<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number 0-24644
TOWER AUTOMOTIVE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 41-1746238
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4508 IDS CENTER 55402
MINNEAPOLIS, MINNESOTA (Zip Code)
(Address of principal executive offices)
(612) 342-2310
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of the Registrant's common stock, par value
$.01 per share, at July 15, 1996 was 13,969,951 shares.
<PAGE>
ITEM 1 - FINANCIAL INFORMATION
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS - UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30,
--------------------------------
1996 1995
------------ ------------
(Note 4)
<S> <C> <C>
Revenues $ 96,521 $ 55,175
Cost of sales 81,170 45,486
------------ ------------
Gross profit 15,351 9,689
Selling, general and administrative expenses 4,569 3,731
Amortization expense 475 300
------------ ------------
Operating income 10,307 5,658
Interest expense, net 1,465 383
------------ ------------
Income before provision for income taxes 8,842 5,275
Provision for income taxes 3,540 2,215
------------ ------------
Net income $ 5,302 $ 3,060
------------ ------------
------------ ------------
Net income applicable to common
stockholders $ 5,340 $ 3,104
------------ ------------
------------ ------------
Net income per common and common
equivalent share $ 0.44 $ 0.27
------------ ------------
------------ ------------
Weighted average common and common
equivalent shares outstanding 12,275 11,679
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
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<PAGE>
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS - UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------
1996 1995
------------ ------------
(Note 4)
<S> <C> <C>
Revenues $ 165,442 $ 113,598
Cost of sales 139,576 94,213
------------ ------------
Gross profit 25,866 19,385
Selling, general and administrative expenses 8,083 7,317
Amortization expense 850 600
------------ ------------
Operating income 16,933 11,468
Interest expense, net 2,773 692
------------ ------------
Income before provision for income taxes 14,160 10,776
Provision for income taxes 5,670 4,420
------------ ------------
Net income $ 8,490 $ 6,356
------------ ------------
------------ ------------
Net income applicable to common
stockholders $ 8,572 $ 6,444
------------ ------------
------------ ------------
Net income per common and common
equivalent share $ 0.71 $ 0.55
------------ ------------
------------ ------------
Weighted average common and common
equivalent shares outstanding 12,004 11,678
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
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<PAGE>
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, December 31,
Assets 1996 1995
- -------------------------------------------------- ------------ ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 54,273 $ 957
Accounts receivable 71,197 39,133
Inventories 22,170 11,398
Other current assets 9,353 10,338
------------ ------------
Total current assets 156,993 61,826
Property, plant and equipment, net 150,199 87,587
Restricted cash 10,333 14,385
Goodwill and other intangible assets, net 87,704 45,678
------------ ------------
$ 405,229 $ 209,476
------------ ------------
------------ ------------
Liabilities and Stockholders' Investment
- --------------------------------------------------
Current liabilities:
Current maturities of long-term debt $ 724 $ 779
Accounts payable 46,901 19,022
Accrued liabilities 21,064 9,780
------------ ------------
Total current liabilities 68,689 29,581
Long-term debt, net of current maturities 135,858 70,300
Other noncurrent liabilities 36,661 24,010
------------ ------------
Stockholders' investment:
Preferred stock -- --
Common stock 140 108
Warrants to acquire common stock 2,000 --
Additional paid-in capital 131,163 63,461
Retained earnings 31,003 22,513
Subscriptions receivable (285) (497)
------------ ------------
Total stockholders' investment 164,021 85,585
------------ ------------
$ 405,229 $ 209,476
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these balance sheets.
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<PAGE>
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS - UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------
1996 1995
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 8,490 $ 6,356
Adjustments to reconcile net income to
net cash provided by operating activities -
Depreciation and amortization 5,739 3,183
Changes in other operating items 5,412 3,007
------------ ------------
Net cash provided by operating activities 19,641 12,546
------------ ------------
INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (80,303) -
Capital expenditures, net (4,279) (13,536)
Change in restricted cash 4,052 (8,522)
------------ ------------
Net cash used in investing activities (80,530) (22,058)
------------ ------------
FINANCING ACTIVITIES:
Proceeds from borrowings 191,833 109,486
Repayment of debt (124,323) (98,789)
Net proceeds from public stock offering 46,350 -
Proceeds from issuance of stock 133 -
Other, net 212 (810)
------------ ------------
Net cash provided by financing activities 114,205 9,887
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 53,316 375
CASH AND CASH EQUIVALENTS:
Beginning of period 957 55
------------ ------------
End of period $ 54,273 $ 430
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to condensed consolidated financial statements
are an integral part of these statements.
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<PAGE>
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying condensed consolidated financial statements have been
prepared by Tower Automotive, Inc. (the "Company"), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission.
The information furnished in the condensed consolidated financial
statements includes normal recurring adjustments and reflects all
adjustments which are, in the opinion of management, necessary for a fair
presentation of such financial statements. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. Although the
Company believes that the disclosures are adequate to make the information
presented not misleading, it is suggested that these condensed consolidated
financial statements be read in conjunction with the audited financial
statements and the notes thereto included in the Company's 1995 Annual
Report to Stockholders. Certain amounts previously reported in the June
30, 1995 statement of operations have been reclassified to conform to the
June 30, 1996 presentation. These reclassifications had no effect on
previously reported operating income or net income.
Revenues and operating results for the three and six months ended June 30,
1996 are not necessarily indicative of the results to be expected for the
full year.
2. On June 20, 1996, the Company completed an offering of 2,000,000 shares of
Common Stock at an offering price of $24.50 per share (the "Offering"). A
portion of the net proceeds from this Offering of approximately $46 million
were used by the Company to retire borrowings under its secured 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. On July 24, 1996, the Company issued
an additional 232,900 shares of Common Stock pursuant to the underwriters'
over-allotment option for net proceeds of approximately $5 million.
3. Inventories consisted of the following (in thousands):
June 30, 1996 Dec. 31, 1995
-------------------- ------------------
Raw materials $ 10,948 $ 4,836
Work in process 6,089 3,431
Finished goods 5,133 3,131
-------------------- ------------------
$ 22,170 $ 11,398
-------------------- ------------------
-------------------- ------------------
4. On May 31, 1996, the Company acquired all of the outstanding common stock
of MascoTech Stamping Technologies, Inc. (MSTI), a wholly owned subsidiary
of MascoTech, Inc. Consideration consisted of $55 million in cash, 785,000
shares of Common Stock and warrants to acquire 200,000 shares of Common
Stock at an exercise price of $18 per share. The Company will make
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<PAGE>
additional payments to MascoTech if certain operating targets are achieved
by the MSTI facilities in the first three years following the acquisition.
MSTI manufactures metal stampings and assemblies for the North American
automotive industry from facilities in Ohio, Indiana and Michigan. MSTI
has annual revenues of approximately $160 million. The cash portion of
the purchase price was financed with proceeds from borrowings under Senior
Notes (See Note 5).
On January 16, 1996, the Company acquired all of the outstanding common
stock of Trylon Corporation (Trylon) for total consideration, including
transaction costs, of approximately $25 million. Trylon manufactures metal
stampings and assemblies for the North American automotive industry from
four facilities in Traverse City, Michigan. The acquisition was financed
with borrowings under a $25 million term loan.
The acquisitions of MSTI and Trylon have been accounted for as purchases
and, accordingly, the assets and liabilities have been recorded based upon
preliminary estimates of fair value as of the dates of acquisition. The
Company does not believe the final allocations of the purchase price will
be materially different than the preliminary allocations. The purchase
price in excess of the fair values of the net assets acquired is included
in goodwill in the accompanying condensed consolidated balance sheets.
Results of operations from MSTI and Trylon have been included in the
accompanying condensed consolidated financial statements from the dates of
acquisition. The accompanying unaudited consolidated pro forma results of
operations for the six months ended June 30, 1996 and 1995 give effect to
the Offering and the acquisitions of MSTI and Trylon as if they were
completed at the beginning of the respective periods. The unaudited pro
forma financial information does not purport to represent what the
Company's results of operations would actually have been if such
transactions had occurred at such date or to project the Company's results
of future operations (in thousands, except per share data):
Pro Forma
-------------------------
Six Months Ended June 30,
1996 1995
---------- ----------
Revenues $ 239,245 $ 216,722
---------- ----------
---------- ----------
Net income applicable to common
stockholders $ 11,883 $ 9,058
---------- ----------
---------- ----------
Weighted average common and common
equivalent shares outstanding 14,482 14,463
---------- ----------
---------- ----------
Net income per common and common
equivalent share $ 0.82 $ 0.63
---------- ----------
---------- ----------
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<PAGE>
5. Long-term debt consisted of the following (in thousands):
June 30, December 31,
1996 1995
---------- ------------
Revolving credit facility $ 21,200 $ 18,631
Senior Notes 65,000 -
Industrial development revenue
bonds 47,365 47,365
Convertible subordinated notes 2,982 5,000
Other 35 83
---------- ----------
136,582 71,079
Less-current maturities (724) (779)
---------- ----------
Total long-term debt $ 135,858 $ 70,300
---------- ----------
---------- ----------
In May 1996, the Company and its lenders amended the Credit Agreement in
connection with the acquisition of MSTI. The amended Credit Agreement
consists of a $75 million secured revolving credit facility which matures
in January 2001 and bears interest at a prime-based rate or LIBOR plus a
variable margin. Borrowings under the Credit Agreement are collateralized
by all assets of the Company. During the third quarter of 1996 the Company
expects to enter into a new five year credit agreement that will provide
for unsecured borrowings of up to $75 million. The Company also expects
the new credit agreement will contain less restrictive covenants and better
pricing terms than the Credit Agreement.
The Company financed the cash portion of the MSTI acquisition 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 bear interest
at 7.65%, have a final maturity on June 1, 2006 and require annual
principal payments commencing on June 1, 2000 which continue every year
thereafter until their final maturity. The $25.0 million of Series B
Senior Notes bear interest at 7.82%, have a final maturity on June 1, 2008
and require annual principal payments commencing on June 1, 2004 which
continue 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 and are collateralized by all of the Company's
assets. Pursuant to the terms of the Senior Notes, the Company may request
release of the collateral after June 30, 1996 if certain conditions are
met. The Company expects to request release of the collateral during the
third quarter of 1996. Net proceeds from the sale of the Senior Notes in
excess of the amounts used to finance the cash portion of the MSTI
acquisition, together with borrowings under the revolving credit facility,
were used to repay in full the remaining balance outstanding on the $25.0
million term loan incurred by the Company in connection with the
acquisition of Trylon.
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<PAGE>
In connection with the acquisition of Edgewood in May 1994, the Company
issued $5.0 million in Convertible Subordinated notes, which are generally
convertible any time into 823,874 shares of Common Stock. As of June 30,
1996, approximately $2.0 million of these notes had been converted into
332,529 shares of Common Stock.
6. Supplemental cash flow information (in thousands):
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash paid for -
Interest $1,899 $1,124 $3,035 $2,003
Income taxes 2,985 1,044 3,225 1,199
</TABLE>
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<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1996 TO THE THREE MONTHS ENDED
JUNE 30, 1995
REVENUES -- Revenues for the three months ended June 30, 1996 totaled $96.5
million compared to $55.2 million for the three months ended June 30, 1995, an
increase of $41.3 million or 74.8%. Revenues for the 1996 period increased over
the 1995 period due to new business awarded to the Company and the acquisitions
of MSTI in May 1996 and Trylon in January 1996.
COST OF SALES -- Cost of sales as a percentage of revenues for the three
months ended June 30, 1996 was 84.1% compared to 82.4% for the three months
ended June 30, 1995. The decrease in gross margin was the result of inherent
lower margins on the MSTI and Trylon business.
S, G & A EXPENSES -- Selling, general and administrative expenses increased
from $3.7 million for the three months ended June 30, 1995 to $4.6 million for
the three months ended June 30, 1996. The increase was due primarily to
incremental costs associated with the Company's 1996 acquisitions and increased
up front engineering costs. As a percentage of revenues, selling, general and
administrative expenses were 4.7% for the three months ended June 30, 1996
compared to 6.8% for the three months ended June 30, 1995.
INTEREST EXPENSE -- Interest expense for the three months ended June 30, 1996
was $1.5 million compared to $383,000 for the three months ended June 30, 1995.
The increase was due principally to increased borrowings incurred to fund the
acquisitions of MSTI and Trylon offset by the application of the proceeds from
the June 1996 offering of common stock (the "Offering").
INCOME TAXES -- The effective income tax rate was 40.0% for the three months
ended June 30, 1996 and 42.0% for the three months ended June 30, 1995. The
effective rates differed from the statutory rates primarily as a result of state
taxes and non-deductible goodwill amortization.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1996 TO THE SIX MONTHS ENDED JUNE 30,
1995
REVENUES -- Revenues for the six months ended June 30, 1996 totaled $165.4
million compared to $113.6 million for the six months ended June 30, 1995, an
increase of $51.8 million or 45.6%. Revenues for the 1996 period increased over
the 1995 period due to new business awarded to the Company and the acquisitions
of MSTI in May 1996 and Trylon in January 1996. These increases were partially
offset by production decreases in the first quarter on key models served by the
Company, including the Ford Escort, Villager, Econoline and the Chrysler LH
line.
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<PAGE>
COST OF SALES -- Cost of sales as a percentage of revenues for the six months
ended June 30, 1996 was 84.4% compared to 82.9% for the six months ended June
30, 1995. The decrease in gross margin was the result of inherent lower margins
on the MSTI and 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.
S, G & A EXPENSES -- Selling, general and administrative expenses increased
from $7.3 million for the six months ended June 30, 1995 to $8.1 million for the
six months ended June 30, 1996. The increase was due primarily to incremental
costs associated with the Company's 1996 acquisitions. As a percentage of
revenues, selling, general and administrative expenses were 4.9% for the six
months ended June 30, 1996 compared to 6.4% for the six months ended June 30,
1995.
INTEREST EXPENSE -- Interest expense for the six months ended June 30, 1996
was $2.8 million compared to $692,000 for the six months ended June 30, 1995.
The increase was due principally to increased borrowings incurred to fund the
acquisitions of MSTI and Trylon partially offset by the application of the
proceeds from the Offering.
INCOME TAXES -- The effective income tax rate was 40.0% for the six months
ended June 30, 1996 and 41.0% for the six months ended June 30, 1995. The
effective rates differed from the statutory rates primarily as a result of state
taxes and non-deductible goodwill amortization.
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 June 30, 1996, the Company had $21.2 million outstanding under its Credit
Agreement. The Company used a portion of the net proceeds from the Offering to
repay borrowings under the 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 as
of June 30, 1996). 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 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 June 30, 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 June 30, 1996, $34.7 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 $10.3 million at June 30,
1996, are invested in treasury securities and will be used to finance the second
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<PAGE>
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 June 30,
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 June 30, 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 (3.45% at June 30, 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 all of the outstanding common stock of
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 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 contingent payments and
amounts paid under the promissory note will not exceed $30.0 million.
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
which continue 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 which continue
every year thereafter until their final maturity. The Senior Notes require the
Company to make semi-annual interest payments commencing December 1, 1996. The
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<PAGE>
Senior Notes are guaranteed by all of the Company's significant subsidiaries.
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
Company expects to request that the collateral securing the Senior Notes be
released during the third quarter of 1996. Net proceeds from the sale of the
Senior Notes in excess of the amounts used to finance the cash portion of the
MSTI acquisition were used, together with borrowings under the revolving credit
facility, 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.
The Company expects to enter into a new credit agreement during the third
quarter of 1996 which will provide for borrowings of up to $75 million and have
a scheduled maturity in June 2001. The Company expects the new credit agreement
will be unsecured and will generally contain less restrictive covenants and
better pricing terms than the Credit Agreement.
During the six months ended June 30, 1996, the Company generated $19.6 million
of cash from operations 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
$4.3 million for the six months ended June 30, 1996 and $13.5 million in the
comparable period of 1995. The Company currently has budgeted approximately
$7.3 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 new credit agreement.
The Company believes the borrowing availability under its Credit Agreement,
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.
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PART II. OTHER INFORMATION
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
Item 1. Legal Proceedings:
None
Item 2. Change in Securities:
None
Item 3. Defaults Upon Senior Securities:
None
Item 4. Submission of Matters to a Vote of Security Holders:
The registrant held its Annual Meeting of Stockholders on May 14,
1996. Proxies for the meeting were solicited pursuant to Regulation
14; there was no solicitation in opposition to management's nominees
for directors as listed in the Proxy Statement, and all such nominees
(S.A. Johnson, Adrian Vander Starre, Dugald K. Campbell, James R.
Lozelle, Scott D. Rued, W.H. Clement, Eric J. Rosen, Matthew O. Diggs,
F.J. Loughrey and Kim B. Clark) were elected. Of the 8,933,319 shares
voted, at least 8,791,944 shares granted authority to vote for these
directors and no more than 141,375 abstaining votes were cast.
The adoption of the Independent Director Stock Option Plan was
approved by the stockholders. A total of 8,855,471 affirmative votes,
75,846 negative votes and 2,002 abstaining votes were cast.
The retention of Arthur Andersen LLP as auditors was approved by the
stockholders. A total of 8,924,844 affirmative votes, 5,600 negative
votes and 2,875 abstaining votes were cast.
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits: Sequential
Page Number
-----------
11 Statements of Computation of Earnings Per Share 17
For the Three and Six Months Ended June 30, 1996
and 1995.
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(b) During the quarter for which is report is filed, the Company
filed Form 8-K Current Reports with the Securities and Exchange
Commission as follows:
1. FORM 8-K CURRENT REPORT
On May 31, 1996, the Company filed Form 8-K reporting under
Item 2 of that Report the acquisition of MascoTech Stamping
Technologies, Inc. on May 31, 1996. The Report was amended
June 4, 1996.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TOWER AUTOMOTIVE, INC.
Date: August 6, 1996 By /s/ Anthony A. Barone
----------------------------------------
Anthony A. Barone
Vice President, Chief Financial Officer
(principal accounting and financial
officer)
- 16 -
<PAGE>
EXHIBIT 11
TOWER AUTOMOTIVE, INC.
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended June 30,
----------------------------------
1996 1995
-------------- ---------------
Net income $ 5,302 $ 3,060
Interest expense on convertible
subordinated notes 38 44
-------------- ---------------
Net income applicable to
common stockholders $ 5,340 $ 3,104
-------------- ---------------
-------------- ---------------
Weighted average number of
common and common
equivalent shares 11,476 10,826
Dilutive effect of outstanding
stock options after application
of the treasury stock method 122 29
Dilutive effect of convertible
subordinated notes assuming
conversion 677 824
-------------- ---------------
Common and common equivalent
shares outstanding 12,275 11,679
-------------- ---------------
-------------- ---------------
Net income per common and
common equivalent share (1) $ 0.44 $ 0.27
-------------- ---------------
-------------- ---------------
(1) The calculation of net income per common and common equivalent share for
the three months ended June 30, 1996 and June 30, 1995 are the same on a primary
and fully diluted basis.
- 17 -
<PAGE>
EXHIBIT 11
(CONTINUED)
TOWER AUTOMOTIVE, INC.
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Six Months Ended June 30,
-----------------------------------
1996 1995
--------------- ----------------
Net income $ 8,490 $ 6,356
Interest expense on convertible
subordinated notes 82 88
--------------- ----------------
Net income applicable to
common stockholders $ 8,572 $ 6,444
--------------- ----------------
--------------- ----------------
Weighted average number of
common and common
equivalent shares 11,157 10,826
Dilutive effect of outstanding
stock options after application
of the treasury stock method 96 28
Dilutive effect of convertible
subordinated notes assuming
conversion 751 824
--------------- ----------------
Common and common equivalent
shares outstanding 12,004 11,678
--------------- ----------------
--------------- ----------------
Net income per common and
common equivalent share (1) $ 0.71 $ 0.55
--------------- ----------------
--------------- ----------------
(1) The calculation of net income per common and common equivalent share for
the three months ended June 30, 1996 and June 30, 1995 are the same on a
primary and fully diluted basis.
- 18 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF OPERATIONS FOUND ON PAGES 3 AND
4 OF THE COMPANY'S FORM 10-Q FOR THE YEAR TO DATE AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000925548
<NAME> TOWER AUTOMOTIVE INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 54,273
<SECURITIES> 0
<RECEIVABLES> 71,197
<ALLOWANCES> 0
<INVENTORY> 22,170
<CURRENT-ASSETS> 156,993
<PP&E> 165,201
<DEPRECIATION> 15,002
<TOTAL-ASSETS> 405,229
<CURRENT-LIABILITIES> 68,689
<BONDS> 0
0
0
<COMMON> 140
<OTHER-SE> 163,881
<TOTAL-LIABILITY-AND-EQUITY> 405,229
<SALES> 165,442
<TOTAL-REVENUES> 165,442
<CGS> 139,576
<TOTAL-COSTS> 139,576
<OTHER-EXPENSES> 8,933
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,773
<INCOME-PRETAX> 14,160
<INCOME-TAX> 5,670
<INCOME-CONTINUING> 8,490
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,490
<EPS-PRIMARY> .71
<EPS-DILUTED> .71
</TABLE>
