<PAGE>
File Pursuant to Rule 424(b)(1)
SEC File Nos. 333-5015 and
333-06491
4,620,000 SHARES
LOGO
COMMON STOCK
----------------
Of the 4,620,000 shares of Common Stock being offered, 2,000,000 shares are
being sold by Tower Automotive, Inc. (the "Company") and 2,620,000 shares are
being sold by the Selling Stockholders. See "Principal and Selling
Stockholders." The Company will not receive any of the proceeds from the sale
of shares offered by the Selling Stockholders.
The Company's Common Stock is traded on the Nasdaq Stock Market under the
symbol "TWER." On June 20, 1996, the last reported sale price of the Common
Stock on the Nasdaq Stock Market was $24.63 per share. See "Market Price of
and Dividends on Common Stock."
SEE "RISK FACTORS," BEGINNING ON PAGE 8 OF THIS PROSPECTUS, FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF
COMMON STOCK OFFERED HEREBY.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THESECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIESCOMMISSION NOR HAS THE SECU-
RITIES AND EXCHANGE COMMISSION ORANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACYOR ADEQUACY OF THIS PROSPECTUS. ANY REP-
RESENTATION TOTHE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underwriting
Discounts and Proceeds to
Price to Commissions Proceeds to Selling
Public (1) Company (2) Stockholders
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share........................ $24.50 $1.16 $23.34 $23.34
- ---------------------------------------------------------------------------------------------
Total............................ $113,190,000 $5,359,200 $46,680,000 $61,150,800
- ---------------------------------------------------------------------------------------------
Total Assuming Full Exercise of
Over-Allotment Option (3)....... $130,168,500 $6,163,080 $56,086,020 $67,919,400
- ---------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) See "Underwriting."
(2) Before deducting expenses estimated at $550,000, which are payable by the
Company.
(3) Assuming exercise in full of the 30-day option granted by the Company and
certain Selling Stockholders to the Underwriters to purchase up to 693,000
additional shares, on the same terms, solely to cover over-allotments. See
"Underwriting."
----------------
The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters, and
subject to their right to reject orders in whole or in part. It is expected
that delivery of the Common Stock will be made in New York City on or about
June 26, 1996.
----------------
PAINEWEBBER INCORPORATED
ROBERT W. BAIRD & CO.
INCORPORATED
PIPER JAFFRAY INC.
----------------
THE DATE OF THIS PROSPECTUS IS JUNE 20, 1996.
<PAGE>
[Car and Minivan Illustrating parts produced by Tower Automotive]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ STOCK MARKET, IN THE OVER-THE-COUNTER
MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
DURING THE OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING IN
THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK OF THE COMPANY PURSUANT TO EXEMPTIONS
FROM RULES 10b-6, 10b-7 AND 10b-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and related notes appearing elsewhere or
incorporated by reference in this Prospectus. Unless otherwise indicated, all
information in this summary and elsewhere in this Prospectus assumes that the
Underwriters' over-allotment option has not been exercised. Unless the context
indicates otherwise, as used in this Prospectus the term "Company" refers to
Tower Automotive, Inc., its consolidated subsidiaries and their respective
predecessors. The Company acquired Trylon Corporation ("Trylon") on January 16,
1996 and MascoTech Stamping Technologies, Inc. ("MSTI") on May 31, 1996.
Revenue data presented herein for 1995 on a pro forma basis give effect to the
acquisitions of Trylon and MSTI as if such acquisitions occurred on January 1,
1995. See "Unaudited Pro Forma Financial Statements."
THE COMPANY
GENERAL
The Company is a leading designer and producer of high-quality, engineered
metal stampings and assemblies used by major North American original equipment
manufacturers ("OEMs"), including Ford, Honda, Chrysler, General Motors, Mazda,
Toyota and Nissan. The Company's products range from engineered mechanical
parts, such as hood and deck lid hinges and brake components, to large
structural stampings and assemblies, such as body pillars, chassis, suspension
and floor pan components and major housing assemblies. The majority of the
Company's revenues are derived from complex, high value-added products,
primarily assemblies which generally consist of multiple parts which the
Company stamps and combines with various welded or fastened components. The
Company's revenues have grown rapidly through a focused strategy of internal
growth and a highly disciplined acquisition program. Since 1993, revenues have
increased from $86.3 million to $222.8 million in 1995, a compound annual
growth rate of approximately 61%.
On May 31, 1996, the Company acquired MSTI, a leading supplier of complex,
high value-added stampings used in chassis and suspension systems for North
American OEMs. The acquisition of MSTI expands the Company's product offerings
to include chassis and suspension components, increases the Company's product
content on several of the most popular light truck models and enhances new
business opportunities with OEMs. On a pro forma basis, the Company had
revenues of approximately $424 million in 1995, which the Company believes
makes it the third largest independent supplier of automotive stampings and
assemblies to North American OEMs.
The Company manufactures products for a wide variety of car and light truck
models, including nine of the ten best-selling vehicles in the United States in
1995. Two of the Company's highest content per car models, the Ford Taurus and
the Honda Accord, have been the best-selling cars in the United States for the
past eleven years. In addition, two of the Company's highest content per light
truck models, the Ford Explorer and F-Series Pick-up, were the best-selling
sport utility vehicle and pick-up truck in North America in 1995. As a result
of its long history of high-efficiency/high-quality manufacturing and extensive
service capabilities as well as strategic acquisitions, the Company has gained
access to most OEMs and has become a long-term preferred supplier to Ford, the
Company's largest customer, as well as its other major customers. In addition
to receiving numerous quality awards, the Company has consistently received one
of Ford's highest commercial ratings for suppliers in its stamping segment.
STRATEGY
The Company operates in the large and highly fragmented stamping segment of
the automotive supply industry, which has recently begun to undergo significant
consolidation. To lower costs and improve quality, OEMs are reducing their
supplier base by awarding sole-source contracts to full-service stamping
suppliers who
3
<PAGE>
are able to supply larger segments of a vehicle. OEMs' criteria for supplier
selection include not only cost, quality and responsiveness, but also full-
service design, engineering and program management capabilities. In addition,
suppliers increasingly will be required by OEMs to deliver their products and
services on a global basis. As a full-service supplier with strong OEM
relationships, the Company expects to benefit from the continued consolidation
within the automotive stamping segment.
The Company's strategy is designed to capitalize on the opportunities created
by the consolidation of stamping suppliers through continued internal growth
and pursuit of strategic acquisitions that complement its existing business.
The Company believes its strong customer relationships with OEMs enable it to
more quickly identify business opportunities and react to customer needs during
all stages of vehicle design.
The key elements of the Company's strategy are:
Technical Design, Engineering and Program Management Capabilities. The
Company strives to maintain a technological advantage through investment in
research and product development, advanced engineering and program management.
The Company works with OEMs throughout the product development process from
concept vehicle and prototype development through the design and implementation
of manufacturing processes, in some cases by placing Company employees at
customer facilities.
Efficient Manufacturing/Continuous Improvement Programs. In response to OEMs'
increasingly stringent demands, the Company has implemented manufacturing
practices designed to maximize quality and timeliness of delivery and eliminate
waste and inefficiency. The Company has continued to upgrade its manufacturing
technology and product design capability through substantial investment in
design and manufacturing equipment and highly trained engineering personnel.
Strategic Acquisitions. The Company believes that consolidation in the
stamping segment will continue to provide attractive opportunities to acquire
high-quality companies that complement its existing business. The Company seeks
to make acquisitions that (i) provide additional product, manufacturing and
technical capabilities, (ii) increase the number of models for which the
Company supplies products and the content supplied for existing models, (iii)
add new customers and (iv) broaden the Company's geographic coverage. Since
1993, the Company has acquired four businesses. The Company intends to seek
future acquisitions or develop strategic alliances that will strengthen the
Company's ability to supply its products on a global basis.
Broad Product Capabilities. The Company believes that its ability to offer a
broad range of products will provide the Company with a competitive advantage
as OEMs continue to consolidate their stamping suppliers. The Company's North
American content per vehicle has increased from $6.23 in 1993 to $14.92 in
1995, and $28.37 on a pro forma basis after giving effect to the acquisitions
of Trylon and MSTI. The acquisition of MSTI further broadens the Company's
product offerings into chassis and suspension components. The Company seeks to
increase volume by offering a broader range of its products to customers for
each vehicle model and by developing new products for customers.
Management and Workforce Incentives. The Company's management team has
extensive experience in supplying OEMs and has a significant stake in the
Company's success. After the Offering, the Company's management team will
continue to own approximately 16% of the Common Stock on a fully diluted basis.
To increase employee productivity, the Company utilizes incentive programs for
all salaried and hourly employees and provides incentives for employees who
take advantage of its continuous improvement programs and who provide cost
saving ideas. The Company's decentralized management style encourages employee
participation in refining and improving production processes.
RECENT ACQUISITIONS
On May 31, 1996, the Company purchased MSTI from MascoTech, Inc.
("MascoTech") for approximately $79 million, plus certain contingent payments
(the "MSTI Acquisition"). MSTI had net revenues of $152.9 million in 1995. The
MSTI Acquisition has expanded the Company's product capabilities into chassis
and
4
<PAGE>
suspension components, thereby permitting further penetration on its existing
vehicle platforms. In addition, MSTI currently supplies assemblies and
components for key light truck models including the Ford F-Series and Explorer
and Chrysler Grand Cherokee and Mini-van and for high-volume passenger cars
including the Ford Taurus/Sable and Escort and Chrysler Cirrus/Stratus. Many of
the components manufactured by MSTI also require substantial value-added
processing including assembly, painting and welding. The Company believes that
its ability to supply a larger portion of the vehicle as a result of the MSTI
Acquisition will afford it with significant opportunities to increase sales to
OEMs. In a separate transaction, the Company agreed to assume production of
certain parts previously manufactured at a non-acquired MascoTech facility and
will make payments to MascoTech equal to 5% of the revenues to be derived by
the Company during the first twelve months of production from each assumed
purchase order resourced to the Company. The Company will also acquire selected
inventory, tooling and production equipment used for such production at an
estimated cost of approximately $6 million. The purchased assets will be
transferred to the Company's existing facilities over the remainder of 1996.
In addition, the Company has completed three other strategic acquisitions:
. In January 1996, the Company acquired Trylon, formerly a wholly owned
subsidiary of MascoTech, for approximately $25 million in cash, including
transaction costs (the "Trylon Acquisition"). The Trylon Acquisition
broadened the Company's product offerings to include small, precision
metal stampings and assemblies, which were previously outsourced to third
parties.
. In June 1994, the Company acquired Kalamazoo Stamping and Die Company
("Kalamazoo"), a supplier of structural stampings and assemblies.
. In May 1994, the Company acquired Edgewood Tool and Manufacturing Company
and its affiliate Ann Arbor Assembly Corporation (collectively,
"Edgewood"), a leading supplier of hood and deck lid hinges as well as
structural stampings and assemblies.
The Company was formed to acquire R.J. Tower Corporation (the "Predecessor"),
the acquisition of which was completed in April 1993 (the "R.J. Tower
Acquisition"). The Company completed an initial public offering of its Common
Stock in August 1994 (the "IPO"). The Company's principal executive offices are
located at 4508 IDS Center, Minneapolis, Minnesota 55402 and its telephone
number is (612) 342-2310.
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered by the Company. 2,000,000 shares
Common Stock Offered by Selling 2,620,000 shares
Stockholders....................... ----------------
Total............................. 4,620,000 shares
Common Stock to be Outstanding after
the Offering....................... 13,960,271 shares (1)
Use of Proceeds..................... The net proceeds to be received by the
Company from the Offering will be used to
repay all indebtedness under the Company's
credit agreement and for general corporate
purposes that may include repayment of
other indebtedness, potential future
acquisitions or capital expenditures. The
Company will not receive any proceeds from
the sale of the shares by the Selling
Stockholders. See "Use of Proceeds."
Nasdaq Stock Market Symbol.......... TWER
</TABLE>
- --------
(1) As of June 20, 1996. Does not include (i) 1,083,504 shares of Common Stock
reserved for issuance under the Company's stock option plans and employee
stock discount purchase plan, of which options to purchase 277,875 shares
were outstanding, (ii) 102,984 shares issuable upon the exercise of stock
options issued in connection with the acquisition of Edgewood, (iii)
491,345 shares issuable upon conversion of convertible subordinated notes
issued in connection with the acquisition of Edgewood (the "Convertible
Notes"), and (iv) 200,000 shares issuable upon the exercise of outstanding
warrants issued to MascoTech in connection with the MSTI Acquisition (the
"MSTI Warrants").
5
<PAGE>
SUMMARY FINANCIAL AND OTHER DATA
(IN THOUSANDS, EXCEPT PER SHARE AND PER VEHICLE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------- ---------------------------
COMBINED PRO FORMA PRO FORMA
1993 (1) 1994 1995 1995 (2) 1995 1996 1996 (2)
-------- --------- --------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues............... $ 86,334 $ 165,526 $ 222,801 $ 423,607 $ 58,423 $ 68,921 $ 111,282
Gross profit (3)....... 13,967 22,540 37,413 59,837 9,696 10,515 16,538
Operating income....... 9,392 14,302 21,920 34,278 5,810 6,626 10,402
Net income............. 5,009 7,361 12,071 17,073 3,296 3,188 5,143
Net income applicable
to common
stockholders (4)..... 5,009 7,476 12,247 17,249 3,340 3,232 5,187
Net income per common
and common equivalent
share................. $ 0.74 $ 0.86 $ 1.05 $ 1.19 $ 0.29 $ 0.28 $ 0.36
======== ========= ========= ========= ======== ======== =========
Weighted average common
and common equivalent
shares outstanding
(5)................... 6,812 8,720 11,697 14,482 11,677 11,733 14,518
OTHER DATA:
Capital expenditures,
net................... $ 5,156 $ 28,524 $ 26,148 $ 38,063 $ 6,774 $ 2,339 $ 2,610
EBITDA (6)............. 12,143 18,440 28,469 46,795 7,383 9,208 13,767
North American content
per vehicle (7)....... $ 6.23 $ 10.83 $ 14.92 $ 28.37 $ 14.24 $ 18.59 $ 30.01
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------------
DECEMBER 31, PRO FORMA AS
1995 ACTUAL PRO FORMA (8) ADJUSTED (9)
------------ -------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.............. $ 32,245 $ 26,501 $ 40,012 $ 54,339
Total assets................. 209,476 251,710 377,815 392,142
Total debt (10).............. 71,079 91,200 149,200 116,790
Stockholders' investment..... 85,585 88,987 110,121 156,858
</TABLE>
- --------
(1) On April 15, 1993, the Company acquired the Predecessor. Operating data of
the Predecessor for the period January 1, 1993 to April 14, 1993 have been
combined for presentation purposes with the operating data of the Company
for the eight and one-half month period ended December 31, 1993, without
giving effect to purchase accounting or the impact of the financing of the
R.J. Tower Acquisition.
(2) The unaudited pro forma statement of operations data for the year ended
December 31, 1995 reflect (i) the Trylon Acquisition (including related
financing transactions), (ii) the MSTI Acquisition (including related
financing transactions) and (iii) the Offering and the application of the
net proceeds to the Company as described in "Use of Proceeds," as if such
transactions had occurred at the beginning of the period. The unaudited pro
forma statement of operations data for the three months ended March 31,
1996 reflect (i) the MSTI Acquisition (including related financing
transactions) and (ii) the Offering and the application of the net proceeds
to the Company as described in "Use of Proceeds," as if such transactions
had occurred at the beginning of the period. The Company acquired Trylon on
January 16, 1996. Results of operations of Trylon for the period January 1,
1996 through the acquisition date are not material and therefore have not
been included in the Company's results of operations for the three-month
period ended March 31, 1996. The unaudited pro forma financial data set
forth herein do not purport to represent what the results of operations or
financial position of the Company would have been if such transactions had
occurred as of the dates indicated or attempt to project the results of
operations or financial position of the Company for any future period or
date. See "Use of Proceeds," "Capitalization" and "Unaudited Pro Forma
Financial Statements."
(3) Beginning in the three-month period ended March 31, 1996, the Company
began classifying certain manufacturing engineering expenses as cost of
sales. Previously, these expenses were classified as general and
administrative expenses. Accordingly, these expenses for the periods prior
to the three months ended March 31, 1996 have been reclassified to conform
to the new presentation. These reclassifications had no effect on
previously reported operating or net income.
(4) Net income applicable to common stockholders reflects the elimination of
interest expense on $5.0 million of Convertible Notes (net of related
income tax benefit).
(5) Assumes conversion of the $5.0 million in aggregate principal amount of
the Convertible Notes issued in connection with the acquisition of
Edgewood. The shares issuable upon conversion of such Convertible Notes
are included in the calculation of earnings per share because the
conversion price is less than the initial public offering price.
(See footnotes on following page)
6
<PAGE>
(6) "EBITDA" is operating income plus depreciation and amortization. EBITDA
does not represent and should not be considered as an alternative to net
income or cash flow from operations as determined by generally accepted
accounting principles.
(7) "North American content per vehicle" is the Company's revenues divided by
total North American vehicle production, which is comprised of car and
light truck production in the United States, Canada and Mexico, as
estimated by the Company from industry sources.
(8) The unaudited pro forma balance sheet data reflect the MSTI Acquisition
(including related financing transactions) as if such transaction had
occurred on March 31, 1996.
(9) The unaudited pro forma as adjusted balance sheet data reflect (i) the
MSTI Acquisition (including related financing transactions) and (ii) the
Offering and the application of the net proceeds to the Company as
described in "Use of Proceeds," as if such transactions had occurred on
March 31, 1996.
(10) Total debt includes an aggregate of $43.8 million of indebtedness from the
issuance of industrial development revenue bonds ("IRBs") to finance the
construction of the Company's Bardstown facility and the purchase of
related equipment. The $14.6 million of uncommitted proceeds from these
IRBs is reflected as "restricted cash" on the Company's balance sheet at
March 31, 1996.
7
<PAGE>
RISK FACTORS
This Prospectus, including the documents incorporated by reference herein,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended ("Securities Act"). Also, documents
subsequently filed by the Company with the Securities and Exchange Commission
and incorporated herein by reference will contain forward-looking statements.
Actual results could differ materially from those projected in the forward-
looking statements as a result of the risk factors set forth below and the
matters set forth or incorporated in the Prospectus generally. The Company
cautions the reader, however, that this list of factors may not be exhaustive,
particularly with respect to future filings. In analyzing an investment in the
Common Stock offered hereby, prospective investors should carefully consider,
along with the other matters referred to herein, the risk factors described
below.
RELIANCE ON MAJOR CUSTOMERS AND SELECTED MODELS
Ford, Honda and Chrysler accounted for approximately 68%, 15% and 10%,
respectively, of the Company's revenues during 1995 and approximately 68%, 8%
and 10%, respectively, on a pro forma basis. Although the Company has
contracts with many of its customers, such contracts provide for supplying the
customers' requirements for a particular model, rather than for manufacturing
a specific quantity of products. The loss of any one of its major customers or
a significant decrease in demand for certain key models or a group of related
models sold by any of its major customers could have a material adverse effect
on the Company. There is substantial and continuing pressure from OEMs to
reduce costs, including the cost of products purchased from outside suppliers
such as the Company. Management believes that the Company's manufacturing and
engineering expertise and its ability to control costs will allow the Company
to remain competitive. Certain of the Company's products are purchased under
long-term agreements that require the Company to provide annual cost
reductions to such purchasers (directly through price reductions or indirectly
through suggestions regarding manufacturing efficiencies or other cost
savings) by certain percentages each year. Although the Company has been able
to achieve a portion of such reductions through production cost savings that
benefit customers, there can be no assurance that the Company will be able to
continue to generate such cost savings in the future. If the Company were
unable to generate sufficient production cost savings in the future to offset
such price reductions, the Company's gross margin could be adversely affected.
See "Business--Customers and Marketing."
Substantially all of the hourly employees of North American OEMs are
represented by the United Automobile, Aerospace and Agricultural Implement
Workers of America ("UAW") under similar collective bargaining agreements. The
collective bargaining agreements applicable to Ford and Chrysler are both
scheduled to expire in September 1996. The failure of Ford or Chrysler to
reach agreement with the UAW relating to the terms of a new collective
bargaining agreement resulting in either a work stoppage or strike at any of
their respective production facilities could have a material adverse effect on
the Company.
INDUSTRY CYCLICALITY AND SEASONALITY
The automobile market is highly cyclical and is dependent on consumer
spending. Economic factors adversely affecting automotive production and
consumer spending could adversely impact the Company. In addition, the
Company's business is somewhat seasonal. The Company typically experiences
decreased revenue and operating income during the third quarter of each year
due to the impact of OEM plant shutdowns in July for vacations and model
changeovers. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Seasonality."
IMPORTANCE OF BUSINESS RELATED TO NEW AND REDESIGNED MODEL INTRODUCTIONS
The Company principally competes for new business both at the beginning of
the development of new models and upon the redesign of existing models by its
major customers. New model development generally begins two to five years
prior to the marketing of such models to the public. The Company has been
successful in obtaining significant new business on new models and in
supplying additional parts for existing models as they are redesigned by its
customers. Although the Company has been awarded replacement business on all
of
8
<PAGE>
its major platforms through 1998, there can be no assurance that the Company
will continue to obtain such new business. The failure of the Company to
obtain new business on new models or to retain or increase business on
redesigned existing models could adversely affect the Company. See "Business--
Competition."
ACQUISITION STRATEGY
Acquiring businesses that complement the Company's existing business has
been and continues to be an important element of the Company's strategy for
achieving profitable growth. There can be no assurance that suitable
acquisition candidates will be identified and acquired in the future, that
financing for any such acquisitions will be available on satisfactory terms,
that the Company will be able to accomplish its strategic objectives as a
result of any such acquisition or that any business or assets acquired by the
Company will be integrated successfully into the Company's operations.
Although the Company is continually evaluating possible acquisitions, it is
not presently involved in active negotiations with any company. See
"Business--Strategy."
The MSTI Acquisition is the Company's largest acquisition to date. Although
the Company has been successful in integrating prior acquisitions, no
assurance can be given that the Company will not experience difficulties in
integrating the operations of MSTI with those of the Company. In addition, the
need to focus management's attention on integration of the operations of MSTI
may constrain the Company's ability to pursue other acquisitions during the
period of such integration.
COMPETITION
The automotive components supply industry is highly competitive. Some of the
Company's competitors, including certain divisions of its OEM customers, are
larger and have substantially greater financial and other resources than the
Company. Although management believes that the Company is well positioned to
continue to supply its products to OEMs, there can be no assurance that the
Company will be able to compete successfully. See "Business--Competition."
INFLUENCE OF EXISTING STOCKHOLDERS; ANTI-TAKEOVER PROVISIONS
Certain of the Company's significant stockholders have entered into
agreements to vote their shares of Common Stock in the same manner that Onex
U.S. Investments, Inc. (together with its affiliates, "Onex"), the Company's
largest stockholder, votes its shares. After giving effect to the sale of
Common Stock offered hereby, Onex will have voting control of 28.8% of the
total number of outstanding shares of Common Stock (26.0% if the Underwriters'
over-allotment is exercised in full). Consequently, Onex will continue to have
significant influence over the policies of the Company and any matters
submitted to a stockholder vote following the Offering. See "Principal and
Selling Stockholders."
Certain provisions of the Company's Restated Certificate of Incorporation,
which permit the Board of Directors to issue up to 5,000,000 shares of
preferred stock without further stockholder approval, as well as certain
provisions of the Delaware General Corporation Law, could have the effect of
delaying, deterring or preventing a change in control of the Company.
POSSIBLE VOLATILITY OF STOCK PRICE
The public offering price per share of the Common Stock has been determined
by negotiations among the Company and representatives of the Underwriters
based in part on the trading price of the Common Stock on the Nasdaq Stock
Market and may not be indicative of the price at which the Common Stock will
trade after completion of the Offering. In addition, the stock markets have
from time to time experienced extreme price and volume volatility. These
fluctuations may be unrelated to the operating performance of particular
companies whose shares are traded. Market fluctuations may adversely affect
the market price of the Common Stock. The market price of the Common Stock
could be subject to significant fluctuations in response to the Company's
operating results and other factors, and there can be no assurance that the
market price of the Common Stock will not decline below the price at which the
shares of the Common Stock are sold in this Offering.
9
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
2,000,000 shares of Common Stock offered by the Company hereby (after
deducting the underwriting discounts and commissions and estimated offering
expenses payable by the Company) are estimated to be $46.1 million ($55.5
million if the Underwriters' over-allotment option is exercised in full). The
Company will use a portion of the net proceeds to repay all of its borrowings
under the Company's secured credit agreement (the "Credit Agreement"). The
remaining proceeds will be used for other general corporate purposes that may
include repayment of other indebtedness, potential acquisitions or capital
expenditures. As of May 31, 1996, the Company had $25.3 million of
indebtedness outstanding under the revolving credit facility of the Credit
Agreement. The revolving credit facility expires in January 2001. Borrowings
under the revolving credit facility bear interest at variable rates. The
interest rate under the revolving credit facility was 7.6% at May 31, 1996. A
portion of the borrowings under the revolving credit facility were used by the
Company in May 1996 to repay a term loan incurred in connection with the
Trylon Acquisition.
Although the Company is continually evaluating possible acquisitions, it is
not presently involved in active negotiations with any company. Pending
application of the remaining net proceeds, the Company intends to invest such
proceeds in short-term, interest-bearing investment grade securities or in
short-term bank deposits.
Following the Offering, the Company expects to either amend its existing
Credit Agreement or enter into a new credit agreement to provide for
borrowings up to $75.0 million on an unsecured basis (the "New Credit
Agreement"). See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Liquidity and Capital Resources."
The Company will not receive any of the proceeds from the sale of Common
Stock by the Selling Stockholders. See "Principal and Selling Stockholders."
10
<PAGE>
MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK
The Common Stock is traded on the Nasdaq Stock Market under the symbol
"TWER." The following table sets forth, for the periods indicated, the high
and low closing sale prices for the Common Stock on the Nasdaq Stock Market.
The Company's Common Stock commenced trading on August 12, 1994. Prior
thereto, there was no public market for the Company's Common Stock.
<TABLE>
<CAPTION>
1994 HIGH LOW
---- ------ ------
<S> <C> <C>
Third Quarter (commencing August 12, 1994)................. $13.75 $11.50
Fourth Quarter............................................. 11.75 7.38
<CAPTION>
1995
----
<S> <C> <C>
First Quarter.............................................. $10.63 $ 7.50
Second Quarter............................................. 10.50 8.25
Third Quarter.............................................. 14.50 10.38
Fourth Quarter............................................. 17.50 13.25
<CAPTION>
1996
----
<S> <C> <C>
First Quarter.............................................. $16.13 $14.63
Second Quarter (through June 20, 1996)..................... 25.25 16.00
</TABLE>
The last reported sale price of the Common Stock on the Nasdaq Stock Market
as of a recent date is set forth on the cover page of this Prospectus.
As of May 30, 1996, there were approximately 115 holders of record of the
outstanding Common Stock. The Company believes it has a significantly larger
number of beneficial holders of its Common Stock.
The Company has not declared or paid any cash dividends on its Common Stock
in the past, currently intends to retain its earnings to support its growth
strategy and does not anticipate paying dividends in the foreseeable future.
Any future payment of dividends is within the discretion of the Company's
Board of Directors and will depend upon, among other factors, the capital
requirements, operating results and financial condition of the Company from
time to time. In addition, the Company's ability to pay cash dividends is
limited by the terms of the Credit Agreement. As of March 31, 1996, under the
most restrictive terms of the Credit Agreement, the Company would not have
been permitted to pay any dividends. The Company expects to be similarly
restricted by the terms of the New Credit Agreement. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition--
Liquidity and Capital Resources."
11
<PAGE>
CAPITALIZATION
The following table sets forth (i) the actual consolidated capitalization of
the Company at March 31, 1996; (ii) the pro forma capitalization of the
Company giving effect to the MSTI Acquisition (including related financing
transactions); and (iii) the pro forma as adjusted capitalization of the
Company giving effect to the MSTI Acquisition (including related financing
transactions) and the sale by the Company of 2,000,000 shares of Common Stock
in the Offering and the application of the net proceeds therefrom as if such
transactions had occurred on such date. See "Use of Proceeds" and "Unaudited
Pro Forma Financial Statements." This table should be read in conjunction with
the consolidated financial statements of the Company and notes thereto
incorporated by reference into this Prospectus.
<TABLE>
<CAPTION>
AT MARCH 31, 1996
--------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C>
Long-term debt:
Term loan.................................... $ 25,000 $ -- $ --
Revolving credit facility (1)................ 13,803 31,803 --
Senior secured notes (1)..................... -- 65,000 65,000
Industrial development revenue bonds (2)..... 47,365 47,365 47,365
Convertible Notes (3)........................ 5,000 5,000 4,393
Other........................................ 32 32 32
Less: current maturities..................... (5,730) (730) (730)
-------- -------- --------
Total long-term debt....................... 85,470 148,470 116,060
-------- -------- --------
Stockholders' investment:
Preferred stock, par value $1.00; 5,000,000
shares authorized; no shares issued or
outstanding................................. -- -- --
Common Stock, par value $.01; 30,000,000
shares authorized; 10,839,867 shares on an
actual basis; 11,624,867 shares on a pro
forma basis; and 13,724,867 shares on a pro
forma as adjusted basis (4)................. 108 116 137
Additional paid-in capital................... 63,547 82,673 129,389
MSTI Warrants (5)............................ -- 2,000 2,000
Retained earnings............................ 25,701 25,701 25,701
Common stock subscriptions receivable........ (369) (369) (369)
-------- -------- --------
Total stockholders' investment............. 88,987 110,121 156,858
-------- -------- --------
Total capitalization....................... $174,457 $258,591 $272,918
======== ======== ========
</TABLE>
- --------
(1) On May 31, 1996, the Company used borrowings under the revolving credit
facility, together with a portion of the net proceeds from the sale of
$65.0 million in aggregate principal amount of senior secured notes (the
"Senior Notes") to repay the remaining balance outstanding on the $25.0
million term loan incurred in connection with the Trylon Acquisition. The
remaining proceeds from sale of the Senior Notes were used to finance the
cash portion of the purchase price of MSTI. See "Management's Discussion
and Analysis of Results of Operations and Financial Condition--Liquidity
and Capital Resources."
(2) Long-term debt includes an aggregate of $43.8 million of indebtedness from
the issuance of IRBs to finance the construction of the Company's
Bardstown facility and the purchase of related equipment. The $14.6
million of uncommitted proceeds from these IRBs is reflected as
"restricted cash" on the Company's balance sheet at March 31, 1996.
(3) Reflects the conversion of $0.6 million of Convertible Notes by a Selling
Stockholder.
(4) Does not include (i) 2,875 shares of Common Stock issued since March 31,
1996 upon the exercise of stock options, (ii) 232,529 shares of Common
Stock issued since March 31, 1996 upon the conversion of certain of the
Convertible Notes, (iii) 1,083,504 shares of Common Stock reserved for
issuance under the Company's stock option plans and employee stock
discount purchase plan, of which options to purchase 277,875 shares were
outstanding as of June 20, 1996, (iv) 102,984 shares issuable upon the
exercise of stock options issued in connection with the acquisition of
Edgewood, (v) 491,345 shares issuable upon conversion of the Convertible
Notes or (vi) 200,000 shares issuable upon the exercise of the MSTI
Warrants.
(5) The MSTI Warrants were valued using the Black-Scholes option pricing
model.
12
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following Unaudited Pro Forma Statement of Operations for the year ended
December 31, 1995 gives effect to (i) the Trylon Acquisition (including
related financing transactions), (ii) the MSTI Acquisition (including related
financing transactions) and (iii) the Offering and the application of the net
proceeds therefrom to the Company as described in "Use of Proceeds," as if
such transactions had occurred on January 1, 1995. The following Unaudited Pro
Forma Statement of Operations for the three months ended March 31, 1996 gives
effect to (i) the MSTI Acquisition (including related financing transactions)
and (ii) the Offering and the application of the net proceeds therefrom to the
Company as described in "Use of Proceeds," as if such transactions had
occurred on January 1, 1996. The Company acquired Trylon on January 16, 1996.
Results of operations of Trylon for the period from January 1, 1996 through
the acquisition date are not material and therefore have not been included in
the Company's results of operations for the three-month period ended March 31,
1996.
The information set forth under the heading Pro Forma included in the
Unaudited Pro Forma Balance Sheet as of March 31, 1996 reflects the MSTI
Acquisition (including related financing transactions) as if such transaction
occurred on such date. The information set forth under the heading Pro Forma
As Adjusted included in the Unaudited Pro Forma Balance Sheet as of March 31,
1996 reflects (i) the MSTI Acquisition (including related financing
transactions) and (ii) the Offering and the application of the net proceeds
therefrom to the Company as described under "Use of Proceeds," as if such
transactions had occurred on such date. The historical financial statements of
the Company as of March 31, 1996 already reflect the Trylon Acquisition.
In connection with the MSTI Acquisition, the Company has committed to make
additional earn-out payments if certain operating targets are achieved by the
MSTI facilities in the first three years following the MSTI Acquisition. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition--Liquidity and Capital Resources." The Unaudited Pro Forma Financial
Statements do not include any amounts related to such payments as a result of
their contingent nature. In addition, the Unaudited Pro Forma Financial
Statements do not include any revenues that may be derived from purchase
orders to be assumed by the Company from a non-acquired MascoTech facility.
The unaudited pro forma financial data presented herein are based on the
assumptions and adjustments described in the accompanying notes. The Unaudited
Pro Forma Statements of Operations do not purport to represent what the
Company's results of operations actually would have been if the events
described above had occurred as of the dates indicated or what such results
will be for any future periods. The Unaudited Pro Forma Financial Statements
are based upon assumptions and adjustments that the Company believes are
reasonable. The Unaudited Pro Forma Financial Statements and the accompanying
notes should be read in conjunction with the historical financial statements
of the Company, Trylon and MSTI, including the notes thereto, included
elsewhere herein or incorporated by reference in this Prospectus.
13
<PAGE>
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THE PRO FORMA OFFERING PRO FORMA
COMPANY (1) TRYLON (2) MSTI ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
----------- --------- -------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues............... $222,801 $47,911 $152,895 $423,607 $423,607
Cost of sales.......... 185,388 41,315 136,592 100 (3) 363,770 363,770
375 (4)
-------- ------- -------- ------- -------- ------- --------
Gross profit........... 37,413 6,596 16,303 (475) 59,837 59,837
Selling, general and
administrative
expenses.............. 14,308 700 8,054 23,062 23,062
Amortization expense... 1,185 372 1,638 (32)(5) 2,497 2,497
(666)(6)
-------- ------- -------- ------- -------- ------- --------
Operating income....... 21,920 5,524 6,611 223 34,278 34,278
Interest expense, net.. 1,799 -- -- 2,000 (7) 8,207 (2,385)(8) 5,822
4,408 (9)
-------- ------- -------- ------- -------- ------- --------
Income before
provision for income
taxes................. 20,121 5,524 6,611 (6,185) 26,071 2,385 28,456
Provision for income
taxes................. 8,050 2,296 3,330 (3,247)(10) 10,429 954 (11) 11,383
-------- ------- -------- ------- -------- ------- --------
Net income........... $ 12,071 $ 3,228 $ 3,281 $(2,938) $ 15,642 $ 1,431 $ 17,073
======== ======= ======== ======= ======== ======= ========
Net income applicable
to common
stockholders........ $ 12,247 $ 3,228 $ 3,281 $(2,938) $ 15,818 $ 1,431 $ 17,249
======== ======= ======== ======= ======== ======= ========
Net income per common
and common
equivalent share.... $ 1.05 $ 1.27 $ 1.19
Weighted average
common and common
equivalent shares
outstanding......... 11,697 785 (12) 12,482 2,000 (13) 14,482
</TABLE>
See accompanying notes to unaudited pro forma statements of operations.
14
<PAGE>
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THE PRO FORMA OFFERING PRO FORMA
COMPANY MSTI ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
------- ------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues............... $68,921 $42,361 $111,282 $111,282
Cost of sales.......... (400)(14)
58,406 36,638 100 (4) 94,744 94,744
------- ------- ----- -------- ----- --------
Gross profit........... 10,515 5,723 300 16,538 16,538
Selling, general and
administrative
expenses.............. 3,514 1,998 5,512 5,512
Amortization expense... 375 410 (161)(6) 624 624
------- ------- ----- -------- ----- --------
Operating income....... 6,626 3,315 461 10,402 10,402
Interest expense, net.. 1,308 -- 1,119 (9) 2,427 (596)(8) 1,831
------- ------- ----- -------- ----- --------
Income before
provision for income
taxes................. 5,318 3,315 (658) 7,975 596 8,571
Provision for income
taxes................. 2,130 1,490 (430)(10) 3,190 238 (11) 3,428
------- ------- ----- -------- ----- --------
Net income........... $ 3,188 $ 1,825 $(228) $ 4,785 $ 358 $ 5,143
======= ======= ===== ======== ===== ========
Net income applicable
to common
stockholders........ $ 3,232 $ 1,825 $(228) $ 4,829 $ 358 $ 5,187
======= ======= ===== ======== ===== ========
Net income per common
and common
equivalent share.... $ 0.28 $ 0.39 $ 0.36
Weighted average
common and common
equivalent shares
outstanding......... 11,733 785 (12) 12,518 2,000 (13) 14,518
</TABLE>
See accompanying notes to unaudited pro forma statements of operations.
15
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(1) Represents the results of operations of the Company for the year ended
December 31, 1995. Beginning in 1996, the Company began classifying
certain engineering expenses that were previously classified as selling,
general and administrative expenses as cost of sales. These engineering
expenses incurred in 1995 have been reclassified to cost of sales to be
consistent with the 1996 presentation. This reclassification had no effect
on previously reported operating income or net income.
(2) Represents the results of operations of Trylon for the year ended December
31, 1995. The Company acquired Trylon on January 16, 1996. Results of
operations of Trylon for the period from January 1, 1996 through the
acquisition date are not material and therefore have not been included in
the Unaudited Pro Forma Consolidated Statement of Operations for the three
months ended March 31, 1996.
(3) Represents the change in depreciation expense resulting from adjustments
to the depreciable lives of property, plant and equipment of Trylon to
their estimated useful lives at the time of their acquisition and from
adjustments to value such property, plant and equipment at fair value as
of the date of acquisition.
(4) Represents the net periodic postretirement benefit cost associated with
the postretirement benefit obligation assumed in connection with the MSTI
Acquisition.
(5) Represents amortization of goodwill arising from the acquisition of
Trylon, net of amortization of goodwill previously recorded by Trylon
which has been eliminated. Goodwill will be amortized on a straight-line
basis over a forty year period.
(6) Represents amortization of goodwill arising from the acquisition of MSTI,
net of amortization of goodwill previously recorded by MSTI which has been
eliminated. Goodwill will be amortized on a straight-line basis over a
forty year period.
(7) Represents incremental interest expense arising from indebtedness incurred
in connection with the Trylon Acquisition. Interest expense was calculated
using the weighted average interest rate on the borrowings incurred to
fund the acquisition.
(8) Represents the reduction in interest expense resulting from the use of the
proceeds from the Offering to repay existing indebtedness, calculated
using the Company's weighted average interest rate on the debt assumed to
be retired for the period presented.
(9) Represents incremental interest expense arising from indebtedness incurred
in connection with the MSTI Acquisition. Interest expense was calculated
using the weighted average interest rate on the borrowings incurred to
fund the acquisition.
(10) To adjust the provision for income taxes on a pro forma basis to reflect
the Company's incremental tax rate of 40%.
(11) To record the income tax effect of the Offering adjustments at the
Company's incremental income tax rate of approximately 40%.
(12) Represents the shares of Common Stock issued to MascoTech in connection
with the MSTI Acquisition.
(13) Represents the shares of Common Stock to be issued by the Company in the
Offering.
(14) Represents the change in depreciation expense resulting from adjustments
to the depreciable lives of property, plant and equipment of MSTI to
their estimated useful lives at the time of their acquisition and from
adjustments to value such property, plant and equipment at fair value as
of the date of acquisition.
16
<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
------------------
THE PRO FORMA OFFERING PRO FORMA
ASSETS COMPANY MSTI ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
------ -------- -------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents.......... $ 1,057 $ 196 $ (196)(1) $ 1,057 $ 14,327 (8) $ 15,384
Accounts receivable... 53,075 26,476 79,551 79,551
Inventories........... 14,777 6,041 20,818 20,818
Other current assets.. 6,826 5,460 12,286 12,286
-------- -------- -------- -------- -------- --------
Total current
assets............. 75,735 38,173 (196) 113,712 14,327 128,039
Property, plant and
equipment, net......... 103,234 48,647 (1,000)(2) 150,881 150,881
Restricted cash......... 14,593 -- 14,593 14,593
Goodwill and other
intangible assets, net. 58,148 47,383 (6,902)(3) 98,629 98,629
-------- -------- -------- -------- -------- --------
$251,710 $134,203 $ (8,098) $377,815 $ 14,327 $392,142
======== ======== ======== ======== ======== ========
<CAPTION>
LIABILITIES AND
STOCKHOLDERS' INVESTMENT
- ------------------------
<S> <C> <C> <C> <C> <C> <C>
Current liabilities:
Current maturities of
long-term debt....... $ 5,730 -- $ (5,000)(4) $ 730 $ 730
Accounts payable...... 28,029 22,019 50,048 50,048
Accrued liabilities... 15,475 7,447 22,922 22,922
-------- -------- -------- -------- -------- --------
Total current
liabilities........ 49,234 29,466 (5,000) 73,700 73,700
Long-term debt, net of
current maturities..... 85,470 -- 63,000 (4) 148,470 (31,803)(8) 116,060
(607)(9)
Other noncurrent
liabilities............ 28,019 7,005 10,500 (5) 45,524 45,524
-------- -------- -------- -------- -------- --------
Stockholders'
investment:
Preferred stock....... -- -- -- --
Common Stock.......... 108 -- 8 (6) 116 20 (8) 137
1 (9)
MSTI Warrants......... -- -- 2,000 (6) 2,000 -- 2,000
Additional paid-in
capital.............. 63,547 -- 19,126 (6) 82,673 46,110 (8) 129,389
606 (9)
Retained earnings..... 25,701 -- 25,701 25,701
Net assets acquired... -- 97,732 (97,732)(7) -- --
Subscriptions
receivable........... (369) -- (369) (369)
-------- -------- -------- -------- -------- --------
Total stockholders'
investment......... 88,987 97,732 (76,598) 110,121 46,737 156,858
-------- -------- -------- -------- -------- --------
$251,710 $134,203 $ (8,098) $377,815 $ 14,327 $392,142
======== ======== ======== ======== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma balance sheet.
17
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(IN THOUSANDS)
(1) To eliminate MSTI cash balances which were not included in the MSTI
Acquisition.
(2) To state property, plant and equipment acquired in the MSTI Acquisition at
estimated fair value and eliminate historical accumulated depreciation.
(3) To adjust goodwill to the amount recognized in connection with the MSTI
Acquisition. The goodwill will be amortized on a straight-line basis over
forty years.
(4) To reflect the financing transactions related to the MSTI Acquisition as
follows:
<TABLE>
<S> <C>
Sources:
Proceeds from Senior Notes..................................... $65,000
Borrowings under the revolving credit facility................. 18,000
-------
$83,000
=======
Uses:
Cash paid to MascoTech in connection with the MSTI Acquisition. $55,000
Repayment of term loan......................................... 25,000
Transaction costs.............................................. 3,000
-------
$83,000
=======
</TABLE>
(5) To record management's preliminary estimate of reserves to be established
in connection with the MSTI Acquisition including $1,300 of losses to be
incurred on the sale of products which have costs in excess of selling
prices, $5,800 of costs to be incurred to rationalize certain facilities of
MSTI, $300 of employee severance and related costs and $3,100 for the
estimated accumulated benefit obligation associated with assumed
postretirement medical and life insurance benefits of certain MascoTech
employees. These reserves have been established based on preliminary
estimates. Management does not believe the actual amounts to be incurred
will be materially different than the estimated amounts.
(6) To reflect the $19,134 value of the Common Stock and $2,000 value of the
MSTI Warrants issued to MascoTech in connection with the MSTI Acquisition.
The MSTI Warrants were valued using the Black-Scholes option pricing model.
(7) To eliminate the historical stockholder's investment of MSTI.
(8) To reflect the application of the proceeds of the Offering to reduce
outstanding indebtedness and provide for general corporate purposes. See
"Use of Proceeds."
(9) To reflect the conversion of $607 principal amount of Convertible Notes
into 100 shares of Common Stock to be sold in the Offering by a Selling
Stockholder. See "Principal and Selling Stockholders."
18
<PAGE>
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND PER VEHICLE AMOUNTS)
The consolidated financial data for the years ended December 31, 1991 and
1992 and the three and one-half month period ended April 14, 1993 are derived
from the audited consolidated financial statements of the Predecessor. The
consolidated financial data for the eight and one-half month period ended
December 31, 1993 and the years ended December 31, 1994 and 1995 have been
derived from the audited consolidated financial statements of the Company,
which are incorporated by reference into this Prospectus. The financial data
for the combined year ended December 31, 1993 have been derived from the
financial statements of the Predecessor and the Company and are unaudited. The
consolidated financial data of the Company for the three months ended March
31, 1995 and 1996 have been derived from the Company's unaudited financial
statements; however, in the Company's opinion, they reflect all adjustments,
consisting only of normal recurring items, necessary for a fair presentation
of the financial position and results of operations of such periods. The
results for the three months ended March 31, 1996 are not necessarily
indicative of the results to be expected for the full year. The selected
financial data below should be read in conjunction with the consolidated
financial statements and the notes thereto of the Predecessor and the Company
incorporated by reference into this Prospectus and "Management's Discussion
and Analysis of Results of Operations and Financial Condition."
<TABLE>
<CAPTION>
PREDECESSOR (1) THE COMPANY
-------------------------------- ------------------------------------------------------------
THREE AND EIGHT AND THREE MONTHS
YEAR ENDED ONE-HALF ONE-HALF ENDED
DECEMBER 31, MONTH PERIOD MONTH PERIOD YEAR ENDED DECEMBER 31, MARCH 31,
------------------ ENDED ENDED ----------------------------- -----------------
APRIL 14, DECEMBER 31, COMBINED
1991 1992 1993 1993 1993 (2) 1994 1995 1995 1996
-------- -------- ------------ ------------ -------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $ 68,025 $ 80,830 $ 25,037 $ 61,297 $ 86,334 $ 165,526 $ 222,801 $ 58,423 $ 68,921
Cost of sales (3)....... 58,599 70,431 20,426 51,941 72,367 142,986 185,388 48,727 58,406
-------- -------- -------- -------- -------- --------- --------- -------- --------
Gross profit (3)....... 9,426 10,399 4,611 9,356 13,967 22,540 37,413 9,696 10,515
Selling, general and
administrative expenses
(3) 3,399 4,440 1,223 3,155 4,378 7,435 14,308 3,586 3,514
Amortization expense.... -- -- -- 197 197 803 1,185 300 375
-------- -------- -------- -------- -------- --------- --------- -------- --------
Operating income....... 6,027 5,959 3,388 6,004 9,392 14,302 21,920 5,810 6,626
Interest expense, net... 959 539 93 636 729 1,899 1,799 309 1,308
Other income, net....... (441) (229) (25) -- (25) -- -- -- --
-------- -------- -------- -------- -------- --------- --------- -------- --------
Income before provision
for income taxes...... 5,509 5,649 3,320 5,368 8,688 12,403 20,121 5,501 5,318
Provision for income
taxes.................. 2,201 2,395 1,392 2,287 3,679 5,042 8,050 2,205 2,130
-------- -------- -------- -------- -------- --------- --------- -------- --------
Net income............. $ 3,308 $ 3,254 $ 1,928 $ 3,081 $ 5,009 $ 7,361 $ 12,071 $ 3,296 $ 3,188
======== ======== ======== ======== ======== ========= ========= ======== ========
Net income applicable
to common stockholders
(4) $ 3,308 $ 3,254 $ 1,928 $ 3,081 $ 5,009 $ 7,476 $ 12,247 $ 3,340 $ 3,232
======== ======== ======== ======== ======== ========= ========= ======== ========
Net income per common
and common equivalent
share................. $ .45 $ .74 $ .86 $ 1.05 $ .29 $ .28
Weighted average common
and common equivalent
shares outstanding
(5)................... 6,812 6,812 8,720 11,697 11,677 11,733
OTHER DATA:
Capital expenditures.... $ 3,066 $ 5,156 $ 28,524 $ 26,148 $ 6,774 $ 2,339
EBITDA (6).............. 7,851 12,143 18,440 28,469 7,383 9,208
North American content
per vehicle (7)........ NA $ 6.23 $ 10.83 $ 14.92 $ 14.24 $ 18.59
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.............................................................. $ 32,245 $ 26,501
Total assets................................................................. 209,476 251,710
Total debt (8)............................................................... 71,079 91,200
Stockholders' investment..................................................... 85,585 88,987
</TABLE>
(See footnotes on following page)
19
<PAGE>
- --------
(1) On April 15, 1993, the Company acquired the Predecessor. Accordingly,
certain information provided for the years ended December 31, 1991 and
1992, and the three and one-half month period ended April 14, 1993 is not
comparable to the Statement of Operations Data of the Company due to the
effects of certain purchase accounting adjustments and the financing of
the R.J. Tower Acquisition. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition."
(2) Operating data for the Predecessor for the period January 1, 1993 to April
14, 1993 have been combined for presentation purposes with the operating
data of the Company for the eight and one-half month period ended December
31, 1993, without giving effect to purchase accounting or the impact of
the financing of the R.J. Tower Acquisition.
(3) Beginning in the three-month period ended March 31, 1996, the Company
began classifying certain manufacturing engineering expenses as cost of
sales. Previously, these expenses were classified as general and
administrative expenses. Accordingly, these expenses for the periods prior
to the three months ended March 31, 1996 have been reclassified to conform
to the new presentation. These reclassifications had no effect on
previously reported operating or net income.
(4) Net income applicable to common stockholders reflects the elimination of
interest expense on $5.0 million of Convertible Notes (net of related
income tax benefit).
(5) Assumes conversion of the $5.0 million in aggregate principal amount of
the Convertible Notes issued in connection with the acquisition of
Edgewood. The shares issuable upon conversion of the Convertible Notes are
included in the calculation of earnings per share for all periods
presented because the conversion price is less than the initial public
offering price of the Company's Common Stock.
(6) "EBITDA" is operating income plus amortization and depreciation. EBITDA
does not represent and should not be considered an alternative to net
income or cash flow from operations as determined by generally accepted
accounting principles.
(7) "North American content per vehicle" is the Company's revenues divided by
total North American vehicle production, which is comprised of car and
light truck production in the United States, Canada and Mexico, as
estimated by the Company from industry sources.
(8) Total debt includes an aggregate of $43.8 million of indebtedness from the
issuance of IRBs to finance the construction of the Company's Bardstown
facility and the purchase of related equipment. The $14.6 million of
uncommitted proceeds from these IRBs is reflected as "restricted cash" on
the Company's balance sheet at March 31, 1996.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
The Company was organized to effect the R.J. Tower Acquisition, which was
financed with a combination of common equity and secured indebtedness. Since
the R.J. Tower Acquisition, the Company has continued to pursue strategic
acquisitions. On May 4, 1994 the Company completed the acquisition of
Edgewood, on June 29, 1994, the Company completed the acquisition of
Kalamazoo, on January 16, 1996, the Company completed the Trylon Acquisition,
and on May 31, 1996, the Company completed the MSTI Acquisition.
The following table sets forth the percentage relationship of certain items
to revenues for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------- -----------------------
PRO FORMA PRO FORMA
1993 (1) 1994 1995 1995 (2) 1995 1996 1996 (2)
-------- ----- ----- --------- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........... 83.8 86.4 83.2 85.9 83.4 84.7 85.1
----- ----- ----- ----- ----- ----- -----
Gross profit............ 16.2 13.6 16.8 14.1 16.6 15.3 14.9
Selling, general and
administrative
expenses............... 5.1 4.5 6.5 5.4 6.1 5.1 5.0
Amortization expense.... .2 .5 .5 .6 .6 .6 .6
----- ----- ----- ----- ----- ----- -----
Operating income........ 10.9 8.6 9.8 8.1 9.9 9.6 9.3
Interest and other
expense................ .8 1.1 .8 1.4 .5 1.9 1.6
----- ----- ----- ----- ----- ----- -----
Income before provision
for income taxes....... 10.1 7.5 9.0 6.7 9.4 7.7 7.7
Provision for income
taxes.................. 4.3 3.0 3.6 2.7 3.7 3.1 3.1
----- ----- ----- ----- ----- ----- -----
Net income.............. 5.8% 4.5% 5.4% 4.0% 5.7% 4.6% 4.6%
===== ===== ===== ===== ===== ===== =====
</TABLE>
- --------
(1) Operating data for the Predecessor for the period January 1, 1993 to April
14, 1993 have been combined for presentation purposes with the operating
data of the Company for the eight and one-half month period ended December
31, 1993, without giving effect to purchase accounting or the impact of
the financing of the R.J. Tower Acquisition.
(2)See "Unaudited Pro Forma Financial Statements."
The Company believes that MSTI's historical gross margin has been slightly
lower than that of the Company, primarily because MSTI's products have
historically contained a greater proportion of components purchased from
outside suppliers. As a result, the Company expects some downward pressure on
its overall gross margin in periods following the MSTI Acquisition. MSTI's
results of operations for the first three quarters of 1995 were adversely
impacted by significant costs incurred by MSTI related to the launch of new
product programs during such periods. Following the MSTI Acquisition, the
Company anticipates cost savings from the consolidation of MSTI's technical,
engineering and sales functions with those of the Company.
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1996 TO THE THREE MONTHS ENDED
MARCH 31, 1995
Revenues
Revenues for the three months ended March 31, 1996 increased by $10.5
million, or 18%, to $68.9 million compared to $58.4 million for the three
months ended March 31, 1995. Revenues for the 1996 period increased over the
1995 period due to new business awarded to the Company and the Trylon
Acquisition in January 1996, despite significant production decreases in key
models served by the Company, including the Ford Escort, Villager,
Taurus/Sable, Econoline and the Chrysler LH line.
Cost of Sales
Cost of sales as a percentage of revenues for the three months ended March
31, 1996 was 84.7% compared to 83.4% for the three months ended March 31,
1995. The decrease in gross margins was the result of lower margins on the
Trylon business and fixed costs at the Company's Bardstown facility while the
plant is ramping up and operating at less than full capacity, partially offset
by operating efficiencies and enhanced productivity.
21
<PAGE>
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased slightly to $3.5
million for the three months ended March 31, 1996 from $3.6 million for the
three months ended March 31, 1995. The decrease was due primarily to lower
engineering costs in the first quarter of 1996. As a percentage of revenues,
selling, general and administrative expenses were 5.1% for the three months
ended March 31, 1996 compared to 6.1% for the three months ended March 31,
1995.
Interest Expense
Interest expense for the three months ended March 31, 1996 was $1.3 million
compared to $309,000 for the three months ended March 31, 1995. The increase
was due principally to increased borrowings under the Credit Agreement to fund
the Trylon Acquisition.
Income Taxes
The effective income tax rate was 40.1% for the three months ended March 31,
1996 and 1995. The effective rates were higher than the statutory rates
primarily as a result of state taxes and nondeductible goodwill amortization.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994
Revenues
Revenues for the year ended December 31, 1995 increased $57.3 million, or
34.6%, to $222.8 million compared to $165.5 million for the year ended
December 31, 1994. Revenues increased despite significant production decreases
on key vehicles served by the Company including the Ford Escort, Taurus/Sable,
and Econoline and Chrysler LH line. These decreases were offset by new
business that began production during the year and the full year effects of
the Company's acquisitions of Edgewood in May 1994 and Kalamazoo in June 1994.
Cost of Sales
Cost of sales, as a percentage of revenues, decreased to 83.2% for the year
ended December 31, 1995 compared to 86.4% for the year ended December 31,
1994. The improvement in gross margins was a result of the productivity
improvement initiatives in place and synergies realized from the acquisitions
of Edgewood and Kalamazoo. These were partially offset by higher raw material
costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to $14.3 million, or
6.5% of revenues, for the year ended December 31, 1995 compared to $7.4
million, or 4.5% of revenues, for the year ended December 31, 1994. The
increased expense was due in part to the full year effect of the acquisitions
of Edgewood and Kalamazoo combined with the incremental engineering, technical
and development costs associated with future programs.
Other
Amortization expense increased to $1.2 million for the year ended December
31, 1995 from $.8 million for the year ended December 31, 1994 due to
incremental goodwill amortization related to the Company's 1994 acquisitions.
Interest expense decreased to $1.8 million in 1995 from $1.9 million in 1994.
The decrease is due to the effect of the application of the proceeds from the
Company's IPO to reduce indebtedness. The provision for income taxes was at an
effective rate of 40.0% for the year ended December 31, 1995 and 40.7% for the
year ended December 31, 1994. The effective rates were higher than federal
statutory rates as a result of nondeductible goodwill amortization and state
income taxes.
22
<PAGE>
COMPARISON OF YEAR ENDED DECEMBER 31, 1994 TO COMBINED YEAR ENDED DECEMBER 31,
1993
Revenues
Revenues for the year ended December 31, 1994 increased $79.2 million, or
91.7%, to $165.5 million from $86.3 million for the combined year ended
December 31, 1993. Approximately $70 million of the increase was due to the
incremental effects of the acquisitions of Edgewood and Kalamazoo. The
remaining increase was from ongoing operations resulting from increased
business on models served by the Company. The balance out of the Ford
Tempo/Topaz in April 1994 and the reduction in Ford's Aerostar mini-van
production in May 1994 offset a portion of the benefits from the continued
recovery in the North American automotive market.
Cost of Sales
Cost of sales, as a percentage of revenues, increased to 86.4% for the year
ended December 31, 1994 compared to 83.8% for the combined year ended December
31, 1993. The Company's margins were lower than 1993 levels due to lower
margins associated with the acquired businesses, higher prices on certain non-
contract steel purchases and costs associated with the launch of new programs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $3.1 million, but
decreased from 5.1% of revenue for the combined year ended December 31, 1993
compared to 4.5% in 1994. The increased costs were reflective of the acquired
businesses and engineering and development activities associated with future
growth in new business.
Other
Amortization expenses increased to $.8 million in 1994 from $.2 million for
the combined year ended December 31, 1993 due to incremental goodwill
amortization related to the Company's 1994 acquisitions. Interest expense
increased to $1.9 million for the year ended December 31, 1994 from $.7 million
for the combined year ended December 31, 1993. The increase was, in part, the
result of additional borrowings to fund the Company's 1994 acquisitions and
higher interest rates on the Company's variable rate indebtedness, offset by
the effect of the application of the proceeds from the IPO to reduce
outstanding indebtedness. The provision for income taxes was at an effective
rate of 40.7% for the year ended December 31, 1994 and 42.3% for the combined
year ended December 31, 1993. The decrease was due primarily to the lower
relative impact of permanent differences on pretax income. The effective rates
were higher than federal statutory rates as a result of nondeductible goodwill
amortization and state income taxes.
SEASONALITY
The Company's performance is dependent on automotive vehicle production,
which is seasonal in nature. The third calendar quarter is historically the
weakest due to the impact of OEM plant shutdowns in July for vacation and model
changeovers.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company had approximately $39 million of indebtedness
outstanding under its Credit Agreement. In connection with the MSTI
Acquisition, the Company and its lenders amended the terms of the Credit
Agreement to permit the acquisition and the related financing arrangements. The
Credit Agreement, as amended, consists of a revolving credit facility with a
committed amount of $75.0 million (subject to eligible accounts receivable and
inventory, as defined in the Credit Agreement, which exceeded $75.0 million
after giving effect to the MSTI Acquisition). The Credit Agreement matures in
January 2001 and bears interest at variable rates equal to, at the Company's
option, either a prime-based rate or LIBOR plus a variable margin. The interest
rate under the revolving credit facility was 7.6% at May 31, 1996. The Credit
Agreement is secured by substantially all of the assets of the Company and
provides for the issuance of letters of credit to collateralize the outstanding
IRBs. At May 31, 1996, the Company had $25.3 million of indebtedness
outstanding under the
23
<PAGE>
revolving credit facility, including the amount borrowed at the time of the
MSTI Acquisition. The Company intends to use a portion of the net proceeds of
the Offering to repay all of its borrowings under the Credit Agreement.
At March 31, 1996, the Company also had $43.8 million of indebtedness
outstanding pursuant to IRBs issued with the City of Bardstown, Kentucky.
Proceeds from these IRBs were used to finance construction of a 240,000 square
foot manufacturing facility and the related purchase of equipment. The
Bardstown IRBs, which are due June 1, 2024 and March 1, 2025, are
collateralized by a letter of credit. As of March 31 1996, $29.2 million of
the proceeds had been expended or committed for the first phase of the
facility and related equipment. The unexpended proceeds from the Bardstown
IRBs of $14.6 million at March 31, 1996, are invested in treasury securities
and will be used to finance the second phase of the facility. These IRBs bear
interest at a floating rate which is adjusted weekly as determined by the bond
remarketing agent (5.5% at March 31, 1996 and 5.85% at December 31, 1995). The
second phase of the facility, which includes the purchase and installation of
additional processing equipment, is anticipated to be completed by the end of
1998.
At March 31, 1996, the Company had $3.6 million in outstanding indebtedness
relating to IRBs issued in connection with the construction of its Auburn,
Indiana plant. The Auburn IRBs are collateralized by a letter of credit,
certain equipment and a mortgage on the Company's Auburn, Indiana plant. The
Auburn IRBs are payable in annual installments of $720,000 through September
2000 and bear interest at a floating rate which is adjusted weekly as
determined by the bond remarketing agent (3.70% at March 31, 1996 and 5.85% at
December 31, 1995).
On January 16, 1996, the Company acquired all of the outstanding common
stock of Trylon for total cash consideration, including transaction costs, of
approximately $25 million. To finance the acquisition, the Company and its
lenders amended the Credit Agreement to provide, among other things, a $25.0
million term loan, which was repaid in May 1996 using a portion of the
proceeds from the sale of the Senior Notes and borrowings under the revolving
credit facility.
On May 6, 1996, the Company agreed to assume production of certain parts
previously manufactured at a non-acquired MascoTech facility and will make
payments to MascoTech equal to 5% of the revenues to be derived by the Company
during the first twelve months of production from each assumed purchase order
resourced to the Company. The Company will also acquire selected inventory,
tooling and production equipment used for such production at an estimated cost
of approximately $6 million. The purchased assets will be transferred to the
Company's existing facilities over the remainder of 1996.
On May 31, 1996, the Company purchased MSTI from MascoTech for an aggregate
purchase price of approximately $79 million (including payment of related fees
and expenses). The aggregate consideration paid by the Company consisted of
(i) 785,000 shares of Common Stock, (ii) $55.0 million in cash (subject to
working capital adjustments), and (iii) warrants to purchase an aggregate of
200,000 shares of Common Stock at an exercise price of $18.00 per share. In
addition, the Company issued a 7% promissory note in favor of MascoTech
payable approximately one year following the acquisition in an aggregate
principal amount of $5.0 million, which is subject to reduction based on the
operating profits of the MSTI facilities for the 12 months following the
acquisition. Pursuant to the terms of the acquisition, the Company is required
to make additional earn-out payments to MascoTech if certain operating targets
are achieved by the MSTI facilities in the first three years following the
acquisition. If all such operating targets are met, the earn-out payments will
not exceed $30.0 million less the principal amount of the promissory note
issued to MascoTech.
The Company financed the cash portion of the purchase price of MSTI through
the issuance in two series of Senior Notes having an aggregate principal
amount of $65.0 million. The $40.0 million of Series A Senior Notes have a
final maturity on June 1, 2006 and require annual principal payments
commencing on June 1, 2000 and continuing every year thereafter until their
final maturity. The $25.0 million of Series B Senior Notes have a final
maturity on June 1, 2008 and require annual principal payments commencing on
June 1, 2004 and continuing every year thereafter until their final maturity.
The Senior Notes require the Company to make semi-annual interest payments
commencing December 1, 1996. The Senior Notes are guaranteed by all of the
Company's significant subsidiaries.
24
<PAGE>
The Senior Notes rank pari passu with the Company's other senior secured
indebtedness and are ratably secured by the accounts receivable, inventory,
owned personal property and certain real property of the Company. On or after
June 30, 1996, at the Company's request, the collateral securing the Senior
Notes will be released in the event that (i) the Company's other senior
creditors which are, at that time, ratably secured by the collateral have
given their approval to such a release, (ii) the Company's consolidated
adjusted net worth is greater than $125.0 million and (iii) the Company has a
consolidated funded debt to consolidated total capitalization of not greater
than 50%. The net proceeds from the sale of the Senior Notes not used to
finance the MSTI Acquisition were used, together with borrowings under the
revolving credit facility portion of the Credit Agreement, to repay in full
the remaining balance outstanding on the $25.0 million term loan incurred by
the Company in connection with the Trylon Acquisition.
Following the consummation of the Offering contemplated hereby, the Company
expects to enter into the New Credit Agreement. Based upon discussions with
its principal lender, the Company expects that the New Credit Agreement will
provide for borrowings of up to $75 million and have a scheduled maturity in
June 2001. The New Credit Agreement will be unsecured and will generally
contain less restrictive covenants and better pricing terms than the Credit
Agreement. To date, no definitive agreements have been executed and no
assurance can be given that the New Credit Agreement will be executed on such
terms.
During the three months ended March 31, 1996 and the year ended December 31,
1995, the Company generated $6.8 million and $13.9 million, respectively, of
cash which was used to partially fund capital expenditures.
The Company has made substantial investments in manufacturing technology and
product design capability to support its products. Capital expenditures were
$2.3 million for the three months ended March 31, 1996 and $6.8 million in the
comparable period of 1995. The Company currently has budgeted $17.7 million
for capital expenditures in the remaining months of 1996 and $24.5 million for
1997, primarily for equipment and dedicated tooling purchases. Capital
expenditures in 1996 and 1997 are expected to be financed either with cash
generated from operations or borrowings under the Credit Agreement or the New
Credit Agreement, as the case may be.
The Company believes the borrowing availability under its Credit Agreement
or New Credit Agreement, as the case may be, together with funds generated by
operations and the remaining net proceeds from the Offering, should provide
the Company with the liquidity and capital resources to pursue its business
strategy through 1996, with respect to working capital, capital expenditures
and other operating needs. To fund additional acquisitions, the Company may
have to arrange for additional financing. Under present conditions, management
does not believe access to funds will restrict its ability to pursue its
acquisition strategy.
EFFECTS OF INFLATION
Inflation generally affects the Company by increasing the interest expense
of floating rate indebtedness and by increasing the cost of labor, equipment
and raw materials. Management believes that inflation has impacted the
Company's business over the past 18 months because of rising labor costs and
raw material costs, principally steel. Certain of the Company's contracts with
customers provide that increases in the Company's cost of raw materials may be
passed through to the customer, subject to certain limitations.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, a fair value
based method of accounting for employee stock options or similar equity
interests for fiscal years beginning after December 15, 1995. The Company has
concluded that it will not adopt the accounting requirements of SFAS No. 123,
but will conform to the disclosure requirements contained therein, which
require the disclosure of pro forma income and earnings per share information
as if this fair value method of accounting had been applied. This disclosure
will have no impact on the Company's results of operations or financial
position.
25
<PAGE>
BUSINESS
GENERAL
The Company is a leading designer and producer of high-quality, engineered
metal stampings and assemblies used by major North American OEMs, including
Ford, Honda, Chrysler, General Motors, Mazda, Toyota and Nissan. The Company's
products range from engineered mechanical parts, such as hood and deck lid
hinges and brake components, to large structural stampings and assemblies,
such as body pillars, chassis, suspension and floor pan components and major
housing assemblies. The majority of the Company's revenues are derived from
complex, high value-added products, primarily assemblies which generally
consist of multiple parts which the Company stamps and combines with various
welded or fastened components. The Company's revenues have grown rapidly
through a focused strategy of internal growth and a highly disciplined
acquisition program. Since 1993, revenues have increased from $86.3 million to
$222.8 million in 1995, a compound annual growth rate of approximately 61%.
On May 31, 1996, the Company acquired MSTI, a leading supplier of complex,
high value-added stampings used in chassis and suspension systems for North
American OEMs. The MSTI Acquisition expands the Company's product offerings to
include chassis and suspension components, increases the Company's product
content on several of the most popular light truck models and enhances new
business opportunities with OEMs. On a pro forma basis, the Company had
revenues of approximately $424 million in 1995, which the Company believes
makes it the third largest independent supplier of automotive stampings and
assemblies to North American OEMs.
The Company manufactures products for a wide variety of car and light truck
models, including nine of the ten best-selling vehicles in the United States
in 1995. Two of the Company's highest content per car models, the Ford Taurus
and the Honda Accord, have been the best-selling cars in the United States for
the past eleven years. In addition, two of the Company's highest content per
light truck models, the Ford Explorer and F-Series Pick-up, were the best-
selling sport utility vehicle and pick-up truck in North America in 1995. As a
result of its long history of high-efficiency/high-quality manufacturing and
extensive service capabilities as well as strategic acquisitions, the Company
has gained access to most OEMs and has become a long-term preferred supplier
to Ford, the Company's largest customer, as well as its other major customers.
In addition to receiving numerous quality awards, the Company has consistently
received one of Ford's highest commercial ratings for suppliers in its
stamping segment.
STRATEGY
The Company operates in the large and highly fragmented stamping segment of
the automotive supply industry, which has recently begun to undergo
significant consolidation. To lower costs and improve quality, OEMs are
reducing their supplier base by awarding sole-source contracts to full-service
stamping suppliers who are able to supply larger segments of a vehicle. OEMs'
criteria for supplier selection include not only cost, quality and
responsiveness, but also full-service design, engineering and program
management capabilities. In addition, suppliers increasingly will be required
by OEMs to deliver their products and services on a global basis. As a full-
service supplier with strong OEM relationships, the Company expects to benefit
from the continued consolidation within the automotive stamping segment.
The Company's strategy is designed to capitalize on the opportunities
created by the consolidation of stamping suppliers through continued internal
growth and pursuit of strategic acquisitions that complement its existing
business. The Company believes its strong customer relationships with OEMs
enable it to more quickly identify business opportunities and react to
customer needs during all stages of vehicle design.
26
<PAGE>
The key elements of the Company's strategy are:
Technical Design, Engineering and Program Management Capabilities. The
Company strives to maintain a technological advantage through investment in
research and product development, advanced engineering and program management.
The Company works with OEMs throughout the product development process from
concept vehicle and prototype development through the design and
implementation of manufacturing processes, in some cases by periodically
placing Company employees at customer facilities.
Efficient Manufacturing/Continuous Improvement Programs. In response to
OEMs' increasingly stringent demands, the Company has implemented
manufacturing practices designed to maximize quality and timeliness of
delivery and eliminate waste and inefficiency. The Company has continued to
upgrade its manufacturing technology and product design capability through
substantial investment in design and manufacturing equipment and highly-
trained engineering personnel.
Strategic Acquisitions. The Company believes that consolidation in the
stamping segment will continue to provide attractive opportunities to acquire
high-quality companies that complement its existing business. The Company
seeks to make acquisitions that (i) provide additional product, manufacturing
and technical capabilities, (ii) increase the number of models for which the
Company supplies products and the content supplied for existing models, (iii)
add new customers and (iv) broaden the Company's geographic coverage. Since
1993, the Company has acquired four businesses. The Company intends to seek
future acquisitions or develop strategic alliances that will strengthen the
Company's ability to supply its products on a global basis. While the Company
manages its manufacturing facilities, including acquired facilities, on a
decentralized basis, all advanced design/engineering, marketing and sales
functions are integrated in order to optimize customer relationships and
facilitate management of vehicle programs.
Broad Product Capabilities. The Company believes that its ability to offer a
broad range of products will provide the Company with a competitive advantage
as OEMs continue to consolidate their stamping suppliers. The Company's North
American content per vehicle has increased from $6.23 in 1993 to $14.92 in
1995, and $28.37 on a pro forma basis after giving effect to the acquisitions
of Trylon and MSTI. The MSTI Acquisition further broadens the Company's
product offerings into chassis and suspension components. The Company seeks to
increase volume by offering a broader range of its products to customers for
each vehicle model and by developing new products for customers.
Management and Workforce Incentives. The Company's management team has
extensive experience in supplying OEMs and has a significant stake in the
Company's success. After the Offering, the Company's management team will
continue to own approximately 16% of the Common Stock on a fully diluted
basis. To increase employee productivity, the Company utilizes incentive
programs for all salaried and hourly employees and provides incentives for
employees who take advantage of its continuous improvement programs and who
provide cost saving ideas. The Company's decentralized management style
encourages employee participation in refining and improving production
processes.
RECENT ACQUISITIONS
On May 31, 1996, the Company completed its most recent acquisition with the
purchase of MSTI from MascoTech. MSTI, a leading supplier of complex, high
value-added stampings used in chassis and suspension systems for North
American OEMs, had net revenues of $152.9 million in 1995. The Company paid an
aggregate of approximately $79 million for MSTI (including the payment of
related fees and expenses), plus additional earn-out payments if certain
operating targets are achieved by the MSTI facilities in the first three years
following the acquisition. In a separate transaction, the Company has agreed
to assume production of certain parts previously manufactured at a non-
acquired MascoTech facility and will make payments to MascoTech equal to 5% of
the revenues to be derived by the Company during the first twelve months of
production from each assumed purchase order resourced to the Company. The
Company will also acquire selected inventory, tooling and production equipment
used for such production at an estimated cost of approximately $6 million. The
purchased assets will be transferred to the Company's existing facilities over
the remainder of 1996.
27
<PAGE>
The Company believes that the MSTI Acquisition will provide the Company with
several strategic benefits, including the following:
Additional Product Offerings. The MSTI Acquisition has expanded the
Company's product offerings by adding complex, high value-added metal
stampings used in chassis and suspension systems. The Company believes that
its ability to produce a larger segment of a vehicle as a result of the MSTI
Acquisition will afford it with significant opportunities to increase sales as
OEMs continue to consolidate their supplier base.
Complementary New Technology. The MSTI Acquisition provides chassis and
suspension technology as well as providing substantial value-added processing
technologies including assembly, painting and welding. The Company believes
that these acquired technologies will provide significant additional
opportunities to both serve existing customers and secure new business.
Increased Model Penetration. As a result of the MSTI Acquisition, the
Company will increase its content per vehicle on key light trucks and sport
utility vehicles such as the Ford F-Series and Explorer and the Chrysler Grand
Cherokee as well as on high volume passenger cars such as the Ford
Taurus/Sable. As a result of this increased model penetration, the Company
believes that it will have greater opportunities to supply additional parts
for such models.
The MSTI Acquisition has enabled the Company to increase its content per
vehicle on the following models:
<TABLE>
<CAPTION>
CUSTOMER CAR MODELS TRUCK MODELS
-------- ---------- ------------
<S> <C> <C>
Ford Taurus/Sable, Econoline, Explorer, Villager, F-Series, Ranger,
Contour/Mystique, Escort Medium Trucks, Expedition
Chrysler Neon, Stratus/Cirrus Grand Cherokee, Voyager, Caravan, Ram Pick-up,
Dakota, Ram Van, Wrangler
General Motors Lumina C/K Truck, Blazer, Chevy Van, Suburban
Nissan Quest
</TABLE>
In January 1996, the Company acquired Trylon for approximately $25 million
in cash, including transaction costs. The Trylon Acquisition (i) broadened the
Company's product offerings to include small, precision metal stampings and
assemblies, which were previously outsourced to third parties, (ii)
established a significant relationship between the Company and General Motors
and (iii) increased content on Ford models, primarily the Villager. Trylon
generated $47.9 million in revenues in 1995.
In June 1994, the Company acquired Kalamazoo, a supplier of structural
stampings and assemblies that added a structural component to the Company's
product offerings and increased model penetration with Ford.
In May 1994, the Company acquired Edgewood, which added engineered
mechanical stampings, primarily hood and deck lid hinges, and structural
components to the Company's product offerings, increased model penetration
with the Company's existing customers and provided the Company with a
significant new customer, Mazda.
PRODUCTS
The Company's products consist primarily of unexposed structural stampings
and assemblies and engineered mechanical parts, many of which are critical to
the structural integrity of the vehicle. These stampings and assemblies are
attached directly to the frame of an automobile at the OEM assembly plant and
comprise the major structure of a vehicle. Mechanical components manufactured
by the Company, such as hood and deck lid hinges, are attached to larger
structural components. These parts use various grades and thicknesses of steel
including hot and cold rolled, galvanized, organically coated, stainless and
aluminized steel. The Company does not produce exposed sheet metal components,
such as exterior body panels. See "Suppliers and Raw Materials."
The Company's primary products are illustrated on the inside front cover
page of this Prospectus.
28
<PAGE>
Although a portion of the Company's stampings are sold directly to OEMs as
finished products, most are used by the Company to produce assemblies or final
products including multiple parts that are welded or otherwise fastened
together by the Company. In 1995, assemblies represented a majority of the
Company's revenues.
CUSTOMERS AND MARKETING
The North American automotive market is dominated by General Motors, Ford
and Chrysler, although Japanese and other foreign manufacturers have captured
a substantial portion of this market. The Company supplies its products
primarily to Ford, Honda, Chrysler, General Motors, Mazda, Toyota and Nissan.
The Company's customers award contracts that normally cover parts to be
supplied for a particular car model. Such contracts typically extend over the
life of the model, which is generally four to seven years and do not require
the purchase by the customer of any minimum number of parts. As a result, the
primary risk to the Company is that an OEM will produce fewer units of a model
than anticipated. The Company supplies parts for a broad cross-section of both
new and mature models, thereby reducing its reliance on any particular model.
For example, the Company supplies parts for substantially all models produced
by Ford, Honda and Chrysler. The following table presents an overview of the
major models for which the Company supplies products:
<TABLE>
<CAPTION>
CUSTOMER CAR MODELS TRUCK MODELS
-------- ---------- ------------
<S> <C> <C>
Ford Taurus/Sable, Contour/ Mystique, Econoline, Explorer, Villager,
Mustang, Escort, Crown Victoria, Aerostar, Windstar, F-Series,
Grand Marquis, Probe, Continental Ranger, Medium Trucks,
Expedition
Honda Accord, Civic, Acura Integra
Chrysler Concorde/Intrepid/Vision, Neon, Grand Cherokee, Voyager,
Viper, Stratus/Cirrus Caravan, Ram Pick-up,
Dakota, Ram Van, Wrangler
General Motors Cavalier, Sunfire, Grand Am, C/K Truck, Blazer,
Lumina, Grand Prix Chevy Van, Suburban
Mazda 626, MX6
Toyota Avalon, Camry Mini-van
Nissan Sentra Quest
</TABLE>
Most of the parts the Company produces have a lead time of two to five years
from product development to production. See "Design and Engineering Support."
Since 1988, the Company has been the leading supplier for hood and deck hinges
at Ford and Chrysler and is responsible for the design and production of such
products. The selling prices of these products are generally negotiated
between the Company and its customers and are typically not subject to a
competitive bid process.
The Company has been awarded new business (i.e., parts not previously
supplied by the Company) for the calendar year indicated for the models set
forth below:
<TABLE>
<CAPTION>
YEAR MODELS
---- ------
<S> <C>
1996.................... Ford Escort, Taurus/Sable, Chrysler Dakota, Acura Integra, Toyota Camry
1997.................... Ford Escort Coupe, Ranger, Continental, Honda Accord, Toyota Mini-van
1998.................... Ford Medium Truck, Lincoln
</TABLE>
Sales of the Company's products to OEMs are made directly by the Company's
sales and engineering force, headquartered at the technical center located in
Farmington Hills, Michigan. Through the technical center, the Company services
its OEM customers and manages its continuing programs of product design
improvement and development. The Company's sales and engineering force
consists of approximately 150 individuals, some of whom are periodically
placed at various customer facilities to facilitate the development of new
programs.
29
<PAGE>
DESIGN AND ENGINEERING SUPPORT
The Company strives to maintain a technological advantage through investment
in product development and advanced engineering capabilities. The Company's
engineering staff currently consists of approximately 140 full-time engineers
whose responsibilities range from research and development, advanced product
development, product design, testing and initial prototype development to the
design and implementation of manufacturing processes.
Because assembled parts must be designed at an early stage in the
development of new vehicles or model revisions, the Company is increasingly
given the opportunity to utilize its product engineering resources early in
the planning process. Advanced development engineering resources create
original engineering designs, computer-aided designs, feasibility studies,
working prototypes and testing programs to meet customer specifications. The
Company's advanced development capabilities have resulted in several
innovations in hinge design that have provided significant benefits to the
Company's customers. These include, among others, adjustable single pivot
hinges, multi-link hinges, lift-assisted deck hinges and an integrated hood
catcher. The Company also has full service design capability for chassis
components.
The Company's manufacturing engineering capabilities enable it to design and
build high-quality and efficient manufacturing systems, processes and
equipment and to continually improve its production processes and equipment.
The Company's manufacturing engineers are located at each of its manufacturing
facilities.
MANUFACTURING AND FACILITIES
Stamping involves passing metal through dies in a stamping press to form the
metal into three-dimensional parts. The Company produces stamped parts using
precision single-stage, progressive and transfer presses, ranging in size from
150 to 2000 tons, which perform multiple functions as raw material proceeds
through the press and is converted into a finished product. A single-stage
press performs a single processing function to a piece of metal. A progressive
press leaves a thin band of connecting metal in place, which permits the
ultimate part to progress through the different stages of the press during the
stamping process. A transfer press is used in conjunction with a mechanical
transfer system, which transfers only the metal part through the various
stages of the press. A transfer press is designed to maximize raw material
utilization by eliminating the need to leave a thin band of connecting metal
in place during the stamping process. Approximately 15% of the Company's
presses are transfer presses, with the remaining 85% being either hand-fed,
tandem or progressive press machines. The Company continually invests in its
press technology to increase flexibility, improve safety and minimize die
changeover time. During 1995, the Company's employees trained on improving die
changeover times. For example, at the Auburn, Indiana manufacturing facility,
a team of employees reduced die changeovers of a 500-ton press from 109
minutes in July 1995 to approximately 14 minutes by January 1996. The faster
changeover times have allowed the Company to increase its product throughput
and to reduce its employee overtime.
After forming is completed, stampings that are to be used in assemblies are
placed in work-in-progress staging areas from which they are fed into cell-
oriented assembly operations that produce complex, value-added assemblies
through the combination of multiple parts that are welded or fastened
together. The Company's assembly operations are performed on either dedicated,
high-volume welding/fastening machines or on flexible-cell oriented robotic
lines for units with lower volume production runs. The assembly machines
attach additional parts, fixtures or stampings to the original metal
stampings. In addition to standard production capabilities, the Company's
assembly machines are also able to perform various statistical control
functions and identify improper welds and attachments. The Company continually
works with manufacturers of fixed/robotic welding systems to develop faster,
more flexible machinery. Several of the Company's welding systems were
designed by the Company.
A significant component of the Company's continuous improvement program is
the formation of Kaizen teams. Kaizen teams are groups of seven to ten people
which meet bi-monthly for periods of two to four days to solve specific
manufacturing issues. Issues dealt with by the Kaizen teams are determined by
a steering
30
<PAGE>
committee. Kaizen teams have the autonomy to redesign the manufacturing process
and the authority and funds to implement recommended changes throughout the
Company.
OEMs have established quality rating systems involving rigorous inspections
of suppliers' facilities and operations. OEMs' factory rating programs provide
a quantitative measure of a company's success in improving the quality of its
operations. The Company has received quality awards from Ford (Q1) and Chrysler
(Pentastar) and has consistently received one of Ford's highest commercial
ratings for suppliers in the stamping segment. The automotive industry has
recently adopted a quality rating system known as QS-9000. The Company is
currently in the process of becoming QS-9000 certified, which it expects to
complete by the end of 1996.
The Company maintains several manufacturing facilities located in close
proximity to many of the high-volume vehicle assembly plants in the United
States. One of the primary goals of the new Bardstown facility is to satisfy
the just-in-time delivery requirements of Toyota in Georgetown, Kentucky;
Nissan in Smyrna, Tennessee; and Ford in Louisville, Kentucky.
The following table provides information regarding the Company's principal
facilities.
<TABLE>
<CAPTION>
DATE
SQUARE TYPE OF DESCRIPTION ACQUIRED OR
LOCATION FOOTAGE INTEREST OF USE FIRST OCCUPIED
- -------- ------- -------- ------------------------- --------------
<S> <C> <C> <C> <C>
Bardstown, Kentucky..... 240,000 Owned Manufacturing 1995
Kalamazoo, Michigan 222,000 Owned/ Manufacturing/ 1994
(3 locations).......... Leased Warehouse/Office
Traverse City, Michigan 220,000 Owned Manufacturing 1996
(4 locations)..........
Greenville, Michigan.... 160,000 Owned Manufacturing/Office 1993
Auburn, Indiana......... 132,000 Owned Manufacturing/Office 1993
Kendallville, 132,000 Owned Manufacturing 1996
Indiana(1).............
Romulus, Michigan....... 115,000 Leased Manufacturing/Office 1994
Bluffton, Ohio(1)....... 102,000 Owned Manufacturing 1996
Rochester Hills, 89,000 Leased Office/Engineering/Design 1996
Michigan(1)............
Manchester, Michigan.... 61,000 Owned Manufacturing 1994
Upper Sandusky, Ohio(1). 56,000 Owned Manufacturing 1996
Grand Rapids, Michigan.. 23,000 Leased Operating Headquarters 1993
Farmington Hills, 12,000 Leased Engineering/Design 1994
Michigan...............
Minneapolis, Minnesota.. 5,700 Leased Corporate Headquarters 1993
</TABLE>
- --------
(1) Acquired in connection with the MSTI Acquisition.
Management believes that substantially all of its property and equipment is
in good condition. In order to increase efficiency, the Company expects to make
capital expenditures for equipment upgrades at the facilities recently acquired
in the MSTI Acquisition. See "Management's Discussion and Analysis of Results
of Operations and Financial Condition--Liquidity and Capital Resources."
In order to increase capacity to meet anticipated needs, the Company has
constructed a 240,000 square foot manufacturing facility in Bardstown,
Kentucky. This facility is being equipped in two phases. Phase one, which
included construction of the basic structure and installation of a portion of
the equipment, has been completed and the Company began shipping products from
the facility in the third quarter of 1995. Phase one of the new facility is
being used primarily to accommodate new business awards, including the redesign
of the Ford Taurus/Sable and the Ford Escort. Phase two of the Bardstown
facility, which includes the purchase and installation of additional production
equipment, is anticipated to be completed by the end of 1998. As of March 31,
1996, the Company had $14.6 million of restricted cash from the issuance of
IRBs to finance phase two of the Bardstown facility. The new facility is
currently operating at 50% of phase one capacity, which the Company expects to
increase as the facility ramps up production.
31
<PAGE>
The Company believes that its existing facilities will be adequate to meet
its production demands for the foreseeable future. The Company's facilities
were specifically designed for the manufacturing of the Company's products.
The utilization and capacity of such facilities are dependent upon the mix of
products being produced by the Company.
COMPETITION
As a result of the MSTI Acquisition, the Company believes it is the third
largest independent supplier of automotive stampings and assemblies to North
American OEMs based on net sales. The Company operates in a highly
competitive, fragmented environment, with a limited number of competitors
generating revenues in excess of $200 million. The number of the Company's
competitors has decreased in recent years and is expected to continue to
decrease due to the supplier consolidation resulting from changing OEM
policies. The Company's largest competitors include The Budd Company, a
subsidiary of Thyssen AG ("Budd"), Magna International Inc. ("Magna"), Midway
Products Corp., Modern Tool & Die Co., L&W Engineering and divisions of OEMs
with internal stamping and assembly operations, all of which have substantial
financial resources.
The Company principally competes for new business both at the beginning of
the development of new models and upon the redesign of existing models. New
model development generally begins two to five years before the marketing of
such models to the public. Once a producer has been designated to supply parts
for a new program, an OEM usually will continue to purchase those parts from
the designated producer for the life of the program, although not necessarily
for a redesign. Competitive factors in the market for the Company's products
include product quality and reliability, cost and timely delivery, technical
expertise and development capability, new product innovation and customer
service.
The Company competes with Magna across most of the Company's product lines,
while the Company competes with its other significant competitors in various
segments of its product lines. For example, the Company competes with Budd for
large stampings, while it competes with ITT Automotive for hinge business.
Aetna Industries, Active Tool & Die Co., AG Simpson, Lobdell-Emory Mfg. Co.
and L&W Engineering compete with the Company for medium-size structural
stampings.
SUPPLIERS AND RAW MATERIALS
The primary raw material used to produce structural stampings and assemblies
is steel. The Company purchases hot- and cold-rolled, galvanized, organically
coated, stainless and aluminized steel from a variety of suppliers. The
Company employs just-in-time manufacturing and sourcing systems enabling it to
meet customer requirements for faster deliveries while minimizing its need to
carry significant inventory levels. The Company has not experienced any
significant shortages of raw materials and normally does not carry inventories
of raw materials or finished products in excess of those reasonably required
to meet production and shipping schedules. Raw materials accounted for
approximately 53% of the Company's revenues in 1995 and steel accounted for
approximately 70% to 75% of raw material costs in 1995.
Honda and Chrysler purchase all of the steel used by the Company for their
models directly from steel producers. The Company anticipates that Ford will
begin purchasing steel directly from steel producers for the Company during
1996. As a result, the Company will have minimal exposure to changes in steel
prices for parts supplied to Ford, Honda and Chrysler, which collectively
represented 93% of the Company's revenues in 1995.
The Company expects that the content level of metal in cars and light trucks
will remain constant or increase slightly due to the trend toward increased
vehicle size and a greater emphasis on metal recycling. Although the search
for improved fuel economy and weight reduction has resulted in attempts to
reduce the sheet metal content of light vehicles, an efficient, cost-effective
substitute for steel used in the Company's products has not been found. While
various polymers have been used recently for fenders, hoods and decks, such
products do not have the inherent strength or structural integrity to be used
for structural components. The Company is involved in an ongoing evaluation of
the potential for the use of aluminum and of specialty steel in its products.
32
<PAGE>
Other raw materials purchased by the Company include dies, fasteners,
tubing, springs, rivets and rubber products, all of which are available from
numerous sources.
EMPLOYEES
Immediately following the completion of the MSTI Acquisition, the Company
had approximately 2,700 employees, including approximately 800 former MSTI
employees. The Company believes that its future success will depend in part on
its ability to continue to recruit, retain and motivate qualified personnel at
all levels of the Company. The Company has instituted a large number of
employee programs to increase employee morale and expand the employees'
participation in the Company's business, including the formation of Kaizen
teams. The Company has approximately 1,100 hourly employees represented by
labor unions, including 120 former MSTI employees who voted to be represented
by the UAW shortly before the MSTI Acquisition. The Company has not
experienced any work stoppages and considers its relations with its employees
to be good.
ENVIRONMENTAL MATTERS
The Company believes it conducts its operations in substantial compliance
with applicable environmental and occupational health and safety laws. The
Company does not expect to incur material capital expenditures for
environmental compliance during its current or succeeding fiscal year.
However, as is the case with manufacturers in general, if a release of
hazardous substances occurs on or from the Company's properties or at any
associated offsite disposal location, or if contamination from prior
activities is discovered at any of the Company's properties, the Company may
be held liable and the amount of such liability could be material. In
connection with the Trylon and MSTI Acquisitions, MascoTech has agreed to
indemnify the Company for certain environmental matters, including replacement
of underground storage tanks at the Traverse City facilities and any
remediation that may be required at the Kendallville facility.
LEGAL PROCEEDINGS
The Company is not currently involved in any material lawsuits. The Company
believes it maintains adequate insurance, including product liability
coverage. The Company historically has not been required to pay any material
liability claims.
33
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
S.A. Johnson............ 56 Chairman and Director
Adrian Vander Starre.... 63 Vice Chairman and Director
Dugald K. Campbell...... 49 President, Chief Executive Officer and Director
James R. Lozelle........ 50 Executive Vice President and Director
Michael W. Doherty...... 53 Vice President
Anthony A. Barone....... 46 Vice President and Chief Financial Officer
Paul D. Rysenga......... 54 Vice President
Ronald E. Gavalis....... 58 Vice President
Scott D. Rued........... 39 Vice President, Corporate Development and Director
Luigi Candusso.......... 46 Vice President
</TABLE>
S.A. (Tony) Johnson has served as Chairman and a Director of the Company
since April 1993. Mr. Johnson is the founder, Chief Executive Officer and
President of Hidden Creek Industries ("Hidden Creek"), a private industrial
management company based in Minneapolis which has provided certain management
and other services to the Company. Mr. Johnson is also the Managing Partner of
J2R Partners ("J2R"). Prior to forming Hidden Creek, Mr. Johnson served from
1985 to 1989 as Chief Operating Officer of Pentair, Inc., a diversified
industrial company. From 1981 to 1985, Mr. Johnson was President and Chief
Executive Officer of Onan Corp., a diversified manufacturer of electrical
generating equipment and engines for commercial, defense and industrial
markets. Mr. Johnson served as Chairman and a director of Automotive
Industries Holding, Inc. from May 1990 to August 1995.
Adrian Vander Starre has served as Vice Chairman and a Director of the
Company since April 1993. Mr. Vander Starre served as President, Chief
Executive Officer and a director of the Predecessor from 1978 to 1993. Mr.
Vander Starre originally joined the Predecessor in 1965 as Controller and
later served as Treasurer from 1974 to 1978. Mr. Vander Starre has entered
into a consulting agreement with the Company under which he performs such
duties as may be assigned by the Board of Directors.
Dugald K. Campbell has served as President and Chief Executive Officer of
the Company since December 1993. From 1991 to 1993, Mr. Campbell served as a
consultant to Hidden Creek. From 1988 to 1991, he served as Vice President and
General Manager of the Sensor Systems Division of Siemens Automotive, a
manufacturer of engine management systems and components. From 1972 to 1988,
he held various executive, engineering and marketing positions with Allied
Automotive, a manufacturer of vehicle systems and components and a subsidiary
of Allied Signal Corporation.
James R. Lozelle has served as Executive Vice President for the Tower
Automotive Technical Center, with responsibility for advanced product
development and customer service, and a Director of the Company since the
Company's acquisition of Edgewood in May 1994. In such capacity, Mr. Lozelle
has also assumed responsibility for the MSTI technical center. Mr. Lozelle
served as President of Edgewood from 1982 until it was acquired by the
Company. Mr. Lozelle joined Edgewood in 1970 and served as Vice President from
1971 to 1982. Mr. Lozelle is past chairman of the Precision Metalforming
Association ("PMA"), the leading stamping industry trade association, and past
chairman of the PMA's Government Affairs Committee.
Michael W. Doherty has served as Vice President, with responsibility for
program management and overall business planning including global strategy,
since April 1993. From October 1992 until April 1993, Mr. Doherty served as
Senior Vice President of the Predecessor, with responsibility for sales and
engineering. From 1978 to 1992, Mr. Doherty served as the Predecessor's Vice
President, Sales and Engineering.
34
<PAGE>
Anthony A. Barone has served as Vice President and Chief Financial Officer
since May 1995. From 1984 to 1995, Mr. Barone served as Chief Financial
Officer of O'Sullivan Corporation, a manufacturer of interior trim components
for the automotive industry.
Paul D. Rysenga has served as Vice President of the Company, with
responsibility for the Company's operations in Greenville, Romulus and
Traverse City, Michigan, since October 1995. Mr. Rysenga is also responsible
for the newly acquired MSTI operating facilities. From June 1994 to October
1995, Mr. Rysenga had responsibility for the Company's operations in Auburn,
Indiana. From July 1991 to June 1994, Mr. Rysenga served as Executive Vice
President and General Manager at Kalamazoo. From 1988 to July 1991, Mr.
Rysenga was Executive Director of Eastman Sterling Pharmaceutical, a division
of Eastman Kodak.
Ronald E. Gavalis has served as Vice President of the Company, with
responsibility for capacity planning, quality operating systems and QS-9000
certification, since April 1995. From June 1994 to April 1995, Mr. Gavalis had
responsibility for the Company's Greenville, Michigan operations. Mr. Gavalis
joined the Predecessor in 1983 as Director of Manufacturing, and served as the
Predecessor's Vice President, Manufacturing, from 1985 until 1989 and as its
Vice President, Operations, from 1989 until June 1994.
Scott D. Rued has served as Vice President, Corporate Development, and a
Director of the Company since April 1993. Mr. Rued served as Vice President,
Chief Financial Officer and a Director of Automotive Industries Holding, Inc.
from April 1990 to August 1995. Mr. Rued, a partner of J2R, has also served as
Executive Vice President and Chief Financial Officer of Hidden Creek since
January 1994 and served as its Vice President--Finance and Corporate
Development from June 1989 through 1993. Mr. Rued is also a director of The
Rottlund Company, Inc., a corporation engaged in the development and sale of
residential real estate.
Luigi Candusso has served as Vice President of the Company, with
responsibility for the Company's operations in Kalamazoo, Michigan and
Bardstown, Kentucky, since April 1995. Since October 1995, Mr. Candusso has
also had responsibility for the Company's operations in Auburn, Indiana. From
1990 to April 1995, Mr. Candusso served as Vice President and General Manager
of the Sensor Systems Division of Siemens Automotive, a manufacturer of engine
management systems and components. From 1988 to 1990, Mr. Candusso served as
Vice President of Operations of Fabricated Steel Products (FABCO), a division
of Indal Canada.
35
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
Unless otherwise noted, the following table sets forth certain information
regarding ownership of the Common Stock as of June 14, 1996 and after
completion of the Offering by (i) the beneficial owners of more than 5% of the
Common Stock of the Company, (ii) all Directors and executive officers of the
Company, (iii) all Directors and executive officers of the Company as a group
and (iv) the Selling Stockholders. To the knowledge of the Company, each of
such stockholders has sole voting and investment power as to the shares shown
unless otherwise noted. Beneficial ownership of the Common Stock listed in the
table has been determined in accordance with the applicable rules and
regulations promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act").
<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO OWNED AFTER THE
DIRECTORS, EXECUTIVE THE OFFERING SHARES TO BE OFFERING (1)
OFFICERS ----------------- SOLD IN THE -----------------
AND 5% STOCKHOLDERS NUMBER PERCENT OFFERING NUMBER PERCENT
- -------------------- --------- ------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
Onex (2)(3)................. 6,641,716 56.0% 1,750,000 4,021,716 28.8%
MascoTech, Inc. (4)......... 985,000 8.2 600,000 385,000 2.7
J2R Partners (5)............ 593,149 5.0 -- 593,149 4.3
First Bank Systems, Inc.
(6)........................ 595,900 5.0 -- 595,900 4.3
S.A. Johnson (5)(7)......... 798,701 6.7 66,666 (8) 732,035 5.2
Adrian Vander Starre (9).... 38,702 * -- 38,702 *
Dugald K. Campbell (10)..... 238,989 2.0 -- 238,989 1.7
James R. Lozelle (11)....... 436,751 3.6 100,000 336,751 2.4
Michael W. Doherty (12)..... 278,470 2.3 25,000 253,470 1.8
Anthony A. Barone........... 6,000 * -- 6,000 *
Paul D. Rysenga............. 3,400 * -- 3,400 *
Ronald E. Gavalis........... 72,294 * -- 72,294 *
Scott D. Rued (5)(13)....... 644,519 5.4 16,666 (8) 627,853 4.5
Luigi Candusso.............. 6,000 * -- 6,000 *
W.H. Clement (5)(14)........ 711,926 6.0 -- 711,926 5.1
Eric J. Rosen (2)........... 10,000 * -- 10,000 *
Matthew O. Diggs, Jr. (15).. 6,000 * -- 6,000 *
Kim B. Clark................ -- -- -- -- --
F.J. Loughrey............... 1,000 * -- 1,000 *
All Directors and executive
officers as a group (15
persons)................... 2,066,454 16.9 208,332 1,858,122 13.1
OTHER SELLING STOCKHOLDERS:
Robert R. Hibbs (5)(16)..... 634,259 5.4 5,556 (8) 628,703 4.5
Mary L. Johnson (5)(17)..... 612,593 5.2 5,556 (8) 607,037 4.4
Carl E. Nelson (5)(18)...... 635,371 5.4 5,556 (8) 629,815 4.5
Doherty Charitable Remainder
Trust #3 (19) ............. 45,000 * 45,000 -- --
</TABLE>
- --------
*Less than one percent.
(1) Does not reflect the exercise of the Underwriters' over-allotment option
and does not give effect to any purchases, if any, by such persons in the
Offering. In the event the over-allotment option is exercised in full,
the Company, Onex and the partners of J2R in the aggregate (excluding Mr.
Clement) will sell an additional 403,000, 275,000 and 15,000 shares,
respectively, in the Offering.
(2) Prior to the Offering, Onex had shared voting power of 6,641,716 shares
and sole dispositive power of 3,531,778 shares. Upon completion of the
Offering, Onex is expected to have shared voting power with respect to
4,021,716 shares and sole dispositive power of 1,781,778 shares. See
Footnote 3. Eric J. Rosen, a Director of the Company, is Managing
Director of Onex Investment Corp. and disclaims beneficial ownership of
all shares of Common Stock owned by Onex. The record holder of such
shares listed in the table as owned by Onex is ONEX DHC LLC, an affiliate
of Onex ("Onex DHC"). Onex DHC and Onex Investment Corp. are both wholly
owned subsidiaries of Onex Corporation. The address for Onex DHC, Onex
and Mr. Rosen is c/o Onex Investment Corp., 712 Fifth Avenue, 40th Floor,
New York, New York 10019.
(3) Onex, J2R, MascoTech, Messrs. Johnson, Vander Starre, Campbell, Lozelle,
Doherty, Gavalis, Rued, Clement and certain of the Company's other
existing stockholders have entered into agreements pursuant to which such
stockholders agreed to vote their shares of the Company's voting stock in
the same manner as Onex votes its shares on all matters presented to the
Company's stockholders for a vote and, to the extent permitted by law,
granted to Onex a proxy to effectuate such agreement.
(Footnotes continued on following page)
36
<PAGE>
(4) Represents 785,000 shares and the MSTI Warrants to purchase 200,000
shares of Common Stock that were issued to MascoTech in connection with
the MSTI Acquisition. The address for MascoTech is 21001 Van Born Road,
Taylor, Michigan 48180.
(5) On June 12, 1996, J2R distributed an aggregate of 111,111 shares of
Common Stock to its partners, of which 100,000 shares will be sold in the
Offering. The partners of J2R are S.A. Johnson, Scott D. Rued, W. H.
Clement, Robert R. Hibbs, Mary L. Johnson and Carl E. Nelson. The address
for J2R is c/o Tower Automotive, Inc., 4508 IDS Center, Minneapolis,
Minnesota 55402.
(6) First Bank Systems, Inc. reported as of December 31, 1995 sole voting and
dispositive power with respect to 595,900 shares of Common Stock, which
represented approximately 5.1% of the outstanding Common Stock at that
time. The address for First Bank Systems, Inc. is 601 2nd Avenue South,
Minneapolis, Minnesota 55402.
(7) Includes the shares owned by J2R, of which Mr. Johnson is Managing
Partner, and 205,552 shares owned by Mr. Johnson. The address for Mr.
Johnson is c/o Tower Automotive, Inc., 4508 IDS Center, Minneapolis,
Minnesota 55402.
(8) Reflects the shares of Common Stock received upon the distribution from
J2R for sale in the Offering.
(9) Includes 38,702 shares held in an irrevocable trust for the benefit of
Mr. Vander Starre's children as to all of which Mr. Vander Starre's
children are the trustees. Mr. Vander Starre disclaims beneficial
ownership of the shares held in trust.
(10) Includes 7,800 shares owned by Mr. Campbell's wife, 350 shares owned by
Mr. Campbell's child and 78,000 shares held in an annuity trust, of which
Mr. Campbell is the trustee. Mr. Campbell disclaims beneficial ownership
of the shares held by his wife, his child and in trust.
(11) Includes 396,000 shares of Common Stock issuable upon the conversion of
Convertible Notes and 37,578 shares issuable upon the exercise of
currently exercisable options held by Mr. Lozelle prior to the Offering.
Does not include options to purchase 65,406 shares of Common Stock held
by Mr. Lozelle as a result of such options not being exercisable within
60 days. The shares of Common Stock to be sold by Mr. Lozelle in the
Offering will be issued as a result of the conversion of certain of the
Convertible Notes.
(12) Includes 275,970 shares owned by Mr. Doherty and 2,500 shares issuable
upon the exercise of currently exercisable options held by Mr. Doherty.
(13) Includes the shares owned by J2R, of which Mr. Rued is a partner, and
51,370 shares owned by Mr. Rued. Mr. Rued disclaims beneficial ownership
of the shares owned by J2R. Mr. Rued's address is c/o Tower Automotive,
Inc., 4508 IDS Center, Minneapolis, Minnesota 55402.
(14) Includes the shares owned by J2R, of which Mr. Clement is a partner,
88,077 shares owned by Mr. Clement and an aggregate of 30,700 shares held
in trusts for the benefit of Mr. Clement's grandchildren, as to all of
which trusts Mr. Clement serves as the sole trustee. Mr. Clement
disclaims beneficial ownership of the shares owned by J2R and the shares
held in trust. The address for Mr. Clement is c/o Tower Automotive, Inc.,
4508 IDS Center, Minneapolis, Minnesota 55402.
(15) Includes 6,000 shares owned by EJJM Partnership, of which Mr. Diggs is
the General Partner. Mr. Diggs disclaims beneficial ownership of the
shares owned by EJJM Partnership.
(16) Includes the shares owned by J2R, of which Mr. Hibbs is a partner and
41,110 shares owned by Mr. Hibbs. Mr. Hibbs disclaims beneficial
ownership of the shares owned by J2R.
(17) Includes the shares owned by J2R, of which Ms. Johnson is a partner and
19,444 shares owned by Ms. Johnson. Ms. Johnson disclaims beneficial
ownership of the shares owned by J2R.
(18) Includes the shares owned by J2R, of which Mr. Nelson is a partner and
42,222 shares owned by Mr. Nelson. Mr. Nelson disclaims beneficial
ownership of the shares owned by J2R.
(19) Represents shares that were donated by Mr. Doherty and his spouse to such
trust prior to the Offering.
The Company will pay all expenses of the Offering attributable to the
Selling Stockholders other than underwriting discounts and commissions and
legal fees and expenses that may be incurred by certain of the Selling
Stockholders. The Company, Onex and the partners of J2R in the aggregate
(excluding Mr. Clement) have each granted the Underwriters an option to
purchase up to an additional 403,000, 275,000 and 15,000, respectively, shares
of Common Stock solely to cover over-allotments in the sale of the shares in
the Offering.
J2R will distribute additional shares of Common Stock to its partners for
their sale to the Underwriters in the event the Underwriters' over-allotment
option is exercised.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, Onex and certain stockholders, including J2R and its partners,
S. A. Johnson, Scott D. Rued, W. H. Clement, Robert R. Hibbs, Mary L. Johnson
and Carl E. Nelson (collectively, the "J2R Investors"), and Mr. Lozelle and
his brother, are parties to a registration agreement pursuant to which the
Company has granted such stockholders rights to register their shares of
Common Stock.
The Company, Onex, Messrs. Doherty and Lozelle and certain other members of
management are parties to a Management Stockholders Agreement pursuant to
which each individual has agreed to vote his or its shares in the same manner
that Onex votes its shares of Common Stock. The Management Stockholders
Agreement will terminate by its terms if Onex and its affiliates holds less
than one-fifth of all outstanding shares of Common Stock. In addition, the
Company, Onex, J2R and the J2R Investors and certain other investors are
parties to an Investor Stockholders Agreement pursuant to which each party has
agreed to vote his or its shares in the same manner that Onex votes its shares
of Common Stock.
37
<PAGE>
The Company leases its Romulus, Michigan manufacturing facility from 8900
Inkster Associates, a partnership of which Mr. Lozelle holds a 46.7%
partnership interest. The lease expires February 28, 1999. The expense under
this lease was $454,000 for the year ended December 31, 1995. The Company
believes the terms of the lease agreement are no less favorable than could have
been obtained pursuant to arm's length transactions with unaffiliated parties.
In April 1993, the Company paid Hidden Creek $500,000 for services in
connection with the R.J. Tower Acquisition and entered into a Management
Agreement with Hidden Creek, a partnership affiliated with Onex, J2R and the
J2R Investors, pursuant to which Hidden Creek has provided strategic direction,
management and financial services to the Company. In 1993 and 1994, Hidden
Creek received $354,170 and $333,000, respectively, for providing such
services. The Management Agreement was terminated upon the completion of the
Company's IPO. In May 1994, the Company paid Hidden Creek $250,000 for services
in connection with the acquisition of Edgewood. In addition, Hidden Creek
received a fee from the Company of $250,000 for services in connection with the
acquisition of Kalamazoo.
In May 1994, the following stockholders acquired shares of Common Stock as
set forth below:
<TABLE>
<CAPTION>
NUMBER AGGREGATE
NAME OF SHARES CONSIDERATION
---- --------- -------------
<S> <C> <C>
Onex.............................................. 788,831 $ 2,543,599
J2R............................................... 197,207 4,176
S.A. Johnson...................................... 32,329 83,534
Scott D. Rued..................................... 12,931 33,413
Robert R. Hibbs................................... 12,931 33,413
Mary L. Johnson................................... 3,232 8,351
Carl E. Nelson.................................... 9,698 25,059
</TABLE>
Onex and J2R are parties to a Co-Investment Agreement pursuant to which they
have agreed to an allocation of the purchase price of their investments. As a
result of this allocation, the combined price per share paid by Onex and J2R in
connection with the purchase of the above-described shares is the same price
per share paid by all other stockholders acquiring shares at such time.
In May 1994, the Company and Mr. Lozelle entered into an Employment Agreement
in connection with the acquisition of Edgewood. The Employment Agreement
provides that Mr. Lozelle shall serve as an Executive Vice President of the
Company until May 4, 1999 or his earlier resignation, death, disability or
termination. The Employment Agreement also provides that Mr. Lozelle will
receive an annual base salary of $200,000 plus annual bonus of up to 30% of his
annual base salary for attaining goals developed by the Company's Board of
Directors and Mr. Lozelle. In May 1994, Mr. Lozelle and the Company also
entered into a Stock Option Agreement pursuant to which Mr. Lozelle was granted
an option to purchase 102,984 shares of Common Stock at an exercise price of
$6.55 per share. The option vests and becomes exercisable with respect to one-
third of the shares covered on each of May 4, 1996, 1997 and 1998; provided
that Mr. Lozelle is still employed by the Company on each such date. In May
1994 in connection with the acquisition of Edgewood, Mr. Lozelle also received
$4,366,094 in cash and $2,407,361 in principal amount of Convertible Notes. Mr.
Lozelle's brother received $2,411,654 in cash and $1,415,222 in principal
amount of Convertible Notes. The shares of Common Stock to be sold by Mr.
Lozelle in the Offering will be issued as a result of the conversion of certain
Convertible Notes.
Messrs. Johnson and Rued provide the Company with strategic direction,
management and financial services with an annual allocation of salary costs of
$200,000 and $100,000, respectively, and will be eligible for performance-based
bonuses of up to 50% of their base salaries.
In connection with the MSTI Acquisition, the Company and MascoTech entered
into an agreement pursuant to which the Company agreed to permit MascoTech to
participate in this Offering and to use its best efforts to
38
<PAGE>
cause a shelf registration statement relating to MascoTech's remaining shares
(including shares issuable upon exercise of the MSTI Warrants) to be filed and
declared effective under the Securities Act within 120 days following this
Offering. In addition, MascoTech is entitled to include its shares of Common
Stock, at the Company's expense, in any registration statement filed by the
Company to register any of its securities under the Securities Act, subject to
certain conditions. The Company has agreed to indemnify MascoTech against
certain liabilities, including liabilities under the Securities Act, in
connection with such registrations. Under this agreement, MascoTech has agreed
to vote its shares of Common Stock in the same manner as Onex votes its shares
until the earlier of the date on which MascoTech transfers such shares or May
31, 2006.
UNDERWRITING
The Underwriters named below, for whom PaineWebber Incorporated, Robert W.
Baird & Co. Incorporated and Piper Jaffray Inc. are acting as representatives
(collectively, the "Representatives"), have severally agreed, subject to the
terms and conditions of the Underwriting Agreement, by and among the Company,
the Selling Stockholders and the Representatives (the "Underwriting
Agreement") (a copy of which is filed as an exhibit to the Registration
Statement, of which this Prospectus is a part), to purchase from the Company
and the Selling Stockholders, and the Company and the Selling Stockholders
have agreed to sell, the respective number of shares of Common Stock set forth
opposite their names below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
PaineWebber Incorporated........................................... 1,055,500
Robert W. Baird & Co. Incorporated................................. 1,055,500
Piper Jaffray Inc.................................................. 1,055,500
A. G. Edwards & Sons, Inc. ........................................ 135,000
Goldman, Sachs & Co. .............................................. 135,000
Lehman Brothers Inc. .............................................. 135,000
Schroder Wertheim & Co. Incorporated............................... 135,000
Smith Barney Inc. ................................................. 135,000
Cleary Gull Reiland & McDevitt Inc. ............................... 86,500
Dain Bosworth Incorporated......................................... 86,500
Fahnestock & Co. Inc. ............................................. 86,500
John G. Kinnard and Co., Inc. ..................................... 86,500
Ladenburg, Thalmann & Co. Inc. .................................... 86,500
Pennsylvania Merchant Group, Ltd. ................................. 86,500
Roney & Co. ....................................................... 86,500
Stifel, Nicolaus & Company Incorporated............................ 86,500
Unterberg Harris................................................... 86,500
---------
Total.......................................................... 4,620,000
=========
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed, subject
to certain conditions, to purchase all of the shares of Common Stock being
sold pursuant to such Underwriting Agreement (other than those covered by the
over-allotment option described below), if any are purchased. The Underwriting
Agreement provides that, in the event of a default by an Underwriter, in
certain circumstances, the purchase commitments of non-defaulting Underwriters
may be increased or the Underwriting Agreement may be terminated.
The Company and the Selling Stockholders have been advised by the
Representatives that the Underwriters propose to offer the Common Stock to the
public initially at the public offering price set forth on the cover of this
Prospectus and to certain dealers at such price less a concession not in
excess of $.68 per share and that the Underwriters may allow and such dealers
may reallow a concession not in excess of $.10 per share to other dealers. The
public offering price and other selling terms may be changed by the
Representatives after this offering. Robert W. Baird & Co. Incorporated
("Baird") acted as a representative of the underwriters in the IPO
39
<PAGE>
in August 1994, was the underwriter and serves as remarketing agent for the
Bardstown IRBs, and has from time to time provided financial advisory services
to the Company. Baird will receive an advisory fee for serving as financial
advisor to the Company in connection with the MSTI Acquisition.
The Company and certain of the Selling Stockholders have granted to the
Underwriters an over-allotment option, exercisable during the 30-day period
following the date of this Prospectus, to purchase up to 693,000 additional
shares of Common Stock at the public offering price less the underwriting
discount set forth on the cover page of this Prospectus. If the Underwriters
exercise their over-allotment option, the Underwriters have severally agreed,
subject to certain conditions, to purchase approximately the same percentage
thereof that the number of shares to be purchased by each of them, as shown in
the foregoing table, bears to the 4,620,000 shares of Common Stock offered
hereby. The Underwriters may exercise the option only to cover over-allotments
made in connection with the sale of the shares of Common Stock offered hereby.
The Company, its significant subsidiaries and the Selling Stockholders have
agreed to indemnify the Underwriters and any person who controls the
Underwriters against certain liabilities, including certain liabilities under
the Securities Act.
The Company has agreed that, without the prior written consent of
PaineWebber Incorporated, as representative of the Underwriters, it will not,
directly or indirectly, assign, transfer, offer, sell, contract to sell, grant
any option to sell, hypothecate or otherwise dispose of any shares of Common
Stock or any securities convertible into or exchangeable for, or any warrants
or other rights to purchase or acquire, Common Stock for a period of 120 days
after the date of this Prospectus, except issuances of Common Stock (i)
pursuant to the Underwriting Agreement, (ii) pursuant to stock options
currently outstanding or which may hereafter be granted under existing stock
options plans of the Company, (iii) as a result of purchases under the
Company's Employee Stock Purchase Plan, (iv) upon the conversion of the
Convertible Notes or (v) upon the exercise of the MSTI Warrants. In addition,
the Company's Directors, executive officers and certain significant
stockholders, who in the aggregate currently own approximately 50% of the
outstanding Common Stock, have agreed that they will not, directly or
indirectly, assign, transfer, offer, offer to sell, sell, contract to sell,
grant any option to sell, hypothecate or otherwise dispose of any shares of,
or require the Company to file with the Commission a registration statement
under the Securities Act to register, Common Stock or any securities
convertible into or exchangeable for, or any rights to purchase or acquire,
Common Stock for a period of 120 days after the date of this Prospectus except
pursuant to the Underwriting Agreement, without the prior written consent of
PaineWebber Incorporated, as representative of the Underwriters.
In connection with the Offering, certain Underwriters and selling group
members (if any) or their respective affiliates who are qualified registered
market makers on the Nasdaq Stock Market, may engage in passive market making
transactions in the Common Stock on the Nasdaq Stock Market in accordance with
Rule 10b-6A under the Exchange Act during the two business day period before
commencement of offers or sales of the Common Stock. The passive market making
transactions must comply with applicable volume and price limits and be
identified as such. In general, a passive market maker may display its bid at
a price not in excess of the highest independent bid for the security. If all
independent bids are lowered below the passive market maker's bid, however,
such bid must then be lowered when certain purchase limits are exceeded.
LEGAL MATTERS
Certain legal matters regarding the issuance of the shares of Common Stock
being offered hereby have been passed upon for the Company by Kirkland &
Ellis, Chicago, Illinois (a partnership which includes professional
corporations). Certain legal matters will be passed upon for the Underwriters
by Gardner, Carton & Douglas, Chicago, Illinois.
EXPERTS
The audited financial statements incorporated by reference into this
Prospectus and elsewhere in the Registration Statement, to the extent and for
the periods indicated in their reports, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of
said firm as experts in accounting and auditing.
40
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement," which
term shall include any amendments thereto) on Form S-3 under the Securities
Act, with respect to the shares of Common Stock offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits and schedules thereto, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and to
which reference is hereby made. Statements made in this Prospectus as to the
contents of any document referred to are not necessarily complete. With
respect to each such document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Registration Statement may be inspected and
copied at the public reference facilities maintained by the Commission
referred to below.
The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and
information filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may be obtained at prescribed rates by
writing the Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material may also be accessed electronically by
means of the Commission's home page on the Internet at http://www.sec.gov.
Such reports, proxy statements and other information can also be inspected at
the offices of the Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C.
20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated by reference in this Prospectus
and shall be deemed to be a part hereof:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, as amended.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996.
3. The Company's Current Report on Form 8-K, dated January 29, 1996, as
amended by its Form 8-K/A filed on March 29, 1996.
4. The Company's Current Report on Form 8-K, dated May 31, 1996, as amended
by its Form 8-K/A No. 1 filed on June 4, 1996.
5. The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed on August 8, 1994.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the Offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from
their respective dates of filing. Any statement contained herein or in any
document incorporated or deemed to be incorporated shall be deemed to be
modified or superseded for all purposes of this Prospectus to the extent that
a statement contained in this Prospectus or in any subsequently filed document
which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference in this Prospectus (other than exhibits thereto, unless such
exhibits are specifically incorporated by reference into the information that
this Prospectus incorporates). Requests should be directed to: Tower
Automotive, Inc., 4508 IDS Center, Minneapolis, Minnesota 55402, Attention:
Shareholder Services (telephone number (612) 342-2310).
41
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDERS OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUB-
SEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECU-
RITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES
IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 8
Use of Proceeds........................................................... 10
Market Price of and Dividends on Common Stock............................. 11
Capitalization............................................................ 12
Unaudited Pro Forma Financial Statements.................................. 13
Selected Financial Data................................................... 19
Management's Discussion and Analysis of Results of Operations and
Financial Condition...................................................... 21
Business.................................................................. 26
Management................................................................ 34
Principal and Selling Stockholders........................................ 36
Certain Relationships and Related Transactions............................ 37
Underwriting.............................................................. 39
Legal Matters............................................................. 40
Experts................................................................... 40
Available Information..................................................... 41
Incorporation of Certain Documents by Reference........................... 41
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
4,620,000 SHARES
LOGO
TOWER AUTOMOTIVE, INC.
COMMON STOCK
----------------
PROSPECTUS
----------------
PAINEWEBBER INCORPORATED
ROBERT W. BAIRD & CO.
INCORPORATED
PIPER JAFFRAY INC.
----------------
JUNE 20, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
