Form 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2005

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___to ___

TOWER AUTOMOTIVE, INC.

(Exact name of Registrant as specified in its charter)

Delaware		41-1746238
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

27175 Haggerty Road Novi, Michigan		48377
(Address of principal executive offices)		(Zip Code)

(248) 675-6000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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, and (2) has been subject to such filing requirements for the past 90 days.

Yes þ		No o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes þ		No o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o		No þ

The number of shares outstanding of the Registrant’s Common Stock, par value $.01 per share, at April 29, 2005 was 58,528,554 shares.

 

 

Tower Automotive, Inc.

Form 10-Q

Table of Contents

PART I Financial Information

Item 1. Financial Statements:

Condensed Consolidated Balance Sheets (unaudited) at March 31, 2005 and December 31, 2004

Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 2005 and 2004

Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2005 and 2004

Notes to Condensed Consolidated Financial Statements (unaudited)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk See “Market Risk” section of Part I, Item 2

Item 4. Controls and Procedures

PART II Other Information

Item 1. Legal Proceedings

Item 6. Exhibits

Signatures

Section 302 Certification of Chief Executive Officer

Section 302 Certification of Chief Financial Officer

Section 906 Certification of Chief Executive Officer

Section 906 Certification of Chief Financial Officer

PART 1 — FINANCIAL INFORMATION

ITEM 1. Financial Statements.

TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2005				December 31, 2004
ASSETS
Current assets:
Cash and cash equivalents		$	35,598			$	149,101
Accounts receivable			528,912				346,031
Inventories			161,366				159,034
Prepaid tooling and other			127,118				124,938
Total current assets			852,994				779,104
Property, plant and equipment, net			1,161,655				1,205,640
Investments in joint ventures			216,144				227,740
Goodwill			166,985				174,563
Other assets, net			152,187				173,727
Total assets		$	2,549,965			$	2,560,774
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities not subject to compromise:
Current maturities of long-term debt and capital lease obligations		$	139,828			$	133,156
Accounts payable			327,216				638,118
Accrued liabilities			307,360				286,262
Total current liabilities			774,404				1,057,536
Liabilities subject to compromise			1,127,364				—
Non-current liabilities not subject to compromise:
Long-term debt, net of current maturities			105,662				1,239,562
Debtor-in-Possession borrowings			510,738				—
Convertible senior debentures			—				121,723
Obligations under capital leases, net of current maturities			34,689				36,823
Other non-current liabilities			222,738				226,062
Total non-current liabilities			873,827				1,624,170
Stockholders’ deficit:
Preferred stock			—				—
Common stock			666				666
Additional paid-in-capital			681,284				681,084
Retained deficit			(814,554	)			(715,754	)
Deferred compensation plans			(7,510	)			(7,636	)
Accumulated other comprehensive loss			(36,192	)			(29,968	)
Treasury stock			(49,324	)			(49,324	)
Total stockholders’ deficit			(225,630	)			(120,932	)
Total liabilities and stockholders’ deficit		$	2,549,965			$	2,560,774

     The accompanying notes are an integral part of these condensed consolidated financial statements.

TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended March 31,
		2005				2004
Revenues		$	915,880			$	781,236
Cost of sales			851,089				720,591
Gross profit			64,791				60,645
Selling, general and administrative expenses			43,206				34,154
Restructuring and asset impairment charges, net			31,895				(5,607	)
Operating income (loss)			(10,310	)			32,098
Interest expense, net (contractual interest of $55,967 in 2005)			43,670				31,470
Chapter 11 and related reorganization items			41,622				—
Income (loss) before provision for income taxes, equity in earnings of joint ventures, minority interest, and gain on sale of joint venture			(95,602	)			628
Provision (benefit) for income taxes			6,125				478
Income (loss) before equity in earnings of joint ventures, minority interest, and gain on sale of joint venture			(101,727	)			150
Equity in earnings of joint ventures, net of tax			4,263				3,447
Minority interest, net of tax			(1,334	)			(1,311	)
Gain on sale of joint venture, net of tax			—				9,732
Net income(loss)		$	(98,798	)		$	12,018
Basic earnings (loss) per share		$	(1.68	)		$	0.21
Weighted average basic shares outstanding			58,648				57,342
Diluted earnings (loss) per share		$	(1.68	)		$	0.21
Weighted average diluted shares outstanding			58,648				58,110

     The accompanying notes are an integral part of these condensed consolidated financial statements.

TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		Three Months Ended March 31,
		2005				2004
OPERATING ACTIVITIES:
Net income (loss)		$	(98,798	)		$	12,018
Adjustments required to reconcile net loss to net cash provided by (used in) operating activities:
Chapter 11 and related reorganization items, net			38,188				—
Non-cash restructuring and impairment			32,095				(6,276	)
Depreciation			43,591				38,357
Deferred income tax provision (benefit)			2,343				(4,104	)
Gain on sale of joint venture investment			—				(9,732	)
Equity in earnings of joint ventures, net			(4,263	)			(3,447	)
Change in working capital and other operating items			(190,011	)			(89,700	)
Net cash used in operating activities			(176,855	)			(62,884	)
INVESTING ACTIVITIES:
Capital expenditures			(31,977	)			(53,186	)
Divestitures and other			—				54,595
Acquisitions			—				(21,299	)
Net cash used in investing activities			(31,977	)			(19,890	)
FINANCING ACTIVITIES:
Proceeds from borrowings			16,151				14,630
Repayments of borrowings			(433,435	)			(14,409	)
Proceeds from DIP credit facility borrowings			623,738				—
Repayments of DIP credit facility borrowings			(111,125	)			—
Net cash provided by financing activities			95,329				221
NET CHANGE IN CASH AND CASH EQUIVALENTS			(113,503	)			(82,553	)
Cash and cash equivalents, beginning of period			149,101				160,899
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	35,598			$	78,346
Supplemental Cash Flow Information:
Interest paid, net of amounts capitalized		$	13,074			$	29,118
Income taxes paid (refunded)		$	(295	)		$	(863	)

     The accompanying notes are an integral part of these condensed consolidated financial statements.

TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by Tower Automotive, Inc. (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished in the condensed consolidated financial statements includes primarily normal recurring adjustments and reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of such financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Although the Company believes that the disclosures are adequate to make the information presented not misleading, these condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.

As indicated in Note 2, Tower Automotive, Inc. and 25 of its U.S. Subsidiaries (collectively the “Debtors”) are operating pursuant to Chapter 11 under the Bankruptcy Code and continuation of the Company as a going concern is contingent upon, among other things, the Debtors’ ability: (i) to comply with the terms and conditions of the Debtor-in-Possession financing agreement described in Note 4; (ii) to obtain confirmation of a plan of reorganization under the Bankruptcy Code; (iii) to undertake certain restructuring actions relative to the Company’s operations in North America; (iv) to reduce unsustainable debt and other liabilities and simplify the Company’s complex and restrictive capital structure through the bankruptcy process; (v) to return to profitability; (vi) to generate sufficient cash flow from operations and; (vii) to obtain financing sources to meet the Company’s future obligations. These matters create uncertainty regarding the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not reflect any adjustments relating to the recoverability and classification of liabilities that might result from the outcome of these uncertainties. In addition, a plan of reorganization could materially change amounts reported in the Company’s consolidated financial statements, which do not give effect to any adjustments of the carrying value of assets and liabilities that are necessary as a consequence of reorganization under Chapter 11.

Subsequent to the bankruptcy filing date, the provisions in Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code (“SOP 90-7”) applies to the Debtors’ financial statements while the Debtors operate under the provisions of Chapter 11. SOP 90-7 does not change the application of generally accepted accounting principles in the preparation of financial statements. However, SOP 90-7 does require that the financial statements, for periods including and subsequent to the filing of the Chapter 11 petition, distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business.

Revenues and operating results for the three months ended March 31, 2005 are not necessarily indicative of the results to be expected for the full year or any future period.

2. Chapter 11 Reorganization Proceedings

On February 2, 2005 (the “Petition Date”), the Debtors filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (“Bankruptcy Code”) in the United States Bankruptcy Court Southern District of New York (“Bankruptcy Court”). The cases were consolidated for administrative purposes. An extensive liquidity deficiency in early 2005 and a significant amount of indebtedness, incurred through internal growth and acquisition activity made the filing necessary. The Debtors are operating their businesses as debtors-in-possession (“DIP”) pursuant to the Bankruptcy Code. An official committee of unsecured creditors has been appointed.

Customer pricing pressures, North American automotive production cuts, significantly higher material costs involving primarily steel and the termination of accelerated payment programs of certain customers adversely affected the Debtors’ operations and financial condition.

Pursuant to the provisions of the Bankruptcy Code, all actions to collect upon any of the Debtors’ liabilities as of the petition date or to enforce pre-petition date contractual obligations are automatically stayed. As a general rule, absent approval from the Bankruptcy Court, the Debtors are prohibited from paying pre-petition obligations. In addition, as a consequence of the Chapter 11 filing, pending litigation against the Debtors is generally stayed, and no party may take any action to collect pre-petition claims except pursuant to an order of the Bankruptcy Court. However, the Debtors have requested that the Bankruptcy Court approve certain pre-petition liabilities, such as payments for the retention of certain legal and financial professionals, employee wages and benefits and certain other pre-petition obligations. Since the filing, all orders sufficient to enable the Debtors to conduct normal business activities, including the approval of the Debtors’ DIP financing, have been entered by the Bankruptcy Court. While the Debtors are subject to Chapter 11, all transactions of the Debtors outside the ordinary course of business will require the prior approval of the Bankruptcy Court.

The objectives of this Chapter 11 filing were to protect and preserve the value of assets and to restructure and improve the Debtors’ financial and operational affairs in order to return to profitability. While the Company believes it will be able to significantly reduce the Debtors’ unsustainable liabilities and simplify its complex and restrictive capital structure through the bankruptcy process, there can be no certainty that it will be successful in doing so.

The Debtors intend to file a plan of reorganization with the Bankruptcy Court. The Company is unable to estimate what recovery such a plan of reorganization will provide holders of the Debtors’ unsecured pre-petition debt. While the Debtors filed for Chapter 11 to gain relief from significant pre-petition debt levels and to address needed operational restructuring of the business the extent to which such relief will be achieved is uncertain at this time. See Note 4 for a description of the DIP financing.

Financial Statement Classification

The majority of the Debtors’ pre-petition debt is in default and is classified as “Liabilities Subject to Compromise” in the accompanying Consolidated Balance Sheet at March 31, 2005 (See Note 4).

In addition to the Debtors pre-petition debt which is in default, liabilities subject to compromise reflects the Debtors other liabilities incurred prior to the commencement of the bankruptcy proceedings. These amounts represent the Company’s estimate of known or potential pre-petition claims to be resolved in connection with the bankruptcy proceedings. Such claims remain subject to future adjustments. Future adjustments may result from: (i) negotiations; (ii) actions of the Bankruptcy Court; (iii) further developments with respect to disputed claims; (iv) rejection of executory contracts and leases; (v) the determination of value of any collateral securing claims; (vi) proofs of claims; or (vii) other events. Payment terms for these claims will be established in connection with a plan of reorganization.

Liabilities subject to compromise consist of the following (in thousands):

		March 31, 2005
Debt:
5.75% Convertible senior debentures		$	125,000
Due to Tower Automotive Capital Trust			258,750
9.25% Senior Euro notes			195,555
12% Senior notes			258,000
Total debt			837,305
Accounts payable			260,689
Accrued interest on debt subject to compromise			21,128
Accrued liabilities			3,616
Executory contracts			4,626
Consolidated liabilities subject to compromise			1,127,364
Inter-company payable to non-Debtor subsidiaries			16,363
Total liabilities subject to compromise		$	1,143,727

The Debtors have incurred certain professional and other expenses directly associated with the bankruptcy proceedings. In addition, the Debtors have made certain provisions to adjust the carrying value of certain pre-petition liabilities to reflect the Debtors’ estimate of allowed claims. Such costs are classified as Chapter 11 and related reorganization items in the accompanying Statement of Operations for the three months ended March 31, 2005 and consist of the following (in thousands):

		Three Months Ended
		March 31, 2005
Professional fees directly related to the filing		$	12,194
Key employee retention costs			36
Write off of deferred financing costs			29,135
Estimated executory contract rejection damages			208
Other expenses directly attributable to the Company’s reorganization			49
Total		$	41,622

Pursuant to the Bankruptcy Code, the Debtors have filed schedules with the Bankruptcy Court setting forth the assets and liabilities of the Debtors as of the Petition Date. The Debtors have issued proof of claim forms to current and prior employees, known creditors, vendors and other parties with whom the Debtors have previously conducted business. To the extent the recipients disagree with the claims quantified on these forms, the recipient may file discrepancies with the Bankruptcy Court. Differences between the amounts recorded by the Debtors and claims filed by creditors will be investigated and resolved as part of the bankruptcy proceedings. The Bankruptcy Court ultimately will determine liability amounts that will be allowed for these claims. The Company is in the process of receiving, cataloging and reconciling claims received in conjunction with this process. Because the Debtors have not received all claims and have not completed the evaluation of the claims received in connection with this process, the ultimate number and allowed amount of such claims is not presently known. The resolution of such claims could result in a material adjustment to the Company’s financial statements.

Debtors’ Financial Statements

Presented below are the condensed consolidated financial statements of the Debtors. These statements reflect the financial position, results of operations and cash flows of the combined Debtors, including certain transactions and resulting assets and liabilities between the Debtors and non-Debtor subsidiaries of the Company, which are eliminated in the Company’s consolidated financial statements.

Debtors’ Condensed Consolidated Balance Sheet
Debtors-in-Possession
(Amounts in thousands — unaudited)

		March 31, 2005
ASSETS
Current Assets:
Cash and cash equivalents		$	2,705
Accounts receivable, net			293,044
Inventories			84,067
Prepaid tooling and other			40,028
Total current assets			419,844
Property, plant and equipment, net			645,399
Investments in subsidiaries			403,537
Inter-company receivables			412,200
Other assets, net			108,739
Total assets		$	1,989,719
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities Not Subject to Compromise:
Current maturities of long-term debt and capital lease obligations		$	5,331
Accounts payable			99,564
Accrued liabilities			214,976
Total current liabilities			319,871
Liabilities subject to compromise			1,143,727
Non-Current Liabilities Not Subject to Compromise:
Long-term debt, net of current maturities			57,125
DIP borrowings			510,738
Other noncurrent liabilities			183,888
Total noncurrent liabilities			751,751
Total stockholders’ deficit			(225,630	)
Total liabilities and stockholders’ deficit		$	1,989,719

Debtors’ Condensed Consolidated Statement of Operations
Debtors-in-Possession
(Amounts in thousands — unaudited)

		Three Months
		Ended March
		31, 2005
Revenues		$	577,617
Cost of sales			545,144
Gross profit			32,473
Selling, general and administrative expenses			28,782
Restructuring and asset impairment charges, net			31,895
Chapter 11 and related reorganization items			41,622
Operating loss			(69,826	)
Interest expense, net			40,560
Inter-company interest income			(5,890	)
Loss before provision for income taxes, equity in earnings of joint ventures and equity in earnings of non-Debtor subsidiaries			(104,496	)
Provision for income taxes			3,251
Loss before equity in earnings of joint ventures and equity in earnings of non-Debtor subsidiaries			(107,747	)
Equity in earnings (loss) of joint ventures, net of tax			(89	)
Equity in earnings of non-Debtor subsidiaries			9,038
Net loss		$	(98,798	)

Debtors’ Condensed Consolidated Statement of Cash Flows

Debtors-in-Possession
(Amounts in thousands — unaudited)

		Three Months
		Ended March 31,
		2005
OPERATING ACTIVITIES:
Net loss		$	(98,798	)
Adjustments required to reconcile net loss to net cash provided by (used in) operating activities:
Chapter 11 and related reorganization expenses			38,188
Non-cash restructuring and impairment			32,095
Depreciation			27,040
Equity in earnings of non-Debtor subsidiaries			(9,038	)
Equity in earnings of joint ventures, net			89
Change in working capital and other operating items			(173,864	)
Net cash used in operating activities			(184,288	)
INVESTING ACTIVITIES:
Capital expenditures			(6,760	)
Net cash used in investing activities			(6,760	)
FINANCING ACTIVITIES:
Repayments of pre-petition borrowings			(425,941	)
Proceeds from DIP borrowings			623,738
Repayments of DIP borrowings			(111,125	)
Net cash provided by financing activities			86,672
NET CHANGE IN CASH AND CASH EQUIVALENTS			(104,376	)
Cash and cash equivalents, beginning of period			107,081
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	2,705

3. Inventories

Inventories are valued at the lower of first-in-first-out (“FIFO”) cost or market, and consisted of the following (in thousands):

		March 31,				December 31,
		2005				2004
Raw materials		$	85,314			$	91,220
Work in process			32,096				26,820
Finished goods			43,956				40,994
		$	161,366			$	159,034

4. Debt

Chapter 11 Impact

Under the terms of the Company’s then-existing credit agreement, the Chapter 11 filing created an event of default. Upon the Chapter 11 filing, the lenders’ obligation to loan additional money to the Company terminated, the outstanding principal of all obligations became immediately due and payable and the Debtors were required to immediately deposit funds into a collateral account to cover the outstanding amounts under the letters of credit issued pursuant to the Company’s pre-petition credit agreement (“Credit Agreement”). Outstanding obligations under the Credit Agreement amounted to $425 million, which was refinanced through the DIP financing described below.

In addition, the Chapter 11 filing created an event of default in relation to the Company’s pre-petition Convertible Debentures, Senior Notes, Senior Euro Notes and the amount due to the Tower Automotive Capital Trust (see Note 2).

Pursuant to SOP 90-7, the Company ceased recognizing interest expense on the pre-petition Convertible Debentures, Senior Notes, Senior Euro Notes and the amount due to the Tower Automotive Capital Trust effective February 2, 2005. The Company’s contractual interest not accrued or paid during the period of February 2, 2005 through March 31, 2005 amounted to $12.3 million.

As described in Note 2, the ability of creditors of the Debtors to seek remedies to enforce their rights under the debt facilities described above is stayed as a result of the Chapter 11 filing, and the creditors’ rights of enforcement are subject to the applicable provisions of the Bankruptcy Code.

The debt of the Company’s foreign subsidiaries is not subject to compromise in the bankruptcy proceedings as the Company’s operating foreign subsidiaries are not included in the Chapter 11 filing.

DIP Financing

In February 2005, the Bankruptcy Court approved a Revolving Credit, Term Loan and Guaranty Agreement, as amended, (“DIP Agreement”) between the Company and a national banking institution as agent for the lenders (“Lenders”) and each of the Lenders.

The DIP Agreement provides for a $725 million commitment of debtor-in-possession financing comprised of a revolving credit and letter of credit facility in an aggregate principal amount not to exceed $300 million and a term loan in the aggregate principal amount of $425 million. The proceeds of the term loan have been used to refinance the Debtors’ obligation amounting to $425 million under the Credit Agreement. The proceeds of the revolving credit loans shall be used to fund the working capital requirements of the Debtors during the Chapter 11 proceedings. Obligations under the DIP Agreement are secured by a lien on the assets of the Debtors (which lien shall have first priority with respect to a significant portion of the Debtors’ assets) and by a super-priority administrative expense claim in each of the bankruptcy cases.

Advances under the DIP Agreement bear interest at a fixed rate per annum equal to (x) the greatest (as of the date the advance is made) of the prime rate, the Base CD Rate (as defined in the DIP Agreement) plus 1%, or the Federal Funds Effective Rate (as defined in the DIP Agreement) plus 0.5%, plus (y) 1.75%, in the case of a loan under the revolving facility, or 2.25% in the case of the term loan. Alternatively, the Debtors may request that advances be made at a variable rate equal to (x) the Adjusted LIBO Rate (as defined in the DIP Agreement), for a one-month, three-month, six-month, or nine-month period, at the election of the Debtors, plus (y) 2.75%, in the case of a loan under the revolving facility, or 3.25% in the case of the term loan. In addition, the DIP Agreement obligates the Debtors to pay certain fees to the Lenders as described in the DIP Agreement.

The DIP Agreement contains various representations, warranties and covenants by the Debtors that are customary for transactions of this nature, including (without limitation) reporting requirements and maintenance of financial covenants.

The Debtors’ obligations under the DIP Agreement may be accelerated following certain events of default, including (without limitation) any breach by the Debtors of any of the representations, warranties, or covenants made in the DIP Agreement or the conversion of any of the bankruptcy cases to a case under Chapter 7 of the Bankruptcy Code or the appointment of a trustee pursuant to Chapter 7 of the Bankruptcy Code.

At March 31, 2005, $225 million was available for borrowing under the revolving credit and letter of credit facility.

For the period of February 2, 2005 through March 31, 2005, the weighted average interest rate associated with borrowings under the DIP Agreement was 6.38%.

The DIP Agreement matures on February 2, 2007; however, the Debtors are obligated to repay all borrowings made pursuant to the DIP Agreement upon substantial consummation of a plan of reorganization of the Debtors that is confirmed pursuant to an order of the Bankruptcy Court.

Back-Stop Agreement

The Debtors have entered into a Back-Stop agreement with a finance company (“Finance Company”). Under the Back-Stop Agreement, the Finance Company agreed to take by assignment any second lien holder’s rights and obligations as a second lien holder in association with second lien letters of credit under the Credit Agreement in an aggregate amount not to exceed $155 million.

Draws were made against the second lien letters of credit in the amount of $10.7 million as of March 31, 2005.

Debt Classified as Not Subject to Compromise

The Company’s industrial development revenue bonds and the debt associated with the Company’s variable interest entity in the amounts of $43.8 million and $18.7 million, respectively, are classified as liabilities not subject to compromise on the Company’s Condensed Consolidated Balance Sheet at March 31, 2005. The Company’s foreign subsidiary indebtedness amounting to $218 million at March 31, 2005, is not subject to compromise because these subsidiaries are not included in the bankruptcy proceedings.

Interest Rate Swap Contracts

In February 2005, the Company’s interest rate swap contracts were terminated. As a result of these terminations, the originator of the contracts drew upon a second lien letter of credit of the Company in the amount of approximately $5.0 million.

As of March 31, 2005, $2.7 million (net of tax) is recorded in accumulated other comprehensive loss in relation to the accumulated losses on one of the contracts, prior to being de-designated as a cash flow hedge. This amount will be amortized as additional interest expense over the initial remaining term of the contract, as the Company expects that the cash flows originally hedged will continue to occur.

5. Accounts Receivable Securitization Facilities

On December 30, 2004, the Company, a qualifying special purpose entity (“QSPE”) and a third-party lender entered into a $50.0 million accounts receivable securitization facility agreement (the “Facility”). Pursuant to the terms of the Facility, the Company unconditionally sold certain accounts receivable to the QSPE on an ongoing basis. The QSPE funded its purchases of the accounts receivable through borrowings from the third-party lender. A security interest with respect to such accounts receivable was granted to the third-party lender.

In addition, the Company was allowed, from time to time, to contribute capital to the QSPE in the form of contributed receivables or cash. The Facility allowed the Company to earn fees for performing collection and administrative functions associated with the Facility. The Facility had an expiration date of the earlier of 36 months subsequent to December 30, 2004 or the occurrence of a termination event as defined in the agreement. The accounts receivable sold were removed from the Consolidated Balance Sheet of the Company as these receivables and the QSPE met the applicable criteria of SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” The Facility became unavailable on February 2, 2005, the date on which the Debtors filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.

During the quarter ended March 31, 2005, the Company received $74.0 million in cash proceeds from receivables sold to the QSPE and reinvested $78.1 million in cash collections in revolving securitizations with the QSPE. The Company recognized interest expense of $0.8 million associated with the Facility, which represents the discount on the sale of the receivables to the QSPE.

6. Income Taxes

During the three months ended March 31, 2005, the Company recognized income tax expense of $6.1 million in relation to a net loss of $98.8 million. This income tax provision resulted primarily from the recognition of foreign income taxes and state taxes. A full valuation allowance was provided for U.S. Federal income tax benefits generated during the 2005 period.

During the three months ended March 31, 2004, the Company’s effective tax rate was 76.1%. The relatively high effective tax rate for the 2004 period was due to the high proportion of non-deductible items in relation to pre-tax income.

7. Stockholders’ Deficit

Earnings (Loss) Per Share

Basic loss per share for the three months ended March 31, 2005 is computed by dividing net loss by the weighted average number of common shares outstanding during the period. The effects of common stock equivalents have not been included in diluted loss per share for the three months ended March 31, 2005 as the effect would be anti-dilutive. Basic earnings per share for the three months ended March 31, 2004 were computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share for the three months ended March 31, 2004 was determined based on the assumption that stock options outstanding were exercised at the beginning of the period or at the time of issuance, if later, to the extent such options were dilutive. The Convertible Subordinated Notes and the Preferred Securities issued by the Tower Automotive Capital Trust, totaling approximately 16.2 million shares, were not included in the computation of earnings per share for the three months ended March 31, 2004 due to their anti-dilutive effect (in thousands, except per share data):

		Three Months Ended
		March 31,
		2005				2004
Net income (loss) — basic and diluted		$	(98,798	)		$	12,018
Weighted average number of common shares outstanding			58,648				57,342
Dilutive effect of stock options			—				768
Weighted average number of diluted shares outstanding			58,648				58,110
Basic earnings (loss) per share		$	(1.68	)		$	0.21
Diluted earnings (loss) per share		$	(1.68	)		$	0.21

Stock-Based Compensation

The Company accounts for stock options under the provisions of Accounting Principles Board Opinion (“APB”) No. 25, under which no compensation expense is recognized when the stock options are granted to colleagues and directors with an exercise price equal to fair market value of the stock as of the grant date, which represents the measurement date of the stock options. The Company may also grant stock options to outside consultants. The fair value of options granted to outside consultants is expensed over the period services are rendered based on the Black-Scholes valuation model.

The Company has three stock option plans: the 1994 Key Employee Stock Option Plan, the Long Term Incentive Plan and the Independent Director Stock Option Plan and three stock purchase plans: the Employee Stock Purchase Plan, the Key Leadership Deferred Income Stock Purchase Plan and the Director Deferred Income Stock Purchase Plan. Had compensation expense for these plans been determined as required under SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” the Company’s pro forma net income (loss) and pro forma net income (loss) per share would have been as follows (in thousands, except per share data):

		For the three months ended March 31,
		2005				2004
Net income (loss), as reported		$	(98,798	)		$	12,018
Add: Stock — based employee compensation included in reported net income (loss), net of tax related effects			274				299
Deduct: Total stock-based employee compensation (expense) income determined under fair value based method for all awards, net of related tax effects			112				(595	)
Pro Forma		$	(98,412	)		$	11,722
Basic earnings (loss) per share as reported		$	(1.68	)		$	0.21
Pro Forma			(1.68	)			0.20
Diluted earnings (loss) per share as reported		$	(1.68	)		$	0.21
Pro forma			(1.68	)			0.20

Total stock-based employee compensation income for the three months ended March 31, 2005 resulted from total amounts relating to forfeitures exceeding stock-based compensation expense for the period.

The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 3.89% in the 2005 period and a risk free interest rate of 3.92% in the 2004 period; expected life of seven years for the 2005 and 2004 periods; expected volatility of 61.2 % in the 2005 period and 58% in the 2004 period; and no expected dividends in both the 2005 and 2004 periods.

8. Acquisitions

Effective February 27, 2004, the Company acquired the remaining 34% ownership interest in Seojin Industrial Company Limited (“Seojin”) for consideration of approximately $21.3 million. Such consideration consisted of cash of $21.3 million offset by the repayment of $11.0 million of loans to Seojin’s minority shareholder, resulting in a net cash outflow of $10.3 million. Seojin is a supplier of frames, modules and structural components to the Korean automotive industry with its primary customers being Hyundai/ Kia. The Company financed the acquisition through Korean debt facilities, which are not covered under the Company’s credit facilities described in Note 6. The acquisition was accounted for under the purchase method of accounting and, accordingly, the assets acquired and liabilities assumed have been recorded at fair value at the date of acquisition.

In conjunction with the Company’s acquisition activities, reserves have been established for certain costs associated with facility shutdowns and consolidation activities involving general and payroll related costs, primarily for planned employee termination activities, and for provisions for acquired loss contracts. As of March 31, 2005, all of the identified facilities have been shutdown.

9. Investments in Joint Ventures

In March 2004, the Company sold its 30.76% ownership interest in Yorozu Corporation (“Yorozu”) to Yorozu, through a share buy-back transaction on the Tokyo Stock Exchange. Yorozu is a supplier of suspension modules and structural parts to the Asian and North American automotive markets. The Company received proceeds of approximately $51.7 million through this sale. The consideration for the sale was based on the prevailing price of Yorozu, as traded on the Tokyo Stock Exchange. The Company recognized a gain on the sale of $9.7 million during the three months ended March 31, 2004. The proceeds of this divestiture were utilized for tooling purchases and other capital expenditures.

On February 10, 2004, the Company announced that a decision had been finalized by DaimlerChrysler to move the production of the frame assembly for the Dodge Ram light truck from the Company’s Milwaukee, Wisconsin facility to the Company’s joint venture partner, Metalsa S. de R.L. (“Metalsa”) headquartered in Monterrey, Mexico. The Dodge Ram frame program produced in the Milwaukee facility was expected to run through 2009. Production related to this program ceased in June 2005 (see Note 15). The Company recognized revenue associated with the Dodge Ram frame program of $46.5 million and $60.2 million for the three months ended March 31, 2005 and 2004, respectively. The Company is a 40% partner in Metalsa with Promotora de Empresas Zano, S.A. de C.V. (“Proeza”). Metalsa is the largest supplier of vehicle frames and structures in Mexico.

10. Retirement Plans

The following table provides the components of net periodic pension benefit cost and other post-retirement benefit cost for the three months ended March 31, (in thousands):

		Pension Benefits								Other Benefits
		2005				2004				2005				2004
Service cost		$	1,720			$	2,140			$	200			$	94
Interest cost			3,790				3,626				2,065				1,935
Expected return on plan assets			(3,672	)			(3,045	)			—				—
Amortization of transition assets			—				(1	)			—				—
Amortization of prior service cost			1,231				1,054				—				—
Amortization of net losses			1,027				941				3,230				1,495
Net periodic benefit cost		$	4,096			$	4,715			$	5,495			$	3,524

The Company previously disclosed in its consolidated financial statements for the year ended December 31, 2004 that it expects its minimum pension funding requirements to be $32.4 million during 2005. During the three months ended March 31, 2005, the Company made contributions of $5.9 million to its pension plans. The Company presently anticipates contributing an additional $21.5 million to fund its pension plans in 2005 for a total of $27.4 million based upon the Company’s most recent estimate.

The Company contributed $2.8 million during the three months ended March 31, 2005 to its defined contribution employee savings plans.

The Company previously disclosed in its consolidated financial statements for the year ended December 31, 2004 that it expects minimum funding requirements in relation to its postretirement plans to be $20.6 million during 2005. During the three months ended March 31, 2005, the Company made contributions of $6.4 million to its postretirement plans. The Company presently anticipates contributing an additional $16.1 million to fund its postretirement plans in 2005 for a total of $22.5 million based upon the Company’s most recent estimate.

11. Segment Information

The Company produces a broad range of assemblies and modules for vehicle body structures and suspension systems for the global automotive industry. The Company’s operations have similar characteristics including the nature of products, production processes and customers. The Company’s products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems and suspension components for the automotive industry. Management reviews the operating results of the Company and makes decisions based upon two operating segments: North America and International.

Financial information by segment follows (in thousands):

		North
		America				International				Total
Three months ended March 31, 2005:
Revenues		$	589,608			$	326,272			$	915,880
Operating income (loss)			(29,851	)			19,541				(10,310	)
Restructuring and asset impairment charge			31,895				—				31,895
Total assets		$	1,419,893			$	1,130,072			$	2,549,965
Three months ended March 31, 2004:
Revenues		$	533,881			$	247,355			$	781,236
Operating income			15,357				16,741				32,098
Total assets		$	1,886,526			$	980,789			$	2,867,315

The change in the carrying amount of goodwill for the three months ended March 31, 2005, by operating segment follows (in thousands):

		International
Balance at December 31, 2004		$	174,563
Currency translation adjustment			(7,578	)
Balance at March 31, 2005		$	166,985

12. Restructuring and Asset Impairment Charges

The Company has executed various restructuring plans and may execute additional plans in the future to respond to its bankruptcy proceedings, customer sourcing decisions, realignment of manufacturing capacity to prevailing global automotive production and to improve the utilization of remaining facilities. Estimates of restructuring charges are based on information available at the time such charges are recorded. Due to the inherent uncertainty involved in estimating restructuring expenses, actual amounts paid for such activities may differ from amounts initially recorded. Accordingly, the Company may record revisions of previous estimates by adjusting previously established reserves.

The table below summarizes the accrual for the Company’s various restructuring actions for the three months ended March 31, 2005 (in thousands):

		Severance				Other Costs				Total
Balance at December 31, 2004		$	2,615			$	4,349			$	6,964
Cash usage			(636	)			—				(636	)
Non-cash charges and revisions of estimates			(1,031	)			(4,349	)			(5,380	)
Balance at March 31, 2005		$	948			$	—			$	948

The Company anticipates additional cash charges in association with these actions in the amount of approximately $0.3 million.

During the three months ended March 31, 2005, the Company recognized an asset impairment charge relating to property, plant and equipment in the amount of $32.1 million in association with the anticipated closing of the Company’s Corydon, IN and Bowling Green, KY facilities. This charge represents the amount by which the carrying value of these assets exceeded fair market value. Fair market value was determined based upon anticipated future cash flows (See Note 15).

13. Comprehensive Income (Loss)

The following table presents comprehensive income (loss), net of tax (in thousands):

		For the three months ended March 31,
		2005				2004
Net income (loss)		$	(98,798	)		$	12,018
Change in cumulative translation adjustment			(7,951	)			(7,678	)
Unrealized gain (loss) on qualifying cash flow hedges, net of tax $- and $384, respectively			1,727				746
Comprehensive income (loss)		$	(105,022	)		$	5,086

14. Commitments and Contingencies

Environmental Matters

The Company owns properties, which have been impacted by environmental releases. The Company is liable for costs associated with investigation and/or remediation of contamination in one or more environmental media at some of these properties. The Company is actively involved in investigation and/or remediation at several of these locations. At certain of these locations, costs incurred for environmental investigation/remediation are being paid partly or completely out of funds placed into escrow by previous property owners. Nonetheless, total costs associated with remediation of environmental contamination at these properties could be substantial and may have an adverse impact on the Company’s financial condition, results of operations or cash flows.

Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. The established liability for environmental matters is based upon management’s best estimates of expected investigation/remediation costs related to environmental contamination. It is possible that actual costs associated with these matters will exceed the environmental reserves established by the Company. Inherent uncertainties exist in the estimates, primarily due to unknown conditions, changing governmental regulations and legal standards regarding liability and evolving technologies for handling site remediation and restoration. As of March 31, 2005 and December 31, 2004, the Company had accrued approximately $13.5 million and $16.3 million, respectively.

Litigation

The Company is subject to various legal actions and claims incidental to its business. Litigation is subject to many uncertainties and the outcome of individual litigated matters is not predictable with assurance. After discussions with counsel, it is the opinion of management that the outcome of such matters will not have a material adverse impact on the Company’s financial position, results of operations or cash flows.

On February 2, 2005, the Debtors filed a voluntary petition for relief under the Bankruptcy Code. The cases of each of the Debtors were consolidated for the purpose of joint administration (See Note 2). As a result of the commencement of the Chapter 11 proceedings by the Debtors, an automatic stay has been imposed against the commencement or continuation of legal proceedings, pertaining to claims existing as of February 2, 2005, against the Debtors outside of the Bankruptcy Court. Claimants against the Debtors may assert their claims in the Chapter 11 proceedings by filing a proof of claim, to which the Debtors may object and seek a determination from the Bankruptcy Court as to the allowability of the claim. Claimants who desire to liquidate their claims in legal proceedings outside of the Bankruptcy Court will be required to obtain relief from the automatic stay by order of the Bankruptcy Court. If such relief is granted, the automatic stay will remain in effect with respect to the collection of liquidated claim amounts. Generally, all claims against the Debtors that seek a recovery from assets of the Debtors’ estates will be addressed in the Chapter 11 proceedings and paid only pursuant to the terms of a confirmed plan of reorganization.

The Company requested an extension of the required due date for the filing of its plan of reorganization. On September 21, 2005, the Bankruptcy Court approved an extension of the due date from September 30, 2005 to January 27, 2006.

Key Employee Retention Plan Agreements

On March 30, 2005, the Bankruptcy Court entered an order approving the execution and implementation by the Company of Key Employee Retention Plan Agreements (the “KERP Agreements”) with 106 of its key employees.

The Company entered into the KERP Agreements to ensure the continued contributions of its key employees during the Company’s Chapter 11 bankruptcy proceedings. Under each KERP Agreement, the Company agrees to pay the applicable employee a retention incentive. The total amount of the retention incentive (which varies by employee from 40% to 110% of base salary) is payable in four installments of 25% each, conditioned upon the employee’s continued employment by the Company through each of the scheduled payment dates. The four scheduled payment dates are (1) May 2, 2005; (2) November 2, 2005; (3) the confirmation of a plan of reorganization in the Company’s Chapter 11 proceedings; and (4) six months after the confirmation of a plan of reorganization in the Company’s Chapter 11 proceedings. The approximate cost of the KERP Agreements is $7.9 million.

Pursuant to each KERP Agreement, if the employee’s employment by the Company is voluntarily terminated by the employee (other than upon retirement) or is terminated by the Company for cause (as defined in the KERP Agreement) prior to a scheduled payment date, the employee forfeits all unpaid amounts of the retention incentive. If an employee’s employment by the Company is terminated by the Company other than for cause or is terminated as a result of retirement, disability or death, the Company is obligated to pay the employee (or his or her estate) a prorated portion of the unpaid amount of the retention incentive, based upon the date of termination of employment.

15. Subsequent Events

Exit or Disposal Activities

On April 15, 2005, the Company committed to a plan to close its Belcamp, MD, Bowling Green, KY and Corydon, IN facilities. The facilities ceased production in June 2005. In addition, as a result of the closing of the Corydon, IN facility, the Company will reduce the number of employees at its Granite City, IL facility. These actions resulted in the elimination of approximately 800 positions. These operational restructuring initiatives are designed to reduce excess capacity and associated costs and improve overall efficiency.

Total costs associated with these actions amount to approximately $63.4 million, which is comprised of employee termination benefits of $3.8 million, asset impairment charges of $32.1 million, related lease costs of $25.0 million and other costs of $2.5 million. The $32.1 million of asset impairment charges were recognized in the three months ended March 31, 2005. See Note 12. Future cash expenditures for these actions are estimated at $4.5 million. These amounts do not include approximately $4.7 million of cash expenditures to be incurred for training and relocation of colleagues and equipment. These actions are contained in the North America operating segment.

In June 2005, production ceased on the Dodge Ram light truck frame at the Company’s Milwaukee, Wisconsin facility (See Note 9). The Company does not expect material net cash costs associated with the customer’s decision to move the Dodge Ram light truck frame production.

The Company anticipates recording approximately $37.8 million in pension and postretirement curtailment charges in the third quarter of 2005, as measured in the second quarter of 2005, based on certain actions the Company believes are probable of occurring which will result in the curtailments.

16. Recently Issued Accounting Prouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) adopted SFAS No. 123(R), “Share-Based Payment.” SFAS 123(R) applies to all transactions involving the issuance of equity instruments (stock, stock options and other equity instruments) for goods or services, or the incurrence of liabilities for goods or services that are based on the fair value of an entity’s equity or may be settled in an entity’s equity. Under this standard, the fair value of all employee share-based payment awards will be expensed through the statement of operations over any applicable vesting period. SFAS 123(R) requires the use of a fair value valuation method to measure share-based payment awards. This standard is effective for the Company on January 1, 2006. The Company will be required to recognize compensation expense, over an applicable vesting period, for all awards granted subsequent to adoption of this standard. In addition, the Company shall be required to recognize compensation expense related to the unvested portion of previously granted awards outstanding as of the date of adoption as those awards continue to vest. The Company is currently evaluating SFAS 123(R) to determine its impact on the Company’s consolidated financial statements.

In May 2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections.” SFAS 154 replaces Accounting Principles Board Opinion No. 20, “Accounting Changes” and SFAS 3, “Reporting Accounting Changes in Interim Financial Statements” and changes the requirements for the accounting and reporting of a change in accounting principle. This statement requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle should be recognized in the period of the accounting change. This statement also requires that a change in depreciation or amortization method for long-lived, non-financial assets be accounted for as a change in accounting estimate effected by a change in accounting principle. This standard is effective for the Company on January 1, 2006. The Company anticipates that SFAS 154 will not have a material effect on its consolidated financial statements.

17. Consolidating Guarantor and Non-Guarantor Financial Information

The following consolidating financial information presents balance sheets, statements of operations and cash flow information related to the Company’s business. Certain foreign subsidiaries of R.J. Tower Corporation are subject to restrictions on their ability to dividend or otherwise distribute cash to R. J. Tower Corporation because they are subject to financing arrangements that restrict them from paying dividends. Each Guarantor, as defined, is a direct or indirect 100% owned subsidiary of the Company and has fully and unconditionally guaranteed the 9.25% senior unsecured Euro notes issued by R. J. Tower Corporation in 2000, the 12% senior unsecured notes issued by R. J. Tower Corporation in 2003 and the DIP financing entered into by R. J. Tower Corporation in February 2005. Tower Automotive, Inc. (the parent company) has also fully and unconditionally guaranteed the notes and the DIP financing and is reflected as the Parent Guarantor in the consolidating financial information. The Non-Guarantor Restricted Companies are the Company’s foreign subsidiaries except for Seojin Industrial Company Limited, which is reflected as the Non-Guarantor Unrestricted Company in the consolidating financial information. As a result of the Chapter 11 filing by the Debtors, the above-mentioned notes are subject to compromise pursuant to the bankruptcy proceedings. Separate financial statements and other disclosures concerning the Guarantors have not been presented because management believes that such information is not material to investors.

TOWER AUTOMOTIVE, INC.

Consolidating Balance Sheets at March 31, 2005

(Amounts in thousands — unaudited)

														Non-Guarantor				Non-Guarantor
		R.J. Tower				Parent				Guarantor				Restricted				Unrestricted
		Corporation				Guarantor				Companies				Companies				Companies				Eliminations				Consolidated
Assets
Current assets:
Cash and cash equivalents		$	2,643			$	—			$	61			$	32,520			$	374			$	—			$	35,598
Accounts receivable			14,912				—				278,131				209,084				26,785				—				528,912
Inventories			—				—				84,068				61,615				15,683				—				161,366
Prepaid tooling and other			4,812				—				35,216				65,283				21,807				—				127,118
Total current assets			22,367				—				397,476				368,502				64,649				—				852,994
Property, plant and equipment, net			850				—				644,548				317,405				198,852				—				1,161,655
Investments in and advances to (from) affiliates			815,263				165,459				(618,057	)			(195,991	)			34				49,436				216,144
Goodwill			—				—				—				166,985				—				—				166,985
Other assets, net			21,275				—				87,282				25,521				18,109				—				152,187
		$	859,755			$	165,459			$	511,249			$	682,422			$	281,644			$	49,436			$	2,549,965
Liabilities and Stockholders’ Investment (Deficit)
Current liabilities:
Current maturities of long-term debt and capital lease obligations		$	—			$	—			$	5,331			$	23,682			$	110,815			$	—			$	139,828
Accounts payable			1,484				—				98,080				177,067				50,585				—				327,216
Accrued liabilities			32,532				—				180,493				84,172				10,163				—				307,360
Total current liabilities			34,016				—				283,904				284,921				171,563				—				774,404
Liabilities subject to compromise			474,704				391,089				261,571				—				—				—				1,127,364
Non-Current Liabilities Not Subject to Compromise:
Long-term debt, net of current maturities			—				—				57,125				10,540				37,997				—				105,662
Debtor-in-possession borrowings, net of current maturities			510,738								—				—				—								510,738
Obligations under capital leases, net of current maturities			—				—				—				34,689								—				34,689
Other noncurrent liabilities			41,366				—				141,870				31,473				8,029				—				222,738
Total noncurrent liabilities			552,104				—				198,995				76,702				46,026				—				873,827
Stockholders’ investment (deficit)			(201,069	)			(225,630	)			(233,221	)			320,799				64,055				49,436				(225,630	)
		$	859,755			$	165,459			$	511,249			$	682,422			$	281,644			$	49,436			$	2,549,965

TOWER AUTOMOTIVE, INC.

Consolidating Statement of Operations for the Three Months Ended March 31, 2005

(Amounts in thousands — unaudited)

														Non-Guarantor				Non-Guarantor
		R.J. Tower				Parent				Guarantor				Restricted				Unrestricted
		Corporation				Guarantor				Companies				Companies				Companies				Eliminations				Consolidated
Revenues		$	—			$	—			$	577,616			$	242,824			$	95,440			$	—			$	915,880
Cost of sales			(1,542	)			—				547,577				215,770				89,284				—				851,089
Gross profit			1,542				—				30,039				27,054				6,156				—				64,791
Selling, general and administrative expenses			(4,212	)			—				32,994				11,587				2,837				—				43,206
Restructuring and asset impairment charge			105				—				31,790				—				—				—				31,895
Operating income (loss)			5,649				—				(34,745	)			15,467				3,319				—				(10,310	)
Interest expense, net			36,376				2,221				1,960				1,368				1,745				—				43,670
Chapter 11 and related reorganization items			41,622				—				—				—				—				—				41,622
Income (loss) before provision for income taxes, equity in earnings of joint ventures and minority interest			(72,349	)			(2,221	)			(36,705	)			14,099				1,574				—				(95,602	)
Provision (benefit) for income taxes			—				—				1,297				4,340				488				—				6,125
Income (loss) before equity in earnings of joint ventures and minority interest			(72,349	)			(2,221	)			(38,002	)			9,759				1,086				—				(101,727	)
Equity earnings in joint ventures and subsidiaries, net			(24,228	)			(96,577	)			—				—				—				125,068				4,263
Minority interest, net			—				—				—				(1,334	)			—				—				(1,334	)
Net income (loss)		$	(96,577	)		$	(98,798	)		$	(38,002	)		$	8,425			$	1,086			$	125,068			$	(98,798	)

TOWER AUTOMOTIVE, INC.

Consolidating Statements of Cash Flows for the Three Months Ended March 31, 2005

(Amounts in thousands — unaudited)

														Non-Guarantor				Non-Guarantor
		R. J. Tower				Parent				Guarantor				Restricted				Unrestricted
		Corporation				Guarantor				Companies				Companies				Companies				Eliminations				Consolidated
OPERATING ACTIVITIES:
Net income (loss)		$	(96,577	)		$	(98,798	)		$	(38,002	)		$	8,425			$	1,086			$	125,068			$	(98,798	)
Adjustments required to reconcile net income to net cash provided by (used in) operating activities
Chapter 11 and related reorganization expenses, net			38,188				—				—				—				—				—				38,188
Non-cash restructuring charge			—				—				32,095				—				—				—				32,095
Depreciation			83				—				26,956				11,507				5,045				—				43,591
Deferred income tax provision (benefit)			—				—				(2,265	)			2,344				2,264				—				2,343
Equity in earnings of joint ventures, net			(4,263	)			—				—				—				—				—				(4,263	)
Changes in working capital and other operating items			(33,647	)			2,445				(10,505	)			(11,154	)			(12,082	)			(125,068	)			(190,011	)
Net cash provided by (used in) operating activities			(96,216	)			(96,353	)			8,279				11,122				(3,687	)			—				(176,855	)
INVESTING ACTIVITIES:
Capital expenditures, net			—				—				(6,760	)			(19,421	)			(5,796	)			—				(31,977	)
Other, net			(96,353	)			96,353				—				—				—				—				—
Net cash provided by (used in) investing activities			(96,353	)			96,353				(6,760	)			(19,421	)			(5,796	)			—				(31,977	)
FINANCING ACTIVITIES:
Proceeds from pre-petition borrowings			—				—				—				5,541				10,610				—				16,151
Repayments of pre-petition borrowings			(425,000	)			—				(941	)			(6,670	)			(824	)			—				(433,435	)
Proceeds from DIP credit facility			623,738				—				—				—				—				—				623,738
Repayments of DIP credit facility borrowings			(111,125	)			—				—				—				—				—				(111,125	)
Net cash provided by (used for) financing activities			87,613				—				(941	)			(1,129	)			9,786				—				95,329
NET CHANGE IN CASH AND CASH EQUIVALENTS			(104,956	)			—				578				(9,428	)			303				—				(113,503	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			107,599				—				(517	)			41,948				71				—				149,101
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	2,643			$	—			$	61			$	32,520			$	374			$	—			$	35,598