<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 20, 1997
HAYES WHEELS INTERNATIONAL, INC.
DELAWARE 1-11592 13-3384636
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
38481 HURON RIVER DRIVE, ROMULUS, MICHIGAN 48174
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code (313) 941-2000
================================================================================
<PAGE> 2
ITEM 5. OTHER EVENTS.
This Current Report on Form 8-K (the "Report") of Hayes Wheels
International, Inc. ("Hayes") is being filed to update the information contained
in the Current Report on Form 8-K of Hayes, dated June 6, 1997 (the "Prior
Report"), including with respect to (i) the estimated sources and uses of funds
in connection with the Lemmerz Acquisition (as defined below), (ii) financial
information of Lemmerz for the three-month period ended March 31, 1997 and (iii)
certain pro forma financial data.
Unless the context otherwise requires, "Hayes" refers to Hayes Wheels
International, Inc. and its subsidiaries, before the acquisition of Lemmerz
reported herein (the "Lemmerz Acquisition"), the term "Lemmerz" refers to
Lemmerz Holding GmbH and its subsidiaries, the term the "Company" refers to
Hayes and its subsidiaries (including Lemmerz) on a combined basis after the
Lemmerz Acquisition, the term "Transactions" refers to the Lemmerz Acquisition
and the financing therefor and the term "Motor Wheel Transactions" refers to the
series of related transactions pursuant to which Motor Wheel Corporation ("Motor
Wheel") became a subsidiary of Hayes. All references to fiscal years of Hayes in
this Report refer to years commencing on February 1 of such year and ending
January 31 of the following year.
Unless otherwise indicated, financial information in this Report with
respect to Lemmerz is expressed in dollars or in Deutsche Mark ("marks" or
"DM"). Amounts stated in dollars, unless otherwise indicated, have been
translated from marks in accordance with United States generally accepted
accounting principles consistently applied and should not be construed as
representations that the mark amounts actually represent such dollar amounts or
could have been converted into dollars at the rate indicated. Assets and
liabilities denominated in marks are translated at the rate of exchange in
effect on the balance sheet date and income and expenses are translated at the
average rates of exchange prevailing during the year.
THE LEMMERZ ACQUISITION
As previously reported, on June 6, 1997, Hayes, Cromodora, S.p.A., Lemmerz
and the shareholders of Lemmerz entered into a definitive acquisition agreement
(the "Acquisition Agreement"), pursuant to which Hayes will purchase the capital
stock of Lemmerz for (i) $200 million in cash and (ii) convertible preferred
stock of Hayes, which following stockholder approval, will automatically convert
into 5 million shares of Hayes common stock (the "Common Stock").
The cash portion of the consideration, the refinancing of existing Lemmerz
debt, working capital of the Company and the fees and expenses of the Lemmerz
Acquisition will be financed with new senior bank debt and the proceeds from the
offering of $250 million of 9 1/8% Senior Subordinated Notes of Hayes due 2007
(the "Notes"). Upon completion of the Lemmerz Acquisition, existing Lemmerz
shareholders will own approximately 18.3% of the Common Stock, after giving
effect to the conversion of their preferred stock.
2
<PAGE> 3
The estimated sources and uses of funds in connection with the Lemmerz
Acquisition are presented in the following table, assuming the Lemmerz
Acquisition occurred as of April 30, 1997 (dollars in millions):
<TABLE>
<S> <C>
SOURCES OF FUNDS:
Term Loan Facility (a)...................................... $100.0
Notes offered hereby........................................ 250.0
Issuance of Hayes convertible preferred stock (b)........... 118.8
------
Total Sources of Funds.................................. $468.8
======
USES OF FUNDS:
Cash consideration for Lemmerz Acquisition.................. $200.0
Equity consideration for Lemmerz Acquisition (b)............ 118.8
Repayment of existing Hayes term debt....................... 50.0
Working capital purposes (c)................................ 25.0
Repayment of existing Lemmerz obligations (d)............... 55.0
Fees and expenses........................................... 20.0
------
Total Uses of Funds..................................... $468.8
======
</TABLE>
--------------------------------
(a) Represents the U.S. dollar equivalent of DM-denominated borrowings.
(b) Assumes conversion of the preferred stock into 5 million shares of
Common Stock at a price based upon the five-day average closing bid
price at June 18, 1997 on The NASDAQ Stock Market of the Common Stock
of $23.75.
(c) The Company anticipates using the $25.0 million for repayment of
amounts expected to be outstanding under the Revolving Credit
Facility. The actual amount of the Revolving Credit Facility that
will be drawn at the closing of the Lemmerz Acquisition will depend
upon the working capital requirements of Hayes and Lemmerz on such
date. At June 18, 1997, amounts outstanding under the existing
revolving credit facility were $11.1 million.
(d) Assumes Lemmerz mortgage loans of $20.2 million remain outstanding.
3
<PAGE> 4
SUMMARY PRO FORMA FINANCIAL DATA
The following table sets forth certain unaudited pro forma financial data
for the Company for the year ended January 31, 1997 and for the three-month
period ended April 30, 1997, which are presented to reflect the pro forma effect
of (i) the Transactions and (ii) the Motor Wheel Transactions. The unaudited pro
forma statement of operations data give effect to the Transactions and the Motor
Wheel Transactions as if they had occurred on February 1, 1996. The unaudited
pro forma balance sheet data give effect to the Transactions as if they had
occurred on April 30, 1997. The unaudited pro forma combined financial data do
not purport to be indicative of the results of operations or financial position
of the Company that would have actually been obtained had the Transactions and
the Motor Wheel Transactions been completed as of February 1, 1996, or which may
be obtained in the future. The unaudited pro forma combined financial data (i)
have been derived from and should be read in conjunction with the "Pro Forma
Combined Condensed Financial Data" and the notes thereto included elsewhere in
this Report and (ii) should be read in conjunction with the separate historical
consolidated financial statements of Hayes and Lemmerz and the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in the Prior Report, the Quarterly Report on Form 10-Q of
Hayes for the three-month period ended April 30, 1997 (the "Form 10-Q") and
elsewhere in this Report.
<TABLE>
<CAPTION>
COMPANY PRO FORMA COMPANY PRO FORMA
YEAR ENDED THREE MONTHS ENDED
JANUARY 31, 1997 (A) APRIL 30, 1997(A)
-------------------- ------------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................................... $ 1,372.9 $ 358.4
Cost of goods sold.......................................... 1,158.7 297.3
Marketing, general and administration....................... 98.8 23.0
Engineering and product development......................... 16.5 4.3
Depreciation and amortization............................... 70.3 19.7
Interest expense, net....................................... 100.2 25.1
Net income (loss)........................................... (70.5) 5.6
OTHER DATA:
EBITDA (b).................................................. $ 191.9 $ 55.7
Cash interest expense, net.................................. 94.5 23.5
Capital expenditures........................................ 98.3 23.1
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets......................................................................... $1,793.1
Total debt........................................................................... 1,031.8
Stockholders' equity (c)............................................................. 66.2
</TABLE>
- -------------------------
(a) The pro forma financial data do not reflect (i) any cost savings related to
or synergies that are expected to result from the Lemmerz Acquisition, (ii)
future unrealized cost savings related to, or synergies that are expected to
result from, the Motor Wheel Transactions or (iii) any cost savings related
to the closing of Hayes' Romulus facility.
(b) "EBITDA" represents the sum of income before interest expense and income
taxes, plus depreciation and amortization, non-recurring charges, and
certain other non-cash income and expense items. EBITDA should not be
construed as a substitute for income from operations, net income or cash
flow from operating activities, for the purpose of analyzing the Company's
operating performance, financial position and cash flows. The Company has
presented EBITDA because it is commonly used by investors to analyze and
compare companies on the basis of operating performance and to determine a
company's ability to service debt.
(c) Assumes issuance of the preferred stock for $118.8 million.
4
<PAGE> 5
PRO FORMA CAPITALIZATION
The following table sets forth the capitalization of the Company (a) on an
actual basis and (b) on a pro forma basis as adjusted to give effect to the
Transactions as if they had occurred on April 30, 1997. This table should be
read in conjunction with "Pro Forma Combined Condensed Financial Data" and the
notes thereto, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Hayes' and Lemmerz's consolidated financial
statements and the notes thereto included in the Prior Report, the Form 10-Q and
elsewhere in this Report.
<TABLE>
<CAPTION>
COMPANY
HAYES ACTUAL LEMMERZ ACTUAL PRO FORMA
APRIL 30, MARCH 31, PRO FORMA AS ADJUSTED
1997 1997 ADJUSTMENTS APRIL 30, 1997
------------ -------------- ----------- --------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Revolving Credit Facility (a).............. $ -- $ -- $ -- $ --
Term Loan A-1.............................. 196.0 -- (23.0) 173.0
New Term Loan A-2 (DM equivalent).......... -- -- 100.0 100.0
Term Loan B................................ 124.7 -- (15.7) 109.0
Term Loan C................................ 99.8 -- (11.3) 88.5
Existing Notes............................. 250.0 -- -- 250.0
Notes offered hereby....................... -- -- 250.0 250.0
Other debt................................. 41.1 75.2 (55.0) 61.3
------ ------ ------ --------
Total debt............................ 711.6 75.2 245.0 1,031.8
Stockholders' equity (deficit) (b)......... (40.1) 104.4 1.9 66.2
------ ------ ------ --------
Total capitalization.................. $671.5 $179.6 $246.9 $1,098.0
====== ====== ====== ========
</TABLE>
- -------------------------
(a) The Revolving Credit Facility permits maximum borrowings of $270 million,
none of which was drawn at April 30, 1997. The actual amount of the
Revolving Credit Facility that will be drawn at the closing of the Lemmerz
Acquisition will depend upon the working capital requirements of Hayes and
Lemmerz on such date. At June 18, 1997, amounts outstanding under the
existing revolving credit facility were $11.1 million.
(b) See Notes (b) and (e) to the unaudited pro forma balance sheet included in
"Pro Forma Combined Condensed Financial Data."
5
<PAGE> 6
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
(a) Financial Statements of Business to be Acquired:
Unaudited Interim Consolidated Financial Statements of Lemmerz Holding
GmbH and Subsidiaries
Consolidated Balance Sheet at March 31, 1997
Consolidated Statement of Earnings for the Three Months Ended March 31,
1997
Consolidated Statement of Cash Flows for the Three Months Ended March
31, 1997
Notes to Unaudited Interim Consolidated Financial Statements for the
Three Months Ended March 31, 1997
(b) Pro Forma Financial Information:
Pro Forma Combined Condensed Financial Data
Unaudited Pro Forma Combined Statement of Operations for the Three-Month
Period Ended April 30, 1997
Unaudited Pro Forma Combined Statement of Operations for the Year Ended
January 31, 1997
Notes to Unaudited Pro Forma Combined Statement of Operations
Unaudited Pro Forma Combined Balance Sheet at April 30, 1997
Notes to Unaudited Pro Forma Combined Balance Sheet
6
<PAGE> 7
INDEX TO FINANCIAL STATEMENTS AND
PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LEMMERZ HOLDING GMBH AND SUBSIDIARIES:
UNAUDITED FINANCIAL STATEMENTS
Unaudited Interim Consolidated Financial Statements of
Lemmerz Holding GmbH and Subsidiaries
Consolidated Balance Sheet at March 31, 1997................ F-2
Consolidated Statement of Earnings for the Three Months
Ended March 31, 1997...................................... F-3
Consolidated Statement of Cash Flows for the Three Months
Ended March 31, 1997...................................... F-4
Notes to Unaudited Interim Consolidated Financial Statements
for the Three Months Ended March 31, 1997................. F-5
PRO FORMA FINANCIAL INFORMATION
Pro Forma Combined Condensed Financial Data................. F-6
Unaudited Pro Forma Combined Statement of Operations for the
Three-Month Period Ended April 30, 1997................... F-7
Unaudited Pro Forma Combined Statement of Operations for the
Year Ended January 31, 1997............................... F-8
Notes to Unaudited Pro Forma Combined Statement of
Operations................................................ F-9
Unaudited Pro Forma Combined Balance Sheet at April 30,
1997...................................................... F-13
Notes to Unaudited Pro Forma Combined Balance Sheet......... F-14
</TABLE>
F-1
<PAGE> 8
LEMMERZ HOLDING GMBH AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF UNITED STATES DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1997
---------
<S> <C>
ASSETS
------
Current assets:
Cash and cash equivalents................................. $ 4,177
Certificates of deposit................................... 11,640
Receivables (less allowances of $873 at March 31, 1997)... 78,340
Inventories............................................... 54,203
Prepaid expenses and other................................ 7,892
--------
Total current assets................................... 156,252
Property, plant, and equipment, net......................... 143,322
Investments in affiliates................................... 42,394
Deferred income taxes....................................... 43,837
Other assets................................................ 6,993
--------
Total assets........................................... $392,798
========
LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------
Current liabilities:
Short-term borrowings..................................... $ 35,031
Current portion of long-term debt......................... 10,674
Current portion of capital lease obligations.............. 929
Accounts payable and accrued liabilities.................. 95,719
--------
Total current liabilities.............................. 142,353
Long-term debt, less current portion........................ 29,457
Capital lease obligations, less current portion............. 4,306
Deferred income taxes....................................... 5,128
Pension and other long-term liabilities..................... 101,803
--------
Total liabilities...................................... 283,047
Minority interests.......................................... 5,304
Shareholders' equity:
Share capital............................................. 57,927
Retained earnings......................................... 46,823
Cumulative translation adjustment......................... (303)
--------
Total shareholders' equity............................. 104,447
--------
Total liabilities and shareholders' equity............. $392,798
========
</TABLE>
See accompanying notes to consolidated financial statements
F-2
<PAGE> 9
LEMMERZ HOLDING GMBH AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(THOUSANDS OF UNITED STATES DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
1997
------------
<S> <C>
Net sales................................................... $108,225
Cost of goods sold.......................................... 88,051
--------
Gross profit........................................... 20,174
Marketing, general, and administrative...................... 10,463
Engineering and product development......................... 2,034
Other income, net........................................... (1,529)
--------
Earnings from operations............................... 9,206
Interest expense, net....................................... 1,111
--------
Earnings before income taxes, minority interests, and
equity in income (loss) of affiliates................. 8,095
Income tax provision........................................ 4,087
--------
Earnings before minority interests and equity in income
(loss) of affiliates.................................. 4,008
Equity in losses of affiliates.............................. (543)
Minority interests.......................................... (218)
--------
Net income............................................. $ 3,247
========
</TABLE>
See accompanying notes to consolidated financial statements
F-3
<PAGE> 10
LEMMERZ HOLDING GMBH AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(THOUSANDS OF UNITED STATES DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
1997
------------
<S> <C>
Cash flows from operating activities:
Net income................................................ $ 3,247
Adjustments to reconcile net income to net cash provided
by operations:
Depreciation of property, plant and equipment.......... 6,323
Depreciation of intangible assets...................... 132
Equity in loss of affiliates........................... 543
Change in deferred taxes............................... 2,714
Increase in inventories................................ (3,593)
Increase in receivables and other current assets....... (5,002)
Decrease in accounts payable and accrued liabilities... 9,713
--------
Net cash provided by operating activities............ 14,077
--------
Cash flows from investing activities:
Repayment of long-term loans and receivables.............. 55
Acquisition of property, plant, and equipment............. (6,400)
Investment in certificates of deposit..................... (4,537)
Other changes............................................. (842)
--------
Cash used for investment activities.................. (11,724)
--------
Cash flows from financing activities:
Repayment of long term borrowings and capital lease
obligations............................................ (7,905)
Long term borrowings...................................... 6,730
Repayment of short-term borrowings........................ (1,308)
--------
Cash used for financing activities................... (2,483)
--------
Translation adjustment for cash............................. (340)
--------
Net decrease in cash and cash equivalents................... (470)
Cash and cash equivalents at beginning of year.............. 4,647
--------
Cash and cash equivalents at end of year.................... $ 4,177
========
Supplemental disclosure of cash flow information:
Cash paid for interest.................................... $ 1,433
========
Cash paid for income taxes................................ $ 506
========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 11
LEMMERZ HOLDING GMBH AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLAR IN THOUSANDS, UNLESS OTHERWISE INDICATED)
(1) SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business -- Lemmerz Holding GmbH and subsidiaries ("Lemmerz"
or the "Company") is a manufacturer and distributor of steel and aluminum wheels
to European automotive manufacturers for use on passenger cars, light trucks,
and commercial highway vehicles.
Basis of Presentation -- The Company's consolidated financial statements
have been prepared in accordance with United States generally accepted
accounting principles ("U.S. GAAP"). All amounts herein are shown in thousands
of United States dollars ("$").
The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with U.S. GAAP for interim financial information.
Accordingly, they do not include all of the information and footnotes required
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. Adjustments
consisted of only normal recurring accruals. Operating results for the three
month period March 31, 1997 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1997. The consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto as of and for the years ended December
31, 1996 and 1995.
(2) INVENTORIES
<TABLE>
<CAPTION>
AT MARCH 31,
1997
------------
<S> <C>
Raw materials and manufacturing supplies.................... $21,578
Work in progress............................................ 17,908
Finished goods, parts and goods purchased for resale........ 16,537
-------
56,023
Reserves.................................................... (1,820)
-------
$54,203
==========
</TABLE>
(3) CONTINGENCIES
Various legal actions, governmental investigations, proceedings and claims
are pending or may be instituted or asserted in the future against the Company,
including those arising out of alleged defects in the Company's products,
governmental regulations relating to safety, emissions and fuel economy,
intellectual property rights, products warranties and environmental matters.
Litigation is subject to many uncertainties; the outcome of individual
litigated matters is not predictable with assurance; and it is reasonably
possible that some of the foregoing matters could be decided unfavorably to the
Company. Although the amount of liability at March 31, 1997 with respect to
these matters cannot be ascertained, the Company believes that the resulting
liability, if any, should not materially affect the consolidated financial
position or results of operations of the Company.
F-5
<PAGE> 12
PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The Unaudited Pro Forma Combined Statement of Operations of the Company for
the fiscal year ended January 31, 1997 and the three-month period ended April
30, 1997 (the "Pro Forma Statements of Operations"), and the Unaudited Pro Forma
Combined Balance Sheet of the Company as of April 30, 1997 (the "Pro Forma
Balance Sheet" and, together with the Pro Forma Statements of Operations, the
"Pro Forma Financial Statements"), have been prepared to illustrate the
estimated effect of the Transactions and the Motor Wheel Transactions. The Pro
Forma Financial Statements do not reflect any anticipated cost savings from the
Lemmerz Acquisition, or any synergies that are anticipated to result from the
Lemmerz Acquisition, and there can be no assurance that any such cost savings or
synergies will occur. The Pro Forma Statements of Operations give pro forma
effect to the Motor Wheel Transactions and the Transactions as if they had
occurred on February 1, 1996. The Pro Forma Balance Sheet gives pro forma effect
to the Transactions as if they had occurred on April 30, 1997. The Pro Forma
Financial Statements do not purport to be indicative of the results of
operations or financial position of the Company that would have actually been
obtained had such transactions been completed as of the assumed dates and for
the period presented, or which may be obtained in the future. The pro forma
adjustments are described in the accompanying notes and are based upon available
information and certain assumptions that Hayes and Lemmerz believe are
reasonable. The Pro Forma Financial Statements should be read in conjunction
with the separate historical consolidated financial statements of Hayes and
Lemmerz and the notes thereto included in the Prior Report, the Form 10-Q and
elsewhere in this Report.
The Lemmerz Acquisition will be accounted for by the purchase method of
accounting. Under purchase accounting, the total purchase price (including the
market value of the Hayes securities issued to the Lemmerz shareholders) will be
allocated to the tangible and intangible assets and liabilities of Lemmerz based
upon their respective fair values as of the effective time of the Lemmerz
Acquisition based on valuations and other studies which are not yet available. A
preliminary allocation of the purchase price has been made to major categories
of assets and liabilities in the accompanying Pro Forma Financial Statements
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. These pro forma adjustments represent Hayes'
management's preliminary determination of purchase accounting adjustments and
are based upon available information and certain assumptions that Hayes believes
to be reasonable. Consequently, the amounts reflected in the Pro Forma Financial
Statements are subject to change, and the final amounts may differ
substantially.
F-6
<PAGE> 13
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(THREE-MONTH PERIOD ENDED APRIL 30, 1997)
<TABLE>
<CAPTION>
HAYES LEMMERZ PRO FORMA
THREE-MONTH PERIOD THREE-MONTH PERIOD PRO FORMA COMBINED
ENDED APRIL 30, 1997 ENDED MARCH 31, 1997 ADJUSTMENTS COMPANY(A)
-------------------- -------------------- ----------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales.................................. $250.2 $108.2 $ -- $358.4
Cost of goods sold......................... 212.2 88.0 (2.9)(c) 297.3
------- ------- ----- ------
Gross profit............................. 38.0 20.2 2.9 61.1
Marketing, general and administration...... 11.2 10.5 1.3(c) 23.0
Engineering and product development
costs.................................... 2.3 2.0 -- 4.3
Equity in losses of subsidiaries........... -- 0.5 -- 0.5
Other income, net.......................... (0.7) (1.5) -- (2.2)
------- ------- ----- ------
Earnings from operations................. 25.2 8.7 1.6 35.5
Interest expense, net...................... 18.4 1.1 5.6(f) 25.1
------- ------- ----- ------
Earnings (loss) before taxes on income
and minority interest................. 6.8 7.6 (4.0) 10.4
Income tax provision (benefit)............. 2.9 4.1 (2.5)(g) 4.5
------- ------- ----- ------
Earnings (loss) before minority
interest.............................. 3.9 3.5 (1.5) 5.9
Minority interest.......................... 0.1 0.2 -- 0.3
------- ------- ----- ------
Net income (loss)........................ $ 3.8 $ 3.3 $(1.5) $ 5.6
====== ====== ===== ======
OPERATING AND OTHER DATA:
EBITDA*.................................... $ 40.0 $ 15.7 $ -- $ 55.7
Depreciation and amortization.............. 14.8 6.5 (1.6) 19.7
Capital expenditures....................... 16.7 6.4 -- 23.1
Cash interest expense, net................. 17.1 1.1 5.3 23.5
SELECTED RATIOS:
Ratio of earnings to fixed charges (i)..... 1.4x
PRO FORMA RECONCILIATION OF EBITDA:
Earnings from operations................... $ 25.2 $ 8.7 $ 1.6 $ 35.5
Add:
Equity in losses of subsidiaries......... -- 0.5 -- 0.5
Depreciation and amortization............ 14.8 6.5 (1.6) 19.7
------- ------- ----- ------
EBITDA*.................................... $ 40.0 $ 15.7 $ -- $ 55.7
====== ====== ====== ======
CASH FLOW PROVIDED BY (USED FOR):
Operating activities..................... $ (4.5) $ 14.1 $ 2.4 $ 12.0
Investing activities..................... (16.9) (11.7) -- (28.6)
Financing activities..................... (1.7) (2.5) -- (4.2)
</TABLE>
- -------------------------
* EBITDA should not be construed as a substitute for income from operations, net
income or cash flow from operating activities, for the purpose of analyzing
Hayes' operating performance, financial position and cash flows. The Company
has presented EBITDA because it is commonly used by investors to analyze and
compare companies on the basis of operating performance and to determine a
company's ability to service debt.
F-7
<PAGE> 14
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(YEAR ENDED JANUARY 31, 1997)
<TABLE>
<CAPTION>
MOTOR WHEEL
HAYES FIVE MONTHS LEMMERZ
YEAR ENDED ENDED PRO FORMA YEAR ENDED
JANUARY 31, JUNE 30, MOTOR WHEEL COMBINED DECEMBER 31,
1997 1996 ADJUSTMENTS HAYES 1996
----------- ----------- ----------- --------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales................................ $ 778.2 $134.9 $ -- $ 913.1 $459.8
Cost of goods sold....................... 675.2 125.3 (4.6)(b) 795.9 377.7
------- ------ ------ ------- ------
Gross profit............................ 103.0 9.6 4.6 117.2 82.1
Marketing, general and administration.... 35.9 6.4 1.3 (b)(d) 43.6 50.2
Engineering and product development
costs................................... 7.2 1.8 (0.9)(d) 8.1 8.4
Equity in (earnings) loss of
subsidiaries............................ 2.5 1.9 -- 4.4 (1.0)
Other income, net........................ (4.5) (0.8) -- (5.3) (5.5)
Nonrecurring charges..................... 115.4 -- -- 115.4 --
------- ------ ------ ------- ------
Earnings (loss) from operations......... (53.5) 0.3 4.2 (49.0) 30.0
Interest expense, net.................... 48.5 7.3 17.8 (e) 73.6 5.3
------- ------ ------ ------- ------
Earnings (loss) before taxes on income,
minority interest and extraordinary
items................................. (102.0) (7.0) (13.6) (122.6) 24.7
Income tax provision (benefit).......... (36.7) 0.1 (5.3)(g) (41.9) 14.8
------- ------ ------ ------- ------
Earnings (loss) before minority interest
and extraordinary items............... (65.3) (7.1) (8.3) (80.7) 9.9
Minority interest........................ 0.2 (0.1) -- 0.1 0.7
------- ------ ------ ------- ------
Earnings (loss) before extraordinary
items................................. (65.5) (7.0) (8.3) (80.8) 9.2
Extraordinary items, net of tax.......... 7.4 -- -- 7.4 --
------- ------ ------ ------- ------
Net income (loss)....................... $ (72.9) $ (7.0) $ (8.3) $ (88.2) $ 9.2
======= ====== ====== ======= ======
OPERATING AND OTHER DATA:
EBITDA*.................................. $ 120.7 $ 9.8 $ 3.1 $ 133.6 $ 58.3
Depreciation and amortization............ 44.4 7.6 (1.1) 50.9 29.3
Capital expenditures..................... 71.4 1.9 -- 73.3 25.0
Cash interest expense, net............... 45.3 7.0 16.7 69.0 5.3
SELECTED RATIOS:
Ratio of earnings to fixed charges (i)...
PRO FORMA RECONCILIATION OF EBITDA:
Earnings (loss) from operations.......... $ (53.5) $ 0.3 $ 4.2 $ (49.0) $ 30.0
Add: Non-recurring charges............... 115.4 -- -- 115.4 --
Equity in (earnings) loss of
subsidiaries.......................... 2.5 1.9 -- 4.4 (1.0)
One-time non-cash charges, net.......... 11.9 -- -- 11.9 --
Depreciation and amortization........... 44.4 7.6 (1.1) 50.9 29.3
------- ------ ------ ------- ------
EBITDA*.................................. $ 120.7 $ 9.8 $ 3.1 $ 133.6 $ 58.3
======= ====== ====== ======= ======
CASH FLOW PROVIDED BY (USED FOR):
Operating activities.................... $ 71.2 $ 6.9 $ (8.6) $ 69.5 $ 34.7
Investing activities.................... (65.1) 1.5 -- (63.6) (35.7)
Financing activities.................... 39.6 (2.4) -- 37.2 (13.2)
<CAPTION>
PRO FORMA
LEMMERZ COMBINED
ADJUSTMENTS COMPANY (A)
----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Net sales................................ $ -- $1,372.9
Cost of goods sold....................... (14.9)(c) 1,158.7
------ --------
Gross profit............................ 14.9 214.2
Marketing, general and administration.... 5.0 (c) 98.8
Engineering and product development
costs................................... -- 16.5
Equity in (earnings) loss of
subsidiaries............................ -- 3.4
Other income, net........................ -- (10.8)
Nonrecurring charges..................... -- 115.4
------ --------
Earnings (loss) from operations......... 9.9 (9.1)
Interest expense, net.................... 21.3 (f) 100.2
------ --------
Earnings (loss) before taxes on income,
minority interest and extraordinary
items................................. (11.4) (109.3)
Income tax provision (benefit).......... (19.9)(g) (47.0)
------ --------
Earnings (loss) before minority interest
and extraordinary items............... 8.5 (62.3)
Minority interest........................ -- 0.8
------ --------
Earnings (loss) before extraordinary
items................................. 8.5 (63.1)
Extraordinary items, net of tax.......... -- 7.4
------ --------
Net income (loss)....................... $ 8.5 $ (70.5)(h)
====== ========
OPERATING AND OTHER DATA:
EBITDA*.................................. $ -- $ 191.9
Depreciation and amortization............ (9.9) 70.3
Capital expenditures..................... -- 98.3
Cash interest expense, net............... 20.2 94.5
SELECTED RATIOS:
Ratio of earnings to fixed charges (i)... --
PRO FORMA RECONCILIATION OF EBITDA:
Earnings (loss) from operations.......... $ 9.9 $ (9.1)
Add: Non-recurring charges............... -- 115.4
Equity in (earnings) loss of
subsidiaries.......................... -- 3.4
One-time non-cash charges, net.......... -- 11.9
Depreciation and amortization........... (9.9) 70.3
------ --------
EBITDA*.................................. $ -- $ 191.9
====== ========
CASH FLOW PROVIDED BY (USED FOR):
Operating activities.................... $ (1.8) $ 102.4
Investing activities.................... -- (99.3)
Financing activities.................... -- 24.0
</TABLE>
- -------------------------
* EBITDA should not be construed as a substitute for income from operations, net
income or cash flow from operating activities, for the purpose of analyzing
Hayes' operating performance, financial position and cash flows. The Company
has presented EBITDA because it is commonly used by investors to analyze and
compare companies on the basis of operating performance and to determine a
company's ability to service debt. See "Description of the Notes -- Certain
Definitions."
F-8
<PAGE> 15
NOTES TO THE UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(a) The Pro Forma Statement of Operations assumes that the Transactions and the
Motor Wheel Transactions occurred on February 1, 1996. For purposes of the
Pro Forma Statement of Operations for the year ended January 31, 1997, Motor
Wheel's historical statement of operations for the five months ended June
30, 1996 and Lemmerz's historical statement of operations for the year ended
December 31, 1996 were combined with Hayes' historical statement of
operations for the year ended January 31, 1997. For purposes of the Pro
Forma Statement of Operations for the three-month period ended April 30,
1997, Lemmerz's historical statement of operations for the three-month
period ended March 31, 1997 was combined with Hayes' historical statement of
operations for the three-month period ended April 30, 1997.
(b) The acquisition of Motor Wheel was accounted for by the purchase method of
accounting. Under purchase accounting, the total purchase price was
allocated to the tangible and intangible assets and liabilities of Motor
Wheel based upon their respective fair values as of the closing date based
upon valuations and other studies. The following presents the effect of the
purchase adjustments and adjustments to reflect adoption of the Company's
accounting policies and pension and post-retirement benefit cost assumptions
on the Motor Wheel Statement of Operations for the five months ended June
30, 1996:
<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 31, 1997
----------------
COST OF SALES MG&A
------------- ----
<S> <C> <C>
Depreciation.............................................. $(3.4) $ --
Reduction in post retirement benefit costs................ (1.2) --
Amortization of intangibles and goodwill.................. -- 2.3
----- ----
Total increase (decrease)............................ $(4.6) $2.3
========== =====
</TABLE>
The adjustments for estimated pro forma depreciation and amortization of
intangible assets and goodwill are based on their estimated fair values.
Property, plant and equipment are being depreciated over estimated useful
lives. Motor Wheel historically depreciated the $215.4 million of historical
cost of its assets appearing on the December 31, 1995 balance sheet over a
composite life of 14 years resulting in $15.4 million of annual
depreciation, accumulated depreciation of $136.4 million and a net book
value of $79.0 million. Upon consummation of the Motor Wheel Transactions,
the fair value of assets acquired was estimated to be approximately $92.0
million. This amount is being depreciated over 25 years for buildings and 12
years for equipment, consistent with Hayes' depreciation policy for used
equipment and Hayes' estimate of the remaining economic life of the assets
($7.2 million of annual depreciation expense). Other intangible assets and
goodwill are being amortized over their estimated useful lives, not to
exceed 40 years. For pro forma purposes, a 35-year composite amortization
life has been used.
(c) The Lemmerz 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 Lemmerz
based upon their respective fair values as of the effective time of the
Lemmerz Acquisition based upon valuations and other studies which are not
yet available. 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. The following presents the effect of the
F-9
<PAGE> 16
purchase adjustments and adjustments to reflect adoption of the Company's
accounting policies on the Pro Forma Statement of Operations:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
JANUARY 31, 1997 APRIL 30, 1997
---------------- ------------------
COST OF SALES MG&A COST OF SALES MG&A
------------- ---- ------------- ----
<S> <C> <C> <C> <C>
Depreciation........................... $(14.9) $ -- $(2.9) $ --
Amortization of intangibles and
goodwill............................. -- 5.0 -- 1.3
------ ---- ----- ----
Total increase (decrease)......... $(14.9) $5.0 $(2.9) $1.3
========== ===== ========== =====
</TABLE>
The adjustments for estimated pro forma depreciation and amortization of
intangible assets and goodwill are based on their estimated fair values.
Property, plant and equipment is expected to be depreciated over estimated
useful lives. Lemmerz currently depreciates the $519.5 million of historical
cost of its assets appearing on the December 31, 1996 balance sheet over a
composite life of 18 years resulting in $28.7 million of annual depreciation
in the year ended December 31, 1996, accumulated depreciation of $364.8
million and a net book value of $154.7 million. Upon consummation of the
acquisition, the fair value of assets acquired is estimated to be $194.7
million. This amount will be depreciated over 25 years for buildings and 12
years for equipment, consistent with Hayes' depreciation policy for used
equipment and Hayes' estimate of the remaining economic life of the assets
($13.8 million of annual depreciation expense). Other intangible assets and
goodwill are expected to be amortized over their estimated useful lives, not
to exceed 40 years. For pro forma purposes, a 35-year composite amortization
life has been used.
(d) As part of its restructuring, Motor Wheel permanently terminated
approximately 50 corporate positions and eliminated certain salaries and
related costs associated with its Okemos, Michigan corporate headquarters.
The savings related to the elimination of these salaries and related costs
are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 31, 1997
----------------
<S> <C>
Marketing, general and administrative....................... $(1.0)
Engineering and product development......................... (0.9)
------
Total savings.......................................... $(1.9)
============
</TABLE>
(e) Reflects adjustments for additional interest expense assuming the Motor
Wheel Transactions occurred on February 1, 1996. The change in interest
expense, in addition to amortization of deferred financing costs, reflect
changes in long term borrowings and their rates based on a three-month LIBOR
of 6.0% (dollars in millions):
F-10
<PAGE> 17
<TABLE>
<CAPTION>
Year Ended
January 31,
1997
----------------
Pro Forma
Interest
Rate Amount Expense
---- ------ ---------
<S> <C> <C> <C>
Revolving Credit Facility.................... 8.50% $ 27.0 $ 1.0
Term Loan A.................................. 8.50 198.5 7.0
Term Loan B.................................. 9.00 125.0 4.7
Term Loan C.................................. 9.50 100.0 4.0
Existing Notes............................... 11.00 250.0 11.4
Unused revolver commitment................... 1.0
Letter of credit fees........................ 0.5
Administrative fee........................... 0.4
-------
30.0
Amortization of capitalized financing fees... 1.1
-------
Total pro forma interest expense........ 31.1
Historical Motor Wheel interest expense...... (7.3)
Historical Hayes interest expense............ (6.0)
-------
Total historical interest expense
(including amortization of financing
fees)................................. (13.3)
-------
Total pro forma interest expense
adjustment............................ $ 17.8
=======
</TABLE>
The Company estimates that an increase or decrease in interest rates on
floating debt of 1/8% would increase or decrease annual interest expense by
approximately $563,000. The Company anticipates entering into interest rate
caps and swaps with respect to a portion of the floating rate debt to
mitigate the effect of interest rate fluctuations.
F-11
<PAGE> 18
LEMMERZ HOLDING GMBH AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(U.S. DOLLAR IN THOUSANDS, UNLESS OTHERWISE INDICATED)
(f) Reflects adjustments for the additional interest expense assuming the
Lemmerz Acquisition occurred on February 1, 1996. The change in interest
expense, in addition to amortization of deferred financing costs, reflects
changes in long term borrowings and their rates expected to be in effect as
of the effective time as follows (dollars in millions):
<TABLE>
<CAPTION>
Year Ended Three Months
January 31, Ended
1997 April 30, 1997
---------------- ----------------
Pro Forma Pro Forma
Interest Interest
Rate Amount Expense Expense
---- ------ --------- ---------
<S> <C> <C> <C> <C>
Term Loan................................. 6.250% $100.0 $ 6.3 $ 1.6
Notes offered hereby...................... 9.125 250.0 22.8 5.7
Paydown on Hayes outstanding
obligations:............................
Term Loan A............................... 8.250 (23.0) (1.9) (0.5)
Term Loan B............................... 8.750 (15.7) (1.4) (0.3)
Term Loan C............................... 9.000 (11.3) (1.0) (0.3)
----- -----
24.8 6.2
Amortization of capitalized financing
fees.................................... 1.1 0.3
Less Adjustment to new financing rates:
Term Loan A............................... (0.250) 198.5 (0.5) (0.1)
Term Loan B............................... (0.250) 125.0 (0.3) (0.1)
Term Loan C............................... (0.500) 100.0 (0.5) (0.1)
----- -----
Total pro forma interest expenses.... 24.6 6.2
Less: Historical Lemmerz interest
expense................................. (3.3) (0.6)
----- -----
Total pro forma interest expense
adjustment......................... $21.3 $ 5.6
===== =====
</TABLE>
The Company estimates that an increase or decrease in interest rates on
floating debt of 1/8% would increase or decrease annual interest expense by
approximately $588,000. The Company anticipates entering into interest rate
caps and swaps with respect to a portion of the floating rate debt to
mitigate the effect of interest rate fluctuations.
(g) Reflects income tax effects of the pro forma adjustments assuming a combined
effective statutory income tax rate of 43%.
(h) Excluding the effects of one-time and non-recurring charges and
extraordinary items, pro forma net income for the year ended January 31,
1997 would have been $2.5 million.
(i) For the purpose of computing this ratio, earnings consist of earnings before
taxes on income and fixed charges. Fixed charges consists of interest
expense, capitalized interest, amortization of deferred debt issuance costs
and one third of rental expense. On a pro forma combined basis for the
fiscal year ended January 31, 1997, earnings were insufficient to cover
fixed charges by $109.3 million.
F-12
<PAGE> 19
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(April 30, 1997)
<TABLE>
<CAPTION>
HAYES LEMMERZ
APRIL 30, MARCH 31, PRO FORMA PRO FORMA
1997 1997 ADJUSTMENTS COMBINED
--------- --------- ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
- -------
Cash and cash equivalents.................. $ 24.8 $ 4.2 $ 25.0 (b) $ 54.0
Certificates of deposit.................... -- 11.6 -- 11.6
Trade accounts and notes receivable........ 152.6 78.4 -- 231.0
Inventories................................ 87.3 54.2 -- 141.5
Other current assets....................... 8.1 7.9 -- 16.0
-------- ------ ------ --------
Current assets........................ 272.8 156.3 25.0 454.1
Property, plant and equipment, net......... 486.6 143.3 40.0 (a) 669.9
Other noncurrent assets.................... 22.8 49.4 -- 72.2
Deferred tax asset......................... 17.6 43.8 -- 61.4
Deferred financing costs................... 29.0 -- 7.5 (b) 36.5
Goodwill................................... 324.6 -- 174.4 (a) 499.0
-------- ------ ------ --------
Total assets.......................... $1,153.4 $392.8 $246.9 $1,793.1
======== ====== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------
Bank borrowings............................ $ 6.4 $ 45.7 $(45.7)(c) $ 6.4
Current portion of bank term loans and
other long term debt..................... 23.6 -- -- 23.6
Trade accounts payable..................... 149.1 76.5 -- 225.6
Accrued liabilities........................ 72.2 20.2 -- 92.4
-------- ------ ------ --------
Current liabilities................... 251.3 142.4 (45.7) 348.0
Pension and other long-term liabilities.... 252.2 106.1 -- 358.3
Minority interest.......................... 8.4 5.3 -- 13.7
Deferred tax liability, net................ -- 5.1 -- 5.1
Bank term loans and other long term debt
less current portion..................... 430.1 29.5 (59.3)(b)(c)(d) 400.3
Term loans................................. -- -- 100.0 (b) 100.0
Senior subordinated debt................... 251.5 -- -- 251.5
Notes offered hereby....................... -- -- 250.0 (b) 250.0
-------- ------ ------ --------
Total liabilities..................... 1,193.5 288.4 245.0 1,726.9
Capital stock.............................. 0.2 -- -- 0.2
Paid in capital............................ 43.6 57.9 48.4 (e) 149.9
Retained earnings (deficit)................ (78.3) 46.8 (46.8)(e) (78.3)
Cumulative translation and pension
liability adjustment..................... (5.6) (0.3) 0.3 (e) (5.6)
-------- ------ ------ --------
Total stockholders' equity
(deficit)........................... (40.1) 104.4 1.9 66.2
-------- ------ ------ --------
Total liabilities and stockholders'
equity (deficit).................... $1,153.4 $392.8 $246.9 $1,793.1
======== ====== ====== ========
</TABLE>
F-13
<PAGE> 20
NOTES TO THE PRO FORMA BALANCE SHEET AT APRIL 30, 1997
(a) The estimated purchase price and preliminary adjustments to historical book
value of Lemmerz as a result of the Transactions are as follows (dollars in
millions):
<TABLE>
<S> <C>
Purchase price:
Estimated value of cash and preferred stock issued........ $ 318.8
Book value of net assets acquired......................... (104.4)
-------
Purchase price in excess of net assets acquired........... $ 214.4
=======
Preliminary allocation of purchase price in excess of net
assets required:
Increase in property, plant and equipment to estimated
fair value............................................. $ 40.0
Estimated goodwill........................................ 174.4
-------
Total..................................................... $ 214.4
=======
</TABLE>
(b) Reflects the estimated sources and uses of funds for the Transactions as
follows, assuming the Transactions occurred as of April 30, 1997 (dollars in
millions):
<TABLE>
<S> <C>
Sources of Funds:
Term Loan Facility........................................ $ 100.0
Notes offered hereby...................................... 250.0
Issuance of Hayes convertible preferred stock............. 118.8
-------
Total Sources of Funds.................................... $ 468.8
=======
Uses of Funds:
Cash consideration for Lemmerz Acquisition................ $ 200.0
Equity consideration for Lemmerz Acquisition.............. 118.8
Repayment of existing Hayes term debt..................... 50.0
Working capital purposes.................................. 25.0
Repayment of existing Lemmerz obligations................. 55.0
Fees and expenses (including deferred financing costs).... 20.0
-------
Total Uses of Funds....................................... $ 468.8
=======
</TABLE>
(c) Proceeds from the Transactions will be used to repay the following
obligations of Lemmerz (dollars in millions):
<TABLE>
<S> <C>
Current portion debt and notes.............................. $ 45.7
Long-term portion debt...................................... 9.3
-------
Total..................................................... $ 55.0
=======
</TABLE>
(d) Proceeds from the Transactions of approximately $50.0 million will be used
to repay certain outstanding obligations of the Company.
(e) The adjustments to paid-in capital, retained earnings and cumulative
translation and pension liability adjustments as a result of the Lemmerz
Acquisition are as follows (dollars in million):
<TABLE>
<S> <C>
Paid-in capital:
Elimination of Lemmerz paid-in capital.................... $ (57.9)
Value of Hayes convertible preferred stock issued......... 118.8
Estimated professional fees and expenses.................. (12.5)
-------
Total..................................................... $ 48.4
=======
Retained earnings:
Elimination of Lemmerz pre-business combination retained
earnings............................................... $ (46.8)
Cumulative translation and pension liability adjustments:
Elimination of Lemmerz pre-business combination amount.... $ 0.3
</TABLE>
Assumes issuance of the preferred stock for $118.8 million.
F-14
<PAGE> 21
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.
Hayes Wheels International, Inc.
Date: June 20, 1997 By: /s/ WILLIAM D. SHOVERS
------------------------------------
William D. Shovers
Vice President -- Finance
