##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the quarterly period ended September 30, 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 1-12733
 TOWER AUTOMOTIVE, INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    41-1746238
(I.R.S. Employer
Identification No.)
 27175 Haggerty Road 
Novi, Michigan
(Address of principal executive offices)
    
    48377
(Zip Code)
 (248) 675-6000
  Not Applicable
   þ o
  o o þ
  o þ




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##### 



Tower Automotive, Inc.
Form 10-Q
 Table of Contents
 PagePART I. Financial InformationItem 1. Financial Statements (unaudited):Condensed Consolidated Balance Sheets at September 30, 2006 and December 31, 2005
    
    
    1Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended
September 30, 2006 and 2005
    
    
    2Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30,
2006 and 2005
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    29Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    36PART II. Other InformationItem 1. Legal Proceedings
    
    
    37Item 1A Risk Factors
    
    
    37Item 6. Exhibits
    
    
    38SignaturesCertification of Chief Executive Officer Pursuant to Rules 13a-15(e) and 15d-15(e)Certification of Chief Financial Officer Pursuant to Rules 13a-15(e) and 15d-15(e)Certification Pursuant to Section 906




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##### Table of Contents



PART 1  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements.
 
 TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands  Unaudited)
 September 30, 2006
    
    
    December 31, 2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    103,443
    
    
    $
    65,791Accounts receivable
    
    
    371,427
    
    
    
    363,040Inventories
    
    
    125,744
    
    
    
    123,433Prepaid tooling and other
    
    
    114,727
    
    
    
    185,646Total current assets
    
    
    715,341
    
    
    
    737,910Property, plant and equipment, net
    
    
    964,184
    
    
    
    1,038,794Investments in joint ventures
    
    
    246,514
    
    
    
    228,634Goodwill
    
    
    163,096
    
    
    
    153,037Other assets, net
    
    
    125,855
    
    
    
    132,851Total assets
    
    $
    2,214,990
    
    
    $
    2,291,226LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities not subject to compromise:Current maturities of long-term debt and capital lease obligations
    
    $
    134,158
    
    
    $
    151,755Current portion of debtor-in-possession borrowings
    
    
    650,000
    
    
    
    Accounts payable
    
    
    327,396
    
    
    
    378,816Accrued liabilities
    
    
    186,907
    
    
    
    169,248Total current liabilities
    
    
    1,298,461
    
    
    
    699,819Liabilities subject to compromise
    
    
    1,279,838
    
    
    
    1,284,217Non-current liabilities not subject to compromise:Long-term debt, net of current maturities
    
    
    105,514
    
    
    
    107,823Debtor-in-possession borrowings
    
    
    
    
    
    
    531,000Capital lease obligations, net of current maturities
    
    
    29,632
    
    
    
    30,308Other non-current liabilities
    
    
    114,714
    
    
    
    125,682Total non-current liabilities
    
    
    249,860
    
    
    
    794,813Stockholders deficit:Preferred stock
    
    
    
    
    
    
    Common stock
    
    
    666
    
    
    
    666Additional paid-in-capital
    
    
    681,843
    
    
    
    681,102Accumulated deficit
    
    
    (1,257,729
    )
    
    
    (1,106,840
    )Deferred compensation plans
    
    
    
    
    
    
    (6,798
    )Accumulated other comprehensive income (loss)
    
    
    11,375
    
    
    
    (6,429
    )Treasury stock
    
    
    (49,324
    )
    
    
    (49,324
    )Total stockholders deficit
    
    
    (613,169
    )
    
    
    (487,623
    )Total liabilities and stockholders deficit
    
    $
    2,214,990
    
    
    $
    2,291,226
  1




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##### Table of Contents



TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts  Unaudited)
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues
    
    $
    615,668
    
    
    $
    712,664
    
    
    $
    2,152,295
    
    
    $
    2,551,558Cost of sales
    
    
    607,788
    
    
    
    688,602
    
    
    
    2,036,498
    
    
    
    2,383,316Gross profit
    
    
    7,880
    
    
    
    24,062
    
    
    
    115,797
    
    
    
    168,242Selling, general and administrative expenses
    
    
    32,176
    
    
    
    36,200
    
    
    
    99,257
    
    
    
    118,828Restructuring and asset impairment charges, net
    
    
    22,793
    
    
    
    37,693
    
    
    
    53,657
    
    
    
    108,877Other operating income
    
    
    
    
    
    
    
    
    
    
    (520
    )
    
    
    Operating loss
    
    
    (47,089
    )
    
    
    (49,831
    )
    
    
    (36,597
    )
    
    
    (59,463
    )Interest expense (contractual interest of
$41,913 and $121,723 in 2006 and $40,006 and
$143,288 in 2005)
    
    
    23,590
    
    
    
    21,872
    
    
    
    67,060
    
    
    
    88,434Interest income
    
    
    (339
    )
    
    
    (362
    )
    
    
    (1,551
    )
    
    
    (911
    )Chapter 11 and related reorganization items
    
    
    2,742
    
    
    
    6,615
    
    
    
    58,013
    
    
    
    151,524Loss before provision for income taxes, equity
in earnings of joint ventures, and minority
interest
    
    
    (73,082
    )
    
    
    (77,956
    )
    
    
    (160,119
    )
    
    
    (298,510
    )(Benefit) provision for income taxes
    
    
    (5,847
    )
    
    
    1,522
    
    
    
    3,883
    
    
    
    17,344Loss before equity in earnings of joint
ventures, and minority interest
    
    
    (67,235
    )
    
    
    (79,478
    )
    
    
    (164,002
    )
    
    
    (315,854
    )Equity in earnings of joint ventures, net of tax
    
    
    4,065
    
    
    
    4,316
    
    
    
    18,282
    
    
    
    10,801Minority interest, net of tax
    
    
    (1,995
    )
    
    
    (1,394
    )
    
    
    (5,167
    )
    
    
    (3,951
    )Net loss
    
    $
    (65,165
    )
    
    $
    (76,556
    )
    
    $
    (150,887
    )
    
    $
    (309,004
    )Basic and diluted loss per share
    
    $
    (1.11
    )
    
    $
    (1.31
    )
    
    $
    (2.57
    )
    
    $
    (5.27
    )Weighted average basic and diluted shares
outstanding
    
    
    58,661
    
    
    
    58,643
    
    
    
    58,659
    
    
    
    58,646
  2




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TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands  Unaudited)
 Nine Months Ended September 30,2006
    
    
    2005OPERATING ACTIVITIES:Net loss
    
    $
    (150,887
    )
    
    $
    (309,004
    )Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:Chapter 11 and related reorganization items, net
    
    
    36,058
    
    
    
    133,171Non-cash restructuring and impairment, net
    
    
    35,372
    
    
    
    101,632Depreciation
    
    
    120,892
    
    
    
    135,788Deferred income tax provision (benefit)
    
    
    (13,105
    )
    
    
    12,863Equity in earnings of joint ventures, net
    
    
    (18,282
    )
    
    
    (10,801
    )Change in working capital and other operating items
    
    
    3,849
    
    
    
    (189,450
    )Net cash provided by (used in) operating activities
    
    
    13,897
    
    
    
    (125,801
    )INVESTING ACTIVITIES:Cash disbursed for purchases of property, plant and equipment
    
    
    (93,671
    )
    
    
    (104,540
    )Cash proceeds from asset disposal
    
    
    32,664
    
    
    
    Net cash used in investing activities
    
    
    (61,007
    )
    
    
    (104,540
    )FINANCING ACTIVITIES:Proceeds from borrowings
    
    
    22,621
    
    
    
    36,702Repayments of borrowings
    
    
    (56,859
    )
    
    
    (465,583
    )Proceeds from DIP credit facility
    
    
    564,500
    
    
    
    1,054,285Repayments of DIP credit facility
    
    
    (445,500
    )
    
    
    (498,647
    )Net cash provided by financing activities
    
    
    84,762
    
    
    
    126,757NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    37,652
    
    
    
    (103,584
    )Cash and cash equivalents, beginning of period
    
    
    65,791
    
    
    
    149,101CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    103,443
    
    
    $
    45,517Supplemental cash flow information:Interest paid, net of amounts capitalized
    
    $
    59,280
    
    
    $
    47,081Income taxes paid (refunded)
    
    $
    7,291
    
    
    $
    (291
    )Non-cash investing activities:Net decrease in liabilities for purchases of property, plant and equipment
    
    $
    (18,261
    )
    
    $
    (27,425
    )
  3




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TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Basis of Presentation
    Change in Accounting Principle
   Note 2. Chapter 11 Reorganization Proceedings
  4




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Financial Statement Classification
    September 30,
    
    
    December 31,2006
    
    
    2005Debt:5.75% Convertible senior debentures
    
    $
    124,999
    
    
    $
    124,9996.75% Subordinated debentures
    
    
    258,750
    
    
    
    258,7509.25% Senior Euro notes
    
    
    190,065
    
    
    
    177,60012% Senior notes
    
    
    258,000
    
    
    
    258,000Total debt
    
    
    831,814
    
    
    
    819,349Pension and other post-retirement benefits
    
    
    141,669
    
    
    
    162,886Pre-petition accounts payable and accruals
    
    
    169,557
    
    
    
    195,294Accrued interest on debt subject to compromise
    
    
    21,343
    
    
    
    21,343Executory contracts
    
    
    115,455
    
    
    
    85,345Total liabilities subject to compromise
    
    $
    1,279,838
    
    
    $
    1,284,217
  5




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Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Professional fees directly related to the filing
    
    $
    7,807
    
    
    $
    4,547
    
    
    $
    28,943
    
    
    $
    24,511Key employee retention (forfeitures) costs
    
    
    (738
    )
    
    
    1,675
    
    
    
    3,098
    
    
    
    3,368Write off of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,135Estimated executory contract rejection
(recoveries) damages
    
    
    (181
    )
    
    
    393
    
    
    
    30,118
    
    
    
    94,313Other (reversals) expenses directly
attributable to the Companys reorganization
    
    
    (4,146
    )
    
    
    
    
    
    
    (4,146
    )
    
    
    197Total
    
    $
    2,742
    
    
    $
    6,615
    
    
    $
    58,013
    
    
    $
    151,524
  6




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##### Table of Contents



Debtors Financial Statements
  Debtors Condensed Combined Balance Sheet
Debtors- in-Possession
 September 30,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    34,491
    
    
    $
    858Accounts receivable
    
    
    146,119
    
    
    
    173,206Inventories
    
    
    62,244
    
    
    
    60,068Prepaid tooling and other
    
    
    17,115
    
    
    
    65,882Total current assets
    
    
    259,969
    
    
    
    300,014Property, plant and equipment, net
    
    
    507,427
    
    
    
    538,598Investments in and advances to non-debtor subsidiaries
    
    
    857,915
    
    
    
    796,662Other assets, net
    
    
    45,899
    
    
    
    60,959Total assets
    
    $
    1,671,210
    
    
    $
    1,696,233LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities not subject to compromise:Current maturities of long-term debt and capital lease obligations
    
    $
    15,156
    
    
    $
    14,257Current portion of debtor-in-possession borrowings
    
    
    650,000
    
    
    
    Accounts payable
    
    
    115,703
    
    
    
    134,069Accrued liabilities
    
    
    103,285
    
    
    
    87,098Total current liabilities
    
    
    884,144
    
    
    
    235,424Liabilities subject to compromise
    
    
    1,296,201
    
    
    
    1,300,580Non-current liabilities not subject to compromise:Long-term debt, net of current maturities
    
    
    84,751
    
    
    
    84,754Long-term portion of debtor-in-possession borrowings
    
    
    
    
    
    
    531,000Other noncurrent liabilities
    
    
    19,283
    
    
    
    32,098Total noncurrent liabilities
    
    
    104,034
    
    
    
    647,852Total stockholders deficit
    
    
    (613,169
    )
    
    
    (487,623
    )Total liabilities and stockholders deficit
    
    $
    1,671,210
    
    
    $
    1,696,233
 7




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##### Table of Contents



Debtors Condensed Combined Statement of Operations
Debtors-in-Possession
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues
    
    $
    295,061
    
    
    $
    418,485
    
    
    $
    1,135,103
    
    
    $
    1,553,624Cost of sales
    
    
    303,972
    
    
    
    412,218
    
    
    
    1,105,667
    
    
    
    1,476,718Gross profit
    
    
    (8,911
    )
    
    
    6,267
    
    
    
    29,436
    
    
    
    76,906Selling, general and administrative expenses
    
    
    18,056
    
    
    
    22,420
    
    
    
    57,543
    
    
    
    76,479Restructuring and asset impairment charges, net
    
    
    14,734
    
    
    
    37,453
    
    
    
    24,998
    
    
    
    106,886Other operating income
    
    
    (828
    )
    
    
    
    
    
    
    (2,943
    )
    
    
    Operating loss
    
    
    (40,873
    )
    
    
    (53,606
    )
    
    
    (50,162
    )
    
    
    (106,459
    )Interest expense
    
    
    20,927
    
    
    
    18,754
    
    
    
    58,964
    
    
    
    78,841Interest income
    
    
    (322
    )
    
    
    (9
    )
    
    
    (1,281
    )
    
    
    (135
    )Intercompany interest income
    
    
    (7,366
    )
    
    
    (5,411
    )
    
    
    (19,896
    )
    
    
    (17,009
    )Chapter 11 and related reorganization items
    
    
    2,742
    
    
    
    6,615
    
    
    
    58,013
    
    
    
    151,524Loss before provision for income taxes,
equity in earnings of joint ventures and
equity in earnings from non-Debtor
subsidiaries
    
    
    (56,854
    )
    
    
    (73,555
    )
    
    
    (145,962
    )
    
    
    (319,680
    )Provision (benefit) for income taxes
    
    
    1,248
    
    
    
    (2,806
    )
    
    
    3,352
    
    
    
    5,409Loss before equity in earnings of joint
ventures and equity in earnings of
non-Debtor subsidiaries
    
    
    (58,102
    )
    
    
    (70,749
    )
    
    
    (149,314
    )
    
    
    (325,089
    )Equity in earnings of joint ventures, net of tax
    
    
    79
    
    
    
    48
    
    
    
    215
    
    
    
    48Equity in earnings (losses) of non-Debtor
subsidiaries, net of tax
    
    
    (7,142
    )
    
    
    (5,855
    )
    
    
    (1,788
    )
    
    
    16,037Net loss
    
    $
    (65,165
    )
    
    $
    (76,556
    )
    
    $
    (150,887
    )
    
    $
    (309,004
    )
 8




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Debtors Condensed Combined Statements of Cash Flows
Debtors- in-Possession
 Nine Months Ended September 30,2006
    
    
    2005OPERATING ACTIVITIES:
    
    $
    (150,887
    )
    
    $
    (309,004
    )Net lossAdjustments required to reconcile net loss to net cash provided
by (used in) operating activities:Chapter 11 and related reorganization items, net
    
    
    36,058
    
    
    
    133,171Non-cash restructuring and impairment, net
    
    
    14,016
    
    
    
    100,065Depreciation
    
    
    68,126
    
    
    
    81,522Equity in earnings of joint ventures and subsidiaries, net
    
    
    1,573
    
    
    
    (16,085
    )Change in working capital and other operating items
    
    
    (13,358
    )
    
    
    (186,100
    )Net cash used for operating activities
    
    
    (44,472
    )
    
    
    (196,431
    )INVESTING ACTIVITIES:Cash disbursed for purchases of property, plant and equipment
    
    
    (40,886
    )
    
    
    (34,743
    )Net cash used for investing activities
    
    
    (40,886
    )
    
    
    (34,743
    )FINANCING ACTIVITIES:
    
    
    
    
    
    
    Repayments of borrowings
    
    
    (9
    )
    
    
    (430,370
    )Proceeds from DIP credit facility
    
    
    564,500
    
    
    
    1,054,285Repayments of DIP credit facility
    
    
    (445,500
    )
    
    
    (498,647
    )Net cash provided by financing activities
    
    
    118,991
    
    
    
    125,268NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    33,633
    
    
    
    (105,906
    )Cash and cash equivalents, beginning of period
    
    
    858
    
    
    
    107,081CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    34,491
    
    
    $
    1,175
 Note 3. New Accounting Pronouncements.
 FASB Interpretation No. 48
 SFAS No. 157, Fair Value Measurements
 SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans
 9




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SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements (SAB No. 108)
 Note 4. Accounts Receivable Securitization Facility
  Note 5. Inventories
  September 30,
    
    
    December 31,2006
    
    
    2005Raw materials
    
    $
    60,353
    
    
    $
    56,309Work in process
    
    
    27,671
    
    
    
    30,710Finished goods
    
    
    37,720
    
    
    
    36,414$
    125,744
    
    
    $
    123,433
 Note 6. Goodwill
  Balance at December 31, 2005
    
    $
    153,037Currency translation adjustment and other
    
    
    10,059Balance at September 30, 2006
    
    $
    163,096
 Note 7. Investments in Joint Ventures
  10




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Note 8. Restructuring and Asset Impairment Charges
       Asset Impairments
    
    
    Severance
    
    
    Other Costs
    
    
    TotalBalance at December 31, 2005
    
    $
    
    
    
    $
    523
    
    
    $
    
    
    
    $
    523Provision
    
    
    16,455
    
    
    
    17,137
    
    
    
    13,277
    
    
    
    46,869Cash usage
    
    
    
    
    
    
    (6,514
    )
    
    
    (8,163
    )
    
    
    (14,677
    )Non-cash usage and revisions of estimates
    
    
    (16,455
    )
    
    
    
    
    
    
    (5,114
    )
    
    
    (21,569
    )Balance at September 30, 2006
    
    $
    
    
    
    $
    11,146
    
    
    $
    
    
    
    $
    11,146
  11




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Restructuring and related asset impairments, net
    
    $
    46,869Revision of estimate
    
    
    Other asset impairments
    
    
    6,788Total
    
    $
    53,657
    Note 9. Debt
 Chapter 11 Impact
     DIP Financing
    12




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Back-Stop Agreement
   Debt Classified as Not Subject to Compromise
  Interest Rate Swap Contracts
  13




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Note 10. Comprehensive Loss
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006

    
    2005
    
    
    2006
    
    
    2005Net loss
    
    $
    (65,165
    )
    
    $
    (76,556
    )
    
    $
    (150,887
    )
    
    $
    (309,004
    )Change in cumulative translation adjustment
    
    
    (1,126
    )
    
    
    964
    
    
    
    17,804
    
    
    
    (16,097
    )Unrealized gain on qualifying cash
flow hedges
    
    
    
    
    
    
    1,132
    
    
    
    
    
    
    
    4,460Comprehensive loss
    
    $
    (66,291
    )
    
    $
    (74,460
    )
    
    $
    (133,083
    )
    
    $
    (320,641
    )
 Note 11. Income Taxes
   Note 12. Stockholders Deficit
 Loss Per Share
  Stock-Based Compensation
     14




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2005Net lossAs Reported
    
    $
    (76,556
    )
    
    $
    (309,004
    )Add: Stockbased employee compensation expense
included in
reported net loss, net of tax related effects
    
    
    106
    
    
    
    617Deduct: Total stock-based employee compensation
(expense) income determined under fair value
based method for all awards, net of related tax
effects
    
    
    (1,204
    )
    
    
    (550
    )Pro forma net loss
    
    $
    (77,654
    )
    
    $
    (308,937
    )Basic loss per share as reported
    
    $
    (1.31
    )
    
    $
    (5.27
    )Pro forma
    
    
    (1.32
    )
    
    
    (5.27
    )Diluted loss per share as reported
    
    $
    (1.31
    )
    
    $
    (5.27
    )Pro forma
    
    
    (1.32
    )
    
    
    (5.27
    )
   Stock Option Plans
     Number
    
    Options Outstanding
    
    Options ExercisableRange of
    
    Outstanding
    
    Weighted-Average
    
    Weighted-
    
    Number
    
    Weighted-Exercisable
    
    At
    
    Remaining
    
    Average
    
    Exercisable
    
    AverageOptions
    
    9/30/06
    
    Contractual Life
    
    Exercise Price
    
    9/30/06
    
    Exercise Price$17.13  $22.97
    
    
    91,500
    
    
    
    1.91
    
    
    $
    18.23
    
    
    
    91,500
    
    
    $
    18.23
 15




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##### Table of Contents



Incentive Plan
    Number
    
    Options Outstanding
    
    Options ExercisableRange of
    
    Outstanding
    
    Weighted-Average
    
    Weighted-
    
    Number
    
    Weighted-Exercisable
    
    At
    
    Remaining
    
    Average
    
    Exercisable
    
    AverageOptions
    
    9/30/06
    
    Contractual Life
    
    Exercise Price
    
    9/30/06
    
    Exercise Price$1.99  $7.08
    
    
    648,975
    
    
    
    7.40
    
    
    $
    3.39
    
    
    
    648,975
    
    
    $
    7.4011.33  15.56
    
    
    817,090
    
    
    
    4.38
    
    
    
    12.76
    
    
    
    817,090
    
    
    
    4.3826.81
    
    
    121,490
    
    
    
    2.56
    
    
    
    26.81
    
    
    
    121,490
    
    
    
    2.56
 Director Option Plan
    Number
    
    Options Outstanding
    
    Options ExercisableRange of
    
    Outstanding
    
    Weighted-Average
    
    Weighted-
    
    Number
    
    Weighted-Exercisable
    
    At
    
    Remaining
    
    Average
    
    Exercisable
    
    AverageOptions
    
    9/30/06
    
    Contractual Life
    
    Exercise Price
    
    9/30/06
    
    Exercise Price$18.94  $22.97
    
    
    85,200
    
    
    
    1.33
    
    
    $
    19.63
    
    
    
    85,200
    
    
    $
    19.63
 16




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##### Table of Contents



Note 13. Retirement Plans
  Pension Benefits
    
    
    Other Benefits2006
    
    
    2005
    
    
    2006
    
    
    2005Service cost
    
    $
    1,065
    
    
    $
    819
    
    
    $
    
    
    
    $
    82Interest cost
    
    
    3,771
    
    
    
    3,906
    
    
    
    2,188
    
    
    
    2,172Expected return on plan assets
    
    
    (3,238
    )
    
    
    (3,835
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    315
    
    
    
    621
    
    
    
    
    
    
    
    Amortization of net losses
    
    
    764
    
    
    
    1,009
    
    
    
    1,210
    
    
    
    3,204Net periodic benefit cost
    
    $
    2,677
    
    
    $
    2,520
    
    
    $
    3,398
    
    
    $
    5,458
  Pension Benefits
    
    
    Other Benefits2006
    
    
    2005
    
    
    2006
    
    
    2005Service cost
    
    $
    3,195
    
    
    $
    4,259
    
    
    $
    125
    
    
    $
    482Interest cost
    
    
    11,313
    
    
    
    11,485
    
    
    
    6,427
    
    
    
    6,302Expected return on plan assets
    
    
    (9,714
    )
    
    
    (11,179
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    945
    
    
    
    3,084
    
    
    
    
    
    
    
    Amortization of net losses
    
    
    2,292
    
    
    
    3,063
    
    
    
    5,029
    
    
    
    9,663Net periodic benefit cost
    
    $
    8,031
    
    
    $
    10,712
    
    
    $
    11,581
    
    
    $
    16,447
      17




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##### Table of Contents



Note 14. Segment Information
  18




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##### Table of Contents



North America
    
    International
    
    TotalThree months ended September 30, 2006:Revenues
    
    $
    299,899
    
    
    $
    315,769
    
    
    $
    615,668Restructuring and asset impairment charges
    
    
    15,012
    
    
    
    7,781
    
    
    
    22,793Operating loss
    
    
    (43,914
    )
    
    
    (3,175
    )
    
    
    (47,089
    )Total assets
    
    $
    1,077,157
    
    
    $
    1,137,833
    
    
    $
    2,214,990Three months ended September 30, 2005:Revenues
    
    $
    427,437
    
    
    $
    285,227
    
    
    $
    712,664Restructuring and asset impairment charges
    
    
    37,454
    
    
    
    239
    
    
    
    37,693Operating income (loss)
    
    
    (55,675
    )
    
    
    5,844
    
    
    
    (49,831
    )Total assets
    
    $
    1,202,898
    
    
    $
    1,118,176
    
    
    $
    2,321,074Nine months ended September 30, 2006:Revenues
    
    $
    1,157,109
    
    
    $
    995,186
    
    
    $
    2,152,295Restructuring and asset impairment charges
    
    
    42,636
    
    
    
    11,021
    
    
    
    53,657Operating income (loss)
    
    
    (73,708
    )
    
    
    37,111
    
    
    
    (36,597
    )Total assets
    
    $
    1,077,157
    
    
    $
    1,137,833
    
    
    $
    2,214,990Nine months ended September 30, 2005:Revenues
    
    $
    1,587,442
    
    
    $
    964,116
    
    
    $
    2,551,558Restructuring and asset impairment charges
    
    
    106,887
    
    
    
    1,990
    
    
    
    108,877Operating income (loss)
    
    
    (111,872
    )
    
    
    52,409
    
    
    
    (59,463
    )Total assets
    
    $
    1,202,898
    
    
    $
    1,118,176
    
    
    $
    2,321,074
  Note 15. Commitments and Contingencies
 Key Employee Retention Plan Agreements
   19




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##### Table of Contents



Environmental Matters
   Litigation
     20




---



##### Table of Contents



Note 16. Subsequent Events
      Note 17. Consolidating Guarantor and Non-Guarantor Financial Information
  21




---



##### Table of Contents



TOWER AUTOMOTIVE INC.
 Consolidating Balance Sheet at September 30, 2006
 (Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR.J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    34,470
    
    
    $
    
    
    
    $
    21
    
    
    $
    68,714
    
    
    $
    238
    
    
    $
    
    
    
    $
    103,443Accounts receivable
    
    
    2,144
    
    
    
    3,337
    
    
    
    140,638
    
    
    
    204,740
    
    
    
    20,568
    
    
    
    
    
    
    
    371,427Inventories
    
    
    
    
    
    
    
    
    
    
    62,244
    
    
    
    50,482
    
    
    
    13,018
    
    
    
    
    
    
    
    125,744Prepaid tooling and other
    
    
    2,438
    
    
    
    
    
    
    
    14,677
    
    
    
    74,145
    
    
    
    23,467
    
    
    
    
    
    
    
    114,727Total current assets
    
    
    39,052
    
    
    
    3,337
    
    
    
    217,580
    
    
    
    398,081
    
    
    
    57,291
    
    
    
    
    
    
    
    715,341Property, plant and equipment, net
    
    
    402
    
    
    
    
    
    
    
    507,025
    
    
    
    304,208
    
    
    
    152,549
    
    
    
    
    
    
    
    964,184Investments in and advances to (from) affiliates and joint ventures
    
    
    554,969
    
    
    
    (224,918
    )
    
    
    (810,860
    )
    
    
    16,838
    
    
    
    (2,449
    )
    
    
    712,934
    
    
    
    246,514Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    163,096
    
    
    
    
    
    
    
    
    
    
    
    163,096Other assets, net
    
    
    19,535
    
    
    
    
    
    
    
    26,364
    
    
    
    63,889
    
    
    
    16,067
    
    
    
    
    
    
    
    125,855$
    613,958
    
    
    $
    (221,581
    )
    
    $
    (59,891
    )
    
    $
    946,112
    
    
    $
    223,458
    
    
    $
    712,934
    
    
    $
    2,214,990Liabilities and Stockholders Investment (Deficit)Current liabilities not subject to compromise:Current maturities of long-term debt and capital lease obligations
    
    $
    
    
    
    $
    
    
    
    $
    15,156
    
    
    $
    12,244
    
    
    $
    106,758
    
    
    $
    
    
    
    $
    134,158Current portion debtor-in-possession borrowings
    
    
    650,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    650,000Accounts payable
    
    
    12,453
    
    
    
    
    
    
    
    103,250
    
    
    
    170,399
    
    
    
    41,294
    
    
    
    
    
    
    
    327,396Accrued liabilities
    
    
    34,079
    
    
    
    
    
    
    
    69,206
    
    
    
    75,458
    
    
    
    8,164
    
    
    
    
    
    
    
    186,907Total current liabilities
    
    
    696,532
    
    
    
    
    
    
    
    187,612
    
    
    
    258,101
    
    
    
    156,216
    
    
    
    
    
    
    
    1,298,461Liabilities subject to compromise
    
    
    609,479
    
    
    
    391,588
    
    
    
    295,134
    
    
    
    
    
    
    
    
    
    
    
    (16,363
    )
    
    
    1,279,838Non-current liabilities not subject to compromise:Long-term debt, net of current maturities
    
    
    40,986
    
    
    
    
    
    
    
    43,765
    
    
    
    4,798
    
    
    
    15,965
    
    
    
    
    
    
    
    105,514Obligations under capital leases, net of current maturities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,632
    
    
    
    
    
    
    
    
    
    
    
    29,632Other noncurrent liabilities
    
    
    1,406
    
    
    
    
    
    
    
    17,877
    
    
    
    80,579
    
    
    
    14,852
    
    
    
    
    
    
    
    114,714Total noncurrent liabilities
    
    
    42,392
    
    
    
    
    
    
    
    61,642
    
    
    
    115,009
    
    
    
    30,817
    
    
    
    
    
    
    
    249,860Stockholders investment (deficit)
    
    
    (734,445
    )
    
    
    (613,169
    )
    
    
    (604,279
    )
    
    
    573,002
    
    
    
    36,425
    
    
    
    729,297
    
    
    
    (613,169
    )$
    613,958
    
    
    $
    (221,581
    )
    
    $
    (59,891
    )
    
    $
    946,112
    
    
    $
    223,458
    
    
    $
    712,934
    
    
    $
    2,214,990
 22




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##### Table of Contents



TOWER AUTOMOTIVE INC.
 Consolidating Statement of Operations for the Three Months Ended September 30, 2006
 (Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR.J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    295,061
    
    
    $
    252,931
    
    
    $
    67,676
    
    
    $
    
    
    
    $
    615,668Cost of sales
    
    
    (1,628
    )
    
    
    
    
    
    
    305,600
    
    
    
    234,009
    
    
    
    69,807
    
    
    
    
    
    
    
    607,788Gross profit
    
    
    1,628
    
    
    
    
    
    
    
    (10,539
    )
    
    
    18,922
    
    
    
    (2,131
    )
    
    
    
    
    
    
    7,880Selling, general and administrative expenses
    
    
    (12,060
    )
    
    
    
    
    
    
    30,116
    
    
    
    12,081
    
    
    
    2,039
    
    
    
    
    
    
    
    32,176Restructuring and asset impairment charges, net
    
    
    45
    
    
    
    (3,582
    )
    
    
    18,271
    
    
    
    1,999
    
    
    
    6,060
    
    
    
    
    
    
    
    22,793Other operating expense/(income)
    
    
    (6,700
    )
    
    
    
    
    
    
    5,872
    
    
    
    828
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    20,343
    
    
    
    3,582
    
    
    
    (64,798
    )
    
    
    4,014
    
    
    
    (10,230
    )
    
    
    
    
    
    
    (47,089
    )Interest expense
    
    
    19,434
    
    
    
    
    
    
    
    1,493
    
    
    
    697
    
    
    
    1,966
    
    
    
    
    
    
    
    23,590Interest income
    
    
    (322
    )
    
    
    
    
    
    
    
    
    
    
    133
    
    
    
    (150
    )
    
    
    
    
    
    
    (339
    )Intercompany interest expense/(income)
    
    
    (7,366
    )
    
    
    
    
    
    
    
    
    
    
    7,711
    
    
    
    (345
    )
    
    
    
    
    
    
    Chapter 11 and related reorganization items
    
    
    2,742
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,742Income (loss) before provision (benefit) for
income taxes, equity in earnings (loss) of
joint ventures and subsidiaries, and minority
interest
    
    
    5,855
    
    
    
    3,582
    
    
    
    (66,291
    )
    
    
    (4,527
    )
    
    
    (11,701
    )
    
    
    
    
    
    
    (73,082
    )Provision (benefit) for income taxes
    
    
    1,156
    
    
    
    68
    
    
    
    24
    
    
    
    (2,671
    )
    
    
    (4,424
    )
    
    
    
    
    
    
    (5,847
    )Income (loss) before equity in earnings (loss)
of joint ventures and subsidiaries, and
minority interest
    
    
    4,699
    
    
    
    3,514
    
    
    
    (66,315
    )
    
    
    (1,856
    )
    
    
    (7,277
    )
    
    
    
    
    
    
    (67,235
    )Equity in earnings (loss) of joint ventures
and subsidiaries, net of tax
    
    
    (73,378
    )
    
    
    (68,679
    )
    
    
    
    
    
    
    3,986
    
    
    
    
    
    
    
    142,136
    
    
    
    4,065Minority interest, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,995
    )
    
    
    
    
    
    
    
    
    
    
    (1,995
    )Net income (loss)
    
    $
    (68,679
    )
    
    $
    (65,165
    )
    
    $
    (66,315
    )
    
    $
    135
    
    
    $
    (7,277
    )
    
    $
    142,136
    
    
    $
    (65,165
    )
 23




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##### Table of Contents



TOWER AUTOMOTIVE INC.
Consolidating Statement of Operations for the Nine Months Ended September 30, 2006
(Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR.J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    1,135,103
    
    
    $
    768,222
    
    
    $
    248,970
    
    
    $
    
    
    
    $
    2,152,295Cost of sales
    
    
    (5,808
    )
    
    
    
    
    
    
    1,111,475
    
    
    
    683,393
    
    
    
    247,438
    
    
    
    
    
    
    
    2,036,498Gross profit
    
    
    5,808
    
    
    
    
    
    
    
    23,628
    
    
    
    84,829
    
    
    
    1,532
    
    
    
    
    
    
    
    115,797Selling, general and administrative expenses
    
    
    (33,285
    )
    
    
    
    
    
    
    90,828
    
    
    
    34,406
    
    
    
    7,308
    
    
    
    
    
    
    
    99,257Restructuring and asset impairment charges, net
    
    
    (15
    )
    
    
    (12,140
    )
    
    
    37,153
    
    
    
    22,791
    
    
    
    5,868
    
    
    
    
    
    
    
    53,657Other operating expense/(income)
    
    
    (23,539
    )
    
    
    
    
    
    
    20,596
    
    
    
    2,423
    
    
    
    
    
    
    
    
    
    
    
    (520
    )Operating income (loss)
    
    
    62,647
    
    
    
    12,140
    
    
    
    (124,949
    )
    
    
    25,209
    
    
    
    (11,644
    )
    
    
    
    
    
    
    (36,597
    )Interest expense
    
    
    55,692
    
    
    
    
    
    
    
    3,272
    
    
    
    2,152
    
    
    
    5,944
    
    
    
    
    
    
    
    67,060Interest income
    
    
    (1,281
    )
    
    
    
    
    
    
    
    
    
    
    212
    
    
    
    (482
    )
    
    
    
    
    
    
    (1,551
    )Intercompany interest expense/(income)
    
    
    (19,896
    )
    
    
    
    
    
    
    
    
    
    
    20,916
    
    
    
    (1,020
    )
    
    
    
    
    
    
    Chapter 11 and related reorganization items
    
    
    27,720
    
    
    
    68
    
    
    
    30,225
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,013Income (loss) before provision (benefit) for
income taxes, equity in earnings (loss) of
joint ventures and subsidiaries, and minority
interest
    
    
    412
    
    
    
    12,072
    
    
    
    (158,446
    )
    
    
    1,929
    
    
    
    (16,086
    )
    
    
    
    
    
    
    (160,119
    )Provision (benefit) for income taxes
    
    
    2,666
    
    
    
    208
    
    
    
    478
    
    
    
    6,161
    
    
    
    (5,630
    )
    
    
    
    
    
    
    3,883Income (loss) before equity in earnings (loss)
of joint ventures and subsidiaries, and
minority interest
    
    
    (2,254
    )
    
    
    11,864
    
    
    
    (158,924
    )
    
    
    (4,232
    )
    
    
    (10,456
    )
    
    
    
    
    
    
    (164,002
    )Equity in earnings (loss) of joint ventures
and subsidiaries, net of tax
    
    
    (160,497
    )
    
    
    (162,751
    )
    
    
    
    
    
    
    18,067
    
    
    
    
    
    
    
    323,463
    
    
    
    18,282Minority interest, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,167
    )
    
    
    
    
    
    
    
    
    
    
    (5,167
    )Net income (loss)
    
    $
    (162,751
    )
    
    $
    (150,887
    )
    
    $
    (158,924
    )
    
    $
    8,668
    
    
    $
    (10,456
    )
    
    $
    323,463
    
    
    $
    (150,887
    )
 24




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##### Table of Contents



TOWER AUTOMOTIVE, INC.
Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2006
(Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR. J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedOPERATING ACTIVITIES:Net income (loss)
    
    $
    (162,751
    )
    
    $
    (150,887
    )
    
    $
    (158,924
    )
    
    $
    8,668
    
    
    $
    (10,456
    )
    
    $
    323,463
    
    
    $
    (150,887
    )Adjustments required to reconcile net income (loss) to
net cash provided by (used in) operating activities:Chapter 11 and related reorganization items, net
    
    
    5,765
    
    
    
    68
    
    
    
    30,225
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,058Non-cash restructuring and impairment, net
    
    
    
    
    
    
    
    
    
    
    14,016
    
    
    
    15,296
    
    
    
    6,060
    
    
    
    
    
    
    
    35,372Depreciation
    
    
    189
    
    
    
    
    
    
    
    67,937
    
    
    
    33,423
    
    
    
    19,343
    
    
    
    
    
    
    
    120,892Deferred income tax provision (benefit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,624
    )
    
    
    (481
    )
    
    
    
    
    
    
    (13,105
    )Equity in (earnings) loss of joint ventures and
subsidiaries, net
    
    
    160,497
    
    
    
    162,751
    
    
    
    
    
    
    
    (18,067
    )
    
    
    
    
    
    
    (323,463
    )
    
    
    (18,282
    )Change in working capital and other operating items
    
    
    (88,922
    )
    
    
    (11,932
    )
    
    
    87,496
    
    
    
    12,975
    
    
    
    4,232
    
    
    
    
    
    
    
    3,849Net cash provided by (used in) operating activities
    
    
    (85,222
    )
    
    
    
    
    
    
    40,750
    
    
    
    39,671
    
    
    
    18,698
    
    
    
    
    
    
    
    13,897INVESTING ACTIVITIES:Cash disbursed for purchases of property, plant and equipment
    
    
    (10
    )
    
    
    
    
    
    
    (40,876
    )
    
    
    (30,401
    )
    
    
    (22,384
    )
    
    
    
    
    
    
    (93,671
    )Cash proceeds from asset disposal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,664
    
    
    
    
    
    
    
    32,664Net cash provided by (used in) investing activities
    
    
    (10
    )
    
    
    
    
    
    
    (40,876
    )
    
    
    (30,401
    )
    
    
    10,280
    
    
    
    
    
    
    
    (61,007
    )FINANCING ACTIVITIES:Proceeds from borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,295
    
    
    
    11,326
    
    
    
    
    
    
    
    22,621Repayments of borrowings
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (16,641
    )
    
    
    (40,209
    )
    
    
    
    
    
    
    (56,859
    )Proceeds from DIP credit facility
    
    
    564,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    564,500Repayments of DIP credit facility
    
    
    (445,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (445,500
    )Net cash provided by (used in) financing activities
    
    
    119,000
    
    
    
    
    
    
    
    (9
    )
    
    
    (5,346
    )
    
    
    (28,883
    )
    
    
    
    
    
    
    84,762NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    33,768
    
    
    
    
    
    
    
    (135
    )
    
    
    3,924
    
    
    
    95
    
    
    
    
    
    
    
    37,652CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    702
    
    
    
    
    
    
    
    156
    
    
    
    64,790
    
    
    
    143
    
    
    
    
    
    
    
    65,791CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    34,470
    
    
    $
    
    
    
    $
    21
    
    
    $
    68,714
    
    
    $
    238
    
    
    $
    
    
    
    $
    103,443
 25




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##### Table of Contents



TOWER AUTOMOTIVE INC.
Consolidating Balance Sheet at December 31, 2005
(Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR.J. Tower
    
    
    Parent
    
    
    
    
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Guarantor Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    702
    
    
    $
    
    
    
    $
    156
    
    
    $
    64,790
    
    
    $
    143
    
    
    $
    
    
    
    $
    65,791Accounts receivable
    
    
    3,381
    
    
    
    3,210
    
    
    
    166,615
    
    
    
    168,600
    
    
    
    21,234
    
    
    
    
    
    
    
    363,040Inventories
    
    
    
    
    
    
    
    
    
    
    60,068
    
    
    
    48,114
    
    
    
    15,251
    
    
    
    
    
    
    
    123,433Prepaid tooling and other
    
    
    5,119
    
    
    
    
    
    
    
    60,763
    
    
    
    88,555
    
    
    
    31,209
    
    
    
    
    
    
    
    185,646Total current assets
    
    
    9,202
    
    
    
    3,210
    
    
    
    287,602
    
    
    
    370,059
    
    
    
    67,837
    
    
    
    
    
    
    
    737,910Property, plant and equipment, net
    
    
    602
    
    
    
    
    
    
    
    537,996
    
    
    
    303,853
    
    
    
    196,343
    
    
    
    
    
    
    
    1,038,794Investments in and advances to (from) affiliates, and joint ventures
    
    
    601,229
    
    
    
    (99,312
    )
    
    
    (749,021
    )
    
    
    55,675
    
    
    
    (3,124
    )
    
    
    423,187
    
    
    
    228,634Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153,037
    
    
    
    
    
    
    
    
    
    
    
    153,037Other assets, net
    
    
    27,386
    
    
    
    
    
    
    
    33,573
    
    
    
    53,787
    
    
    
    18,105
    
    
    
    
    
    
    
    132,851$
    638,419
    
    
    $
    (96,102
    )
    
    $
    110,150
    
    
    $
    936,411
    
    
    $
    279,161
    
    
    $
    423,187
    
    
    $
    2,291,226Liabilities and Stockholders Investment (Deficit)Current liabilities not subject to compromise:Current maturities of long-term debt and capital lease obligations
    
    $
    
    
    
    $
    
    
    
    $
    14,257
    
    
    $
    11,074
    
    
    $
    126,424
    
    
    $
    
    
    
    $
    151,755Accounts payable
    
    
    5,372
    
    
    
    
    
    
    
    128,697
    
    
    
    186,821
    
    
    
    57,926
    
    
    
    
    
    
    
    378,816Accrued liabilities
    
    
    25,211
    
    
    
    
    
    
    
    61,887
    
    
    
    65,408
    
    
    
    16,742
    
    
    
    
    
    
    
    169,248Total current liabilities
    
    
    30,583
    
    
    
    
    
    
    
    204,841
    
    
    
    263,303
    
    
    
    201,092
    
    
    
    
    
    
    
    699,819Liabilities subject to compromise
    
    
    622,302
    
    
    
    391,521
    
    
    
    286,757
    
    
    
    
    
    
    
    
    
    
    
    (16,363
    )
    
    
    1,284,217Non-current liabilities not subject to compromise:Long-term debt, net of current maturities
    
    
    40,986
    
    
    
    
    
    
    
    43,768
    
    
    
    6,608
    
    
    
    16,461
    
    
    
    
    
    
    
    107,823Debtor-in-possession borrowings
    
    
    531,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    531,000Obligations under capital leases, net of current maturities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,308
    
    
    
    
    
    
    
    
    
    
    
    30,308Other noncurrent liabilities
    
    
    11,963
    
    
    
    
    
    
    
    20,135
    
    
    
    76,968
    
    
    
    16,616
    
    
    
    
    
    
    
    125,682Total noncurrent liabilities
    
    
    583,949
    
    
    
    
    
    
    
    63,903
    
    
    
    113,884
    
    
    
    33,077
    
    
    
    
    
    
    
    794,813Stockholders investment (deficit)
    
    
    (598,415
    )
    
    
    (487,623
    )
    
    
    (445,351
    )
    
    
    559,224
    
    
    
    44,992
    
    
    
    439,550
    
    
    
    (487,623
    )$
    638,419
    
    
    $
    (96,102
    )
    
    $
    110,150
    
    
    $
    936,411
    
    
    $
    279,161
    
    
    $
    423,187
    
    
    $
    2,291,226
 26




---



##### Table of Contents



TOWER AUTOMOTIVE, INC.
Consolidating Statement of Operations for the Three Months Ended September 30, 2005
(Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR.J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    418,484
    
    
    $
    226,204
    
    
    $
    67,976
    
    
    $
    
    
    
    $
    712,664Cost of sales
    
    
    (1,731
    )
    
    
    
    
    
    
    414,663
    
    
    
    200,092
    
    
    
    75,578
    
    
    
    
    
    
    
    688,602Gross profit
    
    
    1,731
    
    
    
    
    
    
    
    3,821
    
    
    
    26,112
    
    
    
    (7,602
    )
    
    
    
    
    
    
    24,062Selling, general and administrative expenses
    
    
    (9,274
    )
    
    
    
    
    
    
    31,694
    
    
    
    10,989
    
    
    
    2,791
    
    
    
    
    
    
    
    36,200Restructuring and asset impairment charges, net
    
    
    (2,787
    )
    
    
    
    
    
    
    40,240
    
    
    
    240
    
    
    
    
    
    
    
    
    
    
    
    37,693Operating income (loss)
    
    
    13,792
    
    
    
    
    
    
    
    (68,113
    )
    
    
    14,883
    
    
    
    (10,393
    )
    
    
    
    
    
    
    (49,831
    )Interest expense, net
    
    
    16,802
    
    
    
    
    
    
    
    1,803
    
    
    
    960
    
    
    
    1,945
    
    
    
    
    
    
    
    21,510Chapter 11 and related reorganization items
    
    
    6,615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,615Income (loss) before provision (benefit) for
income taxes, equity in earnings (loss) of
joint ventures and subsidiaries, and minority
interest
    
    
    (9,625
    )
    
    
    
    
    
    
    (69,916
    )
    
    
    13,923
    
    
    
    (12,338
    )
    
    
    
    
    
    
    (77,956
    )Provision (benefit) for income taxes
    
    
    
    
    
    
    
    
    
    
    129
    
    
    
    4,505
    
    
    
    (3,112
    )
    
    
    
    
    
    
    1,522Income (loss) before equity in earnings (loss)
of joint ventures and subsidiaries, and
minority interest
    
    
    (9,625
    )
    
    
    
    
    
    
    (70,045
    )
    
    
    9,418
    
    
    
    (9,226
    )
    
    
    
    
    
    
    (79,478
    )Equity in earnings (loss) of joint ventures
and subsidiaries, net of tax
    
    
    (66,931
    )
    
    
    (76,556
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    147,803
    
    
    
    4,316Minority interest, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,394
    )
    
    
    
    
    
    
    
    
    
    
    (1,394
    )Net income (loss)
    
    $
    (76,556
    )
    
    $
    (76,556
    )
    
    $
    (70,045
    )
    
    $
    8,024
    
    
    $
    (9,226
    )
    
    $
    147,803
    
    
    $
    (76,556
    )
 27




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##### Table of Contents



TOWER AUTOMOTIVE, INC.
Consolidating Statement of Operations for the Nine Months Ended September 30, 2005
(Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR.J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    1,553,622
    
    
    $
    728,527
    
    
    $
    269,409
    
    
    $
    
    
    
    $
    2,551,558Cost of sales
    
    
    (5,072
    )
    
    
    
    
    
    
    1,484,297
    
    
    
    638,665
    
    
    
    265,426
    
    
    
    
    
    
    
    2,383,316Gross profit
    
    
    5,072
    
    
    
    
    
    
    
    69,325
    
    
    
    89,862
    
    
    
    3,983
    
    
    
    
    
    
    
    168,242Selling, general and administrative expenses
    
    
    (21,176
    )
    
    
    
    
    
    
    97,656
    
    
    
    33,457
    
    
    
    8,891
    
    
    
    
    
    
    
    118,828Restructuring and asset impairment charges, net
    
    
    (2,284
    )
    
    
    
    
    
    
    109,170
    
    
    
    1,991
    
    
    
    
    
    
    
    
    
    
    
    108,877Operating income (loss)
    
    
    28,532
    
    
    
    
    
    
    
    (137,501
    )
    
    
    54,414
    
    
    
    (4,908
    )
    
    
    
    
    
    
    (59,463
    )Interest expense, net
    
    
    69,720
    
    
    
    2,221
    
    
    
    6,590
    
    
    
    3,445
    
    
    
    5,547
    
    
    
    
    
    
    
    87,523Chapter 11 and related reorganization items
    
    
    151,524
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    151,524Income (loss) before provision (benefit) for
income taxes, equity in earnings (loss) of
joint ventures and subsidiaries, and minority
interest
    
    
    (192,712
    )
    
    
    (2,221
    )
    
    
    (144,091
    )
    
    
    50,969
    
    
    
    (10,455
    )
    
    
    
    
    
    
    (298,510
    )Provision (benefit) for income taxes
    
    
    
    
    
    
    
    
    
    
    1,887
    
    
    
    17,283
    
    
    
    (1,826
    )
    
    
    
    
    
    
    17,344Income (loss) before equity in earnings (loss)
of joint ventures and subsidiaries, and
minority interest
    
    
    (192,712
    )
    
    
    (2,221
    )
    
    
    (145,978
    )
    
    
    33,686
    
    
    
    (8,629
    )
    
    
    
    
    
    
    (315,854
    )Equity in earnings (loss) of joint ventures
and subsidiaries, net of tax
    
    
    (114,071
    )
    
    
    (306,783
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    431,655
    
    
    
    10,801Minority interest, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,951
    )
    
    
    
    
    
    
    
    
    
    
    (3,951
    )Net income (loss)
    
    $
    (306,783
    )
    
    $
    (309,004
    )
    
    $
    (145,978
    )
    
    $
    29,735
    
    
    $
    (8,629
    )
    
    $
    431,655
    
    
    $
    (309,004
    )
 28




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##### Table of Contents



TOWER AUTOMOTIVE, INC.
Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2005
(Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR. J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedOPERATING ACTIVITIES:Net income (loss)
    
    $
    (306,783
    )
    
    $
    (309,004
    )
    
    $
    (145,978
    )
    
    $
    29,735
    
    
    $
    (8,629
    )
    
    $
    431,655
    
    
    $
    (309,004
    )Adjustments required to reconcile net income (loss) to
net cash provided by (used in) operating activities:Chapter 11 and related reorganization items, net
    
    
    133,171
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    133,171Non-cash restructuring and impairment, net
    
    
    
    
    
    
    
    
    
    
    101,632
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,632Depreciation
    
    
    249
    
    
    
    
    
    
    
    81,274
    
    
    
    32,936
    
    
    
    21,329
    
    
    
    
    
    
    
    135,788Deferred income tax provision (benefit)
    
    
    
    
    
    
    
    
    
    
    (1,006
    )
    
    
    12,874
    
    
    
    995
    
    
    
    
    
    
    
    12,863Equity in (earnings) loss of joint ventures and
subsidiaries, net
    
    
    114,071
    *
    
    
    306,783
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (431,655)
    *
    
    
    (10,801
    )Change in working capital and other operating items
    
    
    (177,232)
    *
    
    
    2,221
    *
    
    
    4,169
    
    
    
    (17,787
    )
    
    
    (821
    )
    
    
    
    *
    
    
    (189,450
    )Net cash provided by (used in) operating activities
    
    
    (236,524)
    *
    
    
    
    *
    
    
    40,091
    
    
    
    57,758
    
    
    
    12,874
    
    
    
    
    
    
    
    (125,801
    )INVESTING ACTIVITIES:Cash disbursed for purchases of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    (34,741
    )
    
    
    (44,428
    )
    
    
    (25,371
    )
    
    
    
    
    
    
    (104,540
    )Net cash used in investing activities
    
    
    
    *
    
    
    
    *
    
    
    (34,741
    )
    
    
    (44,428
    )
    
    
    (25,371
    )
    
    
    
    
    
    
    (104,540
    )FINANCING ACTIVITIES:Proceeds from borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,919
    
    
    
    22,783
    
    
    
    
    
    
    
    36,702Repayments of borrowings
    
    
    (425,000
    )
    
    
    
    
    
    
    (5,370
    )
    
    
    (25,089
    )
    
    
    (10,124
    )
    
    
    
    
    
    
    (465,583
    )Proceeds from DIP credit facility
    
    
    1,054,285
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,054,285Repayments of DIP credit facility
    
    
    (498,647
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (498,647
    )Net cash provided by (used in) financing activities
    
    
    130,638
    
    
    
    
    
    
    
    (5,370
    )
    
    
    (11,170
    )
    
    
    12,659
    
    
    
    
    
    
    
    126,757NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (105,886
    )
    
    
    
    
    
    
    (20
    )
    
    
    2,160
    
    
    
    162
    
    
    
    
    
    
    
    (103,584
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    107,599
    
    
    
    
    
    
    
    (517
    )
    
    
    41,948
    
    
    
    71
    
    
    
    
    
    
    
    149,101CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    1,713
    
    
    $
    
    
    
    $
    (537
    )
    
    $
    44,108
    
    
    $
    233
    
    
    $
    
    
    
    $
    45,517
 
 *
    
    These amounts have been corrected to properly present the cash flow impacts of equity in
(earnings) loss of joint ventures and subsidiaries. Amounts previously reported for the respective
cash flow captions are as follows: (i) R.J. Tower Corporation: $(10,801), $254,199, $70,035 and
$(306,559); (ii) Parent Guarantor: $, $2,445, $(306,559), and $306,559; and (iii) Eliminations: $
and $(431,655). 29




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
   
    
    Significant capital expenditures and spending on product launch activities;
    
    High interest costs;
    
    Declining gross margins;
    
    Termination of accelerated payment programs by key customers;
    
    Lower production volumes at the Companys largest customers; and
    
    Significant raw material price increases (primarily steel).
  
    
    Restructure the Companys North American operations;
    
    Comply with the terms and conditions of the DIP financing agreement described in Note 9
to the Condensed Consolidated Financial Statements;
    
    Obtain confirmation of a plan of reorganization under the Bankruptcy Code;
    
    Reduce unsustainable debt and simplify the Companys complex and restrictive capital
structure through the bankruptcy process; and
    
    Obtain financing sources to meet the Debtors future obligations.
  Results of Operations
 Three Months Ended September 30, 2006 Compared to the Three Months Ended September 30, 2005
 Revenues
 Gross Profit and Gross Margin.
 Selling, General and Administrative Expenses.
 30




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##### Table of Contents



Interest Expense.
 Chapter 11 and Related Reorganization Items.
 Provision for Income Taxes.
  Equity in Earnings of Joint Ventures, Net of Tax.
 Minority Interest, Net of Tax.
 Nine Months Ended September 30, 2006 Compared to the Nine Months Ended September 30, 2005
 Revenues
 Gross Profit and Gross Margin.
 Selling, General and Administrative Expenses.
 Interest Expense.
 31




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##### Table of Contents



Chapter 11 and Related Reorganization Items.
 Provision for Income Taxes.
  Equity in Earnings of Joint Ventures, Net of Tax.
 Minority Interest, Net of Tax.
 Restructuring and Asset Impairment
   
    
    In February 2006, the Company announced its decision to enter into decision bargaining
to close its Greenville, MI facility and to move the work to other facilities in the U.S.
 
    
    In April 2006, the Company submitted for approval to the Bankruptcy Court settlement
agreements with two groups representing current and future retirees. Both settlements
include modifications of retiree health care benefits for both retired salaried employees
as well as current and future retirees of the Companys Milwaukee, WI facility.
 
    
    In June 2006, the Company announced that it would phase out of production at its
Toronto, Ontario aluminum foundry and mini-mill by August 31, 2006.
 32




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##### Table of Contents




    
    In August 2006, the Company announced the ratification of revised collective bargaining
agreements with the United Auto Workers union and the United Steelworkers union covering
hourly employees at the Companys Bluffton, Ohio and Elkton Michigan facilities, as well as
a contract extension and severance agreement at the Companys Clinton, Michigan and Milan,
Tennessee facilities respectively. The tentative agreement previously announced on July 19,
2006 covered hourly employees at nine of the Companys North American facilities, but was
subsequently modified to govern only the four facilities that ratified the agreement. The
U.S. Bankruptcy Court overseeing the Companys Chapter 11 case must still approve the
agreement.
 
    
    In September 2006, the Company announced that production from its Upper Sandusky, Ohio
plant will be consolidated into other Tower facilities in North America by early next year.
   Liquidity and Capital Resources
      33




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##### Table of Contents



Chapter 11 Impact
     DIP Financing
      34




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##### Table of Contents



Back-Stop Agreement
   Stock Options
  Market Risk
       35




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##### Table of Contents



Opportunities
  Disclosure Regarding Forward-Looking Statements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  36




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##### Table of Contents



Item 4. Controls and Procedures.
    
    
    Continuing the centralization of purchasing and accounts payable processing in its North
American operations; and
 
    
    Continuing the standardization of time and attendance systems in its North American
operations through the utilization of a common time and attendance system.
  37




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
   
 Item 1A. Risk Factors.
 Prolonged continuation of the Chapter 11 Cases may harm the Companys businesses. (Revised)
   
 Item 6. Exhibits.
 31.1
    
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 38




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##### Table of Contents



Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 TOWER AUTOMOTIVE, INC.Registrant Date: February 27, 2007
    /s/ James A. MallakJames A. MallakChief Financial Officer 39




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##### Table of Contents



Exhibit No.
    
    
    Description of Exhibits31.1
    
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.