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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
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Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended: Commission file number:
DECEMBER 31, 1997 1-12733
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TOWER AUTOMOTIVE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 41-1746238
(State of Incorporation) (I.R.S. Employer Identification No.)
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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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
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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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.
As of March 23, 1998, 23,064,087 shares of Common Stock of the
Registrant were outstanding and the aggregate market value of the Common
Stock of the Registrant (based upon the last reported sale price of the
Common Stock at that date by the New York Stock Exchange), excluding shares
owned beneficially by affiliates, was approximately $1,014,407,000.
Information required by Items 5,6,7 and 8 of Part II of this Annual Report on
Form 10-K incorporates by reference information (to the extent specific
sections are referred to herein) from the Registrant's Annual Report to
Stockholders for the year ended December 31, 1997 (the "1997 Annual Report").
Information required by Items 10, 11, 12 and 13 of Part III of this Annual
Report on Form 10-K incorporates by reference information (to the extent
specific sections are referred to herein) from the Registrant's Proxy
Statement for its annual meeting to be held May 19, 1998 (the "1998 Proxy
Statement").
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TOWER AUTOMOTIVE, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
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PART I
ITEM 1. BUSINESS
MARKET DATA USED THROUGHOUT THIS FORM 10-K WERE OBTAINED FROM INDUSTRY
PUBLICATIONS AND INTERNAL COMPANY SURVEYS. INDUSTRY PUBLICATIONS GENERALLY
STATED THAT THE INFORMATION CONTAINED THEREIN HAS BEEN OBTAINED FROM SOURCES
BELIEVED TO BE RELIABLE. THE COMPANY HAS NOT INDEPENDENTLY VERIFIED THESE
MARKET DATA. SIMILARLY, INTERNAL COMPANY SURVEYS, WHILE BELIEVED BY THE
COMPANY TO BE RELIABLE, HAVE NOT BEEN VERIFIED BY ANY INDEPENDENT SOURCES.
(a) GENERAL DEVELOPMENT OF BUSINESS
BACKGROUND OF COMPANY
Tower Automotive, Inc. and its subsidiaries (collectively referred to as
the "Company") is a leading designer and producer of high-quality body
structure components and assemblies used by the major North American
automotive original equipment manufacturers ("OEMs"), Ford, Chrysler and
General Motors, and certain foreign OEMs with manufacturing operations in
North America ("Transplants"), including Honda, Toyota, Nissan and Mazda.
The Company's current products range from large structural stampings and
assemblies, such as body pillars, chassis, suspension and floor pan
components and major housing assemblies, to engineered assemblies, such as
hood and deck lid hinges and brake components. Since its inception in April
1993, the Company's revenues have grown rapidly through a focused strategy of
internal growth and a highly disciplined acquisition program. During the
last four years, the Company has successfully completed six acquisitions and
acquired joint venture interests in Mexico and Brazil. As a result of such
acquisitions and internal growth, the Company's revenues have increased from
approximately $86 million in 1993 to approximately $1.2 billion in 1997,
representing a compound annual growth rate of approximately 95%. The
Company's North American content per vehicle has increased from $6.23 in 1993
to $91.14 in 1997.
The Company operates in the large and highly fragmented structural
segment of the automotive supply industry, which has recently begun to
undergo significant consolidation. In order to lower costs and improve
quality, OEMs are reducing their supplier base by awarding sole-source
contracts to full-service suppliers who are able to supply larger portions of
a vehicle on a global basis. OEMs' criteria for supplier selection include
not only cost, quality and responsiveness, but also full-service design,
engineering and program management capabilities. OEMs are increasingly
seeking suppliers capable of providing complete systems or modules rather
than suppliers who only provide separate component parts. In addition, OEMs
are increasingly requiring their suppliers to have the capability to design
and manufacture their products in multiple geographic markets. As a
full-service supplier with strong OEM relationships, the Company expects to
continue to benefit from these trends within the structural segment of the
automotive supply industry.
The Company was formed to acquire R.J. Tower Corporation (the
"Predecessor" or "R.J. Tower"), the acquisition of which was completed in
April 1993 for an aggregate cost of approximately $26 million. Since April
1993, the Company has successfully completed six strategic acquisitions and
acquired joint venture interests in Mexico and Brazil including:
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CATERINA. In March 1998, the Company acquired a 40 percent equity
interest in Metalurgica Caterina S.A. ("Caterina"), a supplier of structural
stampings and assemblies to the Brazilian automotive market. In addition,
the Company also has the right to acquire the remaining 60 percent of the
equity of Caterina in the future. The Company paid approximately $48 million
for its initial equity interest. This investment added Volkswagen and
Mercedes as new customers.
METALSA. In October 1997, the Company acquired a 40 percent equity
interest in Metalsa S. de R.L. ("Metalsa"). In addition, the Company has
entered into a technology sharing arrangement which will allow it to utilize
the latest available product and process technology. Metalsa is the largest
supplier of vehicle frames and structures in Mexico. The Company paid
approximately $120 million for its equity interest with an additional
amount of up to $45 million payable based upon Metalsa's future net earnings.
SIMES. In May 1997, the Company acquired Societa Industria Meccanica e
Stampaggio S.p.A. ("SIMES") for approximately $50.7 million in cash, plus up
to an additional $3.0 million if SIMES achieves certain operating targets
following the acquisition. The acquisition of SIMES (i) significantly
expanded the Company's global capabilities by providing the Company with a
manufacturing presence in Europe, (ii) added Fiat as a new customer and (iii)
enhanced the Company's design and engineering capabilities.
APC. In April 1997, the Company acquired Automotive Products Company
("APC"), a division of A.O. Smith, for approximately $700 million in cash.
APC is a leading designer and producer of structural and suspension
components for the automotive, light truck and heavy truck markets. The
acquisition of APC (i) expanded product offerings and modular product
opportunities; (ii) increased customer penetration within each of the three
major North American OEMs and within certain Transplants; (iii) increased
penetration in the light truck segment and other key models; (iv) added
complementary new technology; (v) provided opportunities to reduce costs and
improve operational efficiency; and (vi) provided an expanded presence in
China, Japan and South America, which complemented the Company's current
European initiatives to provide expanded global production capabilities for
both North American and international OEMs.
MSTI. In May 1996, the Company acquired MascoTech Stamping
Technologies, Inc. ("MSTI") from MascoTech, Inc. ("MascoTech") for
approximately $79 million (including the payment of related fees and
expenses), plus additional earn-out payments if certain operating targets are
achieved by the MSTI facilities in the first three years following the
acquisition. The MSTI acquisition: (i) expanded the Company's product
capabilities into chassis and suspension components; (ii) provided chassis
and suspension technology as well as value-added processing technologies
including assembling, painting and welding; and (iii) increased the Company's
content per vehicle on key light truck and sport utility vehicles such as the
Ford F-Series, Explorer and Windstar and the Chrysler Ram and Dakota as well
as on high volume passenger cars such as the Ford Taurus/Sable.
TRYLON. In January 1996, the Company acquired Trylon Corporation
("Trylon") from MascoTech for approximately $25 million in cash, including
transaction costs. The Trylon acquisition: (i) broadened the Company's
product offerings to include small, precision metal stampings and assemblies,
which were previously outsourced to third parties; (ii) established a
relationship between the Company and General Motors; and (iii) increased
content on Ford models, primarily the Villager.
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KALAMAZOO. In June 1994, the Company acquired Kalamazoo Stamping and
Die Company ("Kalamazoo"), a supplier of structural stampings and assemblies,
for approximately $12 million in cash. The acquisition of Kalamazoo added
additional structural components to the Company's product offerings and
increased model penetration with Ford.
EDGEWOOD. In May 1994, the Company acquired Edgewood Tool and
Manufacturing Company and its affiliate, Ann Arbor Assembly Corporation
(collectively, "Edgewood") for approximately $30 million in aggregate
consideration. Edgewood is a leading supplier of hood and deck lid hinges as
well as structural stampings and assemblies. The acquisition of Edgewood:
(i) added engineered mechanical stampings, primarily hood and deck lid
hinges, and additional structural components to the Company's product
offerings; (ii) increased model penetration with the Company's existing
customers; and (iii) provided the Company with a significant new customer,
Mazda.
The Company completed an initial public offering (the "IPO") of its
Common Stock in August 1994, the sale of an additional 2,232,900 shares in
June 1996 and an additional 8,500,000 shares in April 1997. The Company's
principal executive offices are located at 4508 IDS Center, Minneapolis,
Minnesota 55402, and its telephone number is (612) 342-2310.
BUSINESS STRATEGY
The Company's business objective is to capitalize upon the
consolidation, globalization and system/modular sourcing trends in the
automotive supply industry in order to be the leading provider of structural
and suspension components to OEMs on a worldwide basis. Key elements of the
Company's operating and growth strategies are outlined below:
OPERATING STRATEGY:
FULL-SERVICE TECHNICAL DESIGN, ENGINEERING AND PROGRAM MANAGEMENT
CAPABILITIES. The Company strives to maintain a competitive advantage
through investment in research and product development, advanced engineering
and program management. The Company works with OEMs throughout the product
development process from concept vehicle and prototype development through
the design and implementation of manufacturing processes to provide
full-service capabilities to its customers. In some cases, the Company
places design engineers at customer facilities to coordinate its product
design efforts with those of its OEM customers.
EFFICIENT MANUFACTURING/CONTINUOUS IMPROVEMENT PROGRAMS. In response to
OEMs' increasingly stringent demands, the Company has implemented
manufacturing practices designed to maximize product quality and timeliness
of delivery and eliminate waste and inefficiency. The Company has continued
to upgrade its manufacturing equipment and processes through substantial
investment in new equipment, maintenance of existing equipment and
utilization of manufacturing engineering personnel.
GLOBAL PRESENCE. The Company strives to offer manufacturing and support
services to its customers on a global basis through a combination of
international wholly owned facilities and by entering into joint ventures and
partnerships with foreign suppliers. Since 1993, in furtherance of its
global expansion strategy, the Company has opened a European sales and
engineering office to service U.K. and German OEM customers and has
established an industrial partnership with The Kirchhoff Group ("Kirchhoff")
in Germany. The Company also has relocated certain technical personnel
resources to locations where OEMs are developing "world cars."
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DECENTRALIZED, PARTICIPATIVE CULTURE. The Company's decentralized
approach to managing its manufacturing facilities encourages decision making
and employee participation in areas such as manufacturing processes and
customer service. The Company's leadership team meets frequently at various
Company locations in order to maintain a unified Company culture. To
increase employee productivity, the Company utilizes incentive programs for
all salaried and hourly employees and provides incentives for employees who
take advantage of its continuous improvement programs and who provide cost
savings ideas.
GROWTH STRATEGY:
STRATEGIC ACQUISITIONS. The Company continues to believe that
consolidation in the automotive supply industry will provide further
attractive opportunities to acquire high-quality companies that complement
its existing business. The Company seeks to make acquisitions that (i)
provide additional product, manufacturing and technical capabilities; (ii)
broaden the Company's geographic coverage domestically and strengthen its
ability to supply products on a global basis; (iii) increase the number of
models for which the Company supplies products and the content supplied for
existing models; and (iv) add new customers. The Company intends to seek
future acquisitions or develop strategic alliances that will strengthen the
Company's ability to supply its products on a global basis.
MODULAR PRODUCT OPPORTUNITIES. The Company has capitalized on the
system/modular sourcing trend among OEMs by offering customers higher
value-added supply capabilities through an increasing focus on the production
of assemblies consisting of multiple component parts that are welded or
otherwise fastened together by the Company. The Company has the ability to
supply OEMs with modules consisting of integrated assemblies and component
parts that can be installed as a unit in a vehicle at the OEM assembly plant.
INCREASE VEHICLE PENETRATION. The Company has developed strong
relationships with certain OEM engineering and purchasing personnel which
allow it to identify business opportunities and to react to customer needs in
the early stages of vehicle design. The Company believes that these
relationships give it a competitive advantage over smaller and less capable
suppliers in marketing its broad range of products and in developing new
product concepts, such as expanded use of modules, that complement its
existing product lines.
PURSUIT OF "WORLD CAR" OPPORTUNITIES. The Company has been working
closely with certain customers on the development of "world cars," which are
designed by OEMs in one vehicle center to a single global standard but
produced and sold in different geographic markets. Suppliers for a specific
"world car" are often required to provide their products on a worldwide
basis. The Company believes that it has a competitive advantage in
potentially supplying certain world cars given its international presence,
full-service capabilities and existing position as a leading supplier on the
Ford Escort and DEW98 luxury car, as well as on other existing vehicle
platforms which may eventually evolve into world cars.
INDUSTRY TRENDS
The Company's performance and growth is directly related to certain
trends within the automotive market, including the consolidation of the
component supply industry, the increase in global sourcing and the growth of
system/modular sourcing.
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SUPPLIER CONSOLIDATION. The automotive supply industry has begun to
undergo significant consolidation. In order to lower costs and improve
quality, OEMs are reducing their supplier base by awarding sole-source
contracts to full-service suppliers who are able to supply larger segments of
a vehicle. OEMs' criteria for supplier selection include not only cost,
quality and responsiveness, but also full-service design, engineering and
program management capabilities. For full-service suppliers such as the
Company, the new environment provides an opportunity to grow by obtaining
business previously provided by other non-full service suppliers and by
acquiring suppliers that further enhance product, manufacturing and service
capabilities. OEMs rigorously evaluate suppliers on the basis of product
quality, cost control, reliability of delivery, product design capability,
financial strength, new technology implementation, quality and condition of
facilities and overall management. Suppliers that obtain superior ratings
are considered for sourcing new business. Although these new supplier
policies have already resulted in significant consolidation of component
suppliers in certain segments, the Company believes that consolidation within
the structural and suspension component segments of the automotive industry
will continue to provide attractive opportunities to acquire high-quality
companies that complement its existing business.
GLOBAL SOURCING. Regions such as Asia, Latin America, Mexico and
Eastern Europe are expected to experience significant growth in vehicle
demand over the next ten years. OEMs are positioning themselves to reach
these emerging markets in a cost-effective manner by seeking to design and
produce "world cars" which can be designed in one vehicle center to a single
global standard but produced and sold in different geographic markets,
thereby allowing OEMs to reduce design costs, take advantage of low-cost
manufacturing locations and improve product quality and consistency. OEMs
increasingly are requiring their suppliers to have the capability to design
and manufacture their products in multiple geographic markets.
SYSTEM/MODULAR SOURCING. OEMs are increasingly seeking suppliers
capable of providing complete systems or modules rather than suppliers who
only provide separate component parts. A system is a group of component
parts which operate together to provide a specific engineering driven
functionality whereas a module is a group of systems and/or component parts
which are assembled and shipped to the OEM for installation in a vehicle as a
unit. By outsourcing complete systems or modules, OEMs are able to reduce
their costs associated with the design and integration of different
components and improve quality by enabling their suppliers to assemble and
test major portions of the vehicle prior to beginning production.
PRODUCTS
The Company produces a broad range of stamped and welded assemblies for
vehicle body structures and suspension systems, many of which are critical to
the structural integrity of a vehicle. These products include body
structural assemblies such as pillars and package trays, control arms,
suspension links, engine cradles and full frame assemblies. These stampings
and assemblies are attached directly to the frame of an automobile at the OEM
assembly plant and comprise the major structure of a vehicle. The Company's
products generally can be classified into the following categories:
Structural components, suspension components and engineered assemblies.
STRUCTURAL COMPONENTS. The Company's structural component products form
the basic upper body structure of the vehicle and include large metal
stampings such as body pillars, roofrails, side sills, parcel shelves and
intrusion beams. The Company expanded its product offerings to include
structural component products that form the basic lower body structure of
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the vehicle such as light truck frames, automotive engine cradles and heavy
truck frame rails. Critical to the strength and safety of vehicles,
structural products carry the load of the vehicle and provide crash integrity.
SUSPENSION COMPONENTS. The Company's current suspension component
products include stamped, formed and welded products such as control arms,
suspension links, track bars, spring/shock towers, control arms, suspension
links and trailing axles. Critical to the ride, handling and noise
characteristics of a vehicle, suspension components are a natural extension
of the Company's larger structural components.
ENGINEERED ASSEMBLIES. The Company's current engineered assemblies
include a broad array of highly engineered parts such as hood and deck lid
hinges, brake components and fuel filter assemblies. Such engineered
assemblies are a natural extension to the Company's other products in that
they are attached to both structural and suspension components.
OTHER. In addition to the Company's structural, suspension and
mechanical component products, the Company manufactures a variety of other
products, including heat shields and other precision stampings, for its OEM
customers.
Although a portion of the Company's products are sold directly to OEMs
as finished products, most are used by the Company to produce assemblies
consisting of multiple parts that are welded or otherwise fastened together
by the Company. Systems and assemblies currently produced by the Company
include front and rear structural suspension systems comprised of control
arms, suspension links and axle assemblies consisting of stamped metal
trailing axles, assembled brake shoes, hoses and tie rods.
CUSTOMERS AND MARKETING
The North American automotive market is dominated by General Motors,
Ford and Chrysler, with Transplants representing approximately 28% of this
market in 1997. The Company currently supplies its products primarily to
Ford, Chrysler, General Motors, Honda, Toyota, Nissan and Mazda.
OEMs typically award contracts that cover parts to be supplied for a
particular car model. Such contracts range from one year to over the life of
the model, which is generally three to ten years and do not require the
purchase by the customer of any minimum number of parts. The Company also
competes for new business to supply parts for successor models and therefore
is subject to the risk that the OEM will not select the Company to produce
parts on a successor model. The Company supplies parts for a broad
cross-section of both new and mature models, thereby reducing its reliance on
any particular model. For example, the Company supplies parts for
substantially all models produced by Ford, Honda and Chrysler and currently
supplies Chrysler with substantially all of its full frame requirements. The
following table presents an overview of the major models for which the
Company supplies products:
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CUSTOMER CAR MODELS TRUCK MODELS
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Ford Taurus/Sable, Contour/Mystique, Mustang, Explorer, Ranger, F-Series,
Escort, Crown Victoria, Grand Marquis, Econoline, Villager, Windstar,
Probe, Continental Medium Trucks, Expedition
Chrysler Concorde/Intrepid, Neon, Viper, Ram Pick-up, Dakota, Grand
Stratus/Cirrus/Breeze Cherokee, Voyager, Caravan,
Ram Van, Wrangler, Durango,
General Motors Cavalier, Sunfire, Grand Am, Lumina, Grand C/K Pick-up, Blazer, Chevy Van,
Prix Suburban, Tahoe, Yukon, Astro,
Safari
Honda Accord, Civic, Acura Integra
Mazda 626,MX6
Toyota Avalon, Camry Mini-van
Nissan Sentra Quest, Pick-up
Isuzu Rodeo, Amigo
Fiat Marea, Punto, Bravo
Most of the parts the Company produces have a lead time of two to five
years from product development to production. See "Design and Engineering
Support." Since 1988, the Company has been the leading supplier for hood and
deck hinges at Ford and Chrysler and is responsible for the design and
production of such products. The selling prices of these products are
generally negotiated between the Company and its customers and are typically
not subject to a competitive bid process.
Sales of the Company's products to OEMs are made directly by the
Company's sales and engineering forces, located at its technical centers in
Farmington Hills, Michigan, Milwaukee, Wisconsin, Yokohama, Japan and Torino,
Italy. Through its technical centers, the Company services its OEM customers
and manages its continuing programs of product design improvement and
development. The Company periodically places engineering staff at various
customer facilities to facilitate the development of new programs.
DESIGN AND ENGINEERING SUPPORT
The Company strives to maintain a technological advantage through
investment in product development and advanced engineering capabilities. The
Company's manufacturing engineering capabilities enable it to design and
build high-quality and efficient manufacturing systems, processes and
equipment and to continually improve its production processes and equipment.
The Company's manufacturing engineers are located at each of its
manufacturing facilities. The Company's engineering staff currently consists
of approximately 400 full-time engineers, whose responsibilities range from
research and development, advanced product development, product design,
testing and initial prototype development to the design and implementation of
manufacturing processes.
Because assembled parts must be designed at an early stage in the
development of new vehicles or model revisions, the Company is increasingly
given the opportunity to utilize its product engineering resources early in
the planning process. Advanced development engineering resources create
original engineering designs, computer-aided designs, feasibility studies,
working prototypes and testing programs to meet customer specifications. The
Company's advanced development capabilities have resulted in several
innovations in hinge design that have provided significant benefits to the
Company's customers. The Company also has full-service design capability for
chassis components.
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GLOBAL INITIATIVES
The Company has formed, or is in the process of forming, strategic
alliances with other suppliers throughout the world, including those located
in Europe, Asia and Latin America. The Company has opened a European sales
and engineering office to service its U.K. and German OEM customers. As part
of its acquisition of APC, the Company acquired a 60% equity interest in a
joint venture that manufactures structural components in China. In addition
to the Company's equity interests in Metalsa and Caterina, the Company has a
joint manufacturing and marketing agreement with Kirchhoff, a German
automobile parts supplier, pursuant to which the Company and Kirchhoff have
agreed to provide manufacturing and marketing services to each other when and
as required by each company's OEM customers. A current focus of the
Company's acquisition strategy is to acquire foreign suppliers that would
provide the Company with a manufacturing presence in new geographic areas and
afford the Company access to new customer opportunities.
MANUFACTURING
The Company's manufacturing operations consist primarily of stamping
operations, system and modular assembly operations, roll-forming and
hydroforming operations and associated coating and other ancillary operations.
Stamping involves passing metal through dies in a stamping press to form
the metal into three-dimensional parts. The Company produces stamped parts
using over 640 precision single-stage, progressive and transfer presses,
ranging in size from 150 to 4,000 tons, which perform multiple functions as
raw material proceeds through the press and is converted into a finished
product. The Company continually invests in its press technology to increase
flexibility, improve safety and minimize die changeover time.
After forming is completed, stampings that are to be used in assemblies
are placed in work-in-progress staging areas from which they are fed into
cell-oriented assembly operations that produce complex, value-added
assemblies through the combination of multiple parts that are welded or
fastened together. The Company's assembly operations are performed on either
dedicated, high-volume welding/fastening machines or on flexible-cell
oriented robotic lines for units with lower volume production runs. The
assembly machines attach additional parts, fixtures or stampings to the
original metal stampings. In addition to standard production capabilities,
the Company's assembly machines are also able to perform various statistical
control functions and identify improper welds and attachments. The Company
continually works with manufacturers of fixed/robotic welding systems to
develop faster, more flexible machinery. Several of the Company's welding
systems were designed by the Company.
The products manufactured by the Company use various grades and
thicknesses of steel and aluminum, including hot and cold rolled, galvanized,
organically coated, stainless and aluminized steel. The Company does not
produce exposed sheet metal components, such as exterior body panels. See
"Suppliers and Raw Materials."
OEMs have established quality rating systems involving rigorous inspections
of suppliers' facilities and operations. OEMs' factory rating programs provide
a quantitative measure of a company's success in improving the quality of its
operations. The Company has received quality awards from Ford (Q1) and Chrysler
(Pentastar) and has consistently received one of Ford's highest commercial
ratings for suppliers in the stamping segment. The automotive
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industry adopted a quality rating system known as QS-9000. The Company has
received QS-9000 certification in compliance with the automotive industry
requirements.
COMPETITION
The Company operates in a highly competitive, fragmented market segment
of the automotive supply industry, with a limited number of competitors
generating revenues in excess of $200 million. The number of the Company's
competitors has decreased in recent years and is expected to continue to
decrease due to the supplier consolidation resulting from changing OEM
policies. The Company's largest competitors include The Budd Company, a
subsidiary of Thyssen AG ("Budd"), Magna International, Inc. ("Magna"), Dana
Corporation, Midway Products Corp., Modern Tool & Die Co., L&W Engineering,
Midland Corporation and divisions of OEMs with internal stamping and assembly
operations, all of which have substantial financial resources. The Company
competes with Magna across most of the Company's product lines, and with its
other significant competitors in various segments of its product lines. For
example, the Company competes with Budd for large stampings, while it
competes with ITT Automotive for hinge business. Aetna Industries, Active
Tool & Die Co., AG Simpson Ltd., Oxford Automotive, Inc. and L&W Engineering
compete with the Company for medium-size structural stampings.
The Company principally competes for new business both at the beginning
of the development of new models and upon the redesign of existing models.
New model development generally begins two to five years before the marketing
of such models to the public. Once a producer has been designated to supply
parts for a new program, an OEM usually will continue to purchase those parts
from the designated producer for the life of the program, although not
necessarily for a redesign. Competitive factors in the market for the
Company's products include product quality and reliability, cost and timely
delivery, technical expertise and development capability, new product
innovation and customer service.
SUPPLIERS AND RAW MATERIALS
The primary raw material used to produce the majority of the Company's
products is steel. The Company purchases hot and cold rolled, galvanized,
organically coated, stainless and aluminized steel from a variety of
suppliers. The Company employs just-in-time manufacturing and sourcing
systems enabling it to meet customer requirements for faster deliveries while
minimizing its need to carry significant inventory levels. The Company has
not experienced any significant shortages of raw materials and normally does
not carry inventories of raw materials or finished products in excess of
those reasonably required to meet production and shipping schedules. Raw
material costs represented approximately 47.9% of the Company's revenues in
1997.
Honda and Chrysler currently purchase all of the steel used by the
Company for their models directly from steel producers. Ford is in the
process of implementing a similar program. As a result, the Company will
have minimal exposure to changes in steel prices for parts supplied to Ford,
Honda and Chrysler, which collectively represented 70.7% of the Company's
revenues in 1997.
The Company expects that the content level of metal in cars and light
trucks will remain constant or increase slightly due to the trend toward
increased vehicle size and a greater emphasis on metal recycling. Although
the search for improved fuel economy and weight reduction has resulted in
attempts to reduce the sheet metal content of light vehicles, an efficient,
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cost-effective substitute for steel used in the Company's structural products
has not been found. While various polymers have been used recently for
fenders, hoods and decks, such products do not have the inherent strength or
structural integrity on a cost-effective basis to be used for structural
components. The Company is involved in ongoing evaluations of the potential
for the use of aluminum and of specialty steel in its products.
Other raw materials purchased by the Company include dies, fasteners,
tubing, springs, rivets and rubber products, all of which are available from
numerous sources.
EMPLOYEES
As of December 31, 1997, the Company had approximately 8,750 employees,
of whom approximately 4,000 are covered under collective bargaining
agreements. These collective bargaining agreements expire between 1998 and
2000. The Company believes that its future success will depend in part on
its ability to continue to recruit, retain and motivate qualified personnel
at all levels of the Company. The Company has instituted a large number of
employee programs to increase employee morale and expand the employees'
participation in the Company's business. The Company has not experienced any
work stoppages and considers its relations with its employees to be good.
(b) SAFE HARBOR PROVISIONS
Forward-looking statements included in this Form 10-K are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. There are certain important factors that could cause future results
to differ materially from those that might be anticipated based on some of
the statements made in this report. Investors are cautioned that all
forward-looking statements involve risks and uncertainty. Among the factors
that could cause actual results to differ materially are the following:
- RELIANCE ON MAJOR CUSTOMERS AND SELECTED MODELS. The Company's two
largest customers, Ford and Chrysler, represented approximately 48% and 19%,
respectively, of the Company's 1997 revenues. The loss of Ford, Chrysler or
any of the Company's other significant customers or a significant decrease in
demand for certain key models or a group of related models sold by any of
their major customers could have a material adverse effect on the Company.
- INDUSTRY CYCLICALITY AND SEASONALITY. The automotive market is highly
cyclical and is dependent on consumer spending. Economic factors adversely
affecting automotive production and consumer spending could adversely impact
the Company.
- FAILURE TO OBTAIN BUSINESS RELATED TO NEW AND REDESIGNED MODEL
INTRODUCTIONS. The failure of the Company to obtain new business on new
models or to retain or increase business on redesigned existing models could
adversely affect the Company.
ITEM 2. PROPERTIES
MANUFACTURING FACILITIES
The Company maintains several manufacturing facilities located in close
proximity to many of the high-volume vehicle assembly plants of its
customers. The Company's facilities are geographically located in such a way
as to enable the Company to optimize its management and logistical
capabilities on a regional basis.
-12-
The following table provides information regarding the Company's
principal facilities:
SQUARE TYPE OF DESCRIPTION
LOCATION FOOTAGE INTEREST OF USE
- ----------------------------------------- ------------ ------------ ----------------------------------
Milwaukee, Wisconsin . . . . . . . . . . 3,527,000 Owned Manufacturing
Milan, Tennessee . . . . . . . . . . . . 533,000 Owned Manufacturing
Granite City, Illinois.. . . . . . . . . 458,000 Owned Manufacturing
Turin, Italy (2 locations) . . . . . . . 257,000 Owned Manufacturing
Bardstown, Kentucky. . . . . . . . . . . 240,000 Owned Manufacturing
Kalamazoo, Michigan
(2 locations). . . . . . . . . . . . . 222,000 Mixed Manufacturing/Warehouse/Office
Plymouth, Michigan.. . . . . . . . . . . 221,000 Leased Manufacturing
Traverse City, Michigan
(4 locations). . . . . . . . . . . . . 220,000 Owned Manufacturing
Roanoke, Virginia. . . . . . . . . . . . 185,000 Owned Manufacturing
Greenville, Michigan.. . . . . . . . . . 160,000 Owned Manufacturing/Office
Corydon, Indiana.. . . . . . . . . . . . 155,000 Leased Manufacturing
Rockford, Illinois.. . . . . . . . . . . 140,000 Leased Manufacturing
Auburn, Indiana. . . . . . . . . . . . . 132,000 Owned Manufacturing/Office
Kendallville, Indiana. . . . . . . . . . 132,000 Owned Manufacturing
Romulus, Michigan. . . . . . . . . . . . 115,000 Leased Manufacturing/Office
Bluffton, Ohio . . . . . . . . . . . . . 102,000 Owned Manufacturing
Rochester Hills, Michigan. . . . . . . . 89,000 Leased Office/Engineering/Design
Belcamp, Maryland. . . . . . . . . . . . 68,000 Owned Manufacturing
Bellevue, Ohio.. . . . . . . . . . . . . 66,000 Owned Manufacturing
Manchester, Michigan . . . . . . . . . . 61,000 Owned Manufacturing
Upper Sandusky, Ohio.. . . . . . . . . . 56,000 Owned Manufacturing
Farmington Hills, Michigan . . . . . . . 47,000 Leased Engineering/Design/Sales
Fenton, Missouri.. . . . . . . . . . . . 40,000 Leased Warehouse
Barrie, Ontario. . . . . . . . . . . . . 40,000 Leased Manufacturing
Bowling Green, Kentucky. . . . . . . . . 39,000 Owned Manufacturing
Grand Rapids, Michigan . . . . . . . . . 23,000 Leased Operating Headquarters
Minneapolis, Minnesota . . . . . . . . . 5,700 Leased Corporate Headquarters
Yokohama, Japan. . . . . . . . . . . . . 800 Leased Sales
Changchun, China.. . . . . . . . . . . . 140,500 Leased(1) Manufacturing
- ------------------------
(1) Facility is leased by a joint venture in which the Company holds a
60% equity interest.
Management believes that substantially all of the Company's property and
equipment is in good condition. In order to increase efficiency, the Company
expects to continue to make capital expenditures for equipment upgrades at
its facilities as necessary.
The Company believes that its existing facilities will be adequate to
meet its production demands for the foreseeable future. The Company's
facilities were specifically designed for the manufacturing of the Company's
products. The utilization and capacity of such facilities are dependent upon
the mix of products being produced by the Company.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently involved in any material lawsuits. The
Company believes it maintains adequate insurance, including product liability
coverage. The Company historically has not been required to pay any material
liability claims.
-13-
ENVIRONMENTAL MATTERS
The Company believes it conducts its operations in substantial
compliance with applicable environmental and occupational health and safety
laws. The Company does not expect to incur material capital expenditures for
environmental compliance during its current or succeeding fiscal year.
However, as is the case with manufacturers in general, if a release of
hazardous substances occurs on or from the Company's properties or at any
associated offsite disposal location, if contamination from prior activities
is discovered at any of the Company's properties or if non-compliance with
environmental regulations or permits is discovered, the Company may be held
liable and the amount of such liability could be material. In connection
with the Trylon and MSTI acquisitions, MascoTech has agreed to indemnify the
Company for certain environmental matters, including replacement of
underground storage tanks at the Traverse City facilities and any remediation
that may be required at the Kendallville facility.
In connection with the acquisition of APC, A.O. Smith agreed, subject to
certain limitations, to indemnify the Company for environmental matters
relating to APC arising from events occurring, or conditions arising, prior
to the closing date of the acquisition of APC. In addition, A.O. Smith has
agreed to retain certain environmental liabilities for, among other things,
offsite disposal of hazardous substances prior to the acquisition of APC.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of Stockholders during the
fourth quarter of 1997.
ADDITIONAL INFORMATION - EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Company's executive officers as of March 23, 1998:
Name Age Position
---- --- --------
S.A. Johnson . . . . . . . . . . . . 57 Chairman and Director
Adrian VanderStarre. . . . . . . . . 65 Vice Chairman and Director
Dugald K. Campbell . . . . . . . . . 51 President, Chief Executive Officer and
Director
James R. Lozelle . . . . . . . . . . 52 Executive Vice President and Director
Ronald E. Gavalis. . . . . . . . . . 60 Vice President
Anthony A. Barone. . . . . . . . . . 48 Vice President and Chief Financial Officer
Scott D. Rued. . . . . . . . . . . . 41 Vice President, Corporate Development
and Director
Paul D. Rysenga. . . . . . . . . . . 56 Vice President
Luigi Candusso . . . . . . . . . . . 48 Vice President
Tommy G. Pitser. . . . . . . . . . . 50 Vice President
Richard S. Burgess . . . . . . . . . 43 Vice President
S.A. (TONY) JOHNSON has served as Chairman and a Director of the Company
since April 1993. Mr. Johnson is the founder, Chief Executive Officer and
President of Hidden Creek Industries ("Hidden Creek"), a private industrial
management company based in Minneapolis which has provided certain management
and other services to the Company. Mr. Johnson is also the managing partner
of J2R Partners ("J2R"), an investment partnership that participated in the
-14-
acquisition of R.J. Tower. Prior to forming Hidden Creek, Mr. Johnson served
from 1985 to 1989 as Chief Operating Officer of Pentair, Inc., a diversified
industrial company. From 1981 to 1985, Mr. Johnson was President and Chief
Executive Officer of Onan Corp., a diversified manufacturer of electrical
generating equipment and engines for commercial, defense and industrial
markets. Mr. Johnson currently serves as Chairman and a director of Dura
Automotive Systems, Inc., a manufacturer of mechanical assemblies and
integrated systems for the automotive industry, and served as Chairman and a
director of Automotive Industries Holding, Inc., a supplier of automotive
interior trim components, from May 1990 until its sale to Lear Corporation in
August 1995.
ADRIAN VANDERSTARRE has served as Vice Chairman and a Director of the
Company since April 1993. Mr. VanderStarre served as President, Chief
Executive Officer and a director of the Predecessor from 1978 to 1993. Mr.
VanderStarre originally joined the Predecessor in 1965 as Controller and
later served as Treasurer from 1974 to 1978.
DUGALD K. CAMPBELL has served as President, Chief Executive Officer and
a Director of the Company since December 1993. From 1991 to 1993, Mr.
Campbell served as a consultant to Hidden Creek. From 1988 to 1991, he
served as Vice President and General Manager of the Sensor Systems Division
of Siemens Automotive, a manufacturer of engine management systems and
components. From 1972 to 1988, he held various executive, engineering and
marketing positions with Allied Automotive, a manufacturer of vehicle systems
and components and a subsidiary of AlliedSignal, Inc.
JAMES R. LOZELLE has served as Executive Vice President of the Company,
with responsibility for the Company's operations in Milwaukee, Wisconsin and
Roanoke, Virginia since April 1997. From the Company's acquisition of
Edgewood in May 1994 until March 1997, Mr. Lozelle served at the Tower
Automotive Technical Centers, with responsibility for advanced product
development and customer service. Mr. Lozelle has also served as a Director
of the Company since May 1994. Mr. Lozelle served as President of Edgewood
from 1982 until it was acquired by the Company. Mr. Lozelle joined Edgewood
in 1970 and served as Vice President from 1971 to 1982. Mr. Lozelle is
chairman of the Near Zero Stamping research project of the Autobody
Consortium.
RONALD E. GAVALIS has served as Vice President of the Company, with
responsibility for the Company's operations in Greenville, Kalamazoo and
Traverse City, Michigan since April 1997 and for capacity planning, quality
operating systems and QS-9000 certification, since April 1995. From June
1994 to April 1995, Mr. Gavalis had responsibility for the Company's
Greenville, Michigan operations. Mr. Gavalis joined the Predecessor in 1983
as Director of Manufacturing, and served as the Predecessor's Vice President,
Manufacturing, from 1985 until 1989 and as its Vice President, Operations,
from 1989 until June 1994.
ANTHONY A. BARONE has served as Vice President and Chief Financial
Officer of the Company since May 1995. From 1984 to 1995, Mr. Barone served
as Chief Financial Officer of O'Sullivan Corporation, a manufacturer of
interior trim components for the automotive industry.
SCOTT D. RUED has served as Vice President, Corporate Development, and a
Director of the Company since April 1993. Mr. Rued served as Vice President,
Chief Financial Officer and a director of Automotive Industries Holding, Inc.
from April 1990 until its sale to Lear Corporation in August 1995. Mr. Rued,
a partner of J2R, has also served as Executive Vice President and Chief
Financial Officer of Hidden Creek since January 1994 and served as its Vice
President - Finance and Corporate Development from June 1989 through 1993.
Mr. Rued is also
-15-
a director of The Rottlund Company, Inc., a corporation engaged in the
development and sale of residential real estate.
PAUL D. RYSENGA has served as Vice President of the Company, with
responsibility for the Company's joint venture investment in Metalsa since
October 1997, the Company's operations in Auburn, Indiana, Bellevue, Ohio,
Belcamp, Maryland and Rockford, Illinois since April 1997 and the Company's
operations in Kendallville, Indiana and Bluffton and Upper Sandusky, Ohio,
since August 1996. From August 1996 to April 1997, Mr. Rysenga had
responsibility for the Company's operations in Traverse City, Michigan. From
October 1995 to August 1996, Mr. Rysenga had responsibility for the Company's
operations in Greenville, Romulus, and Traverse City, Michigan. From June
1994 to October 1995, Mr. Rysenga had responsibility for the Company's
operations in Auburn, Indiana. From July 1991 to June 1994, Mr. Rysenga
served as Executive Vice President and General Manager at Kalamazoo. From
1988 to July 1991, Mr. Rysenga was Executive Director of Eastman Sterling
Pharmaceutical, a division of Eastman Kodak.
LUIGI CANDUSSO has served as Vice President of the Company, with
responsibility for the Company's operations in Bowling Green, Kentucky,
Corydon, Indiana, Granite City, Illinois and Milan, Tennessee since April
1997, Turin, Italy since May 1997 and Bardstown, Kentucky since April 1995.
From April 1995 to April 1997, Mr. Candusso had responsibility for the
Company's operations in Kalamazoo, Michigan. From August 1996 to April 1997,
Mr. Candusso had responsibility for the Company's operations in Romulus,
Michigan. From October 1995 to August 1996, Mr. Candusso also had
responsibility for the Company's operations in Auburn, Indiana. From 1990 to
April 1995, Mr. Candusso served as Vice President and General Manager of the
Sensor Systems Division of Siemens Automotive, a manufacturer of engine
management systems and components. From 1988 to 1990, Mr. Candusso served as
Vice President of Operations at Fabricated Steel Products (FABCO), a division
of Indal Canada.
TOMMY G. PITSER has served as Vice President, with responsibility for
the Company's joint venture investment in China and its operations in Barrie,
Ontario, Plymouth, Michigan and Yokohama, Japan and South America since April
1997 and Romulus, Manchester and Farmington Hills, Michigan, since May 1996.
Prior to joining the Company, Mr. Pitser served in various sales and
marketing capacities at MSTI. Prior to joining MSTI, Mr. Pitser served as
Market Director-Automotive at AE Goetze North America. From 1969 to 1992,
Mr. Pitser was an employee of Borg-Warner Corporation, most recently as
General Manager-Marine & Industrial Transmissions.
RICHARD S. BURGESS has served as Vice President of the Company with
responsibility for colleague growth and development since January 1996. From
June 1994 to January 1996, Mr. Burgess served as the colleague growth and
development leader for the Bardstown, Kentucky start-up facility. From
October 1991 to June 1994, Mr. Burgess filled various rolls in Colleague
growth and development at the Predecessor.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by Item 5 is incorporated herein by reference
to the section labeled "Stock Information" which appears in the Company's
1997 Annual Report.
-16-
ITEM 6. SELECTED FINANCIAL DATA
The information required by Item 6 is incorporated herein by reference
to the section labeled "Selected Consolidated Financial Data" which appears
in the Company's 1997 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The information required by Item 7 is incorporated herein by reference
to the section labeled "Management's Discussion and Analysis of Results of
Operations and Financial Condition" which appears in the Company's 1997
Annual Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 is incorporated herein by reference
to the consolidated financial statements, notes thereto and Report of
Independent Public Accountants thereon which appear in the Company's 1997
Annual Report.
Management of the Company is responsible for the financial information
and representations contained in the consolidated financial statements and
other sections of the 1997 Annual Report. The consolidated financial
statements have been prepared in conformity with generally accepted
accounting principles and therefore include certain amounts based on
management's best estimates and judgments. The financial information
contained elsewhere in the 1997 Annual Report is consistent with that in the
consolidated financial statements.
The Company maintains internal accounting control systems which
management believes provide reasonable assurance that the Company's assets
are properly safeguarded and accounted for, that the Company's books and
records properly reflect all transactions, and that the Company's policies
and procedures are implemented by qualified personnel. Reasonable assurance
is based upon the recognition that the cost of an internal control system
should not exceed the related benefits.
The Audit Committee of the Board of Directors meets with representatives
of management and Arthur Andersen LLP, the Company's independent public
accountants, on financial reporting matters and the evaluation of internal
accounting controls. The independent public accountants have free access to
meet with the Audit Committee, without the presence of management, to discuss
any appropriate matters.
Arthur Andersen LLP is engaged to express an opinion as to whether the
consolidated financial statements present fairly, in all material respects
and in accordance with generally accepted accounting principles, the
financial position, results of operations and cash flows of the Company.
Solely for purposes of planning and performing their audit of the Company's
1997 financial statements, Arthur Andersen LLP obtained an understanding of,
and selectively tested, certain aspects of the Company's system of internal
controls.
-17-
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A. DIRECTORS OF THE REGISTRANT
The information required by Item 10 with respect to the directors is
incorporated herein by reference to the section labeled "Election of
Directors" which appears in the Company's 1998 Proxy Statement.
B. EXECUTIVE OFFICERS
The information required by Item 10 with respect to the Company's
executive officers is included above in Part I under the caption "Additional
Information - Executive Officers."
C. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The information required by Item 10 with respect to compliance with
reporting requirements is incorporated herein by reference to the section
labeled "Section 16(a) Beneficial Ownership Reporting Compliance" which
appears in the Company's 1998 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein by reference
to the sections labeled "Compensation of Directors" and "Executive
Compensation" which appear in the Company's 1998 Proxy Statement, excluding
information under the headings "Compensation Committee Report on Executive
Compensation" and "Performance Graph."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated herein by reference
to the section labeled "Security Ownership" which appears in the Company's
1998 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated herein by reference
to the section labeled "Certain Relationships and Related Transactions" which
appears in the Company's 1998 Proxy Statement.
-18-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS REPORT
(1) FINANCIAL STATEMENTS:
The following are incorporated herein by reference to the
Company's 1997 Annual Report:
- Report of Independent Public Accountants
- Consolidated Balance Sheets as of December 31, 1997 and 1996
- Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1996 and 1995
- Consolidated Statements of Stockholders' Investment for the
Years Ended December 31, 1997, 1996 and 1995
- Consolidated Statement of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995
- Notes to Consolidated Financial Statements
(2) EXHIBITS: See "Exhibit Index" beginning on page 21.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Company during the fourth
quarter of 1997.
-19-
SIGNATURES
Pursuant to the requirements of Section 13 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: March 23, 1998 By /s/ S.A. Johnson
------------------------------------
S.A. Johnson, Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ S.A. Johnson Chairman and Director March 23, 1998
- ----------------------------------
S.A. Johnson
/s/ Adrian VanderStarre Vice Chairman and March 23, 1998
- ---------------------------------- Director
Adrian VanderStarre
/s/ Dugald K. Campbell President, Chief Executive March 23, 1998
- ---------------------------------- Officer (Principal Executive
Dugald K. Campbell Officer) and Director
/s/ James R. Lozelle Executive Vice President March 23, 1998
- ---------------------------------- and Director
James R. Lozelle
/s/ Scott D. Rued Vice President, Corporate March 23, 1998
- ---------------------------------- Development and Director
Scott D. Rued
/s/ W.H. Clement Director March 23, 1998
- ----------------------------------
W.H. Clement
/s/ Eric J. Rosen Director March 23, 1998
- ----------------------------------
Eric J. Rosen
/s/ Matthew O. Diggs, Jr. Director March 23, 1998
- ----------------------------------
Matthew O. Diggs, Jr.
/s/ F.J. Loughrey Director March 23, 1998
- ----------------------------------
F.J. Loughrey
/s/ Kim B. Clark Director March 23, 1998
- ----------------------------------
Kim B. Clark
/s/ Enrique Zambrano Director March 23, 1998
- ----------------------------------
Enrique Zambrano
/s/ Anthony A. Barone Vice President and Chief March 23, 1998
- ---------------------------------- Financial Officer (Principal
Anthony A. Barone Accounting Officer)
-20-
TOWER AUTOMOTIVE, INC.
EXHIBIT INDEX TO ANNUAL REPORT
ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
Page Number in
Sequential
Numbering
of all Form 10-K
Exhibit and Exhibit Pages
- ------- -----------------
3.1 Amended and Restated Certificate of Incorporation of the Registrant, *
incorporated by reference to Exhibit 3.1 of the Registrant's Form S-1,
Registration No. 33-80320 filed under the Securities Act of 1933
(the "S-1").
3.2 Amended and Restated By-laws of the Registrant, incorporated by *
reference to Exhibit 3.2 of the S-1.
4.1 Form of Common Stock Certificate, incorporated by reference to *
Exhibit 4.1 of the S-1.
10.1 Form of Stock Subscription Agreement between the Company and *
certain management employees, incorporated by reference to Exhibit
10.3 of the S-1.
10.2 Registration Agreement dated as of April 15, 1993 between the Registrant *
and certain investors; and First Amendment to Registration Agreement
dated as of May 4, 1994 by and among the Registrant and certain
investors, incorporated by reference to Exhibit 10.4 of the S-1.
10.3 Stock Option and Indemnification Agreement dated as of April 15, 1993 *
by and between the Registrant and Onex U.S. Investments, Inc.,
incorporated by reference to Exhibit 10.7 of the S-1.
10.4** Employment and Consulting Agreement dated as of April 15, 1993 between *
R.J. Tower Corporation and Adrian Vander Starre, incorporated by
reference to Exhibit 10.9 of the S-1.
10.5 Form of Management Stock Pledge Agreement, incorporated by reference *
to Exhibit 10.10 of the S-1.
10.6 Form of Convertible Promissory Note dated as of May 4, 1994 of the *
Registrant, incorporated by reference to Exhibit 10.12 of the S-1.
10.7** Employment Agreement dated as of May 4, 1994 among Edgewood *
Manufacturing Corp. and James R. Lozelle, incorporated by reference
to Exhibit 10.13 of the S-1.
10.8** Stock Option Agreement dated May 4, 1994 by and between the Registrant *
and James R. Lozelle incorporated by reference to Exhibit 10.14 of
the S-1.
10.9 Lease Agreement dated March 1, 1988 between 8900 Inkster Associates *
and Edgewood Tool and Manufacturing Company; and Amendment to Lease
dated as of March 1, 1994 between 8900 Inkster Associates and Edgewood
Tool and Manufacturing Company, incorporated by reference to Exhibit
10.16 of the S-1.
10.10 Amended and Restated Credit Agreement dated as of May 4, 1994 by and *
between R.J. Tower Corporation and Comerica Bank, incorporated by
reference to Exhibit 10.17 of the S-1.
10.11** 1994 Key Employee Stock Option Plan, incorporated by reference to Exhibit *
10.18 of the S-1.
10.12** Form of Salary Continuation Agreement between the Registrant and certain *
employees, incorporated by reference to Exhibit 10.19 of the S-1.
10.13 Form of Subscription Agreement between the Registrant and certain *
stockholders, incorporated by reference to Exhibit 10.20 of the S-1.
-21-
10.14 Stock Purchase Agreement by and among the Registrant and certain other *
parties, dated June 10, 1994, incorporated by reference to Exhibit
10.21 of the S-1.
10.15 Second Amended and Restated Credit Agreement dated as of June 29, 1994 *
by and between R.J. Tower Corporation and Comerica Bank, incorporated
by reference to Exhibit 10.22 of the S-1.
10.16 Amended and Restated Investor Stockholders Agreement dated as of *
August 18, 1994 by and among the Registrant, Onex U.S. Investments,
Inc., J2R Partners and certain investors, incorporated by reference to
Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1994, filed under the Securities
Exchange Act of 1934, as amended (the "September 10-Q").
10.17 Second Amended and Restated Management Stockholders Agreement dated as *
of August 18, 1994 among the Registrant, Onex U.S. Investments, Inc.
and certain management stockholders, incorporated by reference to
Exhibit 10.2 of the September 10-Q.
10.18 Third Amended and Restated Credit Agreement dated as of January 16, 1996 *
by and between R.J. Tower Corporation and Comerica Bank, incorporated
by reference to Exhibit 10.24 of the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1995, filed under the
Securities Exchange Act of 1934, as amended.
10.19 Stock Purchase Agreement dated as of May 31, 1996 among Tower *
Automotive, Inc., R.J. Tower Corporation and MascoTech, Inc.,
incorporated by reference to Exhibit 2.1 of the Registrant's Form 8-K
dated May 31, 1996, filed under the Securities Exchange Act of 1934
(the "May 8-K").
10.20 First Amendment to Third Amended and Restated Credit Agreement, dated *
as of May 31, 1996, by and among R.J. Tower Corporation, the financial
institutions parties thereto and Comerica Bank, as agent, incorporated
by reference to Exhibit 4.1 of the May 8-K.
10.21 $39,000,000 Revolving Credit Note, dated as of May 31, 1996, issued by *
R.J. Tower Corporation, a Michigan corporation, to Comerica Bank,
incorporated by reference to Exhibit 4.2 of the May 8-K.
10.22 $18,000,000 Revolving Credit Note, dated as of May 31, 1996, issued *
by R.J. Tower Corporation, a Michigan corporation, to Bank of America
Illinois, incorporated by reference to Exhibit 4.3 of the May 8-K.
10.23 $18,000,000 Revolving Credit Note, dated as of May 31, 1996, issued *
by R.J. Tower Corporation, a Michigan corporation, to First Bank
National Association, incorporated by reference to Exhibit 4.4 of the
May 8-K.
10.24 Joinder Agreement to Amended and Restated Guaranty (Tower Indiana Debt) *
made by MascoTech Stamping Technologies, Inc., a Delaware corporation,
in favor of Comerica Bank, as agent, incorporated by reference to
Exhibit 4.6 of the May 8-K.
10.25 Joinder Agreement to Amended and Restated Guaranty (Tower Kentucky Debt) *
made by MascoTech Stamping Technologies, Inc., a Delaware corporation,
in favor of Comerica Bank, as agent, incorporated by reference to
Exhibit 4.7 of the May 8-K.
10.26 Form of Second Amended and Restated Security Agreement, dated as of *
May 31, 1996, made by each of R.J. Tower Corporation, a Michigan
corporation, R.J. Tower Corporation, a Kentucky corporation, R.J.
Tower Corporation, an Indiana corporation, Kalamazoo Stamping and
Die Company, a Michigan corporation, Edgewood Manufacturing Corp.,
a Delaware corporation, in favor of Comerica Bank, as agent,
incorporated by reference to Exhibit 4.8 of the May 8-K.
10.27 Amended and Restated Security Agreement, dated as of May 31, 1996, *
made by Trylon Corporation, a Michigan corporation, in favor of
Comerica Bank, as agent, incorporated by reference to Exhibit 4.9 of
the May 8-K.
-22-
10.28 Form of Second Amended and Restated Mortgage, dated as of May 31, 1996, *
made by each of R.J. Tower Corporation, a Michigan corporation, R.J.
Tower Corporation, an Indiana corporation, Kalamazoo Stamping and
Die Company, a Michigan corporation, Edgewood Manufacturing Corp.,
a Delaware corporation, in favor of Comerica Bank, as agent,
incorporated by reference to Exhibit 4.10 of the May 8-K.
10.29 Second Amended and Restated Security Agreement (Third Party Pledge), *
dated as of May 31, 1996, made by Tower Automotive, Inc., a
Delaware corporation, in favor of Comerica Bank, as agent, incorporated
by reference to Exhibit 4.11 of the May 8-K.
10.30 Intercreditor and Collateral Agency Agreement, dated as of May 31, 1996, *
among Comerica Bank, Bank of America Illinois, First Bank National
Association, Teachers Insurance and Annuity Association of America,
Northern Life Insurance Company, Northwestern National Life Insurance
Company, Bankers Security Life Insurance Society, Jefferson-Pilot Life
Insurance Company and Alexander Hamilton Life Insurance Company of
America, incorporated by reference to Exhibit 4.12 of the May 8-K.
10.31 Form of R.J. Tower Corporation Note Agreement, dated as of May 31, *
1996, between R.J. Tower Corporation and each of Teachers Insurance
and Annuity Association of America, Northern Life Insurance Company,
Northwestern National Life Insurance Company, Bankers Security Life
Insurance Society, Jefferson-Pilot Life Insurance Company and
Alexander Hamilton Life Insurance Company of America, incorporated
by reference to Exhibit 4.13 of the May 8-K.
10.32 Form of 7.65% Senior Secured Notes, Series A, due June 1, 2006, issued *
by R.J. Tower Corporation to (i) Teachers Insurance and Annuity
Association of America in the principal amount of $10 million, (ii)
Northern Life Insurance Company in the principal amount of $8.5
million, (iii) Northwestern National Life Insurance Company in the
principal amount of $4.0 million, (iv) Bankers Security Life Insurance
Society in the principal amount of $2.5 million, (v) Jefferson-Pilot
Life Insurance Company in the principal amount of $7.5 million and
(vi) Alexander Hamilton Life Insurance Company of America in the
principal amount of $7.5 million, incorporated by reference to Exhibit
4.14 of the May 8-K.
10.33 7.82% Senior Secured Note, Series B, due June 1, 2008, issued by R.J. *
Tower Corporation to Teachers Insurance and Annuity Association
of America in the principal amount of $25 million, incorporated by
reference to Exhibit 4.15 of the May 8-K.
10.34 Subsidiaries Guaranty, dated as of May 31, 1996, made by Trylon *
Corporation, a Michigan corporation, R.J. Tower Corporation, a Kentucky
corporation, R.J. Tower Corporation, an Indiana corporation, Kalamazoo
Stamping and Die Company, a Michigan corporation, Edgewood Manufacturing
Corp., a Delaware corporation and MascoTech Stamping Technologies, Inc.,
a Delaware corporation, in favor of Teachers Insurance and Annuity
Association of America, Northern Life Insurance Company, Northwestern
National Life Insurance Company, Bankers Security Life Insurance
Society, Jefferson-Pilot Life Insurance Company and Alexander
Hamilton Life Insurance Company of America, incorporated by
reference to Exhibit 4.16 of the May 8-K.
10.35 Registration Rights and Voting Agreement dated as of May 31, 1996, *
between Tower Automotive, Inc. and MascoTech, Inc., incorporated by
reference to Exhibit 4.17 of the May 8-K.
10.36 $5 million Promissory Note, dated as of May 31, 1996, issued by R.J. Tower *
Corporation to MascoTech, Inc., incorporated by reference to Exhibit 4.18
of the May 8-K.
10.37 Stock Purchase Warrant, dated as of May 31, 1996, issued by Tower *
Automotive, Inc. to MascoTech, Inc., incorporated by reference to
Exhibit 4.19 of the May 8-K.
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10.38 Second Amended and Restated Guaranty (Tower-Michigan Debt), dated *
as of May 30, 1996, made by R.J. Tower Corporation, an Indiana
corporation, Edgewood Manufacturing Corp., a Delaware corporation,
R.J. Tower Corporation, a Kentucky corporation, Kalamazoo Stamping
and Die Company, a Michigan corporation, Trylon Corporation, a
Michigan corporation and MascoTech Stamping Technologies, Inc., a
Delaware corporation, in favor of Comerica Bank, as agent,
incorporated by reference to Exhibit 4.5 of the Registrant's Form
8-K/A No. 1 dated June 4, 1996, filed under the Securities Exchange
Act of 1934.
10.39 Fourth Amended and Restated Credit Agreement dated as of September 6, 1996 *
by and between R.J. Tower Corporation and Comerica Bank, incorporated
by reference to Exhibit 10.1 of the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1996, filed
under the Securities Exchange Act of 1934, as amended.
13.1 Annual Report to Stockholders for the year ended December 31, 1997 __
filed herewith.
21.1 List of Subsidiaries filed herewith. __
23.1 Consent of Independent Public Accountants filed herewith. __
27.1 Financial Data Schedule filed herewith. __
27.2 Financial Data Schedule filed herewith. __
27.3 Financial Data Schedule filed herewith. __
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* Incorporated by reference.
** Indicates compensatory arrangement.
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