On April
15, 2003, substantially all of the equity interests of Advanced Accessory
Systems, LLC (the "Predecessor") were acquired by Castle Harlan Partners
IV, L.P. (the "Acquisition"), a private equity investment fund organized
and managed by Castle Harlan Inc., a private New York based equity firm. CHAAS
Holdings, LLC ("CHAAS Holdings") was formed in April 2003 in connection with the
Acquisition and was the direct parent of CHAAS Acquisitions, LLC, ("CHAAS
Acquisitions") which was also formed pursuant to the Acquisition.
In
January 2004, Advanced Accessory Holdings Corporation ("AAHC" or "the Company")
was formed by our direct parent, CHAAS Holdings, in connection with an offering
of our $88,000 aggregate principal amount at maturity, 13¼% Senior Discount
Notes due 2011 (the "Senior Discount Notes"). At that time, CHAAS Holdings made
a contribution of all of its equity interests in CHAAS Acquisitions to AAHC in
exchange for all the outstanding membership units of AAHC. Subsequent to this
transaction, CHAAS Holdings is the direct parent of AAHC and AAHC is the direct
parent of CHAAS Acquisitions, LLC and the indirect parent of the Predecessor.
Unless the context otherwise requires, all information which refers to "we,"
"our" or "us" refers to AAHC and its subsidiaries.
The
Acquisition was accounted for in accordance with the purchase method of
accounting. Accordingly, the purchase price of the Acquisition has been
allocated to identifiable assets acquired and liabilities assumed based upon
their estimated fair values at the acquisition date.
The North
American subsidiaries of the Company use a fiscal month-end that corresponds to
two four-week months and one five-week month per quarter, each ending on
Saturday. The exception to this rule is at year-end, when the subsidiaries close
on December 31. The Company’s Brink subsidiary uses the calendar month-end and
year-end. The Company’s financial statements are dated as of the end of the
calendar period, although they reflect the different closing dates identified
above.
The
accompanying unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form
10-Q. Accordingly, they do not include all information and footnotes required by
accounting principles generally accepted in the United States of America for
complete financial statements and should be read in conjunction with the Annual
Report on Form 10-K for the fiscal year ended December 31, 2004.
In the
opinion of the Company, the accompanying unaudited consolidated condensed
financial statements contain all adjustments, which are normal and recurring in
nature, necessary to present fairly its financial position as of March 31, 2005
and December 31, 2004 and the results of its operations for the three months
ended March 31, 2005 and 2004. The Company has reclassified certain prior year
amounts to conform to the presentation of our current consolidated financial
statements.
Comprehensive
loss for the Company is as follows:
| |
|
Three
months ended
March
31, 2005 |
|
Three
months ended
March
31, 2004 |
|
| |
|
|
|
|
|
|
Net
loss |
|
$ |
(7,669 |
) |
$ |
(955 |
) |
Change
in the cumulative translation adjustment, net of tax |
|
|
(1,690 |
) |
|
(985 |
) |
|
Comprehensive
loss |
|
$ |
(9,359 |
) |
$ |
(1,940 |
) |
ADVANCED
ACCESSORY HOLDINGS CORPORATION
NOTES
TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars
in thousands)
(Unaudited)
The
Company has significant operations in Europe where the functional currency is
the Euro. Our
objective is to protect reported earnings from volatility in the Euro/US Dollar
exchange rates. On February 12, 2004, when the Euro to the US Dollar exchange
rate was 1.28:1.00, the Company entered into a series of foreign currency
forward option contracts related to the Euro ("Euro Collar"), which matured
quarterly on a staggered basis. On May 12, 2004 when the Euro to US Dollar
exchange rate was 1.19:1.00, the Company entered into additional foreign
currency option contracts. The Company provided a $1,900 letter of credit in
support of the foreign currency option contracts. To the extent that the quarter
end exchange rate falls between the Euro collar exchange rates, fulfillment of
the Euro collar exchange contracts will result in offsetting foreign currency
gains and losses upon expiration. For each reporting period, the Company
recorded the fair value, as determined by independent financial institutions, of
open obligations and the resultant gains and losses are recorded in the
Statement of Operations. The Company recorded an unrealized gain on foreign
currency options in the first quarters of 2005 and 2004 of $138 and $145,
respectively. Two option contracts having zero value expired during the first
quarter of 2005 and three option contracts having zero value expired during the
same period in 2004.
A summary
of outstanding foreign currency option contracts at March 31, 2005 is as
follows:
|
Euro
Collar Exchange Rates |
|
Expiration
Date |
Contract
Date |
Notional
Value |
Purchased
Put
Option |
Sold
Call
Option |
Purchased
Call
Option |
| |
|
(thousands) |
|
|
|
| |
|
|
|
|
|
|
June
28, 2005 |
May
12, 2004 |
€3,000 |
$1.150 |
$1.242 |
$1.300 |
4. GOODWILL
AND INTANGIBLE ASSETS
The
carrying amount of goodwill was $39,061 at March 31, 2005 and December 31, 2004.
A summary of intangible assets identified by the Company in the allocation of
the April 15, 2003 purchase consideration follows:
| |
|
Customer
Contracts |
|
Customer
Relationships |
|
Technology |
|
Intangible
Pension
Asset |
|
Tradename
/
Trademark |
|
Deferred
Financing
Costs |
|
Total |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
period in years |
|
|
8
- 10 |
|
|
18
- 21 |
|
|
10 |
|
|
15 |
|
|
Indefinite |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2004 |
|
$ |
35,475 |
|
$ |
34,206 |
|
$ |
14,992 |
|
$ |
514 |
|
$ |
11,477 |
|
$ |
8,358 |
|
$ |
105,022 |
|
|
Additions |
|
|
— |
|
|
— |
|
|
4 |
|
|
— |
|
|
— |
|
|
92 |
|
|
96 |
|
|
Foreign
currency translation |
|
|
(70 |
) |
|
(582 |
) |
|
(30 |
) |
|
— |
|
|
(134 |
) |
|
(22 |
) |
|
(838 |
) |
|
Amortization |
|
|
(1,030 |
) |
|
(586 |
) |
|
(450 |
) |
|
— |
|
|
— |
|
|
(350 |
) |
|
(2,416 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at March 31, 2005 |
|
$ |
34,375 |
|
$ |
33,038 |
|
$ |
14,516 |
|
$ |
514 |
|
$ |
11,343 |
|
$ |
8,078 |
|
$ |
101,864 |
|
Amortization
expense of identifiable intangible assets for the quarter ended March 31, 2005
was $2,416.
ADVANCED
ACCESSORY HOLDINGS CORPORATION
| |
Item
2. |
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations |
The
following discussion of our results of operations and financial condition should
be read in conjunction with our financial statements and notes thereto included
elsewhere in this Form 10-Q. This Form 10-Q contains forward-looking statements.
Discussions containing forward-looking statements may be found in the material
set forth above, in the material set forth below, as well as in this Form 10-Q
generally. Forward-looking statements generally can be identified by the use of
terms such as "may," "will," "should," "expect," "anticipate," "believe,"
"intend," "plan," "estimate," "predict," "potential," "forecast," "project,"
"will be," "continue" or variations of such terms, or the use of these terms in
the negative. Our actual results may differ significantly from the results
discussed in the forward-looking statements and such differences may be
material. General risks that may impact the achievement of such forecasts
include, but are not limited to: compliance with new laws and regulations,
general economic conditions in the markets in which we operate, fluctuation in
demand for our products and in the production of vehicles for which we are a
supplier, significant raw material price fluctuations, labor disputes with our
employees or those of our significant customers or suppliers, changes in
consumer preferences, dependence on significant automotive customers, the level
of competition in the automotive supply industry, pricing pressure from
automotive customers, our substantial leverage, limitations imposed by our debt
facilities, changes in the popularity of particular vehicle models or towing and
rack systems, the loss of programs on particular vehicle models, risks
associated with conducting business in foreign countries, other business factors
and other risks detailed from time to time in the Company’s reports filed with
the Securities & Exchange Commission. Any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties. Actual events or results may differ materially from those
discussed in the forward-looking statements. All of these forward-looking
statements are based on estimates and assumptions made by our management which,
although believed to be reasonable, are inherently uncertain. Given these
risks and uncertainties, readers are cautioned not to place undue reliance on
forward-looking statements. We disclaim any obligation to update any
forward-looking statements.
OVERVIEW
We are
one of the world’s leading designers and manufacturers of exterior accessories
for automotive original equipment manufacturers and the aftermarket. We design
and manufacture a wide array of both rack systems and towing systems and related
accessories. Our broad offering of rack systems includes fixed and detachable
racks and accessories, which can be installed on vehicles to carry items such as
bicycles, skis, luggage, surfboards and sailboards. Our towing products and
accessories include trailer hitches, trailer balls, ball mounts, electrical
harnesses, safety chains and locking pins. Our products are sold to OEM’s as
standard accessories or options for a variety of light vehicles and to the
aftermarket.
Company
Background
On April
15, 2003, substantially all of the equity interests of Advanced Accessory
Systems, LLC (the "Predecessor") were acquired by Castle Harlan Partners IV,
L.P. (the "Acquisition"),
a private equity investment fund organized and managed by Castle Harlan Inc., a
private New York based equity firm. CHAAS Holdings, LLC ("CHAAS Holdings") was
formed in April 2003 in connection with the Acquisition and was the direct
parent of CHAAS Acquisitions, LLC ("CHAAS Acquisitions"), which was also formed
pursuant to the Acquisition.
In
January 2004, Advanced Accessory Holdings Corporation ("AAHC" or "the Company")
was formed by CHAAS Holdings in connection with an offering of our $88.0 million
aggregate principal amount at maturity, 13¼% Senior Discount Notes due 2011 (the
"Senior Discount Notes"). At that time, CHAAS Holdings made a contribution of
all of its equity interests in CHAAS Acquisitions to AAHC in exchange for all
the outstanding membership units of AAHC. Subsequent to this transaction, CHAAS
Holdings is the direct parent of AAHC and AAHC is the direct parent of CHAAS
Acquisitions and the indirect parent of the Predecessor. Unless the context
otherwise requires, all information which refers to "we", "our" or "us" refers
to AAHC and its subsidiaries.
ADVANCED
ACCESSORY HOLDINGS CORPORATION
RESULTS
OF OPERATIONS
Three
Months Ended March 31, 2005 Compared to the Three Months Ended March 31,
2004
Net
sales. Net
sales for the first quarter of 2005 were $111.3 million, representing an
increase of $14.7 million, or 15.2%, compared with net sales of $96.6 million
for the first quarter of 2004. This increase primarily includes
approximately $3.0 million due to the increase of the average exchange rates
between the US Dollar and primarily the Euro, the functional currency of Brink
and SportRack Europe. Additionally, North American OEM sales increased
approximately $6.8 million, primarily as a result of new program launches at
SportRack. Offsetting these increases in sales were agreed-upon price
concessions with certain large OEM customers at SportRack US of $1.3 million.
Sales to our aftermarket customers in both North America and Europe increased
$5.9 million of which approximately $3.2 million represented revenue from
surcharges for steel economics with the remainder attributable to other volume
increases.
Gross
profit. Gross
profit for the first quarter of 2005 was $19.8 million, which represents a
decrease of $2.8 million, or 12.4%, compared with gross profit of $22.6 for the
first quarter of 2004. Gross profit as a percentage of net sales was 17.8% for
the first quarter of 2005 and was 23.4% for the first quarter of 2004. The
decrease in gross profit and gross margin percentage reflects higher costs for
steel, aluminum and resin as well as price decreases to our OEM customers.
During the quarter, increased cost of raw material resulted in lower gross
profit of approximately $0.9 million net of recovery through the introduction of
steel surcharges on some of our aftermarket towing systems products. Pursuant to
pre-negotiated contractual obligations, OEM customer price reductions totaled
approximately $1.4 million during the first quarter of 2005. Gross profit was
also negatively impacted by increased depreciation and increased manufacturing
costs associated with program launches. These decreases were offset by
additional gross profit that was driven by the increased sales.
Selling,
administrative and product development expenses. Selling,
administrative and product development expenses for the first quarter of 2005
were $16.6 million representing an increase of $1.5 million, or 9.9%, compared
with $15.1 million for the first quarter of 2004. This increase is primarily due
to higher levels of selling expenses to support sales growth and general and
administrative expenses. In addition, expenses increased by $0.4 million
resulting from an increase in the average exchange rates between the US Dollar
and primarily the Euro.
Operating
income. Our
operating income for the first quarter of 2005 was $1.1 million representing a
decrease of $4.3 million, or 79.6%, compared with operating income of $5.4
million for the first quarter of 2004. The decrease resulted from decreased
gross profit and increased selling, administrative and product development
expenses.
Interest
expense. Interest
expense for the first quarter of 2005 was $7.5 million representing an increase
of $1.4 million or 23.0%, compared with interest expense of $6.1 million for the
first quarter of 2004. This increase is a result of interest on the Senior
Discount Notes for the full quarter in 2005 but only two months in 2004 (issued
February 2004) and higher overall outstanding variable rate debt and slightly
higher interest rates during the first quarter of 2005 relative to the first
quarter of 2004.
Foreign
currency loss. Foreign
currency loss in the first quarter of 2005 was $1.3 million compared to a
foreign currency loss of $0.6 million in the first quarter of 2004. These losses
were primarily attributable to the US Dollar denominated intercompany
indebtedness of Brink, whose functional currency is the Euro. During the first
quarters of both 2004 and 2005 the US Dollar strengthened in comparison with the
Euro. The intercompany indebtedness for our foreign subsidiaries other than
Brink are deemed to be permanently invested and therefore changes in the
intercompany balances for these subsidiaries caused by foreign currency
fluctuations have been recorded in the currency translation adjustment account
and included in other comprehensive income.
Benefit
from income taxes. During
the first quarter of 2005 we recorded a loss before income taxes of $7.7 million
and recorded an income tax benefit of $0.02 million. The effective tax rate
differs from the US federal income tax rate primarily due to changes in
valuation allowances on the deferred tax assets of all North American operations
and differences in the tax rates of foreign countries. During the first quarter
of 2004 we had a net loss before taxes of $1.4 million and recorded an income
tax benefit of $0.5 million.
ADVANCED
ACCESSORY HOLDINGS CORPORATION
Net
loss. We
recorded a net loss of $7.7 million in the first quarter of 2005 and a net loss
of $0.9 million in the first quarter of 2004. The net losses were a result of
the items discussed above related to net sales, gross profit and the other
expense and income items.
LIQUIDITY
AND CAPITAL RESOURCES
Our
principal liquidity requirements are to service our debt and meet our working
capital and capital expenditure needs. Our indebtedness at March 31,
2005 was $257.1 million including current maturities of $3.3 million.
In 2004
our operating results and operating cash flows were negatively impacted
primarily by the costs associated with launching an unprecedented number of new
roof rack programs, the high costs of steel and pricing pressures from certain
OEM customers. As a result of these and other factors, our availability under
our revolving credit facilities declined to $27.1 million at December 31, 2004
and $26.6 million at March 31, 2005 from $38.1 million available at September
30, 2004. Although we met our covenants for the quarter ended December 31, 2004,
we anticipated that we would be unable to meet our fixed charge coverage ratio
and senior secured leverage ratio covenants for the quarter ended March 31,
2005. On March 30, 2005, we entered into the Fourth Amendment to the Amended and
Restated Credit Agreement (the "Fourth Amendment") with General Electric Capital
Corporation individually as a lender and as agent for the lenders referred to
therein to modify the fixed charge coverage ratio and the senior secured
leverage ratio.
Under the
modified fixed charge coverage ratio covenant, the required minimum fixed charge
coverage ratio will be determined quarterly for all borrowers for specified
quarterly periods and for European borrowers for specified quarterly periods.
Prior to this modification the required minimum fixed charge coverage ratios for
all borrowers and their subsidiaries were 1.15:1.00. As modified, the required
minimum fixed charge coverage ratios for all borrowers and their subsidiaries
range from 1.15:1.00 for each fiscal quarter from the fiscal quarter ending June
30, 2004 through and including the fiscal quarter ending December 31, 2004;
1.05:1.00 for the fiscal quarter ending December 31, 2005; and 1.15:1.00 for
each fiscal quarter ending thereafter. The required minimum fixed charge
coverage ratios for the European borrowers and their subsidiaries range from
1.25:1.00 for the fiscal quarters ending March 31, 2005, June 30, 2005 and
September 30, 2005. The actual fixed charge coverage ratio for the European
borrowers for the fiscal quarter ending March 31, 2005 was 1.61:1.00 and we were
in compliance with this covenant as of March 31, 2005.
The
modified senior secured leverage ratio covenant requires that we meet a senior
secured leverage ratio of 1.75:1.00 for the fiscal quarters ending March 31,
2005 and June 30, 2005; 1.50 to 1.00 for the fiscal quarter ending September 30,
2005; and 1.25:1.00 for each fiscal quarter ending thereafter. Prior to this
modification, the credit facility required that we meet a senior secured
leverage ratio of 1.25:1.00 for each fiscal quarter. The actual leverage ratio
for the fiscal quarter ending March 31, 2005 was 1.24:1.00 and we were in
compliance with this covenant as of March 31, 2005.
Although
we anticipate the ability to meet our modified covenants, there can be no such
assurance. Our principal sources of liquidity are funds derived from operations
and borrowings under our revolving credit facilities. Management believes that,
based on current and expected levels of operations, cash flows from operations
and borrowings under the revolving credit facilities will be sufficient to fund
its debt service requirements, working capital needs and capital expenditures
for the next twelve months, although no assurances can be given in this regard.
Our ability to fund operations, make scheduled payments of interest and
principal on our indebtedness and maintain compliance with the terms of our
revolving credit facilities, including our fixed charge coverage ratio covenant
and senior secured leverage ratio covenant, depends on our future operating
performance, which is subject to economic, financial, competitive and other
factors beyond our control. If we are unable to generate sufficient cash flows
from operations to meet our financial obligations and achieve compliance with
our debt covenants, there would be a material adverse effect on our business,
financial condition and results of operations.
ADVANCED
ACCESSORY HOLDINGS CORPORATION
Working
Capital and Cash Flows
Working
capital and key elements of the consolidated statement of cash flows
are:
| |
|
March
31,
2005 |
|
December
31,
2004 |
|
| |
|
(in
thousands) |
|
Working
Capital |
|
$ |
71,940 |
|
$ |
77,916 |
|
| |
|
Three
months ended
March
31, |
|
| |
|
|
2005 |
|
|
2004 |
|
|
|
(in
thousands) |
|
Cash
flows provided by (used for) operating activities |
|
$ |
(4,069 |
) |
$ |
4,442 |
|
|
Cash
flows used for investing activities |
|
$ |
(4,827 |
) |
$ |
(87,041 |
) |
|
Cash
flows provided by (used for) financing activities |
|
$ |
(639 |
) |
$ |
100,987 |
|
Working
Capital
Working
capital decreased by $6.0 million to $71.9 million at March 31, 2005 from $77.9
million at December 31, 2004. This is due primarily to a decrease in cash of
$10.0 million, an increase in accounts payable of $6.6 million, an increase in
accrued liabilities of $4.7 million and an increase in the current maturities of
long term debt of $0.2 million. These decreases in working capital were
partially offset by an increase in accounts receivable of $10.4 million, an
increase in inventories of $4.3 million, an increase in other current assets of
$0.8 million and a decrease in current deferred income tax liabilities of $0.1
million. Included in the net working capital decrease was the negative impact of
the decreased exchange rate between the US Dollar and the Euro as of March 31,
2005 as compared with the exchange rate as of December 31, 2004.
Increases
in accounts payable reflected increased purchasing activities to support the
increased sales volume. The
increase in accrued expenses is primarily due to an increase in accrued interest
on our $150 million of Senior Notes. The increase in accounts receivable was
attributable to the timing of payments from OEM customers and to increased sales
levels in the first quarter of 2005 as compared with the fourth quarter of 2004.
Inventory increased primarily for our aftermarket products to support seasonally
higher sales for the period as compared with the period prior to December 31,
2004. Differences in sales levels between the two periods are primarily due to
increased sales to automotive OEM’s and seasonal sales levels of our aftermarket
products.
Operating
Activities
Our
operations used $4.1 million in cash during the first three months of 2005
compared to providing $4.4 million in the first three months of 2004. The
decrease of $8.5 million is primarily due to decreased net income before
depreciation, amortization and interest accretion of $0.4 million during the
first quarter of 2005 as compared to $5.8 million in the first quarter of 2004
and an increase in inventory and accounts receivable in 2005 of $5.7 million and
$11.3 million, respectively. These uses were partially offset by increases in
accounts payable of $7.4 million and accrued liabilities of $5.2
million.
Investing
Activities
Cash flow
used for investing activities for the first three months of 2005 and 2004
included acquisitions of property and equipment of $4.8 million and $2.6
million, respectively, and were primarily for the expansion of capacity,
productivity, process improvements and maintenance. In conjunction with our
Senior Discount Notes offering of January 2004, our direct parent CHAAS Holdings
made a contribution of all the outstanding membership units in CHAAS
Acquisitions to AAHC for all the outstanding membership units of
AAHC.
ADVANCED
ACCESSORY HOLDINGS CORPORATION
Financing
Activities
During
the first three months of 2005, financing cash flows included a reduction in
borrowings under the revolving line of credit of $0.2 million and repayment of
debt of $0.3 million.
During
the first quarter of 2004, financing cash flows included the issuance of our
membership units for $101.1 million, proceeds from the issuance of our Senior
Discount Notes of $50.3 million, payment of debt issuance costs of $2.3 million,
repayment of debt of $5.2 million, a reduction in the revolving line of credit
of $0.4 million and a payment to our direct parent of $42.5 million to redeem a
portion of their equity interest.
Debt
and Credit Sources
Our
indebtedness at March 31, 2005 was $257.1 million. We expect that our primary
sources of cash will be from operating activities and borrowings under our
revolving credit facilities. As of March 31, 2005, we had borrowings under the
revolving credit facilities totaling $23.0 million and had $26.6 million of
available borrowing capacity. Standby letters of credit totaling $2.9 million
providing security for our US workers compensation program and $1.9 million
providing security to a financial institution for foreign currency instruments
reduced borrowing availability.
On March
30, 2005 we entered into the Fourth Amendment to the Amended and Restated Credit
Agreement. See the discussion of the amendment to the credit facility in "-
Liquidity and Capital Resources".
International
Operations
We
conduct operations in several foreign countries including Canada, the Czech
Republic, Denmark, France, Germany, Italy, The Netherlands, Poland, Spain,
Sweden and the United Kingdom. Net sales from international operations during
the first quarter of 2005 were $41.0 million, or 36.8% of our net sales. At
March 31, 2005, assets associated with these operations were approximately 38.1%
of total assets, and we had indebtedness denominated in currencies other than
the US Dollar of approximately $24.2 million.
Our
international operations may be subject to volatility because of currency
fluctuations, inflation and changes in political and economic conditions in
these countries. Most of the revenues and costs and expenses of our operations
in these countries are denominated in the local currencies. The financial
position and results of operations of the Company's foreign subsidiaries are
measured using the local currency as the functional currency.
Currency
contracts
We have
significant operations in Europe where the functional currency is the Euro. Our
objective is to protect reported earnings from volatility in the Euro/US Dollar
exchange rates. On February 12, 2004, when the Euro to the US Dollar exchange
rate was 1.28:1.00, we entered into a series of foreign currency forward option
contracts related to the Euro ("Euro Collar"), which matured quarterly on a
staggered basis. On May 12, 2004 when the Euro to US Dollar exchange rate was
1.19:1.00, we entered into additional foreign currency option contracts. We
provided a $1.9 million letter of credit in support of the foreign currency
option contracts. To the extent that the quarter end exchange rate falls between
the Euro collar exchange rates, fulfillment of the Euro collar exchange
contracts will result in offsetting foreign currency gains and losses upon
expiration. For each reporting period we record the fair value, as determined by
independent financial institutions, of open obligations and the resultant gains
and losses are recorded in the Statement of Operations. We recorded an
unrealized gain on our foreign currency options in the first quarters of 2005
and 2004 of $0.1 million each. Two option contracts having zero value expired
during the first quarter of 2005 and three option contracts having zero value
expired during the same period in 2004.
ADVANCED
ACCESSORY HOLDINGS CORPORATION
A summary
of outstanding foreign currency option contracts at March 31, 2005 is as
follows:
|
Euro
Collar Exchange Rates |
|
Expiration
Date |
Contract
Date |
Notional
Value |
Purchased
Put
Option |
Sold
Call
Option |
Purchased
Call
Option |
| |
|
(thousands) |
|
|
|
| |
|
|
|
|
|
|
June
28, 2005 |
May
12, 2004 |
€3,000 |
$1.150 |
$1.242 |
$1.300 |
Recently
Issued Accounting Standards
In March
2005, the FASB issued FIN 47, "Accounting for Conditional Asset Retirement
Obligations." FIN 47 clarifies that a conditional asset retirement obligation,
as used in SFAS 143, "Accounting for Asset Retirement Obligations," refers to a
legal obligation to perform an asset retirement activity in which the timing
and/or method of the settlement are conditional on a future event that may or
may not be within the control of the entity. Accordingly, an entity is required
to recognize a liability for the fair value of a conditional asset retirement
obligation if the fair value can be reasonably estimated. FIN 47 is effective
January 1, 2006, with early adoption allowed. We have not yet determined the
impact, if any, FIN 47 will have on the Company's consolidated financial
statements.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
In May
2004, we executed several foreign currency option contracts. See " -
Management’s Discussion and Analysis of Financial Condition and Results of
Operations - Debt and Credit Sources - Currency Contracts".
Under the
supervision and with the participation of management, including our principal
executive officer and principal financial officer, the Company has evaluated the
effectiveness of the design and operation of its disclosure controls and
procedures as of March 31, 2005 and, based on their evaluation, the principal
executive officer and principal financial officer have concluded that these
controls and procedures are effective. There were no significant changes in
internal controls or in other factors that could significantly affect these
controls during the quarter.
Disclosure
controls and
procedures are the Company’s controls and other procedures that are designed to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), is recorded, processed, summarized and reported, within
the time periods specified in the Securities and Exchange Commission’s rules and
forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed in
the reports that the Company files under the Exchange Act is accumulated and
communicated to management, including the principal executive officer and
principal financial officer, as appropriate to allow timely decisions regarding
required disclosure.
PART
II. OTHER INFORMATION AND SIGNATURE
Item
1. Legal Proceedings
From time
to time, we are subject to routine legal proceedings incidental to the operation
of our business. The outcome of any threatened or pending proceedings is not
expected to have a material adverse effect on our financial condition, operating
results or cash flows, based on our current understanding of the relevant facts.
The Company maintains insurance coverage against claims in an amount that it
believes to be adequate.
ADVANCED
ACCESSORY HOLDINGS CORPORATION
Item
2. Changes in Securities, Use of Proceeds and Issuer Purchases of
Equity Security
None
None
Item
4. Submission of Matters to a Vote of
Security-Holders
None
Item
5. Other Information
None
| |
|
Certification
of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
| |
|
Certification
of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 |
| |
|
Certification
of Chief Executive Officer Pursuant To 18 U.S.C. Section 1350, as Adopted
Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002
|
| |
|
Certification
of Chief Financial Officer Pursuant To 18 U.S.C. Section 1350, as Adopted
Pursuant To Section 906 of the Sarbanes-Oxley Act Of 2002
|
ADVANCED
ACCESSORY HOLDINGS CORPORATION
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.
| |
ADVANCED
ACCESSORY HOLDINGS CORPORATION |
| |
|
| |
|
| |
|
| |
|
|
Date:
May 13, 2005 |
/s/
Ronald J. Gardhouse |
| |
Ronald
J. Gardhouse |
| |
Chief
Financial Officer |
| |
(Principal
Financial Officer |
| |
and
Authorized Signatory) |
ADVANCED
ACCESSORY HOLDINGS CORPORATION
EXHIBIT
INDEX
|
Exhibit |
Description
|
| |
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
| |
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 |
| |
|
|
32.1 |
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. |
| |
|
|
32.2 |
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. |
| |
|