sheet,
statement of income and cash flow information related to the Company's
businesses. Upon completion of the transaction described in Note 14, each
Guarantor became a direct or indirect wholly owned subsidiary of Dura and fully
and unconditionally guaranteed Dura's 9% senior subordinated notes, on a joint
and several basis. Separate financial statements and other disclosures
concerning the Guarantors have not been presented because management believes
that such information is not material.
EXCEL INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 28, 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net sales.................................................... $ 878,037 $ 9,807 $ (103) $ 887,741
Cost of goods sold........................................... 773,972 9,506 (103) 783,375
----------- ----------- ----- ------------
Gross profit............................................... 104,065 301 -- 104,366
Selling, administrative and engineering expenses............. 64,440 1,212 -- 65,652
----------- ----------- ----- ------------
Operating income (loss).................................... 39,625 (911) -- 38,714
Interest expense............................................. 9,785 47 (48) 9,784
Other income, net............................................ (1,691) (93) 48 (1,736)
----------- ----------- ----- ------------
Income (loss) before taxes and minority interest........... 31,531 (865) -- 30,666
Provision for income taxes................................... 11,550 -- -- 11,550
----------- ----------- ----- ------------
Net income (loss).......................................... $ 19,981 $ (865) $ -- $ 19,116
----------- ----------- ----- ------------
----------- ----------- ----- ------------
</TABLE>
F-70
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (CONTINUED)
EXCEL INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 28, 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES CONSOLIDATED
----------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................................ $ 19,981 $ (865) $ 19,116
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.......................................... 25,731 515 26,246
Deferred income taxes.................................................. (1,613) -- (1,613)
Other.................................................................. 348 -- 348
Changes in other operating items....................................... 24,594 1,158 25,752
----------- ----------- ------------
Net cash provided by operating activities............................ 69,041 808 69,849
----------- ----------- ------------
Cash flows from investing activities:
Purchase of property, plant and equipment................................ (28,744) (465) (29,209)
Businesses acquired...................................................... (58,984) -- (58,984)
Sale of investments, net................................................. 8,290 -- 8,290
Other.................................................................... 389 540 929
----------- ----------- ------------
Net cash provided by (used for) investing activities................. (79,049) 75 (78,974)
----------- ----------- ------------
Cash flows from financing activities:
Issuance of common shares................................................ 278 -- 278
Payments of long-term debt............................................... (79,934) -- (79,934)
Dividends................................................................ (4,875) -- (4,875)
Purchase of treasury shares.............................................. (155) -- (155)
Issuance of other long-term debt......................................... 100,000 -- 100,000
----------- ----------- ------------
Net cash provided by financing activities............................ 15,314 -- 15,314
----------- ----------- ------------
Net change in cash and short-term investments.............................. 5,306 883 6,189
Cash and short-term investments at beginning of period..................... 39 352 391
----------- ----------- ------------
Cash and short-term investments at end of period........................... $ 5,345 $ 1,235 $ 6,580
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
F-71
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (CONTINUED)
EXCEL INDUSTRIES, INC.
CONSOLIDATING BALANCE SHEETS AS OF DECEMBER 27, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments............................ $ 590 $ 1,727 $ -- $ 2,317
Marketable securities...................................... 24,420 -- -- 24,420
Accounts receivable--trade................................. 140,380 530 -- 140,910
Customer tooling to be billed.............................. 22,176 180 -- 22,356
Inventories................................................ 40,116 813 -- 40,929
Prepaid expenses........................................... 14,927 2 -- 14,929
----------- ----------- ------------ ------------
Total current assets..................................... 242,609 3,252 -- 245,861
Property, plant & equipment, net............................. 158,044 2,924 -- 160,968
Goodwill, net................................................ 35,960 -- -- 35,960
Other assets................................................. 23,035 -- (8,027) 15,008
----------- ----------- ------------ ------------
$ 459,648 $ 6,176 $ (8,027) $ 457,797
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................... $ 85,160 $ 309 $ -- $ 85,469
Accrued liabilities:
Salaries and wages....................................... 9,249 -- -- 9,249
Employee benefits........................................ 11,136 -- -- 11,136
Other.................................................... 20,032 753 -- 20,785
Current maturities of long-term debt....................... 2,672 -- -- 2,672
----------- ----------- ------------ ------------
Total current liabilities................................ 128,249 1,062 -- 129,311
Long-term debt............................................... 105,943 -- -- 105,943
Long-term employee benefits.................................. 32,934 -- -- 32,934
Other long-term liabilities.................................. 4,294 1,617 (1,617) 4,294
Shareholders' equity......................................... 188,228 3,497 (6,410) 185,315
----------- ----------- ------------ ------------
$ 459,648 $ 6,176 $ (8,027) $ 457,797
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</TABLE>
F-72
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (CONTINUED)
EXCEL INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 27, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Net sales.................................................... $ 951,611 $ 10,906 $ (184) $ 962,333
Cost of goods sold........................................... 836,634 10,540 (184) 846,990
----------- ----------- ----- ------------
Gross profit............................................... 114,977 366 -- 115,343
Selling, administrative and engineering expenses............. 76,910 2,357 -- 79,267
----------- ----------- ----- ------------
Operating income (loss).................................... 38,067 (1,991) -- 36,076
Interest expense............................................. 10,984 20 (20) 10,984
Other (income) expense, net.................................. (1,987) 37 20 (1,930)
----------- ----------- ----- ------------
Income (loss) before taxes and minority interest........... 29,070 (2,048) -- 27,022
Provision for income taxes................................... 9,458 -- -- 9,458
----------- ----------- ----- ------------
Net income (loss).......................................... $ 19,612 $ (2,048) $ -- $ 17,564
----------- ----------- ----- ------------
----------- ----------- ----- ------------
</TABLE>
F-73
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (CONTINUED)
EXCEL INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 27, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES CONSOLIDATED
----------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................................ $ 19,612 $ (2,048) $ 17,564
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.......................................... 32,822 560 33,382
Deferred income taxes.................................................. 3,093 -- 3,093
Other.................................................................. 2,080 13 2,093
Due (to)/from affiliates............................................... 1,710 (1,710) --
Changes in other operating items....................................... (19,157) 3,502 (15,655)
----------- ----------- ------------
Net cash provided by operating activities............................ 40,160 317 40,477
----------- ----------- ------------
Cash flows from investing activities:
Purchase of property, plant and equipment................................ (39,008) (279) (39,287)
Businesses acquired...................................................... (2,415) -- (2,415)
Purchase of investments, net............................................. (2,471) -- (2,471)
Proceeds from disposal of business....................................... 6,793 -- 6,793
Other.................................................................... (255) 454 199
----------- ----------- ------------
Net cash provided by (used for) investing activities................. (37,356) 175 (37,181)
----------- ----------- ------------
Cash flows from financing activities:
Issuance of common shares................................................ 543 -- 543
Payments of long-term debt............................................... (2,470) -- (2,470)
Dividends................................................................ (5,632) -- (5,632)
----------- ----------- ------------
Net cash used for financing activities............................... (7,559) -- (7,559)
----------- ----------- ------------
Net change in cash and short-term investments.............................. (4,755) 492 (4,263)
Cash and short-term investments at beginning of period..................... 5,345 1,235 6,580
----------- ----------- ------------
Cash and short-term investments at end of period........................... $ 590 $ 1,727 $ 2,317
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
F-74
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (CONTINUED)
EXCEL INDUSTRIES, INC.
CONSOLIDATING BALANCE SHEETS AS OF JANUARY 2, 1999
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments............................ $ 295 $ 15,995 $ -- $ 16,290
Marketable securities...................................... 14,000 -- -- 14,000
Accounts receivable--trade................................. 127,110 40,290 -- 167,400
Customer tooling to be billed.............................. 21,646 9,003 -- 30,649
Inventories................................................ 39,869 19,533 -- 59,402
Prepaid expenses........................................... 15,089 551 -- 15,640
----------- ----------- ------------ ------------
Total current assets..................................... 218,009 85,372 -- 303,381
Property, plant & equipment, net............................. 162,374 70,295 -- 232,669
Goodwill, net................................................ 41,865 -- -- 41,865
Other assets................................................. 47,594 4,478 (35,603) 16,469
----------- ----------- ------------ ------------
$ 469,842 $ 160,145 $ (35,603) $ 594,384
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................... $ 85,188 $ 21,864 $ -- $ 107,052
Accrued liabilities:
Salaries and wages....................................... 16,875 -- -- 16,875
Employee benefits........................................ 14,464 -- -- 14,464
Other.................................................... 9,765 15,674 -- 25,439
Income taxes payable....................................... 1,461 2,138 -- 3,599
Current maturities of long-term debt....................... 2,001 15,155 -- 17,156
----------- ----------- ------------ ------------
Total current liabilities................................ 129,754 54,831 -- 184,585
Long-term debt............................................... 103,928 45,951 -- 149,879
Long-term employee benefits.................................. 44,469 -- -- 44,469
Other long-term liabilities.................................. (695) 20,359 (10,579) 9,085
Minority interest............................................ -- 12,108 -- 12,108
Shareholders' equity......................................... 192,386 26,896 (25,024) 194,258
----------- ----------- ------------ ------------
$ 469,842 $ 160,145 $ (35,603) $ 594,384
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</TABLE>
F-75
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (CONTINUED)
EXCEL INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF INCOME FOR THE YEAR ENDED JANUARY 2, 1999
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES CONSOLIDATED
----------- ----------- ------------
<S> <C> <C> <C>
Net sales.................................................................. $ 936,940 $ 169,163 $1,106,103
Cost of goods sold......................................................... 844,573 151,409 995,982
----------- ----------- ------------
Gross profit............................................................. 92,367 17,754 110,121
Selling, administrative and engineering expenses........................... 69,272 9,343 78,615
----------- ----------- ------------
Operating income......................................................... 23,095 8,411 31,506
Interest expense........................................................... 11,628 -- 11,628
Other (income) expense, net................................................ (3,772) 1,698 (2,074)
----------- ----------- ------------
Income before taxes and minority interest................................ 15,239 6,713 21,952
Provision for income taxes................................................. 1,029 2,603 3,632
Minority interest.......................................................... -- 1,367 1,367
----------- ----------- ------------
Net income............................................................... $ 14,210 $ 2,743 $ 16,953
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
F-76
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (CONTINUED)
EXCEL INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JANUARY 2, 1999
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES CONSOLIDATED
----------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................................................... $ 14,210 $ 2,743 $ 16,953
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.......................................... 31,726 7,953 39,679
Deferred income taxes.................................................. (394) 1,176 782
Other.................................................................. (734) 2,855 2,121
Due (to)/from affiliates............................................... (986) 986 --
Changes in other operating items....................................... 19,185 (2,718) 16,467
----------- ----------- ------------
Net cash provided by operating activities............................ 63,007 12,995 76,002
----------- ----------- ------------
Cash flows from investing activities:
Purchase of property, plant and equipment................................ (37,040) (8,918) (45,958)
Businesses acquired...................................................... (608) (9,472) (10,080)
Sale of investments, net................................................. 10,420 -- 10,420
Disposal of business..................................................... (18,605) 18,605 --
Other.................................................................... (3,239) 4,932 1,693
----------- ----------- ------------
Net cash provided by (used for) investing activities................. (49,072) 5,147 (43,925)
----------- ----------- ------------
Cash flows from financing activities:
Issuance of common shares................................................ 916 -- 916
Payments of long-term debt............................................... (5,175) (10,730) (15,905)
Dividends................................................................ (6,165) -- (6,165)
Purchase of treasury shares.............................................. (3,806) -- (3,806)
Issuance of other long-term debt......................................... -- 3,359 3,359
Other.................................................................... -- 3,497 3,497
----------- ----------- ------------
Net cash used for financing activities............................... (14,230) (3,874) (18,104)
----------- ----------- ------------
Net change in cash and short-term investments.............................. (295) 14,268 13,973
Cash and short-term investments at beginning of period..................... 590 1,727 2,317
----------- ----------- ------------
Cash and short-term investments at end of period........................... $ 295 $ 15,995 $ 16,290
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
F-77
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (CONTINUED)
EXCEL INDUSTRIES, INC.
CONSOLIDATING BALANCE SHEETS AS OF MARCH 28, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments............................ $ 24,746 $ 809 $ -- $ 25,555
Accounts receivable--trade................................. 147,687 780 -- 148,467
Customer tooling to be billed.............................. 24,723 4 -- 24,727
Inventories................................................ 39,147 848 -- 39,995
Prepaid expenses........................................... 12,181 14 -- 12,195
----------- ----------- ------------ ------------
Total current assets..................................... 248,484 2,455 -- 250,939
Property, plant & equipment, net............................. 161,664 2,867 -- 164,531
Other assets................................................. 59,379 (1,350) (6,591) 51,438
----------- ----------- ------------ ------------
$ 469,527 $ 3,972 $ (6,591) $ 466,908
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable........................................... $ 82,716 $ 304 $ -- $ 83,020
Accrued liabilities........................................ 43,759 409 -- 44,168
Income taxes payable....................................... 4,662 -- -- 4,662
Current maturities of long-term debt....................... 2,712 -- -- 2,712
----------- ----------- ------------ ------------
Total current liabilities................................ 133,849 713 -- 134,562
Long-term debt............................................... 105,317 -- -- 105,317
Other long-term liabilities.................................. 37,546 181 (181) 37,546
Shareholders' equity......................................... 192,815 3,078 (6,410) 189,483
----------- ----------- ------------ ------------
$ 469,527 $ 3,972 $ (6,591) $ 466,908
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</TABLE>
F-78
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (CONTINUED)
EXCEL INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 28, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES CONSOLIDATED
----------- ----------- ------------
<S> <C> <C> <C>
Net sales.................................................................. $ 230,583 $ 411 $ 230,994
Cost of goods sold......................................................... 202,714 700 203,414
----------- ----- ------------
Gross profit (loss)...................................................... 27,869 (289) 27,580
Selling, administrative and engineering expenses........................... 17,110 126 17,236
----------- ----- ------------
Operating income (loss).................................................. 10,759 (415) 10,344
Other expense, net......................................................... 2,190 4 2,194
----------- ----- ------------
Income (loss) before taxes and minority interest......................... 8,569 (419) 8,150
Provision for income taxes................................................. 2,771 -- 2,771
----------- ----- ------------
Net income (loss)........................................................ $ 5,798 $ (419) $ 5,379
----------- ----- ------------
----------- ----- ------------
</TABLE>
F-79
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (CONTINUED)
EXCEL INDUSTRIES, INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 28, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR
COMPANIES COMPANIES CONSOLIDATED
----------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................................ $ 5,798 $ (419) $ 5,379
Adjustments to reconcile net income to net cash provided by (used for)
operating activities:
Depreciation and amortization.......................................... 7,735 113 7,848
Deferred income taxes.................................................. 2,246 -- 2,246
Other.................................................................. 206 8 214
Due (to)/from affiliates............................................... 86 (86) --
Changes in other operating items....................................... (575) (470) (1,045)
----------- ----------- ------------
Net cash provided by (used for) operating activities................. 15,496 (854) 14,642
----------- ----------- ------------
Cash flows from investing activities:
Purchase of property, plant and equipment................................ (11,226) (64) (11,290)
Other.................................................................... (2,737) -- (2,737)
----------- ----------- ------------
Net cash used for investing activities............................... (13,963) (64) (14,027)
----------- ----------- ------------
Cash flows from financing activities:
Issuance of common shares................................................ 344 -- 344
Payments of long-term debt............................................... (586) -- (586)
Dividends................................................................ (1,555) -- (1,555)
----------- ----------- ------------
Net cash used for financing activities............................... (1,797) -- (1,797)
----------- ----------- ------------
Net change in cash and short-term investments.............................. (264) (918) (1,182)
Cash and short-term investments at beginning of period..................... 25,010 1,727 26,737
----------- ----------- ------------
Cash and short-term investments at end of period........................... $ 24,746 $ 809 $ 25,555
----------- ----------- ------------
----------- ----------- ------------
</TABLE>
F-80
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS OF ADWEST AUTOMOTIVE PLC
We have audited the accompanying consolidated balance sheets of Adwest
Automotive Plc and its subsidiaries at 30 June 1998 and 1997, and the related
consolidated profit and loss accounts, statements of movements in shareholders'
equity and consolidated cash flow statements for each of the years in the three
year period ended 30 June 1998. These consolidated financial statements are the
responsibility of the management of Adwest Automotive Plc. Our responsibility is
to express an opinion on these consolidated financial statements based on our
audit.
We conducted our audits in accordance with auditing standards generally
accepted in the United Kingdom, which are substantially consistent with those of
the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Adwest
Automotive Plc and its subsidiaries at 30 June 1998 and 1997, and the results of
their operations and their cash flows for each of the years in the three year
period ended 30 June 1998, in conformity with generally accepted accounting
principles in the United Kingdom.
Accounting principles generally accepted in the United Kingdom vary in
certain significant respects from accounting principles generally accepted in
the United States of America. Application of accounting principles generally
accepted in the United States would have affected net profit for the two years
ended 30 June 1998 and shareholders' equity at 30 June 1998 and 1997, to the
extent summarised in Note 31 to the consolidated financial statements.
<TABLE>
<S> <C>
London, England KPMG Audit Plc
7 September 1998 Chartered Accountants
Registered Auditor
</TABLE>
F-81
<PAGE>
ADWEST AUTOMOTIVE PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE
<TABLE>
<CAPTION>
NOTES 1998 L000 1997 L000 1996 L000
----- --------- --------- ---------
<S> <C> <C> <C> <C>
TURNOVER.................................................................
Continuing operations.................................................. 149,166 150,842 127,345
Acquisitions........................................................... 73,024 -- --
--------- --------- ---------
TOTAL CONTINUING OPERATIONS.............................................. 222,190 150,842 127,345
Discontinued operations................................................ 24,680 40,570 96,305
Discontinued acquisitions.............................................. 2,983 -- --
--------- --------- ---------
2 249,853 191,412 223,650
--------- --------- ---------
OPERATING PROFIT
Continuing operations.................................................. 13,586 14,602 10,221
Acquisitions........................................................... 4,937 -- --
--------- --------- ---------
TOTAL CONTINUING OPERATIONS.............................................. 18,523 14,602 10,221
Discontinued operations................................................ 2,959 3,411 4,729
Discontinued acquisitions.............................................. (124) -- --
--------- --------- ---------
2 21,358 18,013 14,950
EXCEPTIONAL ITEMS........................................................ 3
Continuing operations.................................................. -- -- (3,130)
Discontinued operations................................................ -- -- (1,835)
--------- --------- ---------
OPERATING PROFIT AFTER EXCEPTIONAL ITEMS................................. 4 21,358 18,013 9,985
Associated undertakings................................................ 21 21 86
Profit less losses on disposal of interests in associates.............. -- -- 53
Profit/(losses) and provision for losses on disposal of subsidiaries... 4,051 (791) (9,096)
Goodwill written off on disposal of subsidiaries....................... (17,552) -- (20,173)
6 (13,501) (791) (29,269)
--------- --------- ---------
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE INTEREST..................... 7,878 17,243 (19,145)
Net interest charge...................................................... 7 (5,199) (2,892) (3,852)
--------- --------- ---------
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION..................... 2,679 14,351 (22,997)
Taxation credit (charge)................................................. 8 (4,529) (4,527) 2,082
--------- --------- ---------
(LOSS)/PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION...................... (1,850) 9,824 (25,079)
Minority interests--equity............................................... (505) (400) (263)
--------- --------- ---------
(LOSS)/PROFIT FOR THE FINANCIAL YEAR..................................... (2,355) 9,424 (25,342)
Dividends................................................................ 9 (6,442) (6,428) (6,400)
--------- --------- ---------
RETAINED PROFIT/(LOSS)................................................... 24 (8,797) 2,996 (31,742)
--------- --------- ---------
--------- --------- ---------
EARNINGS PER SHARE
(Loss)/earnings per share................................................ 10 (2.8)p 11.4p (30.7)p
</TABLE>
F-82
<PAGE>
ADWEST AUTOMOTIVE PLC
CONSOLIDATED BALANCE SHEET
AT 30 JUNE
<TABLE>
<CAPTION>
NOTES 1998 L000 1997 L000
--------- --------- ---------
<S> <C> <C> <C>
FIXED ASSETS
Tangible assets................................................................... 12 61,545 37,336
Investments....................................................................... 14 755 805
--------- ---------
62,300 38,141
--------- ---------
CURRENT ASSETS
Stock and work in progress........................................................ 15 18,969 15,387
Debtors (see note below).......................................................... 16 59,646 45,840
Bank and cash balances............................................................ 19,732 22,272
--------- ---------
98,347 83,499
--------- ---------
CREDITORS: DUE WITHIN ONE YEAR
Bank loans and overdrafts......................................................... 19 9,885 821
Creditors......................................................................... 17 72,159 43,266
Proposed final dividend........................................................... 4,545 4,536
--------- ---------
86,589 48,623
--------- ---------
NET CURRENT ASSETS................................................................ 11,758 34,876
--------- ---------
TOTAL ASSETS LESS CURRENT LIABILITIES............................................. 74,058 73,017
CREDITORS: DUE AFTER MORE THAN ONE YEAR:
Borrowings........................................................................ 18 54,319 33,061
Others............................................................................ 18 8,375 6,320
--------- ---------
62,694 39,381
PROVISIONS FOR LIABILITIES AND CHARGES............................................ 21 (74) 1,533
--------- ---------
NET ASSETS........................................................................ 2 11,438 32,103
--------- ---------
--------- ---------
CAPITAL AND RESERVES
Called up share capital........................................................... 23 20,794 20,746
Share premium account............................................................. 23 486 355
Revaluation reserve............................................................... 24 761 876
Special reserve................................................................... 25 20,561 20,561
Profit and loss account........................................................... 24 38,885 47,235
--------- ---------
EQUITY SHAREHOLDERS' FUNDS BEFORE GOODWILL........................................ 81,487 89,773
Goodwill on acquisition........................................................... 26 73,241 60,322
--------- ---------
SHAREHOLDERS' FUNDS--EQUITY....................................................... 8,246 29,451
MINORITY EQUITY INTERESTS......................................................... 3,192 2,652
--------- ---------
11,438 32,103
--------- ---------
--------- ---------
</TABLE>
Debtors include amounts recoverable after more than one year of L8,655,000
(1997:L7,671,000).
F-83
<PAGE>
ADWEST AUTOMOTIVE PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE
<TABLE>
<CAPTION>
1998 1997 1996
NOTES L000 L000 L000
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET CASH INFLOW FROM OPERATING ACTIVITIES................................ 28A 26,353 25,201 15,769
--------- --------- ---------
DIVIDENDS FROM ASSOCIATES................................................ 5 5 4
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received........................................................ 427 400 538
Interest paid on loans................................................... (4,961) (3,235) (4,079)
Interest paid on finance leases.......................................... (434) (285) (329)
Dividends paid to minority interest...................................... -- -- (122)
--------- --------- ---------
Net cash outflow from returns on investments and servicing of finance.... (4,968) (3,120) (3,992)
--------- --------- ---------
TAXATION PAID............................................................ (5,762) (3,459) (4,679)
--------- --------- ---------
CAPITAL EXPENDITURE
Purchase of tangible fixed assets........................................ (18,554) (6,708) (9,830)
Disposal of fixed assets................................................. 1,817 792 811
--------- --------- ---------
Net cash outflow from capital expenditure................................ (16,737) (5,916) (9,019)
--------- --------- ---------
ACQUISITIONS AND DISPOSALS
Receipts from sale of subsidiaries and businesses........................ 28F 21,141 12,373 28,445
Overdrafts and cash balances transferred as part of sale of
subsidiaries........................................................... -- 1,191 (44)
Receipts from sale of interest in associated undertaking................. -- -- 1,221
Purchase of subsidiary undertakings...................................... 28G (35,172) (1,809) (34,282)
Cash acquired with subsidiary acquired................................... 28G 2,697 -- 508
Additional investment in associate....................................... (38) -- --
--------- --------- ---------
Net cash flow from acquisitions and disposals............................ (11,372) 11,755 (4,152)
--------- --------- ---------
EQUITY DIVIDENDS PAID.................................................... (6,440) (6,418) (6,398)
--------- --------- ---------
MANAGEMENT OF LIQUID RESOURCES
Cash withdrawn from/(paid into) short term deposits...................... 12,811 (12,811) --
Monies paid into escrow account.......................................... (1,822) -- --
--------- --------- ---------
Net cash flow from management of liquid resources........................ 10,989 (12,811) (12,467)
--------- --------- ---------
NET CASH FLOW BEFORE FINANCING........................................... (7,932) 5,237 (12,467)
--------- --------- ---------
FINANCING
Receipts from issue of ordinary share capital............................ 179 188 352
Additional capital contribution from minority interest................... -- -- 1,346
New loans................................................................ 34,813 -- --
Repayment of loans....................................................... (23,951) (9,853) (1,455)
Finance lease capital repayments......................................... (875) (344) (321)
Movement on loan with associated undertaking............................. -- -- 420
--------- --------- ---------
Net cash flow from financing............................................. 10,166 (10,009) 342
--------- --------- ---------
Increase/(decrease) in cash.............................................. 28B 2,234 (4,772) (12,125)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-84
<PAGE>
ADWEST AUTOMOTIVE PLC
CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
1998 1997 1996
NOTES L000 L000 L000
--------- --------- --------- ---------
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (NOTE 28D)
<S> <C> <C> <C> <C>
Increase/(decrease) in cash in the year.................................. 2,234 (4,772) (12,125)
Cash outflow from reduction in debt and lease financing.................. 24,826 10,369 1,732
Cash inflow from new loans............................................... (34,813) (172) --
Cash flow from (decrease)/increase in liquid resources................... (10,989) 12,811 --
--------- --------- ---------
Change in net debt resulting from cash flows............................. (18,742) 18,236 (10,393)
--------- --------- ---------
Finance leases sold with subsidiaries.................................... 435 -- --
Loans and finance leases acquired with subsidiaries...................... (15,297) -- (537)
New finance leases....................................................... (1,840) (4,641) (78)
Translation difference................................................... 1,266 2,607 --
--------- --------- ---------
Movement in net debt in the year......................................... (34,178) 16,202 (11,008)
Net debt at 1 July....................................................... (17,959) (34,161) (23,153)
--------- --------- ---------
Net debt at 30 June...................................................... (52,137) (17,959) (34,161)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-85
<PAGE>
ADWEST AUTOMOTIVE PLC
STATEMENT OF CONSOLIDATED RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 30 JUNE
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
(Loss)/profit for the financial year.............................................. (2,355) 9,424 (25,342)
Unrealised deficit on revaluation of properties................................... -- -- (50)
Currency translation differences on net investments............................... 332 (2,219) (462)
--------- --------- ---------
TOTAL RECOGNISED (LOSSES)/GAINS FOR THE FINANCIAL YEAR............................ (2,023) 7,205 (25,854)
--------- --------- ---------
--------- --------- ---------
</TABLE>
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR THE YEAR ENDED 30 JUNE
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
<S> <C> <C> <C>
(Loss)/profit for the financial year.............................................. (2,355) 9,424 (25,342)
Ordinary dividends................................................................ (6,442) (6,428) (6,400)
--------- --------- ---------
Retained (loss)/profit for the year............................................... (8,797) 2,996 (31,742)
Goodwill on disposal of subsidiaries included in the profit and loss account for
the year but previously written off............................................. 17,552 -- 20,173
Other recognised gains and losses................................................. 332 (2,219) (512)
New share capital issued.......................................................... 179 188 352
Goodwill in the year on acquisitions (see note 26)................................ (30,471) (1,329) (29,289)
--------- --------- ---------
Net reductions to shareholders' funds............................................. (21,205) (364) (41,018)
--------- --------- ---------
Shareholders' funds brought forward............................................... 29,451 29,815 70,833
--------- --------- ---------
Shareholders' funds carried forward............................................... 8,246 29,451 29,815
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-86
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS
1 PRINCIPAL ACCOUNTING POLICIES
(a) The financial statements have been prepared under the historical cost
convention modified by the revaluation of certain properties, the Companies
Act 1985 and in accordance with applicable accounting standards.
(b) The consolidated accounts incorporate the accounts of the holding company
and its subsidiaries, together with the group's share of the results of its
associated undertakings.
Results of subsidiaries acquired are included from the effective date of
acquisition. Results of subsidiary and business disposals are included up to
the effective date of disposal.
(c) Premiums for goodwill and discounts on the acquisition of businesses,
subsidiary and associated undertakings are dealt with through reserves at
the time of purchase. The profit or loss on disposal of previously acquired
businesses reflects the attributable amount of premium or discount on
acquisition relating to that business.
(d) Depreciation and amortisation of fixed assets is on a straight line basis
calculated at the annual rates set out below which are estimated to write
off each asset over the term of its useful life to its residual value.
<TABLE>
<S> <C>
Freehold buildings.............. 2-2 1/2% Plant and equipment............... 10-15%
Long leasehold property........... 2 1/2% Vehicles............................. 25%
Short leasehold property.... over term of
lease
</TABLE>
(e) Deferred taxation is calculated using the liability method in respect of the
taxation effect of all timing differences to the extent that it is probable
that provisions will crystallise in the foreseeable future.
(f) Assets held under finance leases are capitalised as tangible fixed assets
and depreciated in line with group policy. The corresponding liability, net
of interest charges, is categorised under creditors due within one year and
after one year, as appropriate.
The interest element of the lease instalments is allocated over the life of
each lease so as to produce a constant periodic rate of charge.
(g) Operating leases are accounted for by charging the instalments as an expense
in the profit and loss account, on a straight line basis.
(h) Exchange rates
(i) Transactions denominated in foreign currencies are recorded at the rate
of exchange ruling at the date of the transaction. Balances denominated
in foreign currencies are translated into sterling at the exchange rate
ruling on the balance sheet date. Differences on exchange are dealt with
through the profit and loss account.
(ii) Exchange differences on translation of the net investment in overseas
subsidiaries and associated undertakings are taken to reserves. To the
extent that such net investment is matched by a corresponding currency
borrowing, the matching exchange difference is also taken to reserves.
(iii) Profits and losses of overseas subsidiaries are translated at average
rates of exchange during the year. The adjustment to financial year end
rates is taken to reserves.
(i) Research and development expenditure is charged to the profit and loss
account as incurred.
F-87
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
1 PRINCIPAL ACCOUNTING POLICIES (CONTINUED)
(j) Estimated current pension scheme surpluses are spread over the expected
average working lifetime of current pension scheme members after deducting
the regular cost of providing pension benefits.
(k) Stock and work in progress
(i) Stock and work in progress is stated at the lower of cost, including
factory overheads, and net realisable value.
(ii) Any significant pre-production costs on new products which are not
pre-funded by the customer are carried forward in work in progress. These
costs are then written off on a unit of production basis over the life of
the contract with the customer.
2 SEGMENTAL ANALYSIS
Turnover of the group, operating profit and net assets are analysed as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
CLASS OF BUSINESS
TURNOVER
Automotive:
UK............................................................................... 79,696 77,347 45,649
Rest of Europe................................................................... 134,384 65,315 70,871
USA.............................................................................. 8,110 8,180 10,825
--------- --------- ---------
Continuing operations............................................................ 222,190 150,842 127,345
Discontinued operations.......................................................... 27,663 40,570 96,305
--------- --------- ---------
249,853 191,412 223,650
--------- --------- ---------
--------- --------- ---------
OPERATING PROFIT
Automotive:
UK............................................................................... 7,281 6,637 3,827
Rest of Europe................................................................... 11,864 7,547 2,242
USA.............................................................................. (622) 418 1,022
--------- --------- ---------
Continuing operations............................................................ 18,523 14,602 7,091
Discontinued operations.......................................................... 2,835 3,411 2,894
--------- --------- ---------
21,358 18,013 9,985
--------- --------- ---------
--------- --------- ---------
NET ASSETS
Automotive continuing operations................................................. 62,545 35,028
Discontinued operations.......................................................... (501) 13,704
--------- ---------
62,044 48,732
--------- ---------
--------- ---------
</TABLE>
F-88
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
2 SEGMENTAL ANALYSIS (CONTINUED)
<TABLE>
<CAPTION>
TURNOVER BY DESTINATION TURNOVER BY ORIGIN
------------------------------- -------------------------------
1998 1997 1996 1998 1997 1996
L000 L000 L000 L000 L000 L000
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
GEOGRAPHICAL SEGMENTS
United Kingdom.................................. 76,193 84,583 98,189 79,696 91,895 112,316
Rest of Europe.................................. 140,542 72,736 64,905 137,367 65,315 81,697
USA............................................. 29,627 31,167 39,003 32,790 34,202 29,637
Rest of the World............................... 3,491 2,926 21,553 -- -- --
--------- --------- --------- --------- --------- ---------
249,853 191,412 223,650 249,853 191,412 223,650
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
OPERATING PROFIT NET ASSETS
------------------------------- --------------------
1998 1997 1996 1998 1997
L000 L000 L000 L000 L000
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
GEOGRAPHICAL SEGMENTS
United Kingdom............................................. 7,281 7,397 5,348 26,708 24,570
Rest of Europe............................................. 11,740 7,547 2,242 28,964 9,209
USA........................................................ 2,337 3,069 2,395 6,372 14,953
Rest of the World.......................................... -- -- -- -- --
--------- --------- --------- --------- ---------
21,358 18,013 9,985 62,044 48,732
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
RECONCILIATION OF CONSOLIDATED NET ASSETS
Net assets as shown above.................................................................... 62,044 48,732
Associated undertaking....................................................................... 114 81
Proposed dividend............................................................................ (4,545) (4,536)
Net borrowings............................................................................... (44,472) (11,610)
Net taxation payable and deferred taxation................................................... (1,703) (564)
--------- ---------
Net assets per consolidated balance sheet.................................................... 11,438 32,103
--------- ---------
--------- ---------
</TABLE>
3 EXCEPTIONAL ITEMS
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
ONGOING ACTIVITIES:
Reorganisation and redundancy costs within the Automotive Division including
reduction of French Productive capacity................................................ -- -- 3,130
DISCONTINUED AND TO BE DISCONTINUED ACTIVITIES
Reorganisation and redundancy cost re Power Systems Division............................. -- -- 607
Redundancy, disruption and related costs with US electronics following
cancellation of customer order......................................................... -- -- 1,228
--------- --------- ---------
-- -- 4,965
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-89
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
4 OPERATING PROFIT
Operating profit can be analysed as follows:
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
<S> <C> <C> <C>
Turnover....................................................................... 249,853 191,412 223,650
Cost of sales.................................................................. (210,178) (156,799) 188,046
---------- ---------- ---------
Gross profit................................................................... 39,675 34,613 35,604
Distribution costs............................................................. (6,197) (4,404) (7,274)
Administration expenses........................................................ (12,120) (12,196) (18,345)
---------- ---------- ---------
Operating profit after exceptional items....................................... 21,358 18,013 9,985
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
Included above in 1996 is cost of sales of L670,000 and administration costs of
L4,295,000 relating to exceptional items.
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
OPERATING PROFIT IS AFTER CREDITING
Rents receivable..................................................................... 378 127 2,437
Pension credit (note 5).............................................................. 1,200 1,050 876
Industrial development government grant.............................................. 36 68 80
AND AFTER CHARGING:
Hire of plant and machinery.......................................................... 269 125 560
Other operating leases............................................................... 428 220 1,937
Depreciation of fixed assets--owned.................................................. 9,193 7,481 8,691
Depreciation of fixed assets held under finance leases............................... 402 174 159
Auditors' remuneration--audit........................................................ 257 274 358
Auditors' remuneration--other........................................................ 79 142 438
Research and development............................................................. 4,283 3,988 4,140
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-90
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
5 EMPLOYEES OF THE GROUP AND PENSIONS COST
<TABLE>
<CAPTION>
1998 1997 1996
NUMBER NUMBER NUMBER
----------- ----------- -----------
<S> <C> <C> <C>
THE AVERAGE NUMBER OF PERSONS EMPLOYED BY THE GROUP WAS AS FOLLOWS:
Production.......................................................................... 3,270 2,290 3,219
Distribution........................................................................ 85 49 106
Administration...................................................................... 418 398 446
----------- ----------- -----------
3,773 2,737 3,771
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
----------- ----------- -----------
<S> <C> <C> <C>
THE AGGREGATE PAYROLL COSTS OF THESE PERSONS WERE AS FOLLOWS:
Wages and salaries.................................................................. 55,506 40,207 53,413
Social security costs............................................................... 11,149 7,950 9,711
Pension costs....................................................................... 138 70 278
----------- ----------- -----------
66,793 48,227 63,402
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The Adwest Group 1988 Pension and Assurance Plan is a defined benefit scheme for
employees of the company and its UK subsidiaries who qualify for membership. The
assets of the scheme are held in separate trustee administered funds. Other
small pension schemes exist in certain subsidiaries.
Pension costs are determined in accordance with the recommendations of
independent actuaries using the projected unit method, so as to spread the cost
of pensions over employees' working lives with the group. Actuarial valuations
are completed every three years, the most recent being at 6 April 1995. The
assumptions which have the most significant effect on the results of the
valuation are those relating to the rate of return on investments and the rates
of increase in salaries and pensions. It was assumed that the average investment
return would exceed by 2% per annum the average rate of salary increase and that
present and future pensions would increase at a rate of 4% per annum.
At 6 April 1995 the assets of the plan amounted to L36,646,000, with investments
taken at market value. At that date, the actuarial value of the assets was
sufficient to cover 128% of the benefits that had accrued to members, after
allowing for expected future increases in earnings and pensions. Accordingly,
the actuaries have indicated that no company contributions were required and
therefore the Trustees have not called for, and the group has not paid, any
contributions during the year. The actuaries are currently carrying out a
valuation of the Plan as at 6 April 1998.
Using the same assumptions as in previous years, the credit to profits for the
year in respect of pensions would have been L1,600,000. In the light of recent
changes to tax credits available to exempt funds and until the actuarial
valuation at 6 April 1998 is available, it has been decided based on actuarial
advice, to limit the effect of pensions on the profit and loss account for the
year to a credit of L1,200,000 (1997: L1,050,000, 1996: L876,000). This credit
represents the amortisation of surpluses over the expected average working
lifetime of the current membership less the regular cost of providing pension
benefits.
The consolidated balance sheet recognises a prepayment of L7,948,000 (1997:
L6,748,000) representing the excess of the amortisation of surpluses over the
accumulated regular cost of providing benefits.
F-91
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
6 DISPOSALS
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
Discontinued:
Property Division.................................................................... (689) -- (1,574)
Automotive Division.................................................................. -- -- 15
UK Power Systems..................................................................... (558) (791) (5,742)
Profit on disposal of US Electronics before goodwill write off....................... 5,891 -- --
Loss on disposal of Heidemann Oberflachentechnik GmbH................................ (593) -- --
Cost of disposal..................................................................... -- -- (1,795)
--------- --- ---------
4,051 (791) (9,096)
Goodwill on disposal................................................................. (17,552) -- (20,173)
--------- --- ---------
(13,501) (791) (29,269)
--------- --- ---------
--------- --- ---------
</TABLE>
7 NET INTEREST CHARGE
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
Payable on bank loans and overdrafts repayable within five years...................... (4,250) (2,390) (1,991)
Payable on loans repayable after more than five years................................. (916) (852) (2,162)
Payable on finance leases............................................................. (434) (309) (329)
--------- --------- ---------
(5,600) (3,551) (4,482)
Bank and other interest receivable.................................................... 401 659 630
--------- --------- ---------
(5,199) (2,892) (3,852)
--------- --------- ---------
--------- --------- ---------
</TABLE>
8 TAXATION ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
TAXATION OF PROFITS ON ORDINARY ACTIVITIES IS MADE UP AS FOLLOWS:
UK corporation tax at 31% (1997:32.5%; 1996:33%)........................................ 2,901 1,258 1,906
Overseas taxation....................................................................... 1,994 2,112 1,320
Associated undertakings (including overseas taxation of L2,000 (1997: L8,000, 1996:
L12,000))............................................................................. 2 8 31
Deferred taxation (note 21)............................................................. (332) 1,133 (1,878)
Prior year adjustments.................................................................. (36) 16 (297)
ACT written off......................................................................... -- -- 1,000
--------- --------- ---------
4,529 4,527 2,082
--------- --------- ---------
--------- --------- ---------
</TABLE>
Total loss on disposals included in the Profit and Loss account, including
goodwill, is L13.5 million (1997 L791,000, 1996 L29.3 million) and the related
taxation charge is nil (1997 nil, 1996 nil).
F-92
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
9 DIVIDENDS
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
Interim paid 2.3p per share.............................................................. 1,897 1,892 1,877
Final proposed 5.5p per share............................................................ 4,545 4,536 4,523
--------- --------- ---------
6,442 6,428 6,400
--------- --------- ---------
--------- --------- ---------
</TABLE>
Shareholders holding 468,009 (1997: 533,792, 1996: 554,678) shares at 30 June
1998 have waived their entitlement to dividends and have been paid no dividends
during the year.
10 EARNINGS PER SHARE
(Loss)/earning per share are based on losses of L2,355,000 (1997 earnings of
L9,424,000, 1996 losses of L25,342,000) and on 83,057,054 (1997: 82,863,578,
1996: 82,504,902) ordinary shares in issue in the year weighted on a time basis.
11 NOTE OF HISTORICAL COST PROFITS/(LOSSES)
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
Profit/(loss) on ordinary activities before taxation................................ 2,679 14,351 (22,997)
Realisation of property revaluation gains of prior years............................ -- 433 14,845
Difference between the historical cost depreciation charge and the actual
depreciation for the year calculated on the revalued amount....................... 100 75 21
--------- --------- ---------
Historical cost profit/(loss) on ordinary activities before taxation................ 2,779 14,859 (8,131)
--------- --------- ---------
Historical cost (loss)/profit retained after taxation, minority interest and
dividends......................................................................... (8,697) 3,504 (16,876)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-93
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
12 FIXED ASSETS: TANGIBLE ASSETS
<TABLE>
<CAPTION>
ASSETS IN
LAND AND PLANT VEHICLES COURSE
BUILDINGS AND EQUIPMENT OF CONSTRUCTION TOTAL
L000 L000 L000 L000
----------- --------------- --------------- ---------
<S> <C> <C> <C> <C>
COST OR VALUATION
At 1 July 1997............................................. 11,155 62,758 2,763 76,676
Exchange rate adjustments.................................. (966) (2,462) -- (3,428)
Additions.................................................. 2,353 17,639 -- 19,992
Disposals.................................................. (2,192) (7,334) -- (9,526)
Transfers between categories............................... 3,255 (492) (2,763) --
Acquisition of subsidiaries................................ 12,267 35,277 -- 47,544
Disposal of fixed assets with subsidiaries sold............ (1,206) (6,162) -- (7,368)
----------- ------ ------ ---------
At 30 June 1998............................................ 24,666 99,224 -- 123,890
----------- ------ ------ ---------
DEPRECIATION
At 1 July 1997............................................. 2,403 36,937 -- 39,340
Exchange rate adjustments.................................. (146) (1,816) -- (1,962)
Disposals.................................................. (692) (5,936) -- (6,628)
Transfer between categories................................ 158 (158) -- --
Acquisition of subsidiaries................................ 1,406 24,738 -- 26,144
Disposal of subsidiaries................................... (945) (3,199) -- (4,144)
Charge for the year........................................ 671 8,924 -- 9,595
----------- ------ ------ ---------
At 30 June 1998............................................ 2,855 59,490 -- 62,345
----------- ------ ------ ---------
NET BOOK VALUES AT 30 JUNE 1998............................ 21,811 39,734 -- 61,545
----------- ------ ------ ---------
Net book values at 30 June 1997............................ 8,752 25,821 2,763 37,336
----------- ------ ------ ---------
----------- ------ ------ ---------
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT OTHER
PROPERTIES PROPERTIES TOTAL
L000 L000 L000
------------- ----------- ---------
<S> <C> <C> <C>
ANALYSIS OF LAND AND BUILDINGS
BY TENURE AT NET BOOK VALUE:
Freehold........................................................................ -- 19,103 19,103
Long lease...................................................................... 434 -- 434
Short lease..................................................................... 137 2,137 2,274
--- ----------- ---------
571 21,240 21,811
--- ----------- ---------
--- ----------- ---------
BY COST OR VALUATION:
Cost............................................................................ -- 23,014 23,014
Professional valuation--1989 to 1997............................................ -- 1,050 1,050
Directors' valuation--1998...................................................... 602 -- 602
--- ----------- ---------
602 24,064 24,666
--- ----------- ---------
--- ----------- ---------
</TABLE>
F-94
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
12 FIXED ASSETS: TANGIBLE ASSETS (CONTINUED)
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
HISTORICAL COST OF LAND AND BUILDINGS:
Cost........................................................................................... 23,843 10,276
Depreciation................................................................................... 2,793 2,400
--------- ---------
21,050 7,876
--------- ---------
--------- ---------
</TABLE>
The net book value for the group included L6,578,000 (1997: L4,462,000) in
respect of land and buildings and assets in the course of construction and
L1,222,000 (1997: L551,000) in respect of plant, vehicles and equipment held
under finance leases. The depreciation included above in respect of these assets
is L402,000 (1997: L174,000).
The net book value of land and buildings includes amounts of L571,000 (1997:
L1,945,000) relating to investment properties and L1,110,000 (1997: L486,000)
relating to the value of land in other freehold property on which no
depreciation is charged.
<TABLE>
<CAPTION>
1998 1997 1996
L000 L000 L000
--------- --------- ---------
<S> <C> <C> <C>
CAPITAL COMMITMENTS:
Contracts placed......................................................................... 3,298 3,494 2,718
--------- --------- ---------
--------- --------- ---------
</TABLE>
13 SHARE OPTION TRUST
As at 30 June 1998, the total market value of own shares within the share
option trust was L62,000 below the original total cost. The directors do not
consider this diminution in value to be permanent and therefore no provision has
been made.
At 30 June 1998 the nominal value of own shares with the share option trust
was L114,392 (1997: L133,448).
14 INVESTMENTS
<TABLE>
<CAPTION>
1998 1997
L000 L000
----- -----
<S> <C> <C>
Investment in associated undertaking................................................................ 114 81
Investment in own shares............................................................................ 641 724
--- ---
755 805
--- ---
--- ---
</TABLE>
F-95
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
14 INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
1998 1997
L000 L000
----- -----
<S> <C> <C>
THE GROUP'S INVESTMENTS IN ASSOCIATED UNDERTAKING IS AS FOLLOWS:
Investments in shares of associated undertaking at cost
Share of post acquisition retained profits.......................................................... 53 15
Share of net assets................................................................................. 61 66
--
---
114 81
--
--
---
---
</TABLE>
<TABLE>
<CAPTION>
UNLISTED SHARES
L000
-----------------
<S> <C>
At July 1997...................................................................................... 81
Exchange differences.............................................................................. (19)
Share of profit before taxation................................................................... 21
Share of taxation................................................................................. (2)
Dividends......................................................................................... (5)
Additional investments in year.................................................................... 38
---
At 30 June 1998................................................................................... 114
---
---
</TABLE>
The results included for the associate are for the year ended 31 March 1998, the
latest available audited accounts.
Details of associated undertakings are set out in note 30.
15 STOCK AND WORK IN PROGRESS
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Raw materials.................................................................................. 7,756 5,866
Work in progress............................................................................... 8,709 6,142
Finished goods................................................................................. 2,504 3,379
--------- ---------
18,969 15,387
--------- ---------
--------- ---------
</TABLE>
16 DEBTORS
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Trade debtors.................................................................................. 38,384 32,925
Other debtors.................................................................................. 7,738 2,843
Taxation recoverable........................................................................... 1,395 923
Prepayments and accrued income................................................................. 12,129 9,149
--------- ---------
59,646 45,840
--------- ---------
--------- ---------
</TABLE>
Included in group prepayments is a sum of L7,948,000 (1997: L6,748,000)
attributable to advanced pension contributions extending beyond one year (note
5).
F-96
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
16 DEBTORS (CONTINUED)
Taxation recoverable in the group includes advanced corporation tax recoverable
after more than one year of L502,000 (1997: L923,000) which is expected to be
offset against mainstream corporation tax.
17 CREDITORS
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Trade creditors................................................................................ 37,952 26,077
Finance lease obligations (note 20)............................................................ 891 643
Other creditors................................................................................ 11,505 1,702
PAYE and social security....................................................................... 4,553 3,543
Taxation payable............................................................................... 3,551 3,158
Accruals and deferred income................................................................... 13,707 8,143
--------- ---------
72,159 43,266
--------- ---------
--------- ---------
</TABLE>
Taxation payable in the Group includes advance corporation tax amounting to
L1,136,000 (1997: L1,132,000) attributable to the proposed final dividend.
18 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Borrowings (note 19)........................................................................... 54,319 33,061
Finance lease obligations (note 20)............................................................ 6,774 5,706
Retirement indemnity provision................................................................. 1,601 614
--------- ---------
62,694 39,381
--------- ---------
--------- ---------
</TABLE>
19 BORROWINGS
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
Bank overdrafts................................................................................ 6,842 298
Bank and other loans repayable within one year................................................. 3,043 523
--------- ---------
9,885 821
--------- ---------
Bank and other loans repayable:
Between one and two years.................................................................... 14,503 150
Between two and five years................................................................... 25,358 23,292
In five years or more........................................................................ 14,458 9,619
--------- ---------
54,319 33,061
--------- ---------
--------- ---------
</TABLE>
In 1998, loans repayable after one year represent:
/ / Loans from two financial institutions totalling US $40,000,000. These US
notes are repayable in six annual instalments commencing in March 2000 and
bear interest at a fixed rate of 8.6%.
F-97
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
19 BORROWINGS (CONTINUED)
/ / A FF 85,000,000 loan from a UK bank, which is repayable in December 1999
and bears interest at a fixed rate of 4.99%.
/ / A DM 30,000.000 loan from a UK bank, which bears interest at a fixed rate
of 5.51%, and is repayable in five annual instalments commencing in October
1998.
/ / A DM 20,000,000 loan which bears interest at a fixed rate of 5.47%, and is
repayable in January 2003.
/ / A DM 20,000,000 loan which bears interest at a fixed rate of 5.84%, and is
repayable in twenty quarterly instalments commencing in March 2003.
Other bank borrowing bear interest at fluctuating rates, linked to the London
Inter-Bank Market rate.
There are no borrowings in the associated undertaking.
At 30 June 1998, the Group had forward contracts outstanding in Japanese Yen
amounting to the equivalent of L1,124,798 (1997: L1,415,000).
20 OBLIGATIONS UNDER FINANCE LEASES
<TABLE>
<CAPTION>
1998 1997
L000 L000
--------- ---------
<S> <C> <C>
THE FUTURE FINANCE LEASES PAYMENTS, TO WHICH THE GROUP WERE COMMITTED
AT 30 JUNE, WERE AS FOLLOWS:
Within one year.................................................................................. 891 643
Between one and five years....................................................................... 2,810 3,599
Over five years.................................................................................. 3,964 2,107
--------- ---------
7,665 6,349
--------- ---------
--------- ---------
</TABLE>
F-98
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
21 PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
PROVISION FOR LOSS ON
DISPOSAL OF REORGANISATION DEFERRED
SUBSIDIARIES PROVISION TAXATION TOTAL
L000 L000 L000 L000
--------------------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
At 1 July 1997........................................... 400 2,804 (1,671) 1,533
Exchange rate adjustments................................ -- (26) (32) (58)
Acquisition of subsidiaries.............................. -- -- 17 17
Charge to profit and loss account........................ -- 279 (332) (53)
Provisions utilised...................................... (300) (1,895) -- (2,195)
Advance corporation tax and other movements.............. -- -- 867 867
Disposal of subsidiaries and business.................... -- (883) 698 (185)
--- ------ ----------- ---------
At 30 June 1998.......................................... 100 279 (453) (74)
--- ------ ----------- ---------
--- ------ ----------- ---------
</TABLE>
<TABLE>
<CAPTION>
AMOUNTS AMOUNTS
NOT PROVIDED FOR PROVIDED FOR
IN THESE ACCOUNTS IN THESE ACCOUNTS
-------------------- --------------------
1998 1997 1998 1997
L000 L000 L000 L000
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
BALANCES FOR THE PROVISION OF DEFERRED TAXATION ARE ANALYSED AS
FOLLOWS:
Accelerated capital allowances................................. -- -- (1,650) 2,097
Other timing differences....................................... 349 163 1,432 (1,247)
--------- --------- --------- ---------
349 163 (218) 850
Advanced corporation tax recoverable........................... -- -- (235) (2,521)
--------- --------- --------- ---------
349 163 (453) (1,671)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
F-99
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
22 LEASE OBLIGATIONS
<TABLE>
<CAPTION>
LAND AND BUILDINGS
OTHER
-------------------- ------------------------
1998 L000 1997 L000 1998 L000 1997 L000
--------- --------- ----- -----
<S> <C> <C> <C> <C>
OPERATING LEASE RENTALS PAYABLE WITHIN ONE YEAR RELATING TO
COMMITMENTS EXPIRING:
Within one year.............................................................. -- 77 271 121
Within two and five years.................................................... 97 384 443 475
After five years............................................................. 945 884 -- --
--------- --------- --- ---
1,042 1,345 714 596
--------- --------- --- ---
--------- --------- --- ---
</TABLE>
23 SHARE CAPITAL AND SHARE PREMIUM ACCOUNT
<TABLE>
<CAPTION>
CALLED UP AND FULLY
AUTHORISED PAID
-------------------- --------------------
1998 L000 1997 L000 1998 L000 1997 L000
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Ordinary shares of 25p each.......................................... 25,000 25,000 20,794 20,746
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
NOMINAL VALUE SHARE PREMIUM
NUMBER L000 L000
------------ ------------- -----------------
<S> <C> <C> <C>
At 1 July 1997...................................................... 82,983,820 20,746 355
Shares issued under option schemes.................................. 190,088 48 131
------------ ------ ---
At 30 June 1998..................................................... 83,173,908 20,794 486
------------ ------ ---
------------ ------ ---
</TABLE>
24 RESERVES
<TABLE>
<CAPTION>
PROFIT AND LOSS
REVALUATION COMPANY AND PROFIT AND LOSS PROFIT AND
RESERVE SUBSIDIARIES ASSOCIATED LOSS TOTAL
L000 L000 UNDERTAKING L000 L000
------------- --------------- ----------------- -----------
<S> <C> <C> <C> <C>
At 1 July 1997........................................... 876 47,169 66 47,235
Retained (loss)/profit for the year...................... -- (8,811) 14 (8,797)
Exchange rate adjustments................................ (15) 366 (19) 347
Depreciation on revalued assets.......................... (100) 100 -- 100
--
--- ------ -----------
At 30 June 1998.......................................... 761 38,824 61 38,885
--
--
--- ------ -----------
--- ------ -----------
</TABLE>
25 SPECIAL RESERVE
The special reserve was created on 31 January 1996 when court permission was
obtained for the cancellation of the share premium account, which had a value at
that date of L20,561,000. The special reserve is non distributable.
F-100
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
26 GOODWILL
<TABLE>
<CAPTION>
1998 L000 1997 L000 1996 L000
--------- --------- ---------
<S> <C> <C> <C>
At start of year................................................................... 60,322 58,993 49,877
Purchase of Conversion Devices Inc................................................. -- -- 3,498
Purchase of Rearsby Automotive Limited............................................. -- -- 25,539
Transferred to profit and loss account on disposal of subsidiaries................. (17,552) -- (20,173)
Additional goodwill re Conversion Devices Inc...................................... -- 734 --
Additional goodwill re Rearsby Automotive Limited.................................. -- 595 --
Purchase of Heidemann Verwatungsgesellschaft mit beschranker Haftung............... 29,318 -- --
Other adjustments.................................................................. 1,153 -- 252
--------- --------- ---------
At end of year..................................................................... 73,241 60,322 58,993
--------- --------- ---------
--------- --------- ---------
</TABLE>
27 DIRECTORS' EMOLUMENTS AND SHARE INTERESTS
<TABLE>
<CAPTION>
1998 L000 1997 L000 1996 L000
----- ----- -----
<S> <C> <C> <C>
TOTAL DIRECTORS' EMOLUMENTS:
Fees and benefits to non-executive directors................................................. 99 121 130
Remuneration (including pension contributions)............................................... 621 498 622
Performance related emoluments............................................................... 95 217 100
--- --- ---
815 836 852
--- --- ---
--- --- ---
</TABLE>
28 CONSOLIDATED CASH FLOW STATEMENT
<TABLE>
<CAPTION>
1998 L000 1997 L000 1996 L000
--------- --------- ---------
<S> <C> <C> <C>
(A) RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM
OPERATING ACTIVITIES
Operating profit................................................................ 21,358 18,013 9,985
Depreciation.................................................................... 9,595 7,655 8,850
Loss/(profit) on disposal of fixed assets....................................... 247 (86) --
Acquisition provisions utilised................................................. -- -- (272)
(Increase)/decrease in stocks................................................... (3,688) 5,241 (2,093)
(Increase)/decrease in debtors.................................................. (3,726) (1,145) (2,102)
Increase/(decrease) in creditors................................................ 2,567 (4,477) 1,401
--------- --------- ---------
Net cash flow from operating activities......................................... 26,353 25,201 15,769
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-101
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
28 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
SHARE CAPITAL SHARE PREMIUM
CASH L000 L000 L000
--------- ------------- -----------------
<S> <C> <C> <C>
(B) ANALYSIS OF CHANGES IN CASH AND FINANCING DURING THE YEAR
At 1 July 1996........................................................... 12,073 20,695 218
Non-cash movements....................................................... 3,000 -- --
Exchange movements....................................................... (1,138) -- --
Net cash inflows......................................................... (4,772) 51 137
--------- ------ ---
Change in the year....................................................... (2,910) 51 137
--------- ------ ---
At 1 July 1997........................................................... 9,163 20,746 355
Exchange movements....................................................... (305) -- --
Net cash inflows......................................................... 2,234 48 131
--------- ------ ---
Change in the year....................................................... 1,929 48 131
--------- ------ ---
At 30 June 1998.......................................................... 11,092 20,794 486
--------- ------ ---
--------- ------ ---
</TABLE>
<TABLE>
<CAPTION>
1998 L000 1997 L000
--------- ---------
<S> <C> <C>
(C) ANALYSIS OF CASH
Cash at bank and in hand.................................................................... 17,934 9,461
Bank overdrafts............................................................................. (6,842) (298)
--------- ---------
11,092 9,163
--------- ---------
--------- ---------
</TABLE>
F-102
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
28 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
ACQUISITION OTHER NON
AT 1 JULY (EXCL CASH & CASH DISPOSAL OF EXCHANGE
1996 CASH FLOW OVERDRAFTS) MOVEMENTS SUBSIDIARIES MOVEMENT
L000 L000 L000 L000 L000 L000
---------- ---------- ----------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
(D) RECONCILIATION OF NET DEBT
Cash at bank and in hand...................... 13,515 (2,864) -- -- -- (1,190)
Bank overdrafts............................... (1,442) (1,908) -- 3,000 -- 52
----------
(4,772)
Borrowings due after one year................. (26,572) 263 -- (9,489) -- 2,737
Borrowings due within one year................ (16,741) 9,590 -- 6,489 -- 139
Finance leases................................ (2,921) 344 -- (4,641) -- 869
----------
10,197
Current asset investments..................... -- 12,811 -- -- -- --
--
---------- ---------- ----------- ----- -----------
(34,161) 18,236 -- (4,641) -- 2,607
--
--
---------- ---------- ----------- ----- -----------
---------- ---------- ----------- ----- -----------
<CAPTION>
AT 30 JUNE
1997
L000
-----------
<S> <C>
(D) RECONCILIATION OF NET DEBT
Cash at bank and in hand...................... 9,461
Bank overdrafts............................... (298)
Borrowings due after one year................. (33,061)
Borrowings due within one year................ (523)
Finance leases................................ (6,349)
Current asset investments..................... 12,811
-----------
(17,959)
-----------
-----------
</TABLE>
Current asset investments at 30 June 1997 represent cash balances on one month
and three months deposit.
<TABLE>
<CAPTION>
ACQUISITION
(EXCL CASH OTHER NON
AT 1 JULY & CASH DISPOSAL OF EXCHANGE
1997 CASH FLOW OVERDRAFTS) MOVEMENTS SUBSIDIARIES MOVEMENT
L000 L000 L000 L000 L000 L000
----------- ----------- ----------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cash at bank and in hand.............. 9,461 8,897 -- -- -- (514)
Bank overdrafts....................... (298) (6,753) -- -- -- 209
-----------
2,234
Borrowings due after one year......... (33,061) (9,453) (13,152) 83 -- 1,264
Borrowings due within one year........ (523) (1,409) (1,129) (83) -- 101
Finance leases........................ (6,349) 875 (1,016) (1,840) 435 230
-----------
(9,987)
Current asset investments............. 12,811 (10,989) -- -- -- (24)
----------- ----------- ----------- ----------- --- -----------
(17,959) (18,742) (15,297) (1,840) 435 1,266
----------- ----------- ----------- ----------- --- -----------
----------- ----------- ----------- ----------- --- -----------
<CAPTION>
AT 30 JUNE
1998
L000
-----------
<S> <C>
Cash at bank and in hand.............. 17,934
Bank overdrafts....................... (6,842)
Borrowings due after one year......... (54,319)
Borrowings due within one year........ (3,043)
Finance leases........................ (7,665)
Current asset investments............. 1,798
-----------
(52,137)
-----------
-----------
</TABLE>
Current asset investments at 30 June 1998 represent part of the sale proceeds
from the sale of the US Electronics companies, which are being held in an escrow
account until May 2001.
F-103
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
28 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
(E) MAJOR NON-CASH TRANSACTIONS
During 1998 the Group entered into finance lease arrangements in respect of
assets with a total capital value at the inception of the leases of L1,840,000
(1997:L4,641,000).
<TABLE>
<CAPTION>
US ELECTRONICS
COMPANIES
L000
<S> <C>
(F) SALE OF SUBSIDIARY UNDERTAKINGS
Net assets sold excluding cash:
Fixed assets...................................................................................... 3,224
Stock............................................................................................. 8,157
Other working capital............................................................................. 3,741
------
Total net assets sold............................................................................. 15,122
Disposal costs paid out in cash................................................................... 1,937
Disposal costs accrued............................................................................ 128
Profit on sale.................................................................................... 5,891
------
23,078
------
------
SATISFIED BY:
Receipt of cash................................................................................... 21,256
Receipt of escrow monies.......................................................................... 1,822
------
Net inflow of cash................................................................................ 23,078
------
------
</TABLE>
The US Electronics subsidiaries sold during the year contributed L1,432,000 to
the group's net operating cash flows, paid L715,000 in respect of net returns on
investments and serving of finance, paid L731,000 in respect of taxation and
utilised L815,000 for capital expenditure.
F-104
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
28 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
FAIR VALUE
ADJUSTMENTS
HEIDEMANN ACCOUNTING POLICY FAIR VALUE
COMPANIES REVALUATIONS ADJUSTMENTS OTHER ADJUSTMENTS BALANCE SHEET
L000 L000 L000 L000 L000
----------- ------------- ------------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
(G) PURCHASE OF SUBSIDIARY
UNDERTAKINGS
Provisional net assets acquired:
Fixed assets...................... 22,549 (1,149) -- -- 21,400
Stock............................. 9,122 -- (316) -- 8,806
Other working capital............. (11,716) -- -- -- (11,716)
Provisions........................ -- -- (101) (562) (663)
Net borrowings.................... (14,281) -- -- -- (14,281)
----------- ------ --- --- -------------
5,674 (1,149) (417) (562) 3,546
Provisional goodwill (note 26).... 29,318
-------------
32,864
-------------
-------------
SATISFIED BY:
Purchase consideration............ 31,127
Acquisition costs................. 3,217
Cash acquired..................... (2,733)
-------------
Net outflow of cash (i)........... 31,611
Purchase consideration accrued.... 1,253
-------------
32,864
-------------
-------------
</TABLE>
The net assets acquired above exclude 5% of the net assets of Adwest Heidemann
Iberica SA which are held by a third party.
Certain fixed assets have been written down in the revaluation column to reflect
their value based upon current earnings and cash generation. The accounting
policy adjustments are to bring stock, warranty and repairs and maintenance
provisions in line with UK GAAP requirements. Other adjustments represent
provisions in respect of potential environmental liabilities at the time of
acquisition.
F-105
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
28 CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)
<TABLE>
<CAPTION>
PURCHASE OF
SUBSIDIARY CASH ACQUIRED WITH
UNDERTAKINGS SUBSIDIARY ACQUIRED TOTAL
L000 L000 L000
------------ ------------------- ---------
<S> <C> <C> <C>
Net cash outflow of cash as above (i)................................ (34,344) 2,733 (31,611)
Minority interest in Adwest Heidemann Iberica SA cash................ -- (36) (36)
Deferred consideration re Electronics Division....................... (767) -- (767)
Other................................................................ (61) -- (61)
------------ ----- ---------
Per cash flow statement.............................................. (35,172) 2,697 (32,475)
------------ ----- ---------
------------ ----- ---------
</TABLE>
Heidemann Verwaltungsgesellschaft mit beschranker Haftung and its subsidiary
undertakings were acquired on 11 September 1997, and have been accounted for
using the acquisition method.
The subsidiary undertakings acquired during the year contributed L2,963,000 to
the group's net operating cash flows, paid L1,425,000 in respect of net returns
on investments and servicing of finance, received L372,000 in respect of
taxation and utilised L6,620,000 for capital expenditure.
In the year ended 31 January 1997, the latest available statutory accounts
before acquisition, the Heidemann group of companies had profit after tax of
L1,073,000 and minority interests of L281,000.
In the period 1 February 1997 to 11 September 1997 -- the date of acquisition by
Adwest, the unaudited results for the company showed the following.
<TABLE>
<CAPTION>
L000
<S> <C>
Turnover................................................................................................. 54,530
Operating profit......................................................................................... 2,788
Profit before taxation................................................................................... 1,954
Taxation charge.......................................................................................... 974
Minority interests....................................................................................... 97
---------
---------
</TABLE>
There were no material recognised gains or losses, other than the results for
the period shown above.
F-106
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
29 PRINCIPAL SUBSIDIARY UNDERTAKINGS
<TABLE>
<S> <C> <C> <C>
Adwest Steering Ltd. Woodley Power steering gears, precision UK
plastic parts
Adwest Bowden TSK Ltd. Llanelli Control cables, gearshifters UK
Adwest Bowden France SA Cauvigny, Boynes Control cables, gearshifters, France
handbrakes, jacks
Adwest Dauphinoise Thomson SA Grenoble Engine thermostats, wax element France
regulators
Adwest OCI SA La Talaudiere Gearshifters France
Adwest Driver Systems Ltd. Rearsby Pedal boxes, gearshifters, UK
handbrakes, suspension links
Adwest Western Automotive Inc. Michigan Precision tubular components and USA
engine thermostats
Adwest Western Thomson Ltd. Woodley, Chard Engine thermostats, radiator UK
caps
Adwest Heidemann Einbeck GmbH Einbeck Gearshifters, steering columns, Germany
tubular structures
Adwest Heidemann Rotenburg Rotenburg Valve spring retainers, fine Germany
GmbH blanked parts, tubular
structures
Adwest Heidemann Iberica SA Valencia, Pamplona Gearshifters, steering columns Spain
Adwest Kohler GmbH Lippstadt Fuel caps, precision pressed Germany
parts
Adwest Heidemann do Brasil Curitiba Gearshifters Brazil
</TABLE>
The Company owns 100% of the ordinary share capital of all subsidiaries, with
the exception of Adwest Bowden TSK Ltd of which 35% of the ordinary share
capital is owned by Nippon Cable Systems Inc. (TSK), a Japanese company, and
Adwest Heidemann Iberica SA, of which 5% of the ordinary share capital is owned
by local management.
The subsidiaries operate principally in the country in which they are
incorporated.
A full list of subsidiaries will be included within the next annual return.
30 ASSOCIATED UNDERTAKING
<TABLE>
<CAPTION>
ISSUED SHARE CAPITAL ACTIVITIES HOLDING INCORPORATED
------------------------------ ------------------- ----------- ---------------
<S> <C> <C> <C> <C>
Western Thomson (India) Ltd. (1) 295,878 shares (10 rupees p.s) Engine thermostats 49% India
</TABLE>
- --------------------------
(1) Held by Adwest Western Thomson Ltd. and located in Madras, India.
31 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The Group's accounts are prepared in conformity with generally accepted
accounting principles applicable in the United Kingdom (UK GAAP), which differ
in certain significant respects from those applicable in the United States (US
GAAP). These differences, together with the approximate effects of the
adjustments on net profit and shareholders' funds, relate principally to the
items set out below:
F-107
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
31 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
GOODWILL AND OTHER INTANGIBLE ASSETS
Under UK GAAP goodwill arising on acquisition has been charged to reserves.
Under US GAAP goodwill is capitalised and amortised by charges against income
over the period, not to exceed 40 years, over which the benefit arises. For US
GAAP, goodwill has been amortised by the Group over 40 years.
Under UK GAAP the profit and loss on the disposal of all or part of a previously
acquired business has been calculated after taking account of the gross amount
of any goodwill previously charged to reserves. Under US GAAP an adjustment to
profit or loss on disposal is required in respect of goodwill previously
amortised.
CUMULATIVE EXCHANGE LOSS ON SALE OF FOREIGN SUBSIDIARIES
Under UK GAAP gains or loss arising on the sale or liquidation of a foreign
subsidiary does not include the related cumulative exchange gain or loss,
previously recorded as a separate component of shareholders' equity for that
investment. Under US GAAP, the gain or loss on sale or liquidation includes the
related cumulative exchange gain or loss.
DIVIDENDS
Under UK GAAP dividends proposed after the end of an accounting period in
respect of that accounting period are deducted in arriving at retained earnings
for that period. Under US GAAP such dividends are not deducted until declared.
DEFERRED TAXATION
Under UK GAAP provision is made for deferred taxation only to the extent that it
is probable that an actual liability or asset will crystallise in the
foreseeable future. US GAAP requires full provision for deferred income taxes
under the liability method on all temporary differences and, if required, a
valuation allowance is established to reduce gross deferred taxation assets to
the amount which is more likely than not to be realised.
Deferred taxation also arises in relation to the tax effect of other US GAAP
differences.
PENSION COSTS
Under UK GAAP, the cost of providing pensions is charged against profits on a
systematic basis, with pension surpluses and deficits being amortised over the
expected remaining service lives of current employees. Under US GAAP, costs and
surpluses are similarly spread over the expected remaining service lives but
based on prescribed actuarial assumptions, allocation of costs and valuation
methods, which differ in certain respects from those used for UK GAAP.
DEFERRED PROFIT ON SALE OF PROPERTY
In 1996, properties were disposed of which had previously been revalued under UK
GAAP. No profit arose on this transaction under UK GAAP. A profit arises under
US GAAP on the basis that US GAAP does not permit the revaluation of property.
Under US GAAP, the element of the profit in respect of property subsequently
leased back on an operating lease basis is amortised in equal instalments over
the life of the lease.
F-108
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
31 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
EMPLOYEE SHARE TRUST ARRANGEMENTS
Employee share trusts have been established in order to hedge obligations in
respect of options issued under certain employee share option schemes. Under UK
GAAP the Company's ordinary shares held by the employee share trusts are
included at cost in fixed asset investments. Dividends receivable on such shares
are included in the statement of income. Under US GAAP, such shares and
dividends receivable from those shares are treated as treasury stock and
included in shareholders' equity.
REVALUATION OF FIXED ASSETS
Under UK GAAP the Group has revalued certain fixed assets. This is not permitted
under US GAAP.
PRE-PRODUCTION COSTS
Under UK GAAP, certain significant pre-production costs on new products which
are not prefunded by the customer are carried forward in work in progress. These
costs are then written off on a unit of production basis over the life of the
contract with the customer. Under US GAAP these costs are generally expensed as
incurred.
CURRENT ASSETS AND LIABILITIES
Under UK GAAP current assets include amounts which fall due after more than one
year. Under US GAAP such assets would be reclassified as non-current assets.
Also under UK GAAP provisions for liabilities and charges include amounts due
within one year which would be reclassified to current liabilities under US
GAAP.
EARNINGS PER ORDINARY SHARE
Under UK GAAP earnings per share is based on profit for the financial year and
computed using the weighted average number of Ordinary Shares in issue during
the year. Under US GAAP basic earnings per share is based on net income and
computed using the weighted average number of Ordinary Shares in issue during
the year. US GAAP also requires the presentation of diluted earnings per share
which is based upon net income, as adjusted, computed using the weighted average
shares and the effect of other dilutive instruments.
CASH FLOWS
The principal difference between UK GAAP and US GAAP is in respect of
classification. Under UK GAAP, the Group presents its cash flows for operating
activities, returns on investments and servicing of finance, taxation, capital
expenditures and financial investments, acquisition and disposals, equity
dividends paid, management of liquid resources, and financing. US GAAP requires
only three categories of cash flow activities which are operating, investing and
financing.
Cash flows arising from taxation and returns on investments and servicing of
finance under UK GAAP would, with the exception of dividends paid, be included
as operating activities under US GAAP; dividend payments would be included as a
financing activity under US GAAP. In addition, capital expenditures and
financial investment, acquisition and disposals, and management of liquid
resources under UK GAAP would be presented as investing activities under US
GAAP.
F-109
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
31 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
UK GAAP defines cash as cash in hand and deposits repayable on demand. Short
term deposits which are readily convertible into known amounts of cash at, or
close to, their carrying value are classified as liquid resources. US GAAP
defines cash and cash equivalents as cash in hand and short term highly liquid
investments with original maturities of three months or less. Cash flows in
respect of short term deposits with original maturities exceeding three months
are included in investing activities under US GAAP and are included in capital
expenditure and financial investment under UK GAAP.
Under US GAAP, the following amounts would be reported:
<TABLE>
<CAPTION>
1998 1997
L'000 L'000
--------- ---------
<S> <C> <C>
Net cash provided by operating activities.................................................... 15,628 18,627
Net cash used in investing activities........................................................ (29,931) 5,839
Net cash provided by/(used in) financing activities.......................................... 10,479 (14,519)
Effect of changes in exchange rate........................................................... (514) (1,190)
--------- ---------
Net (decrease)/increase in cash and cash equivalents......................................... (4,338) 8,757
Cash and cash equivalents at beginning of year............................................... 22,272 13,515
--------- ---------
Cash and cash equivalents at end of year..................................................... 17,934 22,272
--------- ---------
--------- ---------
</TABLE>
Effect on (loss)/profit attributable to shareholders of differences between UK
and US GAAP
<TABLE>
<CAPTION>
1998 1997
L'000 L'000
--------- ---------
<S> <C> <C>
(Loss)/profit attributable to shareholders as reported under UK GAAP......................... (2,355) 9,424
US GAAP adjustments:
Goodwill................................................................................... (1,377) (1,467)
Impact of goodwill previously amoritised on sale of subsidiary............................. 2,905 --
Cumulative exchange loss on sale of foreign subsidiaries................................... (1,182) --
Pension costs.............................................................................. 16 331
Deferred taxation--full provision.......................................................... (143) (168)
Tax effect of other US GAAP reconciling items.............................................. (30) (266)
Fixed asset revaluations................................................................... 100 508
Deferred profit on sale of property........................................................ 303 303
Pre-production costs....................................................................... (1,200) --
Other...................................................................................... 21 (16)
Minority interests......................................................................... -- (5)
--------- ---------
Net (loss)/income under US GAAP.............................................................. (2,942) 8,644
--------- ---------
--------- ---------
Net (loss)/income under US GAAP
Continuing................................................................................. 6,001 6,015
Discontinued............................................................................... (8,943) 2,629
--------- ---------
(2,942) 8,644
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
PENCE PER SHARE PENCE PER SHARE
1998 1997
----------------- -----------------
<S> <C> <C>
Basic and diluted earnings per share under US GAAP...............................
Continuing..................................................................... 7.3 7.2
Discontinued................................................................... (10.9) 3.3
----- ---
(3.6) 10.5
----- ---
----- ---
</TABLE>
F-110
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
31 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
Effect on shareholders' funds of differences between UK and US GAAP
<TABLE>
<CAPTION>
1998 1997
L'000 L'000
--------- ---------
<S> <C> <C>
Shareholders' funds as reported under UK GAAP.................................................. 8,246 29,451
US GAAP adjustments:
Goodwill..................................................................................... 64,744 52,109
Pension costs................................................................................ 4,930 4,913
Deferred taxation--full provision............................................................ (310) (168)
Tax effect of other US GAAP reconciling items................................................ (1,285) (1,283)
Fixed asset revaluations..................................................................... (761) (876)
Proposed dividends........................................................................... 4,545 4,536
Deferred profit on sale of property.......................................................... (4,127) (4,430)
Pre-production costs......................................................................... (1,200) --
Employee share trust arrangements............................................................ (641) (724)
Other........................................................................................ 99 86
Minority interests........................................................................... (149) (146)
--------- ---------
Shareholders' funds under US GAAP.............................................................. 74,091 83,468
--------- ---------
--------- ---------
</TABLE>
NEW US ACCOUNTING STANDARDS AND PRONOUNCEMENTS NOT YET ADOPTED
SFAS 133--In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting
for Derivative Instruments and Hedging Activities". This statement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. It requires that an entity recognise
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. This statement is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
Management has not determined the effect of the adoption of SFAS 133.
SOP 98-1--During January 1998, the American Institute of Certified Public
Accountants (AICPA) issued Statement of Position 98-1 ACCOUNTING FOR THE COSTS
OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE ("SOP 98-1") which
becomes effective for all fiscal years beginning after December 15, 1998. Under
SOP 98-1, computer software costs that are incurred in the preliminary project
stage are expensed as incurred. Once specific capitalisation criteria have been
met, external direct costs of materials and service consumed in developing or
obtaining internal-use computer software, certain personnel costs, and interest
costs incurred when developing computer software for internal use are
capitalised. Training costs and data conversion costs are generally expensed as
incurred. Such capitalised costs are amortised over the estimated useful life of
the software. The company is evaluating the effect of the pronouncement.
NEW UK ACCOUNTING STANDARDS NOT YET ADOPTED
FRS 10 - Goodwill and Intangible Assets: In December 1997, the Accounting
Standard Board in the United Kingdom issued Financial Reporting Standard No. 10
"Goodwill and Intangible Assets" (FRS 10). FRS 10 requires that purchased
goodwill and intangible assets should be capitalised as assets and amortised
over the life of the assets. Goodwill and intangible assets need not be
amortised if it can be
F-111
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
31 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
demonstrated that the current market value of the goodwill or intangible is not
below its carrying value. FRS 10 is effective for accounting periods ending on
or after 23 December 1998. The standard does not require reinstatement of
goodwill previously eliminated against retained surplus.
FRS 11--Impairment of fixed assets and goodwill: In July 1998, the Accounting
Standards Board in the United Kingdom issued Financial Reporting Standard No. 11
"Impairment of fixed assets and goodwill" (FRS 11). The standard requires that
any impairment in the carrying value of fixed assets should be recognised in the
profit and loss account in the current period and requires that impairment
reviews be undertaken when there is some indication of impairment. The review
should be performed on individual income generating units based on discounted
cash flows. FRS 11 covers not only tangible fixed assets, intangible fixed
assets and goodwill but also investments in subsidiaries, associates and joint
ventures to the extent that they are not covered by other standards. FRS 11 is
effective for accounting periods ending on or after 23 December 1998.
FRS 12--Provisions, contingent liabilities and contingent assets: In September
1998, the Accounting Standard Board in the United Kingdom issued Financial
Reporting Standard No. 12 "Provisions, contingent liabilities and contingent
assets" (FRS 12). The principal feature of the standard is that it requires that
a provision is recognised when there is a legal or constructive obligation
arising from past events and it is probable (ie, more likely than not) that
there will be an outflow of benefits and the amount can be reliably estimated.
FRS 12 is effective for accounting periods ending on or after 23 March 1999.
FRS 13--Derivatives and other financial instruments--disclosures: In September
1998, the Accounting Standards Board in the United Kingdom issued Financial
Reporting Standard No. 13 "Derivatives and other financial instruments:
disclosures" (FRS 13). FRS 13 is concerned only with disclosure and the
requirements comprise both narrative and numerical disclosures. FRS 13 is
effective for accounting periods ending on or after 23 March 1999.
FRS 14--Earnings per share: In October 1998, the Accounting Standards Board in
the United Kingdom issued Financial Reporting Standard No. 14 "Earnings per
share" (FRS 14). The standard applies to all entities whose ordinary or
potential ordinary shares are currently publicly traded, or are in the process
of becoming so, and to any other entity providing earnings per share (eps)
information voluntarily. FRS 14 is effective for accounting periods ending on or
after 23 December 1998.
COMPANIES ACT 1985
These consolidated financial statements do not constitute "statutory accounts"
within the meaning of the Companies Act 1985 of Great Britain for any of the
periods presented. Statutory accounts for the years ended 30 June 1997 and 30
June 1998 have been filed with the United Kingdom's Registrar of Companies. The
auditor has reported on these accounts. The reports were unqualified and did not
contain statements under Section 237 (2) or (3) of the Act.
These consolidated financial statements exclude certain parent company
statements and other information required by the Companies Act 1985, however,
they include all material disclosures required by generally accepted accounting
principles in the United Kingdom including those Companies Act 1985 disclosures
relating to the statement of income and balance sheet items.
F-112
<PAGE>
ADWEST AUTOMOTIVE PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT--UK GAAP
FOR THE SIX MONTHS ENDED 31 DECEMBER
<TABLE>
<CAPTION>
1998 1997
----------- -----------
L000 L000
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
TURNOVER
Continuing operations................................................................... 118,155 99,203
Discontinued operations................................................................. -- 12,987
----------- -----------
118,155 112,190
----------- -----------
OPERATING PROFIT
Continuing operations................................................................... 8,326 7,587
Discontinued operations................................................................. -- 1,867
----------- -----------
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST........................................... 8,326 9,454
Net interest charge..................................................................... (2,924) (2,196)
----------- -----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION........................................... 5,402 7,258
Taxation charge......................................................................... (1,536) (2,249)
----------- -----------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION............................................ 3,866 5,009
Profit attributable to minority shareholders--equity.................................... (133) (246)
----------- -----------
PROFIT FOR THE PERIOD................................................................... 3,733 4,763
Dividends:
Interim 0p per share (1997 2.3p)...................................................... -- (1,897)
----------- -----------
RETAINED PROFIT FOR THE PERIOD.......................................................... 3,733 2,866
----------- -----------
----------- -----------
Earnings per share--UK GAAP............................................................. 4.5p 5.7p
</TABLE>
F-113
<PAGE>
ADWEST AUTOMOTIVE PLC
CONSOLIDATED BALANCE SHEET--UK GAAP
AT 31 DECEMBER
<TABLE>
<CAPTION>
1998 1997
L000 L000
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
FIXED ASSETS
Tangible assets....................................................... 70,822 61,513
Investments........................................................... 755 770
----------- -----------
71,577 62,283
----------- -----------
CURRENT ASSETS
Stock and work in progress............................................ 22,314 26,295
Debtors............................................................... 53,214 56,004
Bank and cash balances................................................ 11,005 12,459
----------- -----------
86,533 94,758
----------- -----------
CREDITORS: DUE WITHIN ONE YEAR
Borrowings............................................................ (17,916) (9,143)
Other creditors....................................................... (70,906) (72,133)
----------- -----------
(88,822) (81,276)
----------- -----------
NET CURRENT (LIABILITIES) / ASSETS.................................... (2,289) 13,482
CREDITORS: DUE AFTER ONE YEAR
Borrowings............................................................ (45,593) (60,542)
Provisions and other creditors........................................ (8,782) (7,718)
----------- -----------
(54,375) (68,260)
----------- -----------
NET ASSETS............................................................ 14,913 7,505
----------- -----------
----------- -----------
CAPITAL AND RESERVES
Called up share capital............................................... 20,794 20,758
Reserves.............................................................. 63,464 72,503
----------- -----------
Equity shareholders' funds before goodwill............................ 84,258 93,261
Goodwill on acquisition............................................... (72,681) (88,890)
----------- -----------
Shareholders' funds--equity........................................... 11,577 4,371
MINORITY INTEREST--EQUITY............................................. 3,336 3,134
----------- -----------
14,913 7,505
----------- -----------
----------- -----------
</TABLE>
F-114
<PAGE>
ADWEST AUTOMOTIVE PLC
CONSOLIDATED CASH FLOW STATEMENT--UK GAAP
FOR THE SIX MONTHS ENDED 31 DECEMBER
<TABLE>
<CAPTION>
1997
1998 (RESTATED)
L000 L000
----------- -----------
<S> <C> <C>
(UNAUDITED) (UNAUDITED)
Net cash inflow from operating activities............................................... 8,391 17,807
Return on investments and servicing of finance.......................................... (2,947) (1,821)
Taxation paid........................................................................... (1,075) (3,180)
Capital expenditure..................................................................... (7,977) (7,594)
Equity dividends paid................................................................... (4,551) (4,536)
Acquisitions and disposals.............................................................. 2,872 (32,095)
Management of liquid resources.......................................................... -- 12,811
----------- -----------
Net cash flow before financing.......................................................... (5,287) (18,608)
Financing............................................................................... (2,946) 20,015
----------- -----------
(Decrease)/increase in cash............................................................. (8,233) 1,407
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT L000 L000
- ---------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
(Decrease)/increase in cash in the period............................................... (8,233) 1,407
Cash outflow from reduction in debt and lease financing................................. 2,946 2,464
Cash inflow from new loans.............................................................. -- (22,420)
Cash inflow/(outflow) from movement in liquid resources................................. -- (12,811)
----------- -----------
Change in net debt resulting from cash flows............................................ (5,287) (31,360)
Loans and finance leases acquired with subsidiary....................................... -- (14,848)
New finance leases...................................................................... (2,038) (410)
Translation difference.................................................................. (2,576) 420
----------- -----------
Movement in net debt in the period...................................................... (9,901) (46,198)
Net debt at beginning of period......................................................... (52,137) (17,959)
----------- -----------
Net debt at end of period............................................................... (62,038) (64,157)
----------- -----------
----------- -----------
</TABLE>
F-115
<PAGE>
ADWEST AUTOMOTIVE PLC
RECONCILIATION OF MOVEMENTS IN CONSOLIDATED
SHAREHOLDERS' FUNDS
FOR THE SIX MONTHS ENDED 31 DECEMBER
<TABLE>
<CAPTION>
1998 1997
L000 L000
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Profit for the period................................................. 3,733 4,763
Ordinary dividends.................................................... -- (1,897)
----------- -----------
Retained profit for the period........................................ 3,733 2,866
Currency translation differences on net investments................... (374) 562
Prior year adjustment................................................. (588) --
New share capital issued.............................................. -- 60
Goodwill in the period on acquisitions................................ 560 (28,568)
----------- -----------
NET ADDITIONS/(REDUCTIONS) TO SHAREHOLDERS' FUNDS..................... 3,331 (25,080)
SHAREHOLDERS' FUNDS AT BEGINNING OF PERIOD............................ 8,246 29,451
----------- -----------
SHAREHOLDERS' FUNDS AT END OF PERIOD.................................. 11,577 4,371
----------- -----------
----------- -----------
</TABLE>
RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES
FOR THE SIX MONTHS ENDED 31 DECEMBER
<TABLE>
<CAPTION>
1998 1997
L000 L000
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Operating profit...................................................... 8,326 9,454
Depreciation.......................................................... 4,931 4,508
Increase in stocks.................................................... (1,893) (2,105)
Decrease in debtors................................................... 5,811 3,794
(Decrease)/increase in creditors...................................... (8,784) 2,156
----------- -----------
NET CASH FLOW FROM OPERATING ACTIVITIES............................... 8,391 17,807
----------- -----------
----------- -----------
</TABLE>
F-116
<PAGE>
ADWEST AUTOMOTIVE PLC
ANALYSIS OF NET DEBT
<TABLE>
<CAPTION>
AT 1 JULY CASH FLOW OTHER EXCHANGE AT 31
1998 ----------- NON CASH MOVEMENT DECEMBER
----------- MOVEMENTS ----------- 1998
L000 L000 ----------- L000 -----------
L000 L000
<S> <C> <C> <C> <C> <C>
Cash at bank and in hand................................ 17,934 (10,143) -- 1,411 9,202
Bank overdraft.......................................... (6,842) 1,910 -- (535) (5,467)
-----------
(8,233)
-----------
Borrowings due after one year........................... (54,319) 10 11,083 (2,367) (45,593)
Borrowings due within one year.......................... (3,043) 2,185 (11,083) (508) (12,449)
Finance leases.......................................... (7,665) 751 (2,038) (582) (9,534)
-----------
2,946
-----------
Current asset investments............................... 1,798 -- -- 5 1,803
----------- ----------- ----------- ----------- -----------
(52,137) (5,287) (2,038) (2,576) (62,038)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
F-117
<PAGE>
ADWEST AUTOMOTIVE PLC
SEGMENTAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER
<TABLE>
<CAPTION>
1998 1997
L000 L000
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
TURNOVER
- ----------------------------------------------------------------------
CLASS OF BUSINESS
Automotive: UK........................................................ 32,460 36,004
Rest of Europe............................................. 80,327 59,274
USA........................................................ 5,368 3,925
----------- -----------
Continuing operations................................................. 118,155 99,203
Discontinued operations............................................... -- 12,987
----------- -----------
118,155 112,190
----------- -----------
----------- -----------
GEOGRAPHICAL SEGMENTS (BY DESTINATION)
- ----------------------------------------------------------------------
UK.................................................................... 30,841 34,437
Rest of Europe........................................................ 80,337 62,127
USA................................................................... 5,628 14,664
Rest of the World..................................................... 1,349 962
----------- -----------
118,155 112,190
----------- -----------
----------- -----------
OPERATING PROFIT
- ----------------------------------------------------------------------
CLASS OF BUSINESS
Automotive: UK........................................................ 928 3,147
Rest of Europe............................................. 7,933 4,649
USA........................................................ (535) (209)
----------- -----------
Continuing operations................................................. 8,326 7,587
----------- -----------
Operating profit as % of turnover..................................... 7.1% 7.7%
Discontinued operations............................................... -- 1,867
----------- -----------
Operating profit as % of turnover..................................... -- 14.4%
----------- -----------
8,326 9,454
----------- -----------
----------- -----------
</TABLE>
F-118
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS
(UNAUDITED)
1 PREPARATION OF INTERIM FINANCIAL REPORT
The accompanying Condensed Consolidated Financial Statements present the
financial position and results of operations of the Group and have been prepared
in accordance with UK GAAP, which differ in certain significant respects from
U.S. GAAP. See Note 5 for a discussion and quantifications of the principal
differences between UK GAAP affecting the Group.
The interim financial information included in these Condensed Consolidated
Financial Statements is unaudited but reflects all adjustments (consisting only
of normal recurring accruals) which are in the opinion of management necessary
for a fair presentation of the results for interim periods presented. The
interim Condensed Consolidated Financial Statements should be read in
conjunction with the Consolidated Financial Statements and notes thereto
included herein.
2 TAXATION CHARGE
The taxation charge before disposals is at an effective rate of 29%. This
compares to an effective rate of 31% for the half year to 31 December 1997.
3 EARNINGS PER SHARE
Earnings per share is calculated on earnings of L3,733,000 (L4,763,000 for
the half year to 31 December 1997) and on 83,173,908 (83,025,820 for the half
year to 31 December 1997) shares in issue, weighted on a time basis. Fully
diluted earnings per share based on the exercise of options under the employee
share schemes show no material dilution.
4 ACQUISITIONS AND DISPOSALS
Heidemann Verwaltungsgesellschaft mit beschrankter Haftung was acquired on
11 September 1997. The US Electronics division was sold in May 1998.
5 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
These accounts are prepared in conformity with generally accepted accounting
principles applicable in the United Kingdom (UK GAAP). These differ in certain
significant respects from those applicable in the United States (US GAAP). These
differences, together with the approximate effects of the adjustments on net
profits and shareholders' funds, relate principally to the items set out below:
GOODWILL AND OTHER INTANGIBLE ASSETS
Under UK GAAP goodwill arising on acquisition has been charged to reserves.
Under US GAAP goodwill is capitalised and amortised by charges against income
over the period, not to exceed 40 years, over which the benefit arises. For US
GAAP, goodwill has been amortised by the Group over 40 years.
PRIOR YEAR ADJUSTMENT
Under UK GAAP the introduction of a new accounting standard, FRS12, has been
treated as a prior year adjustment. Under US GAAP the charge is recognized in
the period in which the new accounting policy is implemented.
F-119
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
(UNAUDITED)
5 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
DIVIDENDS
Under UK GAAP dividends proposed after the end of an accounting period in
respect of that accounting period are deducted in arriving at retained earnings
for that period. Under US GAAP such dividends are not deducted until declared.
DEFERRED TAXATION
Under UK GAAP provision is made for deferred taxation only to the extent
that it is probable that an actual liability or asset will crystallise in the
foreseeable future. US GAAP requires full provision for deferred income taxes
under the liability method on all temporary differences and, if required, a
valuation allowance is established to reduce gross deferred taxation assets to
the amount which is more likely than not to be realised.
Deferred taxation also arises in relation to the tax effect of other US GAAP
differences.
PENSION COSTS
Under UK GAAP, the cost of providing pensions is charged against profits on
a systematic basis, with pension surpluses and deficits being amortised over the
expected remaining service lives of current employees. Under US GAAP, costs and
surpluses are similarly spread over the expected remaining service lives but
based on prescribed actuarial assumptions, allocation of costs and valuation
methods, which differ in certain respects from those used for UK GAAP.
DEFERRED PROFIT ON SALE OF PROPERTY
In 1996, properties were disposed of which had previously been revalued
under UK GAAP. No profit arose on this transaction under UK GAAP. A profit
arises under US GAAP on the basis that US GAAP does not permit the revaluation
of property. Under US GAAP, the element of the profit in respect of property
subsequently leased back on an operating lease basis is amortised in equal
instalments over the life of the lease.
EMPLOYEE SHARE TRUST ARRANGEMENTS
Employee share trusts have been established in order to hedge obligations in
respect of options issued under certain employee share option schemes. Under UK
GAAP the Company's ordinary shares held by the employee share trusts are
included at cost in fixed asset investments. Dividends receivable on such shares
are included in the statement of income. Under US GAAP, such shares and
dividends receivable from those shares are treated as treasury stock and
included in shareholders' equity.
REVALUATION OF FIXED ASSETS
Under UK GAAP the Group has revalued certain fixed assets. This is not
permitted under US GAAP.
F-120
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
(UNAUDITED)
5 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
PRE-PRODUCTION COSTS
Under UK GAAP, certain significant pre-production costs on new products
which are not pre-funded by the customer are carried forward in work in
progress. These costs are then written off on a unit of production basis over
the life of the contract with the customer. Under US GAAP these costs are
generally expensed as incurred.
CURRENT ASSETS AND LIABILITIES
Under UK GAAP current assets include amounts which fall due after more than
one year. Under US GAAP such assets would be re-classified as non-current
assets. Also under UK GAAP provisions for liabilities and charges include
amounts due within one year which would be re-classified to current liabilities
under US GAAP.
EARNINGS PER ORDINARY SHARE
Under UK GAAP earnings per share is based on profit for the financial year
and computed using the weighted average number of Ordinary Shares in issue
during the year. US GAAP also requires the presentation of diluted earnings per
share which is based upon net income, as adjusted, computed using the weighted
average shares and the effect of other dilutive instruments.
CASH FLOWS
The principal difference between UK GAAP and US GAAP is in respect of
classification. Under UK GAAP, the Group presents its cash flows for operating
activities, returns on investments and servicing of finance, taxation, capital
expenditures and financial investments, acquisition and disposals, equity
dividends paid, management of liquid resources, and financing. US GAAP requires
only three categories of cash flow activities which are operating, investing and
financing.
Cash flows arising from taxation and returns on investments and servicing of
finance under UK GAAP would, with the exception of dividends paid, be included
as operating activities under US GAAP; dividend payments would be included as a
financing activity under US GAAP. In addition, capital expenditures and
financial investment, acquisition and disposals, and management of liquid
resources under UK GAAP would be presented as investing activities under US
GAAP.
UK GAAP defines cash as cash in hand and deposits repayable on demand. Short
term deposits which are readily convertible into cash, into known amounts of
cash at, or close to, their carrying value are classified as liquid resources.
US GAAP defines cash and cash equivalents as cash in hand and short term highly
liquid investments with original maturities of three months or less. Cash flows
in respect of short term deposits with original maturities of three months or
less. Cash flows in respect of short term deposits with original maturities
exceeding three months are included in investing activities under US GAAP and
are included in capital expenditure and financial investment under UK GAAP.
F-121
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
(UNAUDITED)
5 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
Under US GAAP, the following amounts would be reported:
<TABLE>
<CAPTION>
HALF YEAR
TO
31 DEC 1997
HALF YEAR -----------
TO
31 DEC 1998 L'000
-----------
L'000
<S> <C> <C>
Net cash provided by operating activities.............................................. 4,368 12,806
Net cash used in investing activities.................................................. (5,105) (39,689)
Net cash (used in)/provided by financing activities.................................... (9,406) 17,242
Effect of changes in exchange rate..................................................... 1,411 (172)
----------- -----------
Net decrease in cash & cash equivalents................................................ (8,732) (9,813)
Cash & cash equivalents at beginning of year........................................... 17,934 22,272
----------- -----------
Cash & cash equivalents at end of year................................................. 9,202 12,459
----------- -----------
----------- -----------
</TABLE>
Effect on (loss)/profit attributable to shareholders of differences between
UK and US GAAP
<TABLE>
<CAPTION>
HALF YEAR
TO
31 DEC 1997
HALF YEAR -----------
TO
31 DEC 1998 L'000
-----------
L'000
<S> <C> <C>
Profit attributable to shareholders as reported under UK GAAP.......................... 3,733 4,763
US GAAP adjustments:
Goodwill............................................................................. (908) (519)
Pension costs........................................................................ (249) 9
Deferred taxation--full provision.................................................... (132) (91)
Tax effect of other US GAAP reconciling items........................................ 54 (5)
Fixed asset revaluations............................................................. 50 50
Deferred profit on sale of property.................................................. 152 152
Pre-production costs................................................................. (1,262) (383)
Other................................................................................ (36) (8)
Reverse prior year adjustment........................................................ (588) --
Minority interests................................................................... 8 (2)
----------- -----------
Net income under US GAAP............................................................... 822 3,966
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
EARNINGS
PER SHARE
1997
EARNINGS -----------
PER SHARE
1998 PENCE
-----------
PENCE
<S> <C> <C>
Basic and diluted earnings per share under US GAAP
Continuing........................................................................... 1.7 2.5
Discontinued......................................................................... (0.7) 2.3
----------- -----------
1.0 4.8
----------- -----------
----------- -----------
</TABLE>
F-122
<PAGE>
ADWEST AUTOMOTIVE PLC
NOTES TO THE ACCOUNTS (CONTINUED)
(UNAUDITED)
5 SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
Effect on shareholders' funds of differences between UK and US GAAP
<TABLE>
<CAPTION>
AS AT
31 DEC 1997
AS AT -----------
31 DEC 1998 L'000
-----------
L'000
<S> <C> <C>
Shareholders' funds as reported under UK GAAP.......................................... 11,577 4,371
US GAAP adjustments:
Goodwill............................................................................. 66,323 80,545
Pension costs........................................................................ 4,681 4,922
Deferred taxation--full provision.................................................... (442) (259)
Tax effect of other US GAAP reconciling items........................................ (1,231) (1,288)
Fixed asset revaluations............................................................. (711) (819)
Proposed dividends................................................................... -- 1,897
Deferred profit on sale of property.................................................. (3,976) (4,278)
Pre-production costs................................................................. (2,462) (383)
Employee share trust arrangements.................................................... (641) (651)
Other................................................................................ (134) (94)
Minority interests................................................................... (141) (148)
----------- -----------
Shareholders' funds under US GAAP...................................................... 72,843 83,815
----------- -----------
----------- -----------
</TABLE>
F-123
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO]
DURA OPERATING CORP.
EXCHANGE OFFER FOR
$300,000,000
9% SENIOR SUBORDINATED NOTES DUE 2009
[EURO]100,000,000
9% SENIOR SUBORDINATED NOTES DUE 2009
Unconditionally Guaranteed on a Senior Subordinated Basis by
DURA AUTOMOTIVE SYSTEMS, INC.
--------------
PROSPECTUS
--------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II:
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20: INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Dura is incorporated under the laws of the State of Delaware. Section 145 of
the General Corporation Law of the State of Delaware ("Section 145") provides
that a Delaware corporation may indemnify any persons who are, or are threatened
to be made, parties to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person is or was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, or are threatened to be
made, a party to any threatened, pending or completed action or suit by or in
the right of the corporation by reason of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director has actually and reasonably incurred.
Article Eleven of the Restated Certificate of Incorporation of Dura provides
that no director of the corporation shall be liable to the corporation or its
stockholders for monetary damages arising from a breach of fiduciary duty owed
to the corporation or its stockholders to the fullest extent permitted by the
Delaware General Corporation Law.
Article V of Dura's Amended and Restated By-laws (the "Dura By-laws")
provides that each person who was or is made a party or is threatened to be made
a party to or is otherwise involved (including involvement as a witness) in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that he or she is or was a director or
officer of the corporation, is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan, whether the basis of such proceeding is
alleged action in an official capacity as a director or officer or in any other
capacity while serving as a director or officer, against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered by
such indemnitee in connection therewith and such indemnification shall continue
as to an indemnitee who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided below with respect
to proceedings to enforce rights to indemnification, the corporation shall
indemnify any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the Board of Directors. The right to indemnification is a contract
right and includes the right to be paid by the corporation the expenses incurred
in defending any such proceeding in advance of its final disposition
(advancement of expenses); provided, however, that, if
II-1
<PAGE>
and to the extent that the Delaware General Corporation Law requires, an
advancement of expenses incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the corporation of an
undertaking by or on behalf of such indemnitee, to repay all amounts so advanced
if it shall ultimately be determined by final judicial decision from which there
is no further right to appeal than such indemnitee is not entitled to be
indemnified for such expenses.
Article V of the Dura By-laws further provides that any person serving as a
director, officer, employee or agent of a subsidiary of Dura shall be
conclusively presumed to be serving in such capacity at the request of Dura and,
hence, subject to indemnification by Dura.
Article V of the Dura By-laws further provides that persons who after the
date of the adoption of Article V become or remain directors or officers of the
corporation or who, while a director or officer of the corporation, become or
remain a director, officer, employee or agent of a subsidiary, shall be
conclusively presumed to have relied on the rights to indemnity, advancement of
expenses and other rights contained in Article V in entering into or continuing
such service. The rights to indemnification and to the advancement of expenses
conferred in Article V shall apply to claims made against a indemnitee arising
out of acts or omissions which occurred or occur both prior and subsequent to
the adoption hereof. The rights to indemnification and to the advancement of
expenses conferred in Article V shall not be exclusive of any other right which
any person may have or hereafter acquire under the Amended and Restated
Certificate of Incorporation or under any statute, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
All of the directors and officers of Dura are covered by insurance policies
maintained and held in effect by such corporation against certain liabilities
for actions taken in such capacities, including liabilities under the Securities
Act of 1933.
Dura Operating Corp., Adwest Electronics, Inc., Anderson Industries, Inc.
and Dura Automotive Systems Cable Operations, Inc. are also incorporated under
the General Corporation Law of the State of Delaware. Under their respective
charter documents, each corporation has agreed to indemnify their officers and
directors to the fullest extent authorized by the Delaware General Corporation
Law.
Set forth below is a summary of the indemnification provisions contained in
the charter documents of certain of the subsidiary guarantors:
ADWEST ELECTRONICS, INC. A director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived any improper personal benefit.
DURA AUTOMOTIVE SYSTEMS, INC. COLUMN SHIFTER OPERATIONS AND ADWEST WESTERN
AUTOMOTIVE, INC. A corporation shall have power to indemnify any person who was
or is a director in a proceeding by reason of his or her association with the
corporation against expenses (reasonable and actual), judgements, fines and
amounts paid in settlement in connection with such proceeding if said person
acted in good faith and in a manner reasonably believed to be in or not opposed
to the corporation's
II-2
<PAGE>
best interest. With respect to a criminal action, indemnification is allowed if
said person had no reasonable cause to believe his or her actions were unlawful.
None of these factors for indemnification will be presumed in the negative after
a termination of the action or similar occurrence (e.g. judgement, settlement or
plea nolo contendere). In an action brought by or in right of the corporation,
the same indemnification will be allowed if said person acted in good faith and
in a manner reasonably believed to be in or not opposed to the best interest of
the corporation. Indemnification shall not be made for a matter in which the
person is found liable to the corporation unless the court determines that said
person is entitled to indemnity. Where a director has been successful on the
merits of an action, the corporation shall indemnify said person against actual
and reasonable expenses (including attorney's fees). No indemnification shall be
made in respect of any claim, issue or matter to which such person is found
liable for negligence or misconduct unless the court in which the action is
brought determines that said person is entitled to indemnity. This provision
shall not be deemed exclusive and those seeking indemnification may be entitled
to indemnification under the articles of incorporation, by-laws or a contractual
agreement. The corporation shall have the power to purchase and maintain
insurance for above said person for liability from actions regardless of the
corporation's power to indemnify said person under this statute.
ATWOOD AUTOMOTIVE, INC. Each director and officer of the corporation shall
by indemnified be the corporation against all expenses in connection with any
claim (civil, criminal or otherwise, including appeals) in which he or she may
become involved due to his or her position with the corporation. Where such
cases proceed to final adjudication, indemnification shall not be allowed for
such directors found liable for negligence or misconduct in performance of
duties to the corporation. Neither a judgement of conviction or the entry of any
plea in a criminal case shall of itself be deemed an adjudication that such
individual was liable of negligence or misconduct if the individual acted in
good faith, for a purpose believed to be in the best interest of the corporation
and had no reasonable cause to believe the conduct was unlawful. There rights
herein provided for shall not be deemed exclusive of other rights to which the
individual is entitled.
DURA AUTOMOTIVE SYSTEMS OF TENNESSEE, L.P. The partnership shall indemnify
and hold harmless the general partner against any claims or liability incurred
by the general partner provided that the general partner, in respect to these
claims, acted in good faith and in a reasonable belief to be acting in the scope
of its authority. Nothing contained in this paragraph shall be construed to
impose liability of the limited partners except, and only to the extent, that a
limited partner is acting as general partner.
DURA AUTOMOTIVE SYSTEMS OF INDIANA, INC. AND UNIVERSAL TOOL & STAMPING
COMPANY, INC. A corporation may indemnify an individual who was or is a
director made party to a proceeding if the individual's conduct was in good
faith and the individual reasonably believed that the individual's conduct was
in the corporation's best interest or not opposed to its best interest. For
indemnification in a criminal proceeding, the individual must either: had
reasonable cause to believe the conduct was lawful or no reasonable cause to
believe it was unlawful. In respect to a employee benefit plan, a director's
conduct believed to be in the best interest of the participants and
beneficiaries of the plan is enough to exercise the indemnification protection.
Unless limited by the articles of incorporation, the corporation shall indemnify
a director who was wholly successful in the defense of a proceeding to which the
director was party because of his position as director. Unless the articles of
incorporation provide otherwise, a director may apply for indemnification from
the court. The court must determine if: (1) if the director is entitled to
mandatory indemnification as noted above or (2) the director is fairly and
reasonably entitled to indemnification in view of all relevant circumstances.
The corporation shall have the power to purchase and maintain insurance for
above said person for liability from actions regardless of the corporation's
power to indemnify said person under this provision. This provision shall not be
deemed exclusive and those seeking indemnification may be entitled to
indemnification under any articles of incorporation, by-laws, resolution by
board of directors or shareholders, or any other authorization by a majority
vote of the voting shares.
II-3
<PAGE>
HYDRO FLAME CORPORATION. A corporation may indemnify an individual who was
or is a director made party to a proceeding if the individual's conduct was in
good faith and the individual reasonably believed that the individual's conduct
was in the corporation's best interest or not opposed to its best interest. None
of these factors for indemnification will be presumed in the negative after a
termination of the action or similar occurrence (e.g. judgement, settlement or
plea nolo contendere). For indemnity in a criminal proceeding, the individual
must have had no reasonable cause to believe the conduct was unlawful. In
respect to a employee benefit plan, a director's conduct believed to be in the
best interest of the participants and beneficiaries of the plan is sufficient to
exercise the indemnification protection. A corporation may not indemnify a
director under this section in connection with a proceeding by right or in the
right of the corporation in which the director is adjudged liable to the
corporation. Also, indemnification is not allowed in a proceeding in which the
director derived an improper personal benefit. Unless limited by charter, a
corporation shall indemnify a director who was wholly successful on the merits
of a proceeding in which the director was a party because of his position with
the corporation. Unless the articles of incorporation provide otherwise, a
director may apply for indemnification from the court. The court must determine
if: (1) if the director is entitled to mandatory indemnification as noted above
or (2) the director is fairly and reasonably entitled to indemnification in view
of all relevant circumstances. The corporation shall have the power to purchase
and maintain insurance for above said person for liability from actions
regardless of the corporation's power to indemnify said person under this
provision.
ATWOOD INDUSTRIES, INC. A corporation may indemnify any person in a civil,
criminal, administrative or investigative proceeding by reason of his or her
association with the corporation against expenses, judgements, fines and amounts
paid in settlement in connection with such proceeding if said person acted in
good faith and in a manner reasonably believed to be in or not opposed to the
corporation's best interest. With respect to a criminal action, indemnification
is allowed if said person had no reasonable cause to believe his or her actions
were unlawful. None of these factors for indemnification will be presumed in the
negative after a termination of the action or similar occurrence (e.g.
judgement, settlement or plea nolo contendere). In an action brought by or in
right of the corporation, the same indemnification will be allowed if said
person acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interest of the corporation. However, no indemnification
shall be made in respect of any claim, issue or matter to which such person is
found liable for negligence or misconduct unless the court in which the action
is brought determines that said person is entitled to indemnity. A corporation
shall indemnify a director who was wholly successful on the merits of a
proceeding in which the director was a party because of his or her position with
the corporation. This statute shall not be deemed exclusive and those seeking
indemnification may be entitled to indemnification under any by-law, agreement,
vote of the stockholders or disinterested directors or otherwise for said person
while and after holding office. The corporation shall have the power to purchase
and maintain insurance for above said person for liability from actions
regardless of the corporation's power to indemnify said person under this
provision.
II-4
<PAGE>
ITEM 21. EXHIBITS.
(a) The following exhibits are filed as part of this Registration Statement
or incorporated by reference herein:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S>
** 1.1 Purchase Agreement, dated April 15, 1999, among Dura Operating Corp., Dura
Automotive Systems, Inc., the subsidiary guarantors named therein (the
"Subsidiary Guarantors") and NationsBanc Montgomery Securities LLC, Bank
of America International Limited, Donaldson, Lufkin & Jenrette
Securities Corporation and Donaldson, Lufkin & Jenrette International
(collectively, the "Initial Purchasers").
2.1 Agreement and Plan of Merger, dated as of January 19, 1999, among Dura
Automotive Systems, Inc., Excel Industries, Inc. and Windows Acquisition
Corporation, incorporated by reference to Exhibit 2.1 to Dura's Current
Report on Form 8-K, dated January 22, 1999.
2.2 Amendment to Agreement and Plan of Merger, dated as of March 9, 1999, by
and among Dura Automotive Systems, Inc., Dura Operating Corp., Excel
Industries, Inc. and Windows Acquisition Corporation incorporated by
reference to the additional definitive proxy materials filed with the
SEC on March 11, 1999.
* 3.1 Restated Certificate of Incorporation of Dura Automotive Systems, Inc.
3.2 Amended and Restated By-laws of Dura Automotive Systems, Inc.,
incorporated by reference to Exhibit 3.2 of the Registration Statement
on Form S-1 (Registration No. 333-06601) (the "S-1").
** 3.3 Certificate of Incorporation of Dura Operating Corp.
** 3.4 By-laws of Dura Operating Corp.
** 3.5 Certificate of Incorporation of Dura Automotive Systems, Inc., Column
Shifter Operations
** 3.6 By-laws of Dura Automotive Systems, Inc., Column Shifter Operations
** 3.7 Certificate of Incorporation of Universal Tool & Stamping Company Inc.
** 3.8 By-laws of Universal Tool & Stamping Company Inc.
** 3.9 Certificate of Incorporation of Dura Automotive Systems Cable Operations,
Inc.
** 3.10 By-laws of Dura Automotive Systems Cable Operations, Inc.
** 3.11 Certificate of Incorporation of Adwest Electronics, Inc.
** 3.12 By-laws of Adwest Electronics, Inc.
** 3.13 Certificate of Incorporation of Adwest Western Automotive, Inc.
** 3.14 By-laws of Adwest Western Automotive, Inc.
** 3.15 Certificate of Incorporation of X.E. Co.
** 3.16 By-laws of X.E. Co.
** 3.17 Certificate of Partnership of Dura Automotive Systems of Tennessee, L.P.
** 3.18 By-laws of Dura Automotive Systems of Tennessee, L.P.
** 3.19 Certificate of Incorporation of Dura Automotive Systems
** 3.20 By-laws of Dura Automotive Systems
** 3.21 Certificate of Incorporation of Anderson Industries, Inc.
** 3.22 By-laws of Anderson Industries, Inc.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S>
** 3.23 Certificate of Incorporation of Hydro Flame Corporation
** 3.24 By-laws of Hydro Flame Corporation
** 3.25 Certificate of Incorporation of Atwood Industries, Inc.
** 3.26 By-laws of Atwood Industries, Inc.
** 3.27 Certificate of Incorporation of Atwood Automotive, Inc.
** 3.28 By-laws of Atwood Automotive, Inc.
** 3.29 Certificate of Incorporation of Mark I Molded Plastics, Inc.
** 3.30 By-laws of Mark I Molded Plastics, Inc.
** 3.31 Certificate of Incorporation of Mark I Molded Plastics of Tennessee, Inc.
** 3.32 By-laws of Mark I Molded Plastics of Tennessee, Inc.
4.1 Amended and Restated Stockholders Agreement, dated as of August 13, 1996,
by and among Dura, Onex U.S. Investments, Inc., J2R, Alkin, the HCI
Stockholders (as defined therein) and the Management Stockholders (as
defined therein), incorporated by reference to Exhibit 10.30 of the S-1.
4.2 Amendment No. 1 to Amended and Restated Stockholders Agreement, dated as
of August 13, 1996, by and between Dura, Onex DHC LLC, J2R, Alkin and
the HCI Stockholders and the Management Stockholders, incorporated by
reference to Exhibit 4.1 of the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997.
4.3 Registration Agreement, dated as of August 31, 1994, among Dura, Alkin and
the MC Stockholders (as defined therein), incorporated by reference to
Exhibit 4.3 of the S-1.
4.4 Amendment to Registration Agreement, dated May 17, 1995, by and between
Dura, the MC Stockholders (as defined therein) and Alkin, incorporated
by reference to Exhibit 4.4 of the S-1.
4.5 Amended and Restated Investor Stockholder Agreement, dated as of August
13, 1996, by and among Dura, Onex U.S. Investments, Inc., J2R and
certain other stockholders party thereto, incorporated by reference to
Exhibit 10.31 of the S-1.
4.6 Form of certificate representing Class A common stock of Dura,
incorporated by reference to Exhibit 4.6 of the S-1.
** 4.7 Indenture, dated April 22, 1999, between Dura Operating Corp., Dura
Automotive Systems, Inc., the Subsidiary Guarantors and U.S. Bank Trust
National Association, as trustee, relating to the Dollar Notes.
** 4.8 Indenture, dated April 22, 1999, between Dura Operating Corp., Dura
Automotive Systems, Inc., the Subsidiary Guarantors and U.S. Bank Trust
National Association, as trustee, relating to the Euro Notes.
** 4.9 Registration Rights Agreement, dated April 22, 1999, between the Initial
Purchasers and Dura Operating Corp., Dura Automotive Systems, Inc. and
the Subsidiary Guarantors, relating to the Dollar Notes.
** 4.10 Registration Rights Agreement, dated April 22, 1999, between the Initial
Purchasers and Dura Operating Corp., Dura Automotive Systems, Inc. and
the Subsidiary Guarantors, relating to the Euro Notes.
** 5.1 Opinion of Kirkland & Ellis regarding the validity of the securities
offered hereby.
** 8.1 Opinion of Kirkland & Ellis regarding federal income tax considerations.
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S>
10.1 Amended and Restated Credit Agreement, dated as of March 19, 1999, among
Dura Automotive Systems, Inc., as Parent Guarantor, Dura Operating
Corp., Dura Automotive Systems (Europe) GmbH, Dura Asia-Pacific Pty
Limited ACN 004884539 and Dura Automotive Systems (Canada), Ltd., as
Dura Borrowers, Trident Automotive plc, Dura Automotive Systems Limited,
Spicebright Limited, Dura Automotive Systems Cable Operating Inc., Dura
Automotive Systems Cable Operations Canada, Inc. and Moblan Investments
B.V., as Trident Borrowers, Dura Automotive Acquisition Limited, as the
initial Adwest Borrower, Bank of America National Trust and Savings
Association, as Agent, BA Australia Limited, as Australian Lender, Bank
of America Canada, as Canadian Lender, Bank of America National Trust
and Savings Association, as Swing Line Lender and Issuing Lender, and
the other financial institutions party thereto, NationsBanc Montgomery
Securities LLC, as Lead Arranger and Book Manager, incorporated by
reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1999.
10.2 1996 Key Employee Stock Option Plan, incorporated by reference to Exhibit
10.27 of the S-1.
10.3 Independent Director Stock Option Plan, incorporated by reference to
Exhibit 10.28 of the S-1.
10.4 Employee Stock Discount Purchase Plan, incorporated by reference to
Exhibit 10.29 of the S-1.
10.5 Stock and Asset Purchase Agreement, dated October 3, 1996, among Sparton
Corporation, Sparton Engineered Products, Inc., Lake Odessa Sparton
Group and Dura Automotive Systems, Inc. incorporated by reference to
Exhibit 2.1 of the Registrant's Form 8-K dated December 20, 1996.
10.6 Stock Purchase Agreement, dated August 1, 1997, by and among Dura Shifter
Holding Corp. and the various selling shareholders, incorporated by
reference to Exhibit 2.1 of the Registrant's Form 8-K dated September
12, 1997.
10.7 Joint Venture Agreement by and among Orscheln Co., MC Holding Corp., Onex
U.S. Investments, Inc., J2R Corporation and Dura Automotive Holding,
Inc., dated as of August 31, 1994, incorporated by reference to Exhibit
10.1 of the S-1.
** 10.8 Stock Purchase Agreement, dated April 8, 1998, by and among Dura
Automotive Systems (UK) Limited and the various selling shareholders
listed on the various signature pages thereto.
10.9 Stock Option Agreement, dated as of August 31, 1994, between Dura
Automotive Systems, Inc. and Alkin Co., incorporated by reference to
Exhibit 10.4 of the S-1.
10.10 Promissory Note, dated December 31, 1991, of Karl F. Storrie in favor of
Dura Automotive Systems, Inc., incorporated by reference to Exhibit
10.17 of the S-1.
10.11 1998 Stock Incentive Plan, incorporated by reference to Appendix B in the
Registration Statement on Form S-4 (Registration No. 333-71483).
** 21.1 Subsidiaries of Dura Automotive Systems, Inc.
* 23.1 Consent of Arthur Andersen LLP, Minneapolis, Minnesota.
* 23.2 Consent of Arthur Andersen LLP, Grand Rapids, Michigan.
* 23.3 Consent of Arthur Andersen LLP, Stamford, Connecticut.
* 23.4 Consent of KPMG Audit Plc.
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S>
** 23.5 Consents of Kirkland & Ellis (included in Exhibits 5.1 and 8.1).
** 25.1 Statement of Eligibility of Trustee on Form T-1 under the Trust Indenture
Act of 1939 of U.S. Bank Trust National Association.
** 99.1 Form of Letter of Transmittal for the Dollar Notes.
** 99.2 Form of Letter of Transmittal for the Euro Notes.
** 99.3 Form of Notice of Guaranteed Delivery for the Dollar Notes.
** 99.4 Form of Notice of Guaranteed Delivery for the Euro Notes.
** 99.5 Form of Tender Instructions for the Dollar Notes.
** 99.6 Form of Tender Instructions for the Euro Notes.
</TABLE>
- ------------------------
* Filed herewith.
** To be filed by amendment.
(b) No financial statement schedules are required to be filed herewith
pursuant to this Item.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
Dura's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered,
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Dura pursuant to the provisions, or otherwise, Dura has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Dura of expenses incurred or paid by
a directors, officer or controlling person of Dura in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, Dura
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and Dura
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dura Automotive
Systems, Inc. duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in City of
Rochester Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
DURA AUTOMOTIVE SYSTEMS, INC.
By: /s/ S.A. JOHNSON
-----------------------------------------
S.A. Johnson
CHAIRMAN
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ S.A. JOHNSON
- ------------------------------ Chairman
S.A. Johnson
President, Chief Executive
/s/ KARL F. STORRIE Officer
- ------------------------------ and Director (principal
Karl F. Storrie executive officer)
/s/ ROBERT R. HIBBS
- ------------------------------ Vice President and
Robert R. Hibbs Director
/s/ ROBERT E. BROOKER, JR.
- ------------------------------ Director
Robert E. Brooker, Jr.
/s/ W.H. CLEMENT
- ------------------------------ Director
W.H. Clement
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ J. RICHARD JONES
- ------------------------------ Director
J. Richard Jones
/s/ JACK K. EDWARDS
- ------------------------------ Director
Jack K. Edwards
/s/ JOHN C. JORGENSEN
- ------------------------------ Director
John C. Jorgensen
/s/ JAMES O. FUTTERKNECHT
- ------------------------------ Director
James O. Futterknecht
/s/ RALPH R. WHITNEY, JR.
- ------------------------------ Director
Ralph R. Whitney, Jr.
/s/ WILLIAM L. ORSCHELN
- ------------------------------ Director
William L. Orscheln
/s/ ERIC J. ROSEN
- ------------------------------ Director
Eric J. Rosen
Vice President and Chief
/s/ STEPHEN E. K. GRAHAM Financial Officer
- ------------------------------ (principal financial and
Stephen E. K. Graham accounting officer)
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dura Operating
Corp. duly caused this Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in City of Rochester
Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
DURA OPERATING CORP.
By: /s/ S.A. JOHNSON
-----------------------------------------
S.A. Johnson
CHAIRMAN
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ S.A. JOHNSON
- ------------------------------ Chairman
S.A. Johnson
President, Chief Executive
/s/ KARL F. STORRIE Officer
- ------------------------------ and Director (principal
Karl F. Storrie executive officer)
/s/ ROBERT R. HIBBS
- ------------------------------ Vice President and
Robert R. Hibbs Director
/s/ ROBERT E. BROOKER, JR.
- ------------------------------ Director
Robert E. Brooker, Jr.
/s/ W.H. CLEMENT
- ------------------------------ Director
W.H. Clement
</TABLE>
II-11
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ J. RICHARD JONES
- ------------------------------ Director
J. Richard Jones
/s/ JACK K. EDWARDS
- ------------------------------ Director
Jack K. Edwards
/s/ JOHN C. JORGENSEN
- ------------------------------ Director
John C. Jorgensen
/s/ JAMES O. FUTTERKNECHT
- ------------------------------ Director
James O. Futterknecht
/s/ RALPH R. WHITNEY, JR.
- ------------------------------ Director
Ralph R. Whitney, Jr.
/s/ WILLIAM L. ORSCHELN
- ------------------------------ Director
William L. Orscheln
/s/ ERIC J. ROSEN
- ------------------------------ Director
Eric J. Rosen
Vice President and Chief
/s/ STEPHEN E. K. GRAHAM Financial Officer
- ------------------------------ (principal financial and
Stephen E. K. Graham accounting officer)
</TABLE>
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dura Automotive
Systems, Inc., Column Shifter Operations duly caused this Registration Statement
on Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, in City of Rochester Hills, State of Michigan, on the 21st day of
June, 1999.
<TABLE>
<S> <C> <C>
DURA AUTOMOTIVE SYSTEMS, INC.
COLUMN SHIFTER OPERATIONS
By: /s/ DAVID R. BOVEE
-----------------------------------------
David R. Bovee
PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ DAVID R. BOVEE President and Director
- ------------------------------ (principal executive
David R. Bovee officer)
Vice President, Chief
/s/ STEPHEN E. K. GRAHAM Financial Officer and
- ------------------------------ Director (principal
Stephen E.K. Graham accounting and financial
officer)
</TABLE>
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Universal Tool &
Stamping Company, Inc. duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in City of
Rochester Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
UNIVERSAL TOOL & STAMPING COMPANY, INC.
By: /s/ DAVID R. BOVEE
-----------------------------------------
David R. Bovee
PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ DAVID R. BOVEE President and Director
- ------------------------------ (principal executive
David R. Bovee officer)
Vice President, Chief
/s/ STEPHEN E.K. GRAHAM Financial Officer and
- ------------------------------ Director (principal
Stephen E.K. Graham accounting and financial
officer)
</TABLE>
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dura Automotive
Systems Cable Operations, Inc. duly caused this Registration Statement on Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
City of Rochester Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
DURA AUTOMOTIVE SYSTEMS CABLE
OPERATIONS, INC.
By: /s/ DAVID R. BOVEE
-----------------------------------------
David R. Bovee
PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ DAVID R. BOVEE President and Director
- ------------------------------ (principal executive
David R. Bovee officer)
Vice President, Chief
/s/ STEPHEN E.K. GRAHAM Financial Officer and
- ------------------------------ Director (principal
Stephen E.K. Graham accounting and financial
officer)
</TABLE>
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Adwest
Electronics, Inc. duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in City of
Rochester Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
ADWEST ELECTRONICS, INC.
By: /s/ GRAHAM R. MENZIES
-----------------------------------------
Graham R. Menzies
CHAIRMAN
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ GRAHAM R. MENZIES
- ------------------------------ Director
Graham R. Menzies
President, Chief Executive
/s/ HUGH BLACK Officer and Director
- ------------------------------ (principal executive
Hugh Black officer)
Treasurer, Chief Financial
/s/ DAVID G. BROOKS Officer and Director
- ------------------------------ (principal accounting
David G. Brooks and financial officer)
</TABLE>
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Adwest Western
Automotive, Inc. duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in City of
Rochester Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
ADWEST WESTERN AUTOMOTIVE, INC.
By: /s/ GRAHAM R. MENZIES
-----------------------------------------
Graham R. Menzies
CHAIRMAN
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ GRAHAM R. MENZIES
- ------------------------------ Director
Graham R. Menzies
President, Chief Executive
/s/ HUGH BLACK Officer and Director
- ------------------------------ (principal executive
Hugh Black officer)
Treasurer, Chief Financial
/s/ DAVID G. BROOKS Officer and Director
- ------------------------------ (principal accounting
David G. Brooks and financial officer)
/s/ KEVIN G. LOWEN
- ------------------------------ Director
Kevin G. Lowen
/s/ PHILIP MARSHALLSAY
- ------------------------------ Director
Philip Marshallsay
</TABLE>
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, X.E. Co. duly
caused this Registration Statement on Form S-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in City of Rochester Hills, State of
Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
X.E. CO.
By: /s/ DAVID R. BOVEE
-----------------------------------------
David R. Bovee
PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ DAVID R. BOVEE President and Director
- ------------------------------ (principal executive
David R. Bovee officer)
Vice President, Chief
/s/ STEPHEN E.K. GRAHAM Financial Officer and
- ------------------------------ Director (principal
Stephen E.K. Graham accounting and financial
officer)
</TABLE>
II-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dura Automotive
Systems of Tennessee L.P. duly caused this Registration Statement on Form S-4 to
be signed on its behalf by the undersigned, thereunto duly authorized, in City
of Rochester Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
DURA AUTOMOTIVE SYSTEMS OF TENNESSEE L.P.
By: Dura Industries of Michigan, Inc.
Its General Partner
By: /s/ DAVID R. BOVEE
-----------------------------------------
David R. Bovee
PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
President and Director of
/s/ DAVID R. BOVEE Dura Industries of
- ------------------------------ Michigan, Inc.
David R. Bovee (principal executive
officer)
Vice President and Chief
Financial Officer and
/s/ STEPHEN E.K. GRAHAM Director of Dura
- ------------------------------ Industries of Michigan,
Stephen E.K. Graham Inc. (principal
accounting and financial
officer)
</TABLE>
II-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dura Automotive
Systems of Indiana, Inc. duly caused this Registration Statement on Form S-4 to
be signed on its behalf by the undersigned, thereunto duly authorized, in City
of Rochester Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
DURA AUTOMOTIVE SYSTEMS OF INDIANA, INC.
By: /s/ DAVID R. BOVEE
-----------------------------------------
David R. Bovee
PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ DAVID R. BOVEE President and Director
- ------------------------------ (principal executive
David R. Bovee officer)
Vice President, Chief
/s/ STEPHEN E.K. GRAHAM Financial Officer and
- ------------------------------ Director (principal
Stephen E.K. Graham accounting and financial
officer)
</TABLE>
II-20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Anderson
Industries, Inc. duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in City of
Rochester Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
ANDERSON INDUSTRIES, INC.
By: /s/ DAVID R. BOVEE
-----------------------------------------
David R. Bovee
PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ DAVID R. BOVEE President and Director
- ------------------------------ (principal executive
David R. Bovee officer)
Vice President, Chief
/s/ STEPHEN E.K. GRAHAM Financial Officer and
- ------------------------------ Director (principal
Stephen E.K. Graham accounting and financial
officer)
/s/ JOHN K. KNAPPENBERGER
- ------------------------------ Director
John K. Knappenberger
/s/ KARL F. STORRIE
- ------------------------------ Director
Karl F. Storrie
</TABLE>
II-21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Hydro Flame
Corporation duly caused this Registration Statement on Form S-4 to be signed on
its behalf by the undersigned, thereunto duly authorized, in City of Rochester
Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
HYDRO FLAME CORPORATION
By: /s/ DAVID R. BOVEE
-----------------------------------------
David R. Bovee
PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ DAVID R. BOVEE President and Director
- ------------------------------ (principal executive
David R. Bovee officer)
Vice President, Chief
/s/ STEPHEN E.K. GRAHAM Financial Officer and
- ------------------------------ Director (principal
Stephen E.K. Graham accounting and financial
officer)
</TABLE>
II-22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Atwood
Industries, Inc. duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in City of
Rochester Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
ATWOOD INDUSTRIES, INC.
By: /s/ DAVID R. BOVEE
-----------------------------------------
David R. Bovee
PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ DAVID R. BOVEE President and Director
- ------------------------------ (principal executive
David R. Bovee officer)
Vice President, Chief
/s/ STEPHEN E.K. GRAHAM Financial Officer and
- ------------------------------ Director (principal
Stephen E.K. Graham accounting and financial
officer)
</TABLE>
II-23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Atwood
Automotive Inc. duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in City of
Rochester Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
ATWOOD AUTOMOTIVE INC.
By: /s/ DAVID R. BOVEE
-----------------------------------------
David R. Bovee
PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ DAVID R. BOVEE President and Director
- ------------------------------ (principal executive
David R. Bovee officer)
Vice President, Chief
/s/ STEPHEN E.K. GRAHAM Financial Officer and
- ------------------------------ Director (principal
Stephen E.K. Graham accounting and financial
officer)
</TABLE>
II-24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Mark I Molded
Plastics, Inc. duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in City of
Rochester Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
MARK I MOLDED PLASTICS, INC.
By: /s/ DAVID R. BOVEE
-----------------------------------------
David R. Bovee
PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ DAVID R. BOVEE President and Director
- ------------------------------ (principal executive
David R. Bovee officer)
Vice President, Chief
/s/ STEPHEN E.K. GRAHAM Financial Officer and
- ------------------------------ Director (principal
Stephen E.K. Graham accounting and financial
officer)
</TABLE>
II-25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Mark I Molded
Plastics of Tennessee, Inc. duly caused this Registration Statement on Form S-4
to be signed on its behalf by the undersigned, thereunto duly authorized, in
City of Rochester Hills, State of Michigan, on the 21st day of June, 1999.
<TABLE>
<S> <C> <C>
MARK I MOLDED PLASTICS OF TENNESSEE, INC.
By: /s/ DAVID R. BOVEE
-----------------------------------------
David R. Bovee
PRESIDENT
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Bovee, Stephen E.K. Graham, Scott D.
Rued and Carl E. Nelson, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
offerings which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 21ST DAY OF JUNE,
1999.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ DAVID R. BOVEE President and Director
- ------------------------------ (principal executive
David R. Bovee officer)
Vice President, Chief
/s/ STEPHEN E.K. GRAHAM Financial Officer and
- ------------------------------ Director (principal
Stephen E.K. Graham accounting and financial
officer)
</TABLE>
II-26
<PAGE>
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
DURA AUTOMOTIVE SYSTEMS, INC.
ARTICLE ONE
The name of the Corporation is DURA AUTOMOTIVE SYSTEMS, INC.
ARTICLE TWO
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company. The registered office and/or
registered agent of the Corporation may be changed from time to time by
action of the Board of Directors.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware (the
"Delaware General Corporation Law") either alone or with others through
wholly or partially owned subsidiaries, as a partner (limited or general) in
any partnership, as a joint venturer in any joint venture, or otherwise.
ARTICLE FOUR
SECTION 1. The aggregate number of shares of stock which the
Corporation has authority to issue is 75,000,000, consisting of 5,000,000
shares of Series Preferred Stock, par value $1.00 per share (the "Series
Preferred Stock"), 60,000,000 shares of Class A Common Stock, par value $.01
per share (the "Class A Common Stock"), and 10,000,000 shares of Class B
Common Stock, par value $.01 per share (the "Class B Common Stock"). The
Class A Common Stock and the Class B Common Stock are collectively referred
to herein as the "Common Securities." All of such shares shall be issued as
fully paid and non-assessable shares, and the holder thereof shall not be
liable for any further payments in respect thereof.
SECTION 2. The preferences, limitations, designations and relative
rights of the shares of each class and the qualifications, limitations or
restrictions thereof shall be as follows:
<PAGE>
A. SERIES PREFERRED STOCK.
1. AUTHORIZATION; SERIES; PROVISIONS.
(a) The Board of Directors of the Corporation is authorized,
subject to limitations prescribed by law and the provisions of this Article
Four, to provide for the issuance of shares of the Series Preferred Stock in
series, and by filing a certificate pursuant to the General Corporation Law
of the State of Delaware, to establish from time to time the number of shares
to be included in each such series and to fix the designations, powers,
preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
(b) The Series Preferred Stock may be issued from time to time in one
or more series, the shares of each series to have such powers, designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as are stated and expressed
herein or in a resolution or resolutions providing for the issuance of such
series, adopted by the Board of Directors as hereinafter provided.
(c) Authority is hereby expressly granted to the Board of
Directors, subject to the provisions of this Section 2, to authorize the
issuance of one or more series of Series Preferred Stock, and with respect to
each such series to fix by resolution or resolutions providing for the
issuance of such series:
(i) the maximum number of shares to constitute such series
and the distinctive designation thereof;
(ii) whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law, and, if so, the terms
of such voting rights;
(iii) the dividend rate, if any, on the shares of such series,
the conditions and dates upon which such dividends shall be payable, the
preference or relation which such dividends shall bear to the dividends payable
on any other class or classes or on any other series of capital stock, and
whether such dividends shall be cumulative or noncumulative;
(iv) whether the shares of such series shall be subject to
redemption by the Corporation and, if made subject to redemption, the times,
prices and other terms and conditions of such redemption;
(v) the rights of the holders of shares of such series upon
the liquidation, dissolution or winding up of the Corporation;
(vi) whether or not the shares of such series shall be subject
to the operation of a retirement or sinking fund and, if so, the extent to and
manner in which any such retirement or sinking fund shall be applied to the
purchase or redemption of the shares of such series for retirement or to other
corporate purposes and the terms and provisions relative to the operation
thereof;
-2-
<PAGE>
(vii) whether or not the shares of such series shall be
convertible into, or exchangeable for, shares of stock of any other class or
classes, or of any other series of the same class, and if so convertible or
exchangeable, the price or prices or the rate or rates of conversion or exchange
and the method, if any, of adjusting the same;
(viii) the limitations and restrictions, if any, to be effective
while any shares of such series are outstanding upon the payment of dividends or
making of other distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, Common Securities or any other class or
classes of stock of the Corporation ranking junior to the shares of such series
either as to dividends or upon liquidation;
(ix) the conditions or restrictions, if any, upon the creation
of indebtedness of the Corporation or upon the issue of any additional stock
(including additional shares of such series or of any other series or of any
other class) ranking on a parity with or prior to the shares of such series as
to dividends or distribution of assets on liquidation, dissolution or winding
up; and
(x) any other preference and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof as shall not be inconsistent with this Section 2.
2. SERIES IDENTICAL; RANK. All shares of any one series of Series
Preferred Stock shall be identical with each other in all respects, except that
shares of any one series issued at different times may differ as to the dates
from which dividends, if any, thereon shall be cumulative; and all series shall
rank equally and be identical in all respects, except as permitted by the
foregoing provisions of paragraph 1(c) hereof; and all shares of Series
Preferred Stock shall rank senior to the Common Securities both as to dividends
and upon liquidation.
3. LIQUIDATION. In the event of any liquidation, dissolution or
winding up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set apart
for the holders of any class or classes of stock of the Corporation ranking
junior to the Series Preferred Stock upon liquidation, the holders of the shares
of the Series Preferred Stock shall be entitled to receive payment at the rate
fixed herein or in the resolution or resolutions adopted by the Board of
Directors providing for the issue of such series, plus (if dividends on shares
of such series of Series Preferred Stock shall be cumulative) an amount equal to
all dividends (whether or not earned or declared) accumulated to the date of
final distribution to such holders; but they shall be entitled to no further
payment. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation or proceeds thereof, distributable
among the holders of the shares of the Series Preferred Stock shall be
insufficient to pay in full the preferential amount aforesaid, then such assets,
or the proceeds thereof, shall be distributed among such holders ratably in
accordance with the respective amounts which would be payable on such shares if
all amounts payable thereon were paid in full.
4. VOTING RIGHTS. Except as shall be otherwise stated and expressed
herein or in the resolution or resolutions of the Board of Directors providing
for the issue of any series and except as otherwise required by the laws of the
State of Delaware, the holders of shares of Series
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Preferred Stock shall have, with respect to such shares, no right or power to
vote on any question or in any proceeding or to be represented at, or to
receive notice of, any meeting of stockholders.
5. REACQUIRED SHARES. Shares of any Series Preferred Stock which
shall be issued and thereafter acquired by the Corporation through purchase,
redemption, exchange, conversion or otherwise shall return to the status of
authorized but unissued Series Preferred Stock unless otherwise provided in the
resolution or resolutions of the Board of Directors.
6. INCREASE /DECREASE IN AUTHORIZED SHARES OF A SERIES. Unless
otherwise provided in the resolution or resolutions of the Board of Directors
providing for the issuance thereof, the number of authorized shares of stock of
any such series may be increased or decreased (but not below the number of
shares thereof outstanding) by resolution or resolutions of the Board of
Directors. In case the number of shares of any such series of Series Preferred
Stock shall be decreased, the shares representing such decrease shall, unless
otherwise provided in the resolution or resolutions of the Board of Directors
providing for the issuance thereof, resume the status of authorized but unissued
Series Preferred Stock, undesignated as to series.
B. COMMON SECURITIES.
Except as otherwise provided in this Section 2B of Article or as
otherwise required by applicable law, all shares of Class A Common Stock and
Class B Common Stock shall be identical in all respects and shall entitle the
holders thereof to the same rights and privileges, subject to the same
qualifications, limitations and restrictions.
1. VOTING RIGHTS. Except as otherwise provided in this Section 2B
of Article or as otherwise required by applicable law, holders of Class A Common
Stock shall be entitled to one (1) vote per share on all matters to be voted on
by the stockholders of the Corporation, and the holders of Class B Common Stock
shall be entitled to ten (10) votes per share on all such matters; PROVIDED,
HOWEVER, that holders of Class B Common Stock shall have no right to vote on any
matters to be voted on by the stockholders of the Corporation at any time after
the time at which the MC Stockholders, as defined in the Stockholders Agreement,
dated as of August 31, 1994, and amended on May 17, 1995, and their affiliates
cease to beneficially own, in the aggregate, at least ten percent (10%) of the
total outstanding shares of Common Securities. The holders of Class A Common
Stock and Class B Common Stock shall vote together as a single class on all
matters to be voted on by the stockholders of the Corporation; provided, that
for any matter to be voted on by the stockholders which independently affects
only one class of Common Securities, without such an effect on the other class,
the affected class of Common Securities shall vote as a separate class on such
matters.
2. DIVIDENDS. Subject to the rights of each series of the Series
Preferred Stock, dividends may be declared and paid or set apart for payment
upon the Common Securities out of any assets or funds of the Corporation legally
available for the payment of dividends, and the holders of Class A Common Stock
and Class B Common Stock shall be entitled to participate in such dividends
ratably on a per share basis; provided, that if dividends are declared which are
payable in shares of Class A Common Stock or Class B Common Stock, dividends
shall be declared which are payable at the same rate on both classes of Common
Securities and the dividends payable in shares of Class
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A Common Stock shall be payable to holders of that class of stock and the
dividends payable in shares of Class B Common Stock shall be payable to
holders of that class of stock.
3. LIQUIDATION. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, and after the holders of the
Series Preferred Stock of each series shall have been paid in full the amounts
to which they respectively shall be entitled in accordance with Section 2A of
Article Four, the terms of any outstanding Series Preferred Stock and applicable
law, or an amount sufficient to pay the aggregate amount to which the holders of
the Series Preferred Stock of each series shall be entitled shall have been
deposited with a bank or trust company having capital, surplus and undivided
profits of at least Twenty-Five Million Dollars ($25,000,000) as a trust fund
for the benefit of the holders of such Series Preferred Stock, the remaining net
assets, of the Corporation shall be distributed pro rata to the holders of the
Common Securities, to the exclusion of the holders of such Series Preferred
Stock.
4. CONVERSION.
4A. CONVERSION OF CLASS B COMMON STOCK.
(a) Upon the occurrence of a Conversion Event as set forth in
paragraph (b) of this subsection 4A of Article Four, Section 2B, each share of
Class B Common Stock transferred in connection with such Conversion Event shall
automatically convert into the same number of shares of Class A Common Stock.
Upon the occurrence of any Conversion Event, the holder or holders of Class B
Common Stock affected thereby shall promptly comply with the procedures for
conversion of Class B Common Stock to Class A Common Stock as set forth in
subsection 4B of this Article Four, Section 2B. Each holder of Class B Common
Stock shall also be entitled at any time to convert into the same number of
shares of Class A Common Stock any or all of the shares of such holder's Class B
Common Stock pursuant to the provisions of paragraph (c) of subsection 4A of
this Article Four, Section 2B.
(b) For purposes of this subsection 4A of Article Four, Section 2B, a
"Conversion Event" shall mean any transfer of Class B Common Stock that, at the
time of such transfer, entitles the holder thereof to ten (10) votes per share,
to a person who, immediately prior to such transfer, is not an affiliate of the
transferor.
For purpose of this subsection 4A of Article Four, Section 2B,
"Person" shall include any natural person and any corporation, partnership,
joint venture, trust, unincorporated organization and any other entity or
organization, and "affiliate" shall have the meaning as set forth under Rule
12b-2 of the Regulations promulgated under the Securities Exchange Act of 1934.
(c) Each holder of Class B Common Stock is entitled at any time to
convert any or all of the shares of such holder's Class B Common Stock into the
same number of shares of Class A Common Stock by electing to do so in accordance
with the procedures set forth in subsection 4B of this Article Four, Section 2B.
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4B. CONVERSION PROCEDURE.
(a) Unless otherwise provided in connection with a Conversion Event,
each conversion of shares of Class B Common Stock into shares of Class A Common
Stock shall be effected by the surrender of the certificate or certificates
representing the shares to be converted at the principal office of the
Corporation at any time during normal business hours. In the case of an
elective conversion pursuant to subsection 4A(c) of this Article Four, the
surrender of the certificate or certificates representing such Class B Common
Stock shall be accompanied by a written notice by the holder of such shares
stating that the holder desires to convert the shares, or a stated number of the
shares, of such Class B Common Stock represented by such certificate or
certificates into shares of Class A Common Stock (and such statement will
obligate the Corporation to issue such shares of Class A Common Stock).
Each conversion pursuant to a Conversion Event under subsection 4A(b)
shall be deemed to have been effected as of the point in time at which such
Conversion Event was consummated. Each conversion pursuant to subsection 4A(c)
shall be deemed to have been effected as of the close of business on the date on
which such certificate or certificates have been surrendered and the
corresponding notice has been received. Immediately upon the conversion of
Class B Common Stock to Class A Common Stock, the rights of the holder of the
converted Class B Common Stock as such holder shall cease and the person or
persons in whose name or names the certificate or certificates for shares of
Class A Common Stock are to be issued upon such conversion shall be deemed to
have become the holder or holders of record of the shares of Class A Common
Stock represented thereby.
(b) For each conversion effected pursuant to a Conversion Event under
subsection 4A (b) promptly after the surrender of certificates, the Corporation
shall issue and deliver the certificate or certificates for the Class A Common
Stock issuable upon such conversion. For each conversion effected pursuant to
an elective conversion under subsection 4A(c), promptly after the surrender of
certificates and the receipt of written notice, the Corporation shall issue and
deliver in accordance with the surrendering holder's instructions (i) the
certificate or certificates for the Class A Common Stock issuable upon such
conversion and (ii) a certificate representing any Class B Common Stock which
was represented by the certificate or certificates delivered to the Corporation
in connection with such conversion but which was not converted.
(c) The issuance of certificates for Class A Common Stock upon
conversion of Class B Common Stock will be made without charge to the holders of
such shares for any issuance tax in respect thereof or other cost incurred by
the Corporation in connection with such conversion and the related issuance of
Class A Common Stock.
(d) The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares of Class A Common Stock, solely for the
purpose of issuance upon the conversion of the Class B Common Stock, such number
of shares of Class A Common Stock issuable upon the conversion of all
outstanding Class B Common Stock. All shares of Class A Common Stock which are
so issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Class A Common Stock may be so issued
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without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange or automatic quotation
system upon which shares of Class A Common Stock may be listed or quoted
(except for official notice of issuance which will be immediately transmitted
by the Corporation upon issuance).
(e) The Corporation shall not close its books against the transfer of
shares of Common Securities in any manner which would interfere with the timely
conversion of any shares of Class B Common Stock.
4C. STOCK SPLITS. If the Corporation in any manner subdivides or
combines the outstanding shares of one class of Common Securities, the
outstanding shares of the other class of Common Securities shall be
proportionately subdivided or combined in a similar manner.
C. GENERAL PROVISIONS
1. NONLIQUIDATING EVENTS. A consolidation or merger of the
Corporation with or into another corporation or corporations or a sale, whether
for cash, shares of stock, securities or properties, or any combination thereof,
of all or substantially all of the assets of the Corporation shall not be deemed
or construed to be a liquidation, dissolution or winding up of the Corporation
within the meaning of this Article Four.
2. NO PREEMPTIVE RIGHTS. No holder of Series Preferred Stock or
Common Securities of the Corporation shall be entitled, as such, as a matter of
right, to subscribe for or purchase any part of any new or additional issue of
stock of any class or series whatsoever or of securities convertible into stock
of any class whatsoever, whether now or hereafter authorized and whether issued
for cash or other consideration, or by way of dividend.
ARTICLE FIVE
The Corporation is to have perpetual existence.
ARTICLE SIX
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors, and the directors need not be
elected by ballot unless required by the By-laws of the Corporation. In
furtherance and not in limitation of the powers conferred by statute, the
Board of Directors of the Corporation is expressly authorized to make, alter,
amend, change, add to or repeal the By-laws of the Corporation.
ARTICLE SEVEN
Meetings of stockholders may be held within or without the State of
Delaware, as the By-laws of the Corporation may provide. The books of the
Corporation may be kept outside the
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State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the By-laws of the Corporation. The
Board of Directors shall from time to time decide whether and to what extent
and at what times and under what conditions and requirements the accounts and
books of the Corporation, or any of them, except the stock book, shall be
open to the inspection of the stockholders, and no stockholder shall have any
right to inspect any books or documents of the Corporation except as
conferred by the laws of the State of Delaware or as authorized by the Board
of Directors.
ARTICLE EIGHT
Subject to the rights of the holders of any series of Preferred Stock,
from and after the date on which the Class A Common Stock of the Corporation is
registered pursuant to the Securities Exchange Act of 1934, as amended, (A) any
action required or permitted to be taken by the stockholders of the Corporation
must be effected at an annual or special meeting of stockholders of the
Corporation and may not be effected in lieu thereof by any consent in writing by
such stockholders, and (B) special meetings of stockholders of the Corporation
may be called only by the Chairman of the Board, the President or the Board of
Directors pursuant to a resolution adopted by the affirmative vote of at least a
majority of the members then in office.
ARTICLE NINE
SECTION 1. The number of directors which shall constitute the
whole board shall be such as from time to time shall be fixed by the Board of
Directors in the manner as provided in the by-laws, except that such number
shall not be less than one (1) nor more than fifteen (15). The term of office
of each director shall be one year, and shall expire at the following year's
annual election of directors by the stockholders of the Corporation; subject,
however, to prior death, resignation, retirement, disqualification or removal
from office for cause. At each succeeding annual election of directors by the
stockholders of the Corporation, beginning in 1997, the directors chosen to
succeed those whose terms have expired shall be identified and elected for a
term expiring one year from such election date.
Vacancies and newly created directorships resulting from any
increase in the number of directors may be filled only by the affirmative
vote of the majority of the Board of Directors then in office, although less
than quorum, or by a sole remaining director. Any director elected to fill a
vacancy resulting from an increase in the number of directors shall have an
initial term the same as those of the other directors then serving on the
Board of Directors. Any director elected to fill a vacancy not resulting
from an increase in the number of directors shall have the same remaining
term as that of his predecessor.
Notwithstanding anything to the contrary, whenever the holders of any
one or more classes or series of Preferred Stock issued by the Corporation shall
have the right, voting separately by class or series, to elect directors at an
annual or special meeting of stockholders, the election, term of office, filing
of vacancies and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation applicable thereto.
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Subject to the rights of any class or series of stock having a
preference over the Common Securities as to dividends or upon liquidation to
elect directors under specified circumstances, no director may be removed from
office without cause.
SECTION 2. Except to the extent prohibited by law, the Board of
Directors shall have the right (which, to the extent exercised, shall be
exclusive) to establish the rights, powers, duties, rules and procedures that
from time to time shall govern the Board of Directors and each of its members,
including without limitation the vote required for any action by the Board of
Directors, and that from time to time shall affect the directors' power to
manage the business and affairs of the Corporation; and no by-law shall be
adopted by stockholders which shall impair or impede the implementation of the
foregoing.
ARTICLE TEN
ARTICLE EIGHT, ARTICLE NINE and this ARTICLE TEN of this Restated
Certificate of Incorporation and Sections 2 and 11 of Article II, Sections 2, 3,
4 and 5 of Article III and Article V of the By-laws of the Corporation shall not
be altered, amended or repealed by, and no provision inconsistent therewith
shall be adopted by, the stockholders without the affirmative vote of the
holders of at least 80% of the Common Securities, voting together as a single
class.
ARTICLE ELEVEN
SECTION 1. To the fullest extent permitted by the Delaware General
Corporation Law as it now exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), no director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages arising from a breach of fiduciary duty
owed to the Corporation or its stockholders.
SECTION 2. Any repeal or modification of the foregoing paragraph by
the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE TWELVE
The Corporation expressly elects to be governed by Section 203 of the
Delaware General Corporation Law.
ARTICLE THIRTEEN
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation in the
manner now or hereafter prescribed
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herein and by the laws of the State of Delaware, and all rights conferred
upon stockholders herein are granted subject to this reservation.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
June 16, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Grand Rapids, Michigan,
June 16, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Stamford, Connnecticut,
June 16, 1999
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in the registration statement on Form S-4 dated
21 June 1999 of Dura Automotive Systems, Inc. of our report dated 7 September
1998, in respect to the consolidated balance sheets of Adwest Automotive Plc and
its subsidiaries at 30 June 1998 and 30 June 1997, and the related consolidated
profit and loss accounts, reconciliations of movements in shareholders' funds
and consolidated cash flow statements for each of the years in the three year
period ended 30 June 1998 and to the reference to our firm under the heading
"Experts" in the Form S-4 dated 21 June 1999.
KPMG Audit Plc
June 21, 1999
