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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
Amendment No. 1
(Mark One)
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2006
or
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 0-21139
Dura Automotive Systems, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 38-3185711 | |||
(State or other jurisdiction of | (I.R.S. Employer | |||
incorporation or organization) | Identification Number) | |||
2791 Research Drive, Rochester Hills, Michigan | 48309 | |||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:
(248) 299-7500
(248) 299-7500
Securities registered pursuant to Section 12(b) of the Act:
None
None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $0.01 Par Value
(Title of Class)
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yeso Noþ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Act. Yeso Noþ
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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. Yeso Noþ
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 the 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.o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filero Accelerated filero Non-accelerated filerþ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ
The aggregate value of Common Stock held by non-affiliates of the Registrant was $36,029,647 as of July 2, 2006, based upon the closing price of the Registrant’s Common Stock reported for such date on the Nasdaq National Market. Shares of Common Stock held by each executive officer and director and by each person who owns 10% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. The determination of affiliate status is not necessarily a conclusive determination for other purposes. As of June 1, 2007, the Registrant had outstanding 18,904,222 shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
None
None
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Explanatory Note
This amendment to the Annual Report on Form 10-K/A (“Amendment No. 1”) is being filed in order to reflect the restatement of previously issued consolidated financial statements as of December 31, 2006 and 2005, and for each of the three years in the period ended December 31, 2006 included in the original Annual Report on Form 10-K for the fiscal year ended December 31, 2006, previously filed on July 16, 2007 (the “Original Filing”).
Subsequent to the issuance of the Company’s consolidated financial statements included in Item 8, “Financial Statements and Supplementary Data,” in the Original Filing, the Company determined that certain information in the Condensed Consolidating Guarantor and Non-Guarantor Financial Information Footnote — Note 13 contained errors. See Note 17 to the consolidated financial statements for a more detailed description of these errors that resulted in the restatement. The correction of these errors has no impact, for any previously reported period, on the Company’s (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of stockholders’ investment (deficit), or (iv) consolidated statements of cash flows.
This Amendment No. 1 on Form 10-K/A amends and restates only Items 8 and 9A of Part II and Item 15 of Part IV of the Original Filing to reflect the restatement of the Company’s consolidated financial statements and notes thereto for the periods presented. Except for the foregoing amended information, this Amendment No. 1 on Form 10-K/A continues to describe conditions as of the date of the Original Filing, and we have not updated the disclosures contained herein to reflect events that occurred at a later date. Accordingly, this Amendment No. 1 should be read in conjunction with the Company’s SEC Filings made subsequent to the original filing. We are also updating the Signature Page and certifications of our Chief Executive and Financial Officers contained in Exhibits 31.1, 31.2, 32.1 and 32.2.
Dura Automotive Systems, Inc.
INDEX
INDEX
PART II | ||||||||
PART IV | ||||||||
Certification Pursuant to Section 302 | ||||||||
Certification Pursuant to Section 302 | ||||||||
Certification Pursuant to Section 906 | ||||||||
Certification Pursuant to Section 906 |
3
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Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
10 |
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Item 8.Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Dura Automotive Systems, Inc.
Rochester Hills, Michigan
Dura Automotive Systems, Inc.
Rochester Hills, Michigan
We have audited the accompanying consolidated balance sheets of Dura Automotive Systems, Inc. and subsidiaries (Debtor-in-Possession) (the “Company”) as of December 31, 2006 and 2005, and the related consolidated statements of operations, stockholders’ investment (deficit), and cash flows for each of the three years in the period ended December 31, 2006. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Dura Automotive Systems, Inc. and subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein
As discussed in Note 1 to the consolidated financial statements, Dura Automotive Systems, Inc. and its United States and Canadian subsidiaries filed for reorganization under chapter 11 of the United States Bankruptcy Code. The accompanying consolidated financial statements do not purport to reflect or provide for the consequences of the bankruptcy proceedings. In particular, such consolidated financial statements do not purport to show (1) as to assets, their realizable value on a liquidation basis or their availability to satisfy liabilities; (2) as to prepetition liabilities, the amounts that may be allowed for claims or contingencies, or the status and priority thereof; (3) as to stockholder accounts, the effect of any changes that may be made in the capitalization of the Company; or (4) as to operations, the effect of any changes that may be made in its business.
As discussed in Note 17, the accompanying consolidated financial statements have been restated.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Notes 1 and 14 to the consolidated financial statements, the Company has incurred significant losses from operations during 2006, had negative working capital, negative stockholders’ investment (deficit), and is in default under the terms of the Company’s long-term debt agreements. In addition, the ability of the Company to comply with the terms and conditions of the debtor-in-possession financing agreement, to obtain confirmation of a plan of reorganization under chapter 11 of the United States Bankruptcy Code, to reduce wage and benefit costs and liabilities through the bankruptcy process, to return to profitability, to generate sufficient cash flow from operations, and to obtain financing sources to meet the Company’s future obligations raise substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also discussed in Notes 1 and 14 to the consolidated financial statements. The consolidated financial statements do not include adjustments that might result from the outcome of this uncertainty.
DELOITTE & TOUCHE LLP
Detroit, Michigan
July 13, 2007 (December 20, 2007 as to the effects of the restatement discussed in Note 17)
July 13, 2007 (December 20, 2007 as to the effects of the restatement discussed in Note 17)
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
(DEBTOR-IN-POSSESSION)
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 90,446 | $ | 101,889 | ||||
Accounts receivable, net of allowance of $6,498 in 2006 and $5,061 in 2005 | 311,981 | 286,029 | ||||||
Inventories | 149,367 | 128,681 | ||||||
Deferred income taxes | 6,642 | 17,978 | ||||||
Other current assets | 123,612 | 87,254 | ||||||
Current assets of discontinued operations | — | 10,975 | ||||||
Total current assets | 682,048 | 632,806 | ||||||
Property, plant and equipment, net | 465,475 | 450,379 | ||||||
Goodwill | 258,313 | 850,152 | ||||||
Deferred income taxes | 22,037 | 66,542 | ||||||
Other assets, net of accumulated amortization of $383 in 2006 and $19,377 in 2005 | 26,968 | 63,280 | ||||||
Noncurrent assets of discontinued operations | — | 12,050 | ||||||
$ | 1,454,841 | $ | 2,075,209 | |||||
LIABILITIES AND STOCKHOLDERS’ INVESTMENT (DEFICIT) | ||||||||
Current Liabilities: | ||||||||
Debtors-in-possession financing | $ | 165,000 | $ | — | ||||
Current maturities of long-term debt | 4,679 | 3,473 | ||||||
Accounts payable | 164,831 | 261,258 | ||||||
Accrued liabilities | 160,624 | 158,835 | ||||||
Accrued pension and postretirement benefits | 1,437 | 16,741 | ||||||
Deferred income taxes | 2,768 | 2,577 | ||||||
Current liabilities of discontinued operations | — | 6,771 | ||||||
Total current liabilities | 499,339 | 449,655 | ||||||
Long-term liabilities: | ||||||||
Long-term debt, net of current maturities | 2,596 | 1,139,952 | ||||||
Pension and postretirement benefits | 68,044 | 69,717 | ||||||
Other noncurrent liabilities | 39,515 | 62,657 | ||||||
Deferred income taxes | 8,132 | 8,439 | ||||||
Noncurrent liabilities of discontinued operations | — | 218 | ||||||
Total long-term liabilities | 118,287 | 1,280,983 | ||||||
Liabilities subject to compromise | 1,335,083 | — | ||||||
Total liabilities | 1,952,709 | 1,730,638 | ||||||
Commitments and Contingencies (Notes 6, 7, 10 and 11) | ||||||||
Minority interests | 5,459 | 4,864 | ||||||
Stockholders’ Investment (deficit): | ||||||||
Preferred stock, par value $1; 5,000,000 shares authorized; none issued or outstanding | — | — | ||||||
Common stock, Class A; par value $.01; 60,000,000 shares authorized; 18,904,222 and 18,774,948 issued and outstanding, respectively | 189 | 188 | ||||||
Common stock, Class B; par value $.01; 10,000,000 shares authorized; none issued or outstanding | — | — | ||||||
Additional paid-in capital | 351,878 | 351,994 | ||||||
Treasury stock at cost | (1,743 | ) | (1,948 | ) | ||||
Accumulated deficit | (1,002,185 | ) | (91,528 | ) | ||||
Accumulated other comprehensive income | 148,534 | 81,001 | ||||||
Total stockholders’ investment (deficit) | (503,327 | ) | 339,707 | |||||
$ | 1,454,841 | $ | 2,075,209 | |||||
The accompanying notes are an integral part of these consolidated financial statements.
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
For the Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Revenues | $ | 2,090,766 | $ | 2,291,440 | $ | 2,443,446 | ||||||
Cost of sales | 2,001,013 | 2,040,643 | 2,172,136 | |||||||||
Gross profit | 89,753 | 250,797 | 271,310 | |||||||||
Selling, general and administrative expenses | 141,939 | 155,120 | 149,602 | |||||||||
Prepetition professional fees | 10,455 | — | — | |||||||||
Facility consolidation, asset impairment and other charges | 684,238 | 11,397 | 21,817 | |||||||||
Amortization expense | 405 | 434 | 445 | |||||||||
Operating income (loss) | (747,284 | ) | 83,846 | 99,446 | ||||||||
Interest expense, net of interest income of $2,815 in 2006, $2,987 in 2005, and $2,985 in 2004 | 101,784 | 99,823 | 89,351 | |||||||||
Gain on early extinguishment of debt, net | — | 14,805 | — | |||||||||
Income (loss) from continuing operations before reorganization items, income taxes and minority interest | (849,068 | ) | (1,172 | ) | 10,095 | |||||||
Reorganization items | 25,315 | — | — | |||||||||
Income (loss) from continuing operations before income taxes and minority interest | (874,383 | ) | (1,172 | ) | 10,095 | |||||||
Provision for income taxes | 46,520 | 423 | 1,364 | |||||||||
Minority interest in non wholly owned subsidiaries | 432 | 177 | — | |||||||||
Income (loss) from continuing operations | (921,335 | ) | (1,772 | ) | 8,731 | |||||||
Income from discontinued operations, including gain on disposals, net of tax of $1,442 in 2006, $2,265 in 2005, and $2,306 in 2004 | 9,658 | 3,586 | 2,992 | |||||||||
Income (loss) before change in accounting principle | (911,677 | ) | 1,814 | 11,723 | ||||||||
Cumulative effect of change in accounting principle, net of tax of $712 | 1,020 | — | — | |||||||||
Net income (loss) | $ | (910,657 | ) | $ | 1,814 | $ | 11,723 | |||||
Basic earnings (loss) per share: | ||||||||||||
Income (loss) from continuing operations | $ | (48.83 | ) | $ | (0.09 | ) | $ | 0.47 | ||||
Income from discontinued operations | 0.51 | 0.19 | 0.16 | |||||||||
Cumulative effect of change in accounting principle | 0.05 | — | — | |||||||||
Net income (loss) | $ | (48.27 | ) | $ | 0.10 | $ | 0.63 | |||||
Diluted earnings (loss) per share: | ||||||||||||
Income (loss) from continuing operations | $ | (48.83 | ) | $ | (0.09 | ) | $ | 0.46 | ||||
Income from discontinued operations | 0.51 | 0.19 | 0.16 | |||||||||
Cumulative effect of change in accounting principle | 0.05 | — | — | |||||||||
Net income (loss) | $ | (48.27 | ) | $ | 0.10 | $ | 0.62 | |||||
The accompanying notes are an integral part of these consolidated financial statements.
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT (DEFICIT)
Accumulated | Total | |||||||||||||||||||||||||||||||||||||||
Common Stock | Additional | Other | Stockholders’ | |||||||||||||||||||||||||||||||||||||
Class A | Class B | Paid—in | Treasury Stock | Accumulated | Comprehensive | Investment | ||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Shares | Amount | Deficit | Income (Loss) | (Deficit) | |||||||||||||||||||||||||||||||
(in thousands, except share amounts) | ||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2003 | 16,734,228 | $ | 168 | 1,646,150 | $ | 16 | $ | 349,220 | 233,276 | $ | (2,452 | ) | $ | (105,065 | ) | $ | 88,700 | $ | 330,587 | |||||||||||||||||||||
Sale of stock under Employee Stock Discount Purchase Plan | 114,052 | 1 | — | — | 937 | — | — | — | — | 938 | ||||||||||||||||||||||||||||||
Conversion from Class B to Class A | 1,646,150 | 16 | (1,646,150 | ) | (16 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Exercise of options | 138,100 | 1 | — | — | 1,353 | — | — | — | — | 1,354 | ||||||||||||||||||||||||||||||
Treasury shares, net | — | — | — | — | 61 | 3,735 | (61 | ) | — | — | — | |||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | 11,723 | ||||||||||||||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | — | — | 69,669 | |||||||||||||||||||||||||||||||
Minimum pension liability, net of tax | — | — | — | — | — | — | — | — | (6,780 | ) | ||||||||||||||||||||||||||||||
Total comprehensive income | 74,612 | |||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2004 | 18,632,530 | 186 | — | — | 351,571 | 237,011 | (2,513 | ) | (93,342 | ) | 151,589 | 407,491 | ||||||||||||||||||||||||||||
Sale and exercise of stock options, including the value of treasury stock | 142,418 | 2 | — | — | 423 | (53,328 | ) | 565 | — | — | 990 | |||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | 1,814 | ||||||||||||||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | — | — | (64,832 | ) | ||||||||||||||||||||||||||||||
Minimum pension liability, net of tax | — | — | — | — | — | — | — | — | (5,756 | ) | ||||||||||||||||||||||||||||||
Total comprehensive loss | (68,774 | ) | ||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2005 | 18,774,948 | 188 | — | — | 351,994 | 183,683 | (1,948 | ) | (91,528 | ) | 81,001 | 339,707 | ||||||||||||||||||||||||||||
Sale and exercise of stock options, including the value of treasury stock | 129,274 | 1 | — | — | (116 | ) | (19,321 | ) | 205 | — | — | 90 | ||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (910,657 | ) | — | ||||||||||||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | — | — | 75,561 | |||||||||||||||||||||||||||||||
Minimum pension liability | — | — | — | — | — | — | — | — | (3,128 | ) | ||||||||||||||||||||||||||||||
Total comprehensive loss | (838,224 | ) | ||||||||||||||||||||||||||||||||||||||
SFAS 158 adjustment | — | — | — | — | — | — | — | — | (4,900 | ) | (4,900 | ) | ||||||||||||||||||||||||||||
Balance, December 31, 2006 | 18,904,222 | $ | 189 | — | $ | — | $ | 351,878 | 164,362 | $ | (1,743 | ) | $ | (1,002,185 | ) | $ | 148,534 | $ | (503,327 | ) | ||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31 | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(in thousands) | ||||||||||||
OPERATING ACTIVITIES: | ||||||||||||
Net income (loss) | $ | (910,657 | ) | $ | 1,814 | $ | 11,723 | |||||
Less: Net earnings from discontinued operations | 9,658 | 3,586 | 2,992 | |||||||||
Less: Cumulative effect of accounting change, net of tax | 1,020 | — | — | |||||||||
Income (loss) from continuing operations | (921,335 | ) | (1,772 | ) | 8,731 | |||||||
Adjustments required to reconcile income (loss) from continuing operations to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 78,825 | 78,263 | 82,069 | |||||||||
Asset impairments | 10,838 | 3,160 | 7,100 | |||||||||
Goodwill impairment | 636,927 | — | — | |||||||||
Facility consolidation and other | 36,473 | 8,237 | 14,717 | |||||||||
Amortization of deferred financing fees | 4,122 | 3,889 | 3,522 | |||||||||
(Gain)/loss on sale of property, plant and equipment | (2,398 | ) | (196 | ) | 1,429 | |||||||
Bad debt expense | 42 | 1,856 | 209 | |||||||||
Reorganization items | 25,315 | — | — | |||||||||
Deferred income tax benefit (loss) | 46,387 | (27,156 | ) | (16,663 | ) | |||||||
Favorable settlement of environmental matters | — | (9,960 | ) | — | ||||||||
Gain on early extinguishment of debt | — | (14,805 | ) | — | ||||||||
Change in other operating items: | ||||||||||||
Accounts receivable | (11,167 | ) | (30,505 | ) | 27,032 | |||||||
Inventories | (13,885 | ) | 14,064 | (16,432 | ) | |||||||
Other current assets | (11,732 | ) | (20,814 | ) | 6,541 | |||||||
Accounts payable and accrued liabilities | (59,184 | ) | (9,203 | ) | 993 | |||||||
Other assets, liabilities and noncash items | (1,155 | ) | (15,707 | ) | (18,912 | ) | ||||||
Net cash provided by (used in) continuing operating activities | (181,927 | ) | (20,649 | ) | 100,336 | |||||||
INVESTING ACTIVITIES: | ||||||||||||
Capital expenditures | (84,430 | ) | (63,868 | ) | (65,072 | ) | ||||||
Proceeds from the sale of assets and other | 6,370 | 2,490 | — | |||||||||
Other acquisition related activities | — | — | (13,327 | ) | ||||||||
Net cash used in continuing investing activities | (78,060 | ) | (61,378 | ) | (78,399 | ) | ||||||
FINANCING ACTIVITIES: | ||||||||||||
Debtors in possession borrowings | 165,000 | — | — | |||||||||
Net borrowings under prepetition revolving credit facilities | 68,861 | — | — | |||||||||
Net borrowings under revolving credit facilities | — | 17,500 | — | |||||||||
Long-term borrowings | — | 153,285 | 568 | |||||||||
Repayments of long-term borrowings | — | (179,459 | ) | (19,227 | ) | |||||||
Payment on termination of interest rate swap | (12,185 | ) | — | — | ||||||||
Deferred gain on termination of interest rate swap | — | 11,374 | — | |||||||||
Proceeds from equity securities, net | 257 | 673 | 2,353 | |||||||||
Debt issue costs | (10,522 | ) | (7,613 | ) | (552 | ) | ||||||
Other, net | (98 | ) | (86 | ) | (61 | ) | ||||||
Net cash provided by (used in) continuing financing activities | 211,313 | (4,326 | ) | (16,919 | ) | |||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 16,331 | (7,942 | ) | (718 | ) | |||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS | (32,343 | ) | (94,295 | ) | 4,300 | |||||||
CASH FLOW FROM DISCONTINUED OPERATIONS: | ||||||||||||
Operating activities | 3,313 | 7,565 | 8,136 | |||||||||
Investing activities | 17,587 | (2,949 | ) | (2,136 | ) | |||||||
NET CHANGE IN CASH FLOWS FROM DISCONTINUED OPERATIONS | 20,900 | 4,616 | 6,000 | |||||||||
CASH AND CASH EQUIVALENTS: | ||||||||||||
Beginning of period | 101,889 | 191,568 | 181,268 | |||||||||
End of period | $ | 90,446 | $ | 101,889 | $ | 191,568 | ||||||
SUPPLEMENTAL DISCLOSURE: | ||||||||||||
Cash paid for interest | $ | 70,360 | $ | 95,293 | $ | 85,217 | ||||||
Cash paid for income taxes | $ | 13,336 | $ | 10,496 | $ | 10,330 | ||||||
Unpaid capital expenditures | $ | 9,518 | $ | 11,649 | $ | 12,516 | ||||||
Capitalized interest expense | $ | 101 | $ | 453 | $ | — |
The accompanying notes are an integral part of these consolidated financial statements.
9
Table of Contents
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006, 2005 and 2004
1. Organization and Basis of Presentation:
Dura Automotive Systems, Inc. (a Delaware Corporation) is a holding company whose predecessor was formed in 1990. Dura Automotive Systems, Inc. and its subsidiaries (collectively referred to as “Dura”, “Company”, “we”, “our” and “us”) is a leading independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive and recreation & specialty vehicle (“RVSV”) industries.
We sell our products to every major North American, European and Asian automotive original equipment manufacturer (“OEM”) and nearly every RVSV OEM. We have manufacturing and product development facilities located in the United States (“U.S.”), Brazil, Canada, China, Czech Republic, France, Germany, Mexico, Portugal, Romania, Slovakia, Spain and the United Kingdom (“UK”). We also have a presence in India, Japan, and Korea through sales offices, alliances or technical licenses.
Chapter 11 Bankruptcy Filing and Going Concern— On October 30, 2006, Dura and its United States (“U.S.”) and Canadian subsidiaries (the “Debtors”) filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Debtors’ chapter 11 cases are being jointly-administered under Case No. 06-11202 (KJC). The Debtors will continue to operate their businesses as “debtors-in-possession” under the supervision of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Dura’s European, Asian, and Latin American operations were not included in the filings and will continue their business operations without supervision from the Bankruptcy Court and will not be subject to the requirements of the Bankruptcy Code.
The Debtors are currently operating pursuant to chapter 11 under the Bankruptcy Code and continuation of Dura as a going-concern is contingent upon, among other things, the Debtors’ ability (i) to comply with the terms and conditions of the Debtors-in-possession financing agreements, the DIP Credit Agreements, described in Note 7 to the consolidated financial statements; (ii) to develop a plan of reorganization and obtain confirmation under the Bankruptcy Code; (iii) to reduce unsustainable debt and other liabilities and simplify our complex and restrictive capital structure through the bankruptcy process; (iv) to return to profitability; (v) to generate sufficient cash flow from operations; and (vi) to obtain financing sources to meet our future obligations. These matters create uncertainty relating to our ability to continue as a going concern. The accompanying condensed combined financial statements reported in Note 14 to the consolidated financial statements, do not reflect any adjustments relating to the recoverability and classification of assets or liabilities that might result from the outcome of these uncertainties. In addition, any plan of reorganization could materially change amounts reported in our combined financial statements, which do not give effect to any adjustments of the carrying value of assets and liabilities that may be necessary as a consequence of reorganization under chapter 11.
American Institute of Certified Public Accountants Statement of Position 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code” (“SOP 90-7”), which is applicable to companies in chapter 11, generally does not change the manner in which financial statements are prepared. However, it does require that the financial statements for periods subsequent to the filing of the chapter 11 petition distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Revenues, expenses, realized gains and losses, and provisions for losses that can be directly associated with the reorganization and restructuring of the business must be reported separately as reorganization items in the statements of operations. The balance sheet must distinguish prepetition liabilities subject to compromise from both those prepetition liabilities that are not subject to compromise and from post-petition liabilities. Liabilities that may be affected by a plan of reorganization must be reported at the amounts expected to be allowed, even if they may be settled for lesser amounts. In addition, cash provided by reorganization items must be disclosed separately in the statements of cash flows. Dura adopted SOP 90-7 effective October 30, 2006 and segregated those items, as outlined above, for all reporting periods subsequent to such date.
See Note 14 for the condensed combined financial statements of the Debtors.
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2. Significant Accounting Policies:
Principles of Consolidation:
The accompanying consolidated financial statements include our accounts and those of our wholly and majority owned subsidiaries. Net income is reduced by the portion of the net income of subsidiaries applicable to minority interests. All majority owned subsidiaries are consolidated with all intercompany accounts and activities being eliminated. The operating results of Dura Ganxiang Automotive Systems (Shanghai) Co., Ltd., of which we own 55% of its outstanding common stock, and Dura Vehicle Component Co. Ltd., of which we own 90% of its outstanding common stock, are consolidated in the accompanying financial statements with the non-owned portion shown as minority interest. Our 50% investment in Duratronics GmbH is carried on the equity method as we do not exert controlling interest over its operations.
Reclassifications:
Certain prior year amounts have been reclassified to reflect current year classification to reflect the sale in 2006 of a subsidiary that is required to be reported as a discontinued operation under SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”(“SFAS 144”), as described in Note 3 to the consolidated financial statements.
Cash Equivalents:
Cash equivalents consist of money market instruments with original maturities of three months or less and are stated at cost, which approximates fair value.
Inventories:
Inventories are valued at the lower of first-in, first-out cost or market. We assess inventory valuation based on an estimates of future demand. Our estimated future demand is based upon projections of future related automobile platform sales and RVSV products. Service parts future projected demand is based upon current service usage.
Inventories consisted of the following (in thousands):
December 31, | ||||||||
2006 | 2005 | |||||||
Raw materials | $ | 76,594 | $ | 60,225 | ||||
Work-in-process | 31,415 | 25,018 | ||||||
Finished goods | 41,358 | 43,438 | ||||||
$ | 149,367 | $ | 128,681 | |||||
Other Current Assets:
Other current assets consisted of the following (in thousands):
December 31, | ||||||||
2006 | 2005 | |||||||
Excess of cost over billings on uncompleted tooling projects | $ | 58,107 | $ | 48,820 | ||||
Income and other tax receivables | 29,394 | 17,937 | ||||||
Debt issue costs, net of amortization of $661 in 2006 | 7,897 | — | ||||||
Prepaid expenses and other | 28,214 | 20,497 | ||||||
$ | 123,612 | $ | 87,254 | |||||
Excess of cost over billings on uncompleted tooling projects represents unbilled recoverable costs incurred by us in the production or procurement of customer-owned tooling to be used by us in the manufacture of our products. We receive a specific purchase order for this tooling and are reimbursed by the customer within one operating cycle. Costs are deferred until reimbursed by the customer. Forecasted losses on incomplete projects are recognized currently when identified.
Debt issue costs of approximately $7.9 million that relate to the DIP Credit Agreements have been classified as current as the related debt is due, in full, in December 2007.
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Property, Plant and Equipment:
Property, plant and equipment are stated at cost. For financial reporting purposes, depreciation is provided on the straight-line method over the following estimated useful lives:
Buildings | 20 to 30 years | |||
Machinery and equipment | 3 to 20 years | |||
Leasehold improvements | Shorter of useful life or lease term |
Maintenance and repairs are charged to expense as incurred. Major betterments and improvements which extend the useful life of the item are capitalized and depreciated. The cost and accumulated depreciation of property, plant and equipment retired or otherwise disposed of are removed from the related accounts, and any residual values are charged or credited to income. When circumstances indicate a potential impairment to the carrying value of any property, plant or equipment, we perform an evaluation in accordance SFAS No. 144 to assess the recoverability of the assets. See further discussion in Note 5 to the consolidated financial statements, Facility Consolidation, Asset Impairment and Other Charges. Property, plant and equipment consisted of the following (in thousands):
December 31, | ||||||||
2006 | 2005 | |||||||
Land and buildings | $ | 218,363 | $ | 204,158 | ||||
Machinery and equipment | 760,180 | 659,429 | ||||||
Construction in progress | 42,306 | 42,917 | ||||||
Less — Accumulated depreciation and amortization | (555,374 | ) | (456,125 | ) | ||||
$ | 465,475 | $ | 450,379 | |||||
Goodwill and Other Noncurrent Assets:
Goodwill represents the excess of the purchase price over the fair value of the net assets acquired.
In accordance with SFAS No. 142 “Goodwill and Other Intangible Assets”(“SFAS 142”), we perform impairment tests using both a discounted cash flow methodology and a market multiple approach for each of our four reporting units (Control Systems, Body & Glass, Atwood Mobile Products and Other Operating Companies). This impairment test is conducted during the second quarter of each year or whenever events or circumstances occur indicating that goodwill or other intangible assets might be impaired. In connection with our ongoing review of goodwill during our second quarter of 2006, our analysis indicated the reported value of our goodwill in our Control Systems reporting unit, recorded in connection with various acquisitions that have been completed over the last ten years, was materially impaired. No other impairments were indicated for the other three reporting units. Under SFAS No. 142, we began the step two impairment assessment of the Control Systems’ goodwill. At the end of our second quarter, we disclosed that we were unable to make a good-faith estimate of the potential amount or range of amounts of the impairment charge. During our third quarter ended October 1, 2006, we completed our step two impairment analysis and determined that all of the Control Systems reporting unit’s goodwill was impaired. Accordingly, we recorded an impairment charge for the total amount of the Control Systems reporting unit goodwill of approximately $637.3 million. This charge is reflected in facility consolidation, asset impairment and other charges in the accompanying consolidated statement of operations. In addition to the completion of our assessment of the Control Systems reporting unit, we also reassessed the carrying values of our other reporting units during the second half of 2006, and concluded that no impairment had occurred. If we do not obtain the financial results planned for in our restructuring plans, further impairment of our goodwill could occur.
All goodwill assigned to the Automotive Segment as of December 31, 2006, is associated with the Body & Glass reporting unit’s acquisitions. No goodwill is recorded for the Other Operating Companies and Control Systems reporting units.
A summary of the carrying amount of goodwill by reporting segment is as follows (in thousands):
Atwood | ||||||||||||
Mobile | ||||||||||||
Automotive | Products | Total | ||||||||||
Balance, December 31, 2005 | $ | 778,836 | $ | 71,316 | $ | 850,152 | ||||||
Currency translation adjustment | 45,467 | — | 45,467 | |||||||||
Impairment | (637,306 | ) | — | (637,306 | ) | |||||||
Adjustments | — | — | — | |||||||||
Balance, December 31, 2006 | $ | 186,997 | $ | 71,316 | $ | 258,313 | ||||||
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Other noncurrent assets consisted of the following (in thousands):
December 31, | ||||||||
2006 | 2005 | |||||||
Debt issue costs, net of amortization of $19,110 in 2005 | $ | — | $ | 19,115 | ||||
Notes receivable, net of reserves | 246 | 7,677 | ||||||
Other assets | 13,499 | 18,843 | ||||||
Other intangible assets | 13,223 | 17,645 | ||||||
$ | 26,968 | $ | 63,280 | |||||
In accordance with SOP 90-7, the unamortized prepetition debt issue costs of $15.5 million at December 31, 2006, are no longer being amortized and have been included as an adjustment to the net carrying value of the related prepetition debt.
Other intangible assets consists primarily of trademarks and brand names of $6.9 million as of December 31, 2006 and 2005, that are not being amortized as their estimated useful lives are considered indefinite. In 2005, other intangible included $3 million of pension assets which was classified to accumulated other comprehensive income, in accordance with the guidance of SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, and amendment of FASB Statements No. 87, 88, 106, and 132(R)”(“SFAS 158”), (see Note 10 to the consolidated financial statements, Employee Benefit Plans). Other intangible assets also include amortizing intangible assets which consist primarily of license agreements, customer relationships and other of $6.3 million and $10.8 million, as of December 31, 2006 and 2005, respectively. The amortization of other intangible assets was not significant in 2006 and 2005.
Accrued Liabilities:
Accrued liabilities consisted of the following (in thousands):
December 31, | ||||||||
2006 | 2005 | |||||||
Compensation and benefits | $ | 73,952 | $ | 67,029 | ||||
Income and other taxes | 23,137 | 43,119 | ||||||
Interest | 2,174 | 16,882 | ||||||
Facility closure, acquisition integrations and discontinued operations | 15,914 | 5,638 | ||||||
Warranty and environmental | 2,682 | 2,371 | ||||||
Professional fees | 13,219 | 2,441 | ||||||
Other | 29,546 | 21,355 | ||||||
$ | 160,624 | $ | 158,835 | |||||
Other Noncurrent Liabilities:
Other noncurrent liabilities consisted of the following (in thousands):
December 31, | ||||||||
2006 | 2005 | |||||||
Facility closure, acquisition integrations and discontinued operations | $ | 17,897 | $ | 17,014 | ||||
Warranty and environmental | 7,198 | 12,275 | ||||||
Other | 14,420 | 33,368 | ||||||
$ | 39,515 | $ | 62,657 | |||||
Liabilities Subject to Compromise:
As a result of the chapter 11 filings, the payment of prepetition indebtedness may be subject to compromise or other treatment under the Debtors’ plan of reorganization. Generally, actions to enforce or otherwise effect payment of prepetition liabilities are stayed. Although prepetition claims are generally stayed, at hearings held on October 30, 2006, the Court granted final approval of the Debtors’ “first day” motions generally designed to stabilize the Debtors’ operations and cover, among other things, human capital obligations, supplier relations, customer relations, business operations, tax matters, cash management, utilities, case management and retention of professionals.
The Debtors have been paying and intend to continue to pay undisputed post petition claims in the ordinary course of business. In addition, the Debtors may reject prepetition executory contracts and unexpired leases with
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respect to the Debtors’ operations, with the approval of the Court. Damages resulting from rejection of executory contracts and unexpired leases are treated as general unsecured claims and will be classified as liabilities subject to compromise. On February 23, 2007, the Court entered an order establishing May 1, 2007 as the bar date. The bar date is the date by which claims against the Debtors arising prior to the Debtors’ chapter 11 filings must be filed if the claimants wish to receive any distribution in the chapter 11 cases. On March 2, 2007, the Debtors commenced notification, including publication, to all known actual and potential creditors informing them of the bar date and the required procedures with respect to the filing of proofs of claim with the Court. Any differences between claim amounts listed by the Debtors in their Schedules of Assets and Liabilities (as amended) and claims filed by creditors will be investigated and, if necessary, the Court will make the final determination as to the amount, nature, and validity of claims. The determination of how liabilities will ultimately be settled and treated cannot be made until the Court approves a chapter 11 plan of reorganization. Accordingly, the ultimate amount of such liabilities is not determinable at this time.
SOP 90-7 requires prepetition liabilities that are subject to compromise to be reported at the amounts expected to be allowed, even if they may be settled for lesser amounts. The amounts currently classified as liabilities subject to compromise may be subject to future adjustments depending on Court actions, further developments with respect to disputed claims, determinations of the secured status of certain claims, the values of any collateral securing such claims, or other events.
At December 31, 2006, liabilities subject to compromise consisted of the following (in thousands):
Debt | $ | 1,206,571 | ||
Accrued interest | 44,026 | |||
Accounts payable | 64,616 | |||
Compensation and other benefits | 19,870 | |||
$ | 1,335,083 | |||
Contractual Interest Expense:
In accordance with the Court-approved first day motion, the Company continues to accrue and pay the interest on its Second Lien Term Loan whose principal balance is subject to compromise. Effective October 30, 2006, interest on unsecured prepetition debt, other than the Second Lien Term Loan, has not been accrued as provided for under the U.S. Bankruptcy code. As of December 31, 2006, the amount of unrecorded interest on prepetition debt was approximately $15.0 million. Contractual interest expense for the year ended December 31, 2006 was $119.6 million.
Reorganization Items:
SOP 90-7 requires reorganization items such as certain revenues, expenses such as professional fees directly related to the process of reorganizing the Debtors under chapter 11, realized gains and losses, and provisions for losses resulting from the reorganization and restructuring of the business to be separately disclosed. The Debtors’ reorganization items incurred between the filing date and December 31, 2006, consist of the following:
Professional and other fees directly related to reorganization, excluding prepetition fees | $ | 11,041 | ||
Loss on termination of interest rate swap | 12,185 | |||
Prepetition debt issue costs write-off | 2,089 | |||
$ | 25,315 | |||
Professional fees directly related to the reorganization include fees associated with advisors to the Debtors, unsecured creditors and secured creditors.
Prepetition professional fees:
Special legal and other advisors fees associated with our prepetition reorganization efforts, including preparation for the bankruptcy filing, are reflected in the prepetition professional fees category in the consolidated statement of operations for the year ended December 31, 2006.
Revenue Recognition and Sales Commitments:
We recognize revenue when title passes to our customers, which occurs primarily when products are shipped from our facilities to our customers. We enter into agreements with our customers at the beginning of a given
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vehicle’s life to produce products. Once such agreements are entered into by us, fulfillment of the customers’ purchasing requirements is our obligation for the entire production life of the vehicle, with terms of up to seven years, and we generally have no provisions to terminate such contracts. In certain instances, we may be committed under existing agreements to supply product to our customers at selling prices which are not sufficient to cover the direct cost to produce such product. In such situations, we record a liability for the estimated amount of such future losses. Such losses are recognized at the time that the loss is probable and reasonably estimable and are recorded at the minimum amount necessary to fulfill our obligations to our customers. The estimated amount of such losses as of December 31, 2006 and 2005 were not significant.
Our allowances for doubtful accounts and sales allowances primarily represent potential adjustments to amounts billed to customers for shipments made which are unremitted. Sales price allowances are recorded as an adjustment to sales. Allowances for doubtful accounts, which are not significant, are recorded in cost of sales.
Restructuring Charges:
We recognize restructuring charges in accordance with SFAS No. 88 “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits”(“SFAS 88”), SFAS No. 112 “Employer’s Accounting for Post-employment Benefits” (“SFAS 112”), SFAS 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”, SFAS No. 146 “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”) and EITF 95-3 “Recognition of Liabilities in Connection with a Purchase Business Combination.” Such charges relate to exit activities and primarily include employee termination charges, lease expenses net of any actual or estimated sublease income, employee relocation, asset impairment charges, moving costs for related equipment and inventory, and other exit related costs associated with a plan approved by senior level management. The recognition of restructuring charges requires us to make certain assumptions and estimates as to the amount and when to recognize exit activity related charges. Quarterly, we re-evaluate the amounts recorded and adjust for changes in estimates as facts and circumstances change.
Income Taxes:
We account for income taxes in accordance with the provisions of SFAS No. 109 “Accounting for Income Taxes”(“SFAS 109”), which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differing treatment of items for financial reporting and income tax reporting purposes. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. We have provided deferred income benefits on net operating loss carryforwards to the extent we believe we will utilize them in future tax filings.
Comprehensive Income (Loss):
Comprehensive income (loss) reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. Comprehensive income (loss) represents net income (loss) adjusted for foreign currency translation adjustments, and additional minimum pension liability. In accordance with SFAS No. 130 “Reporting of Comprehensive Income”(“SFAS 130”), we have chosen to disclose comprehensive income (loss) in the consolidated statements of stockholders’ investment (deficit).
The components of accumulated other comprehensive income (loss) are as follows (in thousands):
December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Foreign currency translation adjustment | $ | 184,250 | $ | 108,688 | $ | 173,520 | ||||||
Minimum pension liability of $15,267 in 2006, $17,032 net of tax in 2005, and $13,832 net of tax in 2004, respectively | (35,716 | ) | (27,687 | ) | (21,931 | ) | ||||||
$ | 148,534 | $ | 81,001 | $ | 151,589 | |||||||
Fair Value of Financial Instruments:
The carrying amount of cash and cash equivalents, accounts receivable, inventory, accounts payable, accrued liabilities and the DIP Credit Agreement approximates fair value because of the short maturity of these instruments. We are not able to estimate the fair value of our liabilities subject to compromise. Their fair values are dependent on
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their individual payment priority level in the final reorganization plan which has not been yet approved. Any reorganization is subject to approval by our creditors having prepetition claims and the Bankruptcy Court.
We may use forward exchange contracts to hedge our foreign currency exposure related to certain intercompany transactions. We normally designate these contracts at their inception as cash flow hedges. At December 31, 2006, we had no outstanding forward exchange contracts.
We do not enter into or hold derivatives for trading or speculative purposes.
Common Stock:
The holder of each share of Class A and Class B common stock outstanding is entitled to one vote per share. As of December 31, 2006, there were no shares of Class B common stock outstanding.
Stock Based Awards:
All grants of stock based awards subsequent to January 1, 2006, are accounted for in accordance with SFAS No. 123(R) “Share-based Payment.” On October 27, 2005, the Compensation Committee of the Board of Directors approved the acceleration of vesting of all outstanding out-of-the-money unvested stock options; accordingly, all outstanding unvested stock options at that date became fully vested. No stock options have been issued since such date.
Use of Estimates:
The preparation of consolidated financial statements in conformity with GAAP in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The ultimate results could differ from these estimates.
The accompanying financial statements have been prepared assuming the Company continues as a going concern. As more fully discussed in Note 1 and Note 14, the Company and certain of its subsidiaries filed for chapter 11 protection under the United States Bankruptcy Code. No adjustments to the accompanying financial statements have been made as a result of this event.
Foreign Currency Translation:
Assets and liabilities of our foreign operations that do not use the U.S. dollar as their functional currency, are translated using the year-end rates of exchange. Results of operations are translated using the average rates prevailing throughout the period. Translation gains or losses are included in accumulated other comprehensive income, a separate component of stockholders’ investment (deficit).
Warranty and Environmental:
We face an inherent business risk of exposure to product liability and warranty claims in the event that our products fail to perform as expected and such failure of our products results, or is alleged to result, in bodily injury and/or property damage. OEMs are increasingly requiring their outside suppliers to guarantee or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties. Depending on the terms under which we supply products to an OEM, an OEM may hold us responsible for some or all of the repair or replacement costs of defective products under new vehicle warranties when the product supplied did not perform as represented. In addition, we are subject to the requirements of federal, state, local and foreign environmental and occupational health and safety laws and regulations. Some of our operations generate hazardous substances. Like all manufacturers, if a release of hazardous substances occurs or has occurred at or from any of our current or former properties or at a landfill or another location where we have disposed of wastes, we may be held liable for the contamination, which could be material. Our policy is to record reserves for customer warranty and environmental costs on a case by case basis at the time we believe such amounts are probable and reasonably estimable and to review these determinations on a quarterly basis, or more frequently as additional information is obtained. We have established reserves for issues that are probable and reasonably estimable in amounts management believes are adequate to cover reasonable adverse judgments. We determine our warranty and environmental reserves based on identified claims and the estimated ultimate projected claim cost. The final amounts determined for these matters could differ significantly from recorded estimates. During 2006, we settled two warranty matters with one of our
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customers for approximately $9.0 million for which we had previously recorded reserves in the amount of $3.6 million, which at the time, represented our estimated total exposure. Accordingly, we recorded an additional charge of $5.4 million in cost of sales related to the final settlement of both warranty matters with the customer. We do not carry insurance for warranty or recall matters, as the cost and availability for such insurance, in the opinion of management, is cost prohibitive or not available.
The Michigan Department of Environmental Quality (“MDEQ”) is investigating contamination at our facility in Mancelona, Michigan. The investigation stems from the discovery in the mid-1990s of trichloroethylene (“TCE”) in groundwater at the facility and offsite locations. We have not used TCE since we acquired the Mancelona facility, although TCE may have been used by prior operators. MDEQ has indicated that it does not consider us to be a responsible party for the contamination under the Michigan environmental statutes. We have been cooperating with the MDEQ, and have implemented MDEQ’s due care requirements with respect to the contamination. MDEQ installed a municipal drinking water system in the area.
The Mancelona groundwater contamination matter is subject to an indemnity from Wickes, the prior operator of the facility. Wickes agreed to indemnify us with respect to certain environmental liabilities up to a $2.5 million cap of which approximately $2.3 million has been expended as of December 31, 2006. We will be obligated to indemnify Wickes with respect to any liabilities above such cap. Wickes has been paying indemnification claims relating to the Mancelona matter, subject to a reservation of rights. On May 17, 2005, Collins & Aikman, an affiliate of Wickes, filed a petition for reorganization under chapter 11 of the U.S. Bankruptcy Code. Wickes may seek to discharge its remaining indemnity obligation to us in connection with that reorganization.
MDEQ has filed a claim in connection with our Bankruptcy filing for $9.3 million relating to past response costs for the Mancelona groundwater contamination. Previously, we had not received any notice from MDEQ concerning such claim. We intend to vigorously object to this bankruptcy claim, as we were not responsible for the contamination. We believe that we will be successful, but no guarantee as to the ultimate outcome can be given.
The following presents a summary of our warranty and environmental position (in thousands):
Warranty:
December 31, | ||||||||
2006 | 2005 | |||||||
Beginning balance | $ | 8,020 | $ | 8,874 | ||||
Reductions for payments made | (13,159 | ) | (3,288 | ) | ||||
Additional reserves recorded | 8,442 | 2,847 | ||||||
Changes in preexisting reserves | (121 | ) | (413 | ) | ||||
Ending balance | $ | 3,182 | $ | 8,020 | ||||
Environmental:
December 31, | ||||||||
2006 | 2005 | |||||||
Beginning balance | $ | 6,626 | $ | 17,159 | ||||
Reductions for payments made | (54 | ) | (320 | ) | ||||
Changes in preexisting reserves | 126 | (10,213 | ) | |||||
Ending balance | $ | 6,698 | $ | 6,626 | ||||
New and Proposed Accounting Pronouncements:
In February 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities— including an Amendment of FASB Statement No. 115” (“SFAS 159”). SFAS No. 159 permits an entity to choose to measure many financial instruments and certain other items at fair value. Most of the provisions in SFAS No. 159 are elective; however, the amendment to SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS 115”), applies to all entities with available-for-sale and trading securities. The fair value option established by SFAS No. 159 permits companies to choose to measure eligible items at fair value at specified election dates. A business entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. We are currently in the process of evaluating the effect, if any, SFAS No. 159 will have on our consolidated financial statements in 2008.
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In September 2006, the FASB issued SFAS 158,. SFAS 158 requires recognition of the overfunded or underfunded status of defined benefit and retiree medical plans as an asset or liability, with future changes in the funded status recognized through other comprehensive income in the year in which they occur. Previously, under SFAS 132(R) “Employer’s Disclosures about Pensions and Other Postretirement Benefits” (“SFAS 132 (R)”), certain intangible assets were reflected rather than charging such amounts to other comprehensive income. Intangible assets related to defined benefit and retiree medical at December 31, 2006 (before adjustment), and December 31, 2005, amounted to $2.9 million and $6.2 million, respectively. Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability. Unrecognized prior service costs or credits, net actuarial gains or losses and net transition obligations as well as subsequent changes in the funded status are recognized as a component of accumulated comprehensive loss in stockholders’ equity. Additional minimum pension liabilities and related intangible assets are derecognized upon adoption of the new standard. This Statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions, effective for fiscal years ending after December 15, 2008. The requirement to recognize the funded status of a benefit plan and the disclosure requirements are effective for Dura at the end of fiscal year 2006 and the requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for Dura at the end of fiscal year 2007. The adoption of SFAS 158 increased total liabilities by $0.7 million and decreased total shareholders’ equity by $4.9 million, net of tax at December 31, 2006 (See Note 10 to the consolidated financial statements, Employee Benefit Plans). The adoption of SFAS 158 had no impact on our consolidated results of operations.
In September 2006, the FASB issued SFAS No. 157,Fair Value Measurements(“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements, but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the impact of adopting SFAS 157 on our consolidated results of operations or financial condition.
In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108,Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements(“SAB 108”). SAB 108 addresses diversity in practice in quantifying financial statement misstatements. SAB 108 requires that a company quantify misstatements based on their impact on each of its financial statements and related disclosures. SAB 108 is effective for fiscal years ending after November 15, 2006, allowing a one-time transitional cumulative effect adjustment to retained earnings as of January 1, 2006 for errors that were not previously deemed material, but are material under the guidance in SAB 108. The adoption of SAB 108 did not have a material impact on our consolidated results of operations or financial condition.
In July 2006, the FASB issued FASB Interpretation No. 48Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement 109(“FIN 48”). FIN 48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return, including a decision whether to file or not to file a tax return in a particular jurisdiction. FIN 48 is effective for fiscal years beginning after December 15, 2006. If there are changes in net assets as a result of the application of FIN 48, these will be accounted for as an adjustment to accumulated deficit. We are currently assessing the impact of FIN 48 on our consolidated results of operations and financial condition.
In June 2005, the EITF reached a consensus on Issue No. 05-5,Accounting for Early Retirement or Postemployment Programs with Specific Features (such as Terms Specified in Altersteilzeit Early Retirement Arrangements)(“EITF 05-5”). EITF 05-5 addresses the accounting for the bonus feature in the German Altersteilzeit (“ATZ”) early retirement programs and requires recognition of the program expenses at the time the ATZ contracts are signed. The ATZ program designed to create an incentive for employees, within a certain age group, to leave their employers before the legal retirement age. Although established by law, the actual arrangement between employers and employees is negotiated. The EITF offers two transition alternatives, either cumulative effect or retrospective application. EITF 05-5 was effective for fiscal years beginning after December 15, 2005. Effective, January 1, 2006, we adopted EITF 05-05, which resulted in a favorable adjustment of $1.0 million, net of income taxes of $0.7 million. This amount is reflected in the consolidated statement of operations as a cumulative effect of a change in accounting principle.
The FASB revised SFAS No. 123(R), “Share-Based Payment”(“SFAS 132(R)”) in December 2004 and issued SFAS No. 123(R). This statement supersedes APB No. 25, which resulted in no stock-based employee compensation cost related to stock options if the options granted had an exercise price equal to the market value of
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the underlying common stock on the date of grant. SFAS No. 123(R) requires recognition of employee services provided in exchange for a share-based payment based on the grant date fair market value. We adopted SFAS 123(R) as of January 1, 2006. This statement applies to all new awards issued as well as awards modified, repurchased, or cancelled. Additionally, for stock-based awards issued prior to the effective date, compensation cost attributable to future services will be recognized as the remaining service is rendered. We adopted SFAS No. 123(R) following the modified prospective basis (See Note 6 to the consolidated financial statements, Stockholders’ Investment (Deficit).
3. Discontinued Operations:
During the fourth quarter of 2002, we adopted a plan to divest our Mechanical Assemblies Europe business, as we believed this business would not assist us in reaching our strategic growth and profitability targets for the future. The Mechanical Assemblies Europe business generated annualized revenues of $111.9 million from facilities in Grenoble and Boynes, France; and Woodley, Nottingham and Stourport, UK. In March 2003, we completed the divestiture of our Mechanical Assemblies Europe business to Magal Engineering and members of the local management group, located in Woodley, England. The Mechanical Assemblies Europe divestiture was treated as a discontinued operation under SFAS No. 144. The discontinued operations’ activities, in regards to the Mechanical Assemblies Europe business, has primarily been the resolution of issues still open from when the operations were sold, such as real estate leases, which have not been significant.
At December 31, 2006, we had remaining accruals related to the divestiture of the Mechanical Assemblies Europe business of $20.1 million, primarily related to the future net lease costs on facilities retained by us, which are through 2021. Included in the $20.1 million is $4.1 million of acquisition integration reserves related to facility closures.
The activity relating to accruals for these discontinued operations is as follows (in thousands):
2006 | 2005 | |||||||
Beginning balance | $ | 16,771 | $ | 18,739 | ||||
Reductions for payments made | (1,246 | ) | (1,245 | ) | ||||
Changes in pre-existing reserves | 906 | — | ||||||
Accretion | 1,239 | 1,204 | ||||||
Foreign exchange impact | 2,436 | (1,927 | ) | |||||
$ | 20,106 | $ | 16,771 | |||||
On September 25, 2006, we completed the sale of Dura Automotive Systems Köhler GmbH to an entity controlled by Hannover Finanz GmbH, headquartered in Hannover, Germany. The sale agreement was executed in September 2006. We received approximately $18.5 million in net cash consideration for the sale. No continuing business relationship exists between this former subsidiary and us. The divestiture is part of Dura’s evaluation of strategic alternatives for select German operations, as previously announced in February 2006.
In accordance with SFAS No. 144, the Dura Automotive Systems Köhler GmbH operating results and the gain on the sale, have been shown as discontinued operations for all periods presented in the accompanying consolidated financial statements.
Summarized operating results for Dura Automotive Systems Köhler GmbH and its sale included in discontinued operations are (in thousands):
2006 | 2005 | |||||||
Revenue | $ | 38,975 | $ | 52,699 | ||||
Gross profit | 4,350 | 6,920 | ||||||
Operating income | 3,802 | 6,139 | ||||||
Income before income taxes | 3,581 | 5,941 | ||||||
Income taxes | 1,274 | 2,265 | ||||||
Gain on sale of operation, net of income taxes of $168 | 7,596 | — | ||||||
Net income | 9,903 | 3,676 |
Other discontinued operations expenses relate to continued exit activities associated with previously sold operations.
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Dura Automotive Systems Köhler GmbH’s assets and liabilities reclassified to discontinued operations at December 31, 2005, were as follows (in thousands):
Current assets of discontinued operations: | ||||
Accounts receivable | $ | 5,090 | ||
Inventories | 3,467 | |||
Other current assets | 2,418 | |||
$ | 10,975 | |||
Noncurrent assets of discontinued operations: | ||||
Property, plant and equipment, net | $ | 7,879 | ||
Other noncurrent assets | 4,171 | |||
$ | 12,050 | |||
Current liabilities of discontinued operations: | ||||
Accounts payable | $ | 4,302 | ||
Accrued expenses | 2,469 | |||
$ | 6,771 | |||
Noncurrent liabilities of discontinued operations: | $ | 218 | ||
4. Acquisitions:
Acquisition Integrations:
We have developed and implemented the majority of the facility consolidation plans designed to integrate the operations of our past acquisitions. As of December 31, 2006, we have $4.6 million of purchase liabilities recorded in conjunction with the acquisitions, principally related to costs associated with the shutdown and consolidation of certain acquired facilities. Costs incurred in 2005 and charged to these reserves amounted to $1.4 million. No significant charges were incurred in 2006. The remaining employee terminations and facility closures were completed by December 31, 2004, except for contractual obligations, consisting principally of facility lease payments.
Other Acquisitions activities:
In the first six months of 2004, we made a $12.6 million final payment relating to our acquisition of Reiche in 2000, of which $1.3 million related to an earn out payment resulting in an increase to goodwill. Reiche, located in Germany, manufactures steering columns and steering column components for European and North American OEMs.
On June 19, 2003, we reached an agreement with Heywood Williams Group PLC (“Heywood Williams”) (UK) to acquire its Creation Group, a premier designer and manufacturer of windows, doors and specialty products for the North American recreation vehicle, motor vehicle accessories and manufactured housing markets. The Creation Group, headquartered in Elkhart, Indiana, had 2002 revenues of $145 million, and had approximately 1,100 employees at 10 facilities in Indiana, Ohio, and Pennsylvania. Financial terms of the deal included a purchase price of $57 million, subject to a working capital adjustment and an earn out provision of an additional $3 million if the acquired entity achieved certain financial targets. The targets under the earn out provision were not achieved. We used cash on hand to finance the transaction, which closed on July 23, 2003. The acquisition was accounted for using the purchase method of accounting and, accordingly, the assets acquired and liabilities assumed were recorded at fair value as of the date of acquisition, with the excess purchase price recorded as goodwill. Changes to the preliminary estimates within one year of the purchase date were reflected as an adjustment to goodwill. In March 2004, we paid Heywood Williams $0.7 million relating to a working capital adjustment to the original purchase price. The purchase price adjustment was recorded as an increase to goodwill as of March 31, 2004. Additionally in 2004, we made a final purchase price adjustment of $0.3 million resulting in an increase to goodwill. The final allocation of purchase price was not materially different from preliminary allocations. The operating results of the Creation Group have been included in our consolidated financial statements since the date of acquisition. The pro forma effects of this transaction are not material to our results of operations.
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5. Facility Consolidation, Asset Impairment and Other Charges:
Facility Consolidation:
As a part of our ongoing cost reduction and capacity utilization efforts, we have taken numerous actions to improve our cost structure. Such costs include employee termination benefits, asset impairment charges and other incremental costs, including equipment and personnel relocation costs. These costs are reflected as facility consolidation, asset impairments and other charges in the consolidated statements of operations and were accounted for in accordance with SFAS 88.
In connection with the streamlining of operations during 2006, we recorded facility consolidation, asset impairment and other charges of $684.2 million, consisting of severance and benefit related costs of $23.1 million, asset impairments of $650.9 million ($637.3 million for goodwill impairment, $10.8 million for fixed asset impairments and $2.8 million for other impairments), a $6.0 million adjustment to our 2001 recorded loss on the sale of our former plastic business due to financial inability of the purchaser to meet their obligations under a note we took as partial payment for the sale, $2.2 million of pension curtailment charges resulting from employee terminations and facility closure and other exit activity costs of $2.0 million.
We are engaged in various operational restructuring plans designed to enhance performance optimization, improve worldwide efficiency and financial results, and better align our workforce with our current revenue level. We expect this action to be completed over the next two years. Cash costs for the restructuring plan are expected to be approximately $62 million in 2007, and $35 million in 2008. In 2007, estimated capital expenditures relating to the restructuring plan are expected to be approximately $10 million. The remaining costs will relate primarily to employee severance, capital investment, facility closure and product move costs. We anticipate that the restructuring plan will be financed with cash on hand and availability under the DIP Credit Agreements. Should funds under the DIP Credit Agreements not be available to fund the restructuring plan and/or our ongoing cash requirements for operations, we may be required to modify our plan.
Individual facility consolidation actions, asset impairments and other charges for 2006, 2005 and 2004 were:
• | In August 2006, we notified our Stratford, Ontario, Canada, plant employees that the facility will close during 2007. The current production will be transferred to other Dura facilities to improve overall capacity utilization. A severance charge of $5.1 million for this site was recorded in 2006, along with a pension curtailment charge of $1.1 million. | ||
• | In May 2006, we announced that we would close our Brantford, Ontario, Canada, manufacturing facility. Brantford’s current production will be transferred to other Dura facilities to improve overall capacity utilization. Severance related charges of $1.9 million are recorded in 2006. The plant was closed in June 2007. | ||
• | In June 2006, we announced the proposed closing of our manufacturing facility in Llanelli, Wales, United Kingdom, in order to improve our overall capacity utilization. At that time, we were in the consultation process with Llanelli’s AMICUS trade union concerning the proposed closing, and therefore could not determine if the plant would in fact be closed. In August 2006, it was determined that the Llanelli plant would be closed after completion of negotiations with the trade union. Facility consolidation charges recorded in 2006 totaled $8.5 million, of which $7.6 million were severance related charges, $0.5 million were equipment move related charges, $0.2 million were asset impairment related charges, and $0.2 million of other restructuring charges. The facility was closed in December 2006. | ||
• | During 2006, we incurred severance related charges of $0.8 million for our Barcelona, Spain facility related to workforce reductions. | ||
• | In July 2006, we notified our LaGrange, Indiana, plant employees that we intended to close the facility. Current production will be transferred to other Dura facilities in 2007. Negotiations were completed in the third quarter of 2006 with the respective union, and a $3.5 million of severance and benefit related charges was recorded in 2006, along with a $0.5 million pension curtailment. The plant was closed in 2007. | ||
• | In 2006, we incurred asset impairment charges of $6.1 million and other restructuring charges related to movement of production for certain products of $0.7 million, at our Lawrenceburg facility. |
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• | During the fourth quarter of 2005, we began the streamlining of our Bracebridge, Ontario, Canada plant that will be completed in 2007. Certain employee severance related charges totaling $1.0 million were incurred in 2005. During 2006, this facility incurred additional severance costs of $1.6 million related to further workforce reductions, asset impairment charges of $3.0 million relating to the loss of the GMT 800/900 platform seat track production and $2.3 million relating to the announced closure of the facility, and $0.9 million of pension curtailment charges. | ||
• | In order to improve capacity utilization , we announced during the third quarter of 2005 a plan to streamline our Einbeck, Germany, manufacturing operation. This action resulted in a total severance cost of $0.3 million in 2005, severance costs of $1.5 million in 2006, and an additional $0.1 million of other restructuring costs associated with 2006 production moves, as we continued to streamline the operations at this facility. | ||
• | During the second quarter of 2005, in order to improve capacity utilization, we announced a plan to restructure Plettenberg, Germany, manufacturing operations during 2005 and 2006. | ||
In the third quarter of 2005, we received approval for this action from the appropriate Workers’ Council and Union. Full identification of the actual employees has been substantially completed. Severance related costs of $3.2 million was recorded in 2005 and $0.7 million in 2006. This action is expected to be completed by the end of 2007. | |||
• | In 2005, we began a centralization of our North America enterprise resource system and certain support functions. Related severance costs of $1.3 million were incurred in 2005. | ||
• | In 2004, we announced a plan to exit our Brookfield, Missouri, facility and combine the business with other operations. We have incurred $0.1 million of restructuring costs for this exit activity in 2006, and $0.9 million in 2005. | ||
• | In 2004, we exited our Pikeville, Tennessee, facility and combined the business with other operations. This action is complete and resulted in restructuring charges of $0.1 million in 2006, $0.2 million in 2005 and $3.0 million in 2004. | ||
• | In 2004, we closed our Bondoufle, France, sales and engineering facility and relocated to Velizy, France, which is located near our French OEM customers. This action is complete and resulted in total restructuring charges of $0.2 million in 2004. | ||
• | In 2004, we announced a plan to consolidate certain of our Body & Glass Division product lines in Europe. This action is complete and resulted in total charges of $3.3 million. | ||
• | In 2004, we announced a plan to exit our Rockford, Illinois, facility and combine the business with other operations and relocate our Atwood Mobile Products division headquarters from Rockford, Illinois, to Elkhart, Indiana. This action is complete and resulted in total charges of $0.3 million in 2005 and $8.3 million in 2004. |
We continue to incur exit activity related charges on closed facilities for which we are seeking buyers. In accordance with SFAS No. 146, such expenses are recorded in the period they are incurred.
In April 2007, we announced that, as a continuation of our strategic restructuring initiative, we will be closing the following four manufacturing facilities: Brownstown, Indiana; Bracebridge, Ontario; Hannibal South, Missouri; and Selinsgrove, Pennsylvania. These facilities are planned to close by the end of 2007. The production at these facilities will be moved to other production facilities. Also, we announced our intention to sell our jack business, and our hinge and latch business. The proposed divestitures will include the sale of the facilities in Butler, Indiana; and Mancelona, Michigan. Any final sale agreement requires Bankruptcy Court approval.
In May 2007, we announced that we are exploring strategic alternatives for our Atwood Mobile Products segment, including a possible sale. In July 2007, DURA Automotive Systems, Inc. entered into an asset purchase agreement with Atwood Acquisition Co., LLC for the sale of DURA’s Atwood Mobile Products division. The agreement provides for the acquisition of Atwood Mobile Products for an aggregate potential cash consideration of $160.2 million. Closing of the transaction is subject to the approval of the United States Bankruptcy Court for the
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District of Delaware, which has jurisdiction over DURA’s Chapter 11 reorganization proceedings; government regulatory approvals; and customary closing conditions.
In June 2007, we notified our employees at our Barcelona, Spain, and Jacksonville, Florida, operations that we intend to close these facilities. Production will be transferred to other Dura facilities.
Asset Impairments:
We recorded $10.8 million in 2006, $3.2 million in 2005 and $7.1 million in 2004, of asset impairment charges related to facility consolidation actions. These charges are reflected as facility consolidation, asset impairments and other charges in the consolidated statements of operations and were accounted for in accordance with SFAS 144.
In the third quarter of 2006, we completed our step two analysis under SFAS 142 for our Control Systems reporting unit’s goodwill. Based on this analysis, we fully impaired the Control Systems reporting unit’s goodwill and recorded a charge of $637.3 million, as described in Note 2 to the consolidated financial statements.
Adjustment to 2001 Recorded Sales Proceeds:
In November 2001, we entered into a definitive agreement to divest our Plastic Products business for total proceeds of $41.0 million. The transaction closed on January 28, 2002. Two members of our Board of Directors are members of management of an investor group, which is the general partner of the controlling shareholder of the acquiring company. We currently hold a note receivable from the acquiring company for $6.0 million. The first payment of $4.0 million was due on this note in February 2007, with the remainder of $2.0 million due in February 2008. Based upon our evaluation as to the likelihood that the acquiring company would be able to pay the required amounts, given its current deteriorating financial condition and the subordination of this note to its other creditors, we have provided a full valuation allowance against the note receivable. The valuation allowance change is reflected in facility consolidation, asset impairment and other charges. In 2001, we recognized the loss on the sale of the unit in other charges.
The activity relating to the accruals for facility consolidation, asset impairments and other charges, by quarter, for the year ended December 31, 2006, is as follows (in thousands):
Employee | ||||||||||||||||
termination | Asset impairment | Facility closure | ||||||||||||||
benefits | charges | and other costs | Total | |||||||||||||
Balance December 31, 2005 | $ | 3,952 | $ | — | $ | 521 | $ | 4,473 | ||||||||
Adjustments/Charges | 523 | 1,630 | 419 | 2,572 | ||||||||||||
Cash utilizations | (808 | ) | — | (335 | ) | (1,143 | ) | |||||||||
Noncash/ foreign exchange impact/ other | 33 | (1,630 | ) | 34 | (1,563 | ) | ||||||||||
Balance April 2, 2006 | 3,700 | — | 639 | 4,339 | ||||||||||||
Adjustments/Charges | 2,286 | — | 592 | 2,878 | ||||||||||||
Cash utilizations | (336 | ) | — | (704 | ) | (1,040 | ) | |||||||||
Noncash/ foreign exchange impact/ other | (502 | ) | — | (37 | ) | (539 | ) | |||||||||
Balance July 2, 2006 | 5,148 | — | 490 | 5,638 | ||||||||||||
Adjustments/Charges | 22,228 | 12,345 | (17 | ) | 34,556 | |||||||||||
Cash utilizations | (1,934 | ) | — | (66 | ) | (2,000 | ) | |||||||||
Noncash/ foreign exchange impact/ other | 148 | (12,345 | ) | 51 | (12,146 | ) | ||||||||||
Balance October 1, 2006 | 25,590 | — | 458 | 26,048 | ||||||||||||
Adjustments/Charges | (1,903 | ) | 6,121 | 3,087 | 7,305 | |||||||||||
Cash utilizations | (10,095 | ) | — | (1,368 | ) | (11,463 | ) | |||||||||
Noncash/ foreign exchange impact/ other | 3 | (6,121 | ) | (2,177 | ) | (8,295 | ) | |||||||||
Balance December 31, 2006 | $ | 13,595 | $ | — | $ | — | $ | 13,595 | ||||||||
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6. Stockholders’ Investment (Deficit):
Earnings Per Share:
Basic earnings per share was computed by dividing net income (loss) by the weighted average number of Class A common shares outstanding during the year. Diluted earnings per share for the years ended December 31, 2005 and 2004 includes the effects of outstanding stock options using the treasury stock method. (In thousands, except per share amounts):
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Net income (loss) applicable to common stockholders | $ | (910,657 | ) | $ | 1,814 | $ | 11,723 | |||||
Weighted average number of Class A common shares outstanding | 18,867 | 18,709 | 18,013 | |||||||||
Weighted average number of Class B common shares outstanding | — | — | 495 | |||||||||
18,867 | 18,709 | 18,508 | ||||||||||
Dilutive effect of outstanding stock options after application of the treasury stock method | — | 152 | 360 | |||||||||
Diluted shares outstanding | 18,867 | 18,861 | 18,868 | |||||||||
Basic earnings (loss) per share: | ||||||||||||
Income (loss) from continuing operations | $ | (48.83 | ) | $ | (0.09 | ) | $ | 0.47 | ||||
Income from discontinued operations | 0.51 | 0.19 | 0.16 | |||||||||
Cumulative effect of change in accounting principle | 0.05 | — | — | |||||||||
Net income (loss) | $ | (48.27 | ) | $ | 0.10 | $ | 0.63 | |||||
Diluted earnings (loss) per share: | ||||||||||||
Income (loss) from continuing operations | $ | (48.83 | ) | $ | (0.09 | ) | $ | 0.46 | ||||
Income from discontinued operations | 0.51 | 0.19 | 0.16 | |||||||||
Cumulative effect of change in accounting principle | 0.05 | — | — | |||||||||
Net income (loss) | $ | (48.27 | ) | $ | 0.10 | $ | 0.62 | |||||
Potential common shares of 5,289,020; 4,814,083; and 2,360,827 related to our outstanding stock options were excluded from the computation of diluted earnings per share for 2006, 2005 and 2004, respectively, as inclusion of these options would have been anti-dilutive. Potential common shares of 1,288,630 related to our Preferred Securities were excluded from the computation of diluted earnings per share for the above listed years, as inclusion of these shares would have been anti-dilutive.
The 1998 Stock Incentive Plan:
Certain individuals who are full-time, salaried employees of Dura (Employee Participants) are eligible to participate in the 1998 Stock Incentive Plan (“the 1998 Plan”). A committee of the Board of Directors selects the Employee Participants and determines the terms and conditions of granted options. The 1998 Plan provides for the issuance of options at exercise prices equal to the stock market price on the date of grant to Employee Participants covering up to 1,000,000 shares of Dura Class A common stock plus any shares carried over from the 1996 Key Employee Stock Option Plan (“the 1996 Plan”) plus an annual increase, as defined in the 1998 Plan, subject to certain adjustments reflecting changes in our capitalization. Such option grants vest up to four years from the date of grant. On October 27, 2005, the Compensation Committee (Committee) of the Board of Directors approved the acceleration of all out-of-the-money unvested stock options outstanding on that date. Options available for future grants to purchase shares of our Class A common stock were 2,001,899 at December 31, 2006. Information regarding options outstanding from the 1996 Plan and the 1998 Plan is as follows:
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Weighted | Weighted | |||||||||||||||||||
Shares | Average | Average Fair | Exercisable | |||||||||||||||||
Under | Exercise | Exercise | Value of | At End of | ||||||||||||||||
Option | Price | Price | Options Granted | Year | ||||||||||||||||
Outstanding, December 31, 2003 | 3,803,328 | $5.60—38.63 | $ | 13.14 | 2,146,003 | |||||||||||||||
Granted | 1,109,500 | 9.52 | 9.52 | $ | 7.61 | |||||||||||||||
Exercised | (138,100 | ) | 7.02—13.50 | 7.91 | ||||||||||||||||
Forfeited | (306,800 | ) | 7.02—29.00 | 11.51 | ||||||||||||||||
Outstanding, December 31, 2004 | 4,467,928 | 5.60—38.63 | 12.58 | 2,552,315 | ||||||||||||||||
Granted | 1,497,500 | 3.70—4.27 | 3.70 | 2.75 | ||||||||||||||||
Exercised | (11,075 | ) | 7.02—9.15 | 7.84 | ||||||||||||||||
Forfeited | (203,085 | ) | 3.70—29.00 | 14.53 | ||||||||||||||||
Outstanding, December 31, 2005 | 5,751,268 | 3.70—38.63 | 10.15 | 5,751,268 | ||||||||||||||||
Granted | — | — | — | |||||||||||||||||
Exercised | — | — | — | |||||||||||||||||
Forfeited | (462,248 | ) | 3.70—29.00 | 9.50 | ||||||||||||||||
Outstanding, December 31, 2006 | 5,289,020 | $ | 3.70—38.63 | 5,289,020 | ||||||||||||||||
The following table summarizes information about stock options outstanding at December 31, 2006:
Options Outstanding | Options Exercisable | |||||||||||||||||||||||
Weighted- | ||||||||||||||||||||||||
Range of | Number | Average | Weighted- | Number | Weighted- | |||||||||||||||||||
Exercisable | Outstanding | Remaining | Average | Exercisable | Average | |||||||||||||||||||
Options | at 12/31/06 | Contractual Life | Exercise Price | at 12/31/06 | Exercise Price | |||||||||||||||||||
$ | 3.70 to 4.27 | 1,337,875 | 8.4 | $ | 3.70 | 1,337,875 | $ | 3.70 | ||||||||||||||||
5.60 to 7.02 | 645,375 | 6.2 | 6.76 | 645,375 | 6.76 | |||||||||||||||||||
7.50 | 693,185 | 4.1 | 7.50 | 693,185 | 7.50 | |||||||||||||||||||
8.25 to 9.52 | 1,358,050 | 6.8 | 9.36 | 1,358,050 | 9.36 | |||||||||||||||||||
13.50 to 17.27 | 660,950 | 4.4 | 15.02 | 660,950 | 15.02 | |||||||||||||||||||
20.75 to 29.25 | 543,585 | 1.6 | 27.42 | 543,585 | 27.42 | |||||||||||||||||||
38.63 | 50,000 | 1.3 | 38.63 | 50,000 | 38.63 | |||||||||||||||||||
5,289,020 | 5.9 | $ | 10.21 | 5,289,020 | $ | 10.21 | ||||||||||||||||||
The weighted average exercise price of options exercisable for the years ended December 31, 2006, 2005 and 2004 were $10.21, $10.15 and $15.11, respectively. The weighted average remaining contractual life of outstanding options for the years ended December 31, 2006, 2005 and 2004 was 5.9 years, 6.8 years and 6.9 years, respectively.
The aggregate intrinsic value of options outstanding and options exercisable at December 31, 2006 was zero.
Independent Director Stock Option Plan:
The Dura Automotive Systems, Inc. Independent Director Stock Option Plan (“the Director Option Plan”) provides for the issuance of options to Independent Directors, as defined, to acquire up to 100,000 shares of our Class A common stock, subject to certain adjustments reflecting changes in our capitalization. The option exercise price must be at least 100% of the market value of the Class A common stock at the time the option is issued. Such option grants vest six months from the date of grant. As of December 31, 2005, we had granted options under the Director Option Plan to acquire 21,000 shares of our Class A common stock at an exercise price of $24.50 to $25.50 per share. As of December 31, 2006, 21,000 of these options were exercisable. No granted options have been exercised or forfeited.
Employee Stock Discount Purchase Plan:
The Dura Automotive Systems, Inc. Employee Stock Discount Purchase Plan (“the Employee Stock Purchase Plan”) provides for the sale of up to 1,000,000 shares of our Class A common stock at discounted purchase prices, subject to certain limitations. The cost per share under this plan is 85% of the market value of our Class A common stock at the date of purchase, as defined. Pursuant to this plan, 73,277, 131,343 and 96,944 shares of Class A common stock were issued to employees during the years ended December 31, 2006, 2005, and 2004, respectively. The weighted average fair value of shares purchased in 2006, 2005, and 2004 was $2.05, $4.51 and $9.67, respectively. This plan was suspended in October 2006.
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Deferred Income Leadership Stock Purchase Plan:
During 1999, we established the Deferred Income Leadership Stock Purchase Plan, which allows certain employees to defer receipt of all or a portion of their annual cash bonus. Eligible employees may receive a matching contribution of one-third of their deferral. The vesting of the matching contribution occurs on the first day of the third plan year following the date of the employees’ deferral. In accordance with the terms of the plan, the employee deferrals and our matching contribution may be placed in a “Rabbi” trust, which invests solely in our Class A common stock. As of the years ended December 31, 2006, 2005 and 2004, there were 8,061, 16,868 and 22,407 shares, respectively, purchased through open market transactions that had been distributed to employees. At December 31, 2006, we have purchased on the open market 71,699 shares currently held in the “Rabbi” trust. These shares have not yet been distributed to employees. In addition, 34,086 shares have yet to be purchased for future obligations. This trust arrangement offers the employee a degree of assurance for ultimate payment of benefits without causing constructive receipt for income tax purposes. Distributions to the employee can only be made in the form of our Class A common stock. Under the terms of the plan, we have the option to buy the shares to be distributed in the open market or issue shares that have been authorized under the plan. The plan provides for the issuance of up to 500,000 shares of our Class A common stock, which are still unissued at December 31, 2006. To date, we have used open market transactions to meet our obligations under this plan. The assets of the trust remain subject to our creditors and are not the property of the employees; therefore, they are included as a separate component of stockholders’ investment (deficit) under the caption Treasury Stock.
Director Deferred Stock Purchase Plan:
During 2000, we established the Director Deferred Stock Purchase Plan, which allows outside directors to defer receipt of all or a portion of their annual director retainer fee. Eligible directors may receive a matching contribution of one-third of their deferral. The vesting of the matching contribution occurs on the first day of the third plan year following the date of a directors’ deferral. In accordance with the terms of the Plan, the director’s deferral and our matching contribution may be placed in a “Rabbi” trust, which invests solely in our Class A common stock. For the years ended December 31, 2006, 2005 and 2004 there were 11,260, 36,460 and 48,879 shares, respectively, purchased through open market transactions that had been distributed to directors. At December 31, 2006, we have purchased on the open market 92,663 shares currently held in the “Rabbi” trust. These shares have not yet been distributed to individual directors. No shares had been distributed prior to 2004. In addition, 271,037 shares have yet to be purchased for future obligations. This trust arrangement offers the director a degree of assurance for ultimate payment of benefits without causing constructive receipt for income tax purposes. Distributions to the director can only be made in the form of our Class A common stock. Under the terms of the plan, we have the option to buy the shares to be distributed in the open market or issue shares that have been authorized under the plan. The plan provides for the issuance of up to 200,000 shares of our Class A common stock, which are still unissued at December 31, 2006. To date, we have used open market transactions to meet our obligations under this plan. The assets of the trust remain subject to our creditors and are not the property of the directors; therefore, they are included as a separate component of stockholders’ investment (deficit) under the caption Treasury Stock.
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Stock-Based Compensation Plans:
On January 1, 2006, we adopted the fair value recognition provisions of SFAS 123(R), requiring us to recognize expense related to the fair value of our stock based compensation awards. We elected the modified prospective transition method as permitted by SFAS 123(R). Under this transition method, any stock based compensation expense includes: (a) compensation expense for all stock based compensation awards granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123(R); and (b) compensation expense for all stock based compensation awards granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123(R).
The following tables illustrate our pro forma net income (loss) and pro forma earnings (loss) per share under the fair value recognition provisions of SFAS 123(R) to stock-based compensation during the years ended December 31, 2005 and 2004 (in thousands, except per share amounts):
2005 | 2004 | |||||||
Net income, as reported | $ | 1,814 | $ | 11,723 | ||||
Add: Stock based compensation expense included in reported net income, net of tax | — | — | ||||||
Deduct: Stock based compensation expense determined under fair value method for all awards, net of tax | (10,152 | ) | (4,364 | ) | ||||
Net income (loss) | $ | (8,338 | ) | $ | 7,359 | |||
Basic earnings (loss) per share: | ||||||||
As Reported | 0.10 | 0.63 | ||||||
Pro Forma | (0.45 | ) | 0.40 | |||||
Diluted earnings (loss) per share: | ||||||||
As Reported | 0.10 | 0.62 | ||||||
Pro Forma | (0.45 | ) | 0.39 |
On October 27, 2005, the Compensation Committee (Committee) of the Board of Directors approved the acceleration of all out-of-the-money unvested stock options outstanding on that date. The Committee prescribed that October 27, 2005’s closing price of our Class A Common Stock as quoted on The Nasdaq Stock Market (“Nasdaq”) be used to determine which outstanding unvested stock options are out-of-the-money. With the prescribed closing quoted stock price being $3.28 per share, all outstanding unvested stock options (2.7 million) issued by the Company became fully vested. The acceleration of the out-of-the money options was undertaken to avoid future compensation expense that would be required to be recognized when we adopted SFAS 123(R) on January 1, 2006. Future SFAS 123(R) pre-tax expense avoided by this acceleration for the following three years is $3.0 million in 2007, $1.6 million in 2008 and $0.3 million in 2009. This avoided SFAS 123(R) expense is required to be fully recognized in the 2005 pro forma net income presented above.
On May 31, 2006, the Compensation Committee of our Board of Directors made 1,600,000 performance based share grants to the Company officers comprising our Leadership Team. The fair value at the grant date was $2.31 per share, and will expire May 31, 2008, if the required performance goal is not obtained as determined by the Compensation Committee. The required performance goal established by the Compensation Committee is the completion of a material improvement in the Company’s consolidated balance sheet. The Compensation Committee has concluded that as of December 31, 2006, it is less than likely that the stated goal will be obtained given current industry conditions. Accordingly, no related expense has been recorded in the statement of operations for 2006. Thus, as prescribed by SFAS 128, these shares are not included in basic or dilutive earnings per share calculations because the contingency for issuance was not met and because they are anti-dilutive.
The effect of the stock issued under the Employee Stock Purchase Plan was not material for 2006 and 2005.
The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the principal following weighted average assumptions: risk-free interest rate of 3.69% and 3.70% in 2004 and 2005, respectively, expected life of four years and an average expected volatility of 64% in 2005 and 74% in 2004.
Dividends:
We have not declared or paid any cash dividends in the past. As discussed in Note 7 to the consolidated financial statements, our 2006 DIP Credit Agreement prohibits dividends to be declared or paid.
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7. Debt:
Due to the chapter 11 filings, outstanding prepetition long-term debt of the Debtors has been reclassified to the caption Liabilities Subject to Compromise (refer to Note 2 to the consolidated financial statements, Liabilities Subject to Compromise) on the consolidated balance sheet as of December 31, 2006.
The following is a summary of long-term debt at December 31, 2006 and 2005, including current maturities, and unsecured long-term debt included in liabilities subject to compromise as of December 31, 2006:
�� | ||||||||||||
December 31, | ||||||||||||
2006 | 2005 | |||||||||||
Subject to | ||||||||||||
Compromise | Debt | |||||||||||
Debtors-In-Possession (“DIP”) Credit Agreements | $ | — | $ | 165,000 | $ | — | ||||||
Prepetition Credit Agreement: | ||||||||||||
Revolving credit facility | — | — | 17,500 | |||||||||
Second lien term loan | 225,000 | — | 150,000 | |||||||||
Senior unsecured notes | 400,000 | — | 400,000 | |||||||||
Senior subordinated notes | 532,872 | — | 523,906 | |||||||||
Convertible trust preferred securities | 55,250 | — | 55,250 | |||||||||
Senior unsecured notes — derivative instrument adjustment | — | — | (10,781 | ) | ||||||||
Deferred gain on interest rate swap, net | 8,976 | — | — | |||||||||
Debt issue costs, net | (15,527 | ) | — | — | ||||||||
Other | — | 7,275 | 7,550 | |||||||||
1,206,571 | 172,275 | 1,143,425 | ||||||||||
Less — Current maturities | — | (169,679 | ) | (3,473 | ) | |||||||
$ | 1,206,571 | $ | 2,596 | $ | 1,139,952 | |||||||
Pursuant to the requirements of SOP 90-7 as of the chapter 11 filing (October 30, 2006), debt issue costs related to prepetition debt are no longer being amortized and have been included as an adjustment to the net carrying value of the related prepetition debt.
In accordance with the Court-approved first day motion, the Company continues to accrue and pay the interest on its Second Lien Term Loan whose principal balance is subject to compromise. Interest on unsecured prepetition debt, other than the Second Lien Term Loan, has not been accrued as provided for under the U.S. Bankruptcy Code and the requirements of SOP 90-7.
Debtors-In-Possession (“DIP”) Financing
In connection with the chapter 11 filings, the Debtors have entered into a Senior Secured Super-Priority Debtors In Possession Term Loan and Guaranty Agreement, dated as of October 31, 2006, by and among Dura Operating Corp. (“DOC”), as Borrower, the Company and certain subsidiaries of the Company and DOC, as Guarantors, Goldman Sachs Credit Partners L.P., as Administrative Agent and Collateral Agent, Goldman Sachs Credit Partners L.P., as Sole Bookrunner, Joint Lead Arranger and Syndication Agent, and Barclays Capital (the investment banking division of Barclays Bank, PLC), as Joint Lead Arranger and Documentation Agent, and each of the Lenders party thereto (the “Term Loan DIP Agreement”). The Bankruptcy Court gave interim approval to borrow $50.0 million under this agreement. Additionally, the Debtors also entered into a Senior Secured Super-Priority Debtors In Possession Revolving Credit and Guaranty Agreement, by and among DOC, as Borrower, the Company and certain subsidiaries of the Company and DOC, as Guarantors, General Electric Capital Corporation, as Administrative Agent and Collateral Agent, Goldman Sachs Credit Partners L.P., as Sole Bookrunner, Joint Lead Arranger and Syndication Agent, and Barclays Capital (the investment banking division of Barclays Bank, PLC), as Joint Lead Arranger and Documentation Agent, and each of the Lenders party thereto (the “Revolving DIP Agreement” and together with the Term Loan DIP Agreement, the “DIP Credit Agreements”). The Bankruptcy Court approved the full DIP Credit Agreements of $300 million on November 30, 2006.
The Term Loan DIP Agreement provides for up to $165 million term loan and up to a $20.0 million pre-funded synthetic letter of credit facility and the Revolving DIP Agreement will provide for an asset based revolving credit facility for up to $115 million, subject to borrowing base and availability terms, with a $5.0 million sublimit for letters of credit. Borrowings under the DIP Credit Agreement will be used to repay outstanding amounts and support outstanding letters of credit under DOC’s existing asset based revolving credit facility, terminated interest rate swaps liabilities, payment of certain adequate protection payments, professionals’ fees, transaction costs, fees and expenses incurred in connection with the DIP Credit Agreements, other prepetition expenses, to provide working
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capital and for other general corporate purposes. Obligations under the DIP Credit Agreements are secured by a lien on the assets of the Debtors (which lien will have first priority with respect to many of the Debtors’ assets) and by a superpriority administrative expense claim in each of the Cases. The DIP Term Loan is fully funded, with a balance of $165 million as of December 31, 2006, and June 29, 2007. The outstanding balance on the DIP Revolver was $0, and $68.8 million as of December 31, 2006, and, June 29, 2007, respectively.
In May 2007, the Debtors negotiated with their senior secured postpetition lenders (the “Postpetition Lenders”) to amend certain covenants in the DIP Credit Agreements (the “DIP Amendments”) in an effort to stabilize and enhance their liquidity position during the process of negotiating a chapter 11 plan of reorganization. The DIP Amendments adjust the applicable covenants in the DIP Credit Agreements to: (a) reduce the Debtors’ minimum monthly EBITDA performance targets for a temporary four-month period from May 2007 through August 2007; (b) combine the baskets for the Debtors’ European and other foreign affiliates (the “Non-Guarantors”) receivables factoring and sale-leaseback transactions; (c) permit the issuance of Non-Guarantor letters of credit up to $5 million; and (d) permit the Debtors to return up to $1.45 million in funds received from one of their Brazilian subsidiaries. Although no defaults are projected under the salient terms of the DIP Credit Agreements, the DIP Amendments are a proactive measure to ensure a stable environment as the Debtors prepare to exit chapter 11.
In consideration for the negotiated covenant relief, the DIP Amendments provide for an aggregate fee of up to $300,000 to be paid to the Postpetition Lenders if all Postpetition Lenders provide timely support for the DIP Amendments. On June 28, 2007, the Bankruptcy Court entered an order authorizing and approving the DIP Amendments.
The DIP Credit Agreements bear interest as follows: (a) in the case of borrowings under the Revolving DIP Agreement, at the Borrower’s option, (i) at the Base Rate plus 0.75% per annum or (ii) at the reserve adjusted LIBOR Rate plus 1.75% per annum; and (b) in the case of borrowings under the Term Loan DIP Agreement, at the Borrower’s option, (i) at the Base Rate plus 2.25% per annum or (ii) at the reserve adjusted LIBOR Rate plus 3.25% per annum. In addition, the DIP Credit Agreements obligate the Debtors to pay certain fees to the Lenders, as described in the DIP Credit Agreements.
The DIP Credit Agreements contain various representations, warranties, and covenants by the Debtors that are customary for transactions of this nature, including (without limitation) reporting requirements and maintenance of financial covenants.
The Debtors’ obligations under the DIP Credit Agreements may be accelerated following certain events of default, including (without limitation) any breach by the Debtors of any of the representations, warranties, or covenants made in the DIP Credit Agreements or the conversion of any of the chapter 11 filings to a case under chapter 7 of the Bankruptcy Code or the appointment of a trustee pursuant to chapter 11 of the Bankruptcy Code.
The DIP Credit Agreements mature on the earlier of (i) December 31, 2007; (ii) the effective date of a plan of reorganization in the Cases or (iii) termination of the commitment or acceleration of the loans as a result of an Event of Default.
Debt in Default
The chapter 11 filings triggered defaults on substantially all prepetition debt obligations of the Debtors. However, under section 362 of the Bankruptcy Code, the filing of a bankruptcy petition automatically stays most actions against the debtors, including most actions to collect prepetition indebtedness or to exercise control over the property of the debtors’ estate. Absent an order of the Bankruptcy Court, substantially all prepetition liabilities are subject to settlement under a plan of reorganization.
On November 30, 2006, we fully paid off the outstanding obligations under the prepetition secured revolving credit facility in the amount of $106 million through proceeds from borrowings under the DIP Credit Agreements.
The following borrowings represent the debt agreements which are in default, and classified as liabilities subject to compromise:
In May 2005, we entered into senior secured credit facilities with an aggregate borrowing capacity of $325 million, consisting of a five-year $175 million asset based revolving credit facility (the “Credit Agreement”) and a six-year $150 million senior secured second lien term loan (the “Second Lien Term Loan” and together with the Credit Agreement, the “Credit Facilities”). In March 2006, we completed a $75 million upsize to our Second
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Lien Term Loan. In connection with the transaction, we amended both our existing $150 million Second Lien Term Loan and Credit Agreement. Debt issuance costs of $2.0 million were incurred on this transaction, resulting in net cash proceeds of $73.0 million, of which $46.3 million was used to reduce our outstanding borrowings under the Credit Agreement. No amounts are outstanding under the asset backed revolving credit facility at December 31, 2006, as any borrowings were fully paid off in November 2006 with the proceeds from the DIP Credit Agreement. The amount under the Second Lien Term Loan is included in liabilities subject to compromise.
Interest under the Credit Facilities was based on LIBOR. The Second Lien Term Loan was due and payable in its entirety in May 2011. No amounts are currently available under the Credit Agreement as a result of our defaults, as discussed above. Our borrowings under the Credit Agreement are secured by a first priority lien on certain U.S. and Canadian assets and a 65% pledge of the stock of our foreign subsidiaries. The Credit Agreement contains various restrictive covenants, which among other things: limit indebtedness, investments, capital expenditures and certain dividends. We continue to accrue and pay the Second Lien Term loan’s interest, in accordance with an order issued by the Bankruptcy Court.
In April 2002, we completed the offering of $350.0 million 8.625% Senior Unsecured Notes, which were due in April 2012. The interest on the 2002 Senior Unsecured Notes was payable semi-annually each April and October. Principal was payable in full in April 2012. In November 2003, we completed an additional Senior Unsecured Notes offering of $50.0 million, which was due also in April 2012 (collectively the “Senior Unsecured Notes”). The interest on the 2003 Senior Unsecured Notes were payable semi-annually each April and October. No interest expense has been accrued for on this unsecured debt from the date of our bankruptcy filing.
In April 1999, we completed the offering of our 9% Senior Subordinated Notes. The offering was done in two currencies; $300 million in U.S. dollars and 100 million in Euros. In June 2001, we completed an additional Senior Subordinated Notes offering of $158.5 million (collectively the “Senior Subordinated Notes”). All of the 9% Senior Subordinated Notes were initially payable in May 2009. The interest on the Senior Subordinated Notes was payable semi-annually each May and November. These notes are collateralized by guarantees of certain Dura subsidiaries. During the fourth quarter of 2005 we retired through purchase, Senior Subordinated Notes with an approximate face value of $49.4 million. As of December 31, 2006, the outstanding balance on these Senior Subordinated Notes was $535.6 million. Face value of the Senior Subordinated Notes consists of $409.1 million denominated in U.S. dollars and $126.5 million denominated in Euros. The Euro denominated Senior Subordinated Notes have been converted to the U.S. dollars using the exchange rate applicable to October 30, 2006, the date of our filing for bankruptcy protection, which we believe will be the allowable claim amount for such debt subject to compromise. No interest expense has been accrued for on this unsecured debt from the date of our bankruptcy filing.
In October 2003, DOC executed an amended and restated credit facility and, in connection therewith, eight subsidiaries acquired by DOC on July 2003 in connection with its acquisition of Creation Group Holdings, Inc. were added as guarantors under the then existing amended and restated credit facility. Under the terms of the indentures governing the Notes, each of these subsidiaries were required to become a Guarantor under the Notes. Only two of the eight subsidiaries were added as Guarantors at that time. The remaining guarantees were not executed until March 2005, and prior to that time DOC was not in compliance with indentures governing the Senior Unsecured Notes and Senior Subordinated Notes.
In March 1998, Dura Automotive Systems Capital Trust (the “Issuer”), a wholly owned statutory business trust of Dura, completed the offering of its Preferred Securities with total amount of $55.3 million. The Preferred Securities are currently redeemable, in whole or part, and were to be redeemed no later than March 2028. The Preferred Securities are convertible at the option of the holder into our Class A common stock at a rate of 0.5831 shares of Class A common stock for each Preferred Security, which is equivalent to a conversion price of $42.875 per share. The net proceeds of the offering were used to repay outstanding indebtedness. We were required to adopt FIN 46(R) and SFAS No.150 effective December 31, 2003. SFAS No.150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity” requires issuers to classify as liabilities (or assets in some circumstances) freestanding financial instruments that embody obligations for the issuer. The application of FIN 46(R) and SFAS 150 resulted in the reclassification of the Preferred Securities from the mezzanine section of the balance sheet for 2003 to a long-term liability. In addition, Minority Interest — Dividends on Trust Preferred Securities, Net, are classified in the statement of operations as a component of interest expense on a gross basis, prospectively, for periods subsequent to December 31, 2003. No separate financial statements of the Issuer have been included herein. We do not consider that such financial statements would be material to holders of Preferred Securities because (i) all of the voting securities of the Issuer are owned, directly or indirectly, by Dura, a reporting company under the Exchange Act; (ii) the Issuer has no independent operations and exists for the sole purpose of issuing securities representing undivided beneficial interests in the assets of the Issuer and investing the proceeds thereof in 7.5% convertible subordinated debentures due March 2028 issued by Dura; and (iii) the obligations of the Issuer under the Preferred Securities are fully and unconditionally guaranteed by Dura. No interest expense has been accrued for on this unsecured debt from the date of our bankruptcy filing.
We had outstanding interest rate swaps in the notional amount of $400.0 million that effectively converts the interest on our Senior Notes to a variable rate. As a result of filing for chapter 11 under the Bankruptcy Code on
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October 30, 2006, these interest rate swaps were terminated. Accordingly, in November 2006 we were requested to, and did settle these outstanding interest rate swap contracts with a payment of $12.2 million. This termination resulted in the unwinding of the hedge and resulted in a charge to income in November 2006 for this amount. These interest rate swap contracts were with various high credit quality major financial institutions and were to expire in April 2012. At their inception, we designated these contracts as fair value hedges.
We use standby letters of credit to guarantee our performance under various contracts and arrangements. These letter of credit contracts expire annually and are usually extended on a year-to-year basis.
As of December 31, 2006, future principal maturities of debt not subject to compromise are as follows (in thousands):
Year | Amount | |||
2007 | $ | 169,679 | ||
2008 | 833 | |||
2009 | 833 | |||
2010 | 930 | |||
2011 | — | |||
Thereafter | — | |||
$ | 172,275 | |||
8. Income Taxes:
The summary of income (loss) from continuing operations before income taxes and minority interest consisted of the following (in thousands):
2006 | 2005 | 2004 | ||||||||||
United States | $ | (277,117 | ) | $ | (27,416 | ) | $ | (21,070 | ) | |||
Foreign | (597,266 | ) | 26,244 | 31,165 | ||||||||
$ | (874,383 | ) | $ | (1,172 | ) | $ | 10,095 | |||||
The provision for income taxes consisted of the following (in thousands):
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Currently payable - | ||||||||||||
United States | $ | 2,291 | $ | 3,358 | $ | 549 | ||||||
Foreign | (4,221 | ) | 16,311 | 17,478 | ||||||||
(1,930 | ) | 19,669 | 18,027 | |||||||||
Deferred - | ||||||||||||
United States | 62,079 | (17,563 | ) | (12,189 | ) | |||||||
Foreign | (13,629 | ) | (1,683 | ) | (4,474 | ) | ||||||
48,450 | (19,246 | ) | (16,663 | ) | ||||||||
$ | 46,520 | $ | 423 | $ | 1,364 | |||||||
The 2006 to 2004 foreign tax expense was reduced by tax credits and tax holiday benefits. The 2006 and 2005 deferred tax benefit includes amounts attributable to net operating loss carryforwards, tax credits, adjustments to deferred tax assets and liabilities arising from changes in enacted tax rates in foreign jurisdictions and net future deductions that we expect to utilize against future operating income.
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A reconciliation of the provision for income taxes at the statutory rates to the reported income tax provision is as follows (in thousands):
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Federal provision at statutory rates | $ | (306,034 | ) | $ | (410 | ) | $ | 3,533 | ||||
Valuation allowance | 193,975 | 650 | 3,327 | |||||||||
Goodwill impairment | 146,281 | — | — | |||||||||
Capital losses not benefited/(utilized) | (148 | ) | (816 | ) | 1,055 | |||||||
State taxes, net of federal income tax benefit | 960 | (296 | ) | (198 | ) | |||||||
Extraterritorial income exclusion benefit | 72 | (890 | ) | (1,199 | ) | |||||||
Foreign provision more than U.S. tax rate | 11,254 | 6,168 | (5,065 | ) | ||||||||
Research and development credits | 745 | (1,264 | ) | (1,710 | ) | |||||||
Foreign tax holidays | (22 | ) | 335 | (2,661 | ) | |||||||
Change in tax contingency reserve | (1,320 | ) | (4,324 | ) | 3,609 | |||||||
Other | 757 | 1,270 | 673 | |||||||||
$ | 46,520 | $ | 423 | $ | 1,364 | |||||||
A summary of deferred tax assets (liabilities) is as follows (in thousands):
December 31, | ||||||||
2006 | 2005 | |||||||
Depreciation and property basis differences | $ | 15,023 | $ | (62,404 | ) | |||
Net operating loss carryforwards | 175,047 | 125,136 | ||||||
Postretirement benefit obligations | 23,945 | 20,622 | ||||||
Accrued interest | 17,660 | 18,280 | ||||||
Accrued compensation costs | 14,702 | 12,220 | ||||||
Research and development and other credit carryforwards | 9,689 | 10,990 | ||||||
Facility closure and consolidation costs | 3,432 | 1,476 | ||||||
Inventory valuation adjustments | 7,830 | 6,472 | ||||||
Warranty and environmental costs | 4,447 | 6,179 | ||||||
Capital loss carryforwards | 4,241 | 4,135 | ||||||
Loss contracts | 1,148 | 846 | ||||||
Bad debt allowance | 1,835 | 958 | ||||||
Other | 14,246 | (2,575 | ) | |||||
Valuation allowance | (275,466 | ) | (68,831 | ) | ||||
$ | 17,779 | $ | 73,504 | |||||
Current and noncurrent deferred tax assets and liabilities, within the same tax jurisdiction, are offset for presentation in the consolidated balance sheets. The December 31, 2006, consolidated balance sheet includes $6.6 million and $22.1 million of current and noncurrent deferred tax assets, respectively; and $2.8 million and $8.1 million of current and noncurrent deferred tax liabilities, respectively. The December 31, 2005, consolidated balance sheet includes $18.0 million and $66.5 million of current and noncurrent deferred tax assets, respectively; and $2.6 million and $8.4 million of current and noncurrent deferred tax liabilities, respectively.
A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Significant judgment is required in determining our provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. During 2006 we provided a full valuation allowance against all applicable U.S. deferred tax assets amounting to $194.2 million as of December 31, 2006. In 2006 and 2005, the valuation allowance increased by $206.6 million and $5.8 million, respectively. No provision has been made for U.S. income taxes related to undistributed earnings of foreign subsidiaries that are intended to be permanently reinvested that amounted to approximately $325.6 million at December 31, 2006.
The valuation allowance is based on our review of all available positive and negative evidence, including our past and future performance in the jurisdictions in which we operate, the market environment in which we operate, the utilization of tax attributes in the past, the length of carryback and carryforward periods in jurisdictions and evaluation of potential tax planning strategies. At December 31, 2006, management continued to believe there is overwhelming negative evidence that the related deferred tax assets would not be realized. In the event that actual results differ from these estimates or we adjust these estimates in future periods, the effects of these adjustments could materially impact our financial position and results of operations.
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The net current and noncurrent U.S. deferred tax liability as of December 31, 2006, was $3.0 million. This reflects a reduction of the U.S. deferred liability (which is entirely related to the timing difference of deductible goodwill) of $31.8 million as a result of the tax benefit on a portion of the goodwill impairment charge recorded. In addition during 2003 and 2004, we recorded total losses from discontinued operations of $129.4 million related to the disposition of the Mechanical Assemblies Europe business. We have not recorded tax benefits for these losses as we believe it is more likely than not that such benefits will not be realized.
To the extent we recognize or can reasonably support the future realization of these U.S. deferred taxes assets, the valuation allowance will be adjusted accordingly.
We currently have $509.9 million of U.S. and foreign gross net operating loss carryforwards on which we have provided a net deferred tax benefit of $167.7 million before valuation allowance. The general time frame of the net operating loss carryforwards expiration is as follows:
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U.S. | Foreign | Valuation | Net | |||||||||||||
2007-2009 | $ | — | $ | 5.5 | $ | — | $ | 5.5 | ||||||||
2010-2014 | — | 25.2 | (2.0 | ) | 23.2 | |||||||||||
2015-2019 | 10.4 | 28.5 | (34.7 | ) | 4.2 | |||||||||||
2020 | 9.0 | 2.0 | (11.0 | ) | — | |||||||||||
2021 | 7.0 | — | (7.0 | ) | — | |||||||||||
2023 | 41.1 | — | (41.1 | ) | — | |||||||||||
2024 | 25.6 | — | (25.6 | ) | — | |||||||||||
2025 | 46.5 | — | (46.5 | ) | — | |||||||||||
2026 | 147.8 | — | (147.8 | ) | — | |||||||||||
No expiration | — | 161.3 | (131.6 | ) | 29.7 | |||||||||||
$ | 287.4 | $ | 222.5 | $ | (447.3 | ) | $ | 62.6 | ||||||||
In addition, we currently have $7.3 million in state net operating loss carryforwards, against which we have provide a valuation allowance of $7.3 million. These net operating loss carryforwards will expire in varying amounts over the next 20 years.
Any current net operating loss carryforwards will be significantly impacted by our valuation and final settlement of prepetition liabilities when we emerge from chapter 11, if at all.
We have provided deferred income tax benefits on $9.1 million of U.S. Research and Experimental credit carryforwards against which we have fully provided a valuation allowance. These carryforwards expire in the following general time periods:
Years | Amount | |||
2015-2019 | $ | 1.0 | ||
2020-2024 | 8.1 | |||
$ | 9.1 | |||
We operate within multiple tax jurisdictions and are subject to audits in these jurisdictions. Upon audit, these taxing jurisdictions could retroactively disagree with our tax treatment of certain items. Consequently, the actual liabilities with respect to any year may be determined long after financial statements have been issued. We established tax reserves for estimated tax exposures. These potential exposures result from varying applications of statutes, rules, regulations, case law and interpretations. The settlement of these exposures primarily occurs upon finalization of tax audits. However, the amount of the exposures can also be impacted by changes in tax laws and other factors. On a quarterly basis, we revalue the reserve amounts in light of any additional information and adjust the reserve balances as necessary to reflect the best estimate of the probable outcomes. We believe that we have established the appropriate reserves for these estimated exposures. However, actual results may differ from these estimates. The resolution of these tax matters in a particular future period could have a material impact on our consolidated statement of operations.
During 2006 and 2005, we recognized $1.3 million and $4.3 million, respectively, of previously established tax contingency valuation reserves as a result of a change in estimated exposures due to tax planning and favorable tax audit results.
FIN 48 prescribes a consistent recognition threshold and measurement attribute, as well as clear criteria for subsequently recognizing, derecognizing and measuring such tax positions for financial statement purposes. FIN 48 also requires expanded disclosure with respect to the uncertainty in income taxes. FIN 48 is effective for the Company as of January 1, 2007. The Company is currently assessing the potential impact on accumulated deficit upon adoption.
9. Segment Reporting:
Economic and operating characteristics of our businesses have changed in 2006 from that experienced in prior years. Accordingly, at the end of 2006, we operated our business along the following two reporting segments based on products, customer base, economic and operating factors (all segment information and discussion contained herein for prior years has been recast to reflect these two business segments):
• | Automotive Segment — Designs and manufactures driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. Automotive segment includes the Control Systems, the Body & Glass and the Other Operating |
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Companies Divisions reporting units. During December 2006, the Control Systems, Body & Glass, and Other Operating Companies Divisions were combined under one chief operating officer. | |||
• | Atwood Mobile Products Segment — Designs and manufactures appliances, hardware and engineered assemblies for the RVSV industry. In May 2007, we announced that we are exploring strategic alternatives and sales for our Atwood Mobile Products segment. Any final sales agreement requires Bankruptcy Court approval. In July 2007, DURA Automotive Systems, Inc. entered into an asset purchase agreement with Atwood Acquisition Co., LLC for the sale of DURA’s Atwood Mobile Products division. The agreement provides for the acquisition of Atwood Mobile Products for an aggregate potential cash consideration of $160.2 million. Closing of the transaction is subject to the approval of the United States Bankruptcy Court for the District of Delaware, which has jurisdiction over DURA’s Chapter 11 reorganization proceedings; government regulatory approvals; and customary closing conditions. |
Each segment reports their results of operations, submits budgets, and makes capital expenditure requests to the chief operating decision-making group. This group consists of the President and Chief Executive Officer, the divisional Chief Operating Officers of Automotive and Atwood, the Chief Financial Officer and Vice President of Human Resources. Each business segment has a separate operational management team that are dedicated to providing vehicle components, systems and appliances to their respective customers. Our operations use similar manufacturing techniques and utilize common cost-saving tools. These techniques include continuous improvement programs designed to reduce our overall cost base and to enable us to better handle OEM and RVSV volume fluctuations.
The accounting policies of our operating segments are the same as those described in the summary of significant accounting policies. We evaluate performance based on sales and internal operating income (loss) of the segments and use a variety of ratios to measure performance. These results are not necessary indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented. Certain support functions for North America Automotive and Atwood Mobile Products are reflected in Other, as they are not considered by the chief operating decision-making group. Other amounts include corporate and nonallocated support and administration costs, and intercompany eliminations.
The following table presents a summary of financial information by reportable business segment: (in thousands):
Atwood | ||||||||||||||||
Mobile | ||||||||||||||||
Automotive | Products | Other * | Total | |||||||||||||
2006 | ||||||||||||||||
Net sales | $ | 1,735,872 | $ | 364,312 | $ | (9,418 | ) | $ | 2,090,766 | |||||||
Operating income (loss) | (9,310 | ) | 18,622 | (756,596 | ) | (747,284 | ) | |||||||||
Depreciation and amortization | 64,789 | 5,689 | 8,347 | 78,825 | ||||||||||||
Facility consolidation, asset impairment & other charges | 673,731 | 4,163 | 6,344 | 684,238 | ||||||||||||
Goodwill | 186,997 | 71,316 | — | 258,313 | ||||||||||||
Segment assets | 1,710,231 | 174,058 | (429,448 | ) | 1,454,841 | |||||||||||
Capital expenditures | 76,908 | 1,150 | 6,372 | 84,430 | ||||||||||||
2005 | ||||||||||||||||
Net sales | 1,910,864 | 386,667 | (6,091 | ) | 2,291,440 | |||||||||||
Operating income (loss) | 99,571 | 27,461 | (43,186 | ) | 83,846 | |||||||||||
Depreciation and amortization | 64,704 | 6,065 | 7,494 | 78,263 | ||||||||||||
Facility consolidation, asset impairment & other charges | 10,798 | 520 | 79 | 11,397 | ||||||||||||
Goodwill | 778,836 | 71,316 | — | 850,152 | ||||||||||||
Segment assets | 2,131,374 | 191,620 | (247,785 | ) | 2,075,209 | |||||||||||
Capital expenditures | 55,715 | 2,982 | 5,171 | 63,868 | ||||||||||||
2004 | ||||||||||||||||
Net sales | 2,067,230 | 381,791 | (5,575 | ) | 2,443,446 | |||||||||||
Operating income (loss) | 123,926 | 33,129 | (57,609 | ) | 99,446 | |||||||||||
Depreciation and amortization | 68,099 | 7,207 | 6,763 | 82,069 | ||||||||||||
Facility consolidation, asset impairment & other charges | 12,281 | 9,536 | — | 21,817 | ||||||||||||
Goodwill | 827,520 | 71,316 | — | 898,836 | ||||||||||||
Segment assets | 2,067,763 | 194,256 | (38,098 | ) | 2,223,921 | |||||||||||
Capital expenditures | 53,372 | 7,532 | 4,168 | 65,072 |
* | Other includes all cash and cash equivalents, unallocated corporate expenses, shared service center costs, facility consolidation, asset impairment and other charges (see Note 5), amortization, prepetition professional fees and discontinued operations. |
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The following table presents revenues and long-lived assets for each of the geographic areas in which we operate (in thousands):
Years Ended December 31, | ||||||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||||
Long-Lived | Long-Lived | Long-Lived | ||||||||||||||||||||||
Revenues | Assets | Revenues | Assets | Revenues | Assets | |||||||||||||||||||
North America | $ | 1,098,913 | $ | 181,991 | $ | 1,333,863 | $ | 195,511 | $ | 1,477,678 | $ | 205,964 | ||||||||||||
Europe | 903,553 | 260,344 | 885,823 | 234,471 | 918,503 | 259,056 | ||||||||||||||||||
Other foreign countries | 88,300 | 23,140 | 71,754 | 20,397 | 47,265 | 14,439 | ||||||||||||||||||
$ | 2,090,766 | $ | 465,475 | $ | 2,291,440 | $ | 450,379 | $ | 2,443,446 | $ | 479,459 | |||||||||||||
Revenues are attributed to geographic locations based on the location of product production and shipment.
The following is a summary composition by product category of our revenues (in thousands):
Years Ended December 31, | ||||||||||||
Product Category | 2006 | 2005 | 2004 | |||||||||
Driver control systems | $ | 781,386 | $ | 786,623 | $ | 846,295 | ||||||
Glass systems | 340,415 | 350,675 | 402,339 | |||||||||
Seating control systems | 178,432 | 302,849 | 344,032 | |||||||||
Structural door modules | 232,065 | 234,655 | 231,646 | |||||||||
Exterior trim systems | 148,418 | 148,517 | 173,212 | |||||||||
Engineered assemblies | 104,408 | 137,168 | 151,631 | |||||||||
RVSV appliances | 115,301 | 124,211 | 110,290 | |||||||||
Other | 190,341 | 206,742 | 184,001 | |||||||||
$ | 2,090,766 | $ | 2,291,440 | $ | 2,443,446 | |||||||
Customers that accounted for a significant portion of consolidated revenues for the following years were:
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Ford | 22 | % | 20 | % | 19 | % | ||||||
Volkswagen | 10 | % | 9 | % | 8 | % | ||||||
GM | 9 | % | 11 | % | 12 | % | ||||||
DCX | 8 | % | 8 | % | 9 | % | ||||||
Lear | 6 | % | 10 | % | 11 | % |
As of December 31, 2006, 2005 and 2004, receivables from these customers represented approximately 60%, 58%, and 51% of total accounts receivable, respectively.
10. Employee Benefit Plans:
Defined Benefit Plans and Postretirement Benefits:
We sponsor 12 defined benefit type plans that cover certain hourly and salaried employees in the U.S., Canada and certain European countries. Our policy is to make annual contributions to the plans to fund the normal cost as required by local regulations. In addition, we have 8 postretirement medical benefit plans for certain employee groups and have recorded a liability for our estimated obligation under these plans. The tables below are based on measurement dates of September 30 for U.S. plans, and December 31 for non-U.S. plans. We’ll adjust our measurement date for all plans to December 31 in accordance with SFAS 158.
On December 31, 2006, we adopted SFAS No. 158 which requires recognition of the overfunded or underfunded status of defined benefit and retiree medical plans as an asset or liability, with future changes in the funded status recognized through other comprehensive income in the year in which they occur. Previously, under SFAS 132(R), certain intangible assets were reflected rather than charging such amounts to other comprehensive income. Intangible assets related to defined benefit and retiree medical at December 31, 2006 (before adjustment), and December 31, 2005, amounted to $2.9 million and $6.2 million, respectively. Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability. Unrecognized prior service costs or credits, net actuarial gains or losses and net transition obligations as well as subsequent changes in the funded status are recognized as a component of comprehensive loss in stockholders’ equity. Additional minimum pension liabilities and related intangible assets are derecognized upon adoption of the new standard. This Statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with
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limited exceptions, effective for fiscal years ending after December 15, 2008. The requirement to recognize the funded status of a benefit plan and the disclosure requirements are effective for Dura at the end of fiscal year 2006 and the requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for Dura at the end of fiscal year 2007. The adoption of SFAS 158 increased total liabilities by $0.7 million and decreased total shareholders’ equity by $4.9 million, net of tax at December 31, 2006. The adoption of SFAS 158 had no impact on our consolidated results of operations.
In accordance with the requirements of SFAS 88 we recognized in 2006 curtailment expenses and special termination benefits totaling approximately $2.2 million, as a result of exit activities discussed in Note 5 to the consolidated financial statements — Facility Consolidation, Asset Impairment and Other Charges.
The change in accounts relating to all defined pension and post retirement benefit plans due to the adoption of SFAS 158 is as follows (amounts in thousands):
December 31, 2006 | Effect of | December 31, 2006 | ||||||||||
Prior to SFAS No. 158 | SFAS No. 158 | After SFAS No. 158 | ||||||||||
adjustment | Adjustment | adjustment | ||||||||||
Intangible asset | $ | 2,877 | $ | (2,877 | ) | $ | — | |||||
Accrued pension liability | (88,724 | ) | (627 | ) | (89,351 | ) | ||||||
Total liabilities | (1,952,082 | ) | (627 | ) | (1,952,709 | ) | ||||||
Accumulated other comprehensive income | (143,634 | ) | (4,900 | ) | (148,534 | ) | ||||||
Total shareholder’s equity | 508,227 | (4,900 | ) | 503,327 | ||||||||
Total liabilities and shareholder’s equity, excluding minority interest | $ | (1,443,855 | ) | $ | (5,527 | ) | $ | (1,449,382 | ) |
The change in benefit obligation, plan assets and funded status for the plans related to continuing operations consisted of the following (in thousands):
Pension Plans in Which | ||||||||||||||||
Accumulated Benefits | Postretirement Benefits | |||||||||||||||
Exceed Assets | Other than Pensions | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Change in Benefit Obligation: | ||||||||||||||||
Benefit obligation at beginning of year | $ | 160,578 | $ | 150,216 | $ | 20,258 | $ | 30,727 | ||||||||
Service cost | 2,268 | 2,192 | 669 | 650 | ||||||||||||
Interest cost | 8,223 | 8,288 | 1,072 | 1,341 | ||||||||||||
Plan participants’ contributions | (873 | ) | — | 494 | 542 | |||||||||||
Amendments | — | (315 | ) | — | (8,416 | ) | ||||||||||
Curtailments | 130 | — | (2,615 | ) | — | |||||||||||
Actuarial (gain)/loss | 1,670 | 12,217 | 3,757 | (1,479 | ) | |||||||||||
Benefits paid | (9,531 | ) | (9,790 | ) | (2,097 | ) | (3,336 | ) | ||||||||
Exchange rate changes | 2,311 | (2,230 | ) | 16 | 229 | |||||||||||
Benefit obligation at end of year | $ | 164,776 | $ | 160,578 | $ | 21,554 | $ | 20,258 | ||||||||
Change in Plan Assets: | ||||||||||||||||
Fair value of plan assets at beginning of year | $ | 91,138 | $ | 85,568 | $ | — | $ | — | ||||||||
Actual return on plan assets | 6,931 | 6,058 | — | — | ||||||||||||
Employer contributions | 8,120 | 8,177 | 2,097 | 3,336 | ||||||||||||
Benefits paid | (9,527 | ) | (9,056 | ) | (2,097 | ) | (3,336 | ) | ||||||||
Exchange rate changes | 317 | 391 | — | — | ||||||||||||
Fair value of plan assets at end of year | $ | 96,979 | $ | 91,138 | $ | — | $ | — | ||||||||
Change in Funded Status: | ||||||||||||||||
Funded status | $ | (67,797 | ) | $ | (69,263 | ) | $ | (21,554 | ) | $ | (20,258 | ) | ||||
Unrecognized actuarial loss | * | 44,719 | * | 3,063 | ||||||||||||
Unrecognized prior service cost (benefit) | * | 7,770 | * | (1,534 | ) | |||||||||||
Net amount recognized | $ | (67,797 | ) | $ | (16,774 | ) | $ | (21,554 | ) | $ | (18,729 | ) | ||||
* | Not applicable due to adoption of SFAS 158. |
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The amounts recognized in the consolidated balance sheet are as follows (in thousands):
Postretirement Benefits | ||||||||||||||||
Pension Benefits | Other than Pensions | |||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Intangible assets | * | $ | 7,770 | * | $ | (1,534 | ) | |||||||||
Accrued benefit liability | * | $ | (69,263 | ) | * | $ | (17,195 | ) | ||||||||
Current liabilities | (130 | ) | * | (1,307 | ) | * | ||||||||||
Noncurrent liabilities | (47,797 | ) | * | (20,247 | ) | * | ||||||||||
Liabilities subject to compromise | (19,870 | ) | — | — | — | |||||||||||
Other comprehensive income | * | 44,719 | * | — | ||||||||||||
Net amount recognized | $ | (67,797 | ) | $ | (16,774 | ) | $ | (21,554 | ) | $ | (18,729 | ) | ||||
* | Not applicable due to adoption of SFAS 158. |
Amounts not yet recognized in net periodic benefit cost and included in accumulated other comprehensive income (pre-tax) are as follows (in thousands):
Postretirement Benefits | ||||||||||||||||
Pension Benefits | Other than Pensions | |||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Prior service cost (benefit) | $ | 4,309 | * | $ | (1,433 | ) | * | |||||||||
Net actuarial loss | 43,759 | * | 4,348 | * | ||||||||||||
Accumulated other comprehensive loss | $ | 48,068 | * | $ | 2,915 | * | ||||||||||
* | Not applicable due to adoption of SFAS 158. |
The estimated amount that will be amortized from accumulated other comprehensive income into net periodic benefit costs in 2007 is as follows:
Pension | Postretirement | |||||||
Benefits | Benefits | |||||||
Prior service cost (benefit) | $ | 1,259 | $ | (209 | ) | |||
Net actuarial loss | 3,403 | 427 | ||||||
Total estimated 2007 amortization | $ | 4,662 | $ | 218 | ||||
For the years ended December 31, 2006 and 2005, the accumulated benefit obligation for all defined benefit pension plans was $164.3 million and $160.1 million, respectively. As of December 31, 2006 and 2005, the accumulated benefit obligations and projected benefit obligations for all major defined benefit and postretirement medical benefit plans exceeded the plan assets.
The components of net periodic benefit costs are as follows (in thousands):
Postretirement Benefits | ||||||||||||||||||||||||
Pension Benefits | Other than Pensions | |||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2006 | 2005 | 2004 | |||||||||||||||||||
Service cost | $ | 2,268 | $ | 2,197 | $ | 2,344 | $ | 669 | $ | 650 | $ | 643 | ||||||||||||
Interest cost | 8,223 | 8,300 | 8,525 | 1,072 | 1,341 | 1,795 | ||||||||||||||||||
Expected return on plan assets | (6,716 | ) | (6,677 | ) | (6,355 | ) | — | — | — | |||||||||||||||
Amendments | — | — | 1,357 | — | (3,563 | ) | (437 | ) | ||||||||||||||||
Curtailment expense | 2,517 | — | — | (358 | ) | — | — | |||||||||||||||||
Amortization of prior service benefit | 1,087 | 1,366 | 2,076 | (109 | ) | (7 | ) | (9 | ) | |||||||||||||||
Recognized actuarial loss | 2,943 | 1,286 | 172 | 229 | 154 | 239 | ||||||||||||||||||
Net periodic benefit cost | $ | 10,322 | $ | 6,472 | $ | 8,119 | $ | 1,503 | $ | (1,425 | ) | $ | 2,231 | |||||||||||
Continuing operations | $ | 10,322 | $ | 6,452 | $ | 7,815 | $ | 1,503 | $ | (1,425 | ) | $ | 2,231 | |||||||||||
Discontinued operations | — | 20 | 304 | — | — | — | ||||||||||||||||||
Net periodic benefit cost | $ | 10,322 | $ | 6,472 | $ | 8,119 | $ | 1,503 | $ | (1,425 | ) | $ | 2,231 | |||||||||||
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The following weighted-average assumptions were used to determine benefit obligations:
Post-retirement Benefits | ||||||||||||||||
Pension Benefits | Other than Pensions | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Discount rate | 5.40 | % | 5.28 | % | 5.32 | % | 5.00 | % | ||||||||
Rate of compensation increase | 2.01 | % | 1.65 | % | N/A | N/A |
We employ a building block approach in determining the expected long-term rate of return for plan assets. Historical markets are studied and long-term historical relationships between equities and fixed income are preserved consistent with the widely-accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The expected long-term portfolio return is established via a building block approach with proper consideration of diversification and rebalancing. Peer data and historical returns are reviewed to check for reasonability and appropriateness.
The following health care cost trend rates were used to account for the plans:
2006 | 2005 | |||||||
Health care cost trend rate assumed for next year | 9.00—12.00 | % | 9.00—13.00 | % | ||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 5.00—6.00 | % | 5.00—6.00 | % | ||||
Year that the rate reaches the ultimate trend rate | 2010—2013 | 2010—2013 |
The following weighted-average assumptions were used to determine net periodic benefit costs:
Post-retirement Benefits | ||||||||||||||||
Pension Benefits | Other than Pensions | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Discount rate | 5.25 | % | 5.51 | % | 5.32 | % | 5.00 | % | ||||||||
Expected return on plan assets | 7.38 | % | 7.40 | % | N/A | N/A | ||||||||||
Rate of compensation increase | 2.01 | % | 1.65 | % | N/A | N/A |
Assumed health care cost trend rates have a significant effect on the amounts reported for the post-retirement medical benefit plans. A one percentage-point change in assumed health care cost trend rates would have the following effects (in thousands):
One Percentage-Point | One Percentage-Point | |||||||
Increase | Decrease | |||||||
Effect on total of service and interest cost components | $ | 287 | $ | (240 | ) | |||
Effect on the post-retirement benefit obligation | 3,067 | (2,383 | ) |
Our U.S. pension plan weighted-average asset allocations at the September 30, 2006 and 2005 measurement dates were as follows:
Pension Benefits | ||||||||
2006 | 2005 | |||||||
Equity securities | 62 | % | 63 | % | ||||
Debt securities | 37 | % | 37 | % | ||||
Other | 1 | % | — | |||||
Total | 100 | % | 100 | % | ||||
The investment strategy for the U.S. defined benefit pension plans is becoming more conservative due to the cessation of accepting new participants. The focus is on diminishing the under funding of $44.5 million at December 31, 2006, and at the same time protecting the participants’ positions. Consequently, the current target investment mix is approximately 60% in equity securities and 40% in fixed income and debt securities.
Our foreign pension plan weighted-average asset allocations at the September 30, 2006 and 2005 measurement dates were as follows:
Pension Benefits | ||||||||
2006 | 2005 | |||||||
Equity securities | 64 | % | 60 | % | ||||
Debt securities | 32 | % | 34 | % | ||||
Other | 4 | % | 6 | % | ||||
Total | 100 | % | 100 | % | ||||
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The investment strategy for the foreign defined benefit pension plans is becoming more conservative due to the cessation of accepting new participants. The focus is on diminishing the under funding of $23.3 million at December 31, 2006, and at the same time protecting the participants’ positions. Consequently, the current target investment mix is 60% in equity securities and 40% in fixed income and debt securities.
We employ a total return on investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. The intent of this strategy is to minimize plan expenses by outperforming plan liabilities over the long run. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. The investment portfolio contains a diversified blend of equity and fixed income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks as well as growth, value, and small and large capitalization companies. Other assets such as real estate, private equity, and hedge funds are used judiciously to enhance long-term returns while improving portfolio diversification. Derivatives may be used to gain market exposure in an efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value of the underlying investments. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews.
We expect to contribute $10.8 million to our pension plans and $1.3 million to our postretirement medical benefit plans in 2007.
The following table presents our projected benefit payments as of December 31, 2006 (in thousands):
Year | Pension | Post-Retirement | ||||||
2007 | $ | 8,568 | $ | 1,307 | ||||
2008 | 8,755 | 1,323 | ||||||
2009 (*) | 32,931 | 1,340 | ||||||
2010 | 8,493 | 1,322 | ||||||
2011 | 8,541 | 1,346 | ||||||
Thereafter | 46,829 | 7,176 |
(*) | Due to the planned closure of certain Canadian facilities, we are estimating a $25.2 million payment in 2009 for annuities regarding our Canadian Pension Plans. This $25.2 million is included in the $32.9 million amount in the above table. |
Retirement Savings Plans:
We sponsor various employee retirement savings plans that allow qualified employees to provide for their retirement on a tax-deferred basis. In accordance with the terms of the retirement savings plans, we may match certain of the participants’ contributions and/or provide employer contributions based on our performance and other factors. Our contributions totaled $4.9 million, $3.9 million, and $8.5 million during 2006, 2005, and 2004, respectively. We did not make any discretionary contribution to the U.S. savings plan in 2006.
11. Commitments and Contingencies:
Leases:
We lease office space, manufacturing space and certain equipment under operating lease agreements which require us to pay maintenance, insurance, taxes and other expenses in addition to annual rentals. Of these lease commitments, $20.1 million are included in facility closure and consolidation costs reserves. Future annual rental commitments at December 31, 2006, under these operating leases are as follows (in thousands):
Year | Amount | |||
2007 | $ | 17,969 | ||
2008 | 14,178 | |||
2009 | 12,461 | |||
2010 | 11,262 | |||
2011 | 9,857 | |||
Thereafter | 30,724 |
Operating rental expenses were approximately $32 million, $37 million and $39 million for the years ended December 31, 2006, 2005 and 2004, respectively.
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Litigation:
We are involved in various legal proceedings. Due to their nature, such legal proceedings involve inherent uncertainties, including, but not limited to, court rulings, negotiations between affected parties and governmental intervention. We have established reserves for matters that are probable and reasonably estimable in amounts we believe are adequate to cover reasonable adverse judgments not covered by insurance. Based upon the information available to us and discussions with legal counsel, it is our opinion that the ultimate outcome of the various legal actions and claims that are incidental to our business will not have a material adverse impact on our consolidated financial position, results of operations, or cash flows; however, such matters are subject to many uncertainties, and the outcome of individual matters are not predictable with assurance. See Note 2 to these consolidated financial statements for further discussion.
12. Related Party Transactions:
In November 2001, we entered into a definitive agreement to divest our Plastic Products business for total proceeds of $41.0 million. The transaction closed on January 28, 2002. Two members of our Board of Directors are members of management of an investor group, which is the general partner of the controlling shareholder of the acquiring company. We currently hold a note receivable from the acquiring company for $6.0 million of the sales proceeds as of December 31, 2006. As discussed in Note 5 to the consolidated financial statements, we have adjusted the sales proceeds to reflect the inability of the purchaser to financially meet its obligations under this note.
During 1999, we formed Automotive Aviation Partners, LLC (“AAP”) with our former Chairman to facilitate the purchase of a corporate airplane. We owned 25% of AAP and our former Chairman owned 75%. Each party provided guarantees for their ownership percent in favor of the AAP’s lending institution; our guarantee was for $1.25 million. In 2001, we loaned $1.2 million to AAP (the “Dura Loan”) to enable it to make a principal and interest payment to the lending institution. The former chairman had personally guaranteed repayment of 75% of this loan. The Dura Loan was due and payable in October 2002. Subsequently, we established a repayment schedule with our former Chairman with respect to his guarantee. In March 2004, a wholly-owned subsidiary of Dura acquired the former Chairman’s 75% interest in AAP in exchange for nominal consideration. We have repaid the loan to AAP’s lending institution and the former Chairman has been released from his guaranty to such lender. The former Chairman remained liable under his guaranty to Dura at December 31, 2005. The loan was paid off in January 2006 by the former Chairman.
In March 2003, we entered into a two year agreement with our former Chief Executive Officer. Under the terms of the agreement, this individual would receive an annual consulting fee of $525,000 for two years, stock options for 270,000 shares of Class A Common Stock and his existing vested options exercise period were extended to the remaining life of those options. As of December 31, 2004, all 270,000 of the additional options have been granted.
During April 2004, Onex Corporation, our controlling shareholder at that time, converted all of its remaining Class B common stock into Class A common stock, resulting in a single class of voting shares outstanding and effectively eliminated their majority voting control over our shareholder matters. As a result, during June 2004, we entered into change of control agreements (“the Agreements”) with certain key officers and directors. The Agreements provide for severance pay including incentive compensation, continuation of certain other benefits, gross-up of payments deemed to be excess parachute payments, additional years of credited service under our supplemental executive retirement plan and undiscounted lump-sum payment of the benefit due there under within ten days of the termination date, and indemnification of the individual with respect to certain matters associated with their employment by us. Change of control is defined as the accumulation by any person, entity or group of affiliated entities meeting certain levels of voting power of our voting stock or the occurrence of certain other specified events, as defined in the Agreements. The continuation of the current Agreements is subject to Bankruptcy Court approval. The Change in control benefits that would be payable under the defined changes of control, and if approved by the Bankruptcy Court, approximates $21 million at December 31, 2006.
In connection with Dura’s acquisition of Trident Automotive plc in April 1998, Dura entered into a consulting agreement with Mr. J. Richard Jones on April 8, 1998. Mr. Jones was subsequently appointed to the Board of Directors of Dura in May 1998 and currently serves as a director. Upon the execution of the consulting agreement, Mr. Jones received a cash payment of $2.0 million in connection with the termination of Mr. Jones’ prior employment agreement with Trident, and as consideration for entering into a noncompete with Dura, Mr. Jones also received options to purchase 50,000 shares of Class A Stock at an exercise price of $38.63 per share. The consulting agreement, as amended, has a term ending on May 5, 2007, and provides that Mr. Jones is entitled to consulting
41
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payments of $300,000 per annum for the first four years of the agreement and $60,000 per annum thereafter. In addition, Mr. Jones was entitled to certain other benefits under the agreement through the first five years of the agreement, including heath care coverage, automobile and country club allowances, life insurance coverage and a lifetime annuity contract purchased by Dura. In the aggregate, Mr. Jones has subsequently received payments and other benefits under the consulting agreement through December 31, 2006 approximating $1,671,599. Mr. Jones received payments and other benefits under the consulting agreement approximating $51,309 in 2006 and $60,708 in 2005. Dura also reimburses Mr. Jones for his expenses incurred from time to time in providing consulting services to Dura.
13. Condensed Consolidating Guarantor and Non-Guarantor Financial Information:
The following condensed consolidating financial information presents balance sheets, statements of operations and cash flow information related to our business and gives effect to the restatement discussed in Note 17. Each Guarantor, as defined, is a direct or indirect wholly owned subsidiary and has fully and unconditionally guaranteed the Senior Unsecured Notes and Senior Subordinated Notes (collectively, the “Notes”) issued by Dura Operating Corp. (“DOC”), on a joint and several basis. Separate financial statements and other disclosures concerning the Guarantors have not been presented because management believes that such information is not material to investors. As a result of the chapter 11 filings, the liabilities under the Notes are subject to compromise. (See “Note 7, Debt”, to the consolidated financial statements for a further description of the Notes).
DOC is the principal operating subsidiary of Dura Automotive Systems, Inc. (“DASI” or the “Parent Guarantor”). DASI does not itself conduct operations, but rather all operations of the Company are conducted by DOC and its direct and indirect subsidiaries. DASI’ s assets consist primarily of the investment in DOC and its 25% ownership share in AAP (See “Note 12, Related Party Transactions” to the consolidated financial statements). DASI does not have any material operating assets. DASI is also the issuer of $57.0 million of 7 1/2% convertible subordinated debentures due March 31, 2028, which are held by Dura Automotive Systems Capital Trust, a statutory business trust which has issued $55.3 million in liquidation preference of Preferred Securities. (See “Note 7, Debt” to the consolidated financial statements). The assets and liabilities shown in the condensed consolidating financial statements, except for the investment in DOC and the investment in AAP, are located at DOC and its direct and indirect subsidiaries. DASI has unconditionally guaranteed the Senior Unsecured Notes on an unsecured, senior basis and the Senior Subordinated Notes on an unsecured, senior subordinated basis.
The Non-Guarantor Companies consist primarily of our non United States operations.
The condensed consolidating guarantor and non-guarantor financial information as of December 31, 2006 and 2005 and for the three years in the period ended December 31, 2006 has been presented on a basis consistent with the signed guarantors as of December 31, 2006, for all periods presented.
On October 30, 2006, the Debtors filed for chapter 11. (See detailed discussion in Notes 1 and 14 of the consolidated financial statements). The Debtors condensed combined financial information in Note 14 represents our U.S and Canadian operations, while the Guarantor and Dura Operating Corporation financial information represent U.S operations only.
See Note 17, Restatement of Previously Issued Financial Statements.
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Dura Automotive Systems, Inc. and Subsidiaries
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Balance Sheets as of December 31, 2006
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Balance Sheets as of December 31, 2006
Dura | Dura | Non- | ||||||||||||||||||||||
Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||
As restated* | As restated* | As restated* | As restated* | As restated* | ||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 12,415 | $ | 21 | $ | 78,010 | $ | — | $ | 90,446 | ||||||||||||
Accounts receivable, net | — | 17,884 | 115,605 | 178,492 | — | 311,981 | ||||||||||||||||||
Inventories | — | 9,576 | 63,093 | 76,698 | — | 149,367 | ||||||||||||||||||
Other current assets | — | 28,649 | 17,179 | 84,426 | — | 130,254 | ||||||||||||||||||
Due from affiliates | — | 40,511 | — | — | (40,511 | ) | — | |||||||||||||||||
Total current assets | — | 109,035 | 195,898 | 417,626 | (40,511 | ) | 682,048 | |||||||||||||||||
Property, plant and equipment, net | — | 35,138 | 124,719 | 305,618 | — | 465,475 | ||||||||||||||||||
Investment in subsidiaries | — | 718,414 | 10,239 | 137,303 | (865,956 | ) | — | |||||||||||||||||
Notes receivable from affiliates | 57,091 | — | 196,085 | — | (253,176 | ) | — | |||||||||||||||||
Goodwill | — | 228,000 | 21,927 | 8,386 | — | 258,313 | ||||||||||||||||||
Other assets, net of accumulated amortization | — | 13,292 | 12,355 | 23,358 | — | 49,005 | ||||||||||||||||||
$ | 57,091 | $ | 1,103,879 | $ | 561,223 | $ | 892,291 | $ | (1,159,643 | ) | $ | 1,454,841 | ||||||||||||
Liabilities and Stockholders’ Investment (Deficit) | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Debtors-in-possession financing | $ | — | $ | 165,000 | $ | — | $ | — | $ | — | $ | 165,000 | ||||||||||||
Current maturities of long-term debt | 2,042 | 224 | — | 2,413 | — | 4,679 | ||||||||||||||||||
Accounts payable | — | 21,182 | 11,627 | 132,022 | — | 164,831 | ||||||||||||||||||
Accrued liabilities | — | 42,557 | 21,271 | 101,001 | — | 164,829 | ||||||||||||||||||
Due to affiliates | — | — | 1,317 | 39,194 | (40,511 | ) | — | |||||||||||||||||
Total current liabilities | 2,042 | 228,963 | 34,215 | 274,630 | (40,511 | ) | 499,339 | |||||||||||||||||
Long-term debt, net of current maturities | — | — | — | 2,596 | — | 2,596 | ||||||||||||||||||
Other noncurrent liabilities | — | 49,464 | 699 | 65,528 | — | 115,691 | ||||||||||||||||||
Investment in subsidiaries obligation | 503,327 | — | — | — | (503,327 | ) | — | |||||||||||||||||
Minority interests | — | — | — | 5,459 | — | 5,459 | ||||||||||||||||||
Notes payable to affiliates | — | 50,782 | — | 202,394 | (253,176 | ) | — | |||||||||||||||||
Total long-term liabilities | 503,327 | 100,246 | 699 | 275,977 | (756,503 | ) | 123,746 | |||||||||||||||||
Liabilities subject to compromise | 55,049 | 1,280,034 | — | — | — | 1,335,083 | ||||||||||||||||||
Stockholders’ investment (deficit) | (503,327 | ) | (505,364 | ) | 526,309 | 341,684 | (362,629 | ) | (503,327 | ) | ||||||||||||||
$ | 57,091 | $ | 1,103,879 | $ | 561,223 | $ | 892,291 | $ | (1,159,643 | ) | $ | 1,454,841 | ||||||||||||
* | See Note 17. |
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Dura Automotive Systems, Inc. and Subsidiaries
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Statements of Operations for the Year Ended December 31, 2006
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Statements of Operations for the Year Ended December 31, 2006
Dura | Dura | Non- | ||||||||||||||||||||||
Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||
As restated* | As restated* | As restated* | As restated* | As restated* | ||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
Revenues | $ | — | $ | 153,302 | $ | 781,402 | $ | 1,169,456 | $ | (13,394 | ) | $ | 2,090,766 | |||||||||||
Cost of sales | — | 155,382 | 768,725 | 1,090,300 | (13,394 | ) | 2,001,013 | |||||||||||||||||
Gross profit (loss) | — | (2,080 | ) | 12,677 | 79,156 | — | 89,753 | |||||||||||||||||
Selling, general and administrative expenses | — | 6,579 | 70,871 | 64,489 | — | 141,939 | ||||||||||||||||||
Prepetition professional fees | — | 10,455 | — | — | — | 10,455 | ||||||||||||||||||
Facility consolidation, asset impairment and other charges | — | 119,716 | 159,578 | 404,944 | — | 684,238 | ||||||||||||||||||
Amortization expense | — | 223 | 183 | (1 | ) | — | 405 | |||||||||||||||||
Operating loss | — | (139,053 | ) | (217,955 | ) | (390,276 | ) | — | (747,284 | ) | ||||||||||||||
Interest expense, net of interest income | 3,567 | 86,337 | 1,415 | 10,465 | — | 101,784 | ||||||||||||||||||
Reorganization items | — | 21,927 | — | 3,388 | — | 25,315 | ||||||||||||||||||
Loss from continuing operations before provision for income taxes and minority interest | (3,567 | ) | (247,317 | ) | (219,370 | ) | (404,129 | ) | — | (874,383 | ) | |||||||||||||
Provision (benefit) for income taxes | (1,250 | ) | 142,460 | (76,778 | ) | (17,912 | ) | — | 46,520 | |||||||||||||||
Minority interest in non wholly owned subsidiaries / Equity in losses of affiliates | 908,340 | 520,059 | — | 45,163 | (1,473,130 | ) | 432 | |||||||||||||||||
Loss from continuing operations | (910,657 | ) | (909,836 | ) | (142,592 | ) | (431,380 | ) | 1,473,130 | (921,335 | ) | |||||||||||||
Cumulative effect of change in accounting principle, net | — | — | — | 1,020 | — | 1,020 | ||||||||||||||||||
Income from discontinued operations, including gain on disposal | — | 1,496 | — | 8,162 | — | 9,658 | ||||||||||||||||||
Net loss | $ | (910,657 | ) | $ | (908,340 | ) | $ | (142,592 | ) | $ | (422,198 | ) | $ | 1,473,130 | $ | (910,657 | ) | |||||||
* | See Note 17. |
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Dura Automotive Systems, Inc. and Subsidiaries
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Statements of Cash Flows for the Year Ended December 31, 2006
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Statements of Cash Flows for the Year Ended December 31, 2006
Dura | Dura | Non- | ||||||||||||||||||||||
Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||
As restated* | As restated* | As restated* | As restated* | As restated* | ||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net loss | $ | (910,657 | ) | $ | (908,340 | ) | $ | (142,592 | ) | $ | (422,198 | ) | $ | 1,473,130 | $ | (910,657 | ) | |||||||
Less: Net earnings from discontinued operations | — | 1,496 | — | 8,162 | — | 9,658 | ||||||||||||||||||
Less: Cumulative effect of accounting change, net of tax | — | — | — | 1,020 | — | 1,020 | ||||||||||||||||||
Loss from continuing operations | (910,657 | ) | (909,836 | ) | (142,592 | ) | (431,380 | ) | 1,473,130 | (921,335 | ) | |||||||||||||
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | — | 7,226 | 21,710 | 49,889 | — | 78,825 | ||||||||||||||||||
Asset impairments | — | 254 | 5,013 | 5,571 | — | 10,838 | ||||||||||||||||||
Goodwill impairment | — | 113,117 | 146,256 | 377,554 | — | 636,927 | ||||||||||||||||||
Facility consolidation and other | — | 6,345 | 8,309 | 21,819 | — | 36,473 | ||||||||||||||||||
Amortization of deferred financing fees | — | 4,122 | — | — | — | 4,122 | ||||||||||||||||||
(Gain) loss on sale of plant, property and equipment | — | 20 | (133 | ) | (2,285 | ) | — | (2,398 | ) | |||||||||||||||
Bad debt expense (income) | — | 322 | 155 | (435 | ) | — | 42 | |||||||||||||||||
Reorganization items | — | 21,927 | — | 3,388 | — | 25,315 | ||||||||||||||||||
Deferred income tax provision (benefit) | — | 59,340 | — | (12,953 | ) | — | 46,387 | |||||||||||||||||
Equity in losses of affiliates and minority interest | 908,340 | 520,059 | — | 45,163 | (1,473,130 | ) | 432 | |||||||||||||||||
Changes in other operating items | 2,317 | (13,211 | ) | (16,012 | ) | (70,649 | ) | — | (97,555 | ) | ||||||||||||||
Net cash provided by (used in) continuing operating activities | — | (190,315 | ) | 22,706 | (14,318 | ) | — | (181,927 | ) | |||||||||||||||
INVESTING ACTIVITIES: | — | |||||||||||||||||||||||
Capital expenditures | — | (11,913 | ) | (24,851 | ) | (47,666 | ) | — | (84,430 | ) | ||||||||||||||
Proceeds from sale of assets and other | — | 403 | 852 | 5,115 | — | 6,370 | ||||||||||||||||||
Net cash used in continuing investing activities | — | (11,510 | ) | (23,999 | ) | (42,551 | ) | — | (78,060 | ) | ||||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Debtor-in-possession borrowing | — | 165,000 | — | — | — | 165,000 | ||||||||||||||||||
Net borrowings (payments) under prepetition revolving credit facilities | — | 69,763 | — | (902 | ) | — | 68,861 | |||||||||||||||||
Payment on termination of interest rate swap | — | (12,185 | ) | — | — | — | (12,185 | ) | ||||||||||||||||
Proceeds from equity securities, net | — | 257 | — | — | — | 257 | ||||||||||||||||||
Debt issue costs | — | (10,522 | ) | — | — | — | (10,522 | ) | ||||||||||||||||
Debt financing (to) from affiliates | — | (3,144 | ) | 1,081 | 2,063 | — | — | |||||||||||||||||
Other, net | — | — | — | (98 | ) | — | (98 | ) | ||||||||||||||||
Net cash provided by continuing financing activities | — | 209,169 | 1,081 | 1,063 | — | 211,313 | ||||||||||||||||||
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | — | — | — | 16,331 | — | 16,331 | ||||||||||||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS | — | 7,344 | (212 | ) | (39,475 | ) | — | (32,343 | ) | |||||||||||||||
NET CASH FLOW FROM DISCONTINUED OPERATIONS | ||||||||||||||||||||||||
Operating activities | — | 1,496 | — | 1,817 | — | 3,313 | ||||||||||||||||||
Investing activities | — | — | — | 17,587 | — | 17,587 | ||||||||||||||||||
NET CHANGE IN CASH FLOWS FROM DISCONTINUED OPERATIONS | — | 1,496 | — | 19,404 | — | 20,900 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS: | ||||||||||||||||||||||||
Beginning of period | — | 3,575 | 233 | 98,081 | — | 101,889 | ||||||||||||||||||
End of period | $ | — | $ | 12,415 | $ | 21 | $ | 78,010 | $ | — | $ | 90,446 | ||||||||||||
* | See Note 17. |
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Dura Automotive Systems, Inc. and Subsidiaries
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Balance Sheets as of December 31, 2005
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Balance Sheets as of December 31, 2005
Dura | Non- | |||||||||||||||||||||||
Dura Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||
As restated* | As restated* | As restated* | As restated* | As restated* | ||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 3,575 | $ | 233 | $ | 98,081 | $ | — | $ | 101,889 | ||||||||||||
Accounts receivable, net | — | 17,553 | 110,585 | 157,891 | — | 286,029 | ||||||||||||||||||
Inventories | — | 6,122 | 59,038 | 63,521 | — | 128,681 | ||||||||||||||||||
Other current assets | — | 24,095 | 15,787 | 65,350 | — | 105,232 | ||||||||||||||||||
Due from affiliates | — | 64,250 | — | — | (64,250 | ) | — | |||||||||||||||||
Current assets of discontinued operations | — | — | — | 10,975 | — | 10,975 | ||||||||||||||||||
Total current assets | — | 115,595 | 185,643 | 395,818 | (64,250 | ) | 632,806 | |||||||||||||||||
Property, plant and equipment, net | — | 28,668 | 133,738 | 287,973 | — | 450,379 | ||||||||||||||||||
Investment in subsidiaries | 339,707 | 1,150,891 | 12,053 | 183,895 | (1,686,546 | ) | — | |||||||||||||||||
Notes receivable from affiliates | 54,616 | — | 327,777 | — | (382,393 | ) | — | |||||||||||||||||
Goodwill | — | 341,497 | 168,183 | 340,472 | — | 850,152 | ||||||||||||||||||
Other assets, net of accumulated amortization | 1,670 | 95,943 | 12,300 | 19,909 | — | 129,822 | ||||||||||||||||||
Noncurrent assets of discontinued operations | — | — | — | 12,050 | — | 12,050 | ||||||||||||||||||
$ | 395,993 | $ | 1,732,594 | $ | 839,694 | $ | 1,240,117 | $ | (2,133,189 | ) | $ | 2,075,209 | ||||||||||||
Liabilities and Stockholders’ Investment | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Current maturities of long-term debt | $ | — | $ | 2,189 | $ | — | $ | 1,284 | $ | — | $ | 3,473 | ||||||||||||
Accounts payable | — | 27,908 | 85,590 | 147,760 | — | 261,258 | ||||||||||||||||||
Accrued liabilities | 1,036 | 66,890 | 14,693 | 95,534 | — | 178,153 | ||||||||||||||||||
Due to affiliates | — | — | 38,576 | 25,674 | (64,250 | ) | — | |||||||||||||||||
Current liabilities of discontinued operations | — | — | — | 6,771 | — | 6,771 | ||||||||||||||||||
Total current liabilities | 1,036 | 96,987 | 138,859 | 277,023 | (64,250 | ) | 449,655 | |||||||||||||||||
Long-term debt, net of current maturities | 55,250 | 1,080,625 | — | 4,077 | — | 1,139,952 | ||||||||||||||||||
Other noncurrent liabilities | — | 82,854 | 932 | 57,027 | — | 140,813 | ||||||||||||||||||
Minority interests | — | — | — | 4,864 | — | 4,864 | ||||||||||||||||||
Notes payable to affiliates | — | 134,187 | — | 248,206 | (382,393 | ) | — | |||||||||||||||||
Noncurrent liabilities of discontinued operations | — | — | — | 218 | — | 218 | ||||||||||||||||||
Total liabilities | 56,286 | 1,394,653 | 139,791 | 591,415 | (446,643 | ) | 1,735,502 | |||||||||||||||||
Total stockholders’ investment, net | 339,707 | 337,941 | 699,903 | 648,702 | (1,686,546 | ) | 339,707 | |||||||||||||||||
$ | 395,993 | $ | 1,732,594 | $ | 839,694 | $ | 1,240,117 | $ | (2,133,189 | ) | $ | 2,075,209 | ||||||||||||
* | See Note 17. |
46
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Dura Automotive Systems, Inc. and Subsidiaries
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Statements of Operations for the Year Ended December 31, 2005
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Statements of Operations for the Year Ended December 31, 2005
Dura | Non- | |||||||||||||||||||||||
Dura Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||
As restated* | As restated* | As restated* | As restated* | As restated* | ||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
Revenues | $ | — | $ | 187,896 | $ | 947,248 | $ | 1,183,911 | $ | (27,615 | ) | $ | 2,291,440 | |||||||||||
Cost of sales | — | 152,989 | 838,375 | 1,076,894 | (27,615 | ) | 2,040,643 | |||||||||||||||||
Gross profit | — | 34,907 | 108,873 | 107,017 | — | 250,797 | ||||||||||||||||||
Selling, general and administrative expenses | — | 4,260 | 65,234 | 85,626 | — | 155,120 | ||||||||||||||||||
Facility consolidation, asset impairment and other charges | — | 975 | 4,515 | 5,907 | — | 11,397 | ||||||||||||||||||
Amortization expense | — | 222 | 182 | 30 | — | 434 | ||||||||||||||||||
Operating income | — | 29,450 | 38,942 | 15,454 | — | 83,846 | ||||||||||||||||||
Interest expense, net of interest income | 4,280 | 83,944 | 2,330 | 9,269 | — | 99,823 | ||||||||||||||||||
Gain on early extinguishment of debt, net | — | 14,805 | — | — | — | 14,805 | ||||||||||||||||||
Income (loss) from continuing operations before income taxes and minority interest | (4,280 | ) | (39,689 | ) | 36,612 | 6,185 | — | (1,172 | ) | |||||||||||||||
Provision (benefit) for income taxes | (1,500 | ) | (14,006 | ) | 12,814 | 3,115 | — | 423 | ||||||||||||||||
Minority interest in non wholly owned subsidiaries / Equity in (earnings) losses of affiliates | (4,594 | ) | (30,277 | ) | — | (15,122 | ) | 50,170 | 177 | |||||||||||||||
Income (loss) from continuing operations | 1,814 | 4,594 | 23,798 | 18,192 | (50,170 | ) | (1,772 | ) | ||||||||||||||||
Income from discontinued operations | — | — | — | 3,586 | — | 3,586 | ||||||||||||||||||
Net income | $ | 1,814 | $ | 4,594 | $ | 23,798 | $ | 21,778 | $ | (50,170 | ) | $ | 1,814 | |||||||||||
* | See Note 17. |
47
Table of Contents
Dura Automotive Systems, Inc. and Subsidiaries
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Statements of Cash Flows for the Year Ended December 31, 2005
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Statements of Cash Flows for the Year Ended December 31, 2005
Dura | Non- | |||||||||||||||||||||||
Dura Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||
As restated* | As restated* | As restated* | As restated* | As restated* | ||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net income | $ | 1,814 | $ | 4,594 | $ | 23,798 | $ | 21,778 | $ | (50,170 | ) | $ | 1,814 | |||||||||||
Less: Net earnings (loss) from discontinued operations | — | — | — | 3,586 | — | 3,586 | ||||||||||||||||||
Income (loss) from continuing operations | 1,814 | 4,594 | 23,798 | 18,192 | (50,170 | ) | (1,772 | ) | ||||||||||||||||
Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | — | 5,871 | 23,382 | 49,010 | — | 78,263 | ||||||||||||||||||
Asset impairments | — | 759 | 2,401 | — | — | 3,160 | ||||||||||||||||||
Facility consolidation and other | — | (132 | ) | 4,058 | 4,311 | — | 8,237 | |||||||||||||||||
Amortization of deferred financing fees | — | 3,889 | — | — | — | 3,889 | ||||||||||||||||||
Bad debt expense | — | — | 1,670 | 186 | — | 1,856 | ||||||||||||||||||
Deferred income tax provision (benefit) | — | (45,694 | ) | 19,775 | (1,237 | ) | — | (27,156 | ) | |||||||||||||||
Gain on sale of property, plant and equipment | — | 60 | 19 | (275 | ) | — | (196 | ) | ||||||||||||||||
Favorable settlement of environmental matters | — | (1,200 | ) | (8,760 | ) | — | — | (9,960 | ) | |||||||||||||||
Gain on early extinguishment of debt | — | (14,805 | ) | — | — | — | (14,805 | ) | ||||||||||||||||
Equity in earnings of affiliates and minority interests | (4,594 | ) | (30,277 | ) | — | (15,122 | ) | 50,170 | 177 | |||||||||||||||
Changes in other operating items | 2,780 | (166,128 | ) | 107,794 | (6,788 | ) | — | (62,342 | ) | |||||||||||||||
Net cash provided by (used in) continuing operating activities | — | (243,063 | ) | 174,137 | 48,277 | — | (20,649 | ) | ||||||||||||||||
INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Capital expenditures | — | (3,699 | ) | (18,852 | ) | (41,317 | ) | — | (63,868 | ) | ||||||||||||||
Proceeds from the sale of assets and other | — | 662 | 2,661 | (833 | ) | — | 2,490 | |||||||||||||||||
Net cash used in continuing investing activities | — | (3,037 | ) | (16,191 | ) | (42,150 | ) | — | (61,378 | ) | ||||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Net borrowings under revolving credit facilities | — | 17,500 | — | — | — | 17,500 | ||||||||||||||||||
Long-term borrowings | — | 153,285 | — | — | — | 153,285 | ||||||||||||||||||
Repayments of long-term borrowings | — | (178,129 | ) | (3 | ) | (1,327 | ) | — | (179,459 | ) | ||||||||||||||
Deferred gain on termination of interest rate swap | — | 11,374 | — | — | — | 11,374 | ||||||||||||||||||
Proceeds from equity securities, net | — | 673 | — | — | — | 673 | ||||||||||||||||||
Debt issue costs | — | (7,613 | ) | — | — | — | (7,613 | ) | ||||||||||||||||
Debt financing (to) from affiliates | — | 249,637 | (159,332 | ) | (90,305 | ) | — | — | ||||||||||||||||
Other, net | — | — | — | (86 | ) | — | (86 | ) | ||||||||||||||||
Net cash provided by (used in) continuing financing activities | — | 246,727 | (159,335 | ) | (91,718 | ) | — | (4,326 | ) | |||||||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | — | — | (7,942 | ) | — | (7,942 | ) | ||||||||||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS | — | 627 | (1,389 | ) | (93,533 | ) | — | (94,295 | ) | |||||||||||||||
NET CASH FLOW FROM DISCONTINUED OPERATIONS | ||||||||||||||||||||||||
Operating activities | — | — | — | 7,565 | — | 7,565 | ||||||||||||||||||
Investing activities | — | — | — | (2,949 | ) | — | (2,949 | ) | ||||||||||||||||
NET CHANGE IN CASH FLOWS FROM DISCONTINUED OPERATIONS | — | — | — | 4,616 | — | 4,616 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS: | ||||||||||||||||||||||||
Beginning of period | — | 2,948 | 1,622 | 186,998 | — | 191,568 | ||||||||||||||||||
End of period | $ | — | $ | 3,575 | $ | 233 | $ | 98,081 | $ | — | $ | 101,889 | ||||||||||||
�� |
* | See Note 17. |
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Dura Automotive Systems, Inc. and Subsidiaries
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Statements of Operations for the Year Ended December 31, 2004
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Statements of Operations for the Year Ended December 31, 2004
Dura | Non- | |||||||||||||||||||||||
Dura Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||
As restated* | As restated* | As restated* | As restated* | As restated* | ||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
Revenues | $ | — | $ | 207,746 | $ | 1,085,587 | $ | 1,191,973 | $ | (41,860 | ) | $ | 2,443,446 | |||||||||||
Cost of sales | — | 176,964 | 953,952 | 1,083,080 | (41,860 | ) | 2,172,136 | |||||||||||||||||
Gross profit | — | 30,782 | 131,635 | 108,893 | — | 271,310 | ||||||||||||||||||
Selling, general and administrative expenses | — | 4,059 | 63,665 | 81,878 | — | 149,602 | ||||||||||||||||||
Facility consolidation, asset impairment and other charges | — | 323 | 17,204 | 4,290 | — | 21,817 | ||||||||||||||||||
Amortization expense | — | 222 | 182 | 41 | — | 445 | ||||||||||||||||||
Operating income | — | 26,178 | 50,584 | 22,684 | — | 99,446 | ||||||||||||||||||
Interest expense, net of interest income | 4,280 | 67,629 | 6,927 | 10,515 | — | 89,351 | ||||||||||||||||||
Income (loss) from continuing operations before provision for income taxes and minority interest | (4,280 | ) | (41,451 | ) | 43,657 | 12,169 | — | 10,095 | ||||||||||||||||
Provision (benefit) for income taxes | (1,500 | ) | (17,288 | ) | 15,280 | 4,872 | — | 1,364 | ||||||||||||||||
Minority interest in non wholly owned subsidiaries / Equity in (earnings) losses of affiliates | (14,503 | ) | (38,786 | ) | — | 2,348 | 50,941 | — | ||||||||||||||||
Income from continuing operations | 11,723 | 14,623 | 28,377 | 4,949 | (50,941 | ) | 8,731 | |||||||||||||||||
Income (loss) from discontinued operations | — | (120 | ) | — | 3,112 | — | 2,992 | |||||||||||||||||
Net income | $ | 11,723 | $ | 14,503 | $ | 28,377 | $ | 8,061 | $ | (50,941 | ) | $ | 11,723 | |||||||||||
* | See Note 17. |
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Dura Automotive Systems, Inc. and Subsidiaries
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Statements of Cash Flows for the Year Ended December 31, 2004
(DEBTOR-IN-POSSESSION)
Condensed Consolidating Statements of Cash Flows for the Year Ended December 31, 2004
Dura | Non- | |||||||||||||||||||||||
Dura Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||
As restated* | As restated* | As restated* | As restated* | As restated* | ||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net income | $ | 11,723 | $ | 14,503 | $ | 28,377 | $ | 8,061 | $ | (50,941 | ) | $ | 11,723 | |||||||||||
Less: Net earnings (loss) from discontinued operations | — | (120 | ) | — | 3,112 | — | 2,992 | |||||||||||||||||
Income from continuing operations | 11,723 | 14,623 | 28,377 | 4,949 | (50,941 | ) | 8,731 | |||||||||||||||||
Adjustments required to reconcile income to net cash provided by operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | — | 5,427 | 25,016 | 51,626 | — | 82,069 | ||||||||||||||||||
Asset impairments | — | — | 7,100 | — | — | 7,100 | ||||||||||||||||||
Facility consolidation and other | — | — | 10,426 | 4,291 | — | 14,717 | ||||||||||||||||||
Amortization of deferred financing fees | — | 3,522 | — | — | — | 3,522 | ||||||||||||||||||
Deferred income tax provision (benefit) | — | 750 | (14,573 | ) | (2,840 | ) | — | (16,663 | ) | |||||||||||||||
Gain on sale of property, plant and equipment | — | — | 1,097 | 332 | — | 1,429 | ||||||||||||||||||
Bad debt expense | — | — | 287 | (78 | ) | — | 209 | |||||||||||||||||
Equity in losses (earnings) of affiliates and minority interest | (14,503 | ) | (38,786 | ) | — | 2,348 | 50,941 | — | ||||||||||||||||
Changes in other operating items | 2,780 | (307,421 | ) | 345,868 | (42,005 | ) | — | (778 | ) | |||||||||||||||
Net cash provided by (used in) continuing operating activities | — | (321,885 | ) | 403,598 | 18,623 | — | 100,336 | |||||||||||||||||
INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Capital expenditures | — | (4,873 | ) | (18,231 | ) | (41,968 | ) | — | (65,072 | ) | ||||||||||||||
Other acquisition related activities | — | — | — | (13,327 | ) | — | (13,327 | ) | ||||||||||||||||
Net cash used in continuing investing activities | — | (4,873 | ) | (18,231 | ) | (55,295 | ) | — | (78,399 | ) | ||||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Long-term borrowings | — | — | — | 568 | — | 568 | ||||||||||||||||||
Repayments of long-term borrowings | — | (8,897 | ) | (37 | ) | (10,293 | ) | — | (19,227 | ) | ||||||||||||||
Proceeds from equity securities, net | — | 2,353 | — | — | — | 2,353 | ||||||||||||||||||
Debt issue costs | — | (552 | ) | — | — | — | (552 | ) | ||||||||||||||||
Debt financing (to) from affiliates | — | 291,131 | (384,830 | ) | 93,699 | — | — | |||||||||||||||||
Purchase of treasury shares and other, net | — | (61 | ) | — | — | — | (61 | ) | ||||||||||||||||
Net cash provided by (used in) continuing financing activities | — | 283,974 | (384,867 | ) | 83,974 | — | (16,919 | ) | ||||||||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | 13,632 | — | (14,350 | ) | — | (718 | ) | ||||||||||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS | — | (29,152 | ) | 500 | 32,952 | — | 4,300 | |||||||||||||||||
NET CASH FLOW FROM DISCONTINUED OPERATIONS | ||||||||||||||||||||||||
Operating activities | — | (120 | ) | — | 8,256 | — | 8,136 | |||||||||||||||||
Investing activities | — | — | — | (2,136 | ) | — | (2,136 | ) | ||||||||||||||||
NET CHANGE IN CASH FLOWS FROM DISCONTINUED OPERATIONS | — | (120 | ) | — | 6,120 | — | 6,000 | |||||||||||||||||
CASH AND CASH EQUIVALENTS: | ||||||||||||||||||||||||
Beginning of period | — | 32,220 | 1,122 | 147,926 | — | 181,268 | ||||||||||||||||||
End of period | $ | — | $ | 2,948 | $ | 1,622 | $ | 186,998 | $ | — | $ | 191,568 | ||||||||||||
* | See Note 17. |
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14. Debtors Financial Statements:
The financial statements of the Debtors are presented as follows:
Basis of Presentation
Condensed Combined Debtors-in-Possession Financial Statements— The financial statements contained within this note represent the condensed combined financial statements for the Debtors only. Dura’s non-Debtor subsidiaries are treated as non-consolidated subsidiaries in these financial statements and as such their net income (loss) is included as “Equity income (loss) from non-Debtor subsidiaries, net of tax” in the statement of operations and their net assets are included as “Investments in non-Debtor subsidiaries” in the balance sheet. Amounts presented in the statement of cash flows for the period from the chapter 11 filings to December 31, 2006 were based upon recorded asset and liability balances as of the filing dates and actual balances as of December 31, 2006, as well as the aforementioned estimated results of operations for the period from the chapter 11 filings to December 31, 2006. The Debtor’s financial statements contained herein have been prepared in accordance with the guidance in SOP 90-7.
Intercompany Transactions— Intercompany transactions between Debtors have been eliminated in the financial statements contained herein. Intercompany transactions with the Debtors’ non-Debtor subsidiaries have not been eliminated in the financial statements and are reflected as intercompany receivables, loans and payables.
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED COMBINED DEBTOR-IN-POSSESSION BALANCE SHEET
As of December 31, 2006
(In thousands of dollars)
As of December 31, 2006
(In thousands of dollars)
ASSETS: | ||||
Current Assets: | ||||
Cash and cash equivalents | $ | 13,787 | ||
Accounts receivable, net | ||||
Third parties | 157,825 | |||
Non-debtors subsidiaries | 17,479 | |||
Inventories | 78,574 | |||
Other current assets | 57,956 | |||
Total Current Assets | 325,621 | |||
Property, plant and equipment, net | 175,730 | |||
Goodwill | 249,927 | |||
Notes receivable from non-debtor subsidiaries | 181,657 | |||
Investments in non-debtor subsidiaries | 225,374 | |||
Other noncurrent assets | 25,715 | |||
Total Assets | $ | 1,184,024 | ||
LIABILITIES AND STOCKHOLDERS’ INVESTMENT: | ||||
Current Liabilities Not Subject to Compromise: | ||||
Debtors-in-possession financing | $ | 165,000 | ||
Current maturities of long-term debt | 2,266 | |||
Accounts payable | 34,879 | |||
Accounts payable to non-debtor subsidiaries | 1,073 | |||
Accrued liabilities | 76,938 | |||
Total Current Liabilities Not Subject to Compromise | 280,156 | |||
Long-term Liabilities: | ||||
Notes payable to non-debtor subsidiaries | 8,539 | |||
Other noncurrent liabilities | 63,573 | |||
Liabilities Subject to Compromise | 1,335,083 | |||
Total Liabilities | 1,687,351 | |||
Stockholders’ deficit | (503,327 | ) | ||
Total Liabilities and Stockholders’ Investment | $ | 1,184,024 | ||
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED COMBINED DEBTOR-IN-POSSESSION STATEMENT OF OPERATIONS
PERIOD FROM NOVEMBER 1, 2006 TO DECEMBER 31, 2006
(In thousands of dollars)
PERIOD FROM NOVEMBER 1, 2006 TO DECEMBER 31, 2006
(In thousands of dollars)
Revenues | $ | 147,624 | ||
Cost of sales | 160,496 | |||
Gross loss | (12,872 | ) | ||
Selling, general and administrative expenses | 8,780 | |||
Facility consolidation, asset impairment and other charges | 6,639 | |||
Amortization expense | 68 | |||
Operating loss | (28,359 | ) | ||
Interest expense, net of interest income | 6,701 | |||
Loss before reorganization items, loss on equity investment and income taxes | (35,060 | ) | ||
Reorganization Items | 23,327 | |||
Loss before loss on equity investment and income taxes | (58,387 | ) | ||
Equity loss from non-Debtor subsidiaries, net of tax | 10,000 | |||
Income tax benefit | 8,209 | |||
Net loss | $ | (56,596 | ) | |
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED COMBINED DEBTOR-IN-POSSESSION STATEMENT OF CASH FLOWS
PERIOD FROM NOVEMBER 1, 2006 TO DECEMBER 31, 2006
(In thousands of dollars)
PERIOD FROM NOVEMBER 1, 2006 TO DECEMBER 31, 2006
(In thousands of dollars)
Operating Activities: | ||||
Net loss | $ | (56,596 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation, amortization and asset impairments | 11,436 | |||
Reorganization items | 23,327 | |||
Other | 61 | |||
Change in other operating items: | ||||
Accounts receivable | (27,865 | ) | ||
Inventories | 4,544 | |||
Other current assets | (9,762 | ) | ||
Noncurrent assets | 8,844 | |||
Accounts payable | 24,777 | |||
Accrued liabilities | 24,150 | |||
Noncurrent liabilities | (21,232 | ) | ||
Current intercompany transactions | (10,297 | ) | ||
Net cash used in operating activities | (28,613 | ) | ||
Investing Activities: | ||||
Capital expenditures | (886 | ) | ||
Noncurrent intercompany transactions | (4,207 | ) | ||
Net cash used in investing activities | (5,093 | ) | ||
Financing Activities: | ||||
Debtor-in-possession borrowings | 165,000 | |||
Payments on prepetition revolving credit facilities | (108,008 | ) | ||
Payment on termination of interest rate swap loss | (12,185 | ) | ||
Debt issue costs | (8,192 | ) | ||
Net cash provided by financing activities | 36,615 | |||
Effect of exchange rate changes on cash and cash equivalents | — | |||
Net increase in cash and cash equivalents | 2,909 | |||
Cash and cash equivalents, Beginning of period | 10,878 | |||
Cash and cash equivalents, Ending of period | $ | 13,787 | ||
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15. Quarterly Financial Data (Unaudited):
The following is a condensed summary of actual quarterly results of operations for 2006 and 2005 (in thousands, except per share amounts):
(Gain)/Loss | Basic | Diluted | ||||||||||||||||||||||||||
From | Net | Earnings | Earnings | |||||||||||||||||||||||||
Gross | Operating | Discontinued | Income | (Loss) | (Loss) | |||||||||||||||||||||||
Revenues | Profit | Income (Loss) | Operations | (Loss) | Per Share | Per Share | ||||||||||||||||||||||
2006: | ||||||||||||||||||||||||||||
First | $ | 570,925 | $ | 51,930 | $ | 12,502 | $ | (1,865 | ) | $ | (7,020 | ) | $ | (0.38 | ) | $ | (0.38 | ) | ||||||||||
Second | 560,130 | 36,920 | (3,722 | ) | (1,080 | ) | (131,268 | ) | (6.96 | ) | (6.96 | ) | ||||||||||||||||
Third | 475,829 | 1,913 | (711,046 | ) | (7,037 | ) | (694,391 | ) | (36.75 | ) | (36.75 | ) | ||||||||||||||||
Fourth | 483,882 | (1,010 | ) | (45,018 | ) | 324 | (77,978 | ) | (4.74 | ) | (4.74 | ) | ||||||||||||||||
$ | 2,090,766 | $ | 89,753 | $ | (747,284 | ) | $ | (9,658 | ) | $ | (910,657 | ) | ||||||||||||||||
2005: | ||||||||||||||||||||||||||||
First | $ | 606,598 | $ | 58,741 | $ | 14,994 | $ | (1,031 | ) | $ | (4,833 | ) | $ | (0.26 | ) | $ | (0.26 | ) | ||||||||||
Second | 610,047 | 76,672 | 33,117 | (1,019 | ) | 2,959 | 0.16 | 0.16 | ||||||||||||||||||||
Third | 523,280 | 49,499 | 11,875 | (954 | ) | (6,584 | ) | (0.35 | ) | (0.35 | ) | |||||||||||||||||
Fourth | 551,515 | 65,885 | 23,860 | (582 | ) | 10,272 | 0.55 | 0.55 | ||||||||||||||||||||
$ | 2,291,440 | $ | 250,797 | $ | 83,846 | $ | (3,586 | ) | $ | 1,814 | ||||||||||||||||||
The 2006 quarterly results were impacted by the following transactions and events:
First quarter of 2006:
• | Effective, January 1, 2006, we adopted EITF Issue 05-05, which resulted in a favorable adjustment of $1.0 million, net of income taxes of $0.7 million. This amount is reflected in the consolidated statement of operations as a cumulative effect of a change in accounting principle. |
Second quarter of 2006:
• | We provided, and have continued to provide, a full valuation allowance against all applicable U.S. deferred tax assets amounting to $90.8 million during the second quarter ended July 2, 2006. |
Third quarter of 2006:
• | In connection with the streamlining of operations during 2006, we recorded facility consolidation, asset impairment and other charges of $671.7 million, consisting of severance and benefit related costs of $22.2 million, asset impairments of $643.5 million ($637.3 million for goodwill impairment, and $6.2 million for fixed asset impairments), and a $6.0 million adjustment to our 2001 recorded loss on the sale of our former plastic business due to financial inability of the purchaser to meet their obligations under a note we took as partial payment for the sale. |
• | In September 2006, we completed the sale of Dura Automotive Systems Köhler GmbH to an entity controlled by Hannover Finanz GmbH, headquartered in Hannover, Germany. The Company received approximately $18.5 million in net cash consideration for the sale. No continuing business relationship exists between this former subsidiary and the Company. The gain recognized on the sale was approximately $7.9 million. The divestiture is part of Dura’s evaluation of strategic alternatives for select German operations, as previously announced in February 2006. |
• | We settled two warranty matters with one of our customers for approximately $9.0 million for which we had previously recorded reserves in the amount of $3.6 million, which at the time, represented our estimated total exposure. Accordingly, during the third quarter of 2006, we recorded a charge of $5.4 million related to the final settlement of both warranty matters with the customer. |
• | As a result of the chapter 11 filing, we incurred prepetition professional fees of $4.6 million recorded in the consolidated statement of operations during the third quarter of 2006. |
• | We provided, and have continued to provide, a full valuation allowance against all applicable U.S. deferred tax assets. |
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Fourth quarter of 2006:
• | We incurred $7.1 million of facility consolidation, asset impairment and other charges in the fourth quarter, of which $5.9 million was related to asset impairments and $1.2 million was related to other charges. |
• | On October 30, 2006, Dura and its U.S. and Canadian subsidiaries (the “Debtors”) filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court. As a result of this filing, we incurred reorganization costs of $25.3 million, and prepetition professional fees of $5.9 million recorded in the consolidated statement of operations during the fourth quarter of 2006. |
• | In accordance with the Court-approved First Day Motions, the Company continues to accrue and pay the interest on its Second Lien Term Loan whose principal balance is subject to compromise. Interest on unsecured prepetition debt, other than the Second Lien Term Loan, has not been accrued as provided for under the U.S. Bankruptcy code. As of December 31, 2006, the amount of unrecorded interest on prepetition debt was approximately $15.0 million |
• | We were released from certain potential warranty exposures. Accordingly, we reversed the warranty reserves to cost of sales resulting in a favorable impact of approximately $2.0 million. |
• | We provided, and have continued to provide, a full valuation allowance against all applicable U.S. deferred tax assets. |
The 2005 quarterly results were impacted by the following transactions and events:
In the second quarter of 2005, we were released from a potential environmental exposure relating to a former manufacturing facility whose lease expired on that date. Accordingly, we reversed the remaining environmental exposure accrual to cost of sales resulting in a favorable $8.2 million impact in the second quarter. In the fourth quarter of 2005, cost of sales was positively impacted by certain one time operational and commercial events in the amount of $6.8 million. Additionally in the fourth quarter of 2005, net income was increased by an $18.2 million gain on the early extinguishment of debt and a $4.3 million favorable resolution of a tax matter.
16. Subsequent Events (Unaudited):
In April 2007, we announced that, as a continuation of our strategic restructuring initiative, we will be closing the following four manufacturing facilities: Brownstown, Indiana; Bracebridge, Ontario; Hannibal South, Missouri; and Selinsgrove, Pennsylvania. These facilities are planned to close by the end of 2007. The production at these facilities will be moved to other production facilities. Also, we announced our intention to sell our jack business, and our hinge and latch business. The proposed divestitures will include the sale of the facilities in Butler, Indiana; and Mancelona, Michigan. Any final sales agreement requires Bankruptcy Court approval.
In May 2007, we announced that we are exploring strategic alternatives for our Atwood Mobile Products segment, including a possible sale. In July 2007, DURA Automotive Systems, Inc. entered into an asset purchase agreement with Atwood Acquisition Co., LLC for the sale of DURA’s Atwood Mobile Products division. The agreement provides for the acquisition of Atwood Mobile Products for an aggregate potential cash consideration of $160.2 million. Closing of the transaction is subject to the approval of the United States Bankruptcy Court for the District of Delaware, which has jurisdiction over DURA’s Chapter 11 reorganization proceedings; government regulatory approvals; and customary closing conditions.
In June 2007, we notified our employees at our Barcelona, Spain, and Jacksonville, Florida, operations that we intend to close these facilities. Production will be transferred to other Dura facilities.
In early June, the Debtors developed a proposed equity rights offering term sheet (the “Backstop Term Sheet”). The Debtors’ analysis and preliminary plan developments indicated that a significant — and fully subscribed — equity rights offering was needed to supplement exit financing and other cash sources in order to pay off senior secured and priority classes of debt and otherwise fully fund the Debtors’ exit from chapter 11. The Debtors engaged in substantive discussions with various creditor constituencies and other capital market participants and solicited proposals for a backstopped rights offering from a number of potential sources.
On July 11, 2007, the Debtors executed the Backstop Term Sheet with the following parties: (1) investment entities affiliated with Pacificor, LLC , which have committed to undertake 75% of the Backstop Commitment; (2)
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investment entities affiliated with Bennett Management Corporation , which have committed to undertake 20% of the Backstop Commitment; and (3) investment entities affiliated with Wilfrid Aubrey LLC, which have committed to undertake 5% of the Backstop Commitment (collectively, the “Backstop Parties”). The Backstop Term Sheet contemplates a rights offering amount of $140 to $160 million in new cash investments in exchange for approximately 39.4% to 42.6% of the New Common Stock in the reorganized Debtors (the “Rights Offering”).
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17. Restatement of Previously Issued Financial Statements
Subsequent to the issuance of the Company’s consolidated financial statements for the fiscal year ended December 31, 2006, the Company determined that certain information presented in the condensed consolidating balance sheets as of December 31, 2006 and 2005 and the related statements of operations and cash flows for each of three years in the period ended December 31, 2006, presented in Note 13 “Condensed Consolidating Guarantor and Non-Guarantor Financial Information” to the consolidated financial statements, contained errors. The errors primarily relate to: (i) the misclassification of certain operations between DOC and Guarantor Companies columns; (ii) the improper accounting for certain equity transactions in DOC column, specifically the effects of foreign currency translation adjustments on the equity transactions were improperly accounted for; (iii) the failure to correctly record certain reclassifications and allocations related to intercompany transactions between DOC and the subsidiaries; and (iv) operations of DASI, the parent company of DOC were not appropriately presented as a separate column. The Company has corrected the errors and restated the condensed consolidating financial statements included in the footnote. The cumulative impact on beginning stockholders’ investment for the year ended December 31, 2004 for DOC and Guarantor Companies correcting for these errors was an increase of $156.1 million and $88.1 million, respectively, and a decrease of $23.0 million for the Non-Guarantor Companies, which was primarily related to the errors in the application of the equity method of accounting for Non-Guarantor subsidiaries.
The condensed consolidating guarantor and non-guarantor financial information as of December 31, 2006 and 2005 and for the three years in the period ended December 31, 2006 has been presented on a basis consistent with the signed guarantors as of December 31, 2006, for all periods presented.
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The following tables reflect the effects of the restatement on the condensed consolidating financial statements as of December 31, 2006 and December 31, 2005 and the related condensed consolidating statements of operations and cash flows for each of three years in the period ended December 31, 2006, contained in Note 13, Consolidating Guarantor and Non-Guarantor Financial Information:
Previously Reported | Restated | |||||||||||||||||||||||||||||||||||||||||||||||
Dura | Dura | Non- | Dura | Dura | Non- | |||||||||||||||||||||||||||||||||||||||||||
Automotive | Operating | Guarantor | Guarantor | Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||
Condensed Consolidating Balance Sheet | ||||||||||||||||||||||||||||||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||
Accounts receivable, net | $ | — | $ | 34,267 | $ | 99,222 | $ | 178,492 | $ | — | $ | 311,981 | $ | — | $ | 17,884 | $ | 115,605 | $ | 178,492 | $ | — | $ | 311,981 | ||||||||||||||||||||||||
Inventories | — | 11,875 | 60,794 | 76,698 | — | 149,367 | — | 9,576 | 63,093 | 76,698 | — | 149,367 | ||||||||||||||||||||||||||||||||||||
Other current assets | — | 36,726 | 9,102 | 84,426 | — | 130,254 | — | 28,649 | 17,179 | 84,426 | — | 130,254 | ||||||||||||||||||||||||||||||||||||
Due from affiliates | — | 217,479 | 30,191 | 30,816 | (278,486 | ) | — | — | 40,511 | — | — | (40,511 | ) | — | ||||||||||||||||||||||||||||||||||
Total Current Assets | — | 312,762 | 199,330 | 448,442 | (278,486 | ) | 682,048 | — | 109,035 | 195,898 | 417,626 | (40,511 | ) | 682,048 | ||||||||||||||||||||||||||||||||||
Property, plant and equipment, net | — | 54,796 | 105,061 | 305,618 | — | 465,475 | — | 35,138 | 124,719 | 305,618 | — | 465,475 | ||||||||||||||||||||||||||||||||||||
Investment in subsidiaries | — | 336,378 | 28,844 | 160,907 | (526,129 | ) | — | — | 718,414 | 10,239 | 137,303 | (865,956 | ) | — | ||||||||||||||||||||||||||||||||||
Notes receivable from affiliates | — | 501,161 | 400,953 | 38,539 | (940,653 | ) | — | 57,091 | — | 196,085 | — | (253,176 | ) | — | ||||||||||||||||||||||||||||||||||
Total assets | — | 1,446,389 | 768,470 | 985,250 | (1,745,268 | ) | 1,454,841 | 57,091 | 1,103,879 | 561,223 | 892,291 | (1,159,643 | ) | 1,454,841 | ||||||||||||||||||||||||||||||||||
Current maturities of long-term debt | 2,266 | 2,413 | 4,679 | 2,042 | 224 | — | 2,413 | — | 4,679 | |||||||||||||||||||||||||||||||||||||||
Accounts Payable | — | 23,706 | 9,103 | 132,022 | — | 164,831 | — | 21,182 | 11,627 | 132,022 | — | 164,831 | ||||||||||||||||||||||||||||||||||||
Accrued liabilities | — | 48,002 | 15,826 | 101,001 | — | 164,829 | — | 42,557 | 21,271 | 101,001 | — | 164,829 | ||||||||||||||||||||||||||||||||||||
Due to affiliates | — | 58,171 | 178,251 | 42,064 | (278,486 | ) | — | — | — | 1,317 | 39,194 | (40,511 | ) | — | ||||||||||||||||||||||||||||||||||
Total Current Liabilities | — | 297,145 | 203,180 | 277,500 | (278,486 | ) | 499,339 | 2,042 | 228,963 | 34,215 | 274,630 | (40,511 | ) | 499,339 | ||||||||||||||||||||||||||||||||||
Other noncurrent liabilities | — | 49,652 | 510 | 65,529 | — | 115,691 | — | 49,464 | 699 | 65,528 | — | 115,691 | ||||||||||||||||||||||||||||||||||||
Investment in subsidiaries obligation | — | — | — | — | — | — | 503,327 | — | — | — | (503,327 | ) | — | |||||||||||||||||||||||||||||||||||
Notes payable to affiliates | — | 414,492 | 282,668 | 243,493 | (940,653 | ) | — | — | 50,782 | — | 202,394 | (253,176 | ) | — | ||||||||||||||||||||||||||||||||||
Total long-term liabilities | — | 464,144 | 283,178 | 317,077 | (940,653 | ) | 123,746 | 503,327 | 100,246 | 699 | 275,977 | (756,503 | ) | 123,746 | ||||||||||||||||||||||||||||||||||
Liabilities subject to compromise | 1,335,083 | — | — | — | 1,335,083 | 55,049 | 1,280,034 | — | — | — | 1,335,083 | |||||||||||||||||||||||||||||||||||||
Stockholders’ investment (deficit) | — | (649,983 | ) | 282,112 | 390,673 | (526,129 | ) | (503,327 | ) | (503,327 | ) | (505,364 | ) | 526,309 | 341,684 | (362,629 | ) | (503,327 | ) | |||||||||||||||||||||||||||||
Total Liabilities and Stockholders’ Investment | $ | — | $ | 1,446,389 | $ | 768,470 | $ | 985,250 | $ | (1,745,268 | ) | $ | 1,454,841 | $ | 57,091 | $ | 1,103,879 | $ | 561,223 | $ | 892,291 | $ | (1,159,643 | ) | $ | 1,454,841 |
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Previously Reported | Restated | |||||||||||||||||||||||||||||||||||||||||||||||
Dura | Dura | Non- | Dura | Dura | Non- | |||||||||||||||||||||||||||||||||||||||||||
Automotive | Operating | Guarantor | Guarantor | Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statement of Operations | ||||||||||||||||||||||||||||||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | — | $ | 235,911 | $ | 698,793 | $ | 1,169,456 | $ | (13,394 | ) | $ | 2,090,766 | $ | — | $ | 153,302 | $ | 781,402 | $ | 1,169,456 | $ | (13,394 | ) | $ | 2,090,766 | ||||||||||||||||||||||
Cost of sales | — | 259,064 | 665,043 | 1,090,300 | (13,394 | ) | 2,001,013 | — | 155,382 | 768,725 | 1,090,300 | (13,394 | ) | 2,001,013 | ||||||||||||||||||||||||||||||||||
Gross profit (loss) | — | (23,153 | ) | 33,750 | 79,156 | — | 89,753 | — | (2,080 | ) | 12,677 | 79,156 | — | 89,753 | ||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | — | 50,425 | 27,025 | 64,489 | — | 141,939 | — | 6,579 | 70,871 | 64,489 | — | 141,939 | ||||||||||||||||||||||||||||||||||||
Facility consolidation, asset impairment and other charges | — | 159,203 | 120,091 | 404,944 | — | 684,238 | — | 119,716 | 159,578 | 404,944 | — | 684,238 | ||||||||||||||||||||||||||||||||||||
Operating loss | — | (243,459 | ) | (113,549 | ) | (390,276 | ) | — | (747,284 | ) | — | (139,053 | ) | (217,955 | ) | (390,276 | ) | — | (747,284 | ) | ||||||||||||||||||||||||||||
Interest expense, net of interest income | — | 89,904 | 1,415 | 10,465 | — | 101,784 | 3,567 | 86,337 | 1,415 | 10,465 | — | 101,784 | ||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations before provision for income taxes and minority interest | — | (355,290 | ) | (114,964 | ) | (404,129 | ) | — | (874,383 | ) | (3,567 | ) | (247,317 | ) | (219,370 | ) | (404,129 | ) | — | (874,383 | ) | |||||||||||||||||||||||||||
Provision for income taxes | — | 71,444 | (7,074 | ) | (17,850 | ) | — | 46,520 | (1,250 | ) | 142,460 | (76,778 | ) | (17,912 | ) | — | 46,520 | |||||||||||||||||||||||||||||||
Minority interest in non wholly owned subsidiaries / Equity in (earnings) losses of affiliates | — | 490,033 | — | 30,302 | (519,903 | ) | 432 | 908,340 | 520,059 | — | 45,163 | (1,473,130 | ) | 432 | ||||||||||||||||||||||||||||||||||
Dividends from affiliates | — | (4,614 | ) | — | — | 4,614 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Loss from continuing operations | — | (912,153 | ) | (107,890 | ) | (416,581 | ) | 515,289 | (921,335 | ) | (910,657 | ) | (909,836 | ) | (142,592 | ) | (431,380 | ) | 1,473,130 | (921,335 | ) | |||||||||||||||||||||||||||
Net loss | $ | — | $ | (910,657 | ) | $ | (107,890 | ) | $ | (407,399 | ) | $ | 515,289 | $ | (910,657 | ) | $ | (910,657 | ) | $ | (908,340 | ) | $ | (142,592 | ) | $ | (422,198 | ) | $ | 1,473,130 | $ | (910,657 | ) |
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Previously Reported | Restated | |||||||||||||||||||||||||||||||||||||||||||||||
Dura | Dura | Non- | Dura | Dura | Non- | |||||||||||||||||||||||||||||||||||||||||||
Automotive | Operating | Guarantor | Guarantor | Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statement of Cash Flows | ||||||||||||||||||||||||||||||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | $ | — | $ | (910,657 | ) | $ | (107,890 | ) | $ | (407,399 | ) | $ | 515,289 | $ | (910,657 | ) | $ | (910,657 | ) | $ | (908,340 | ) | $ | (142,592 | ) | $ | (422,198 | ) | $ | 1,473,130 | $ | (910,657 | ) | |||||||||||||||
Loss from continuing operations | — | (912,153 | ) | (107,890 | ) | (416,581 | ) | 515,289 | (921,335 | ) | (910,657 | ) | (909,836 | ) | (142,592 | ) | (431,380 | ) | 1,473,130 | (921,335 | ) | |||||||||||||||||||||||||||
Depreciation and amortization | — | 10,695 | 18,241 | 49,889 | — | 78,825 | — | 7,226 | 21,710 | 49,889 | — | 78,825 | ||||||||||||||||||||||||||||||||||||
Goodwill impairment | — | 152,527 | 106,846 | 377,554 | — | 636,927 | — | 113,117 | 146,256 | 377,554 | — | 636,927 | ||||||||||||||||||||||||||||||||||||
Facility consolidation and other | — | 6,422 | 8,232 | 21,819 | — | 36,473 | — | 6,345 | 8,309 | 21,819 | — | 36,473 | ||||||||||||||||||||||||||||||||||||
Other non-cash | — | (815 | ) | 3 | (443 | ) | — | (1,255 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Equity in losses (earnings) of affiliates and minority interest | — | 490,033 | — | 29,870 | (519,903 | ) | — | 908,340 | 520,059 | — | 45,163 | (1,473,130 | ) | 432 | ||||||||||||||||||||||||||||||||||
Changes in other operating items | — | 57,382 | (81,041 | ) | (72,209 | ) | — | (95,868 | ) | 2,317 | (13,211 | ) | (16,012 | ) | (70,649 | ) | — | (97,555 | ) | |||||||||||||||||||||||||||||
Net cash provided by (used in) continuing operating activities | — | (109,924 | ) | (50,574 | ) | (16,815 | ) | (4,614 | ) | (181,927 | ) | — | (190,315 | ) | 22,706 | (14,318 | ) | — | (181,927 | ) | ||||||||||||||||||||||||||||
INVESTING ACTIVITIES: | ||||||||||||||||||||||||||||||||||||||||||||||||
Capital expenditures | — | (12,280 | ) | (24,484 | ) | (47,666 | ) | — | (84,430 | ) | — | (11,913 | ) | (24,851 | ) | (47,666 | ) | — | (84,430 | ) | ||||||||||||||||||||||||||||
Net cash used in continuing investing activities | — | (11,877 | ) | (23,632 | ) | (42,551 | ) | — | (78,060 | ) | — | (11,510 | ) | (23,999 | ) | (42,551 | ) | — | (78,060 | ) | ||||||||||||||||||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||||||||||||||||||||||||||||||||||
Debt financing (to) from affiliates | — | (83,504 | ) | 78,881 | 4,623 | — | — | — | (3,144 | ) | 1,081 | 2,063 | — | — | ||||||||||||||||||||||||||||||||||
Other, net | — | — | (4,614 | ) | (98 | ) | 4,614 | (98 | ) | — | — | — | (98 | ) | — | (98 | ) | |||||||||||||||||||||||||||||||
Net cash provided by (used in) continuing financing activities | — | 128,809 | 74,267 | 3,623 | 4,614 | 211,313 | — | 209,169 | 1,081 | 1,063 | — | 211,313 | ||||||||||||||||||||||||||||||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS | — | 7,008 | 61 | (39,412 | ) | — | (32,343 | ) | — | 7,344 | (212 | ) | (39,475 | ) | — | (32,343 | ) | |||||||||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS: | ||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | $ | — | $ | 3,911 | $ | (40 | ) | $ | 98,018 | $ | — | $ | 101,889 | $ | — | $ | 3,575 | $ | 233 | $ | 98,081 | $ | — | $ | 101,889 |
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Previously Reported | Restated | |||||||||||||||||||||||||||||||||||||||||||||||
Dura | Dura | |||||||||||||||||||||||||||||||||||||||||||||||
Automotive | Dura | Non- | Automotive | Dura | Non- | |||||||||||||||||||||||||||||||||||||||||||
Systems, | Operating | Guarantor | Guarantor | Systems, | Operating | Guarantor | Guarantor | |||||||||||||||||||||||||||||||||||||||||
Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||
Condensed Consolidating Balance Sheet | ||||||||||||||||||||||||||||||||||||||||||||||||
(Amounts in thousands) As of December 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 3,911 | $ | (40 | ) | $ | 98,018 | $ | — | $ | 101,889 | $ | — | $ | 3,575 | $ | 233 | $ | 98,081 | $ | — | $ | 101,889 | |||||||||||||||||||||||
Accounts receivable, net | — | 39,630 | 88,508 | 157,891 | — | 286,029 | — | 17,553 | 110,585 | 157,891 | — | 286,029 | ||||||||||||||||||||||||||||||||||||
Inventories | — | 10,018 | 55,142 | 63,521 | — | 128,681 | — | 6,122 | 59,038 | 63,521 | — | 128,681 | ||||||||||||||||||||||||||||||||||||
Other current assets | — | 30,247 | 9,635 | 65,350 | — | 105,232 | — | 24,095 | 15,787 | 65,350 | — | 105,232 | ||||||||||||||||||||||||||||||||||||
Due from affiliates | — | 180,078 | 23,841 | 7,481 | (211,400 | ) | — | — | 64,250 | — | — | (64,250 | ) | — | ||||||||||||||||||||||||||||||||||
Total current assets | — | 263,884 | 177,086 | 403,236 | (211,400 | ) | 632,806 | — | 115,595 | 185,643 | 395,818 | (64,250 | ) | 632,806 | ||||||||||||||||||||||||||||||||||
Property, plant and equipment, net | — | 54,280 | 108,126 | 287,973 | — | 450,379 | — | 28,668 | 133,738 | 287,973 | — | 450,379 | ||||||||||||||||||||||||||||||||||||
Investment in subsidiaries | — | 772,942 | 28,799 | 190,777 | (992,518 | ) | — | 339,707 | 1,150,891 | 12,053 | 183,895 | (1,686,546 | ) | — | ||||||||||||||||||||||||||||||||||
Notes receivable from affiliates | — | 423,553 | 358,908 | 37,724 | (820,185 | ) | — | 54,616 | — | 327,777 | — | (382,393 | ) | — | ||||||||||||||||||||||||||||||||||
Other assets, net of accumulated amortization | — | 97,613 | 12,300 | 19,909 | — | 129,822 | 1,670 | 95,943 | 12,300 | 19,909 | — | 129,822 | ||||||||||||||||||||||||||||||||||||
Total assets | — | 1,993,178 | 813,992 | 1,292,142 | (2,024,103 | ) | 2,075,209 | 395,993 | 1,732,594 | 839,694 | 1,240,117 | (2,133,189 | ) | 2,075,209 | ||||||||||||||||||||||||||||||||||
Accounts payable | — | 40,516 | 73,044 | 147,698 | — | 261,258 | — | 27,908 | 85,590 | 147,760 | — | 261,258 | ||||||||||||||||||||||||||||||||||||
Accrued liabilities | — | 70,481 | 12,138 | 95,534 | — | 178,153 | 1,036 | 66,890 | 14,693 | 95,534 | — | 178,153 | ||||||||||||||||||||||||||||||||||||
Due to affiliates | — | 26,951 | 179,300 | 5,149 | (211,400 | ) | — | — | — | 38,576 | 25,674 | (64,250 | ) | — | ||||||||||||||||||||||||||||||||||
Total current liabilities | — | 140,137 | 264,482 | 256,436 | (211,400 | ) | 449,655 | 1,036 | 96,987 | 138,859 | 277,023 | (64,250 | ) | 449,655 | ||||||||||||||||||||||||||||||||||
Long-term debt, net of current maturities | — | 1,135,875 | — | 4,077 | — | 1,139,952 | 55,250 | 1,080,625 | — | 4,077 | — | 1,139,952 | ||||||||||||||||||||||||||||||||||||
Other noncurrent liabilities | — | 83,114 | 672 | 57,027 | — | 140,813 | — | 82,854 | 932 | 57,027 | — | 140,813 | ||||||||||||||||||||||||||||||||||||
Notes payable to affiliates | — | 371,632 | 160,065 | 288,488 | (820,185 | ) | — | — | 134,187 | — | 248,206 | (382,393 | ) | — | ||||||||||||||||||||||||||||||||||
Total liabilities | — | 1,730,758 | 425,219 | 611,110 | (1,031,585 | ) | 1,735,502 | 56,286 | 1,394,653 | 139,791 | 591,415 | (446,643 | ) | 1,735,502 | ||||||||||||||||||||||||||||||||||
Stockholders’ investment | — | 262,420 | 388,773 | 681,032 | (992,518 | ) | 339,707 | 339,707 | 337,941 | 699,903 | 648,702 | (1,686,546 | ) | 339,707 | ||||||||||||||||||||||||||||||||||
Total Liabilities and Stockholders’ Investment | $ | — | $ | 1,993,178 | $ | 813,992 | $ | 1,292,142 | $ | (2,024,103 | ) | $ | 2,075,209 | $ | 395,993 | $ | 1,732,594 | $ | 839,694 | $ | 1,240,117 | $ | (2,133,189 | ) | $ | 2,075,209 |
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Previously Reported | Restated | |||||||||||||||||||||||||||||||||||||||||||||||
Dura | Dura | Non- | Dura | Dura | Non- | |||||||||||||||||||||||||||||||||||||||||||
Automotive | Operating | Guarantor | Guarantor | Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statement of Operations | ||||||||||||||||||||||||||||||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | — | $ | 282,854 | $ | 852,290 | $ | 1,183,911 | $ | (27,615 | ) | $ | 2,291,440 | $ | — | $ | 187,896 | $ | 947,248 | $ | 1,183,911 | $ | (27,615 | ) | $ | 2,291,440 | ||||||||||||||||||||||
Cost of sales | — | 256,043 | 735,321 | 1,076,894 | (27,615 | ) | 2,040,643 | — | 152,989 | 838,375 | 1,076,894 | (27,615 | ) | 2,040,643 | ||||||||||||||||||||||||||||||||||
Gross profit | — | 26,811 | 116,969 | 107,017 | — | 250,797 | — | 34,907 | 108,873 | 107,017 | — | 250,797 | ||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | — | 61,296 | 30,989 | 62,835 | — | 155,120 | — | 4,260 | 65,234 | 85,626 | — | 155,120 | ||||||||||||||||||||||||||||||||||||
Facility consolidation, asset impairment and other charges | — | 1,113 | 4,377 | 5,907 | — | 11,397 | — | 975 | 4,515 | 5,907 | — | 11,397 | ||||||||||||||||||||||||||||||||||||
Operating income (loss) | — | (35,820 | ) | 81,421 | 38,245 | — | 83,846 | — | 29,450 | 38,942 | 15,454 | — | 83,846 | |||||||||||||||||||||||||||||||||||
Interest expense, net of interest in | — | 88,224 | 2,330 | 9,269 | — | 99,823 | 4,280 | 83,944 | 2,330 | 9,269 | — | 99,823 | ||||||||||||||||||||||||||||||||||||
Income from continuing operations before income taxes and minority interest | — | (109,239 | ) | 79,091 | 28,976 | — | (1,172 | ) | (4,280 | ) | (39,689 | ) | 36,612 | 6,185 | — | (1,172 | ) | |||||||||||||||||||||||||||||||
Provision for income taxes | — | (55,346 | ) | 40,997 | 14,772 | — | 423 | (1,500 | ) | (14,006 | ) | 12,814 | 3,115 | — | 423 | |||||||||||||||||||||||||||||||||
Minority interest in non wholly owned subsidiaries / Equity in (earnings) losses of affiliates | — | (50,116 | ) | — | (7,553 | ) | 57,846 | 177 | (4,594 | ) | (30,277 | ) | — | (15,122 | ) | 50,170 | 177 | |||||||||||||||||||||||||||||||
Dividends from affiliates | — | (5,591 | ) | — | — | 5,591 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Income from continuing operations | — | 1,814 | 38,094 | 21,757 | (63,437 | ) | (1,772 | ) | 1,814 | 4,594 | 23,798 | 18,192 | (50,170 | ) | (1,772 | ) | ||||||||||||||||||||||||||||||||
Net income | $ | — | $ | 1,814 | $ | 38,094 | $ | 25,343 | $ | (63,437 | ) | $ | 1,814 | $ | 1,814 | $ | 4,594 | $ | 23,798 | $ | 21,778 | $ | (50,170 | ) | $ | 1,814 |
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Previously Reported | Restated | |||||||||||||||||||||||||||||||||||||||||||||||
Dura | Dura | Non- | Dura | Dura | Non- | |||||||||||||||||||||||||||||||||||||||||||
Automotive | Operating | Guarantor | Guarantor | Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statement of Cash Flows | ||||||||||||||||||||||||||||||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $ | — | $ | 1,814 | $ | 38,094 | $ | 25,343 | $ | (63,437 | ) | $ | 1,814 | $ | 1,814 | $ | 4,594 | $ | 23,798 | $ | 21,778 | $ | (50,170 | ) | $ | 1,814 | ||||||||||||||||||||||
Income (loss) from continuing operations | — | 1,814 | 38,094 | 21,757 | (63,437 | ) | (1,772 | ) | 1,814 | 4,594 | 23,798 | 18,192 | (50,170 | ) | (1,772 | ) | ||||||||||||||||||||||||||||||||
Depreciation and amortization | — | 9,321 | 19,932 | 49,010 | — | 78,263 | — | 5,871 | 23,382 | 49,010 | — | 78,263 | ||||||||||||||||||||||||||||||||||||
Facility consolidation and other | — | — | 3,926 | 4,311 | — | 8,237 | — | (132 | ) | 4,058 | 4,311 | — | 8,237 | |||||||||||||||||||||||||||||||||||
(Gain)/loss on sale of plant, property, and equipment | — | — | — | — | — | — | — | 60 | 19 | (275 | ) | — | (196 | ) | ||||||||||||||||||||||||||||||||||
Equity in losses (earnings) of affiliates and minority interest | — | (50,116 | ) | — | (7,730 | ) | 57,846 | — | (4,594 | ) | (30,277 | ) | — | (15,122 | ) | 50,170 | 177 | |||||||||||||||||||||||||||||||
Changes in other operating items | — | (8,092 | ) | (33,625 | ) | (20,644 | ) | — | (62,361 | ) | 2,780 | (166,128 | ) | 107,794 | (6,788 | ) | — | (62,342 | ) | |||||||||||||||||||||||||||||
Net cash provided by (used in) continuing operating activities | — | (104,124 | ) | 43,413 | 45,653 | (5,591 | ) | (20,649 | ) | — | (243,063 | ) | 174,137 | 48,277 | — | (20,649 | ) | |||||||||||||||||||||||||||||||
INVESTING ACTIVITIES: | ||||||||||||||||||||||||||||||||||||||||||||||||
Capital expenditures | — | (10,803 | ) | (11,748 | ) | (41,317 | ) | — | (63,868 | ) | — | (3,699 | ) | (18,852 | ) | (41,317 | ) | — | (63,868 | ) | ||||||||||||||||||||||||||||
Net cash used in continuing investing activities | — | (10,141 | ) | (9,087 | ) | (42,150 | ) | — | (61,378 | ) | — | (3,037 | ) | (16,191 | ) | (42,150 | ) | — | (61,378 | ) | ||||||||||||||||||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||||||||||||||||||||||||||||||||||
Debt financing (to) from affiliates | — | 118,142 | (30,398 | ) | (87,744 | ) | — | — | — | 249,637 | (159,332 | ) | (90,305 | ) | — | — | ||||||||||||||||||||||||||||||||
Dividends paid | — | — | (5,591 | ) | — | 5,591 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Net cash provided by (used in) continuing financing activities | — | 115,232 | (35,992 | ) | (89,157 | ) | 5,591 | (4,326 | ) | — | 246,727 | (159,335 | ) | (91,718 | ) | — | (4,326 | ) | ||||||||||||||||||||||||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS | — | 967 | (1,666 | ) | (93,596 | ) | — | (94,295 | ) | — | 627 | (1,389 | ) | (93,533 | ) | — | (94,295 | ) | ||||||||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS: | ||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | — | 2,944 | 1,626 | 186,998 | — | 191,568 | — | 2,948 | 1,622 | 186,998 | — | 191,568 | ||||||||||||||||||||||||||||||||||||
End of period | $ | — | $ | 3,911 | $ | (40 | ) | $ | 98,018 | $ | — | $ | 101,889 | $ | — | $ | 3,575 | $ | 233 | $ | 98,081 | $ | — | $ | 101,889 |
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Previously Reported | Restated | |||||||||||||||||||||||||||||||||||||||||||||||
Dura | Dura | Non- | Dura | Dura | Non- | |||||||||||||||||||||||||||||||||||||||||||
Automotive | Operating | Guarantor | Guarantor | Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statement of Operations | ||||||||||||||||||||||||||||||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | — | $ | 327,516 | $ | 972,793 | $ | 1,191,973 | $ | (48,836 | ) | $ | 2,443,446 | $ | — | $ | 207,746 | $ | 1,085,587 | $ | 1,191,973 | $ | (41,860 | ) | $ | 2,443,446 | ||||||||||||||||||||||
Cost of sales | — | 298,655 | 839,237 | 1,083,080 | (48,836 | ) | 2,172,136 | — | 176,964 | 953,952 | 1,083,080 | (41,860 | ) | 2,172,136 | ||||||||||||||||||||||||||||||||||
Gross profit | — | 28,861 | 133,556 | 108,893 | — | 271,310 | — | 30,782 | 131,635 | 108,893 | — | 271,310 | ||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | — | 55,379 | 31,111 | 63,112 | — | 149,602 | — | 4,059 | 63,665 | 81,878 | — | 149,602 | ||||||||||||||||||||||||||||||||||||
Facility consolidation, asset impairment and other charges | — | 295 | 17,232 | 4,290 | — | 21,817 | — | 323 | 17,204 | 4,290 | — | 21,817 | ||||||||||||||||||||||||||||||||||||
Operating income (loss) | — | (27,035 | ) | 85,031 | 41,450 | — | 99,446 | — | 26,178 | 50,584 | 22,684 | — | 99,446 | |||||||||||||||||||||||||||||||||||
Interest expense, net of interest income | — | 71,909 | 6,927 | 10,515 | — | 89,351 | 4,280 | 67,629 | 6,927 | 10,515 | — | 89,351 | ||||||||||||||||||||||||||||||||||||
Income from continuing operations before provision for income taxes and minority interest | — | (98,944 | ) | 78,104 | 30,935 | — | 10,095 | (4,280 | ) | (41,451 | ) | 43,657 | 12,169 | — | 10,095 | |||||||||||||||||||||||||||||||||
Provision for income taxes | — | (13,533 | ) | 11,561 | 3,336 | — | 1,364 | (1,500 | ) | (17,288 | ) | 15,280 | 4,872 | — | 1,364 | |||||||||||||||||||||||||||||||||
Minority interest in non-wholly owned subsidiaries | — | (92,355 | ) | — | 482 | 91,873 | — | (14,503 | ) | (38,786 | ) | — | 2,348 | 50,941 | — | |||||||||||||||||||||||||||||||||
Dividends from affiliates | — | (4,899 | ) | — | — | 4,899 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Income from continuing operations | — | 11,843 | 66,543 | 27,117 | (96,772 | ) | 8,731 | 11,723 | 14,623 | 28,377 | 4,949 | (50,941 | ) | 8,731 | ||||||||||||||||||||||||||||||||||
Net Income | $ | — | $ | 11,723 | $ | 66,543 | $ | 30,229 | $ | (96,772 | ) | $ | 11,723 | $ | 11,723 | $ | 14,503 | $ | 28,377 | $ | 8,061 | $ | (50,941 | ) | $ | 11,723 |
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Previously Reported | Restated | |||||||||||||||||||||||||||||||||||||||||||||||
Dura | Dura | Non- | Dura | Dura | Non- | |||||||||||||||||||||||||||||||||||||||||||
Automotive | Operating | Guarantor | Guarantor | Automotive | Operating | Guarantor | Guarantor | |||||||||||||||||||||||||||||||||||||||||
Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | Systems, Inc. | Corp. | Companies | Companies | Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||
Condensed Consolidating Statement of Cash Flows | ||||||||||||||||||||||||||||||||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $ | — | $ | 11,723 | $ | 66,543 | $ | 30,229 | $ | (96,772 | ) | $ | 11,723 | $ | 11,723 | $ | 14,503 | $ | 28,377 | $ | 8,061 | $ | (50,941 | ) | $ | 11,723 | ||||||||||||||||||||||
Income (loss) from continuing operations | — | 11,843 | 66,543 | 27,117 | (96,772 | ) | 8,731 | 11,723 | 14,623 | 28,377 | 4,949 | (50,941 | ) | 8,731 | ||||||||||||||||||||||||||||||||||
Depreciation and amortization | — | 8,826 | 21,617 | 51,626 | — | 82,069 | — | 5,427 | 25,016 | 51,626 | — | 82,069 | ||||||||||||||||||||||||||||||||||||
Equity in losses (earnings) of affiliates and minority interest | — | (92,355 | ) | — | 482 | 91,873 | — | (14,503 | ) | (38,786 | ) | — | 2,348 | 50,941 | — | |||||||||||||||||||||||||||||||||
Changes in other operating items | — | 100,722 | (36,632 | ) | (64,868 | ) | — | (778 | ) | 2,780 | (307,421 | ) | 345,868 | (42,005 | ) | — | (778 | ) | ||||||||||||||||||||||||||||||
Net cash provided by continuing operating activities | — | 33,308 | 55,865 | 16,062 | (4,899 | ) | 100,336 | — | (321,885 | ) | 403,598 | 18,623 | — | 100,336 | ||||||||||||||||||||||||||||||||||
INVESTING ACTIVITIES: | ||||||||||||||||||||||||||||||||||||||||||||||||
Capital expenditures | — | (9,399 | ) | (13,705 | ) | (41,968 | ) | — | (65,072 | ) | — | (4,873 | ) | (18,231 | ) | (41,968 | ) | — | (65,072 | ) | ||||||||||||||||||||||||||||
Net cash used in continuing investing activities | — | (9,399 | ) | (13,705 | ) | (55,295 | ) | — | (78,399 | ) | — | (4,873 | ) | (18,231 | ) | (55,295 | ) | — | (78,399 | ) | ||||||||||||||||||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||||||||||||||||||||||||||||||||||
Debt financing (to) from affiliates | — | (59,536 | ) | (36,724 | ) | 96,260 | — | — | — | 291,131 | (384,830 | ) | 93,699 | — | — | |||||||||||||||||||||||||||||||||
Dividends paid | — | — | (4,899 | ) | — | 4,899 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Net cash provided by (used in) continuing financing activities | — | (66,693 | ) | (41,660 | ) | 86,535 | 4,899 | (16,919 | ) | — | 283,974 | (384,867 | ) | 83,974 | — | (16,919 | ) | |||||||||||||||||||||||||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS | — | (29,152 | ) | 500 | 32,952 | — | 4,300 | — | (29,152 | ) | 500 | 32,952 | — | 4,300 | ||||||||||||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS: | ||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | — | 32,216 | 1,126 | 147,926 | — | 181,268 | — | 32,220 | 1,122 | 147,926 | — | 181,268 | ||||||||||||||||||||||||||||||||||||
End of period | $ | — | $ | 2,944 | $ | 1,626 | $ | 186,998 | $ | — | $ | 191,568 | $ | — | $ | 2,948 | $ | 1,622 | $ | 186,998 | $ | — | $ | 191,568 |
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
Schedule II: Valuation and Qualifying Accounts
Acquisition Integrations, Purchase Liabilities:
The transactions in the purchase liabilities account recorded in conjunction with acquisitions account for the years ending December 31, 2006, 2005, and 2004 were as follows (in thousands):
2006 | 2005 | 2004 | ||||||||||
Balance, beginning of the year | $ | 4,485 | $ | 6,406 | $ | 8,982 | ||||||
Provisions | — | — | 170 | |||||||||
Adjustments | 142 | (201 | ) | 40 | ||||||||
Utilizations | (44 | ) | (1,720 | ) | (2,786 | ) | ||||||
Balance, end of the year | $ | 4,583 | $ | 4,485 | $ | 6,406 | ||||||
Facility Consolidation and Discontinued Operations:
The transactions in the facility consolidation reserve account (including discontinued operations) for the year ending December 31, 2006, 2005, and 2004 were as follows (in thousands):
2006 | 2005 | 2004 | ||||||||||
Balance, beginning of the year | $ | 18,167 | $ | 21,550 | $ | 19,875 | ||||||
Provisions | 45,818 | 5,499 | 12,904 | |||||||||
Adjustments | (20,401 | ) | (418 | ) | (971 | ) | ||||||
Utilizations | (14,356 | ) | (8,464 | ) | (10,258 | ) | ||||||
Balance, end of the year | $ | 29,228 | $ | 18,167 | $ | 21,550 | ||||||
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s management re-evaluated, with the participation of its principal executive officer and principal financial officer, the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. Disclosure controls and procedures mean the Company’s controls and other procedures that are designed to ensure that information required to be disclosed by the Company in its reports filed or submitted under the Securities Exchange Act of 1934 are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information is accumulated and communicated to management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. The Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving their objectives. Management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon the re-evaluation of the Company’s disclosure controls and procedures, as of the end of the period covered by this report, the Company’s principal executive officer and principal financial officer concluded that, as of such date, the Company’s disclosure controls and procedures were not effective at the reasonable assurance level, due to the fact that there was a material weakness identified in our internal control over financial reporting (which is a subset of disclosure controls and procedures) related to preparation and review of the Company’s supplemental guarantor information note, which resulted in the errors described in Note 17 and the material weaknesses described below in our Management’s Report on Internal Control Over Financial Reporting, as Revised.
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Internal Control Over Financial Reporting
Management’s Report on Internal Control Over Financial Reporting, As Revised
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control system is designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
• | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; | ||
• | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and | ||
• | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As a result of the restatement discussed in Note 17 to the consolidated financial statements, management reassessed the effectiveness of our internal control over financial reporting as of December 31, 2006. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control — Integrated Framework.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected in a timely basis.
2005 Material Weakness
During 2005, management determined that the processes and procedures surrounding the accounting for the current tax effects of foreign nonrecurring transactions, as well as foreign deferred income tax accounts, did not include adequate controls. These 2005 matters represented a design and operating deficiency and, based upon misstatements requiring correction to the financial statements that impacted the Income Tax Provision, Income Tax Payable and Deferred Income Tax accounts, constituted a material weakness as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005. Management believes that it did remediate the design of its controls related to the above matters. However, based upon misstatements requiring correction to the financial statements in 2006, concluded that additional remediation actions are still required. Therefore, we are continuing to report this previously identified material weakness and will do so until further remediation, testing and assessment is completed.
The following actions will be undertaken by management during 2007 to address the continued material weakness identified above: (i) critical assessment of the redesigned processes and procedures for the detailed documentation and reconciliations surrounding the tax effects of nonrecurring transactions and deferred income tax accounting in our foreign tax jurisdictions to help ensure that we are able to identify and address tax accounting issues in a more timely and comprehensive manner; (ii) hiring additional tax department personnel who have the appropriate skill and knowledge background with respect to SFAS No. 109, Accounting for Income Taxes, SFAS No. 5, Accounting for Contingencies, FIN 48, Accounting for Uncertainty in Income Taxes, and other applicable rules and regulations with respect to tax matters; and (iii) implementing additional recurring review procedures to ensure compliance with SFAS No. 109, SFAS No. 5, FIN 48, and other applicable rules and regulations with respect to tax matters.
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To address this material weakness until such time as management can complete the above action steps, management has determined the following additional procedures will be performed:
• | We will engage an outside professional firm to assist on a quarterly basis with the accounting for foreign deferred income taxes; and | ||
• | The Corporate Controller will perform a detail review in conjunction with the outside professional firm of all foreign deferred income taxes on a quarterly basis. |
2006 Material Weaknesses as Revised
Management has determined that the following additional material weaknesses in its internal control over financial reporting existed at December 31, 2006.
Preparation and review of the Company’s consolidating guarantor and non-guarantor financial information.
Insufficient numbers of personnel having appropriate knowledge, experience and training in the application of U.S. GAAP at both the Company’s operating locations and corporate headquarters, and insufficient personnel at the Company’s corporate headquarters to provide effective oversight and review of financial transactions.
The Company’s controls over the application and disclosure of generally accepted accounting principles as applied in the U.S. (GAAP) are ineffective as a result of insufficient resources and technical accounting expertise within the organization to resolve and determine appropriate accounting and disclosures in a timely manner. Furthermore, accounting for transactions is performed across multiple locations that are not adequately staffed or are staffed with individuals that do not have the appropriate level of GAAP knowledge, resulting in non-timely completion of various accounting and financial reporting requirements. Additional personnel and oversight is needed within the Company to ensure timely completion of financial reporting requirements and to review the accounting for transactions to ensure compliance with GAAP.
Management is working toward increasing the number of qualified accounting personnel by actively recruiting additional experienced accountants to increase the knowledge of accounting and strengthen internal controls within the Company. In addition, management has committed to providing the finance staff with additional support and training in order to enable them to identify unusual or complex transactions and disclosures requiring further consideration by technical accounting experts or others within the organization, to address this material weakness. Until such time as management can execute on the above remediation plans, management has determined the following additional procedures will be performed:
• | More transactions will be reviewed by the Corporate Controller and/or the European Finance Staff rather than at an operating location or within the Company’s shared services organization, particularly those which deviate from previously reviewed or standard terms and conditions; | ||
• | Management will strengthen its review of the documentation supporting the accounting for transactions and the related disclosures; and | ||
• | External experts will be utilized, when deemed necessary, to assist in evaluating transactions as well as preparing and reviewing the appropriate supporting documentation. |
Preparation, review and monitoring controls over account reconciliations and analyses did not operate effectively to ensure significant account balances were accurate and supported with appropriate underlying calculations and documentations in a timely manner.
With the significant changes in our business caused in part by our chapter 11 status, and the loss of several finance and accounting personnel during our fourth quarter, account reconciliations were not completed or reviewed adequately, appropriately and/or on a timely basis, resulting is significant delay in our ability to complete the preparation of our consolidated financial statements as of December 31, 2006.
As noted above, the lack of personnel contributed, among other matters, to our inability to prepare, review and monitor account reconciliations and associated analyses. We are in process of re-educating and training our current accounting personnel, and implementing standard account reconciliation processes and analyses throughout the
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organization, to address this material weakness. Until such time as the aforementioned procedures can be adequately implemented, the following additional procedures will be implemented:
• | A detailed review of significant account reconciliations and analyses will be performed by the Corporate Controller and/or the European Finance Staff rather than at an operating location or within the Company’s shared services organization; and | ||
• | External experts will be utilized, when deemed necessary, to assist in reviewing account reconciliations and analyses. |
Process controls over cash disbursements and receipts implemented in the U.S. Accounting Shared Service Center following our filing for protection under chapter 11 of the U.S. bankruptcy code did not operate effectively to ensure proper accounting for such transactions in a timely manner.
During 2006, significant changes were required within our U.S. Accounting Shared Services Center around the management of cash disbursements and receipts due to the following: (i) the majority of our North America Automotive Segment accounting operations were consolidated into the new U.S. Accounting Shared Services Center; (ii) a new enterprise resource planning system was implemented and (iii) filing for protection under chapter 11 of the U.S. bankruptcy code on October 30, 2006. We did not have appropriate or adequate personnel, processes, procedures or controls in place to adjust to all of these changes. As a result, several errors were noted by us upon attempting to manage, reconcile and track our cash disbursements and receipts post October 30, 2006, and such reconciliation and tracking process was not able to be completed on a timely basis resulting in significant delay in our ability to complete the preparation of our consolidated financial statements as of December 31, 2006. Such transactions were not timely accounted for nor were related discrepancies timely addressed and resolved.
We are in process of designing and implementing adequate, permanent processes and controls over transactions conducted in the U.S. Accounting Shared Services Center surrounding cash disbursements and receipts to address this material weakness. Until such time as the aforementioned procedures can be adequately implemented, management has engaged temporary employees, and external experts with sufficient experience to monitor, account and control cash transactions in the U. S. Accounting Shared Services Center.
Based upon criteria established inInternal Control — Integrated Framework,the material weaknesses described above has caused management to conclude that we did not maintain effective internal control over financial reporting as of December 31, 2006.
Changes in internal control over financial reporting
Because of the inherent nature of the chapter 11 reorganization process, including the need to maintain existing customer and supply relationships while at the same time changing business processes and organizational structure to streamline operations, reduce administrative burden and costs, and resolve our legacy liabilities as we seek to transform our business, we must continuously adapt our control framework. As new processes are implemented and existing ones change, additional risks may arise that are not currently contemplated by our existing internal control framework. Although management will continue to monitor the chapter 11 restructuring process for control activities outside our normal control framework and seek to adapt our control framework to newly identified risks, we cannot assure we will be successful in identifying and addressing such risks in a timely manner.
The demands of the chapter 11 reorganization and related processes described above, will impact our ability to remediate all of the identified material weaknesses in a timely manner. However, management continues to remain focused on remediation efforts and plans to remediate as many material weaknesses in 2007 as possible. However, until such time that the remediation actions are undertaken and the material weaknesses noted above are corrected, there is continued risk of material misstatement to our interim and annual financial statements.
Item 9B.Other Information
None.
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Item 15. Exhibits and Financial Statement Schedules.
(a) Documents Filed as Part of this Report on Form 10-K/A
(1) Financial Statements:
• | Report of Independent Registered Public Accounting Firm | ||
• | Consolidated Balance Sheets as of December 31, 2006 and 2005 | ||
• | Consolidated Statements of Operations for the Years Ended December 31, 2006, 2005 and 2004 | ||
• | Consolidated Statements of Stockholders’ Investment (deficit) for the Years Ended December 31, 2006, 2005 and 2004 | ||
• | Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005 and 2004 | ||
• | Notes to Consolidated Financial Statements |
(2) Financial Statement Schedules:
• | Financial Statement Schedule II—Valuation and Qualifying Accounts |
(3) Exhibits: See “Exhibit Index”
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DURA AUTOMOTIVE SYSTEMS, INC.
EXHIBIT INDEX TO ANNUAL REPORT
ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
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3.1 | Restated Certificate of Incorporation of Dura Automotive Systems, Inc., incorporated by reference to Exhibit 3.1 of the Registration Statement on Form S-4 (Registration No. 333-81213) (the “S-4”). | * | ||
3.2 | Amended and Restated By-laws of Dura Automotive Systems, Inc., incorporated by reference to exhibit 3.2 of the Registration Statement on Form S-1 (Registration No. 333-06601) (the “S-1”). | * | ||
4.1 | Registration Agreement, dated as of August 31, 1994, among Dura, Alkin and the MC Stockholders (as defined therein), incorporated by reference to Exhibit 4.3 of the S-1. | * | ||
4.2 | Form of certificate representing Class A common stock of Dura, incorporated by reference to Exhibit 4.6 of the S-1 | * | ||
4.3 | Indenture, dated April 22, 1999, between Dura Operating Corp., Dura Automotive. Systems, Inc., the Subsidiary Guarantors and U.S. Bank Trust National Association, as trustee, relating to the 9% senior subordinated notes denominated in U.S. dollars, incorporated by reference to Exhibit 4.7 of the S-4. | * | ||
4.4 | Indenture, dated April 22, 1999, between Dura Operating Corp., Dura Automotive Systems, Inc., the Subsidiary Guarantors and U.S. Bank Trust National Association, as trustee, relating to the 9% senior subordinated notes denominated in Euros, incorporated by reference to Exhibit 4.8 of the S-4. | * | ||
4.5 | Certificate of Trust of Dura Automotive Systems Capital Trust, incorporated by reference to Exhibit 4.8 of the Registrant’s Form S-3, Registration No. 333-47273 filed under the Securities Act of 1933 (the “Form S-3”). | * | ||
4.6 | Form of Amended and Restated Trust Agreement of Dura Automotive Systems Capital Trust among Dura Automotive Systems, Inc., as Sponsor, The First National Bank of Chicago, as Property Trustee, First Chicago Delaware, Inc., as Delaware Trustee and the Administrative Trustees named therein, incorporated by reference to Exhibit 4.9 of the Form S-3. | * | ||
4.7 | Form of Junior Convertible Subordinated Indenture between Dura Automotive Systems, Inc. and The First National Bank of Chicago, as Indenture Trustee, incorporated by reference to Exhibit 4.10 of the Form S-3. | * | ||
4.8 | Form of Preferred Security, incorporated by reference to Exhibit 4.11 of the Form S-3. | * | ||
4.9 | Form of Debenture, incorporated by reference to Exhibit 4.12 of the Form S-3. | * | ||
4.10 | Form of Guarantee Agreement between Dura Automotive Systems, Inc., as Guarantor, and The First National Bank of Chicago, as Guarantee Trustee with respect to the Preferred Securities of Dura Automotive Systems Capital Trust, incorporated by reference to Exhibit 4.13 of the Form S-3. | * | ||
4.11 | Indenture, dated June 22, 2001, between Dura Operating Corp., Dura Automotive Systems, Inc., the Subsidiary Guarantors and U.S. Bank Trust National Association, as trustee, relating to the Series C and Series D, 9% senior subordinated notes denominated in U.S. Dollars, incorporated by reference to Exhibit 4.7 of the S-4. | * |
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4.12 | Supplemental Indenture, dated July 29, 1999, between Dura Operating Corp., Dura Automotive Systems, Inc., the subsidiary guarantors and U.S. Bank Trust National Association, as trustee, relating to the 9% senior subordinated notes denominated in U.S. dollars, incorporated by reference to Exhibit 4.1 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999. | * | ||
4.13 | Supplemental Indenture, dated July 29, 1999, between Dura Operating Corp., Dura Automotive Systems, Inc., the subsidiary guarantors and U.S. Bank Trust National Association, as trustee, relating to the 9% senior subordinated notes denominated in Euros, incorporated by reference to Exhibit 4.2 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1999. | * | ||
4.14 | Second Supplemental Indenture, dated June 1, 2001 between Dura Operating Corp., Dura Automotive Systems, Inc., the guaranteeing subsidiary named therein, the original guarantors named therein and U.S. Bank Trust National Association, as trustee, relating to the 9% senior subordinated notes, incorporated by reference to Exhibit 4.3 of the Registration Statement on Form S-4 (Registration No. 333-65470). | * | ||
4.15 | Supplemental Indenture, dated as of February 21, 2002, by and among Dura G.P., Dura Operating Corp., Dura Automotive Systems, Inc., Dura Automotive Systems Cable Operations, Inc., Universal Tool & Stamping Company Inc., Adwest Electronics, Inc., Dura Automotive Systems of Indiana, Inc., Atwood Automotive Inc., and Mark I Molded Plastics of Tennessee, Inc., Atwood Mobile Products, Inc., and U.S. Bank Trust National Association, as trustee under the indentures relating to the 9% senior subordinated notes, incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002. | * | ||
4.16 | Indenture, dated April 18, 2002, between Dura Operating Corp., Dura Automotive Systems, Inc., the subsidiary guarantors named therein and BNY Midwest Trust Company, as trustee, relating to the 8 5/8% senior notes due 2012, incorporated by reference to Exhibit 4.6 of the Registration Statement on Form S-4 (Registration No. 333-88800). | * | ||
4.17 | Supplemental Indenture, dated as of October 22, 2003, among Creation Group Holdings, Inc., Creation Group, Inc., Dura G.P., Dura Operating Corp., Dura Automotive Systems, Inc., Dura Automotive Systems Cable Operations, Inc., Universal Tool & Stamping Company, Inc., Adwest Electronics, Inc., Dura Automotive Systems of Indiana, Inc., Atwood Automotive Inc., and Mark I Molded Plastics of Tennessee, Inc., Atwood Mobile Products, Inc., and BNY Midwest Trust Company, as trustee, relating to the 8 5/8% senior notes due 2012. Incorporated by reference to Exhibit 4.21 to Form��10-K for the year ended December 31, 2003. | * | ||
4.18 | Supplemental Indenture, dated as of October 22, 2003 among Creation Group Holdings, Inc., Creation Group, Inc., Dura G.P., Dura Operating Corp., Dura Automotive Systems, Inc., Dura Automotive Systems Cable Operations, Inc., Universal Tool & Stamping Company, Inc., Adwest Electronics, Inc., Dura Automotive Systems of Indiana, Inc., Atwood Automotive Inc., and Mark I Molded Plastics of Tennessee, Inc., Atwood Mobile Products, Inc., and U.S. Bank Trust National Association, as trustee, relating to the 9% senior subordinated notes. Incorporated by reference to Exhibit 4.22 to Form 10-K for the year ended December 31, 2003. | * | ||
10.1** | 1996 Key Employee Stock Option Plan, incorporated by reference to Exhibit 10.27 of the S-1. | * | ||
10.2** | Independent Director Stock Option Plan, incorporated by reference to Exhibit 10.28 of the S-1. | * | ||
10.3** | Employee Stock Discount Purchase Plan, as amended, incorporated by reference to Exhibit B to the 2003 Proxy Statement filed with the SEC on April 29, 2003. | * | ||
10.4** | Stock Option Agreement, dated as of August 31, 1994, between Dura Automotive Systems, Inc., and Alkin, incorporated by reference to Exhibit 10.4 of S-1. | * | ||
10.5** | Dura Automotive Systems, Inc. 2003 Supplemental Executive Retirement Plan, incorporated by reference to Exhibit 10.6 to Form 10-K for the year ended December 31, 2003, filed with the SEC on March 11, 2004. | * | ||
10.6** | Consulting Agreement, dated as of April 1, 2003, between Dura Automotive Systems, Inc. and | * |
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Karl F. Storrie, incorporated by reference to Exhibit 10.7 to Form 10-K for the year ended December 31, 2003, filed with the SEC on March 11, 2004. | ||||
10.7** | Employment Letter, dated December 23, 2002, relating to the offer of employment for Mr. Larry Denton, incorporated by reference to Exhibit 10.8 to Form 10-K for the year ended December 31, 2003, filed with the SEC on March 11, 2004. | * | ||
10.8** | Employment Agreement, dated February 16, 2006, between Dura Automotive Systems, Inc. and Jr. Jurgen von Heyden, incorporated by reference to Exhibit 10.1, 10.2 and 10.3 to Form 8-K filed with the SEC on February 23, 2006. | * | ||
10.9** | Termination of Employment Agreement by and between Dura Holding Germany GmbH represented by Dura Operating Corporation and Heyden/Mr. Jurgen von Heyden. | # | ||
10.10** | 1998 Stock Incentive Plan, as amended, incorporated by reference to Exhibit 10.1 of the Company’s 2000 Form 10-Q for the quarterly period ended June 30, 2004 filed with the SEC on August 6, 2004. | * | ||
10.11** | Deferred Income Leadership Stock Purchase Plan, incorporated by reference to Appendix A of the 2000 Proxy Statement filed with the SEC on May 25, 2000. | * | ||
10.12** | Director Deferred Stock Purchase Plan, incorporated by reference to Appendix B of the 2000 Proxy Statement filed with the SEC on May 25, 2000. | * | ||
10.13 | Fifth Amended and Restated Credit Agreement, Dated May 3, 2005, among Dura Automotive Systems, Inc., as Parent Guarantor, The Subsidiary Guarantors Party thereto, as Loan Guarantors, Dura Operating Corp., and Dura Automotive Systems (Canada), Ltd., as borrowers; and Bank of America, N.A., J.P. Morgan Chase Bank, N.A., and J.P. Morgan Securities Inc., as lenders, incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarterly period ended July 3, 2005, filed with the SEC on August 29, 2005. | * | ||
10.14 | $150,000,000 Credit Agreement dated May 3, 2005 among Dura Automotive Systems, Inc., as Parent Guarantor, Dura Operating Corp., as Borrower, The Subsidiary Guarantors from time to time parties thereto; and Wilmington Trust Company, Bank of America Securities, LLC, J.P. Morgan Chase Bank, N.A., as lenders, incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarterly period ended July 3, 2005, filed with the SEC on August 29, 2005. | * | ||
10.15 | Intercreditor agreement dated May 3, 2005, incorporated by reference to Exhibit 10.3 to Form 10-Q for the quarterly period ended July 3, 2005, filed with the SEC on August 29, 2005. | * | ||
10.16 | 1998 Stock Incentive Plan, as amended May 25, 2000 and as further amended May 19, 2004, incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on From 10-Q for the quarterly period ended June 30, 2004, filed with the SEC on August 6, 2004. | * | ||
10.17 | Form of Change of Control Agreement dated as of June 16, 2004, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004, filed with the SEC on August 6, 2004. | * | ||
10.18** | Deferred Compensation Plan Change of Control Agreement dated as of June 16, 2004, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004, filed with the SEC on August 6, 2004. | * | ||
10.19** | Plan participants of the Dura Automotive Systems, Inc. 2003 Supplemental Executive Retirement Plan as of March 1, 2006. | # | ||
10.20** | Plan participants of the Dura Automotive Systems, Inc. Change of Control Agreements. | # | ||
10.21** | Employment Contract between the Company and David Szczupak. | # | ||
10.22** | Employment Contract between the Company and David L. Harbert. | # | ||
10.23** | Termination of Employment Contract between the Company and Milton D. Kniss. | # | ||
10.24** | Tatum, LLC Interim Engagement Resource Agreement. | # |
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10.25** | Key Management Incentive Plan. | # | ||
10.26** | Performance Share Award Agreement dated May 31, 2006. | # | ||
10.27 | $115,000,000 Senior Secured Super-priority Debtor In Possession Revolving Credit Facilities and Guaranty Agreement, dated as of November 30, 2006 | # | ||
10.28 | Amendment No.1 and Waiver to the Debtor In Possession Revolving Credit Facilities and Guaranty Agreement dated May 1, 2007. | # | ||
10.29 | Amendment No.2 to the Debtor In Possession Revolving Credit and Guaranty Credit Agreement, incorporated by reference to Exhibit 99.1 of Form 8-K, filed with the SEC on July 6, 2007. | * | ||
10.30 | $185,000,000 Senior Secured Super-priority Debtor In Possession Term Loan and Guaranty Agreement, dated as of October 31, 2006 | # | ||
10.31 | Amendment to the Debtor In Possession Term Loan and Guaranty Agreement dated November 30, 2006. | # | ||
10.32 | Amendment No.2 and Waiver to Debtor In Possession Term Loan and Guaranty Agreement dated May 1, 2007. | # | ||
10.33 | Amendment No.3 to Debtor In Possession Term Loan and Guaranty Agreement, incorporated by reference to Exhibit 99.2 of Form 8-K, filed with the SEC on July 6, 2007. | * | ||
12.1 | Statement of Computation of Ratio of Earnings (Loss) to Fixed Charges. | # | ||
21.1 | Subsidiaries of Dura Automotive Systems, Inc. | # | ||
31.1 | Certification Pursuant to Rule 13a-14(a)/15d-14(a), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | — | ||
31.2 | Certification Pursuant to Rule 13a-14(a)/15d-14(a), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | — | ||
32.1 | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | — | ||
32.2 | Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | — |
* | Incorporated by reference. | |
** | Indicates compensatory arrangement. | |
# | Filed with the Annual Report on Form 10-K for the fiscal year ended December 31, 2006, previously filed on July 16, 2007. |
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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.
DURA AUTOMOTIVE SYSTEMS, INC. | ||||
By | /s/ Lawrence A. Denton | |||
Lawrence A. Denton, | ||||
Chairman of the Board of Directors, President and Chief Executive Officer | ||||
Date: December 20, 2007
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/ Lawrence A. Denton | Chairman of the Board of Directors, President | December 20, 2007 | ||
and Chief Executive Officer (Principal Executive Officer) | ||||
/s/ Walter P. Czarnecki | Director | December 20, 2007 | ||
/s/ Jack K. Edwards | Director | December 20, 2007 | ||
/s/ James O. Futterknecht, Jr. | Director | December 20, 2007 | ||
/s/ Yousif B. Ghafari | Director | December 20, 2007 | ||
/s/ J. Richard Jones | Director | December 20, 2007 | ||
/s/ Nick G. Preda | Director | December 20, 2007 | ||
/s/ Ralph R. Whitney, Jr. | Director | December 20, 2007 | ||
/s/ C. Timothy Trenary | Vice President and Chief Financial Officer | December 20, 2007 | ||
(Principal Financial and Accounting Officer) |
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