<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): July 16, 1997
HAYES WHEELS INTERNATIONAL, INC.
<TABLE>
<S> <C> <C>
DELAWARE 1-11592 13-3384636
(State or Other Jurisdiction (Commission File Number) (IRS Employer Identification
of Incorporation) Number)
38481 HURON RIVER DRIVE, ROMULUS, MICHIGAN 48174
(Address of principal executive offices) (Zip Code)
</TABLE>
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. (the "Company") is being filed to update certain information
contained in the Current Reports on Form 8-K of the Company, dated June 6, 1997,
June 20, 1997 and June 30, 1997 (the "Prior Reports"), with respect to (i) the
sources and uses of funds in connection with the Lemmerz Acquisition (as defined
below) and (ii) 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 on
June 30, 1997 (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 the
Company 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
On June 30, 1997, Hayes acquired 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 was 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"). Subsequent to the completion of the Lemmerz Acquisition, the
Company agreed to issue and sell an additional $150 million of 9 1/8% Senior
Subordinated Notes due 2007 (the "New Notes") on substantially the same terms
and conditions as the Notes. The net proceeds from the issuance and sale of the
New Notes will be used to repay outstanding bank indebtedness.
2
<PAGE> 3
SUMMARY UNAUDITED 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 Lemmerz Transactions, (ii) the Motor Wheel Transactions and (iii) the
issuance and sale of the Notes and the New Notes (collectively, the "Offerings")
and the application of the proceeds thereof. The unaudited pro forma statement
of operations data give effect to the Lemmerz Transactions, the Motor Wheel
Transactions and the Offerings as if they had occurred on February 1, 1996. The
unaudited pro forma balance sheet data give effect to the Lemmerz Transactions
and the Offerings 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 Lemmerz Transactions, the Motor Wheel Transactions and the
Offerings 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 Reports and in the Quarterly Report on Form
10-Q of Hayes for the three-month period ended April 30, 1997 (the "Form 10-Q").
<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....................... 98.5 22.9
Engineering and product development......................... 16.5 4.3
Depreciation and amortization............................... 70.0 19.6
Interest expense, net....................................... 101.5 25.4
Net income (loss)........................................... (71.1) 5.5
OTHER DATA:
EBITDA (b).................................................. $ 191.9 $ 55.7
Cash interest expense, net.................................. 95.4 23.7
Capital expenditures........................................ 98.3 23.1
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets......................................................................... $1,783.1
Total debt........................................................................... 1,031.8
Stockholders' equity................................................................. 56.2
</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.
3
<PAGE> 4
PRO FORMA CAPITALIZATION
The following table sets forth the capitalization of the Company as of
April 30, 1997 (a) on an actual basis and (b) on a pro forma basis as adjusted
to give effect to the Lemmerz Transactions and the Offerings 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"
included in the Prior Reports and the Form 10-Q and Hayes' and Lemmerz's
consolidated financial statements and the notes thereto included 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 -- (93.0) 103.0
New Term Loan A-2 (DM equivalent).......... -- -- 100.0 100.0
Term Loan B................................ 124.7 -- (59.8) 64.9
Term Loan C................................ 99.8 -- (47.2) 52.6
11% Notes.................................. 250.0 -- -- 250.0
9 1/8% Notes issued June 1997.............. -- -- 250.0 250.0
9 1/8% Notes issued July 1997.............. -- -- 150.0 150.0
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 (8.1) 56.2
------ ------ ------ --------
Total capitalization.................. $671.5 $179.6 $236.9 $1,088.0
====== ====== ====== ========
</TABLE>
- -------------------------
(a) Pursuant to the Amended Credit Agreement, the Revolving Credit Facility
permits maximum borrowings of $270 million, none of which was drawn at April
30, 1997. At June 30, 1997, amounts outstanding under the revolving credit
facility pursuant to the Amended Credit Agreement were $5.0 million.
(b) See Notes (b) and (e) to the unaudited pro forma balance sheet included in
"Pro Forma Combined Condensed Financial Data."
4
<PAGE> 5
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
(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
5
<PAGE> 6
INDEX TO FINANCIAL STATEMENTS AND
PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PRO FORMA FINANCIAL INFORMATION
Pro Forma Combined Condensed Financial Data................. F-2
Unaudited Pro Forma Combined Statement of Operations for the
Three-Month Period Ended April 30, 1997................... F-3
Unaudited Pro Forma Combined Statement of Operations for the
Year Ended January 31, 1997............................... F-4
Notes to Unaudited Pro Forma Combined Statement of
Operations................................................ F-5
Unaudited Pro Forma Combined Balance Sheet at April 30,
1997...................................................... F-9
Notes to Unaudited Pro Forma Combined Balance Sheet......... F-10
</TABLE>
F-1
<PAGE> 7
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 Lemmerz Transactions, the Motor Wheel Transactions and
the Offerings. 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, the Lemmerz
Transactions and the Offerings as if they had occurred on February 1, 1996. The
Pro Forma Balance Sheet gives pro forma effect to the Lemmerz Transactions and
the Offerings 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 the Company believes 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 and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in the Prior Reports and the Form 10-Q.
The Lemmerz Acquisition was 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) was
allocated to the tangible and intangible assets and liabilities of Lemmerz based
upon their respective fair values as of June 30, 1997, 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 management's preliminary determination of purchase
accounting adjustments and are based upon available information and certain
assumptions that the Company 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-2
<PAGE> 8
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 1.2(c) 22.9
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 1.7 35.6
Interest expense, net...................... 18.4 1.1 5.9(f) 25.4
------- ------- ----- ------
Earnings (loss) before taxes on income
and minority interest................. 6.8 7.6 (4.2) 10.2
Income tax provision (benefit)............. 2.9 4.1 (2.6)(g) 4.4
------- ------- ----- ------
Earnings (loss) before minority
interest.............................. 3.9 3.5 (1.6) 5.8
Minority interest.......................... 0.1 0.2 -- 0.3
------- ------- ----- ------
Net income (loss)........................ $ 3.8 $ 3.3 $(1.6) $ 5.5
======= ======= ===== ======
OPERATING AND OTHER DATA:
EBITDA*.................................... $ 40.0 $ 15.7 $ -- $ 55.7
Depreciation and amortization.............. 14.8 6.5 (1.7) 19.6
Capital expenditures....................... 16.7 6.4 -- 23.1
Cash interest expense, net................. 17.1 1.1 5.5 23.7
SELECTED RATIOS:
Ratio of earnings to fixed charges (i)..... 1.4x
PRO FORMA RECONCILIATION OF EBITDA:
Earnings from operations................... $ 25.2 $ 8.7 $ 1.7 $ 35.4
Add:
Equity in losses of subsidiaries......... -- 0.5 -- 0.5
Depreciation and amortization............ 14.8 6.5 (1.7) 19.6
------- ------- ----- ------
EBITDA*.................................... $ 40.0 $ 15.7 $ -- $ 55.7
======= ======= ===== ======
CASH FLOW PROVIDED BY (USED FOR):
Operating activities..................... $ (4.5) $ 14.1 $(2.9) $ 6.7
Investing activities..................... (16.9) (11.7) -- (28.6)
Financing activities..................... (1.7) (2.5) -- (4.2)
</TABLE>
- -------------------------
* "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.
F-3
<PAGE> 9
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>
LEMMERZ
AND PRO FORMA
OFFERING 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.... 4.7 (c) 98.5
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......... 10.2 (8.8)
Interest expense, net.................... 22.6 (f) 101.5
------ --------
Earnings (loss) before taxes on income,
minority interest and extraordinary
items................................. (12.4) (110.3)
Income tax provision (benefit)........... (20.3)(g) (47.4)
------ --------
Earnings (loss) before minority interest
and extraordinary items............... 7.9 (62.9)
Minority interest........................ -- 0.8
------ --------
Earnings (loss) before extraordinary
items................................. 7.9 (63.7)
Extraordinary items, net of tax.......... -- 7.4
------ --------
Net income (loss)....................... $ 7.9 $ (71.1)(h)
====== ========
OPERATING AND OTHER DATA:
EBITDA*.................................. $ -- $ 191.9
Depreciation and amortization............ (10.2) 70.0
Capital expenditures..................... -- 98.3
Cash interest expense, net............... 21.1 95.4
SELECTED RATIOS:
Ratio of earnings to fixed charges (i)... --
PRO FORMA RECONCILIATION OF EBITDA:
Earnings (loss) from operations.......... $ 10.2 $ (8.8)
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........... (10.2) 70.0
------ --------
EBITDA*.................................. $ -- $ 191.9
====== ========
CASH FLOW PROVIDED BY (USED FOR):
Operating activities.................... $ (0.8) $ 103.4
Investing activities.................... -- (99.3)
Financing activities.................... -- 24.0
</TABLE>
- -------------------------
* "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.
F-4
<PAGE> 10
NOTES TO THE UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(a) The Pro Forma Statement of Operations assumes that the Lemmerz Transactions,
the Motor Wheel Transactions and the Offerings 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 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 Lemmerz
based upon their respective fair values as of June 30, 1997, 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
F-5
<PAGE> 11
the 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............................... -- 4.7 -- 1.2
------ ---- ----- ----
Total increase (decrease)............ $(14.9) $4.7 $(2.9) $1.2
====== ==== ===== ====
</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 being depreciated over estimated useful
lives. Lemmerz historically depreciated 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
Lemmerz Acquisition, the fair value of assets acquired was estimated to be
$194.7 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 ($13.8 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.
(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-6
<PAGE> 12
<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-1................................ 8.50 198.5 7.0
Term Loan B.................................. 9.00 125.0 4.7
Term Loan C.................................. 9.50 100.0 4.0
11% 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) Reflects adjustments for the additional interest expense assuming the
Lemmerz Acquisition and the Offering 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
based on a three-month LIBOR of 6% (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 A-2............................. 6.250% $100.0 $ 6.3 $ 1.6
9 1/8% Notes issued June 1997............. 9.125 250.0 22.8 5.7
9 1/8% Notes issued July 1997............. 9.125 150.0 13.7 3.4
Paydown on Hayes outstanding obligations:
Term Loan A-1............................. 8.250 (93.0) (7.7) (1.9)
Term Loan B............................... 8.750 (59.8) (5.2) (1.3)
Term Loan C............................... 9.000 (47.2) (4.2) (1.1)
------ ------
25.7 6.4
Amortization of capitalized financing
fees.................................... 1.5 0.4
Less Adjustment to new financing rates:
Term Loan A-1............................. (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.... 25.9 6.5
Less: Historical Lemmerz interest
expense................................. (3.3) (0.6)
------ ------
Total pro forma interest expense
adjustment......................... $22.6 $ 5.9
====== ======
</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 $405,000. The Company anticipates
F-7
<PAGE> 13
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 $110.3 million.
F-8
<PAGE> 14
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 $ 20.0 (b) $ 49.0
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 20.0 449.1
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 -- 12.5 (b) 41.5
Goodwill................................... 324.6 -- 164.4 (a) 489.0
-------- ------ ------ --------
Total assets.......................... $1,153.4 $392.8 $236.9 $1,783.1
======== ====== ====== ========
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 (209.3)(b)(c)(d) 250.3
Term loans................................. -- -- 100.0 (b) 100.0
Senior subordinated debt................... 251.5 -- -- 251.5
9 1/8% Notes issued June 1997.............. -- -- 250.0 (b) 250.0
9 1/8% Notes issued July 1997.............. -- -- 150.0 (b) 150.0
-------- ------ ------ --------
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 38.4 (e) 139.9
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 (8.1) 56.2
-------- ------ ------ --------
Total liabilities and stockholders'
equity (deficit).................... $1,153.4 $392.8 $236.9 $1,783.1
======== ====== ====== ========
</TABLE>
F-9
<PAGE> 15
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 Lemmerz Transactions are as follows
(dollars in millions):
<TABLE>
<S> <C>
Purchase price:
Estimated value of cash and preferred stock issued........ $ 308.8
Book value of net assets acquired......................... (104.4)
-------
Purchase price in excess of net assets acquired........... $ 204.4
=======
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........................................ 164.4
-------
Total..................................................... $ 204.4
=======
</TABLE>
(b) Reflects the sources and uses of funds for the Lemmerz Transactions and the
Offerings as follows, assuming the Lemmerz Transactions occurred and the
Notes and the New Notes were issued as of April 30, 1997 (dollars in
millions):
<TABLE>
<S> <C>
Sources of Funds:
Term Loan A-2............................................. $ 100.0
9 1/8% Notes issued June 1997............................. 250.0
9 1/8% Notes issued July 1997............................. 150.0
Issuance of Hayes convertible preferred stock............. 108.8
-------
Total Sources of Funds.................................... $ 608.8
=======
Uses of Funds:
Cash consideration for Lemmerz Acquisition................ $ 200.0
Equity consideration for Lemmerz Acquisition.............. 108.8
Repayment of existing Hayes term debt..................... 200.0
Working capital purposes.................................. 20.0
Repayment of existing Lemmerz obligations................. 55.0
Fees and expenses (including deferred financing costs).... 25.0
-------
Total Uses of Funds....................................... $ 608.8
=======
</TABLE>
(c) Proceeds from the Lemmerz Transactions and the Offerings 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 Lemmerz Transactions and the Offerings of approximately
$200.0 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......... 108.8
Estimated professional fees and expenses.................. (12.5)
-------
Total..................................................... $ 38.4
=======
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 $108.8 million.
F-10
<PAGE> 16
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: July 17, 1997 By: /s/ WILLIAM D. SHOVERS
------------------------------------
William D. Shovers
Vice President -- Finance
