SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 2, 2000
Tower Automotive, Inc.
(Exact name of registrant as
specified in its charter)
Delaware 1-12733 41-1746238
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
4508 IDS Center
Minneapolis, Minnesota 55402
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number,
including area code: (612) 342-2310
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Item 5 OTHER EVENTS
On October 2, 2000, Tower Automotive, Inc., issued the press release attached as
Exhibit 99.1 to this Form 8-K.
As described in Exhibit 99.1, Tower Automotive, Inc. has announced that it will
sell its Roanoke, Virginia heavy truck rail manufacturing plant to its 40% owned
affiliate, Metalsa S. de R. L., a company located in Monterrey, Mexico, for $55
million in cash plus an earnout of up to $30 million based upon achieving
certain profit levels over the next three years.
The Company also announced the following actions:
- Discontinuation of the Heavy Truck rail manufacturing operation in
Milwaukee, Wisconsin.
- Discontinuation of operations in Kalamazoo, Michigan, with the
transfer of substantially all of the product manufacturing conducted
in that facility to other Tower Automotive locations.
- Reduction and consolidation of support activities to achieve an
appropriate level relative to remaining operations and future business
requirements.
These actions will result in a pre-tax restructuring charge in the range of $140
million. This charge will require cash payments in the range of $35 million over
the next twelve months combined with the write-off of assets having a book value
in the range of $105 million.
The sale of Roanoke and the discontinuation of Milwaukee heavy truck rail
manufacturing was the result of a decision to exit the heavy truck rail
manufacturing business within Tower Automotive. The primary reasons for the
decision were to focus the Company's attention on its light truck and passenger
car business and to avoid the capital intensity of a non-strategic business.
If the assumptions were made that the sale of the Roanoke facility and the exit
of the Milwaukee heavy truck operation took place on January 1, 2000, the
results would have been lower sales of approximately $60 million and lower
operating income of $9 million for the six months ended June 30, 2000.
Additionally, after-tax equity earnings in joint ventures for the same six-month
period would have increased between $2.5 million and $4.5 million, which
reflects the Company's 40% ownership in Metalsa. The primary reason for the
enhanced profitability, if this business were conducted in Mexico, is the
substantially lower labor costs in a product that requires significant labor
application.
Due to the uncertainties in the heavy truck market, including continued declines
in volume, the results described above may not be indicative of future results.
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The decision to exit Kalamazoo reflects the Company's decision to rationalize
its over-capacity in stamping operations. Substantially all of the sales and
manufacturing activities will be retained by transferring the work to other
Tower Automotive units. The closure of Kalamazoo will result in a reduction in
force of 375 colleagues. Approximately 150 colleagues will be added at the other
Tower Automotive units to manufacture the transferred product. Additionally,
fixed overhead expenses relating to occupancy and related costs will not have to
be incurred at the receiving Tower Automotive units. Sales at Kalamazoo for the
six months ended June 30, 2000 were $38 million.
To maintain the appropriate balance of support activities relative to business
operations conducted by the Company, it will be necessary to rationalize these
activities across the enterprise. This action results in a reduction of 76
colleagues and associated costs for benefits, travel and administration as well
as infrastructure and related costs to support these activities.
Based upon the historical financial results of the discontinued and transferred
operations, as well as certain assumptions relating to the future performance of
the transferred business, the costs of implementing the restructuring, and other
factors over which the Company has no control, the Company could realize annual
savings of between 15 and 25 cents per share from this restructuring.
In addition to the proceeds of $55 million realized on the sale of Roanoke, the
Company expects working capital savings of approximately $20 million relating to
the exiting businesses. The Company expects to also realize approximately $10
million in cash tax savings as a result of the above actions. These cash
proceeds will be more than sufficient to satisfy the payments required by the
restructuring.
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Item 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS
(c) Exhibits
99.1 Press Release dated October 2, 2000.
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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.
Dated: October 2, 2000 TOWER AUTOMOTIVE, INC.
By: /s/ Anthony A. Barone
Anthony A. Barone, Vice President
and Chief Financial Officer
::ODMA\PCDOCS\GRR\486474\1
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EXHIBIT INDEX
Exhibit Number Document
99.1 Press Release dated October 2, 2000.
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EXHIBIT 99.1
DATE: October 2, 2000
FROM:
Tower Automotive, Inc.
5211 Cascade Road
Grand Rapids, Michigan 49546
CONTACT: Financial Community: Anthony A. Barone 616-802-1608
Media Inquiries: John Mackay 616-802-1608
FOR IMMEDIATE RELEASE
TOWER AUTOMOTIVE TO SELL ROANOKE, VA., HEAVY TRUCK RAIL
BUSINESS; TAKE CHARGE RELATED TO REALIGNMENT OF BUSINESS
Action Strengthens Technology Focus in Automotive and Light Truck Structural
Systems and Modules
Includes:
- Selling Roanoke, Va., heavy truck rail business to Metalsa S. de R.L. for
more than $55 million
- Phasing out heavy truck rail manufacturing in Milwaukee, Wisc.
- Reducing capital assets in stamping capacity
- Resulting in fourth-quarter pre-tax charge in the range of $140 million
Company indicates third-quarter EPS to be in the range of 20 to 25 cents
Grand Rapids, Mich., Oct. 2, 2000-- Tower Automotive, Inc. (NYSE: TWR),
announced today that it has signed a definitive agreement to sell its Roanoke,
Va., heavy truck rail manufacturing business to its joint venture partner,
Metalsa S. de R.L. The sale is for $55 million in cash plus an earnout to Tower
Automotive of up to $30 million based upon Metalsa heavy truck achieving certain
profit levels over the next three years. Tower Automotive has a 40 percent
ownership position in Metalsa S. de R.L., a privately owned company
headquartered in Monterrey, Mexico. The transaction is expected to be completed
by the end of December 2000.
In addition, Tower Automotive announced it will phase out its heavy truck
rail manufacturing and related activities in Milwaukee by March 2001.
The company also announced that it is reducing its stamping capacity and
consolidating related support activities. This will include discontinuing
operations at its Kalamazoo, Mich., stamping facility.
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"The decision to exit the heavy truck rail business reflects our intent to
focus our investments and efforts on growing our light vehicle structures and
modules business around the world," said Dugald Campbell, president and CEO of
Tower Automotive.
"The consolidation of stamping production reflects our efforts to more
effectively utilize our capacity," said Campbell. "Although these actions will
strengthen the enterprise for our stakeholders going forward, including our
colleagues, it is nonetheless a difficult decision because some colleagues will
be affected by the phase-out of certain operations. We will provide support and
assistance to help affected colleagues find other employment opportunities."
The effect on employment levels of the company will be fewer than 800
colleagues.
The company announced that it is taking an estimated $140 million pre-tax
restructuring charge in the fourth quarter related to this realignment of its
business activities.
The company also warned that third-quarter earnings would be below
expectations and indicated an estimated range most likely would be 20 to 25
cents per share. This shortfall was attributed to much more severe impact on
operations and earnings caused by Ranger/Explorer tire issues, continued heavy
truck product sales decline, new product launches, and schedule disruptions
created by irregular releases from its customers.
Tower Automotive, Inc., produces a broad range of assemblies and modules
for vehicle structures and suspension systems for original equipment
manufacturers of automobiles and light trucks including Ford, DaimlerChrysler,
GM, Honda, Toyota, Nissan, Auto Alliance, Fiat, BMW and Volkswagen. Products
include exterior panels, body structural assemblies, suspension components,
engine cradles, full frame assemblies and modules. Additional company
information is available at www.towerautomotive.com.
This news release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from the anticipated results as a consequence of certain risks and
uncertainties, including but not limited to general economic conditions in the
markets in which Tower Automotive operates; a change in the terms, timing or an
inability to complete the sale of business to Metalsa; unanticipated costs
associated with the discontinuation of operations at
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Kalamazoo and phasing out of heavy truck rail operations in Milwaukee; and other
risks detailed from time to time in the company's Securities and Exchange
Commission filings.
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