-----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, NvXRECK62l+XIlwYOf14IuP1ko8FnljORLm6FgUuVHHMyVRPHPEjpsJjz47ZTx9p JpKrfW/PW9rEQq4S5c26Cg== 0000950152-06-002789.txt : 20060331 0000950152-06-002789.hdr.sgml : 20060331 20060331142959 ACCESSION NUMBER: 0000950152-06-002789 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20051231 FILED AS OF DATE: 20060331 DATE AS OF CHANGE: 20060331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STONERIDGE INC CENTRAL INDEX KEY: 0001043337 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 341598949 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-13337 FILM NUMBER: 06727838 BUSINESS ADDRESS: STREET 1: 9400 EAST MARKET ST CITY: WARREN STATE: OH ZIP: 44484 BUSINESS PHONE: 3308562443 MAIL ADDRESS: STREET 1: 9400 EAST MARKET ST CITY: WARREN STATE: OH ZIP: 44484 10-K/A 1 l19414ae10vkza.htm STONERIDGE, INC. 10-K/A Stoneridge, Inc. 10-K/A
 

 
 
UNITED STATES
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, 2005
Commission file number: 001-13337
STONERIDGE, INC.
(Exact name of registrant as specified in its charter)
     
Ohio   34-1598949
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
     
9400 East Market Street, Warren, Ohio   44484
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code: (330) 856-2443
Securities registered pursuant to Section 12(b) of the Act:
     
Title of each class   Name of each exchange on which registered
     
Common Shares, without par value   New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act:
None
     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
o Yes þ No
     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
o Yes þ No
     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.
þ Yes o No
     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) 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.
o
     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
         
Large accelerated filer o
  Accelerated filer þ   Non-accelerated filer o
     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
o Yes þ No
     As of July 2, 2005, the aggregate market value of the registrant’s Common Shares, without par value, held by non-affiliates of the registrant was approximately $95.7 million. The closing price of the Common Shares on July 2, 2005 as reported on the New York Stock Exchange was $7.13 per share. As of July 2, 2005, the number of Common Shares outstanding was 23,212,366.
     The number of Common Shares, without par value, outstanding as of February 10, 2006 was 23,327,478.
DOCUMENTS INCORPORATED BY REFERENCE
     None
 
 

 


 

EXPLANATORY STATEMENT
     This Amendment No. 1 on Form 10-K/A, which amends the Company’s Form 10-K for the year ended December 31, 2005, filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2006 (the “Original Filing”), is being filed to include Exhibit 99.1, financial statements of PST Indústria Eletrônica da Amazônia Ltda. (“PST”).
     This Form 10-K/A amends Item 15 of Part IV of the Original Filing by filing Exhibits 99.1 and 23.1. The CEO and CFO of the Company have also reissued their certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act. All other information is unchanged and reflects those disclosures made at the time of the Original Filing.
     During the preparation of the Company’s 2005 financial statements, it was determined that one of the Company’s joint ventures, PST, accounted for greater than 20% of the Company’s income before income taxes. Therefore, PST is considered significant under Rule 3-09(a) of Regulation S-X, which requires the Company to file separate financial statements of subsidiaries not consolidated and 50% owned or less. Accordingly, the financial statements for the Company’s unconsolidated joint venture, PST, have been filed as Exhibit 99.1.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a) 3. Exhibits: The following exhibits are hereby added to the Exhibits originally filed with the Original Filing.
     
Exhibit    
Number   Exhibit
 
23.1
  Consent of Independent Registered Public Accounting Firm, filed herewith.
 
   
31.1
  Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
 
   
31.2
  Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
 
   
32.1
  Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
 
   
32.2
  Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
 
   
99.1
  Financial Statements of PST Indústria Eletrônica da Amazônia Ltda., filed herewith.

2


 

SIGNATURES
     Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused Amendment No. 1 to this report to be signed on its behalf by the undersigned, thereunto duly authorized.
     
 
  STONERIDGE, INC.
 
   
Date: March 31, 2006
  /s/ GEORGE E. STRICKLER
 
   
 
  George E. Strickler
 
  Executive Vice President and Chief Financial Officer
 
  (Principal Financial Officer)
     Pursuant to the requirements of the Securities Exchange Act of 1934, Amendment No. 1 to this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
     
Date: March 31, 2006
  /s/ D.M. DRAIME
 
   
 
  D.M. Draime
 
  Chairman of the Board of Directors and Assistant
 
  Secretary
 
   
Date: March 31, 2006
  /s/ JOHN C. COREY
 
   
 
  John C. Corey
 
  President, Chief Executive Officer, and Director
 
  (Principal Executive Officer)
 
   
Date: March 31, 2006
  /s/ AVERY S. COHEN
 
   
 
  Avery S. Cohen
 
  Secretary and Director
 
   
Date: March 31, 2006
  /s/ JEFFREY P. DRAIME
 
   
 
  Jeffrey P. Draime
 
  Director
 
   
Date: March 31, 2006
  /s/ RICHARD E. CHENEY
 
   
 
  Richard E. Cheney
 
  Director
 
   
Date: March 31, 2006
  /s/ SHELDON J. EPSTEIN
 
   
 
  Sheldon J. Epstein
 
  Director
 
   
Date: March 31, 2006
  /s/ DOUGLAS C. JACOBS
 
   
 
  Douglas C. Jacobs
 
  Director
 
   
Date: March 31, 2006
  /s/ WILLIAM M. LASKY
 
   
 
  William M. Lasky
 
  Director
 
   
Date: March 31, 2006
  /s/ EARL L. LINEHAN
 
   
 
  Earl L. Linehan
 
  Director

3


 

INDEX TO EXHIBITS
     
Exhibit    
Number   Exhibit
 
23.1
  Consent of Independent Registered Public Accounting Firm, filed herewith.
 
   
31.1
  Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
 
   
31.2
  Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
 
   
32.1
  Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
 
   
32.2
  Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
 
   
99.1
  Financial Statements of PST Indústria Eletrônica da Amazônia Ltda., filed herewith.

4

EX-23.1 2 l19414aexv23w1.htm EXHIBIT 23.1 CONSENT OF IND REG PUBLIC ACCTG FIRM Exhibit 23.1
 

EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference of our report dated February 11, 2006, with respect to the consolidated financial statements of PST Indústria Eletrônica da Amazônia Ltda., included in this Form 10-K/A for the year ended December 31, 2005, in the following Registration Statements:
    No. 333-96953 on Form S-8 — Stoneridge, Inc. Director’s Share Option Plan,
 
    No. 333-72176 on Form S-8 — Stoneridge, Inc. Director’s Share Option Plan,
 
    No. 333-72178 on Form S-8 — Stoneridge, Inc. Long-Term Incentive Plan,
 
    No. 333-91175 on Form S-8 — Stoneridge, Inc. Long-Term Incentive Plan,
 
    No. 333-127017 on Form S-8 — Stoneridge, Inc. Directors Restricted Shares Plan
Campinas, Brazil,
March 24, 2006
ERNST & YOUNG
Auditores Independentes S.S.
CRC2SP015199/O-6
/s/ B. Alfredo Baddini Blanc
B. Alfredo Baddini Blanc
Accountant CRC1SP126402/O-8

5

EX-31.1 3 l19414aexv31w1.htm EXHIBIT 31.1 CEO CERTIFICATION PURSUANT TO SECTION 302 Exhibit 31.1
 

EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES–OXLEY ACT OF 2002
     I, John C. Corey, President, Chief Executive Officer and Director, of Stoneridge, Inc. (the “Company”), certify that:
(1)   I have reviewed Amendment No. 1 on Form 10-K/A of the Company;
 
(2)   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
(3)   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
 
(4)   The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the Company and we have:
  (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
  (c)   Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  (d)   Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
(5)   The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:
  (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
 
  (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
     
/s/ John C. Corey
 
   
John C. Corey, President, Chief Executive Officer and Director
   
March 31, 2006
   

6

EX-31.2 4 l19414aexv31w2.htm EXHIBIT 31.2 CFO CERTIFICATION PURSUANT TO SECTION 302 Exhibit 31.2
 

EXHIBIT 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES–OXLEY ACT OF 2002
I, George E. Strickler, Executive Vice President and Chief Financial Officer, of Stoneridge, Inc. (the “Company”), certify that:
(1)   I have reviewed Amendment No. 1 on Form 10-K/A of the Company;
 
(2)   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
(3)   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
 
(4)   The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the Company and we have:
  (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
  (c)   Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  (d)   Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
(5)   The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors:
  (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
 
  (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
     
/s/ George E. Strickler
 
   
George E. Strickler, Executive Vice President and Chief Financial Officer
   
March 31, 2006
   

7

EX-32.1 5 l19414aexv32w1.htm EXHIBIT 32.1 CEO CERTIFICATION PURSUANT TO SECTION 906 Exhibit 32.1
 

EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
     I, John C. Corey, President, Chief Executive Officer and Director, of Stoneridge, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
     (1) the Amendment No. 1 on Form 10-K/A of the Company for the fiscal year ended December 31, 2005 (“the Report”) which this certification accompanies fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
     (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
     
/s/ John C. Corey
 
   
John C. Corey, President, Chief Executive Officer and Director
   
March 31, 2006
   
     A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

8

EX-32.2 6 l19414aexv32w2.htm EXHIBIT 32.2 CEO CERTIFICATION PURSUANT TO SECTION 906 Exhibit 32.2
 

EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
     I, George E. Strickler, Executive Vice President and Chief Financial Officer, of Stoneridge, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
     (1) the Amendment No. 1 on Form 10-K/A of the Company for the fiscal year ended December 31, 2005 (“the Report”) which this certification accompanies fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
     (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
     
/s/ George E. Strickler
 
   
George E. Strickler, Executive Vice President and Chief Financial Officer
   
March 31, 2006
   
     A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

9

EX-99.1 7 l19414aexv99w1.htm EXHIBIT 99.1 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Exhibit 99.1
 


Table of Contents

REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and quotaholders of PST Indústria Eletrônica da Amazônia Ltda.
We have audited the accompanying consolidated balance sheet of PST Indústria Eletrônica da Amazônia Ltda. and subsidiary as of December 31, 2005, and the related consolidated statement of income, quotaholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of PST Indústria Eletrônica da Amazônia Ltda. and subsidiary at December 31, 2005, and the consolidated results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States.
Campinas, Brazil,
February 11, 2006
ERNST & YOUNG
Auditores Independentes S.S.
CRC2SP015199/O-6
/s/ B. Alfredo Baddini Blanc
B. Alfredo Baddini Blanc
Accountant CRC1SP126402/O-8

11


Table of Contents

PST INDÚSTRIA ELETRÔNICA DA AMAZONIA LTDA. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands)
                 
    December 31,  
    2005     2004  
            (Unaudited)  
ASSETS
               
 
               
Current Assets:
               
Cash and cash equivalents
  $ 5,314     $ 507  
Accounts receivable, less allowance for doubtful accounts of $373 and $217, in 2005 and 2004, respectively
    7,157       5,270  
Inventories, net
    9,037       8,871  
Taxes recoverable
    648       505  
Related parties
    120       78  
Prepaid expenses and other
    215       239  
Deferred income taxes
    615       377  
 
           
Total current assets
    23,106       15,847  
 
           
 
               
Long-Term Assets:
               
Property, plant and equipment, net
    6,868       5,702  
Other Assets:
               
Deferred income taxes
    608       521  
Other
    18       26  
 
           
Total Assets
  $ 30,600     $ 22,096  
 
           
 
               
LIABILITIES AND QUOTAHOLDERS’ EQUITY
               
 
               
Current Liabilities:
               
Current portion of long-term debt
  $ 1,206     $ 3,679  
Accounts payable
    3,755       2,161  
Due to related parties
    51       42  
Dividends payable to quotaholders
    2,141        
Employee profit sharing and management bonuses
    1,899        
Accrued expenses and other
    2,572       1,590  
 
           
Total current liabilities
    11,624       7,472  
 
           
 
               
Long-Term Liabilities:
               
Long-term debt, net of current portion
    2,082       3,824  
Due to related parties
    2,814       2,807  
Other liabilities
    1,159       640  
 
           
Total long-term liabilities
    6,055       7,271  
 
           
 
               
Commitments and contingencies (Note 6)
               
 
               
Quotaholders’ Equity:
               
Capital, $0.399 and $0.386 par values, 7,113,128 and 4,892,368 quotas authorized and issued as of December 31, 2005 and 2004, respectively
    2,837       1,886  
Retained earnings
    8,395       5,070  
Accumulated other comprehensive income
    1,689       397  
 
           
Total quotaholders’ equity
    12,921       7,353  
 
           
Total Liabilities and Quotaholders’ Equity
  $ 30,600     $ 22,096  
 
           
The accompanying notes are an integral part of these consolidated financial statements.

12


Table of Contents

PST INDÚSTRIA ELETRÔNICA DA AMAZONIA LTDA. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
                         
    For the Fiscal Years Ended  
    December 31,  
    2005     2004     2003  
            (Unaudited)     (Unaudited)  
 
                       
Net Sales
  $ 70,819     $ 47,807     $ 35,525  
 
                       
Costs and Expenses:
                       
Cost of goods sold
    38,700       27,445       20,836  
Product design and engineering expenses
    2,358       1,802       1,415  
Selling, general and administrative
    18,136       13,488       10,878  
 
                 
 
                       
Operating Income
    11,625       5,072       2,396  
 
                       
Exchange gains, net
    (188 )     (96 )     (1,063 )
Interest expense, net
    857       1,263       1,122  
 
                 
 
                       
Income Before Income Taxes
    10,956       3,905       2,337  
 
                       
Provision for income taxes
    2,330       610       369  
 
                 
 
                       
Net Income
  $ 8,626     $ 3,295     $ 1,968  
 
                 
The accompanying notes are an integral part of these consolidated financial statements.

13


Table of Contents

PST INDÚSTRIA ELETRÔNICA DA AMAZONIA LTDA. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                         
    For the Fiscal Years Ended  
    December 31,  
    2005     2004     2003  
            (Unaudited)     (Unaudited)  
OPERATING ACTIVITIES:
                       
Net income
  $ 8,626     $ 3,295     $ 1,968  
Adjustments to reconcile net income to net cash provided by operating activities -
                       
Depreciation and amortization
    1,247       980       767  
Deferred income taxes
    (197 )     40       (118 )
Loss on sales of property, plant and equipment
    6       21       64  
Changes in operating assets and liabilities-
                       
Accounts receivable, net
    (1,165 )     (1,844 )     457  
Inventories, net
    1,050       (964 )     (764 )
Prepaid expenses and other
    (49 )     404       (24 )
Other assets
    12       35       (40 )
Accounts payable
    1,297       (963 )     609  
Accrued expenses and other
    3,097       335       427  
 
                 
Net cash provided by operating activities
    13,924       1,339       3,346  
 
                 
 
                       
INVESTING ACTIVITIES:
                       
Capital expenditures
    (1,749 )     (1,523 )     (2,338 )
Proceeds from sales of property, plant and equipment
    81       16       206  
Business acquisitions and other
                28  
 
                 
Net cash used by investing activities
    (1,668 )     (1,508 )     (2,104 )
 
                 
 
                       
FINANCING ACTIVITIES:
                       
Borrowings of long-term debt
    2,069       3,809       71  
Repayments of long-term debt
    (4,334 )     (69 )     (27 )
Borrowings of short-term debt
    1,186       1,931       776  
Repayments of short-term debt
    (4,164 )     (898 )     (1,666 )
Decrease in amounts due to related parties
    (377 )     (4,941 )     (1,021 )
Dividends paid
    (2,175 )            
Other equity transactions
    2       79       250  
 
                 
Net cash used by financing activities
    (7,793 )     (89 )     (1,617 )
 
                 
 
                       
Effect of exchange rate changes on cash and cash equivalents
    344       482       205  
 
                 
 
                       
Net change in cash and cash equivalents
    4,807       224       (170 )
 
                       
Cash and cash equivalents at beginning of period
    507       283       453  
 
                 
 
                       
Cash and cash equivalents at end of period
  $ 5,314     $ 507     $ 283  
 
                 
 
                       
Supplemental disclosure of cash flow information:
                       
Cash paid for interest
  $ 846     $ 685     $ 769  
 
                 
Cash paid for income taxes
  $ 2,438     $ 258     $ 393  
 
                 
The accompanying notes are an integral part of these consolidated financial statements.

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PST INDÚSTRIA ELETRÔNICA DA AMAZONIA LTDA. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF QUOTAHOLDERS’ EQUITY
(in thousands, except for number of quotas)
                                                 
                            Accumulated Other              
    Number of             Retained     Comprehensive Income     Total Quotaholders’     Comprehensive  
    Quotas     Capital     Earnings     (Loss)     Equity     Income  
BALANCE, JANUARY 1, 2003
    200,000     $ 119     $ 1,574     $     $ 1,693          
(Unaudited)
                                               
 
                                               
Net income
                1,968             1,968       1,968  
Other comprehensive income:
                                               
Currency translation adjustments
                      (1,755 )     (1,755 )     (1,755 )
 
                                   
Comprehensive income
                                          $ 213  
 
                                             
 
                                               
BALANCE, DECEMBER 31, 2003
    200,000       119       3,542       (1,755 )     1,906          
(Unaudited)
                                               
 
                                               
Net income
                3,295             3,295       3,295  
Capitalization of retained earnings
    4,692,368       1,767       (1,767 )                    
Other comprehensive income:
                                               
Currency translation adjustments
                      2,152       2,152       2,152  
 
                                   
Comprehensive income
                                          $ 5,447  
 
                                             
 
                                               
BALANCE, DECEMBER 31, 2004
    4,892,368       1,886       5,070       397       7,353          
(Unaudited)
                                               
 
                                               
Net income
                8,626               8,626       8,626  
Capitalization of retained earnings
    2,220,760       951       (951 )                    
Dividend
                (4,350 )           (4,350 )        
Other comprehensive income:
                                               
Currency translation adjustments
                      1,292       1,292       1,292  
 
                                   
Comprehensive income
                                          $ 9,918  
 
                                             
 
                                               
BALANCE, DECEMBER 31, 2005
    7,113,128     $ 2,837     $ 8,395     $ 1,689     $ 12,921          
 
                                     
The accompanying notes are an integral part of these consolidated financial statements.

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PST INDÚSTRIA ELETRÔNICA DA AMAZONIA LTDA. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts and data related to 2004 and 2003 are unaudited)
(in thousands, unless otherwise indicated)
1. Organization and Nature of Business
     PST Indústria Eletrônica da Amazônia Ltda. (“PST”) is a Brazilian limited liability corporation, which specializes in the design, manufacture and sale of electronic vehicle security devices. The Company’s administrative headquarters are located in the city of Campinas, State of São Paulo, Brazil. The Company also has a branch in the city of Rio de Janeiro, which carries out customer services, and a sales branch in the city of Buenos Aires, Argentina.
     Manufacturing activities are carried out in the Company’s industrial plant established in the Manaus Free-Trade Zone and in a manufacturing unit at the Company’s facilities in the city of Campinas. Given the location of such a unit in an economic developing area, the Manaus plant has obtained the following federal and state benefits through 2013:
    Exemption from IPI (federal excise tax) on products;
 
    Suspension of import duties on imports of capital assets and reduction of the current tax rate applied to foreign raw materials;
 
    Refund of up to 90.25% of the ICMS (State value-added tax) charged on product lines such as antennas, electric locks, replacement parts and printed circuit plates;
 
    100% refund of the ICMS tax charged on other items for the Company’s product lines;
 
    75% reduction of the income tax for amounts computed on sales of products manufactured by the Company in its Manaus unit. The related tax benefit must not be distributed to the quotaholders and may only be used to absorb losses or increase capital.
2. Summary of Significant Accounting Policies
     Basis of Presentation
     The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary PST Industrial Ltda., which has no operations currently. The Company and its subsidiary are hereinafter referred to as the “Company”. Intercompany transactions and balances have been eliminated in consolidation.
     The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP), which differ in certain respects from accounting practices applied by the Company in its statutory financial statements, which are prepared in accordance with accounting practices adopted in Brazil.
     Based on an analysis of the Company’s revenues, expenses and financial structure, management has concluded that the Company’s functional currency for its Brazilian operations is the Brazilian Real.
     The financial statements are translated into US dollars using exchange rates in effect at the period end for assets and liabilities and average exchange rates during each reporting period for the results of operations. Adjustments resulting from translation of financial statements are reflected as a component of accumulated other comprehensive income (loss). Foreign currency translations are remeasured into the functional currency using translation rates in effect at the time of the transaction, with the resulting adjustments included in the results of operations.
     Cash and Cash Equivalents
     The Company considers all short-term investments with original maturities of three months or less to be cash equivalents. Cash equivalents are stated at cost plus interest earned through the balance sheet date, when applicable, which approximates fair value, due to the highly liquid nature and short-term duration of the underlying investments.

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PST INDÚSTRIA ELETRÔNICA DA AMAZONIA LTDA. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts and data related to 2004 and 2003 are unaudited)
(in thousands, unless otherwise indicated)
     Accounts Receivable and Concentrations of Credit Risk
     Revenues are principally generated from the automotive vehicle markets, which is comprised of approximately, 88% from Aftermarket customers and 12% from Original Equipment Manufacturers. The Company’s products are sold through distributors and resellers. Two customers accounted for 14% and 11%, 13% and 12% and 11% and 10% of the Company’s sales for the years ended December 31, 2005, 2004 and 2003, respectively. Trade accounts receivables are not secured by collateral.
     Inventories
     Inventories are valued at the lower of cost or market. Cost is determined at the average cost of purchase or production, which includes material, labor and overhead. Inventories consist of the following at December 31:
                 
    2005     2004  
            (Unaudited)  
Raw materials
  $ 3,983     $ 4,474  
Work in progress
    1,142       1,159  
Finished goods
    4,030       3,343  
 
           
Total inventories
    9,155       8,976  
Less: provision for lower of cost or market valuation and slow-moving inventories
    (118 )     (105 )
 
           
Total
  $ 9,037     $ 8,871  
 
           
     Property, Plant and Equipment
     Property, plant and equipment are recorded at cost and consist of the following at December 31:
                 
    2005     2004  
            (Unaudited)  
Land and land improvements
  $ 632     $ 555  
Buildings and improvements
    1,810       1,466  
Machinery and equipment
    3,573       2,848  
Computer equipment and software
    1,756       1,268  
Office furniture and fixtures
    347       285  
Tooling
    3,368       2,557  
Vehicles
    644       371  
Other
    343       251  
 
           
Total property, plant and equipment
    12,473       9,601  
Less: Accumulated depreciation
    (5,605 )     (3,899 )
 
           
Property, plant and equipment, net
  $ 6,868     $ 5,702  
 
           
     Depreciation is provided by the straight-line method over the estimated useful lives of the assets. Depreciation expense for the years ended December 31, 2005, 2004 and 2003 was $1,247, $980 and $767, respectively. Depreciable lives within each property classification are as follows:

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PST INDÚSTRIA ELETRÔNICA DA AMAZONIA LTDA. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts and data related to 2004 and 2003 are unaudited)
(in thousands, unless otherwise indicated)
         
Buildings and improvements
  10-25 years
Machinery and equipment
  10 years
Office furniture and fixtures
  10 years
Tooling
  3-10 years
Vehicles
  5 years
Computer equipment and software
  4 years
     Maintenance and repair expenditures that are not considered improvements and do not extend the useful life of property are charged to expense as incurred. Expenditures for improvements and major renewals are capitalized. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss on the disposition is credited or charged to income.
     At December 31, 2005 and 2004, property, plant and equipment includes vehicles held under capital leasing arrangements with an aggregate cost of $405 and $98 and accumulated depreciation of $36 and $7, respectively.
     Accrued Expenses and Other Current Liabilities
     Accrued expenses and other current liabilities consist of the following at December 31:
                 
    2005     2004  
            (Unaudited)  
Compensation-related obligations
  $ 1,500     $ 1,082  
Warranty-related obligations
    502       271  
Other
    570       237  
 
           
Total
  $ 2,572     $ 1,590  
 
           
     Income Taxes
     The Company accounts for income taxes using the provisions of Statement of Financial Accounting Standard (SFAS) 109, “Accounting for Income Taxes.” Deferred income taxes reflect the tax consequences on future years of differences between the tax basis of assets and liabilities and their financial reporting amounts. Future tax benefits are recognized to the extent that realization of such benefits is more likely than not.
     Revenue Recognition and Sales Commitments
     Revenues and expenses are recognized on the accrual basis. Revenues from sales of products are recognized when the risks and rewards of ownership have been transferred to the customers. No revenue is recognized if there are significant uncertainties regarding its realization.
     Bad Debts
     The Company evaluates the collectibility of accounts receivable based on a combination of factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific allowance for doubtful accounts is recorded against amounts due to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. Additionally, the Company reviews historical trends for collectibility in determining an estimate for its allowance for doubtful accounts. If economic circumstances change substantially, estimates of the recoverability of amounts due to the Company could be reduced by a material amount. The company does not have collateral requirements with its customers.
     Bad debt expense for the years ended December 31, 2005, 2004 and 2003 was $123, $62 and $43, respectively.

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PST INDÚSTRIA ELETRÔNICA DA AMAZONIA LTDA. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts and data related to 2004 and 2003 are unaudited)
(in thousands, unless otherwise indicated)
     Freight expenses
     Shipping and handling costs incurred for delivering products sold are reported in selling expenses and were $1,972, $1,037 and $1,038 for the years ended December 31, 2005, 2004 and 2003, respectively.
     Warranty Reserves
     The Company’s warranty reserve is established based on the Company’s best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. The following is a reconciliation of the changes in the Company’s warranty reserve at December 31:
                 
    2005     2004  
            (Unaudited)  
Warranty reserves at beginning of period
  $ 309     $ 237  
Payments made
    (190 )     (422 )
Costs recognized for warranties issued during the period
    490       247  
Changes in estimates for preexisting warranties
    (107 )     209  
 
           
Warranty reserve at end of period
  $ 502     $ 271  
 
           
     Product Development Expenses
     Expenses associated with the development of new products and changes to existing products are charged to expense as incurred. These costs amounted to $2,358, $1,802 and $1,415 in 2005, 2004 and 2003, respectively.
     Financial Instruments
     Financial instruments held by the Company include cash and cash equivalents, accounts receivable, accounts payable and long-term debt. The carrying value of cash and cash equivalents, accounts receivable and accounts payable is considered to be representative of fair value because of the short maturity of these instruments. The carrying value of the Company’s variable rate debt approximates its fair value. Refer to Note 5 of the Company’s consolidated financial statements for fair value disclosures of the Company’s loan payable to Stoneridge, Inc.
     Accounting Estimates
     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Because actual results could differ from those estimates, the Company revises its estimates and assumptions as new information becomes available.
     Comprehensive Income
     SFAS 130, “Reporting Comprehensive Income,” establishes standards for the reporting and display of comprehensive income. Other comprehensive income consists of foreign currency translation adjustments. Balances of each after-tax component of accumulated other comprehensive income, as reported in the Statement of Consolidated Quotaholders’ Equity as of December 31, are as follows:

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PST INDÚSTRIA ELETRÔNICA DA AMAZONIA LTDA. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts and data related to 2004 and 2003 are unaudited)
(in thousands, unless otherwise indicated)
                         
    For the Fiscal Years Ended  
    December 31,  
    2005     2004     2003  
            (Unaudited)     (Unaudited)  
Net income
  $ 8,626     $ 3,295     $ 1,968  
Other comprehensive income:
                       
Currency translation adjustments
    1,292       2,152       (1,755 )
 
                 
Comprehensive income
  $ 9,918     $ 5,447     $ 213  
 
                 
     Impairment of Assets
     The Company reviews its long-lived assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairment charges were recorded in 2005, 2004 or 2003. Impairment would be recognized when events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. Measurement of the amount of impairment may be based on appraisal, market values of similar assets or estimated discounted future cash flows resulting from the use and ultimate disposition of the asset.
3. Long-Term Debt
     Long-term debt consists of the following:
                 
    December 31,  
    2005     2004  
            (Unaudited)  
Working capital loans
  $ 3,019     $ 7,362  
Leasing obligations
    269       141  
 
           
Total debt
    3,288       7,503  
Less: Current portion
    (1,206 )     (3,679 )
 
           
Total long-term debt less current portion
  $ 2,082     $ 3,824  
 
           
     Working capital loans from Brazilian financial institutions are secured by promissory notes and by guarantees from two Brazilian financial institutions. The weighted average interest rate on outstanding debt obligations at December 31, 2005 and 2004 were 14.0% and 23.8%, respectively, per year.
     Future maturities of long-term debt at December 31, 2005 are as follows:
         
2006
  $ 1,206  
2007
    1,986  
2008
    96  
Total
  $ 3,288  
 
     
4. Income Taxes
     Under Brazilian tax law, taxes are paid monthly based on the actual or estimated monthly taxable income. Income taxes in Brazil include federal income tax and social contribution (which is an additional federal income tax). The applicable statutory income tax rate was 25% and the social contribution rate was 9% during the years ended December 31, 2005, 2004 and 2003, respectively. The composite tax rate was 34% for the years ended December 31, 2005, 2004 and 2003, respectively. There are no state or local income taxes in Brazil.

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PST INDÚSTRIA ELETRÔNICA DA AMAZONIA LTDA. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts and data related to 2004 and 2003 are unaudited)
(in thousands, unless otherwise indicated)
     The Company’s Manaus plant operates in an economic developing area (Free-Trade Zone) and therefore, its operating income from the production of products at that plant is exempt from federal income tax through 2013, as commented in Note 1.
     The provisions for taxes on income included in the consolidated financial statements represent Brazilian federal and other foreign income taxes. The components of income before income taxes and the provision for income taxes consist of the following:
                         
    For the Fiscal Years Ended  
    December 31,  
    2005     2004     2003  
            (Unaudited)     (Unaudited)  
Income before income taxes:
                       
Brazilian
  $ 10,324     $ 3,633     $ 2,254  
Other foreign
    632       272       83  
 
                 
Total income before income taxes
  $ 10,956     $ 3,905     $ 2,337  
 
                 
 
                       
Income tax provision:
                       
Current:
                       
Brazilian federal
  $ 2,465     $ 570     $ 487  
Other foreign
    63              
 
                 
Total current provision
    2,528       570       487  
 
                 
Deferred:
                       
Brazilian federal
    (198 )     40       (118 )
Other foreign
                 
 
                 
Total deferred provision
    (198 )     40       (118 )
 
                 
Total Income tax provision
  $ 2,330     $ 610     $ 369  
 
                 
     The reconciliation of the Company’s effective income tax rate to the statutory federal tax rate for is as follows:
                         
    2005   2004   2003
            (Unaudited)   (Unaudited)
Brazilian federal income tax rate
    34.0 %     34.0 %     34.0 %
Earnings of foreign branch
    (1.8 )     (3.1 )     (4.8 )
Manaus free-trade zone income tax incentives
    (15.3 )     (19.5 )     (20.0 )
Other
    4.4       4.2       6.6  
 
                       
Effective income tax rate
    21.3 %     15.6 %     15.8 %
 
                       

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PST INDÚSTRIA ELETRÔNICA DA AMAZONIA LTDA. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts and data related to 2004 and 2003 are unaudited)
(in thousands, unless otherwise indicated)
     Deferred tax assets and liabilities consisted of the following at December 31:
                 
    2005     2004  
            (Unaudited)  
Deferred tax assets:
               
Inventory reserves
  $ 47     $ 36  
Provision for product warranties
    171       92  
Provision for loss contingencies
    394       217  
Product design and development costs deferred for tax purposes
    179       272  
Deferred revenues subject to current taxation
    412       250  
Other nondedutible reserve
    20       31  
 
           
Net deferred tax asset
  $ 1,223     $ 898  
 
           
5. Fair Value of Financial Instruments
     A financial instrument is cash or a contract that imposes an obligation to deliver, or conveys a right to receive cash or another financial instrument. The carrying values of cash and cash equivalents, accounts receivable and accounts payable are considered to be representative of their fair value because of the short maturity of these instruments. The estimated fair value of the Company’s loan payable to the related party Stoneridge, Inc. at December 31, 2005, based on internal analyses of present value discounted by a market rate to similar operations, was approximately $1,327 and the carrying value was $2,814.
     The Company does not enter into financial instruments for hedging or other purposes.
6. Commitments and Contingencies
     In the ordinary course of business, the Company is involved in various legal proceedings, principally related to tax and labor claims. Following the opinion of its legal advisors, the Company has recorded its Federal excise tax credits related to purchases of raw materials and other materials that are tax exempt, non-taxed or taxed at zero rate. The related tax credits were offset against current federal excise taxes payable and will be maintained as a provision for contingencies until the Company is judicially granted the right to recognize it. The Company is of the opinion that the ultimate resolution of these matters will not have a material adverse effect on the results of operations, cash flows or the financial position of the Company.
     The Company is judicially challenging the extension of the calculation basis of its Employees’ Profit Participation Program (PIS) and Tax for Social Security Financing (COFINS) on exchange gains enacted by Brazilian Law 9,718/98. As such, these amounts may represent a legal obligation under enacted legislation. A full provision for the amounts not paid has been recorded pending a final determination from the courts on the Company’s claim.
     The recorded provisions for loss contingencies are comprised as follows at December 31, 2005 and 2004:
                 
    2005     2004  
            (Unaudited)  
IPI extemporaneous credits offset
  $ 871     $ 443  
PIS and COFINS on exchange gains
    171       133  
Labor claims
    117       64  
 
           
Total
  $ 1,159     $ 640  
 
           

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts and data related to 2004 and 2003 are unaudited)
(in thousands, unless otherwise indicated)
7. Related Party Transactions
     Related party transactions with Stoneridge, Inc. for the fiscal years ended December 31 are as follows:
                         
    2005   2004   2003
Transactions:
                       
Commissions/Royalties
  $ 194     $ 160     $ 115  
Purchases
  $ 6     $ 161     $ 426  
     Related party balances with Stoneridge, Inc. as of December 31 are as follows:
                         
    2005   2004   2003
Balances:
                       
Accounts receivable
  $ 120     $ 78     $ 145  
Accounts payable
    51       42       57  
Loans payable
  $ 2,814     $ 2,807     $ 7,145  
     The loan payable to quotaholder Stoneridge, Inc., which holds 50% of the Company’s quotas, refers to a loan agreement entered into on March 2, 1998, whose principal was fully amortized in December 2004, representing the remaining balance related to interest accrued through the principal amortization date. Such amount, monetarily adjusted based on the US dollar exchange variation, will be paid in 24 equal monthly installments starting January 2010, with a maturity date of December 2011. The quotaholders are presently discussing the possible early repayment of the outstanding balance by December 31, 2006.
8. Quotaholders’ equity
     The payment of dividends is limited to the amount of retained earnings in the Company’s local currency financial statements prepared in accordance with accounting principles adopted in Brazil (equivalent to $8,395 and $5,070 at December 31, 2005 and 2004, respectively). Dividends are payable in Brazilian Reais and may be remitted to quotaholders abroad, provided the foreign capital is registered with the Brazilian Central Bank.

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