<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 1,1999
Accuride Corporation
- ------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 333-50239 61-1109077
- ------------------------------------------------------------------------------
(State or Other (Commission (IRS Employer
Jurisdiction of Incorporation) File Number) Identification No.)
2315 Adams Lane, Henderson, Kentucky 42420
- ------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (502) 826-5000
- ------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
This Current Report on Form 8-K/A amends the Registrant's Current
Report on Form 8-K filed by the Registrant on April 12, 1999, and is being filed
solely to add the financial statements of the business acquired required by Item
7(a) and the pro forma financial information required by Item 7(b).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired beginning on page F-1.
Balance sheets of AKW L.P. (the Partnership), a Delaware limited
partnership, as of December 31, 1998 and 1997, and the related
statements of income, partners' capital and cash flows for the year
ended December 31, 1998, and the period from inception (May 1, 1997)
through December 31, 1997.
(b) Pro forma financial information beginning on page F-14.
Unaudited pro forma consolidated condensed balance sheet as of December
31, 1998 and unaudited pro forma consolidated condensed statement of
income for the year ended December 31, 1998 and the notes related
thereto.
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
23.1 Consent of Arthur Andersen LLP
</TABLE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
FINANCIAL STATEMENTS:
Report of Independent Public Accountants F-2
Balance Sheets - December 31, 1998 and 1997 F-3
Statements of Income For the Year Ended
December 31, 1998, and the Period From
Inception (May 1, 1997) Through December, 1997 F-4
Statements of Partners' Capital For the Year
Ended December 31, 1998, and the Period From
Inception (May 1, 1997) Through December 31, 1997 F-5
Statements of Cash Flows For the Year Ended
December 31, 1998, and the Period From Inception
(May 1, 1997) Through December 31, 1997 F-6
Notes to Financial Statements - December 31, 1998 F-7
PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Consolidated Financial Information F-14
Unaudited Pro Forma Consolidated Balance Sheet as of
December 31, 1998 F-15
Unaudited Pro Forma Consolidated Condensed Statement
of Income For the Year Ended December 31, 1998 F-16
Notes to Unaudited Pro Forma Consolidated Financial
Information F-17
</TABLE>
<PAGE>
AKW L.P.
(A DELAWARE LIMITED PARTNERSHIP)
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
TOGETHER WITH AUDITORS' REPORT
F-1
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners,
AKW L.P.:
We have audited the accompanying balance sheets of AKW L.P. (the Partnership), a
Delaware limited partnership, as of December 31, 1998 and 1997, and the related
statements of income, partners' capital and cash flows for the year ended
December 31, 1998, and the period from inception (May 1, 1997) through December
31, 1997. These financial statements are the responsibility of the Partnership'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 AKW L.P. as of December 31,
1998 and 1997, and the results of its operations and its cash flows for the year
ended December 31, 1998, and the period from inception (May 1, 1997) through
December 31, 1997, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Houston, Texas
January 10, 1999 (except with respect
to the matter discussed in Note 9, as to
which the date is April 1, 1999)
F-2
<PAGE>
AKW L.P.
(A Delaware Limited Partnership)
BALANCE SHEETS--DECEMBER 31, 1998 AND 1997
(In Thousands)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ - $ -
Accounts receivable, trade 15,311 7,191
Accounts receivable, other-
Kaiser 2,871 3,332
Other 663 539
Inventories 8,348 8,087
Prepaid expenses 95 89
------- -------
Total current assets 27,288 19,238
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $3,510 and $1,305, 25,862 22,758
respectively
GOODWILL, net of accumulated amortization of $1,545 and $632, respectively 12,140 13,053
------- -------
Total assets $65,290 $55,049
------- -------
------- -------
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable, trade $ 9,373 $ 7,212
Accounts payable, other 280 280
Wheel recall liability 4,728 4,600
Accrued liabilities, other 620 611
------- -------
Total current liabilities 15,001 12,703
RETIREMENT AND OTHER LIABILITIES 3,861 3,240
PARTNERS' CAPITAL 46,428 39,106
------- -------
Total liabilities and partners' capital $65,290 $55,049
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
AKW L.P.
(A Delaware Limited Partnership)
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998, AND
THE PERIOD FROM INCEPTION (MAY 1, 1997)
THROUGH DECEMBER 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
NET SALES $86,531 $52,516
COST OF GOODS SOLD 68,043 45,133
------- -------
Gross profit 18,488 7,383
SELLING, GENERAL AND ADMINISTRATIVE 6,266 3,883
------- -------
Operating income 12,222 3,500
OTHER EXPENSE - 348
------- -------
NET INCOME $12,222 $ 3,152
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
AKW L.P.
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1998, AND
THE PERIOD FROM INCEPTION (MAY 1, 1997)
THROUGH DECEMBER 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
Kaiser AKW
Aluminum Accuride General
and Chemical Ventures, Partner
Corporation Inc. L.L.C. Total
------------ --------- -------- -----
<S> <C> <C> <C> <C>
PARTNERSHIP FORMATION $ 40,828 $ - $ 870 $ 41,698
CONTRIBUTIONS, May 1, 1999
SALE OF PARTNERSHIP INTEREST (20,414) 20,414 - -
CONTRIBUTIONS FROM PARTNERS 12,035 12,016 485 24,536
DISTRIBUTIONS TO PARTNERS (14,743) (14,724) (596) (30,063)
PURCHASE PRICE ADJUSTMENT (107) (107) (3) (217)
NET INCOME 1,544 1,544 64 3,152
-------- -------- -------- --------
BALANCE, December 31, 1997 19,143 19,143 820 39,106
CONTRIBUTIONS FROM PARTNERS 29,327 29,302 1,196 59,825
DISTRIBUTIONS TO PARTNERS (31,728) (31,703) (1,294) (64,725)
NET INCOME 5,989 5,989 244 12,222
-------- -------- -------- --------
BALANCE, December 31, 1998 $ 22,731 $ 22,731 $ 966 $ 46,428
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
AKW L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998, AND
THE PERIOD FROM INCEPTION (MAY 1, 1997)
THROUGH DECEMBER 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,222 $ 3,152
Adjustments to reconcile net income to net cash provided by
operating activities-
Depreciation and amortization 3,118 1,937
Increase in receivables (7,783) (8,615)
Increase in inventories (261) (1,251)
Increase in prepaid expenses (6) (89)
Increase in accounts payable 2,161 7,212
Increase in other accrued and other liabilities 758 5,504
-------- --------
Net cash provided by operating activities 10,209 7,850
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (5,309) (2,323)
-------- --------
Net cash used in investing activities (5,309) (2,323)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from partners 59,825 24,536
Distributions to partners (64,725) (30,063)
-------- --------
Net cash used in financing activities (4,900) (5,527)
-------- --------
NET CHANGE IN CASH - -
CASH AT BEGINNING OF PERIOD - -
-------- --------
CASH AT END OF PERIOD $ - $ -
-------- --------
-------- --------
SUPPLEMENTAL NONCASH INVESTING ACTIVITIES:
Accounts receivable contributed $ - $ 2,447
Inventory contributed - 6,836
Property, plant and equipment contributed - 21,740
Goodwill contributed - 13,685
Liabilities assumed - (3,010)
-------- --------
$ - $ 41,698
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
AKW L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(In Thousands)
1. GENERAL AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES:
GENERAL
AKW L.P. (AKW or the Partnership) is a Delaware limited partnership formed on
May 1, 1997, to design, commercialize, manufacture, market, sell and service
aluminum wheels and tire molds primarily for medium and heavy-duty trucks,
trailers and buses. Kaiser Aluminum and Chemical Corporation (Kaiser), a
wholly owned subsidiary of Kaiser Aluminum Corporation, and Accuride
Ventures, Inc. (AVI), a wholly owned subsidiary of Accuride Corporation
(Accuride), are the limited partners of AKW (the Partners). The general
partner is AKW General Partner L.L.C. (the GP), a Delaware limited liability
company which is owned equally by Kaiser and Accuride.
The Partnership was formed with initial capital contributions from the GP of
$870 (consisting of contributed inventory), representing a 2 percent interest in
the Partnership, and contributions from Kaiser at an agreed-upon value of
$40,828, representing a 98 percent interest in the Partnership. The contribution
from Kaiser consisted primarily of machinery, equipment and inventory, net of
certain employee-related liabilities. Simultaneously with the initial capital
contribution by Kaiser, Accuride remitted $20,414 in cash to Kaiser in exchange
for half of Kaiser's 98 percent interest in the Partnership and contributed
certain customer contracts to the Partnership. Based on the allocation of fair
value to the assets and liabilities contributed by the Partners, goodwill of
$13,685 was recognized.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities known to exist as of the date the financial statements are
published, and the reported amounts of revenues and expenses during the
reporting period. Uncertainties, with respect to such estimates and assumptions,
are inherent in the preparation of the Partnership's financial statements;
accordingly, it is possible that the actual results could differ from these
estimates and assumptions, which could have a material effect on the reported
amounts of the Partnership's financial position and results of operations.
INVENTORIES
Inventories are valued at the lower of cost or market. Inventory costs have been
determined by the first-in, first-out (FIFO) method. The cost of products
manufactured includes raw materials, direct labor and operating expenses.
REVENUE RECOGNITION
The Partnership recognizes product sales revenues upon delivery to the customer.
All product sales revenues are presented net of customer volume rebate, if
applicable.
F-7
<PAGE>
GOODWILL
Goodwill, which represents the excess of cost over the fair value of net assets
contributed by the Partners, is amortized on a straight-line basis over 15
years. AKW regularly evaluates whether subsequent events or circumstances have
occurred that indicate the remaining useful life of goodwill may warrant
revision or that the remaining balance of goodwill may not be recoverable.
Management believes that there have been no events or circumstances which
warrant revision to the remaining useful life or which affect the recoverability
of goodwill.
CASH
The Partnership considers cash equivalents to include all highly liquid
investments with maturities of three months or less when purchased.
The Partnership maintains a consolidation bank account for receipts and
disbursements, which is administered by the bank on behalf of the partners, who
are advised daily of the net activity. Cash requirements are funded by, and cash
surplus is transferred to, the partners equally. Such funding and transfer
activity is reflected in the respective partners' capital accounts.
DEPRECIATION
Depreciation is computed by the straight-line method at rates based on the
estimated useful lives of the various classes of assets. The estimated useful
lives of leasehold improvements, tooling, machinery and equipment, and furniture
and fixtures are two to 15 years.
Reclassification
Certain reclassifications have been made to amounts previously reported to
conform with the current-year presentation.
2. INVENTORIES:
Inventory components at December 31, 1998 and 1997, were as follows:
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Raw materials and supplies $ 2,071 $ 3,068
Work in process 2,330 2,421
Finished goods 3,947 2,598
------- -------
$ 8,348 $ 8,087
------- -------
------- -------
</TABLE>
F-8
<PAGE>
3. PROPERTY, PLANT AND EQUIPMENT:
The components of property, plant and equipment at December 31, 1998 and 1997,
were as follows:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Leasehold improvements $ 690 $ 549
Machinery and equipment 24,019 22,032
Furniture and fixtures 180 169
Construction in progress 4,483 1,313
-------- --------
29,372 24,063
Less- Accumulated depreciation (3,510) (1,305)
-------- --------
Property, plant and equipment, net $ 25,862 $ 22,758
-------- --------
-------- --------
</TABLE>
4. INCOME TAXES:
A provision for income taxes is not made in the accounts of the Partnership
since such taxes are liabilities of the partners and depend upon their
respective tax situations.
5. RETIREMENT PLANS
AND EMPLOYEE BENEFITS:
Retirement plans are noncontributory for salaried and hourly employees and
generally provide for benefits based on a formula which considers length of
service and earnings during years of service. Employer contributions to the plan
were $189 and $195 for the year ended December 31, 1998, and the period from
inception to December 31, 1997, respectively. No retirement benefits were paid
under the plans during the year ended December 31, 1998, or the period from
inception to December 31, 1997.
The following table sets forth the plan's funded status and amounts recognized
in the Partnership's balance sheet at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Actuarial present value of-
Accumulated benefit obligation, including vested
benefits of $256 and $201, respectively $ 501 $ 325
------- -------
------- -------
Projected benefit obligation $ 1,046 $ 702
Plan assets at fair value (418) (2)
------- -------
Projected benefit obligation in excess of plan assets 628 700
Unrecognized net gain 3 7
Unrecognized prior service cost (110) (118)
------- -------
Accrued pension cost $ 521 $ 589
------- -------
------- -------
</TABLE>
F-9
<PAGE>
Pension costs for the year ended December 31, 1998, and the period from
inception through December 31, 1997, included the following components:
<TABLE>
<CAPTION>
1998 1997
----- -----
<S> <C> <C>
Service cost on benefits earned during the period $ 273 $ 168
Interest cost on projected benefit obligation 50 24
Expected return on plan assets (14) -
Amortization of unrecognized gain (2) (3)
Prior service cost 8 8
----- -----
Net periodic pension cost $ 315 $ 197
----- -----
----- -----
</TABLE>
Assumptions used to value obligations at year-end and to determine the net
periodic pension cost in the subsequent year are as follows:
<TABLE>
<CAPTION>
1998 1997
----- -----
<S> <C> <C>
Discount rate 7.00% 7.25%
Expected long-term rate of return on assets 9.00 9.00
Rate of increase in compensation levels 4.00 4.00
</TABLE>
6. POSTRETIREMENT BENEFITS:
The Partnership provides certain healthcare benefits for retired employees. This
component of the postretirement benefit gives rise to a liability for the
Partnership. No payments for these healthcare benefits were made to retired
employees during the year ended December 31, 1998, or the period from inception
to December 31, 1997.
The following table sets forth the plan's unfunded status reconciled with
amounts shown in the Partnership's balance sheet at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation-
Retirees $ - $ -
Actives 3,921 3,287
Plan assets at fair value - -
------- -------
Accumulated postretirement benefit obligation 3,921 3,287
Unrecognized net loss (922) (770)
------- -------
Accrued postretirement benefit obligation $ 2,999 $ 2,517
------- -------
------- -------
</TABLE>
Postretirement benefit expense recognized in the statement of income for the
year ended December 31, 1998, and the period from inception through December 31,
1997, is summarized as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Service cost $206 $126
Interest cost on accumulated postretirement benefit obligation 238 118
Amortization of unrecognized loss 38 -
---- ----
Postretirement benefit expense $482 $244
---- ----
---- ----
</TABLE>
F-10
<PAGE>
The healthcare cost trend rate assumption can have a significant effect on the
amounts reported. For measurement purposes, the plan assumes a 5.25 percent
annual rate of increase in the per capita cost of covered healthcare benefits
for 1998 and 1997, respectively. An increase or decrease of 1 percent in the
healthcare cost trend rate would increase or decrease the accumulated
postretirement benefit obligation and the aggregate of the service and interest
cost components of the postretirement benefits expense by $817 or $(670) and
$104 or $(84), respectively.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation for 1998 and 1997 was 7.00 percent and 7.25
percent, respectively.
7. TRANSACTIONS WITH
PARTNERS AND RELATED PARTIES:
Kaiser and Accuride provide administrative and technical services to AKW
consisting of treasury, legal, sales and marketing support, and product design
and testing. Pursuant to the AKW formation agreements, Accuride performs all
billing and collection functions, as well as calculation and notification of
rebates. For the year ended December 31, 1998, and the period from inception
through December 31, 1997, AKW incurred $1,762 and $2,683, respectively, related
to these services. Additionally, Kaiser and Accuride provide general liability
insurance coverage for claims that exceed $11,000. As of December 31, 1998, AKW
had no claims which exceeded this threshold.
AKW has transactions in the normal course of its business with Kaiser for the
purchase of metal used in its operations and the sale of scrap. For the year
ended December 31, 1998, and the period from inception through December 31,
1997, AKW purchased metal at market prices totaling $17,201 and $2,090,
respectively, from Kaiser and had sales of scrap at market prices to Kaiser
totaling $14,061 and $8,103, respectively.
AKW leases the Erie, Pennsylvania, facility from Kaiser and shares certain site
services with Kaiser. The initial term of the lease is for 10 years at a
below-market rate, after which the lease can be renewed for three additional
five-year periods at the then fair market value.
AKW provides volume rebates to its significant customers. Based on the nature of
the billing arrangements described above, Accuride determines the amount of the
rebates due, provides these rebates to the customers and passes the costs on to
AKW.
AKW's machining and finishing operations are performed under a converter
contract with an unrelated entity (the contractor) that provides services solely
to the Partnership. Under the terms of the contract, AKW provides the building
and equipment used by the contractor and is charged a fixed fee for each wheel
that is processed. Additionally, AKW participates in a cost-sharing arrangement
with the contractor wherein AKW receives a rebate from the contractor if its
payments for machining and finishing operations exceed the costs incurred by the
contractor. Conversely, if costs exceed payments or if contractor is able to
meet certain performance incentives, AKW is obligated to make additional
payments to the contractor. For the year ended December 31, 1998, and the period
from inception through December 31, 1997, the net effect of AKW's cost-sharing
arrangement with the contractor resulted in a $1,855 and a $641 reduction to
cost of sales, respectively.
In addition to the transactions discussed above, Kaiser has provided certain
environmental guarantees on behalf of the Partnership (see Note 8).
F-11
<PAGE>
8. COMMITMENTS AND CONTINGENCIES:
CONCENTRATIONS OF RISK
The Partnership's revenues are derived predominantly from sales to customers in
the heavy-truck manufacturing industry. This industry concentration has the
potential to impact the Partnership's exposure to credit risk, either positively
or negatively, because customers may be similarly affected by changes in
economic or other conditions. The creditworthiness of this customer base is
strong, and the Partnership has not experienced significant credit losses on
receivables; therefore, no provision for bad debt is provided.
The Partnership's machining and finishing operations are performed by an
unrelated contractor (see Note 7). The Partnership's production activities are
dependent upon the contractor's ability to perform machining and finishing
operations which satisfy AKW's volume and quality requirements. Events which
impair the contractor's ability to perform these services may have an
unfavorable impact on the Partnership's operations.
COMMITMENTS
Rental agreements under operating leases at December 31, 1998, are as follows:
<TABLE>
<CAPTION>
Year ending December 31-
<S> <C>
1999 $ 743
2000 706
2001 627
2002 543
2003 500
Thereafter -
--------
$ 3,119
--------
--------
</TABLE>
Rental expenses were $678 and $417 for the year ended December 31, 1998, and for
the period from inception through December 31, 1997, respectively.
The Partnership has entered into an unconditional purchase contract with one of
its partners (Kaiser). Under the contract, the Company is obligated to take
delivery of materials to be used in its normal production activities. The
contract expires on December 31, 1999, and minimum payments during the year are
$13,103.
ENVIRONMENTAL CONTINGENCIES
The Partnership is subject to a number of environmental laws, to fines or
penalties assessed for alleged breaches of the environmental laws, and to claims
and litigation based upon such laws in connection with its leased production
facility from Kaiser. However, as a condition of the Partnership agreement,
Kaiser retained responsibility for certain capital expenditures for
environmental projects totaling approximately $1,287. Additionally, Kaiser has
agreed to indemnify the Partnership with respect to substantially all
environmental matters at the Erie site existing at the date the Partnership was
formed.
WHEEL RECALL CAMPAIGN
In April 1998, the Partnership submitted notice to the National Highway Safety
Administration of its intent to recall approximately 47,800 wheels for a defect
related to potential motor vehicle safety. These wheels were produced and
shipped during the period from April 23, 1997, through February 28, 1998.
F-12
<PAGE>
From the initiation of the recall through December 31, 1998, a total of $1,972
has been paid by the Partnership. Remaining costs are expected to be incurred by
the end of 1999. The recall is not anticipated to have a material adverse impact
on the Partnership's financial condition or liquidity.
YEAR 2000 ISSUE
The Partnership recognizes the need to ensure its operations will not be
adversely impacted by year 2000 software or hardware failures. Software or
hardware failures due to processing errors potentially arising from calculations
using the year 2000 date are a known risk. The Partnership is addressing this
risk to the availability and integrity of financial systems and the reliability
of operational systems. The Partnership has established processes for evaluating
and managing the risks and costs associated with this problem. The computing
portfolio was identified, and an initial assessment has been completed. The cost
of achieving year 2000 compliance is estimated to be immaterial to the
Partnership's operations.
OTHER CONTINGENCIES
The Partnership was named in a National Labor Relations Board charge by the
United Auto Workers union at the Erie facility in connection with Kaiser's
decision to close its separate operations in the same facility. The charge was
settled in August 1998 with no financial impact on the Partnership.
9. SUBSEQUENT EVENT (UNAUDITED):
On April 1, 1999, Accuride purchased Kaiser's 50 percent interest in the
Partnership which is composed of a 49 percent limited partner interest and a 1
percent interest owned indirectly through AKW General Partner L.L.C. The
transaction is not expected to have a material impact on the Partnership.
F-13
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated condensed financial
statements have been derived from the application of pro forma adjustments to
the audited historical consolidated financial statements of Accuride Corporation
(the "Company") and AKW L.P. ("AKW") included elsewhere in this Form 8-K. The
unaudited pro forma consolidated condensed balance sheet as of December 31, 1998
gives effect to the acquisition of the 50% interest in AKW from Kaiser Aluminum
and Chemical Corporation ("Kaiser") for $70 million (the "Acquisition") , the
$0.9 million purchase of equipment from Kaiser (the "Equipment Purchase") and
the $100 million additional term loan ("Loan") borrowed pursuant to the
acquisition as if such transactions had occurred on December 31, 1998. The
unaudited pro forma consolidated condensed statement of income for the year
ended December 31, 1998 gives effect to the Acquisition, the Equipment Purchase
and the Loan as if the transactions had occurred on January 1, 1998. The
adjustments are described in the accompanying notes. The pro forma consolidated
condensed financial statements should not be considered indicative of actual
results that would have been achieved if the Acquisition, the Equipment Purchase
and the Loan had been consummated on the date or for the periods indicated and
do not purport to indicate results of operations as of any future date or for
any future period. The pro forma consolidated condensed financial statements
should be read in conjunction with the Company's historical consolidated
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
F-14
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL ACQUISITION PRO FORMA
ACCURIDE AKW ADJUSTMENTS COMBINED
-------- --- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,471 $ 1 $100,000(a) $ 3,472
(71,250)(b)
(28,750)(j)
Customer receivables, net of allowance for doubtful accounts 52,287 15,311 67,598
Other receivables 8,372 3,534 (2,246)(i) 9,660
Inventories, net 36,980 8,348 887(c) 46,215
Supplies 7,187 - 7,187
Deferred income taxes 611 - 611
Income taxes receivable 458 - 458
Prepaid expenses 139 95 234
--------- --------- -------- ---------
Total current assets 109,505 27,289 (1,359) 135,435
PROPERTY, PLANT AND EQUIPMENT, NET 159,826 25,862 900(b) 186,588
OTHER ASSETS:
Goodwill, net of accumulated amortization 83,317 12,140 59,075(c) 142,392
(12,140)(c)
Investment in affiliates 25,855 (23,214)(c) 2,641
Deferred financing costs, net of accumulated amortization 12,609 12,609
Deferred income taxes 3,287 (172)(c) 3,115
Other 10,526 10,526
--------- --------- -------- ---------
TOTAL $ 404,925 $ 65,291 $ 23,090 $ 493,306
--------- --------- -------- ---------
--------- --------- -------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable $ 27,008 $ 9,654 $ (2,246)(i) $ 34,416
Current portion of long-term debt 1,350 - 1,350
Short-term notes payable 3,911 - 3,911
Accrued payroll and compensation 8,149 - 8,149
Accrued interest payable 9,807 - 9,807
Wheel recall liability - 4,728 4,728
Accrued and other liabilities 6,606 620 7,226
--------- --------- -------- ---------
Total current liabilities 56,831 15,002 (2,246) 69,587
LONG-TERM DEBT, less current portion 387,939 - 100,000(a) 459,189
(28,750)(j)
DEFERRED INCOME TAXES
OTHER LIABILITIES 12,021 3,861 514(c) 16,396
MINORITY INTEREST 6,230 - 6,230
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred stock, $.01 par value; 5,000 shares authorized and
unissued Common stock and additional paid-in capital, $.01 par
value; 45,000 shares authorized, 24,768 and 24,000 shares issued
and outstanding in 1998 and 1997 24,158 - 24,158
Stock subscriptions receivable (1,644) (1,644)
Retained earnings (deficit) (80,610) 46,428 (46,428)(c) (80,610)
--------- --------- -------- ---------
Total stockholders' equity (deficiency) (58,096) 46,428 (46,428) (58,096)
--------- --------- -------- ---------
TOTAL $ 404,925 $ 65,291 $ 23,090 $ 493,306
--------- --------- -------- ---------
--------- --------- -------- ---------
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Information.
F-15
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(Dollars in Thousands)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL ACQUISITION PRO FORMA
ACCURIDE AKW ADJUSTMENTS COMBINED
-------- --- ----------- --------
<S> <C> <C> <C> <C>
Net sales $ 383,583 $ 86,897 $ 470,480
Cost of goods sold 301,029 68,409 4,700(h) 375,025
887(l)
--------- --------- ------- ---------
Gross profit 82,554 18,488 (5,587) 95,455
Operating expenses 34,034 6,266 1,173(e) 41,602
129(g)
--------- --------- ------- ---------
Income from operations 48,520 12,222 (6,889) 53,853
Other income (expense):
Interest income (expense), net (32,311) - (5,657)(f) (38,220)
(252)(k)
Equity in earnings of affiliates 3,929 - (3,486)(m) 443
Other income (expense), net (2,904) - (2,904)
--------- --------- ------- ---------
Income before income taxes and minority interest 17,234 12,222 (16,284) 13,172
Income tax provision (benefit) 7,935 - (1,604)(n) 6,066
(265)(o)
Minority Interest 1,348 - 1,348
--------- --------- ------- ---------
Net income (loss) $ 7,951 $ 12,222 $ (14,415) $ 5,758
--------- --------- ------- ---------
--------- --------- ------- ---------
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Financial Information.
F-16
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(a) Reflects an additional $100 million term loan borrowed under the credit
facility for the Acquisition. The Company used $71.25 million for the
cost of the Acquisition and Equipment Purchase and $28.75 million to
pay down existing indebtedness. Also, see Notes b and j below.
(b) Reflects net cost of Acquisition and Equipment Purchase, as follows:
<TABLE>
<S> <C>
Purchase price .......................................... $70,000
Acquisition costs ....................................... 350
-------
Net Acquisition Cost ............................... 70,350
Purchase of Kaiser equipment ............................ 900
-------
Total cash outlay .................................. $71,250
-------
-------
</TABLE>
(c) Reflects excess of costs over estimated net fair value of assets
acquired and liabilities assumed in the Acquisition at December 31,
1998, as follows:
<TABLE>
<S> <C> <C>
Net cost of Acquisition (b) .................................................. $70,350
Less AKW shareholder's equity. .............................................................. (46,428)
Adjustment to eliminate Accuride's share of AKW Equity previously owned ..................... 23,214
Adjustment to eliminate AKW unamortized goodwill ............................................ 12,140
-------
Net Assets Acquired .......................................................... (11,074)
-------
Estimated excess consideration over book value ............................... $59,276
-------
-------
Adjustments to reflect fair value:
Step up Inventory to fair value ......................................... 1,774
Increase in pension and postretirement liabilities due to the
excess of the projected benefit obligation over plan assets ........ (1,029)
-------
Total step up in assets and liabilities ................................. 745
Adjusted by Accuride's previous ownership percentage of 50%
to eliminate Accurides's share prior to the purchase of AKW
of the step up in assets and liabilities ........................... 373
Tax effect of above adjustments ......................................... (172) (d)
-------
Total fair value adjustments ............................................ 201
-------
Total goodwill .......................................................... $59,075
-------
-------
</TABLE>
The acquisition will be accounted for by the purchase method of accounting.
Under purchase accounting, the total purchase price will be allocated to the
tangible and intangible assets and liabilities of AKW based upon their
respective fair values as of the date of the Acquisition based upon valuations
and other studies that have not yet been completed. A preliminary allocation of
the purchase price has been made to major categories of assets and liabilities
based on available information. The actual allocation of purchase price and the
resulting effect on income from operations may differ significantly from the pro
forma amounts included herein.
(d) Adjustment reflects the net deferred tax asset attributable to purchase
accounting adjustments associated with the Acquisition at the Company's
1998 combined effective federal and state rate of 46%.
F-17
<PAGE>
(e) Adjustment reflects one year of amortization expense (straight-line
basis over 40 years) on the incremental amount of goodwill arising from
the acquisition (estimated to be $46,935) as follows:
<TABLE>
<S> <C>
Excess consideration over book value (see Note c) ................... $59,075
Less AKW unamortized goodwill at December 31, 1998 .................. 12,140
-------
Resultant incremental goodwill arising from acquisition ............. $46,935
-------
-------
</TABLE>
(f) The pro forma adjustment to interest expense assumes a weighted average
interest rate of 7.94% per annum (LIBOR + 2.5%) on $71.25 million of
additional indebtedness under the Credit Facility (see also Note a).
(g) Adjustment reflects one year of depreciation expense (straight-line
basis over 7 years for equipment) on the $0.9 million in property,
plant and equipment obtained in the Equipment Purchase.
(h) Adjustment reflects the increase in cost of goods sold attributable to
the AKW Wheel Recall Campaign. AKW had previously recorded $4,700 of
the total $6,800 Wheel Recall liability in their 1997 financial
statements; however, Accuride recorded their 50% portion of the entire
Wheel Recall liability in its statement of income for the year ended
December 31, 1998, as a decrease to equity in earnings of affiliates
(see Note m). Excluding the $6,800 AKW Wheel Recall Campaign expense,
income before income taxes and minority interest in the 1998 unaudited
pro forma consolidated condensed statement of income would have been
$19,972.
(i) Adjustment reflects the elimination of intercompany receivables and
payables, which consists of $2.2 million miscellaneous receivables and
payables.
(j) Adjustment reflects the $28.75 million portion of the $100 million term
loan used to pay down existing indebtedness under Accuride's revolving
credit facility (the "Revolver") (see Note a).
(k) Adjustment reflects incremental interest expense incurred as a result
of $28.75 million of indebtedness borrowed as a term loan under the
credit facility at LIBOR plus 2.5% and used to pay down the existing
indebtedness under the Revolver borrowed at LIBOR plus 1.625% (see
Notes a, f, and j).
(l) Adjustment reflects the increase in cost of goods sold attributable to
the step up in fair value of inventory (see Note c). This amount has
been recorded under the assumption that the inventory purchased will
turnover during the first year of operation.
F-18
<PAGE>
(m) Reflects the elimination of the 1998 equity in earnings of affiliates
arising from Accuride's 50% interest in AKW owned prior to the
Acquisition. Amount reported by Accuride in its Consolidated Statement
of Income for the Year ended December 31, 1998, is calculated as
follows:
<TABLE>
<S> <C>
50% of AKW Net Income for the year ended December 31, 1998 .............. $ 6,111
Less: 50% of the AKW Wheel Recall Campaign recorded by Accuride in
1998 ($6,800) reduced by 50% of the amount AKW recorded
in 1998 ($2,100). AKW had previously recorded the
remainder in their 1997 financial statements .................. (2,350)
50% of miscellaneous audit and purchase price adjustments
recorded by Accuride in 1998. AKW had previously recorded
100% of these amounts in their 1997 financial statements ...... (275)
-------
Total Equity in AKW Earnings reported by Accuride in 1998 ............... $ 3,486
-------
-------
</TABLE>
(n) Adjustment to eliminate income taxes on equity in earnings previously
recorded in Accuride's income tax provision:
<TABLE>
<S> <C>
Total equity in AKW earnings reported by Accuride ....................... $3,486
1998 effective tax rate ...................................... 46%
------
Income tax provision on affiliate earnings of AKW to be eliminated ... $1,604
------
------
</TABLE>
(o) Adjustment to record income tax provision on AKW's income and related
tax effect of Acquisition Adjustments, calculated as follows:
<TABLE>
<S> <C>
Historical AKW income ................................. $ 12,222
Acquisition Adjustments:
AKW Wheel Recall (see Note h) ............... (4,700)
Step up in Inventory (see Note l) ........... (887)
Interest expense (see Notes f and k) ........ (5,909)
Depreciation expense (see Note g) ........... (129)
Amortization expense (see Note e) ........... (1,173)
--------
Pro Forma adjusted AKW pre-tax loss ......... (576)
1998 effective tax rate ............................... 46%
--------
Income tax benefit .................................... $ (265)
--------
--------
</TABLE>
F-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACCURIDE CORPORATION
Dated: June 10, 1999 By: /s/ William P. Greubel
---------------------------------
William P. Greubel
President and Chief Executive Officer
<PAGE>
ARTHUR ANDERSEN LLP
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included in this Form 8-K into the Company's
previously filed Registration Statement File No. 333-68227.
/s/ Arthur Andersen LLP
Houston, Texas
June 10, 1999
