<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 September 30, 1999
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 1-12733
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 October 15, 1999 was 46,879,454 shares.
<PAGE>
TOWER AUTOMOTIVE, INC.
FORM 10-Q
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Statements of Operations (unaudited)
for the Three Months Ended September 30, 1999 and 1998
Condensed Consolidated Statements of Operations (unaudited)
for the Nine Months Ended September 30, 1999 and 1998
Condensed Consolidated Balance Sheets at September 30, 1999
(unaudited) and December 31, 1998
Condensed Consolidated Statements of Cash Flows (unaudited)
for the Nine Months Ended September 30, 1999 and 1998
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See "Market Risk & Foreign Currency Transactions" Sections
of Management Discussion & Analysis
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
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<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 September 30,
-------------------------------------
1999 1998
-------------- ------------
<S> <C> <C>
Revenues $ 536,152 $ 444,851
Cost of sales 453,851 377,862
-------------- ------------
Gross profit 82,301 66,989
Selling, general and administrative expenses 29,382 24,003
Amortization expense 4,451 3,461
-------------- ------------
Operating income 48,468 39,525
Interest expense, net 10,642 8,620
-------------- ------------
Income before provision for income taxes 37,826 30,905
Provision for income taxes 15,130 12,362
-------------- ------------
Income before equity in earnings of joint
ventures and minority interest 22,696 18,543
Equity in earnings of joint ventures 3,664 2,342
Minority interest--dividends on trust preferred,
net (2,619) (2,619)
-------------- ------------
Net income $ 23,741 $ 18,266
-------------- ------------
-------------- ------------
Basic earnings per share $ 0.50 $ 0.40
-------------- ------------
-------------- ------------
Diluted earnings per share $ 0.44 $ 0.36
-------------- ------------
-------------- ------------
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated statements.
-3-
<PAGE>
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS - UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------------
1999 1998
---------------- ---------------
<S> <C> <C>
Revenues $ 1,565,404 $ 1,367,854
Cost of sales 1,316,627 1,166,822
---------------- ---------------
Gross profit 248,777 201,032
Selling, general and administrative expenses 76,386 65,968
Amortization expense 11,642 10,034
---------------- ---------------
Operating income 160,749 125,030
Interest expense, net 25,171 33,230
---------------- ---------------
Income before provision for income taxes 135,578 91,800
Provision for income taxes 54,231 36,722
---------------- ---------------
Income before equity in earnings of joint
ventures and minority interest 81,347 55,078
Equity in earnings of joint ventures 10,959 9,013
Minority interest - dividends on trust preferred,
net (7,861) (3,259)
---------------- ---------------
Net income $ 84,445 $ 60,832
---------------- ---------------
---------------- ---------------
Basic earnings per share $ 1.80 $ 1.32
---------------- ---------------
---------------- ---------------
Diluted earnings per share $ 1.52 $ 1.18
---------------- ---------------
---------------- ---------------
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated statements.
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<PAGE>
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
Assets 1999 1998
-------------- -------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,067 $ 3,434
Accounts receivable 359,362 239,888
Inventories 115,863 76,913
Prepaid tooling and other 99,011 115,859
-------------- -------------
Total current assets 575,303 436,094
-------------- -------------
Property, plant and equipment, net 1,047,872 821,873
Restricted cash -- 2,677
Investments in joint ventures 220,902 209,625
Goodwill and other assets, net 654,651 465,898
-------------- -------------
$ 2,498,728 $ 1,936,167
-------------- -------------
-------------- -------------
Liabilities and Stockholders' Investment
Current liabilities:
Current maturities of long-term debt and capital lease
obligations $ 6,303 $ 18,191
Accounts payable 245,620 214,194
Accrued liabilities 158,337 96,773
-------------- -------------
Total current liabilities 410,260 329,158
-------------- -------------
Long-term debt, net of current maturities 710,012 316,579
Obligations under capital leases, net of current maturities 23,246 25,770
Convertible subordinated notes 200,000 200,000
Deferred income taxes 3,510 20,376
Other noncurrent liabilities 193,148 178,738
-------------- -------------
Total non-current liabilities
1,129,916 741,463
-------------- -------------
Mandatorily redeemable trust convertible preferred securities 258,750 258,750
Stockholders' investment:
Preferred stock -- --
Common stock 471 463
Warrants to acquire common stock 2,000 2,000
Additional paid-in capital 435,710 426,471
Retained earnings 261,879 177,434
Accumulated other comprehensive income (loss) -
cumulative translation adjustment (258) 428
-------------- -------------
Total stockholders' investment 699,802 606,796
-------------- -------------
$ 2,498,728 $ 1,936,167
-------------- -------------
-------------- -------------
</TABLE>
-5-
The accompanying notes are an integral part of
these condensed consolidated balance sheets.
<PAGE>
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS - UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 84,445 $ 60,832
Adjustments to reconcile net income to net cash provided by
Operating activities -
Depreciation and amortization 80,665 64,925
Changes in other operating items (65,395) (2,353)
-------------- --------------
Net cash provided by operating activities 99,715 123,404
-------------- --------------
INVESTING ACTIVITIES:
Acquisitions and investment in joint venture (331,767) (116,827)
Net proceeds from sale of Hinge Business -- 35,631
Capital expenditures, net (160,299) (122,308)
Change in restricted cash 2,677 5,254
-------------- --------------
Net cash used in investing activities (489,389) (198,250)
-------------- --------------
FINANCING ACTIVITIES:
Proceeds from borrowings 1,647,118 786,231
Repayment of debt (1,269,190) (965,198)
Proceeds from issuance of stock 9,379 2,094
Proceeds from issuance of preferred securities -- 251,350
Other, net -- 532
-------------- --------------
Net cash provided by financing activities 387,307 75,009
-------------- --------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (2,367) 163
CASH AND CASH EQUIVALENTS:
Beginning of period 3,434 --
-------------- --------------
End of period $ 1,067 $ 163
-------------- --------------
-------------- --------------
</TABLE>
-6-
The accompanying notes are an integral part
of these condensed consolidated statements.
<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 1998
Annual Report Form and 10-K for the year ended December 31, 1998.
Revenues and operating results for the three and nine months ended
September 30, 1999 are not necessarily indicative of the results to be
expected for the full year.
2. Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Raw materials $ 49,532 $ 26,787
Work in process 36,685 27,734
Finished goods 29,646 22,392
------------- ------------
$115,863 $ 76,913
------------- ------------
------------- ------------
</TABLE>
3. Basic earnings per share were computed by dividing net income by the
weighted average number of common shares outstanding during the respective
quarters. Diluted earnings per share were determined on the assumptions:
(i) the Edgewood notes were converted at the beginning of the respective
periods, (ii) the Convertible Subordinated Notes were converted at the
beginning of the respective periods, and (iii) the Preferred Securities
were converted upon issuance on June 3, 1998 as follows (in thousands,
except per share data):
-7-
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income $23,741 $18,266 $84,445 $60,832
Interest expense on Edgewood notes,
net of tax 9 14 28 45
Interest expense on Convertible
Subordinated Notes, net of tax 1,627 1,627 4,881 4,881
Dividends on Preferred Securities,
net of tax 2,619 2,619 7,861 3,259
------- ------- ------- -------
Net income applicable to common
stockholders -- diluted $27,996 $22,526 $97,215 $69,017
------- ------- ------- -------
------- ------- ------- -------
Weighted average number of
common shares outstanding 47,081 46,236 46,871 46,174
Dilutive effect of outstanding stock
options and warrants after
application of the treasury stock
method 569 427 647 499
Dilutive effect of Edgewood notes,
assuming conversion 296 539 339 549
Dilutive effect of Convertible
Subordinated Notes,
assuming conversion 7,728 7,728 7,728 7,728
Dilutive effect of Preferred
Securities, assuming conversion 8,425 8,425 8,425 3,495
------- ------- ------- -------
Diluted shares outstanding 64,099 63,355 64,010 58,445
------- ------- ------- -------
------- ------- ------- -------
Basic earnings per share $ 0.50 $ 0.40 $ 1.80 $ 1.32
------- ------- ------- -------
------- ------- ------- -------
Diluted earnings per share $ 0.44 $ 0.36 $ 1.52 $ 1.18
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
4. Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
-------------- ---------------
<S> <C> <C>
Revolving credit facility $ 330,054 $ 257,563
Term loan add on facility 325,000 --
Industrial development revenue bonds 43,765 43,765
Edgewood notes 878 1,636
Italian Stand Alone Demand Borrowings -- 10,889
Other 11,933 16,412
--------- ---------
711,630 330,265
Less-current maturities (1,618) (13,686)
--------- ---------
--------- ---------
Total long-term debt $ 710,012 $ 316,579
--------- ---------
--------- ---------
</TABLE>
The Company's Credit Agreement includes a revolving credit facility that
provides for borrowings of up to $750 million on an unsecured basis with a
letter of credit sublimit of $75 million. In addition, under the terms of
the revolving credit facility, the equivalent of up to $85 million in
borrowings can be denominated in foreign currency. As of September 30,
1999, approximately $81 million of the outstanding borrowings are
denominated in Italian lira. The amount available under the revolving
credit facility reduces to $675 million in April 2000, $600 million in
April 2001 and $500 million in April 2002. The Credit Agreement has a
final maturity of April 2003. Interest on the credit facility is at the
prime rate or LIBOR plus a margin ranging from 17 to 50 basis points
depending upon the ratio of the consolidated indebtedness of the Company
to its total capitalization. The weighted average interest rate for such
borrowings was 6.2% for the nine months ended September 30, 1999.
-8-
<PAGE>
On August 23, 1999, the Company amended and restated its Credit Agreement
to include a term loan add on facility of $325 million. The term loan
facility matures in eight equal repayments beginning September 2002 with
final maturity in June 2004. Interest on the term loan facility is at
prime rate or Libor plus a margin ranging from 25 to 175 basis points
depending on the Company's ratio of consolidated indebtedness to its total
capitalization. The weighted average interest rate for the term loan
facility was 7.38% for the nine months ending September 30, 1999. The
proceeds from the term facility were used to repay outstanding
indebtedness under the revolving facility incurred in connection with the
acquisition of Active on July 29, 1999. (See note 5)
The Credit Agreement requires the Company to meet certain financial tests,
including but not limited to a minimum interest coverage, maximum
debt/capital, maximum leverage and maximum senior leverage ratio. As of
September 30, 1999, the Company was in compliance with all debt covenants.
5. Effective July 1, 1998, the Company acquired IMAR, S.r.L. ("IMAR") and
OSLAMT S.p.A. ("OSLAMT"). IMAR designs and manufactures structural parts
and assemblies from two facilities in Italy, primarily for Fiat. OSLAMT
designs and manufactures tools and assemblies for the automotive market
from its facility in Turin, Italy. The purchase price consisted of
approximately $32.5 million in cash plus the assumption of approximately
$17 million of indebtedness plus an additional amount of $15 million for
achieving certain operating targets. In July 1999 the Company paid the
additional amount of $15 million in connection with this agreement.
On August 31, 1998, the Company sold its hinge business (the "Hinge
Business") to Dura Automotive Systems, Inc. for net proceeds of
approximately $36.9 million which approximated the book value of the net
assets sold. The net proceeds were used to repay outstanding indebtedness
under the revolving credit facility.
On July 29, 1999, the Company acquired all of the outstanding stock of
Active Tool and Manufacturing Company, Inc. and its affiliate Active
Products Corporation (collectively "Active") for total consideration of
approximately $315 million. Active, which has five facilities, is a
leading designer and producer of large structural stampings and assemblies
including Class A exposed metal surfaces to the North American automotive
industry. Active's principle customers include DaimlerChrysler, Ford,
General Motors, and Saturn. Products offered by Active include body sides,
pickup box sides, fenders, floor pan assemblies, door panels, pillars, and
heat shields. The acquisition of Active enhances the Company's ability to
manufacture large and complex structures, as well as exposed surface
panels. The acquisition was financed under the Company's revolving credit
facility.
These acquisitions have been accounted for using the purchase method of
accounting and, accordingly, the assets and acquired liabilities assumed
have been recorded at the fair value as of the date of the acquisitions.
The assets and liabilities of Active have been recorded based on
preliminary estimates of fair value as of the dates of the acquisition.
The excess of the purchase price over the fair value of the assets
acquired and liabilities assumed has been recorded as goodwill. The
Company is further evaluating the fair value of certain assets acquired
and liabilities assumed in connection with the Active acquisition and as a
result, will likely result in adjustments to the preliminary allocation
of the purchase price.
In conjunction with acquisitions made, reserves have been established
for certain costs associated with facility shutdown and consolidation
activities and for general and payroll related costs primarily for
planned employee termination activities. As of December 31, 1998,
approximately $18.5 million and $3.2 million were recorded for facility
shutdown and payroll related costs, respectively. Additional reserves
of $6.6 million related to facility shutdown costs and $4.7 million for
payroll related costs were recorded in the nine months ended September
30, 1999 in connection with acquisitions. Cost incurred and charged to
such reserves amounted to $1.9 million for payroll related termination
costs for the nine months ended September 30, 1999. At September 30,
1999, liabilities for approximately $25.1 million for costs associated
with facility shutdown and consolidation activities and $6.0 million of
general and payroll related and costs primarily for planned employee
termination activities remained. The timing of facility shutdown and
consolidation activities has been adjusted to reflect customer concerns
with supply interruption. These reserves have been utilized as
originally intended and management believes the liabilities recorded
for shutdown and consolidation activities are adequate but not excessive
as of September 30, 1999.
-9-
<PAGE>
6. The following presents comprehensive income, defined as changes in the
stockholder's investment of the Company, for the three and nine month
periods ended September 30, 1999 and 19998 (in thousands):
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------------- ----------------------------------------
1999 1998 1999 1998
------------------- -------------- -------------- ----------------------
<S> <C> <C> <C> <C>
Net income $ 23,741 $ 18,266 $ 84,445 $ 60,832
Change in cumulative
translation adjustments 333 (87) (686) (89)
Comprehensive income $ 24,074 $ 18,179 $ 83,759 $ 60,743
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
7. SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", becomes effective for the years beginning after June 15,
2000. SFAS No. 133 establishes accounting and reporting standards
requiring that every derivative instrument, including certain derivative
instruments embedded in other contracts, be recorded in the balance sheet
as either an asset or liability measured at its fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge criteria are met. Special
accounting for qualifying hedges allow a derivative's gains or losses to
offset related results on the hedged item in the income statement and
requires that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting. The Company
has not yet quantified the impact of adopting SFAS No. 133.
During the first quarter of 1999, the Company adopted the Financial
Accounting Standards Board Statement of Position (SOP) No. 98-5,
"Reporting on the Costs of Start-Up Activities". SOP 98-5 requires that
start-up activities be expensed as incurred, versus capitalizing and
expensing them over a period of time. The adoption of SOP 98-5 did not
affect the Company's consolidated results of operations of the financial
position of the Company.
8. Supplemental cash flow information (in thousands):
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------------- --------------------------------------
1999 1998 1999 1998
------------------ --------------- --------------- --------------------
<S> <C> <C> <C> <C>
Cash paid for -
Interest $ 11,447 $ 10,913 $ 25,438 $ 33,519
Income taxes $ 2,100 $ 455 $ 12,356 $ 5,663
</TABLE>
On June 3, 1998, Tower Automotive Capital Trust (the "Issuer"), a wholly
owned statutory business trust of the Company, completed the offering of
$258.8 million of its 6 3/4% Trust Convertible Preferred Securities
("Preferred Securities No separate financial statements of the Issuer have
been included herein. The Company does not consider that such financial
statements would be material to holders of Preferred Securities because
(i) all of the voting securities of the Issuer are owned, directly or
indirectly, by the Company, a reporting company under the Exchange Act,
(ii) the Issuer has no independent operations and exists for the sole
purpose of issuing securities representing undivided beneficial interests
in the assets of the Issuer and investing the proceeds thereof in 6 3/4%
Convertible Subordinated Debentures due June 30, 2018 issued by the
Company and (iii) the obligations of the Issuer under the Preferred
Securities are fully and unconditionally guaranteed by the Company.
9. On October 14, 1999, the Company loaned $30.0 million to J. L. French
Automotive Castings, Inc. (J. L. French) in exchange for a convertible
subordinated promissory note due October 14, 2009. The note bears interest
at 7.50% annually with interest payable on the last day of each calendar
quarter beginning December 31, 1999. The Company can convert, at its
option, any portion of the outstanding principle of the note into Class A
Common Stock of J. L. French at a preset agreed upon conversion price.
-10-
<PAGE>
On October 29, the Company infused $21 million for new shares representing
a 49% equity interest in Seojin Industrial Company Limited ("Seojin").
Seojin is a supplier of frames, modules and structural components to the
Korean automobile industry. Total consideration for the equity interest
was financed under the Company's revolving credit facility. In addition,
the Company advanced $19 million to Seojin in exchange for variable rate
convertible bonds ("bonds") due October 30, 2009. The bonds are unsecured
and rank pari passu with all other present and future obligations of
Seojin. Interest on the bonds is payable annually beginning October 30,
2000 and each October 30 thereafter until maturity. The Company has the
right at its option to convert the bonds into common stock of Seojin any
time on or after October 30, 2000.
-11-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1999 TO THE THREE MONTHS
ENDED SEPTEMBER 30, 1998
REVENUES -- Revenues for the third quarter of 1999 were $536.2 million, compared
to $444.9 million for the prior period. The increase is due to incremental new
business of approximately $31.2 million, including business relating to the
Lincoln LS/Jaguar S type, Ford Excursion, and Freightliner, $64 million relating
to the acquisitions of Active Tool and Manufacturing Company Inc. and its
affiliate Active Products Corporation (collectively "Active"), offset by a
decline of $20 million relating primarily to Ford Escort, Ranger, and Taurus.
The General Motors strike had the effect of reducing revenues in the 1998 period
by approximately $16.1 million.
COST OF SALES -- Cost of sales as a percentage of revenues for the third quarter
of 1999 was 84.6% compared to 84.9% for the prior period. The improvement in
gross profit was primarily due to increased production volumes and product mix
on light truck, sport utility and other models served by the Company. The
expected improvement from increased production was offset by inefficiencies
caused by significant launch activity incurred during the current period
compared with the 1998 period.
S, G & A EXPENSES -- Selling, general and administrative expenses increased to
$29.4 million, or 5.5% of revenues, for the third quarter of 1999 compared to
$24.0 million, or 5.4% of revenues for the prior period. The increased expense
was due primarily to $3.3 million of incremental costs associated with the
Company's acquisition of Active, increased engineering, program development, and
launch costs related to new business of $1.1 million, and the write off of $ 1.0
million of expenses relating to EVA training and unsuccessful acquisitions
efforts.
AMORTIZATION EXPENSE -- Amortization expense for the third quarter of 1999 was
$4.5 million compared to $3.5 million for the prior period. The increase was
primarily due to incremental goodwill amortization related to the acquisitions
of IMAR and OSLAMT in July 1998 including operating performance payments, and
the acquisition of Active in July 1999.
INTEREST EXPENSE -- Interest expense for the third quarter of 1999 was $10.6
million compared to $8.6 million for the prior period. Interest expense was
primarily affected by increased borrowings to fund the Company's acquisition of
Active in July 1999 and payments for performance made in connection with the
acquisition of IMAR.
INCOME TAXES -- The effective income tax rate was 40% for the third quarter of
1999 and 1998. The effective rates differed from the statutory rates primarily
as a result of state taxes and non-deductible goodwill amortization.
EQUITY IN EARNINGS OF JOINT VENTURES -- Equity in earnings of joint ventures for
the third quarter of 1999 and 1998 represents the Company's share of the
earnings from its joint venture interests in Metalsa, Caterina and Tower Golden
Ring.
MINORITY INTEREST -- Minority interest for the third quarter of 1999 and 1998
represents dividends, net of income tax benefits, on the Preferred Securities.
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1999 TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
REVENUES -- Revenues for the nine months ended September 30, 1999 were $1,565.4
million, compared to $1,367.9 million for the nine months ended September 30,
1998. The increase is due to net new business of approximately $113.1 million.
The new business related primarily to the Ford Explorer, F-Series pick-up,
Ranger , Excursion and Lincoln LS/Jaguar S Type, Dodge Durango and Dakota, and
the Chrysler LH. The increase of $94.4 million relating to the acquisitions of
IMAR, OSLAMT , and Active offset by $39.0 million relating to the sale of the
Hinge Business. The General Motors strike had the effect of reducing revenues in
the 1998 period by approximately $29.0 million.
-12-
<PAGE>
COST OF SALES -- Cost of sales as a percentage of revenues for the nine
months ended September 30, 1999 was 84.1% compared to 85.3% for the nine
months ended September 30, 1998. Improvement in gross profit was due to
increased production volumes and product mix on light truck, sport utility
and other models served by the Company. The improvement from increased
production was offset by inefficiencies caused by customer demand exceeding
planned capacity at certain locations, resulting in weekend overtime to meet
production, and inefficiencies due to significant launch activity.
S, G & A EXPENSES -- Selling, general and administrative expenses increased to
$76.4 million, or 4.9% of revenues, for the nine months ended September 30, 1999
compared to $66.0 million, or 4.8% of revenues, for the nine months ended
September 30, 1998. The increased expense was due to incremental costs
associated with the Company's acquisitions of IMAR, OSLAMT, and Active of $5.0
million and increased engineering, program development, and launch costs related
to new business of approximately $5.6 million. Additionally, the Company wrote
off certain expenses of approximately $1.7 million relating to unsuccessful
acquisition efforts. This increase was offset partially by the realization of
gains totaling $1.9 million on the cash settlement of amounts due under the
interest rate swap and lock agreements during the first nine months of 1999.
AMORTIZATION EXPENSE -- Amortization expense for the nine months ended September
30, 1999 was $11.6 million compared to $10.0 million for the nine months ended
September 30, 1998. The increase was due to amortization related to the costs
associated with the June 1998 offering of the Preferred Securities and
incremental goodwill amortization related to the acquisitions of IMAR and OSLAMT
in July 1998, including performance payments, and Active in July 1999.
INTEREST EXPENSE -- Interest expense for the nine months ended September 30,
1999 was $25.2 million compared to $33.2 million for the nine months ended
September 30, 1998. Interest expense was affected by (i) increased borrowings
incurred to fund the Company's joint venture interests in Caterina in March
1998, (ii) increased borrowings to fund the Company's acquisition of IMAR and
OSLAMT in July 1998, (iii) increased borrowings to fund the Company's
acquisition of Active in July 1999, and (iv) the proceeds from the June 1998
offering of Preferred Securities, which were used to reduce borrowings under the
Company's revolving credit facility, (v) increased capitalized interest on long
term frame line construction projects.
INCOME TAXES -- The effective income tax rate was 40% for the nine months ended
September 30, 1999 and 1998. The effective rates differed from the statutory
rates primarily as a result of state taxes and non-deductible goodwill
amortization.
EQUITY IN EARNINGS OF JOINT VENTURES -- Equity in earnings of joint ventures for
the first nine months of 1999 and 1998 represents the Company's share of the
earnings from its joint venture interests in Metalsa, Caterina and Tower Golden
Ring.
MINORITY INTEREST -- Minority interest for the first nine months of 1999 and
1998 represents dividends, net of income tax benefits, on the Preferred
Securities.
LIQUIDITY AND CAPITAL RESOURCES
The Company has a credit agreement, which includes a revolving credit facility
that provides for borrowings of up to $750 million on an unsecured basis, with a
letter of credit sublimit of $75 million. In addition, under the terms of the
credit facility, the equivalent of up to $85 million in borrowings can be
denominated in foreign currency. As of September 30, 1999 approximately $81
million of the $330.1 million outstanding borrowings under the revolving credit
facility are denominated in Italian lira. The amount available under the
revolving credit facility reduces to $675 million in April 2000, $600 million in
April 2001 and $500 million in April 2002. The credit facility has a final
maturity of April 2003. Interest on the credit facility is at the prime rate or
LIBOR plus a margin ranging from 17 to 50 basis points depending upon the ratio
of the consolidated indebtedness of the Company to its total capitalization. The
weighted average interest rate for such borrowings was 6.2% for the nine months
ended September 30, 1999.
On August 23, 1999, the Company amended and restated its Credit Agreement to
include a term loan add on facility of $325 million.
-13-
<PAGE>
The term loan facility matures in eight equal repayments beginning September
2002 with final maturity in June 2004. Interest on the term loan facility is at
prime rate or Libor plus a margin ranging from 25 to 175 basis points depending
on the Company's ratio of consolidated indebtedness to its total capitalization.
The weighted average interest rate for the term loan facility was 7.38% for the
nine months ending September 30, 1999.
The Credit Agreement requires the Company to meet certain financial tests,
including but not limited to minimum interest coverage, maximum debt/capital,
maximum leverage and maximum senior leverage ratio as detailed below. As of
September 30, 1999 the Company was in compliance with all debt covenants.
<TABLE>
<CAPTION>
SENIOR
INTEREST COVERAGE DEBT/CAPITAL LEVERAGE LEVERAGE
PERIODS RATIO (1) RATIO (2) RATIO (3) RATIO (4)
------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
12/31/98 - 12/30/1999 2.50 to 1.00 60% 4.50 to 1.00 3.50 to 1.00
12/31/99 - 12/30/2000 2.75 to 1.00 55% 4.25 to 1.00 3.25 to 1.00
12/31/2000 - thereafter 3.00 to 1.00 50% 4.00 to 1.00 3.00 to 1.00
</TABLE>
--------------------------
(1) Interest Coverage Ratio means the ratio of EBIT (as defined) to
consolidated interest expense.
(2) Debt/Capital Ratio means the ratio of total indebtedness of the
Company to the sum of the Company's stockholders' investment plus
total indebtedness of the Company.
(3) Leverage Ratio means the ratio of total indebtedness of the Company to
EBITDA (as defined).
(4) Senior Leverage Ratio means the ratio of total indebtedness of the
Company, excluding subordinated indebtedness and the Convertible Notes
and Debentures, to EBITDA (as defined).
The Credit Agreement also contains certain negative covenants that restrict,
among other things, the ability of the Company to: (i) incur any liens and other
encumbrances; (ii) sell, assign, lease or transfer assets; (iii) consolidate or
merge with another person; (iv) make loan or make any investment in any person;
(v) incur any additional indebtedness; (vi) engage in transactions with
affiliates; (vii) incur any contingent obligations; (viii) enter into any joint
venture; (ix) enter into any obligations for the payment of rent for any
property under a lease or agreement to lease; declare or make any dividend
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any shares of its capital stock, or purchase, redeem
or otherwise acquire or retire for value any subordinated indebtedness or any
shares of its capital stock; (x) engage in a prohibited transaction or violation
of the fiduciary responsibility rules with respect to any employee benefit plan
qualified under ERISA which has resulted or could reasonably be expected to
result in liability in an aggregate amount in excess of 10% of the Company's
tangible net worth; and (xi) engage in any material line of business
substantially different from their existing lines of business.
Effective July 1, 1998, the Company acquired IMAR, S.r.L. ("IMAR") and OSLAMT
S.p.A. ("OSLAMT"). IMAR designs and manufactures structural parts and assemblies
from two facilities in Italy, primarily for Fiat. OSLAMT designs and
manufactures tools and assemblies for the automotive market from its facility in
Turin, Italy. The purchase price consisted of approximately $32.5 million in
cash plus the assumption of approximately $17 million of indebtedness plus an
additional amount of $15 million for achieving certain operating targets. In
July 1999 the Company paid the additional amount of $15 million in connection
with this agreement.
On July 29, 1999, the Company acquired all of the outstanding stock of Active
Tool and Manufacturing Company, Inc. and its affiliate Active Products
Corporation (collectively "Active") for total consideration of approximately
$315 million. Active, which has five facilities, is a leading designer and
producer of large structural stampings and assemblies including Class A exposed
metal surfaces to the North American automotive industry. Active's principle
customers include DaimlerChrysler, Ford, General Motors, and Saturn. Products
offered by Active include body sides, pickup box sides, fenders, floor pan
assemblies, door panels, pillars, and heat shields. The acquisition of Active
enhances the Company's ability to manufacture large and complex structures, as
well as exposed surface panels. The acquisition was financed under the Company's
revolving credit facility.
These acquisitions have been accounted for using the purchase method of
accounting and, accordingly, the assets acquired and liabilities assumed have
been recorded at fair value as of the dates of the acquisitions. The excess of
the purchase price over the fair value of the assets acquired and liabilities
assumed has been recorded as goodwill.
-14-
<PAGE>
Results of operations for these acquisitions have been included in the
accompanying consolidated financial statements since the dates of acquisition.
On August 31, 1998, the Company sold its hinge business (the "Hinge Business")
to Dura Automotive Systems, Inc. for net proceeds of approximately $36.9 million
which approximated the book value of the net assets sold. The net proceeds were
used to repay outstanding indebtedness under the revolving credit facility.
The Company is a 40% partner in Metalsa S. de R.L. ("Metalsa") with Promotora de
Empresas Zano, S.A. de C.V. ("Proeza"). The partnership agreement provides
additional amounts of up to $45 million payable based upon net earnings of
Metalsa during 1998, 1999, and 2000. Based upon Metalsa's 1998 net earnings, the
Company paid Proeza approximately $9.0 million in additional consideration
during the second quarter of 1999.
During the first nine months of 1999, the Company generated $99.7 million of
cash from operations. This compares with $123.4 million provided during the same
period in 1998. Cash provided by net income, depreciation and amortization was
$165.1 million and $125.8 million for 1999 and 1998, respectively. Working
capital requirements relating to customer tooling development and related
receivables during pre-launch phase decreased operating cash flow by
approximately $46 million during the period.
Net cash used in investing activities was $489.4 million during the first nine
months of 1999 as compared to $198.3 million in the prior period. Net capital
expenditures totaled $160.3 million and $122.3 million for the comparable 1999
and 1998 periods, respectively. Acquisitions and investments in joint ventures
were approximately $331.8 and $116.8 million for the 1999 and 1998 periods
respectively.
Net cash provided by financing activities totaled $387.3 million for the first
nine months of 1999 compared with $75.0 million in the prior period. Net
proceeds from borrowings were $377.9 million. The issuance of stock contributed
$9.4 million to cash flow for the period.
At September 30, 1999, the Company had unused borrowing capacity of $420.0
million, under its most restrictive debt covenant. The Company believes the
borrowing availability under its credit agreement, together with funds generated
by operations, should provide liquidity and capital resources to pursue its
business strategy for the foreseeable future, with respect to working capital,
capital expenditures, and other operating needs. The Company estimates its 1999
capital expenditures will approximate $200 million. 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 not significantly effected
the Company's business over the past 12 months. However, because selling prices
generally cannot be increased until a model changeover, the effects of inflation
must be offset by productivity improvements and volume from new business awards.
MARKET RISK
The Company is exposed to various market risks, including changes in foreign
currency exchange rates and interest rates. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as foreign
currency exchange and interest rates. The Company's policy is not to enter into
derivatives or other financial instruments for trading or speculative purposes.
The Company periodically enters into financial instruments to manage and reduce
the impact of changes in interest rates.
At September 30, 1999, Tower Automotive had debt totaling $911.6 million. Of
this amount, $200 million represents fixed debt and $711.6 million represents
floating rate debt. For fixed rate debt, interest rate changes affect the fair
market value but do not impact earnings and cash flows. Conversely for floating
rate debt, interest rate changes generally do not affect the fair market value
but do impact future earnings and cash flows, assuming other factors are held
constant (such as foreign exchange rates and debt levels). Based on debt levels
at September 30, 1999, a one percentage point change in interest rates would
have a net change in the unrealized fair market value of the fixed rate debt of
approximately $5.7 million. The pre-tax earnings and cash flows impact for the
next year resulting from a one percentage point increase in interest rates on
variable rate debt would be approximately $7.1 million, holding other variables
constant.
-15-
<PAGE>
During June of 1999, the Company terminated its position in interest rate swaps
in the notional amount of $300 million, resulting in a gain of $0.5 million. The
swaps were held as a hedge to convert floating rate indebtedness to fixed rate
indebtedness without changing the underlying debt instrument. The Company
believes that over the life of the revolving credit facility, interest rates
will continue to remain stable, decreasing the effectiveness of the interest
swap, and therefore, terminated the hedge.
FOREIGN CURRENCY TRANSACTIONS
A portion of Tower Automotive's revenues was derived from manufacturing
operations in Europe. The results of operations and financial position of the
Company's operations in Europe are principally measured in its respective
currency and translated into U. S. dollars. The effects of foreign currency
fluctuations in Europe are somewhat mitigated by the fact that expenses are
generally incurred in the same currency in which revenues are generated. The
reported income of these subsidiaries will be higher or lower depending on a
weakening or strengthening of the U. S. dollar against the respective foreign
currency.
A portion of Tower Automotive's assets is based in its foreign operations and is
translated into U. S. dollars at foreign currency exchange rates in effect as of
the end of each period, with the effect of such translation reflected as a
separate component of stockholders' investment. Accordingly, the Company's
consolidated stockholders' investment will fluctuate depending upon the
weakening or strengthening of the U. S. dollar against the respective foreign
currency.
The Company's strategy for management of currency risk relies primarily upon
conducting its operations in a country's respective currency and may, from time
to time, engage in hedging programs intended to reduce the Company's exposure to
currency fluctuations. There are no foreign currency hedges outstanding during
the periods presented.
YEAR 2000
The Company is currently working to resolve the potential impact of the year
2000 ("Y2K") on the processing of date-sensitive information by the Company's
computerized and embedded systems. Any of the Company's programs that have
date-sensitive software may recognize the year "00" as 1900 rather than the year
2000. This could result in miscalculations, classification errors or system
failures.
Based on the information available to date, none of the Company's products
contain software or embedded date related logic. Therefore, the Company does not
anticipate any significant readiness problems with respect to its products.
The Company's facilities have completed the inventory and assessment of their
internal information technology ("IT") and non-IT systems (including business,
operating, facilities and factory floor systems). During 1998 remediation
includes repair, replacement, upgrading or retirement of specific systems and
components, with priorities based on a business risk assessment. The Company's
remediation activities were substantially completed in the third quarter of
1999, with isolated, limited exceptions expected to be completed in the fourth
quarter of 1999.
The Company is currently assessing Y2K issues associated with its suppliers by
working with the Automotive Industry Action Group ("AIAG"), an industry trade
association. As the critical supplier assessments are completed, the Company
will develop contingency plans, where feasible and needed, to address the risks
which are identified. Such plans sometimes include resourcing materials or
building inventory banks of purchased items.
The most reasonably likely worst case scenario that the Company currently
anticipates with respect to Y2K is the failure of some of its suppliers,
including utilities suppliers, to be ready. This could cause a temporary
interruption of materials or services that the Company needs to make its
products, which could result in delayed shipments to customers and lost sales
and profits for the Company.
Contingency plans, as needed, are in progress and they will be completed before
the end of 1999. Driven by our internal risk assessment and customer
expectations, in some cases some stockpiling of inventory will occur, to help
ensure business continuity.
The Company estimates that it has spent $1.5 million on Y2K activities to date
and anticipates that it will incur additional future costs not to exceed $0.5
million in total in addressing Y2K issues. These costs are included in normal
operating expenses.
-16-
<PAGE>
The outcome of the Company's Y2K program is subject to a number of risks and
uncertainties, some of which (such as the availability of qualified personnel
and the Y2K preparation of third parties) are beyond its control. Therefore,
there can be no assurances that the Company will not incur material remediation
costs beyond the above anticipated future costs, or that the Company's business,
financial condition, or results of operations will not be significantly impacted
if Y2K problems with its systems, or with the products or systems of other
parties with whom it does business, are not resolved in a timely manner.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities",
becomes effective for the years beginning after June 15, 2000. SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument, including certain derivative instruments embedded in other
contracts, be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge criteria are met. Special accounting for qualifying hedges allow a
derivative's gains or losses to offset related results on the hedged item in the
income statement and requires that a company must formally document, designate
and assess the effectiveness of transactions that receive hedge accounting. The
Company has not yet quantified the impact of adopting SFAS No. 133 and has not
yet determined the timing of adoption.
During the first quarter of 1999, the Company adopted the Financial Accounting
Standards Board Statement of Position (SOP) No. 98-5, "Reporting on the Costs of
Start-Up Activities". SOP 98-5 requires that start-up activities be expensed as
incurred, versus capitalizing and expensing them over a period of time. The
adoption of SOP 98-5 did not affect the Company's consolidated results of
operations of the financial position of the Company.
FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, included in this Form
10-Q, including without limitation the statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" are, or may be
deemed to be, forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended. When used in this Form 10-Q, the words "anticipate," "believe,"
"estimate," "expect," "intends," and similar expressions, as they relate to the
Company, are intended to identify forward-looking statements. Such
forward-looking statements are based on the beliefs of the Company's management
as well as on assumptions made by and information currently available to the
Company at the time such statements were made. Various economic and competitive
factors could cause actual results to differ materially from those discussed in
such forward-looking statements, including factors which are outside the control
of the Company, such as risks relating to: (i) the degree to which the Company
is leveraged; (ii) the Company's reliance on major customers and selected
models; (iii) the cyclicality and seasonality of the automotive market; (iv) the
failure to realize the benefits of recent acquisitions and joint ventures; (v)
obtaining new business on new and redesigned models; (vi) the Company's ability
to continue to implement its acquisition strategy; and (vii) the highly
competitive nature of the automotive supply industry. All subsequent written and
oral forward-looking statements attributable to the Company or persons acing on
behalf of the Company are expressly qualified in their entirety by such
cautionary statements.
-17-
<PAGE>
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 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
12.1 Statement and Computation of Ratio of Earnings to Fixed Charges.
27.1 Financial Data Schedule.
(b) During the quarter for which this report is filed, the Company filed
the following Form 8-K Current Reports with the Securities and
Exchange Commission:
1. The Company's current report on Form 8-K dated July 20, 1999
(Commission File No. 1-12733).
-18-
<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: November 15, 1999 By /S/ ANTHONY A. BARONE
--------------------------------------------
Anthony A. Barone
Vice President, Chief Financial Officer
(principal accounting and financial
officer)
-19-
<PAGE>
EXHIBIT 12.1
TOWER AUTOMOTIVE, INC.
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30,
--------------------------------------------------------------------- --------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Income before income
taxes and extraordinary
item .................. $ 12,403 $ 20,121 $ 34,337 $ 80,741 $135,353 $135,578
Net fixed charges (1) ... 2,351 2,501 8,551 44,385 52,217 32,719
-------- -------- -------- -------- -------- --------
Total earnings .......... $ 14,754 $ 22,622 $ 42,888 $125,126 $187,570 $168,297
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Fixed charges:
Interest expense ........ $ 1,956 $ 2,027 $ 7,636 $ 36,651 $ 42,506 $ 25,874
Capitalized interest .... -- 1,157 -- 3,409 3,732 5,372
Interest factor of rental
expense (2) ........... 271 311 660 6,255 7,352 5,021
Amortization of debt
expense ............... 124 163 255 1,479 2,359 1,824
Dividends on trust
preferred securities -- -- -- -- 9,800 13,099
-------- -------- -------- -------- -------- --------
Total fixed charges ..... $ 2,351 $ 3,658 $ 8,551 $ 47,794 $ 65,749 $ 51,190
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Earnings to fixed
charges................ 6.3 6.2 5.0 2.6 2.9 3.3
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
- -----------------------------
(1) Net fixed charges represents total fixed charges less capitalized
interest and dividends on trust preferred securities.
(2) The interest factor of rental expense has been calculated using the
rate implied pursuant to the terms of the rental agreements. For the
periods presented, the interest factor ranged from 30% to 55% of total
rental expense.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND STATEMENT OF OPERATIONS FOUND ON PAGES 3
THROUGH 5 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,067
<SECURITIES> 0
<RECEIVABLES> 359,362
<ALLOWANCES> 0
<INVENTORY> 115,863
<CURRENT-ASSETS> 575,303
<PP&E> 1,295,354
<DEPRECIATION> 247,482
<TOTAL-ASSETS> 2,498,728
<CURRENT-LIABILITIES> 410,260
<BONDS> 0
0
0
<COMMON> 471
<OTHER-SE> 699,331
<TOTAL-LIABILITY-AND-EQUITY> 2,498,728
<SALES> 1,565,404
<TOTAL-REVENUES> 1,565,404
<CGS> 1,316,627
<TOTAL-COSTS> 1,316,627
<OTHER-EXPENSES> 88,028
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,171
<INCOME-PRETAX> 135,578
<INCOME-TAX> 54,231
<INCOME-CONTINUING> 81,347
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 84,445
<EPS-BASIC> 1.80
<EPS-DILUTED> 1.52
</TABLE>
