-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qsx+WDolfEViMGRIHX8TtmyN3jsft9SJsIdSPa6qlKWtUJclbsR2ldCiU4/ETqHf 2lQ81X+ueBqy7CyhJdbW0w== 0000950124-97-003514.txt : 19970625 0000950124-97-003514.hdr.sgml : 19970625 ACCESSION NUMBER: 0000950124-97-003514 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970624 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WALBRO CORP CENTRAL INDEX KEY: 0000104174 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 381358966 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11567 FILM NUMBER: 97628848 BUSINESS ADDRESS: STREET 1: 6242 GARFIELD ST CITY: CASS CITY STATE: MI ZIP: 48726 BUSINESS PHONE: 5178722131 MAIL ADDRESS: STREET 1: 6432 GARFIELD ST CITY: CASS CITY STATE: MI ZIP: 48726 10-K/A 1 10-K/A 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-K/A (Amendment No. 1) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1996 Commission File Number 0-6955 ----------------------------- WALBRO CORPORATION (Exact name of registrant as specified in its charter) Delaware 38-1358966 (State of Incorporation) (I.R.S. Employer ID No.)
6242 Garfield Street, Cass City, Michigan 48726 (Address of principal executive offices) (Zip Code) (517) 872-2131 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.50 par value (Title of Class) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. The aggregate market value of the registrant's voting stock held by non-affiliates of the registrant, based upon the last reported sale price of the registrant's Common Stock on March 20, 1997. $145,167,210 The number of shares outstanding of the registrant's Common Stock, par value $.50, as of March 20, 1997. 8,652,737 --------- DOCUMENTS INCORPORATED BY REFERENCE Certain sections of the registrant's Annual Report to Stockholders for the fiscal year ended December 31, 1996 and of the registrant's Notice of Annual Meeting of Stockholders and Proxy Statement for its Annual Meeting of Stockholders to be held on April 30, 1997 are incorporated by reference into Parts II and III of this report. ================================================================================ 2 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this Form 10-K: 1. The following consolidated financial statements of the Company and its subsidiaries, together with the applicable report of independent public accountants, included in the Company's Annual Report to Stockholders for the fiscal year ended December 31, 1996 (the "1996 Annual Report"), are incorporated by reference to Item 8 of the Company's 1996 Annual Report on Form 10-K: Report of Independent Public Accountants. Consolidated Balance Sheets at December 31, 1996 and 1995. Consolidated Statements of Income for the years ended December 31, 1996, 1995 and 1994. Consolidated Statements of Stockholders' Equity for the years ended December 31, 1996, 1995 and 1994. Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994. Notes to Consolidated Financial Statements. 2. The following consolidated financial information of the Company and its subsidiaries for the three years ended December 31, 1996, 1995 and 1994 are incorporated by reference to the Company's 1996 Annual Report on Form 10-K. Report of Independent Public Accountants. Supplemental Note to Consolidated Financial Statements. (1) Valuation and Qualifying Accounts. (2) Supplemental Guarantor Condensed Consolidating Financial Statements. The information required to be submitted in Schedule II is included in the Supplemental Notes to Consolidated Financial Statements. 3. The following exhibits are filed with this report or incorporated by reference as set forth below. Exhibit No. - ----------- 3.1 Restated Certificate of Incorporation of the Company, filed as Exhibit 3.1 to the Company's Registration Statement on Form S-3, File No. 333-18317, incorporated herein by reference. 3.2 By-laws of the Company, as amended, filed as Exhibit 3.2 to the Company's 1989 Annual Report on Form 10-K, incorporated herein by reference. 3.3 Amendment to Section 2.9 of the By-laws of the Company, filed as Exhibit 3.3 to the Company's 1994 Annual Report on Form 10-K, incorporated herein by reference. 2 3 4.1 Shareholder Rights Plan, dated December 8, 1988, filed as the Exhibit to the Company's Registration Statement on Form 8-A for Shareholder Stock Purchase Rights filed December 12, 1988, incorporated herein by reference. 4.2 First Amendment to Rights Agreement, dated February 6, 1991, filed as Exhibit 4.8 to the Company's 1990 Annual Report on Form 10-K, incorporated herein by reference. 4.3 Loan Agreement between City of Ligonier, Indiana and Sharon Manufacturing Company, dated as of June 1, 1992, filed as Exhibit 4.12 to the Company's 1992 Annual Report on Form 10-K, incorporated herein by reference. 4.4 Loan Agreement between Walbro Automotive Corporation and the Town of Ossian, Indiana, dated as of December 1, 1993, filed as Exhibit 4.13 to the Company's 1993 Annual Report on Form 10-K, incorporated herein by reference. 4.5 Note Agreement among the Company and the purchasers named therein, dated as of October 1, 1994, relating to the 7.68% Senior Notes of the Company, filed as Exhibit 4.9 to the Company's 1994 Annual Report on Form 10-K, incorporated herein by reference. 4.6 Indenture for the Notes, dated as of July 27, 1995, among the Company, Walbro Engine Management Corporation, Sharon Manufacturing Company, Whitehead Engineered Products, Inc., and Bankers Trust Company, as Trustee (including form of Exchange Note), filed as Exhibit 2.3 to the Company's Current Report on Form 8-K, dated July 27, 1995 (the "Form 8-K"), incorporated herein by reference. 4.7 Amended and Restated Credit Agreement, dated as of September 22, 1995, among the Company, certain of its subsidiaries, Comerica Bank, as agent, and Harris Bank, as co-agent, filed as Exhibit 4.2 to the Company's Registration Statement on Form S-4, filed September 27, 1995, incorporated herein by reference. 4.8 First Amendment, dated March 8, 1996, to the Amended and Restated Credit Agreement among the Company, certain of its subsidiaries, Comerica Bank, as agent, and Harris Bank, as co-agent, filed as Exhibit 4.8 to the Company's 1995 Annual Report on Form 10-K, incorporated herein by reference. 4.9 First Amendment, dated as of July 26, 1995, to the Note Agreement among the Company and the purchasers named therein, relating to the 7.68% Senior Notes of the Company, filed as Exhibit 4.9 to the Company's 1995 Annual Report on Form 10-K, incorporated herein by reference. 4.10 Certificate of Trust of Walbro Capital Trust, dated December 17, 1996, filed as Exhibit 4.10 to the Company's Registration Statement on Form S-3, File No. 333-18317, incorporated herein by reference. 4.11 Amended and Restated Declaration of Trust of Walbro Capital Trust, dated as of February 3, 1997, among Walbro Corporation, as Sponsor, Bankers Trust (Delaware), as Delaware Trustee and Lambert E. Althaver, Daniel L. Hittler and Michael A. Shope, as Regular Trustees filed as Exhibit 4.11 to the Company's Annual Report on Form 10-K, incorporated herein by reference. 4.12 Indenture between Walbro Corporation and Bankers Trust Company, as Indenture Trustee, dated as of February 3, 1997 filed as Exhibit 4.12 to the Company's Annual Report on Form 10-K, incorporated herein by reference. 3 4 4.13 Form of Preferred Security issued by Walbro Capital Trust (included as Exhibit A-1 to Exhibit 4.11 hereof). 4.14 Convertible Debenture issued by Walbro Corporation to Walbro Capital Trust (included as Exhibit A to Exhibit 4.12 hereof). 4.15 Preferred Securities Guarantee Agreement between Walbro Corporation, as Guarantor, and Bankers Trust Company, as Guarantee Trustee with respect to the Preferred Securities of Walbro Capital Trust, dated as of February 3, 1997 filed as Exhibit 4.15 to the Company's Annual Report on Form 10-K, incorporated herein by reference. 10.1 The Company's 1983 Incentive Stock Option Plan, filed as the Exhibit to the Company's Registration Statement on Form S-8, filed November 15, 1989, incorporated herein by reference.** 10.2 Joint Venture Agreement between the Company and Mitsuba Electric Manufacturing Company, Ltd., dated December 12, 1986, filed as Exhibit 10.4 to the Company's 1986 Annual Report on Form 10-K, incorporated herein by reference. 10.3 The Company's Equity Based Long-Term Incentive Plan, filed as Exhibit 4.5 to the Company's Registration Statement on Form S-8, filed June 15, 1992, incorporated herein by reference.** 10.4 Executive Disability Plan adopted July 8, 1988, filed as Exhibit 10.10 to the Company's 1988 Annual Report on Form 10-K, incorporated herein by reference.** 10.5 Retirement Income Plan for Directors, dated February 9, 1988, filed as Exhibit 10.11 to the Company's 1988 Annual Report on Form 10-K, incorporated herein by reference.** 10.6 Equipment Leasing Agreement between the Company and NEMLC Leasing Associates No. 3, without supplements, dated July 1, 1988, filed as Exhibit 10.13 to the Company's 1988 Annual Report on Form 10-K, incorporated herein by reference. 10.7 The Company's Employee Stock Ownership Plan, dated August 15, 1989, filed as Exhibit 10.14 to the Company's 1989 Annual Report on Form 10-K, incorporated herein by reference. 10.8 Walbro Engine Management Incentive Compensation Plan, filed as Exhibit 10.21 to the Company's 1990 Annual Report on Form 10-K, incorporated herein by reference.** 10.9 Joint Venture Agreement, dated June 17, 1991, between the Company and Jaeger S.A, an indirect, majority-controlled subsidiary of Magneti Marelli S.p.A., relating to the Marwal Systems S.A. joint venture, filed as Exhibit 10.23 to the Company's Registration Statement on Form S-2, File No. 33-41425, incorporated herein by reference. 10.10 Joint Venture Agreement between the Company and Jaeger S.A., dated as of January 1, 1993, relating to the Marwal do Brasil joint venture, filed as Exhibit 10.10 to the Company's 1992 Annual Report on Form 10-K, incorporated herein by reference. 10.11 Agreement among AB Svenska Elektromagneter, Opcon AB, Cartona Fastighetsforvaltning K.B., Erling Edmundson, Four Seasons Venture Capital AB, SEM-Walbro Corporation and the Company, effective as of January 2, 1991, filed as Exhibit 10.20 to the Company's 1991 Annual Report on Form 10-K, incorporated herein by reference. 4 5 10.12 The Company's Advantage Plan, filed as the Exhibit to the Company's Registration Statement on Form S-8, filed October 28, 1991, incorporated herein by reference.** 10.13 Aircraft Lease Agreement between the Company and C.I.T. Leasing Corporation, dated as of October 27, 1992, filed as Exhibit 10.13 to the Company's 1992 Annual Report on Form 10-K, incorporated herein by reference. 10.14 Joint Venture Contract among Walbro Engine Management Corporation, Fujian Fuding Carburetor Factory and Twin Winner Trading Co., Ltd., dated December 30, 1993, relating to the Fujian Hualong Carburetor Co. Ltd. joint venture, filed as Exhibit 10.14 to the Company's 1994 Annual Report on Form 10-K, incorporated herein by reference. 10.15 Agreement among the Company, Walbro Automotive Corporation and Magneti Marelli France S.A., dated February 7, 1995, filed as Exhibit 10.24 to the Company's 1994 Annual Report on Form 10-K, incorporated herein by reference. 10.16 Joint Venture Agreement between the Company and Daewoo Precision Industries, Ltd., dated November 30, 1994, filed as Exhibit 10.25 to the Company's 1994 Annual Report on Form 10-K, incorporated herein by reference.** 10.17 Purchase and Sale Agreement dated as of April 7, 1995 by and between the Company and Dyno, filed as Exhibit 2.1 to the Company's Quarterly Report on Form 10-Q, for the quarter ended March 31, 1995, incorporated herein by reference. 10.18 Addendum to Purchase and Sale Agreement by and between the Company and Dyno dated as of July 27, 1995, filed as Exhibit 2.2 to the Form 8-K, incorporated herein by reference. 10.19 Joint Venture Agreement between Walbro Automotive Corporation and Mutual Industries Ltd., dated November 28, 1995, relating to the Mutual Walbro P. Ltd. joint venture, filed as Exhibit 10.30 to the Company's 1995 Annual Report on Form 10-K, incorporated herein by reference. 10.20 General Partnership Agreement dated August 18, 1995 between Iwaki Diecast U.S.A., Inc. and Walbro Tucson Corp., filed as Exhibit 10.31 to the Company's 1995 Annual Report on Form 10-K, incorporated herein by reference. 10.21 Employment Agreement between the Company and L. E. Althaver, dated August 16, 1996 filed as Exhibit 10.21 to the Company's Annual Report on Form 10-K, incorporated herein by reference.** 10.22 Termination and Change of Control Agreement between the Company and L. E. Althaver, dated August 16, 1996 filed as Exhibit 10.22 to the Company's Annual Report on Form 10-K, incorporated herein by reference.** 10.23 Employment Agreement between the Company and Daniel L. Hittler, dated August 16, 1996 filed as Exhibit 10.23 to the Company's Annual Report on Form 10-K, incorporated herein by reference.** 10.24 Termination and Change of Control Agreement between the Company and Daniel L. Hittler, dated August 16, 1996 filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K, incorporated herein by reference.** 5 6 10.25 Employment Agreement between the Company and Michael A. Shope, dated August 16, 1996 filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K, incorporated herein by reference.** 10.26 Termination and Change of Control Agreement between the Company and Michael A. Shope, dated August 16, 1996 filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K, incorporated herein by reference.** 10.27 Employment Agreement between the Company and Robert H. Walpole, dated August 16, 1996 filed as Exhibit 10.27 to the Company's Annual Report on Form 10-K, incorporated herein by reference.** 10.28 Termination and Change of Control Agreement between the Company and Robert H. Walpole, dated August 16, 1996 filed as Exhibit 10.28 to the Company's Annual Report on Form 10-K, incorporated herein by reference.** 10.29 Employment Agreement between the Company and R. H. Whitehead III, dated August 16, 1996 filed as Exhibit 10.29 to the Company's Annual Report on Form 10-K, incorporated herein by reference.** 10.30 Termination and Change of Control Agreement between the Company and R. H. Whitehead III, dated August 16, 1996 filed as Exhibit 10.30 to the Company's Annual Report on Form 10-K, incorporated herein by reference.** 10.31 Employment Agreement between the Company and Frank E. Bauchiero, dated October 3, 1996 filed as Exhibit 10.31 to the Company's Annual Report on Form 10-K, incorporated herein by reference.** 10.32 Termination and Change of Control Agreement between the Company and Frank E. Bauchiero, dated October 3, 1996 filed as Exhibit 10.32 to the Company's Annual Report on Form 10-K, incorporated herein by reference.** 13.1 1996 Annual Report to Stockholders. With the exception of the information incorporated by reference into Items 5, 6, 7, 8 and 14(a) (1) of this Form 10-K, the 1996 Annual Report to Stockholders is not deemed filed as part of this report filed as Exhibit 13.1 to the Company's Annual Report on Form 10-K, incorporated herein by reference. 21.1 Subsidiaries of the Company filed as Exhibit 21.1 to the Company's Annual Report on Form 10-K, incorporated herein by reference. 23.1 Consent of Arthur Andersen LLP, independent public accountants. 23.2 Consent of Ernst & Young Audit. 27.1 Financial Data Schedule filed as Exhibit 27.1 to the Company's Annual Report on Form 10-K, incorporated herein by reference. - ------------------ ** Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K. (b) Reports on Form 8-K: During the last quarter of the period covered by this Form 10-K, the Company filed a Current Report on Form 8-K dated December 16, 1996 reporting Items 5 and 7. 6 7 (d) (2) The following Financial Statements of Marwal Systems S.N.C. as of December 31, 1996, 1995 and 1994, and for the years ended December 31, 1996, 1995 and 1994 are included as part of this Form 10-K/A on pages F-1 through F-40: Letter of Confirmation . . . . . . . . . . . . . . . . . . . . .F-1 Report of Independent Public Accountants for 1996 . . . . . . . .F-2 Balance Sheet as of December 31, 1996 . . . . . . . . . . . . . .F-3 Income Statement for the year ended December 31, 1996 . . . . . .F-5 Notes to the Financial Statements for 1996 . . . . . . . . . . .F-7 Report of Independent Public Accountants for 1995 . . . . . . . .F-16 Balance Sheet as of December 31, 1995 . . . . . . . . . . . . . .F-17 Income Statement for the year ended December 31, 1995 . . . . . .F-19 Notes to the Financial Statements for 1995 . . . . . . . . . . .F-21 Report of Independent Public Accountants for 1994 . . . . . . . .F-28 Balance Sheet as of December 31, 1994 . . . . . . . . . . . . . .F-29 Income Statement for the year ended December 31, 1994 . . . . . .F-31 Notes to the Financial Statements for 1994 . . . . . . . . . . .F-33 7 8 SIGNATURES 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, on the 24th day of June 1997. WALBRO CORPORATION By: /s/ MICHAEL A. SHOPE ----------------------- Michael A. Shope, Chief Financial Officer 9 [ERNST & YOUNG LETTERHEAD] Mr. Mike Shope Walbro Corporation 6242 Garfield Street Cass City, Michigan 48726-1325 June 24, 1997 Dear Sirs, With respect to the contemplated filing of a registration statement by Walbro Corporation and the inclusion in this filing of the audited financial statements under French GAAP of Marwal Systems for fiscal years ended December 31, 1994, 1995, and 1996, we confirm that our audits of these Marwal Systems financial statements were conducted substantially in accordance with US generally accepted auditing standards. Yours faithfully, ERNST & YOUNG Audit /s/ Gilles Meyer ------------------- Gilles Meyer Partner F-1 10 MARWAL SYSTEMS, S.N.C. STATUTORY AUDITOR'S GENERAL REPORT YEAR ENDED DECEMBER 31, 1996 In our capacity as statutory auditor, we present below our report on: - - the accompanying annual accounts of Marwal Systems, - - the specific procedures and disclosures prescribed by law, for the year ended December 31, 1996. These annual accounts are the responsibility of the Company's management. Our responsibility is to express an opinion on these annual accounts based on our audit. 1. OPINION ON THE ANNUAL ACCOUNTS We conducted our audit in accordance with French auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the annual accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the annual accounts. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall annual account presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the annual accounts present fairly, in all material respects, the financial position of the Company at December 31, 1996 and the results of its operations for the year then ended. II. SPECIFIC PROCEDURES AND DISCLOSURES PRESCRIBED BY LAW We have also carried out, in accordance with professional standards, the specific procedures prescribed by law. We have nothing to report with respect to the fairness of information contained in the Directors' Report and its consistency with the annual accounts and other information presented to shareholders concerning the financial position and annual accounts. The Statutory Auditor ERNST & YOUNG Audit Gilles Meyer March 7, 1997 F-2 11 MARWAL SYSTEMS, S.N.C. Balance Sheet as of December 31, 1996 (in French Francs)
ASSETS December 31, 1996 ---------------------------------------------------- Gross Accumulated Net book value depreciation amortization and allowances ---------------------------------------------------- Fixed Assets - ------------ Intangible fixed assets 19.761.392,48 19.074.600,32 686.792,16 Tangible fixed assets 156.594.185,63 90.816.990,28 65.777.195,35 Financial investments: - - Associates 22.731.315,00 - 22.731.315,00 - - Others 5.029.079,77 - 5.029.079,77 -------------- -------------- -------------- Sub-total 204.115.972,88 109.891.590,60 94.224.382,28 -------------- -------------- -------------- Inventories - ----------- - - Raw materials 28.365.181,00 2.416.159,00 25.949.022,00 - - Work-in-progress 2.868.378,00 233.271,00 2.635.107,00 - - Finished goods 10.119.722,00 928.075,00 9.191.647,00 -------------- -------------- ------------- Sub-total 41.353.281,00 3.577.505,00 37.775.776,00 -------------- -------------- -------------- Current assets - -------------- Advances and payments on accounts 932.195,00 932.195,00 Trade accounts and notes receivable: - - Customers and related accounts 118.214.952,27 3.803.797,82 114.411.154,45 - - Other 9.530.704,08 9.530.704,08 Other receivables 1.489.686,35 1.489.686,35 Cash and cash equivalent 101.785.260,99 101.785.260,99 Payments in advance 244.063,94 244.063,94 Deferred charges 497.004,94 497.004,94 Foreign exchange translation differences 761.691,02 761.691,02 -------------- -------------- -------------- Sub-total 233.455.558,59 3.803.797,82 229.651.760,77 -------------- -------------- -------------- TOTAL ASSETS 478.924.812,47 117.272.893,42 361.651.919,05 -------------- -------------- --------------
F-3 12 MARWAL SYSTEMS, S.N.C. Balance Sheet as of December 31, 1996 (in French Francs)
DECEMBER 31, 1996 ----------------- LIABILITIES AND SHAREHOLDERS' EQUITY Shareholders' equity Share capital 90.660.000,00 Reserves 1.470.178,30 Revaluation reserve Retained earnings at January 1st 24.306.987,50 Result for the year 56.697.450,69 ----------------- Sub-total 173.134.616,49 ----------------- Provisions for contingencies and charges 11.222.783,62 Liabilities Financial debts: - - Amounts owed to financial institutions 71.741,14 - - Other financial debts 7.637.640,38 Accounts payable and related accounts 130.236.872,44 Social charges payable 21.804.322,68 Taxes 3.224.512,15 Other 4.710.583,24 Other creditors: - - Accounts payable on fixed assets 7.006.722,04 - - Group 449,84 - - Other 64.874,81 Deferred income 1.271.517,00 Foreign exchange translation differences 1.265.283,22 ----------------- Sub-total 177.294.518,94 ----------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 361.651.919,05 -----------------
F-4 13 MARWAL SYSTEMS, S.N.C. Income Statement for the year ended December 31, 1996 (in French Francs)
INCOME STATEMENT FOR THE YEAR December 31, 1996 ----------------- Operating revenues: 616.818.427,92 Sale of goods 596.746.296,62 Sale of services 13.732.425,85 Net sales 610.478.722,77 Movement in finished goods and work-in-progress (1.616.414,00) In-house production 568.066,00 Grants 493.725,00 Reversal of provisions and transfer of charges 5.013.288,15 Other income 1.881.040,00 Operating expenses 554.232.751,85 Purchases of raw materials and other supplies 284.395.019,10 Movements in raw materials stock (3.520.706,00) Other purchases and external charges 95.604.496,22 Taxes and similar charges 9.677.879,14 Wages & salaries 91.916.790,49 Social charges 39.787.018,33 Depreciation and amortisation expenses and provisions: - - Fixed assets 23.855.292,82 - - Current assets 2.259.789,97 - - Contingencies and charges 8.262.354,05 Other charges 1.994.817,73 -------------- 554.232.751,85 Operating profit 62.585.676,07 Financial income: From other investments 136,92 Other interest and similar income 2.245.533,46 Reversal of provisions and transfer of charges -- Foreign exchange gains 10.316.211,72 -------------- 12.561.882,10 Financial expenses: Depreciation and provisions 1.022.855,69 Interest and similar charges 3.906.694,57 Foreign exchange losses 4.124.523,99 -------------- 9.054.074,25 Net financial income / (expenses) 3.507.807,85
F-5 14 MARWAL SYSTEMS, S.N.C. Income Statement for the year ended December 31, 1996 (in French Francs)
INCOME STATEMENT FOR THE YEAR December 31, 1996 - ----------------------------- ----------------- Profit before taxation 66.093.483,92 3.104.503,48 Exceptional income: - ------------------ From operating activities 1.448.388,61 From capital transactions 431.443,87 Reversal of provisions and transfer of charges 1.224.671,00 ------------ 3.104.503,48 6.152.294,71 Exceptional charges: - ------------------- From operating activites 4.382.238,16 From capital transactions 275.084,55 Depreciation and provisions 1.494.972,00 ------------ 6.152.294,71 Exceptional profit (loss) (3.047.791,23) - ------------------------- Profit before taxation 63.045.692,69 - ------------------------- Profit-Sharing 6.348.242,00 Income Tax -- Profit after taxation 56.697.450,69 - -------------------------
F-6 15 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) EVENTS DURING THE YEAR The financial investment in Marwal de Mexico was raised from 36.369 French Francs to 22.731.315 French Francs, which is 95% of the shares. NOTE 1: ACCOUNTING POLICIES The accounts of the Company have been prepared based upon generally accepted accounting principles in France which conform with the Chart of Accounts as set out in the French law dated April 30, 1983 and the decree of November 29, 1983. 1.1 Intangible fixed assets The intangible fixed assets consist mainly of goodwill which is amortised on a straight line basis over 5 years and totally amortised at the end of 1996. The amortisation methods and the useful lives for other categories are as follows: - -Set-up costs 3 years straight line - -Computer software 1-3 years straight line 1.2 Tangible fixed assets Tangible fixed assets are valued at historical purchase price or cost of production when they have been produced in house. The cost of production is made up of the following elements: purchase price of raw materials, consumables and direct production costs. Assets are depreciated on a straight line basis or declining balance, when applicable, for items purchased during or after 1992. The depreciation methods and the useful lives applied are as follows: Installations 10 years straight line Machinery 5-6 2/3 straight line/declining balance Toolings 1-5 years straight line/declining balance Leasehold improvements-Mac/Toolings 5-6 2/3 straight line/declining balance Vehicles 4-5 years straight line Fixtures and fittings 10 years straight line Computer hardware 4-5 years straight line/declining balance F-7 16 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) 1.3 Financial investments - -The investments in associates are valued at their acquisition cost in the assets of the Company. - -A reserve is recorded when their fair value is less than their book value. 1.4 Inventory and work-in-progress The policies used are as follows: - - Inventory is valued at the total cost of production. - - Raw materials and consumables are valued at the average weighted cost for goods received in the last month. This method is similar to FIFO. - - The Cost of production includes direct and indirect production expenses and an allocation of the costs of running the Head Office, to the extent that they are related to the production. - - The provision for obsolescence is determined based upon the anticipated sales. 1.5 Allowance for doubtful accounts The receivables are valued at their face value, a provision is recorded when the value recoverable is less than the book value. 1.6 Foreign exchange transactions The receivables and payables denominated in foreign currency are translated into French Francs at the December 31st exchange rate. The resulting differences with amounts translated at historical exchange rates are shown in the balance sheet as << foreign exchange translation differences >>. A provision for exchange losses is recorded separately for unrealised losses. 1.7 Retirement indemnity liabilities The << Projected Benefit Obligation >> has been applied to calculate the retirement obligation. The total obligation is covered by: - -a fund run by La Mondiale, with a value of KFRF.9,006, - -a provision of KFRF.652 included in the Marwal accounts at December 31, 1996, - -an amount payable to La Mondiale of KFRF.810. F-8 17 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) NOTE 2: FIXED ASSETS The movements in gross value are as follows:
------------------------------------------- 12/31/95 Increase Decrease 12/31/96 ------------------------------------------- Intangible fixed assets 18226 1535 - 19761 Tangible fixed assets 128952 28909 1267 156594 Financial investments 1047 26812 99 27760 -------------------------------------------
The movements in amortisation and depreciation are analysed as follows:
------------------------------------------- 12/31/95 Increase Decrease 12/31/96 ------------------------------------------- Intangible fixed assets 16433 2642 - 19075 Tangible fixed assets 70815 21213 1211 90817 -------------------------------------------
NOTE 3: INVENTORIES AND WORK IN PROGRESS The reserve for obsolescence for raw materials, consumables and finished goods at 31/12/96 amounts to KFRF.3,577. NOTE 4: ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES At December 31, 1996, accounts receivable can be split by maturity date as follows:
--------------------------------------------------- Total Less than 1 year Greater than 1 year --------------------------------------------------- Long term receivables 5029 5026 3 Current assets 130167 130167 - ----------------------------------------------------
NOTE 5: SHORT TERM INVESTMENTS N/A. F-9 18 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) NOTE 6: PREPAYMENTS AND DEFERRED INCOME
12/31/96 -------- Prepayments - ----------- Documentation 2 Prepaid maintenance 43 Leasing 199 --- 244 12/31/96 -------- Deferred income Long term contracts (tooling) 1272
NOTE 7: DEFERRED CHARGES ----------------------------------------- Total Charged to 12/31/96 income statement 1996 ----------------------------------------- Deferred charges Amortised over 3 years 2005 1508 497 ----------------------------------------- NOTE 8: SHAREHOLDERS' EQUITY The capital stock is made up of 906,600 shares with a nominal value of FRF.100, completely paid up. The accounts of the Company are consolidated in the group accounts of the Magneti Marelli Spa Group. F-10 19 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) NOTE 9: TAX PROVISIONS AND PROVISIONS FOR CONTINGENCIES AND CHARGES The movements in the year are analysed as follows:
12/31/95 Additions Reversals 12/31/96 ------------------------------------------- Provisions for contingencies and charges of which: 5513 10953 5243 11223 - - Provision for payments on retirement 357 672 357 672 - - Provision for guarantee 2523 5812 2523 5812 - - Provision for loss on foreign exchange 433 762 433 762 - - Provision for litigation 455 1892 455 1892 - - Provision for reimplantation - 1033 - 1033 -------------------------------------------
NOTE 10: CREDITORS At December 31, 1996, debts, excluding advances and deposits received, deferred income and foreign exchange differences, can be analysed by maturity date as follows:
Total Less than 1 Between 1 and > 5 years year 5 years ------------------------------------------------ Other financial debts 7638 7638 Trade payables and other liabilities* 167048 160700* 6348 Overdraft 71 71 ------------------------------------------------
*of which trade bills payable: 46031 NOTE 11: INFORMATION ON SUBSIDIARY (In thousands of Pesos)
Share in % Detail information Share capital Equity capital Last closing other than result capital - -------------------------------------------------------------------------------- 95% Marwal de Mexico S.A. de C.V. Tepotzotplan 42870 (5075) 1325 Estado de Mexico
F-11 20 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) (In thousands of Francs)
- ----------------------------------------------------------------------------------------------------- Detailed information Gross Net book Loans Guarantee Dividends value value given given recevied - ----------------------------------------------------------------------------------------------------- Marwal de Mexico S.A. de C.V. 22731 22731 - - - - -----------------------------------------------------------------------------------------------------
The exemption of sub-groups enables Marwal Systems to not consolidate Marwal de Mexico. NOTE 12: RELATED PARTIES The related parties transactions are included in the different accounts in the balance sheet as follows:
- -------------------------------------------------------------------------------- Assets Liabilities ------ ----------- - -------------------------------------------------------------------------------- Trade receivables 42640 Trade payables 12212 Other receivables 1972 Other payables 2069 Cash and cash equivalent 100323 Financial debt - - -------------------------------------------------------------------------------- Interest expenses and financial income with related parties are as follows: - -------------------------------------------------------------------------------- Operating income 57100 Operating expenses 46067 Financial income 1972 Interest expenses 3535 - --------------------------------------------------------------------------------
NOTE 13: ACCRUALS AND INCOME RECEIVABLE RELATING TO DIFFERENT BALANCE SHEET ACCOUNTS
- -------------------------------------------------------------------------------------- Assets Liabililties ------ ------------ - -------------------------------------------------------------------------------------- Trade receivables - - Customers 8442 Trade payables - - Suppliers - - Suppliers 14284 - - State 2000 - Tax and social charges 17107 - Other 1896 - Other receivables Other liabilities - Financial debts 804 - --------------------------------------------------------------------------------------
F-12 21 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) NOTE 14: EXCHANGE DIFFERENCES RELATED TO BALANCE SHEET ACCOUNTS Exchange difference -------------------------------- Asset Liability Assets Trade receivables 80 1257 Liabilities Trade payables 682 8 -------------------------------- NOTE 15: SALES TURNOVER ANALYSIS 1995 1996 ---- ---- Sales 559587 610479 Sales of goods 540479 596746 Sales of services 19108 13733 Split between export/domestic Domestic 318495 323428 Export 241092 287051 Sales 559587 610479 NOTE 16: DEFERRED TAX POSITION
12/31/95 Movements 12/31/96 ----------------------------------------------------------------- Nature Asset Liability Asset Liability Asset Liability ----------------------------------------------------------------- Timing differences Organic 730 730 799 799 -----------------------------------------------------------------
Elements having an impact on 1996 fiscal result None. NOTE 17: EMPLOYEE INFORMATION Permanent staff Temporary staff ----------------------------------------------- Executives & Management 67 Employees 143 3 Labor and production 468 23 ----------------------------------------------- TOTAL 678 26 ----------------------------------------------- F-13 22 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) NOTE 18: LEASE COMMITMENTS None. NOTE 19: COMMITMENTS UNDERTAKEN AND RECEIVED Discounted trade bills receivable but not matured 82132 NOTE 20: INFORMATION RELATING TO MANAGEMENT N/A. NOTE 21: EXCEPTIONAL INCOME Exceptional income from operating activities 1448 Grant relating to training 1400 Other 48 Exceptional income from capital transactions 431 Income from the sale of fixed assets 136 Other 295 Reversal of provisions and transfer of charges 1225 Provision for delocalisation 1225 NOTE 22: EXCEPTIONAL CHARGES Exceptional charges on operating activities 4382 Redundancy payments 1543 Training costs 2756 Other 83 Exceptional charges from capital transactions 275 Net book value of fixed assets sold 55 Other 220 Depreciation and provisions 1495 Provision for risk 392 Other 70 Provision for charges 1033 F-14 23 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) NOTE 23: CHANGE IN ACCOUNTING POLICIES Effective January 1, 1996, the toolings participation with Walbro, that used to be booked in deferred charges and amortized over 3 years, are recorded in fixed assets. The amount involved is KFRF. 4,650 at 1996 year end. Past years participations have not been reclassified and are still shown as deferred charges for an amount of KFRF. 497 at December 31, 1996. NOTE 24: ANALYSIS OF INCOME TAX As Marwal Systems became a partnership as from 10/01/95, there is no income tax booked. Base Tax 12/31/96 -------------------------- Operating profit 66094 0 Exceptional items (3048) 0 -------------------------- Profit before tax 63046 0 Income tax credit 1994 0 -------------------------- TOTAL INCOME TAX FOR THE COMPANY 0 -------------------------- NOTE 25: RECONCILIATION TO U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The accompanying financial statements of Marwal Systems S.N.C. have been prepared in accordance with accounting principles required in France. A reconciliation of these reported results to generally accepted principles in the United States is as follows:
For the Year Ended December 31, 1996 1995 1994 ---- ---- ---- (In Thousands of French Francs) Profit after taxation as shown in the financial statements 56,697 25,473 15,534 Adjust depreciable life of goodwill 1,375 2,625 2,625 Adjust depreciation expense of fixed assets 1,361 1,597 4,827 Other 537 409 89 Deferred taxes -- 3,582 (1,657) ------ ------ ------ Net income according to generally accepted accounting principles in the United States 59,970 33,686 21,418 ====== ====== ======
F-15 24 MARWAL SYSTEMS, S.N.C. (MARWAL SYSTEMS, S.A. UNTIL SEPTEMBER 30, 1995) STATUTORY AUDITOR'S GENERAL REPORT YEAR ENDED DECEMBER 31, 1995 In our capacity as statutory auditor, we present below our report on: * the accompanying annual accounts of Marwal Systems, * the specific procedures and disclosures prescribed by law, for the year ended December 31, 1995. These annual accounts are the responsibility of the Company's management. Our responsibility is to express an opinion on these annual accounts based on our audit. I. OPINION ON THE ANNUAL ACCOUNTS We conducted our audit in accordance with French auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the annual accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the annual accounts. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall annual account presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the annual accounts present fairly, in all material respects, the financial position of the Company at December 31, 1995 and the results of its operations for the year then ended. II. SPECIFIC PROCEDURES AND DISCLOSURES PRESCRIBED BY LAW We have also carried out, in accordance with professional standards, the specific procedures prescribed by law. We have nothing to report with respect to the fairness of information contained in the Directors' Report and its consistency with the annual accounts and other information presented to shareholders concerning the financial position and annual accounts. The Statutory Auditor ERNST & YOUNG Audit Gilles Meyer February 26, 1996 F-16 25 MARWAL SYSTEMS, S.N.C. Balance Sheet as of December 31, 1995 (in French Francs)
ASSETS December 31, 1995 ------------------------------------------------------------------ Accumulated depreciation amortization and Gross allowances Net book value ------------------------------------------------------------------ Fixed assets Intangible fixed assets 18.226.005,10 16.433.332,65 1.792.672,45 Tangible fixed assets 128.951.636,21 70.814.996,81 58.136.639,40 Financial investments: - - Associates 36.369,00 36.369,00 - - Others 1.011.340,15 1.011.340,15 -------------- -------------- -------------- Sub-total 148.225.350,46 87.248.329,46 60.977.021,00 -------------- -------------- -------------- Inventories - - Raw materials 24.844.475,00 2.489.620,00 22.354.855,00 - - Work-in-progress 2.910.543,00 258.005,00 2.652.538,00 - - Finished goods 11.693.971,00 1.057.171,00 10.636.800,00 -------------- -------------- -------------- Sub-total 39.448.989,00 3.804.796,00 35.644.193,00 -------------- -------------- -------------- Current assets Advances and payments on accounts 823.782,34 823.782,34 Trade accounts and notes receivable: - - Customers and related accounts 109.941.372,93 3.971.285,50 105.970.087,43 - - Other 13.189.440,94 13.189.440,94 Other receivables 2.327.218,02 2.327.218,02 Cash and cash equivalent 67.163.748,22 67.163.748,22 Payments in advance 2.113,74 2.113,74 Deferred Charges 2.004.784,97 2.004.784,97 Foreign exchange translation differences 432.784,33 432.784,33 -------------- -------------- -------------- Sub-total 195.885.245,49 3.971.285,50 191.913.959,99 -------------- -------------- -------------- TOTAL ASSETS 383.559.584,95 95.024.410,96 288.535.173,99 -------------- -------------- --------------
F-17 26 MARWAL SYSTEMS, S.N.C. Balance Sheet as of December 31, 1995 (in French Francs)
LIABILITIES AND SHAREHOLDERS' EQUITY DECEMBER 31, 1995 Shareholders' equity Share capital 90.660.000,00 Reserves 196.550,23 Revaluation reserve 0 Retained earnings at January 1st 108.054,10 Result for the year 25.472.561,45 -------------- Sub-total 116.437.165,78 -------------- Provisions for contingencies and charges 5.513.067,65 Liabilities Financial debts: - - Amounts owed to financial institutions 0 - - Other financial debts 2.695.629,49 Accounts payable and related accounts 130.472.854,90 Social charges payable 19.810.842,99 Taxes 2.808.171,90 Other 2.115.551,85 Other creditors: - - Accounts payable on fixed assets 6.502.143,36 - - Group 0 - - Other 128.985,44 Deferred income 1.112.983,10 Foreign exchange translation differences 937.777,53 -------------- Sub-total 166.584.940,56 -------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 288.535.173,99 --------------
F-18 27 MARWAL SYSTEMS, S.N.C. Income Statement for the year ended December 31, 1995 (in French Francs)
December 31, 1995 ---------------------------------- Operating revenues: 565.719.064,53 Sale of goods 540.478.654,89 Sale of services 19.107.848,98 -------------- Net sales 559.586.503,87 Movement in finished goods and work-in-progress (957.292,00) In-house production 958.322,00 Grants 1.004.628,42 Reversal of provisions and transfer of charges 4.277.496,90 Other income 849.405,34 -------------- 565.719.064,53 Operating expenses 515.796.687,06 Purchases of raw materials and other supplies 267.809.549,46 Movements in raw materials stock 4.985.449,00 Other purchases and external charges 81.354.762,36 Taxes and similar charges 9.142.104,58 Wages & salaries 85.212.941,72 Social charges 37.218.880,73 Depreciation and amortisation expenses and provisions: * Fixed assets 23.363.492,27 * Current assets 1.571.179,46 * Contingencies and charges 4.826.888,73 Other charges 311.438,75 -------------- 515.796.687,06 Operating profit 49.922.377,47 Financial income: 14.072.141,78 From other investments 521,35 Other interest and similar income 2.887.113,46 Reversal of provisions and transfer of charges 3.136.636,82 Foreign exchange gains 8.047.870,15 -------------- 14.072.141,78 22.428.209,50 Financial expenses: Depreciation and provisions 924.032,56 Interest and similar charges 6.080.465,40 Foreign exchange losses 15.423.711,54 -------------- 22.428.209,50 Net financial income/(expenses) (8.356.067,72)
F-19 28 MARWAL SYSTEMS, S.N.C. Income Statement for the year ended December 31, 1995 (in French Francs)
December 31, 1995 ----------------- Profit before taxation 41.566.309,75 Exceptional income: 8.712.352,95 From operating activities 2.897.314,03 From capital transactions 1.072.032,92 Reversal of provisions and transfer of charges 4.743.006,00 ------------ 8.712.352,95 Exceptional charges: 9.209.111,25 From operating activities 7.178.141,85 From capital transactions 1.217.422,40 Depreciation and provisions 813.547,00 ------------ 9.209.111,25 Exceptional profit (loss) (496.758,30) Profit before taxation 41.069.551,45 Profit-Sharing 4.750.000,00 Income tax 10.846.990,00 Profit after taxation 25.472.561,45 Total income 588.503.559,26 Total expenditure 563.030.997,81 Profit 25.472.561,45
F-20 29 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) EVENTS DURING THE YEAR The Marwal branch based in Italy was closed on December 31, 1995. An extraordinary shareholders' meeting held on September 29, 1995 decided the transformation of the Company into a "Societe en Nom Collectif", a partnership, with effect from October 1 , 1995. NOTE 1: ACCOUNTING POLICIES The accounts of the Company have been prepared based upon generally accepted accounting principles in France which conform with the Chart of Accounts as set out in the French law dated April 30, 1983 and the decree of November 29, 1983. 1.1 Intangible fixed assets The intangible fixed assets consist mainly of goodwill which is amortised on a straight line basis over 5 years. The amortisation methods and the useful lives for other categories are as follows: - - Set-up costs 3 years straight line - - Computer software 1-3 years straight line 1.2 Tangible fixed assets Tangible fixed assets are valued at historical purchase price or cost of production when they have been produced in house. The cost of production is made up of the following elements: purchase price of raw materials, consumables and direct production costs. Assets are depreciated on a straight line basis or declining balance, when applicable, for items purchased during or after 1992. The depreciation methods and the useful lives applied are as follows: Installations 10 years straight line Machinery 5-6 2/3 straight line / declining balance Toolings 1-5 years straight line / declining balance Leasehold improvements - Mac./Toolings 5-6 2/3 straight line / declining balance Vehicles 4-5 years straight line Fixtures and fittings 10 years straight line Computer hardware 4-5 years straight line / declining balance
F-21 30 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) 1.3 Financial investments - - The investments in associates are valued at their acquisition cost in the assets of the Company. - - A reserve is recorded when their fair value is less than their book value. 1.4 Inventory and work-in-progress The policies used are as follows: * Inventory is valued at the total cost of production. * Raw materials and consumables are valued at the average weighted cost for goods received in the last month. This method is similar to FIFO. * The Cost of production includes direct and indirect production expenses and an allocation of the costs of running the Head Office, to the extent that they are related to the production. * The provision for obsolescence is determined based upon the sales. 1.5 Allowance for doubtful accounts The receivables are valued at their face value, a provision is recorded when the value recoverable is less than the book value. 1.6 Foreign exchange transactions The receivables and payables denominated in foreign currency are translated into French Francs at the December 31st exchange rate. The resulting differences with amounts translated at historical exchange rates are shown in the balance sheet as "foreign exchange translation differences". A provision for exchange losses is recorded separately for unrealised losses. 1.7 Retirement indemnity liabilities The "Projected Benefit Obligation" has been applied to calculate the retirement obligation. The total obligation is covered by: - - a fund run by La Mondiale, with a value of KFRF.8,343, - - a provision of KFRF.357 included in the Marwal accounts at December 31, 1995. NOTE 2: FIXED ASSETS The movements in gross value are as follows:
12/31/94 Increase Decrease 12/31/95 Intangible fixed assets 18519 307 600 18226 Tangible fixed assets 107067 24751 2866 128952 Financial investments 1122 852 927 1047
F-22 31 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) The movements in amortisation and depreciation are analysed as follows:
12/31/94 Increase Decrease 12/31/95 -------- -------- -------- -------- Intangible fixed assets 13658 3375 600 16433 Tangible fixed assets 52431 19988 1604 70815
NOTE 3: INVENTORIES AND WORK IN PROGRESS The reserve for obsolescence for raw materials, consumables and finished goods at 31/12/95 amounts to KFRF. 3,805. NOTE 4: ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES At December 31, 1995, accounts receivable can be split by maturity date as follows:
Greater Total Less than 1 year than 1 year ----- ---------------- ----------- Long term receivables 1011 1008 3 Current assets 126284 126284 -
NOTE 5: SHORT TERM INVESTMENTS N/A. NOTE 6: PREPAYMENTS AND DEFERRED INCOME
12/31/95 -------- Prepayments Other 2 12/31/95 -------- Deferred income Long term contracts (tooling) 1089 Other 24 ---- 1113 ====
NOTE 7: DEFERRED CHARGES
Charged to income statement Total 1995 12/31/95 ---- ---------------- -------- Deferred charges Amortised over 3 years 3921 1916 2005
F-23 32 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) NOTE 8: SHAREHOLDERS' EQUITY The capital stock is made up of 906,600 shares with a nominal value of FRF.100, completely paid up. The accounts of the Company are consolidated in the group accounts of the Magneti Marelli Spa Group. NOTE 9: TAX PROVISIONS AND PROVISIONS FOR CONTINGENCIES AND CHARGES The movements in the year are analysed as follows:
12/31/94 Additionals Reversals 12/31/95 -------- ----------- --------- -------- Provisions for contingencies and charges of which: 10058 5104 9649 5513 * Provision for payments 357 357 on retirement * Provision for guarantee 1000 2523 1000 2523 * Provision for loss on 3136 433 3136 433 foreign exchange
NOTE 10: CREDITORS At December 31, 1995, debts, excluding advances and deposits received, deferred income and foreign exchange differences, can be analysed by maturity date as follows:
Less than Between Total 1 year 1 and 5 years > 5 years ----- --------- ------------- --------- Other financial debts 2696 2696 Trade payables and other liabilities* 161839 157089* 4750 * of which trade bills payable: 27225
NOTE 11: RELATED PARTIES The related parties transactions are included in the different accounts in the balance sheet as follows:
Assets Liabilities ------ ----------- Trade receivables 16856 Trade payables 14716 Other receivables 198 Other payables 8 Cash and cash equivalent 73017 Financial debt 432
Interest expenses and financial income with related parties are as follows: Operating income 47440 Operating expenses 54317 Financial income 2373 Interest expenses 5991 F-24 33 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) NOTE 12: ACCRUALS AND INCOME RECEIVABLE RELATING TO DIFFERENT BALANCE SHEET ACCOUNTS
Assets Liabilities ------ ----------- Trade receivables Trade payables * Customers 6558 * Suppliers 14246 * Suppliers 2354 * Tax and social charges 14641 * State 2490 * Other 1283 Other receivables 534 Other liabilities 390
NOTE 13: EXCHANGE DIFFERENCES RELATED TO BALANCE SHEET ACCOUNTS
Exchange difference ----------------------- Asset Liability ----- --------- Asset Trade receivables 431 3 Liabilities Trade payables 1 935
NOTE 14: SALES TURNOVER ANALYSIS
1994 1995 ---- ---- Sales 565671 559587 Sales of goods 535259 540479 Sales of services 30412 19108 Split between export/domestic Domestic 353114 318495 Export 212557 241092 Sales 565671 559587
NOTE 15: DEFERRED TAX POSITION
12/31/94 Movements 12/31/95 ---------------- ---------------- ---------------- Nature Asset Liability Asset Liability Asset Liability - ------ ----- --------- ----- --------- ----- --------- Timing differences Organic 559 559 730 730
F-25 34 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) NOTE 16: EMPLOYEE INFORMATION
Permanent staff Temporary staff --------------- --------------- Executives & Management 55 Employees 135 4 Labor and production 476 10 --------------- -------------- Total 666 14 NOTE 17: LEASE COMMITMENTS None. NOTE 18: COMMITMENTS UNDERTAKEN AND RECEIVED Discounted trade bills receivable but not matured 89827 NOTE 19: INFORMATION RELATING TO MANAGEMENT N/A. NOTE 20: EXCEPTIONAL INCOME Exceptional income from operating activities 2897 Redundancy payments reinvoiced to Jaeger S.A. 251 Grant relating to training 2565 Other 81 Exceptional income from capital transactions 1072 Income from the sale of fixed assets 1066 Other 6 Reversal of provisions and transfer of charges 4743 Provision for delocalisation 1700 Provision for the starting of pumps 1304 Other 1739 NOTE 21: EXCEPTIONAL CHARGES Exceptional charges on operating activities 7178 Redundancy payments 3378 Training costs 3056 Other 744 Exceptional charges from capital transactions 1217 Net book value of fixed assets sold 1217 Depreciation and provisions 813 Provision for delocalisation and other 813
F-26 35 MARWAL SYSTEMS, S.N.C. Notes to the financial statements (in thousands of French Francs) NOTE 22: CHANGE IN ACCOUNTING POLICIES N/A. NOTE 23: ANALYSIS OF INCOME TAX The income tax accounted for is that which is calculated for the accounts to 9/30/1995, Marwal Systems becoming a partnership as from 10/01/95. BASE BASE TAX 12/31/95 9/30/95 9/30/95 Operating profit 41566 28083 10977 Exceptional items (497) (156) (61) ----- ----- ----- Profit before tax 41069 27927 10916 Income tax credit 1994 69 ----- TOTAL INCOME TAX FOR THE COMPANY (10847) F-27 36 MARWAL SYSTEMS, S.A. STATUTORY AUDITOR'S GENERAL REPORT YEAR ENDED DECEMBER 31, 1994 In our capacity as statutory auditor, we present below our report on: - - the accompanying annual accounts of Marwal Systems, S.A.; - - the specific procedures and disclosures prescribed by law, for the year ended December 31, 1994. I. OPINION ON THE ANNUAL ACCOUNTS We have audited the annual accounts in accordance with professional standards and, accordingly, performed such auditing procedures as we considered necessary in the circumstances. In our opinion, the annual accounts present fairly, in conformity with generally accepted accounting principles in France, the financial position of the Company at December 31, 1994, and the results of its operations for the year then ended. II. SPECIFIC PROCEDURES AND DISCLOSURES PRESCRIBED BY LAW We have also carried out, in accordance with professional standards, the specific procedures prescribed by law. We have nothing to report with respect to the fairness of information contained in the Directors' Report and its consistency with the annual accounts and other information presented to shareholders concerning the financial position and annual accounts. The Statutory Auditor ERNST & YOUNG Audit Gilles Meyer March 17, 1995 F-28 37 MARWAL SYSTEMS, S.A. Balance Sheet as of December 31, 1994 (in French Francs)
ASSETS December 31, 1994 ------------------------------------------------ Gross Accumulated Net book Depreciation value amortization and allowances ------------------------------------------------ Fixed assets Intangible fixed assets 18.519.155,10 13.658.164,14 4.860.990,96 Tangible fixed assets 107.067.527,50 52.430.885,19 54.636.642,31 Financial investments 1.122.471,53 1.122.471,53 --------------- -------------- -------------- Sub-total 126.709.154,13 66.089.049,33 60.620.104,80 --------------- -------------- -------------- Inventories * Raw materials 29.829,924,00 1.591.848,00 28.238.076,00 * Work-in-progress 3.101.279,00 182.005,00 2.919.274,00 * Finished goods 12.460.527,00 1.062.465,00 11.398.062,00 --------------- -------------- -------------- Sub-total 45.391.730,00 2.836.318,00 42.555.412,00 --------------- -------------- -------------- Current assets Advances and payments on account 1.186.853,59 1.186.853,59 Trade accounts & notes receivable * Customers and related accounts 108.200.292,33 4.815.370,90 103.384.921,43 * Other 10.379.297,27 0,00 10.379.297,27 Other receivables 4.465.165,81 0,00 4.465.165,81 Cash and cash equivalent 69.076.737,77 69.076.737,77 Payments in advance 216.943,59 216.943,59 Deferred Charges 2.430.152,50 2.430.152,50 Foreign exchange translation differences 3.136.636,82 3.136.636,82 --------------- -------------- -------------- Sub-total 199.092.079,68 4.815.370,90 194.276.708,78 --------------- -------------- -------------- TOTAL ASSETS 371.192.963,81 73.740.738,23 297.452.225,58 --------------- -------------- --------------
F-29 38 MARWAL SYSTEMS, S.A. Balance Sheet as of December 31, 1994 (in French Francs) LIABILITIES AND SHAREHOLDERS' EQUITY DECEMBER 31, 1994 ----------------- Shareholders' equity Share Capital 90.660.000,00 Revaluation reserve 172.508,46 Retained earnings at January 1st (11.603.376,40) Result for the year 15.534.381,07 --------------- Sub-total 94.763.513,13 Provisions for contingencies and charges 10.058.014,45 Liabilities Financial debts: - - Amounts owed to financial institutions 6.344.656,90 Accounts payable and related accounts 136.837.422,79 Social charges payable 20.444.348,88 Taxes 10.435.846,93 Other 13.034.865,71 Other creditors: * Accounts payable on fixed assets 1.878.106,81 * Group 689.291,53 * Other 40.995,22 Deferred income 2.185.908,10 Foreign exchange translation differences 739.255,13 --------------- Sub-total 192.630.698,00 --------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 297.452.225,58 =============== F-30 39 MARWAL SYSTEMS, S.A. Income Statement for the year ended December 31, 1994 (in French Francs)
December 31, 1994 ------------------ Operating Revenues: 579.451.349,75 Sale of goods 535.259.461,85 Sale of services 30.412.022,43 -------------- Net sales 565.671.484,28 Movement in finished goods and work-in-progress (1.383.971,17) In-house production 728.865,00 Grants 1.351.306,20 Reversal of provisions and transfer of charges 12.830.704,98 Other income 252.960,46 -------------- 579.451.349,75 Operating expenses: 544.962.616,72 Purchases of raw materials and other supplies 296.647.374,00 Movements in raw materials stock (11.922.463,00) Other purchases and external charges 89.956.155,98 Taxes and similar expenses 8.664.895,48 Wages & salaries 81.428.350,72 Social charges 45.200.262,16 Depreciation and amortization expenses and provisions * Fixed assets 24.834.071,13 * Current assets 4.221.947,14 * Contingencies and charges 5.257.039,66 Other charges 674.983,45 -------------- 544.962.616,72 Operating profit 34.488.733,03 -------------
F-31 40 MARWAL SYSTEMS, S.A. Income Statement for the year ended December 31, 1994 (in French Francs)
December 31, 1994 -------------------------------- Financial income: 10.022.168,72 From other investments 942,13 Other interest and similar income 1.624.516,23 Reversal of provisions and transfer of charges 1.884.372,97 Foreign exchange gains 6.512.337,39 ------------- 10.022.168,72 Financial expenses: 14.971.569,16 Depreciation and provisions 3.136.636,82 Interest and similar charges 4.373.906,83 Foreign exchange losses 7.461.025,51 ------------- 14.971.569,16 Net financial income / (expenses) (4.949.400,44) Profit (loss) before tax 29.539.332,59 Exceptional income: 7.540.565,06 From operating activities 4.284.190,06 From capital transactions Reversal of provision and transfer of charges 3.256.375,00 ------------- 7.540.565,06 Exceptional charges: 12.626.722,58 From operating activities 8.776.657,58 From capital transactions Depreciation and provisions 3.850.065,00 ------------- 12.626.722,58 Exceptional profit (5.086.157,52) Profit before taxation 24.453.175,07 Profit-Sharing 2.745.109,00 Income tax 6.173.685,00 Profit after taxation 15.534.381,07 Total income 597.014.083,53 Total expenditure 581.479.702,46 PROFIT (LOSS) 15.534.381,07
F-32 41 MARWAL SYSTEMS, S.A. Notes to the financial statements (in thousands of French Francs) The accounts of the branch based in Italy have been translated using the year end rate of exchange. The entire business will be transferred to France with effect starting in 1995 which will result in the closure of Marwal Italy during the year. NOTE 1: ACCOUNTING POLICIES The accounts of the Company have been prepared based upon generally accepted accounting principles in France which conform with the Chart of Accounts as set out in the French law dated April 30, 1983 and the decree of November 29, 1983. 1.1 INTANGIBLE FIXED ASSETS The intangible fixed assets consist mainly of goodwill which is amortised on a straight line basis over 5 years. The amortisation methods and the useful lives for other categories are as follows: - - Set-up costs 3 years straight line - - Computer software 1-3 years straight line 1.2 TANGIBLE FIXED ASSETS Tangible fixed assets are valued at historical purchase price or cost of production when they have been produced in house. The cost of production is made up of the following elements: purchase price of raw materials, consumables and direct production costs. Assets are depreciated on a straight line basis or declining balance, when applicable for items purchased during or after 1992. F-33 42 MARWAL SYSTEMS, S.A. Notes to the financial statements (in thousands of French Francs) The depreciation methods and the useful lives applied are as follows: Installations 10 years straight line Machinery 5-6 2/3 straight line/declining balance Toolings 1-5 years straight line/declining balance Leasehold improvements Mach./Toolings 5-6 2/3 straight line/declining balance Vehicles 4-5 years straight line Fixtures and fittings 10 years straight line Computer hardware 4-5 years straight line/declining balance 1.3 FINANCIAL INVESTMENTS N/A. 1.4 INVENTORY AND WORK-IN-PROGRESS The policies used are as follows: - - Inventory is valued at the total cost of production. - - Raw materials and consumables are valued at the average weighted cost for goods received in the last month. This method is similar to FIFO. - - The Cost of production includes direct and indirect production expenses and an allocation of the costs of running the Head Office, to the extent that they are related to the production. - - The provision for obsolescence is determined based upon the sales forecasts. 1.5 ALLOWANCE FOR DOUBTFUL ACCOUNTS The receivables are valued at their face value, a provision is recorded when the value recoverable is less than the book value. 1.6 FOREIGN EXCHANGE TRANSACTIONS The receivables and payables denominated in foreign currency are translated into French francs at the December 31st, exchange rate. The resulting differences with amounts translated at historical exchange rates are shown in the balance sheet as "foreign exchange translation differences." A provision for exchange losses is recorded separately for unrealised losses. F-34 43 MARWAL SYSTEMS, S.A. Notes to the financial statements (in thousands of French Francs) 1.7 RETIREMENT INDEMNITY LIABILITIES The "Projected Benefit Obligation" has been applied to calculate the retirement obligation. The fund was placed during 1994 with a specialized organisation and therefore the provision has reversed at 12/31/94. NOTE 2: FIXED ASSETS The movements in gross value are as follows:
12/31/93 Increase Decrease 12/31/94 -------- -------- -------- -------- Intangible fixed assets 18159 360 - 18519 Tangible fixed assets 89813 17254 - 107067 Financial investments 4 1118 - 1122
The movements in amortisation and depreciation are analysed as follows:
12/31/93 Increase Decrease 12/31/94 -------- -------- -------- -------- Intangible fixed assets 9875 3783 - 13658 Tangible fixed assets 31380 21051 - 52431 Financial investments 0 0 - 0
NOTE 3: INVENTORY AND WORK IN PROGRESS The reserve for obsolescence for raw materials, consumables and finished goods at 12/31/94 amounts to KFRF. 2,836. NOTE 4: ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES At December 31, 1994, accounts receivable can be split by maturity date as follows:
Greater than Total Less than 1 year 1 year ----- ---------------- ------------ Long term receivables 1122 1118 4 Current assets 124449 124449
F-35 44 MARWAL SYSTEMS, S.A. Notes to the financial statements (in thousands of French Francs) NOTE 5: SHORT TERM INVESTMENTS N/A. NOTE 6: PREPAYMENTS AND DEFERRED INCOME
31/12/94 -------- Prepayments Interest 217
31/12/94 -------- Deferred income Long term contracts (tooling) 2185
NOTE 7: DEFERRED CHARGES
Charged to income statement Total 1994 12/31/94 ----- ---------------- -------- Deferred charges 3849 1419 2430
NOTE 8: SHAREHOLDERS' EQUITY The capital stock is made up of 906,600 shares with a nominal value of FRF.100, completely paid up. The accounts of the Company are consolidated in the group accounts of the Magneti Marelli Spa Group. F-36 45 MARWAL SYSTEMS, S.A. Notes to the financial statements (in thousands of French Francs) NOTE 9: TAX PROVISIONS AND PROVISIONS FOR CONTINGENCIES AND CHARGES The movements in the year are analysed as follows:
12/31/93 Additions Reversals 12/31/94 -------- --------- --------- -------- Provisions for contingencies and charges of which: 12.813 11.353 14.108 10.058 Provision for payments on retirement 4.845 3.370 8.215 0 Provision for guarantee 1.020 242 262 1.000 Provision for loss on foreign exchange 1.884 3.136 1.884 3.136
NOTE 10: CREDITORS At December 31, 1994, debts, excluding advances and deposits received, deferred income and foreign exchange differences, can be analysed by maturity date as follows:
Less than Between 1 Total 1 year and 5 years > 5 years ----- --------- ----------- --------- Bank overdrafts 6345 6345 Trade payables and other liabilities* 183361 180616 2745 * of which trade bills payable: 30585
NOTE 11: RELATED PARTIES The related parties transactions are included in the different accounts in the balance sheet as follows:
Assets Liabilities ------ ----------- Fixed assets 1747 Trade receivables 22014 Trade payables 20388 Other receivables 268 Other payables 1656 Cash and cash equivalent 67689 Financial debt 6497
F-37 46 MARWAL SYSTEMS, S.A. Notes to the financial statements (in thousands of French Francs) Interest expenses and financial income with related parties are as follows: Operating income 62784 Operating expenses 52309 Financial income 51 Interest expenses 4331
NOTE 12: Accruals and income receivable relating to different balance sheet accounts
Assets Liabilities ------ ----------- Trade receivables 10768 Trade payables Other receivables 132 * Suppliers 22135 * Tax and social charges 23730 * Other 5106
NOTE 13: Exchange differences related to balance sheet accounts
Exchange difference ------------------- Asset Liability ----- --------- Assets Trade receivables 2210 64 Liabilities Trade payables 927 675 The exchange difference resulting from the translation of the accounts of Marwal Italy has been included in the revaluation reserve within shareholders' equity 173
NOTE 14: Sales turnover analysis
1993 1994 ---- ---- Sales 424023 565671 Sales of goods 378099 535259 Sales of services 45924 30412 Split between export/domestic Domestic 295213 353114 Export 128810 212557 Sales 424023 565671
F-38 47 MARWAL SYSTEMS, S.A. Notes to the financial statements (in thousands of French Francs) NOTE 15: DEFERRED TAX POSITION
12/31/93 Movements 12/31/94 ---------------- ---------------- ---------------- Nature Asset Liability Asset Liability Asset Liability - ------ ----- --------- ----- --------- ----- --------- Timing differences Organic 425 425 559 0 559
NOTE 16: EMPLOYEE INFORMATION
Permanent staff Temporary staff --------------- --------------- Executive and Management 46 Employees 135 2 Labor and production 518 36 Total 699 38
NOTE 17: LEASE COMMITMENTS None. NOTE 18: COMMITMENTS UNDERTAKEN AND RECEIVED Discounted trade bills receivable but not matured 90177 NOTE 19: INFORMATION RELATING TO MANAGEMENT N/A. F-39 48 MARWAL SYSTEMS, S.A. Notes to the financial statements (in thousands of French Francs) NOTE 20: EXCEPTIONAL INCOME Exceptional income from operating activities 4284 Redundancy payments reinvoiced to Jaeger S.A. 2214 Grant relating to training 1811 Other 259 Exceptional income from capital transactions Not significant Reversal of provisions 3256 Provision for delocalization 2027 Provision for the starting of pumps 1229 NOTE 21: EXCEPTIONAL CHARGES Exceptional charges on operating activities 8777 Redundancy payments 4024 Training costs 3439 Other 1314 Depreciation and provisions 3850 Provision for delocalization 2111 Other 1739 NOTE 22: CHANGE IN ACCOUNTING POLICIES N/A. NOTE 23: ANALYSIS OF INCOME TAX
Base Tax ------ ----- Operating profit 29539 10087 Exceptional items -5086 -1695 ------ ----- Profit before tax 24453 8392 Income tax credit 1993 -2218 ----- TOTAL INCOME TAX FOR THE COMPANY 6174
F-40 49 INDEX TO EXHIBITS
EXHIBITS DESCRIPTION -------- ----------- 23.1 Consent of Arthur Andersen LLP, independent public accountants. 23.2 Consent of Ernst & Young Audit.
EX-23.1 2 EX-23.1 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports dated February 11, 1997 included (or incorporated by reference) in this Form 10-K/A, into the Company's previously filed Registration Statement File Nos. 33-20841, 33-32068 and 33-48562. Arthur Andersen LLP Detroit, Michigan June 23, 1997 EX-23.2 3 EX-23.2 1 EXHIBIT 23.2 [LETTERHEAD OF ERNST & YOUNG] CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation of our reports dated March 17, 1995, February 26, 1996 and March 7, 1997 with respect to the balance sheets of Marwal Systems as of December 31, 1994, December 31, 1995 and December 31, 1996, and the related statements of income for the years then ended, which reports are included or incorporated by reference in this Form 10-K/A of Walbro Corporation, into the Company's previously filed Registration Statement File Nos. 33-20841, 33-32068 and 33-48562. ERNST & YOUNG Audit /s/ Gilles Meyer -------------------- Gilles Meyer June 24, 1997 -----END PRIVACY-ENHANCED MESSAGE-----