##### 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 June 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
    
    41-1746238(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 27175 Haggerty Road
    
    48377Novi, Michigan
    
    (Zip Code)(Address of principal executive offices)
 (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 June 30, 2006 and December 31, 2005
    
    
    1Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2006 and 2005
    
    
    2Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2006 and 2005 (as restated)
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    28Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    35PART II. Other InformationItem 1. Legal Proceedings
    
    
    36Item 1A Risk Factors
    
    
    36Item 6. Exhibits
    
    
    36SignaturesCertification 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
I  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements.
 TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Amounts in thousands  Unaudited)
 June 30, 2006
    
    
    December 31, 2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    120,123
    
    
    $
    65,791Accounts receivable
    
    
    392,484
    
    
    
    363,040Inventories
    
    
    134,316
    
    
    
    123,433Prepaid tooling and other
    
    
    134,006
    
    
    
    185,646Total current assets
    
    
    780,929
    
    
    
    737,910Property, plant and equipment, net
    
    
    983,926
    
    
    
    1,038,794Investments in joint ventures
    
    
    242,852
    
    
    
    228,634Goodwill
    
    
    164,524
    
    
    
    153,037Other assets, net
    
    
    129,480
    
    
    
    132,851Total assets
    
    $
    2,301,711
    
    
    $
    2,291,226LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities not subject to compromise:Current maturities of long-term debt and capital lease obligations
    
    $
    142,375
    
    
    $
    151,755Current portion of debtor-in-possession borrowings
    
    
    607,000
    
    
    
    Accounts payable
    
    
    371,878
    
    
    
    378,816Accrued liabilities
    
    
    181,821
    
    
    
    169,248Total current liabilities
    
    
    1,303,074
    
    
    
    699,819Liabilities subject to compromise
    
    
    1,299,553
    
    
    
    1,284,217Non-current liabilities not subject to compromise:Long-term debt, net of current maturities
    
    
    106,383
    
    
    
    107,823Debtor-in-possession borrowings
    
    
    
    
    
    
    531,000Capital lease obligations, net of current maturities
    
    
    30,876
    
    
    
    30,308Other non-current liabilities
    
    
    108,893
    
    
    
    125,682Total non-current liabilities
    
    
    246,152
    
    
    
    794,813Stockholders deficit:Preferred stock
    
    
    
    
    
    
    Common stock
    
    
    666
    
    
    
    666Additional paid-in-capital
    
    
    681,653
    
    
    
    681,102Accumulated deficit
    
    
    (1,192,564
    )
    
    
    (1,106,840
    )Deferred compensation plans
    
    
    
    
    
    
    (6,798
    )Accumulated other comprehensive income (loss)
    
    
    12,501
    
    
    
    (6,429
    )Treasury stock
    
    
    (49,324
    )
    
    
    (49,324
    )Total stockholders deficit
    
    
    (547,068
    )
    
    
    (487,623
    )Total liabilities and stockholders deficit
    
    $
    2,301,711
    
    
    $
    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 June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues
    
    $
    766,907
    
    
    $
    923,014
    
    
    $
    1,536,627
    
    
    $
    1,838,894Cost of sales
    
    
    708,778
    
    
    
    843,625
    
    
    
    1,428,710
    
    
    
    1,694,714Gross profit
    
    
    58,129
    
    
    
    79,389
    
    
    
    107,917
    
    
    
    144,180Selling, general and administrative expenses
    
    
    33,044
    
    
    
    39,422
    
    
    
    67,081
    
    
    
    82,628Restructuring and asset impairment charges, net
    
    
    28,342
    
    
    
    39,289
    
    
    
    30,864
    
    
    
    71,184Other operating income
    
    
    
    
    
    
    
    
    
    
    (520
    )
    
    
    Operating income (loss)
    
    
    (3,257
    )
    
    
    678
    
    
    
    10,492
    
    
    
    (9,632
    )Interest expense (contractual interest of $40,929 and
$79,810 in 2006 and $40,819 and $94,226 in 2005)
    
    
    22,664
    
    
    
    22,392
    
    
    
    43,470
    
    
    
    66,501Interest income
    
    
    (756
    )
    
    
    (49
    )
    
    
    (1,212
    )
    
    
    (488
    )Chapter 11 and related reorganization items
    
    
    43,662
    
    
    
    103,287
    
    
    
    55,271
    
    
    
    144,909Loss before provision for income taxes, equity in
earnings of joint ventures, and minority interest
    
    
    (68,827
    )
    
    
    (124,952
    )
    
    
    (87,037
    )
    
    
    (220,554
    )Provision for income taxes
    
    
    11,885
    
    
    
    9,697
    
    
    
    9,730
    
    
    
    15,822Loss before equity in earnings of joint ventures,
and minority interest
    
    
    (80,712
    )
    
    
    (134,649
    )
    
    
    (96,767
    )
    
    
    (236,376
    )Equity in earnings of joint ventures, net of tax
    
    
    7,533
    
    
    
    2,222
    
    
    
    14,217
    
    
    
    6,485Minority interest, net of tax
    
    
    (2,206
    )
    
    
    (1,223
    )
    
    
    (3,172
    )
    
    
    (2,557
    )Net loss
    
    $
    (75,385
    )
    
    $
    (133,650
    )
    
    $
    (85,722
    )
    
    $
    (232,448
    )Basic and diluted loss per share
    
    $
    (1.29
    )
    
    $
    (2.28
    )
    
    $
    (1.46
    )
    
    $
    (3.96
    )Weighted average basic and diluted shares outstanding
    
    
    58,661
    
    
    
    58,646
    
    
    
    58,657
    
    
    
    58,647
  2




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TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Amounts in thousands  Unaudited)
 Six Months Ended June 30,2006
    
    
    2005(as restatedsee Note 1)OPERATING ACTIVITIES:Net loss
    
    $
    (85,722
    )
    
    $
    (232,448
    )Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:Chapter 11 and related reorganization items, net
    
    
    38,682
    
    
    
    131,535Non-cash restructuring and impairment, net
    
    
    26,313
    
    
    
    63,722Depreciation
    
    
    81,405
    
    
    
    89,931Deferred income tax provision (benefit)
    
    
    (7,448
    )
    
    
    12,711Equity in earnings of joint ventures, net
    
    
    (14,217
    )
    
    
    (6,485
    )Change in working capital and other operating items
    
    
    (9,994
    )
    
    
    (170,509
    )Net cash provided by (used in) operating activities
    
    
    29,019
    
    
    
    (111,543
    )INVESTING ACTIVITIES:Cash disbursed for purchases of property, plant and equipment
    
    
    (60,359
    )
    
    
    (89,718
    )Cash proceeds from asset disposal
    
    
    32,664
    
    
    
    Net cash used in investing activities
    
    
    (27,695
    )
    
    
    (89,718
    )FINANCING ACTIVITIES:Proceeds from borrowings
    
    
    20,894
    
    
    
    18,452Repayments of borrowings
    
    
    (43,886
    )
    
    
    (449,871
    )Proceeds from DIP credit facility
    
    
    345,500
    
    
    
    866,785Repayments of DIP credit facility
    
    
    (269,500
    )
    
    
    (331,625
    )Net cash provided by financing activities
    
    
    53,008
    
    
    
    103,741NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    54,332
    
    
    
    (97,520
    )Cash and cash equivalents, beginning of period
    
    
    65,791
    
    
    
    149,101CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    120,123
    
    
    $
    51,581Supplemental cash flow information:Interest paid, net of amounts capitalized
    
    $
    38,920
    
    
    $
    29,161Income taxes paid (refunded)
    
    $
    4,140
    
    
    $
    (292
    )Non-cash investing activities:Net decrease in liabilities for purchases of property, plant and equipment
    
    $
    (12,321
    )
    
    $
    (38,181
    )
  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
   Restatement
  4




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Six Months EndedJune 30, 2005As previously
    
    Asreported
    
    restatedConsolidated Financial Statement CaptionConsolidated Statement of Cash FlowsChange in working capital and other operating items
    
    
    (208,690
    )
    
    
    (170,509
    )Net cash used in operating activities
    
    
    (149,724
    )
    
    
    (111,543
    )Cash disbursed for purchases of property, plant and equipment*
    
    
    (51,537
    )
    
    
    (89,718
    )Net cash used in investing activities
    
    
    (51,537
    )
    
    
    (89,718
    )Net decrease in liabilities for purchases of property, plant and equipment
    
    
    
    
    
    
    (38,181
    )
 
 *  Previously referred to as Capital expenditures, net when amounts accrued were included. Note 2. Chapter 11 Reorganization Proceedings
     Financial Statement Classification
   5




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June 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
    
    
    191,790
    
    
    
    177,60012% Senior notes
    
    
    258,000
    
    
    
    258,000Total debt
    
    
    833,539
    
    
    
    819,349Pension and other post-retirement benefits
    
    
    153,854
    
    
    
    162,886Pre-petition accounts payable and accruals
    
    
    175,181
    
    
    
    195,294Accrued interest on debt subject to compromise
    
    
    21,343
    
    
    
    21,343Executory contracts
    
    
    115,636
    
    
    
    85,345Total liabilities subject to compromise
    
    $
    1,299,553
    
    
    $
    1,284,217
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Professional fees directly related to the filing
    
    $
    12,556
    
    
    $
    7,770
    
    
    $
    21,136
    
    
    $
    19,964Key employee retention costs
    
    
    875
    
    
    
    1,657
    
    
    
    3,836
    
    
    
    1,693Write off of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,135Estimated executory contract rejection damages
    
    
    30,231
    
    
    
    93,712
    
    
    
    30,299
    
    
    
    93,920Other expenses directly attributable to the
Companys reorganization
    
    
    
    
    
    
    148
    
    
    
    
    
    
    
    197Total
    
    $
    43,662
    
    
    $
    103,287
    
    
    $
    55,271
    
    
    $
    144,909
  6




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Debtors Financial Statements
  Debtors Condensed Combined Balance Sheet
Debtors- in-Possession
 June 30,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    51,879
    
    
    $
    858Accounts receivable
    
    
    159,811
    
    
    
    173,206Inventories
    
    
    61,755
    
    
    
    60,068Prepaid tooling and other
    
    
    27,546
    
    
    
    65,882Total current assets
    
    
    300,991
    
    
    
    300,014Property, plant and equipment, net
    
    
    511,457
    
    
    
    538,598Investments in and advances to non-debtor subsidiaries
    
    
    856,264
    
    
    
    796,662Other assets, net
    
    
    51,616
    
    
    
    60,959Total assets
    
    $
    1,720,328
    
    
    $
    1,696,233LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities not subject to compromise:Current maturities of long-term debt and capital lease obligations
    
    $
    14,255
    
    
    $
    14,257Current portion of debtor-in-possession borrowings
    
    
    607,000
    
    
    
    Accounts payable
    
    
    129,809
    
    
    
    134,069Accrued liabilities
    
    
    95,086
    
    
    
    87,098Total current liabilities
    
    
    846,150
    
    
    
    235,424Liabilities subject to compromise
    
    
    1,315,916
    
    
    
    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
    
    
    20,579
    
    
    
    32,098Total noncurrent liabilities
    
    
    105,330
    
    
    
    647,852Total stockholders deficit
    
    
    (547,068
    )
    
    
    (487,623
    )Total liabilities and stockholders deficit
    
    $
    1,720,328
    
    
    $
    1,696,233
 7




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##### Table of Contents



Debtors Condensed Combined Statement of Operations
Debtors-in-Possession
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Revenues
    
    $
    408,392
    
    
    $
    557,522
    
    
    $
    840,042
    
    
    $
    1,135,139Cost of sales
    
    
    385,437
    
    
    
    519,356
    
    
    
    801,695
    
    
    
    1,064,500Gross profit
    
    
    22,955
    
    
    
    38,166
    
    
    
    38,347
    
    
    
    70,639Selling, general and administrative expenses
    
    
    18,229
    
    
    
    25,277
    
    
    
    39,487
    
    
    
    54,059Restructuring and asset impairment charges, net
    
    
    7,853
    
    
    
    37,538
    
    
    
    10,264
    
    
    
    69,433Other operating income
    
    
    (810
    )
    
    
    
    
    
    
    (2,115
    )
    
    
    Operating loss
    
    
    (2,317
    )
    
    
    (24,649
    )
    
    
    (9,289
    )
    
    
    (52,853
    )Interest expense
    
    
    20,017
    
    
    
    19,402
    
    
    
    38,037
    
    
    
    60,087Interest income
    
    
    (638
    )
    
    
    (1
    )
    
    
    (959
    )
    
    
    (126
    )Inter-company interest income
    
    
    (6,436
    )
    
    
    (5,708
    )
    
    
    (12,530
    )
    
    
    (11,598
    )Chapter 11 and related reorganization items
    
    
    43,662
    
    
    
    103,287
    
    
    
    55,271
    
    
    
    144,909Loss before provision for income taxes, equity in
earnings of joint ventures and equity in earnings
from non-Debtor subsidiaries
    
    
    (58,922
    )
    
    
    (141,629
    )
    
    
    (89,108
    )
    
    
    (246,125
    )Provision for income taxes
    
    
    1,166
    
    
    
    4,964
    
    
    
    2,104
    
    
    
    8,215Loss before equity in earnings of joint ventures
and equity in earnings of non-Debtor subsidiaries
    
    
    (60,088
    )
    
    
    (146,593
    )
    
    
    (91,212
    )
    
    
    (254,340
    )Equity in earnings of joint ventures, net of tax
    
    
    68
    
    
    
    89
    
    
    
    136
    
    
    
    Equity in earnings (losses) of non-Debtor subsidiaries
    
    
    (15,365
    )
    
    
    12,854
    
    
    
    5,354
    
    
    
    21,892Net loss
    
    $
    (75,385
    )
    
    $
    (133,650
    )
    
    $
    (85,722
    )
    
    $
    (232,448
    )
 8




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Debtors Condensed Combined Statements of Cash Flows
Debtors- in-Possession
 Six Months Ended June 30,2006
    
    
    2005(as restated)OPERATING ACTIVITIES:Net loss
    
    $
    (85,722
    )
    
    $
    (232,448
    )Adjustments required to reconcile net loss to net cash provided
by (used in) operating activities:Chapter 11 and related reorganization items, net
    
    
    38,682
    
    
    
    131,535Non-cash restructuring and impairment, net
    
    
    10,986
    
    
    
    62,155Depreciation
    
    
    46,463
    
    
    
    56,106Equity in earnings of joint ventures and subsidiaries, net
    
    
    (5,490
    )
    
    
    (21,892
    )Change in working capital and other operating items
    
    
    (4,929
    )
    
    
    (169,570
    )Net cash used for operating activities
    
    
    (10
    )
    
    
    (174,114
    )INVESTING ACTIVITIES:Cash disbursed for purchases of property, plant and equipment
    
    
    (24,963
    )
    
    
    (33,430
    )Net cash used for investing activities
    
    
    (24,963
    )
    
    
    (33,430
    )FINANCING ACTIVITIES:Repayments of borrowings
    
    
    (6
    )
    
    
    (428,941
    )Proceeds from DIP credit facility
    
    
    345,500
    
    
    
    866,785Repayments of DIP credit facility
    
    
    (269,500
    )
    
    
    (331,625
    )Net cash provided by financing activities
    
    
    75,994
    
    
    
    106,219NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    51,021
    
    
    
    (101,325
    )Cash and cash equivalents, beginning of period
    
    
    858
    
    
    
    107,081CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    51,879
    
    
    $
    5,756
 Note 3. New Accounting Pronouncements.
 SFAS No. 151, Inventory Costs, an Amendment of ARB No. 43, Chapter 4
 FASB Interpretation No. 48
 Note 4. Accounts Receivable Securitization Facility
  9




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Note 5. Inventories
  June 30,
    
    
    December 31,2006
    
    
    2005Raw materials
    
    $
    60,292
    
    
    $
    56,309Work in process
    
    
    32,855
    
    
    
    30,710Finished goods
    
    
    41,169
    
    
    
    36,414$
    134,316
    
    
    $
    123,433
 Note 6. Goodwill
  Balance at December 31, 2005
    
    $
    153,037Currency translation adjustment and other
    
    
    11,487Balance at June 30, 2006
    
    $
    164,524
 Note 7. Investments in Joint Ventures
  Note 8. Restructuring and Asset Impairment Charges
   10




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AssetImpairments
    
    
    Severance
    
    
    Other Costs
    
    
    TotalBalance at December 31, 2005
    
    $
    
    
    
    $
    523
    
    
    $
    
    
    
    $
    523Provision
    
    
    13,511
    
    
    
    6,126
    
    
    
    7,080
    
    
    
    26,717Cash usage
    
    
    
    
    
    
    (2,827
    )
    
    
    (1,966
    )
    
    
    (4,793
    )Non-cash usage and revisions of estimates
    
    
    (13,511
    )
    
    
    
    
    
    
    (5,114
    )
    
    
    (18,625
    )Balance at June 30, 2006
    
    $
    
    
    
    $
    3,822
    
    
    $
    
    
    
    $
    3,822
   Restructuring
and related asset impairments, net
    
    $
    26,717Revision of
estimate
    
    
    Other asset
impairments
    
    
    4,147Total
    
    $
    30,864
 Note 9. Debt
 Chapter 11 Impact
     DIP Financing
   11




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Back-Stop Agreement
   Debt Classified as Not Subject to Compromise
  Interest Rate Swap Contracts
  12




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##### Table of Contents



Note 10. Comprehensive Loss
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net loss
    
    $
    (75,385
    )
    
    $
    (133,650
    )
    
    $
    (85,722
    )
    
    $
    (232,448
    )Change in cumulative translation adjustment
    
    
    11,598
    
    
    
    (9,110
    )
    
    
    18,930
    
    
    
    (17,061
    )Unrealized gain (loss) on qualifying cash
flow hedges
    
    
    
    
    
    
    1,601
    
    
    
    
    
    
    
    3,328Comprehensive loss
    
    $
    (63,787
    )
    
    $
    (141,159
    )
    
    $
    (66,792
    )
    
    $
    (246,181
    )
 Note 11. Income Taxes
   Note 12. Stockholders Deficit
 Loss Per Share
  Stock-Based Compensation
    13




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##### Table of Contents



Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30, 2005
    
    
    June 30, 2005Net lossAs Reported
    
    $
    (133,650
    )
    
    $
    (232,448
    )Add: Stock based employee compensation expense
included in
reported net loss, net of tax related effects
    
    
    237
    
    
    
    511Deduct: Total stock-based employee compensation
(expense) income determined under fair value
based method for all awards, net of related tax
effects
    
    
    542
    
    
    
    654Pro forma net loss
    
    $
    (132,871
    )
    
    $
    (231,283
    )Basic loss per share as reported
    
    $
    (2.28
    )
    
    $
    (3.96
    )Pro forma
    
    
    (2.27
    )
    
    
    (3.94
    )Diluted loss per share as reported
    
    $
    (2.28
    )
    
    $
    (3.96
    )Pro forma
    
    
    (2.27
    )
    
    
    (3.94
    )
   Stock Option Plans
     Number
    
    Options Outstanding
    
    Options ExercisableRange of
    
    Outstanding
    
    Weighted-Average
    
    Weighted-
    
    Number
    
    Weighted-Exercisable
    
    At
    
    Remaining
    
    Average
    
    Exercisable
    
    AverageOptions
    
    6/30/06
    
    Contractual Life
    
    Exercise Price
    
    6/30/06
    
    Exercise Price17.13  22.97
    
    
    93,500
    
    
    
    2.13
    
    
    $
    18.25
    
    
    
    93,500
    
    
    $
    18.25
 14




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##### Table of Contents



Incentive Plan
    Number
    
    Options Outstanding
    
    Options ExercisableRange of
    
    Outstanding
    
    Weighted-Average
    
    
    
    
    
    NumberExercisable
    
    At
    
    Remaining
    
    Weighted-Average
    
    Exercisable
    
    Weighted-AverageOptions
    
    6/30/06
    
    Contractual Life
    
    Exercise Price
    
    6/30/06
    
    Exercise Price$1.99  $7.08
    
    
    671,825
    
    
    
    7.64
    
    
    $
    3.39
    
    
    
    671,825
    
    
    $
    3.3911.33  15.56
    
    
    962,100
    
    
    
    4.60
    
    
    
    12.94
    
    
    
    962,100
    
    
    
    12.9426.81
    
    
    121,490
    
    
    
    2.81
    
    
    
    26.81
    
    
    
    121,490
    
    
    
    26.81
 Director Option Plan
    Options Outstanding
    
    Options ExercisableRange of
    
    Number
    
    Weighted-Average
    
    
    
    
    
    NumberExercisable
    
    Outstanding
    
    Remaining
    
    Weighted-Average
    
    Exercisable
    
    Weighted-AverageOptions
    
    At 6/30/06
    
    Contractual Life
    
    Exercise Price
    
    6/30/06
    
    Exercise Price$18.94  $22.97
    
    
    85,200
    
    
    
    1.83
    
    
    $
    19.63
    
    
    
    85,200
    
    
    $
    19.63
 15




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##### Table of Contents



Note 13. Retirement Plans
  Pension Benefits
    
    
    Other Benefits2006
    
    
    2005
    
    
    2006
    
    
    2005Service cost
    
    $
    1,065
    
    
    $
    1,720
    
    
    $
    32
    
    
    $
    200Interest cost
    
    
    3,771
    
    
    
    3,790
    
    
    
    2,084
    
    
    
    2,065Expected return on plan assets
    
    
    (3,238
    )
    
    
    (3,672
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    315
    
    
    
    1,231
    
    
    
    
    
    
    
    Amortization of net losses
    
    
    764
    
    
    
    1,027
    
    
    
    1,951
    
    
    
    3,229Net periodic benefit cost
    
    $
    2,677
    
    
    $
    4,096
    
    
    $
    4,067
    
    
    $
    5,494
  Pension Benefits
    
    
    Other Benefits2006
    
    
    2005
    
    
    2006
    
    
    2005Service cost
    
    $
    2,130
    
    
    $
    3,440
    
    
    $
    64
    
    
    $
    400Interest cost
    
    
    7,542
    
    
    
    7,580
    
    
    
    4,133
    
    
    
    4,130Expected return on plan assets
    
    
    (6,476
    )
    
    
    (7,344
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    630
    
    
    
    2,462
    
    
    
    
    
    
    
    Amortization of net losses
    
    
    1,528
    
    
    
    2,054
    
    
    
    4,098
    
    
    
    6,459Net periodic benefit cost
    
    $
    5,354
    
    
    $
    8,192
    
    
    $
    8,295
    
    
    $
    10,989
      16




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##### Table of Contents



Note 14. Segment Information
  NorthAmerica
    
    International
    
    TotalThree months ended June 30, 2006:Revenues
    
    $
    415,824
    
    
    $
    351,083
    
    
    $
    766,907Operating income (loss)
    
    
    (20,938
    )
    
    
    17,681
    
    
    
    (3,257
    )Restructuring and asset impairment charges
    
    
    25,213
    
    
    
    3,129
    
    
    
    28,342Total assets
    
    $
    1,129,299
    
    
    $
    1,172,412
    
    
    $
    2,301,711Three months ended June 30, 2005:Revenues
    
    $
    570,397
    
    
    $
    352,617
    
    
    $
    923,014Operating income (loss)
    
    
    (26,346
    )
    
    
    27,024
    
    
    
    678Restructuring and asset impairment charges
    
    
    37,538
    
    
    
    1,751
    
    
    
    39,289Total assets
    
    $
    1,356,539
    
    
    $
    1,115,262
    
    
    $
    2,471,801Six months ended June 30, 2006:Revenues
    
    $
    857,211
    
    
    $
    679,416
    
    
    $
    1,536,627Operating income (loss)
    
    
    (29,794
    )
    
    
    40,286
    
    
    
    10,492Restructuring and asset impairment charges
    
    
    27,624
    
    
    
    3,240
    
    
    
    30,864Total assets
    
    $
    1,129,299
    
    
    $
    1,172,412
    
    
    $
    2,301,711Six months ended June 30, 2005:Revenues
    
    $
    1,160,005
    
    
    $
    678,889
    
    
    $
    1,838,894Operating income (loss)
    
    
    (56,197
    )
    
    
    46,565
    
    
    
    (9,632
    )Restructuring and asset impairment charges
    
    
    69,433
    
    
    
    1,751
    
    
    
    71,184Total assets
    
    $
    1,356,539
    
    
    $
    1,115,262
    
    
    $
    2,471,801
  Note 15. Commitments and Contingencies
 Key Employee Retention Plan Agreements
  17




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##### Table of Contents



Environmental Matters
   Litigation
     18




---



##### Table of Contents



Note 16. Subsequent Events
    Note 17. Consolidating Guarantor and Non-Guarantor Financial Information
  19




---



##### Table of Contents



TOWER AUTOMOTIVE INC.
Consolidating Balance Sheet at June 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
    
    $
    51,852
    
    
    $
    
    
    
    $
    27
    
    
    $
    68,115
    
    
    $
    129
    
    
    $
    
    
    
    $
    120,123Accounts receivable
    
    
    2,585
    
    
    
    4,056
    
    
    
    153,170
    
    
    
    212,534
    
    
    
    20,139
    
    
    
    
    
    
    
    392,484Inventories
    
    
    
    
    
    
    
    
    
    
    61,755
    
    
    
    55,957
    
    
    
    16,604
    
    
    
    
    
    
    
    134,316Prepaid tooling and other
    
    
    3,911
    
    
    
    
    
    
    
    23,635
    
    
    
    79,809
    
    
    
    26,651
    
    
    
    
    
    
    
    134,006Total current assets
    
    
    58,348
    
    
    
    4,056
    
    
    
    238,587
    
    
    
    416,415
    
    
    
    63,523
    
    
    
    
    
    
    
    780,929Property, plant and equipment, net
    
    
    432
    
    
    
    
    
    
    
    511,025
    
    
    
    305,050
    
    
    
    167,419
    
    
    
    
    
    
    
    983,926Investments in and advances to (from) affiliates
    
    
    579,900
    
    
    
    (159,536
    )
    
    
    (763,429
    )
    
    
    22,936
    
    
    
    (3,373
    )
    
    
    566,354
    
    
    
    242,852Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    164,524
    
    
    
    
    
    
    
    
    
    
    
    164,524Other assets, net
    
    
    23,125
    
    
    
    
    
    
    
    28,491
    
    
    
    61,452
    
    
    
    16,412
    
    
    
    
    
    
    
    129,480$
    661,805
    
    
    $
    (155,480
    )
    
    $
    14,674
    
    
    $
    970,377
    
    
    $
    243,981
    
    
    $
    566,354
    
    
    $
    2,301,711Liabilities and Stockholders Investment (Deficit)Current liabilities not subject to compromise:Current maturities of long-term debt and capital lease obligations
    
    $
    
    
    
    $
    
    
    
    $
    14,255
    
    
    $
    21,007
    
    
    $
    107,113
    
    
    $
    
    
    
    $
    142,375Current portion debtor-in-possession borrowings
    
    
    607,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    607,000Accounts payable
    
    
    9,180
    
    
    
    
    
    
    
    120,629
    
    
    
    189,597
    
    
    
    52,472
    
    
    
    
    
    
    
    371,878Accrued liabilities
    
    
    34,891
    
    
    
    
    
    
    
    60,195
    
    
    
    77,027
    
    
    
    9,708
    
    
    
    
    
    
    
    181,821Total current liabilities
    
    
    651,071
    
    
    
    
    
    
    
    195,079
    
    
    
    287,631
    
    
    
    169,293
    
    
    
    
    
    
    
    1.303,074Liabilities subject to compromise
    
    
    629,016
    
    
    
    391,588
    
    
    
    295,312
    
    
    
    
    
    
    
    
    
    
    
    (16,363
    )
    
    
    1,299,553Non-current liabilities not subject to compromise:Long-term debt, net of current maturities
    
    
    40,986
    
    
    
    
    
    
    
    43,765
    
    
    
    5,215
    
    
    
    16,417
    
    
    
    
    
    
    
    106,383Obligations under capital leases, net of current maturities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,876
    
    
    
    
    
    
    
    
    
    
    
    30,876Other noncurrent liabilities
    
    
    9,117
    
    
    
    
    
    
    
    11,462
    
    
    
    73,756
    
    
    
    14,558
    
    
    
    
    
    
    
    108,893Total noncurrent liabilities
    
    
    50,103
    
    
    
    
    
    
    
    55,227
    
    
    
    109,847
    
    
    
    30,975
    
    
    
    
    
    
    
    246,152Stockholders investment (deficit)
    
    
    (668,385
    )
    
    
    (547,068
    )
    
    
    (530,944
    )
    
    
    572,899
    
    
    
    43,713
    
    
    
    582,717
    
    
    
    (547,068
    )$
    661,805
    
    
    $
    (155,480
    )
    
    $
    14,674
    
    
    $
    970,377
    
    
    $
    243,981
    
    
    $
    566,354
    
    
    $
    2,301,711
 20




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##### Table of Contents



TOWER AUTOMOTIVE INC.
Consolidating Statement of Operations for the Three Months Ended June 30, 2006
(Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR.J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    408,392
    
    
    $
    269,277
    
    
    $
    89,238
    
    
    $
    
    
    
    $
    766,907Cost of sales
    
    
    (2,081
    )
    
    
    
    
    
    
    387,518
    
    
    
    233,860
    
    
    
    89,481
    
    
    
    
    
    
    
    708,778Gross profit
    
    
    2,081
    
    
    
    
    
    
    
    20,874
    
    
    
    35,417
    
    
    
    (243
    )
    
    
    
    
    
    
    58,129Selling, general and administrative expenses
    
    
    (11,349
    )
    
    
    
    
    
    
    29,578
    
    
    
    12,109
    
    
    
    2,706
    
    
    
    
    
    
    
    33,044Restructuring and asset impairment charges, net
    
    
    (65
    )
    
    
    (4,416
    )
    
    
    12,334
    
    
    
    20,489
    
    
    
    
    
    
    
    
    
    
    
    28,342Other operating expense/(income)
    
    
    (8,891
    )
    
    
    
    
    
    
    8,081
    
    
    
    810
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    22,386
    
    
    
    4,416
    
    
    
    (29,119
    )
    
    
    2,009
    
    
    
    (2,949
    )
    
    
    
    
    
    
    (3,257
    )Interest expense
    
    
    19,093
    
    
    
    
    
    
    
    924
    
    
    
    712
    
    
    
    1,935
    
    
    
    
    
    
    
    22,664Interest income
    
    
    (640
    )
    
    
    
    
    
    
    2
    
    
    
    32
    
    
    
    (150
    )
    
    
    
    
    
    
    (756
    )Intercompany interest expense/(income)
    
    
    (6,436
    )
    
    
    
    
    
    
    
    
    
    
    6,778
    
    
    
    (342
    )
    
    
    
    
    
    
    Chapter 11 and related reorganization items
    
    
    13,437
    
    
    
    
    
    
    
    30,225
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,662Income (loss) before provision for income taxes, equity in
earnings (loss) of joint ventures and subsidiaries, and
minority interest
    
    
    (3,068
    )
    
    
    4,416
    
    
    
    (60,270
    )
    
    
    (5,513
    )
    
    
    (4,392
    )
    
    
    
    
    
    
    (68,827
    )Provision (benefit) for income taxes
    
    
    763
    
    
    
    78
    
    
    
    325
    
    
    
    11,928
    
    
    
    (1,209
    )
    
    
    
    
    
    
    11,885Income (loss) before equity in earnings of joint ventures
and subsidiaries, and minority interest
    
    
    (3,831
    )
    
    
    4,338
    
    
    
    (60,595
    )
    
    
    (17,441
    )
    
    
    (3,183
    )
    
    
    
    
    
    
    (80,712
    )Equity in earnings (loss) of joint ventures and
subsidiaries, net of tax
    
    
    (75,892
    )
    
    
    (79,723
    )
    
    
    
    
    
    
    7,465
    
    
    
    
    
    
    
    155,683
    
    
    
    7,533Minority interest, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,206
    )
    
    
    
    
    
    
    
    
    
    
    (2,206
    )Net income (loss)
    
    $
    (79,723
    )
    
    $
    (75,385
    )
    
    $
    (60,595
    )
    
    $
    (12,182
    )
    
    $
    (3,183
    )
    
    $
    155,683
    
    
    $
    (75,385
    )
 21




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##### Table of Contents



TOWER AUTOMOTIVE INC.
Consolidating Statement of Operations for the Six Months Ended June 30, 2006
(Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR.J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    840,042
    
    
    $
    515,291

    
    
    $
    181,294
    
    
    $
    
    
    
    $
    1,536,627Cost of sales
    
    
    (4,180
    )
    
    
    
    
    
    
    805,875
    
    
    
    449,384
    
    
    
    177,631
    
    
    
    
    
    
    
    1,428,710Gross profit
    
    
    4,180
    
    
    
    
    
    
    
    34,167
    
    
    
    65,907
    
    
    
    3,663
    
    
    
    
    
    
    
    107,917Selling, general and administrative expenses
    
    
    (21,225
    )
    
    
    
    
    
    
    60,712
    
    
    
    22,325
    
    
    
    5,269
    
    
    
    
    
    
    
    67,081Restructuring and asset impairment charges, net
    
    
    (60
    )
    
    
    (8,558
    )
    
    
    18,882
    
    
    
    20,792
    
    
    
    (192
    )
    
    
    
    
    
    
    30,864Other operating expense/(income)
    
    
    (16,839
    )
    
    
    
    
    
    
    14,724
    
    
    
    1,595
    
    
    
    
    
    
    
    
    
    
    
    (520
    )Operating income (loss)
    
    
    42,304
    
    
    
    8,558
    
    
    
    (60,151
    )
    
    
    21,195
    
    
    
    (1,414
    )
    
    
    
    
    
    
    10,492Interest expense
    
    
    36,258
    
    
    
    
    
    
    
    1,779
    
    
    
    1,455
    
    
    
    3,978
    
    
    
    
    
    
    
    43,470Interest income
    
    
    (958
    )
    
    
    
    
    
    
    (1
    )
    
    
    79
    
    
    
    (332
    )
    
    
    
    
    
    
    (1,212
    )Intercompany interest expense/(income)
    
    
    (12,530
    )
    
    
    
    
    
    
    
    
    
    
    13,205
    
    
    
    (675
    )
    
    
    
    
    
    
    Chapter 11 and related reorganization items
    
    
    24,978
    
    
    
    68
    
    
    
    30,225
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,271Income (loss) before provision for income taxes, equity in
earnings (loss) of joint ventures and subsidiaries, and
minority interest
    
    
    (5,444
    )
    
    
    8,490
    
    
    
    (92,154
    )
    
    
    6,456
    
    
    
    (4,385
    )
    
    
    
    
    
    
    (87,037
    )Provision (benefit) for income taxes
    
    
    1,509
    
    
    
    140
    
    
    
    455
    
    
    
    8,832
    
    
    
    (1,206
    )
    
    
    
    
    
    
    9,730Income (loss) before equity in earnings of joint ventures
and subsidiaries, and minority interest
    
    
    (6,953
    )
    
    
    8,350
    
    
    
    (92,609
    )
    
    
    (2,376
    )
    
    
    (3,179
    )
    
    
    
    
    
    
    (96,767
    )Equity in earnings (loss) of joint ventures and
subsidiaries, net of tax
    
    
    (87,119
    )
    
    
    (94,072
    )
    
    
    
    
    
    
    14,081
    
    
    
    
    
    
    
    181,327
    
    
    
    14,217Minority interest, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,172
    )
    
    
    
    
    
    
    
    
    
    
    (3,172
    )Net income (loss)
    
    $
    (94,072
    )
    
    $
    (85,722
    )
    
    $
    (92,609
    )
    
    $
    8,533
    
    
    $
    (3,179
    )
    
    $
    181,327
    
    
    $
    (85,722
    )
 22




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##### Table of Contents



TOWER AUTOMOTIVE, INC.
Consolidating Statement of Cash Flows for the Six Months Ended June 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)
    
    $
    (94,072
    )
    
    $
    (85,722
    )
    
    $
    (92,609
    )
    
    $
    8,533
    
    
    $
    (3,179
    )
    
    $
    181,327
    
    
    $
    (85,722
    )Adjustments required to reconcile net income (loss) to
net cash provided by (used in) operating activities:Chapter 11 and related reorganization items, net
    
    
    8,389
    
    
    
    68
    
    
    
    30,225
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,682Non-cash restructuring and impairment, net
    
    
    
    
    
    
    
    
    
    
    10,986
    
    
    
    15,327
    
    
    
    
    
    
    
    
    
    
    
    26,313Depreciation
    
    
    166
    
    
    
    
    
    
    
    46,297
    
    
    
    22,216
    
    
    
    12,726
    
    
    
    
    
    
    
    81,405Deferred income tax provision (benefit)
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (11,605
    )
    
    
    4,159
    
    
    
    
    
    
    
    (7,448
    )Equity in (earnings) loss of joint ventures and
subsidiaries, net
    
    
    87,119
    
    
    
    94,072
    
    
    
    
    
    
    
    (14,081
    )
    
    
    
    
    
    
    (181,327
    )
    
    
    (14,217
    )Change in working capital and other operating items
    
    
    (26,442
    )
    
    
    (8,418
    )
    
    
    29,933
    
    
    
    (582
    )
    
    
    (4,485
    )
    
    
    
    
    
    
    (9,994
    )Net cash provided by (used in) operating activities
    
    
    (24,840
    )
    
    
    
    
    
    
    24,830
    
    
    
    19,808
    
    
    
    9,221
    
    
    
    
    
    
    
    29,019INVESTING ACTIVITIES:Cash disbursed for purchases of property, plant and equipment
    
    
    (10
    )
    
    
    
    
    
    
    (24,953
    )
    
    
    (21,231
    )
    
    
    (14,165
    )
    
    
    
    
    
    
    (60,359
    )Cash proceeds from asset disposal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,664
    
    
    
    
    
    
    
    32,664Net cash provided by (used in) investing activities
    
    
    (10
    )
    
    
    
    
    
    
    (24,953
    )
    
    
    (21,231
    )
    
    
    18,499
    
    
    
    
    
    
    
    (27,695
    )FINANCING ACTIVITIES:Proceeds from borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,295
    
    
    
    9,599
    
    
    
    
    
    
    
    20,894Repayments of borrowings
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    (6,547
    )
    
    
    (37,333
    )
    
    
    
    
    
    
    (43,886
    )Proceeds from DIP credit facility
    
    
    345,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    345,500Repayments of DIP credit facility
    
    
    (269,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (269,500
    )Net cash provided by (used in) financing activities
    
    
    76,000
    
    
    
    
    
    
    
    (6
    )
    
    
    4,748
    
    
    
    (27,734
    )
    
    
    
    
    
    
    53,008NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    51,150
    
    
    
    
    
    
    
    (129
    )
    
    
    3,325
    
    
    
    (14
    )
    
    
    
    
    
    
    54,332CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    702
    
    
    
    
    
    
    
    156
    
    
    
    64,790
    
    
    
    143
    
    
    
    
    
    
    
    65,791CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    51,852
    
    
    $
    
    
    
    $
    27
    
    
    $
    68,115
    
    
    $
    129
    
    
    $
    
    
    
    $
    120,123
 23




---



##### Table of Contents



TOWER AUTOMOTIVE INC.
Consolidating Balance Sheet at December 31, 2005
(Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR.J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    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
    
    
    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
 24




---



##### Table of Contents



TOWER AUTOMOTIVE, INC.
Consolidating Statement of Operations for the Three Months Ended June 30, 2005
(Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR.J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    557,522
    
    
    $
    259,499
    
    
    $
    105,993
    
    
    $
    
    
    
    $
    923,014Cost of sales
    
    
    (1,799
    )
    
    
    
    
    
    
    522,057
    
    
    
    222,803
    
    
    
    100,564
    
    
    
    
    
    
    
    843,625Gross profit
    
    
    1,799
    
    
    
    
    
    
    
    35,465
    
    
    
    36,696
    
    
    
    5,429
    
    
    
    
    
    
    
    79,389Selling, general and administrative expenses
    
    
    (7,690
    )
    
    
    
    
    
    
    32,968
    
    
    
    10,881
    
    
    
    3,263
    
    
    
    
    
    
    
    39,422Restructuring and asset impairment charges, net
    
    
    398
    
    
    
    
    
    
    
    37,140
    
    
    
    1,751
    
    
    
    
    
    
    
    
    
    
    
    39,289Operating income (loss)
    
    
    9,091
    
    
    
    
    
    
    
    (34,643
    )
    
    
    24,064
    
    
    
    2,166
    
    
    
    
    
    
    
    678Interest expense
    
    
    16,542
    
    
    
    
    
    
    
    2,827
    
    
    
    1,117
    
    
    
    1,857
    
    
    
    
    
    
    
    22,343Chapter 11 and related reorganization items
    
    
    103,287
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103,287Income (loss) before provision for income taxes, equity
in earnings (loss) of joint ventures and subsidiaries,
and minority interest
    
    
    (110,738
    )
    
    
    
    
    
    
    (37,470
    )
    
    
    22,947
    
    
    
    309
    
    
    
    
    
    
    
    (124,952
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    461
    
    
    
    8,438
    
    
    
    798
    
    
    
    
    
    
    
    9,697Income (loss) before equity in earnings (loss) of
joint ventures and subsidiaries, and minority interest
    
    
    (110,738
    )
    
    
    
    
    
    
    (37,931
    )
    
    
    14,509
    
    
    
    (489
    )
    
    
    
    
    
    
    (134,649
    )Equity in earnings (loss) of joint ventures and
subsidiaries, net of tax
    
    
    (22,912
    )
    
    
    (133,650
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    158,784
    
    
    
    2,222Minority interest, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,223
    )
    
    
    
    
    
    
    
    
    
    
    (1,223
    )Net income (loss)
    
    $
    (133,650
    )
    
    $
    (133,650
    )
    
    $
    (37,931
    )
    
    $
    13,286
    
    
    $
    (489
    )
    
    $
    158,784
    
    
    $
    (133,650
    )
 25




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##### Table of Contents



TOWER AUTOMOTIVE, INC.
Consolidating Statement of Operations for the Six Months Ended June 30, 2005
(Amounts in thousands)
 Non-Guarantor
    
    
    Non-GuarantorR.J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    1,135,138
    
    
    $
    502,323
    
    
    $
    201,433
    
    
    $
    
    
    
    $
    1,838,894Cost of sales
    
    
    (3,341
    )
    
    
    
    
    
    
    1,069,634
    
    
    
    438,573
    
    
    
    189,848
    
    
    
    
    
    
    
    1,694,714Gross profit
    
    
    3,341
    
    
    
    
    
    
    
    65,504
    
    
    
    63,750
    
    
    
    11,585
    
    
    
    
    
    
    
    144,180Selling, general and administrative expenses
    
    
    (11,902
    )
    
    
    
    
    
    
    65,962
    
    
    
    22,468
    
    
    
    6,100
    
    
    
    
    
    
    
    82,628Restructuring and asset impairment charges, net
    
    
    503
    
    
    
    
    
    
    
    68,930
    
    
    
    1,751
    
    
    
    
    
    
    
    
    
    
    
    71,184Operating income (loss)
    
    
    14,740
    
    
    
    
    
    
    
    (69,388
    )
    
    
    39,531
    
    
    
    5,485
    
    
    
    
    
    
    
    (9,632
    )Interest expense
    
    
    52,918
    
    
    
    2,221
    
    
    
    4,787
    
    
    
    2,485
    
    
    
    3,602
    
    
    
    
    
    
    
    66,013Chapter 11 and related reorganization items
    
    
    144,909
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144,909Income (loss) before provision for income taxes, equity
in earnings (loss) of joint ventures and subsidiaries,
and minority interest
    
    
    (183,087
    )
    
    
    (2,221
    )
    
    
    (74,175
    )
    
    
    37,046
    
    
    
    1,883
    
    
    
    
    
    
    
    (220,554
    )Provision (benefit) for income taxes
    
    
    
    
    
    
    
    
    
    
    1,758
    
    
    
    12,778
    
    
    
    1,286
    
    
    
    
    
    
    
    15,822Income (loss) before equity in earnings (loss) of
joint ventures,
and minority interest
    
    
    (183,087
    )
    
    
    (2,221
    )
    
    
    (75,933
    )
    
    
    24,268
    
    
    
    597
    
    
    
    
    
    
    
    (236,376
    )Equity in earnings (loss) of joint ventures, net of tax
    
    
    (47,140
    )
    
    
    (230,227
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    283,852
    
    
    
    6,485Minority interest, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,557
    )
    
    
    
    
    
    
    
    
    
    
    (2,557
    )Net income (loss)
    
    $
    (230,227
    )
    
    $
    (232,448
    )
    
    $
    (75,933
    )
    
    $
    21,711
    
    
    $
    597
    
    
    $
    283,852
    
    
    $
    (232,448
    )
 26




---



##### Table of Contents



TOWER AUTOMOTIVE, INC.
Consolidating Statement of Cash Flows for the Six Months Ended June 30, 2005
(Amounts in thousands) (as restated)
 Non-Guarantor
    
    
    Non-GuarantorR. J. Tower
    
    
    Parent
    
    
    Guarantor
    
    
    Restricted
    
    
    UnrestrictedCorporation
    
    
    Guarantor
    
    
    Companies
    
    
    Companies
    
    
    Companies
    
    
    Eliminations
    
    
    ConsolidatedOPERATING ACTIVITIES:Net income (loss)
    
    $
    (230,227
    )
    
    $
    (232,448
    )
    
    $
    (75,933
    )
    
    $
    21,711
    
    
    $
    597
    
    
    $
    283,852
    
    
    $
    (232,448
    )Adjustments required to reconcile net income (loss) to
net cash provided by (used in) operating activities:Chapter 11 and related reorganization items, net
    
    
    131,535
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131,535Non-cash restructuring and impairment, net
    
    
    
    
    
    
    
    
    
    
    63,722
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,722Depreciation
    
    
    166
    
    
    
    
    
    
    
    55,940
    
    
    
    22,054
    
    
    
    11,771
    
    
    
    
    
    
    
    89,931Deferred income tax provision (benefit)
    
    
    
    
    
    
    
    
    
    
    (281
    )
    
    
    12,722
    
    
    
    270
    
    
    
    
    
    
    
    12,711Equity in (earnings) loss of joint ventures and
subsidiaries, net
    
    
    47,140
    *
    
    
    230,227
    *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (283,852
    )*
    
    
    (6,485
    )Change in working capital and other operating items
    
    
    (160,346
    )*
    
    
    2,221
    *
    
    
    (5,831
    )
    
    
    (7,024
    )
    
    
    471
    
    
    
    
    *
    
    
    (170,509
    )Net cash provided by (used in) operating activities
    
    
    (211,732
    )*
    
    
    
    *
    
    
    37,617
    
    
    
    49,463
    
    
    
    13,109
    
    
    
    
    
    
    
    (111,543
    )INVESTING ACTIVITIES:Cash disbursed for purchases of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    (33,430
    )
    
    
    (40,095
    )
    
    
    (16,193
    )
    
    
    
    
    
    
    (89,718
    )Net cash provided by (used in) investing activities
    
    
    
    *
    
    
    
    *
    
    
    (33,430
    )
    
    
    (40,095
    )
    
    
    (16,193
    )
    
    
    
    
    
    
    (89,718
    )FINANCING ACTIVITIES:Proceeds from borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,887
    
    
    
    12,565
    
    
    
    
    
    
    
    18,452Repayments of borrowings
    
    
    (425,000
    )
    
    
    
    
    
    
    (3,941
    )
    
    
    (11,626
    )
    
    
    (9,304
    )
    
    
    
    
    
    
    (449,871
    )Proceeds from DIP credit facility
    
    
    866,785
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    866,785Repayments of DIP credit facility
    
    
    (331,625
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (331,625
    )Net cash provided by (used in) financing activities
    
    
    110,160
    
    
    
    
    
    
    
    (3,941
    )
    
    
    (5,739
    )
    
    
    3,261
    
    
    
    
    
    
    
    103,741NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (101,572
    )
    
    
    
    
    
    
    246
    
    
    
    3,629
    
    
    
    177
    
    
    
    
    
    
    
    (97,520
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    107,599
    
    
    
    
    
    
    
    (517
    )
    
    
    41,948
    
    
    
    71
    
    
    
    
    
    
    
    149,101CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    6,027
    
    
    $
    
    
    
    $
    (271
    )
    
    $
    45,577
    
    
    $
    248
    
    
    $
    
    
    
    $
    51,581
  27




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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 June 30, 2006 Compared to the Three Months Ended June 30, 2005
 Revenues
 Gross Profit and Gross Margin.
 Selling, General and Administrative Expenses.
 28




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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.
 Six Months Ended June 30, 2006 Compared to the Six Months Ended June 30, 2005
 Revenues
 Gross Profit and Gross Margin.
 Selling, General and Administrative Expenses.
 29




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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.
 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.
 30




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##### Table of Contents




    
    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.
    
    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.
   Liquidity and Capital Resources
       31




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##### Table of Contents



Chapter 11 Impact
     DIP Financing
      32




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##### Table of Contents



Back-Stop Agreement
   Stock Options
  Market Risk
       33




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##### Table of Contents



Opportunities
  Disclosure Regarding Forward-Looking Statements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  34




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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.
  35




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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.
 36




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##### Table of Contents



TOWER AUTOMOTIVE, INC.RegistrantDate: September 15, 2006
    
    /s/ Christopher T. HattoChristopher T. HattoCorporate Controller and
Chief Accounting Officer
 37




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##### Table of Contents



Exhibitnumber
    
    Description31.1
    
    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.