UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

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

For the fiscal year ended:		Commission file number:
December 31, 2005		1-12733

Tower Automotive, Inc.

Delaware (State of Incorporation)		41-1746238 (I.R.S. Employer Identification No.)

27175 Haggerty Road Novi, Michigan (Address of Principal Executive Offices)		48377 (Zip Code)

None
(Former Name or Former Address, if Changed Since Last Report)

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15d of the Act. Yes o No þ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer þ

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

As of May 31, 2006, 58,548,801 shares of Common Stock of the Registrant were outstanding. As of May 31, 2006, the aggregate market value of the Common Stock of the Registrant (based upon the last reported sale price of the Common Stock at that date on the Pink Sheets), excluding shares owned beneficially by affiliates, was approximately $4,310,794.

Documents Incorporated By Reference
None.

 

 

TOWER AUTOMOTIVE, INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

				Page
PART I
Item 1.		Business			1
Item 1A.		Risk Factors			13
Item 1B.		Unresolved Staff Comments			16
Item 2.		Properties			17
Item 3.		Legal Proceedings			18
Item 4.		Submission of Matters to a Vote of Security Holders			18
PART II
Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			19
Item 6.		Selected Financial Data			20
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Item 7A.		Quantitative and Qualitative Disclosures about Market Risk			33
Item 8.		Financial Statements and Supplementary Data			34
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			86
Item 9A.		Controls and Procedures			86
Item 9B.		Other Information			87
PART III
Item 10.		Directors and Executive Officers of the Registrant			87
Item 11.		Executive Compensation			91
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			95
Item 13.		Certain Relationships and Related Transactions			96
Item 14.		Principal Accountant Fees and Services			96
PART IV
Item 15.		Exhibits and Financial Statement Schedules			97
		Signatures			102
Sixth Amendment to Revolving Credit Term Loan & Guaranty Agreement
Statement & Computation of Ratio of Earnings to Fixed Charges
List of Subsidiaries
Consent of Deloitte and Touche LLP
Consent of KPMG Cardenas Dosal, S.C.
Section 302 Certification of Chief Executive Officer
Section 302 Certification of Chief Financial Officer
Section 906 Certification of CEO AND CFO

PART I

Item 1. Business

Tower Automotive, Inc. and its subsidiaries (collectively referred to as the “Company” or “Tower Automotive”) is a leading global designer and producer of structural metal components and assemblies used by the major automotive original equipment manufacturers (“OEMs”), including Ford, Volvo, DaimlerChrysler, General Motors (“GM”), Hyundai/Kia, Volkswagen Group, Renault/Nissan, Toyota, Fiat, BMW, Honda, and Chery. The Company provides broad technical design, engineering and program management capabilities for products that cover the entire body structure of a vehicle, including automotive body structural stampings and assemblies, exposed sheet metal (“Class A”) components, lower vehicle structural stampings and assemblies, suspension components, modules and systems. The Company believes it is one of the largest independent global suppliers of structural components and assemblies to the automotive market (based on net revenues).

Tower Automotive is one of only a few companies that provide a broad array of structural metal products and services for the automotive sector. These products and services are delivered to our customers on a global basis from 50 production and engineering facilities located in the United States, Canada, Mexico, Germany, Belgium, Slovakia, Poland, Italy, France, Spain, Brazil, India, South Korea, Japan and China. As OEMs reduce their supplier bases in efforts to lower costs and improve quality, they are more frequently awarding sole-source contracts to broadly capable suppliers who are able to supply large and complex portions of a vehicle on a global basis, rather than to suppliers that only provide individual component parts. OEMs’ criteria for supplier selection include cost, quality, responsiveness, full-service design and engineering, and program management capabilities. In addition, OEMs increasingly are requiring their suppliers to have the capability to design and manufacture their products in multiple geographic markets. As a supplier with strong OEM relationships, broad capabilities and technologies, scale and global presence, the Company expects to continue to benefit from these trends going forward.

Proceedings under Chapter 11 and Administration of the Bankruptcy Code

On February 2, 2005, Tower Automotive, Inc. and 25 of its United States subsidiaries (collectively, “the Debtors”) each 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 (“the “Court”). The cases are jointly consolidated for administrative purposes. The Debtors are operating as debtors-in-possession (“DIP”) pursuant to the Bankruptcy Code. An official committee of unsecured creditors has been appointed.

The Debtors’ liquidity position was adversely affected in early 2005 by customer pricing pressures, North American automotive production cuts, significantly higher raw material costs (primarily steel), high interest costs and the termination of accelerated payment programs of certain customers. An extensive liquidity deficiency and a significant amount of indebtedness, incurred through internal growth and acquisition activity, made the filing necessary.

The objectives of the Chapter 11 filing are 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. As part of the Debtors’ Chapter 11 process, the Debtors have filed pleadings seeking to reduce their retiree medical obligations and reject certain collective bargaining agreements. While the Debtors are hopeful that a consensual resolution can occur, there is no certainty this will happen. 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 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, the extent to which such relief will be achieved is uncertain at this time.

DIP Financing

In February 2005, the Bankruptcy Court approved a Revolving Credit, Term Loan and Guaranty Agreement (“DIP Agreement”), as amended, with 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’ pre-petition obligation amounting to $425 million under the credit agreement existing at the time of the bankruptcy filing. The proceeds of the revolving credit loans will be used to fund the ongoing cash requirements of the Debtors during the Chapter 11 proceedings.

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.

Going Concern

As indicated above, effective February 2, 2005, 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 to: (i) comply with the terms and conditions of the debtor-in-possession financing agreement described in Note 8 to the Consolidated Financial Statements; (ii) obtain confirmation of a plan of reorganization under the Bankruptcy Code; (iii) undertake certain restructuring actions relative to the Company’s operations in North America; (iv) reduce unsustainable debt and other liabilities and simplify the Company’s complex and restrictive capital structure through the bankruptcy process; (v) return to profitability; (vi) generate sufficient cash flow from operations; and, (vii) obtain financing sources to meet the Company’s future obligations. These matters raise substantial doubt regarding the Company’s ability to continue as a going concern.

Overview of the Company

Since its inception in April 1993, when the Company was formed to acquire R. J. Tower Corporation, the Company’s revenues have grown rapidly through internal growth and acquisitions. From 1993 to 2005, the Company successfully completed 15 acquisitions and established five joint ventures to create the global footprint that characterizes the Company today. As a result of these acquisition activities and significant organic growth, Company revenues have increased from approximately $86 million in 1993 to $3.3 billion in 2005.

Approximately 61% of the Company’s 2005 revenues were generated from sales in North America. The Company supplies products for many car, light truck and sport utility models, including: the Ford Five Hundred/Freestyle, Taurus, Focus cars, and Ranger and F-Series pickup trucks, Ford Expedition, Explorer, Escape SUVs, Lincoln Navigator and Mercury Mountaineer SUVs, Econoline full size van; Chevrolet Silverado and GMC Sierra pickups; Chrysler Town & Country and Dodge Caravan minivans; Dodge Ram and Dakota pickup trucks; Toyota Camry, Avalon, Corolla cars and Tundra pickup; Honda Accord and Civic; Nissan Xterra, Pathfinder, Armada SUVs, Infiniti QX56 SUV and Titan, Frontier pickup. Approximately 23% of the Company’s 2005 revenues were generated from sales in Europe, 13% in Asia and 3% in South America. Key vehicle programs include: Volvo S40 and V50; DaimlerChrysler A-Class and Sprinter; BMW 1 & 3 series; VW Golf, Jetta and Toureg and the Porsche Cayenne; Fiat Punto, Stilo, Ducato; Alpha Romeo 147 and 156; Hyundai/Kia Spectra, Cerato, Sportage, Carinival and Sorento; and, Chery Flagcloud, WindCloud and Orient.

The Company makes available, free of charge through our Internet website (www.towerautomotive.com), annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, filed with the Securities Exchange Commission (“SEC”), as soon as reasonably practicable after those reports are filed with the SEC.

Financial information about segments

See Note 13 to the Consolidated Financial Statements contained in Item 8 of this Form 10-K.

Business and operating strategy

Tower Automotive was created through a series of acquisitions of complementary businesses that have allowed the Company to become one of the largest independent global suppliers of structural metal components and assemblies (based on net revenues) with a diverse customer portfolio and a broad scope of product offerings. In the Company’s early years, the growth coincided with an extended period of increased production and consolidation in the automotive industry, resulting in high levels of utilization of the Company’s resources and capacity. Unfortunately, with little post-merger integration across the acquisitions, insufficient operational disciplines and a highly leveraged balance sheet, when automotive production declined relative to prior periods, the Company struggled with profitability in its U.S. operations.

Starting in 2001 through early 2005, the Company successfully finished launching the significant backlog of new business, which drove profitability in its international operations and helped strengthen customer relationships. At the same time, the North American region was reorganized, cutting SG&A costs while strengthening engineering resources, reducing excess capacity and eliminating redundant overhead costs. Despite the restructuring activities, developments in late 2004 and early 2005 led to a significant decline in the Company’s liquidity position. These developments included market share and production declines at key North American OEM customers, a rise in steel prices, the termination of accelerated payment programs by certain automakers, higher than anticipated new program launch costs and the continued underperformance of the North American operations. The complex and restrictive capital structure built during the acquisition years presented a strategic challenge as debt service required cash outflows almost as high as on-going capital expenditures and drove the cost of capital above competitive levels.

The Company’s current challenge is to restructure its U.S. operations under the protection of Chapter 11 while continuing to support its flourishing international business.

The Company’s key strategies are to consolidate its position as a global metal structures leader, strengthen its financial performance by reorganizing under Chapter 11 protection and emerging successfully, drive operational excellence throughout the company, leverage its scale to realize structural improvements and strengthen organizational depth to support leadership development and succession.

Recent initiatives implemented by the Company include:

	§		On February 2, 2005, the Company’s U.S. subsidiaries petitioned for relief under Chapter 11 in the Southern District of New York. The Company’s foreign operations were not included in the filing and are continuing to operate on a normal basis.
	§		During the second quarter of 2005, the Company announced the impending closure of its Belcamp, Md., Bowling Green, Ky., and Corydon, Ind., facilities. In addition, the Company announced the downsizing of its Granite City, Ill., location. These actions resulted in reducing the number of colleagues by approximately 800.
	§		The production of the Dodge Ram frame in Milwaukee, Wis., ceased in June 2005. In October 2005, the Company announced the movement of the Ford Ranger production from Milwaukee to its Bellevue, Ohio, facility. This move was completed in the first quarter of 2006 and all production at the Milwaukee facility has ended.
	§		Also during October 2005, the Company announced the closure of its Granite City, Ill., and Milan, Tenn., facilities. The facilities are expected to close by December 2006.
	§		During 2005, the Company strategically reviewed its powertrain module assembly business in the U.S. and determined that the business no longer fit the strategic direction of its U.S. operations. This business, which is still included in the Company’s operations through 2006, is expected to be sold back to General Motors or their designee in December 2006.

	§		As part of its strategy to diversify its customer base, the Company announced the opening of a manufacturing facility in Meridian, Miss., to support large-scale stampings and assemblies for southern U.S. OEM production sites.
	§		On January 4, 2006, the Company filed a motion in Bankruptcy Court asking the Court to modify its postretirement medical benefits and to reject its collective bargaining agreements. The Company is seeking concessions to reduce its postretirement medical benefits. The Company is also seeking to obtain wage and benefit reductions from its unions to help in its plan to emerge from bankruptcy.
	§		In February 2006, the Company announced its decision to enter into decision bargaining to close its Greenville, MI facility and to move the work to other facilities in the U.S. The Company is currently in effects bargaining with the union.
	§		In March 2006, the Company announced that it had reached an agreement in principle with its Milwaukee unions on a variety of issues including postretirement medical benefits.
	§		In April 2006, the Company announced that it had reached an agreement in principle with its salaried retirees on a variety of issues including postretirement medical benefits.
	§		In May 2006, the Company announced its intention to enter into decision bargaining to downsize its Bluffton, OH facility and move work to other facilities in the U.S.

The Company believes these and other initiatives will accelerate reductions in operational costs, allow it to leverage economies of scale and enhance its ability to serve its customers, creditors and shareholders.

Growth Strategy

The Company’s growth strategy now focuses on cadenced organic growth. Specifically, the Company believes the following strengths have played, and will continue to play, an important role in achieving the organic growth objectives:

	§		Strong customer relationships with key domestic and foreign OEMs;
	§		Broad technical capabilities in vehicle structures;
	§		Scale position as one of the largest independent suppliers of automotive structural assemblies; and,
	§		Global engineering and manufacturing presence, including two established facilities in China.

As a result of these competitive strengths and the efforts to increase organic growth, the Company was awarded programs that launched in 2003-2005, which have helped to further diversify the Company’s customer and geographic base. These programs have resulted in a decrease in the proportion of revenues from Ford Motor Company, General Motors and DaimlerChrysler (Detroit 3) from 64% in 2001 to 54% in 2005.

Industry Trends

The Company’s performance and growth are directly related to certain trends within the automotive market, including the consolidation of the component supply industry and variations in automotive production levels, which are cyclical and depend on general economic conditions and consumer confidence.

The Company’s strategy capitalizes on several important trends in the automotive industry that have benefited Tower Automotive in the past and will continue to benefit it in the future. These trends include:

§

Continuation of Trend to Larger, More Capable Suppliers. In order to lower costs and improve quality, OEMs have continued to reduce their supply bases by awarding sole-source contracts to suppliers who are able to supply greater vehicle content through complex subassemblies. OEMs’ criteria for supplier selection include not only cost, quality and responsiveness, but also design engineering and program management capabilities. As a result, the automotive supply industry has undergone significant consolidation. Furthermore, beginning in 2001, a number of suppliers experienced financial difficulties. These factors have combined to provide an opportunity for further organic growth by obtaining business

			from smaller or troubled suppliers through providing the scale and broad capabilities that OEMs require. This trend accelerated in 2005 and 2006 with the bankruptcy filings of Delphi, Dana, Collins & Aikman, Meridian and Citation, among others.
	§		OEM “Shakeout.” The recent acquisition and consolidation activity among select OEMs has not led to the disadvantage of the smaller OEMs in the industry as previously predicted. Rather, smaller OEMs such as Peugeot, Honda, Hyundai/Kia, BMW and the emerging Chinese automakers have strengthened their financial performance and position in the industry, while some of the larger OEMs have struggled to successfully integrate acquisitions and manage legacy costs. The Company’s global capabilities have allowed it to continue to serve as a valued supplier to those smaller producers.
	§		System/Modular Sourcing. OEMs are increasingly seeking suppliers capable of providing larger assemblies, systems or modules. A system is a group of components which may be dispersed throughout the vehicle, yet operate together to provide a specific engineering function. Modules, on the other hand, consist of sub-assemblies at a specific location in the vehicle, incorporating components from various functional systems which are assembled and shipped to the OEM ready for installation in a vehicle as a unit. By outsourcing complete systems or modules, OEMs are able to reduce the costs associated with the design and integration of various components, and improve quality by enabling their suppliers to assemble and test major portions of the vehicle prior to production. Tower Automotive has capitalized on the system/modular sourcing trend among OEMs by offering customers high value-added supply capabilities through a focus on the production of assemblies consisting of multiple component parts that are welded or otherwise fastened together by the Company. While the Company continues to focus on systems and modules, it has made the determination that its powertrain module business no longer fit the strategic direction of its U.S. operations. This business is expected to be sold back to General Motors or their designee in December 2006.
	§		Growth in Emerging Markets. Countries such as China, Korea, Thailand, India, Mexico and Brazil, and regions such as Eastern Europe, are expected to experience significant growth in vehicle demand over the next ten years. OEMs are positioning themselves to reach these emerging markets in a cost-effective manner. In order to best meet these OEM requirements, the Company is well-positioned with more than 20 manufacturing facilities outside North America, including locations in Germany, Italy, Belgium, Poland, Slovakia, Brazil, Korea, China and a technical center in India.

Products

The Company produces a broad range of structural components and assemblies, many of which are critical to the structural integrity of a vehicle. The Company’s products generally can be classified into the following categories: body structures and assemblies; lower vehicle frames and structures; chassis modules and systems; and, suspension components. A brief summary of each of the principal product categories follows:

Product Category/Description

Body structures and assemblies

These products form the basic upper body structure of the vehicle and include large metal stampings such as body pillars, roof rails, side sills, parcel shelves and intrusion beams. This category also includes Class A surfaces and assemblies. Class A surfaces include exposed sheet metal components such as body sides, pickup truck box sides, door panels and fenders.

Complex body-in-white assemblies

These products are comprised of multiple components and sub-assemblies welded to form major portions of the vehicle’s body structure. Examples of complex assemblies include front and rear floor pan assemblies and door/pillar assemblies.

Lower vehicle frames and structures

Products such as pickup truck and SUV full frames, automotive engine and rear suspension cradles, floor pan

components and cross members form the basic lower body structure of the vehicle. These heavy gauge metal stampings, built using both traditional and hydroforming methods, carry the load of the vehicle, provide crash integrity and are critical to the strength and safety of vehicles.

Chassis modules and systems

Products include axle assemblies and front and rear structural suspension modules/systems. Axle assemblies consist of stamped metal trailing axles, assembled brake shoes, hoses and tie rods. Front and rear structural suspension modules/systems consist of control arms, suspension links, value-added assemblies and powertrain modules. The Company has made the decision to exit the powertrain module business at the end of 2006.

Suspension components

Products include stamped, formed and welded products such as control arms, suspension links, track bars, spring and shock towers, and trailing axles. These suspension components are critical to the ride, handling and noise characteristics of a vehicle.

Other

The Company manufactures a variety of other products including heat shields and other precision stampings for its OEM customers.

The following table summarizes the approximate composition by product category of the Company’s global revenues for the last three years:

		Years Ended
		December 31,
Product Category		2005				2004				2003
Body structures and assemblies			45	%			40	%			43	%
Complex body-in-white assemblies			12				7				—
Lower vehicle frames and structures			24				27				34
Chassis modules and systems			12				16				12
Suspension components			6				8				8
Other			1				2				3
Total			100	%			100	%			100	%

Customers and Marketing

North American automotive manufacturing has been dominated by General Motors (“GM”), Ford, and DaimlerChrysler, which are the company’s largest customers in North America. International automakers continue to expand their production capacity, representing approximately 31% of North American production in 2005 versus 28% in 2004.

As a result of past growth strategies, the Company has further expanded its global presence, increased penetration with certain existing customers and added programs with customers such as Mercedes, Fiat, BMW, Volkswagen Group, Nissan, Hyundai/Kia, Volvo and Renault.

Following is a summary of the global composition of the Company’s key customers for the last three years:

		Years Ended
		December 31,
Customer		2005				2004				2003
Ford Motor Company			30	%			34	%			35	%
General Motors			13				14				10
DaimlerChrysler			11				14				19
Hyundai/Kia			11				10				9
Renault/Nissan			10				5				1
Volkswagen Group			7				7				5
Fiat			4				4				4
Toyota			4				4				3
BMW			3				2				2
Honda			1				1				2
Other			6				5				10
Total			100	%			100	%			100	%

Following is a summary of the Company’s sales by geographic region for the last three years:

		Years Ended
		December 31,
Geographic Category		2005				2004				2003
North America			61	%			66	%			71	%
Europe			23				20				15
Asia			13				12				13
South America			3				2				1
Total			100	%			100	%			100	%

The following table presents an overview of the major models for which the Company supplies products:

Vehicle Manufacturer		Car Models				Truck Models
Ford      Ford		§		Taurus, Mustang, Focus, Crown Victoria, Thunderbird, Ka, Five Hundred, GT		§		Explorer, Explorer Sport Trac, Freestyle, Econoline, Freestar, Escape, Expedition, Excursion, Ranger, Transit, F-Series LD & HD, Medium Duty Trucks
Mercury		§		Sable, Grand Marquis, Montego		§		Mountaineer, Monterey, Mariner
Lincoln		§		LS, Towncar		§		Aviator, Navigator
Mazda		§		6		§		Tribute, B-Series Pick-up
Volvo		§		S40/V50, C30, C70
Jaguar		§		XJ, S-Type
Land Rover						§		Range Rover
DaimlerChrysler
Chrysler		§		Sebring, Sebring Convertible		§		Town & Country,
Dodge		§		Stratus		§		Ram Pickup, Dakota, Caravan
Jeep						§		Wrangler, Grand Cherokee
Mercedes-Benz		§		A-Class, B-Class, C-Class, SLK, CLK, SL		§		Atego, Actros, Sprinter, Vario, Accelo
Smart		§		Fortwo, Cabrio
General Motors
Cadillac		§		CTS, STS		§		SRX
GMC						§		Sierra, Safari,
Chevrolet						§		Silverado, Astro,
Saturn						§		Vue
Opel		§		Astra, Agila, Corsa, Zafira, Meriva, Vectra
Saab		§		9-3
Hyundai/Kia
Hyundai		§		Equus, NF Sonata, Click		§		Terracan, Starex, Libero, Porter, Porter II
Kia		§		Spectra, Rio,-Lotze, Cerato, Opirus, Morning		§		Sportage, Carens, Pregio, Carnival, Grand Carnival, Frontier, Sorento, Bongo III
Volkswagen Group
Volkswagen		§		Passat, Bora, Golf, GOL, Polo, Kombi, Santana, Fox, Jetta, Phaeton		§		Caddy Van, Touareg, T5, Crafter
Audi		§		A3, A4, A6, Cabrio, TT
Skoda		§		Fabia, Octavia, Superb
Renault/Nissan
Renault		§		Clio, Twingo, Megane, Kangoo, Modus, Scenic, Espace
Nissan		§		Sentra, Micra		§		Quest, Xterra, Frontier, Pathfinder, Titan, Armada
Infiniti						§		QX56
Fiat      Fiat		§		Croma, Marea, Grande Punto Punto, Palio, Panda, Stilo, Multipla, Uno, Idea, Barchetta, Strada, Sedici		§		Ducato
Alfa Romeo		§		Brera, 159, 147, 156, 166, GT
Lancia		§		Lybra, Thesis, Y, Musa
Toyota
Toyota		§		Avalon, Camry, Solara, Corolla, Vios, Xiali, Crown		§		Sienna, Tacoma, Tundra, Sequoia
Lexus						§		RX330
BMW
BMW		§		3 Series, 1 Series		§		X5, X3
Honda
Honda		§		Accord, Civic, Fit		§		Odyssey, Element, Pilot, Ridgeline
Acura		§		EL, TL		§		MDX
PSA
Peugeot		§		206
Citroen		§		C3
Bentley
Bentley		§		Continental Coupe
Porsche
Porsche		§		911, Boxter		§		Cayenne
Suzuki
Suzuki		§		Wagon R+, Ignis, Swift
Chery
Chery		§		Flagcloud, WindCloud, Orient Son, Tiggo,

Most of the Company’s products have a lead time of two to five years from product development to production. The selling prices of these products are generally negotiated between the Company and its customers.

Sales of the Company’s products to OEMs are made directly by the sales and engineering teams, located at its technical/customer service centers in Novi, Michigan; Yokohama, Japan; Turin, Italy; Bergisch-Gladbach, Germany; Sao Paolo, Brazil; Seoul, Korea; Changchun and Wuhu, China; and Hyderabad, India. Through its technical centers, the Company services its OEM customers and manages its continuing programs of product design improvement and development. The Company periodically places engineering colleagues at various customer facilities to facilitate the development of new programs.

The Company’s sales and marketing efforts are designed to create overall awareness of its engineering, program management, manufacturing and assembly expertise, to acquire new business and to provide ongoing customer service. The customer service group is organized into customer-dedicated teams within regions. From time to time, the Company also participates in industry and customer specific trade and technical shows.

Design, Development and Engineering Support

The Company strives to maintain a technological advantage through targeted investment in product development and in advanced engineering capabilities. The Company’s engineering capabilities enable it to design and build high quality, efficient manufacturing systems, processes and equipment and to continuously improve our production processes, systems and equipment. The Company’s manufacturing engineers are located at each of its manufacturing facilities. The Company’s engineering responsibilities range from research and development, advanced product development, product design, testing and initial prototype development to the design and implementation of manufacturing processes.

Because structural parts must be designed at an early stage in the development of new vehicles or model revisions, the Company is given the opportunity to utilize its product and process engineering competencies early in the vehicle planning process. Advanced development and engineering resources create original engineering designs, computer-aided designs, feasibility studies, working prototypes and testing programs to meet customer specifications. The Company’s Hyderabad, India technical center allows for 24 hour engineering capabilities globally, thereby optimizing product design and analysis capabilities and leading to reduced development costs.

Manufacturing

The Company’s manufacturing operations consist primarily of stamping and welding operations, system and modular assembly operations, and associated coating and other ancillary operations.

Stamping involves passing metal through dies in a stamping press to form the metal into three-dimensional parts. The Company produces stamped parts using precision single-stage, progressive and transfer presses, ranging in size from 150 to 4,500 tons, which perform multiple functions to convert raw material into finished products. The Company continually invests in its press technology to increase flexibility, improve safety and minimize die changeover time.

Stampings that are to be used in assemblies are fed into cell-oriented assembly operations that produce complex, value-added assemblies through the combination of multiple parts that are welded or fastened together. The Company’s assembly operations are performed on either dedicated, high-volume welding/fastening machines or on flexible cell-oriented robotic lines for units with lower volume production runs. The assembly machines attach additional parts, fixtures or stampings to the original metal stampings. In addition to standard production capabilities, the Company’s assembly machines also are able to perform various statistical control functions and identify improper welds and attachments. The Company works continuously with manufacturers of fixed/robotic welding systems to develop faster, more flexible machinery.

The products manufactured by the Company use various grades and thicknesses of steel and aluminum, including high strength hot- and cold-rolled, galvanized, organically coated, stainless and aluminized steel. See “Suppliers and Raw Materials.”

OEMs have established quality rating systems involving rigorous inspections of suppliers’ facilities and operations. Their factory rating programs provide a quantitative measure of a company’s success in improving the quality of its

operations. The Company has received quality awards from Ford (Q1) and DaimlerChrysler (Pentastar). The automotive industry has adopted a quality rating system known as TS-16949. Substantially all of the Company’s existing operating facilities in North America and around the world have received TS-16949 certification in compliance with the automotive industry requirements.

Competition

The Company operates in a highly competitive, fragmented market segment of the automotive supply industry, with a limited number of competitors generating revenues in excess of $200 million each. The number of the Company’s competitors has decreased in recent years and is expected to continue to decline due to supplier consolidation. The Company’s major competitors include: Magna International, Inc. (“Magna”); Thyssen-Budd, a subsidiary of Thyssen-Krupp AG; Dana Corporation; Benteler Automotive; and divisions of OEMs with internal stamping and assembly operations, all of which have substantial financial resources. The Company competes with other competitors in various segments of its product lines and in various geographic markets. The Company views Magna as its strongest competitor across most of the Company’s product lines; however, the Company believes that no single competitor can provide the same range of products and capabilities as the Company across as broad a geographic range.

The Company principally competes for new business both at the beginning of the development of new models and upon the redesign of existing models. New-model development generally begins two to five years before the marketing of such models to the public. Once a supplier has been designated to supply parts for a new program, an OEM usually will continue to purchase those parts from the designated producer for the life of the program, although not necessarily for a redesign. Competitive factors in the market for the Company’s products include product quality and reliability, cost, timely delivery, technical expertise and development capability, new product innovation and customer service. In addition, there is substantial and continuing pressure from the OEMs to reduce costs, including the cost of products purchased from outside suppliers such as the Company. Companies must be able to offset pricing givebacks to customers as well as overall economic cost increases with improved productivity to maintain needed profitability levels.

Suppliers and Raw Materials

The primary raw material used to produce the majority of the Company’s products is steel. The Company purchases hot- and cold-rolled, coated, stainless and aluminized steel from a variety of suppliers. The Company employs just-in-time manufacturing and sourcing systems enabling it to meet customer requirements for faster deliveries while minimizing its need to carry significant inventory levels. The price of steel increased significantly during the second half of 2004 compared to recent historical periods. In 2005, steel prices generally leveled off and decreased moderately from their peaks in 2004. The Company purchases a substantial portion of its steel from certain of its customers through the customers’ repurchase programs. The purchases through customer repurchase programs have buffered price swings associated with the procurement of steel. The remainder of steel purchasing requirements is met through contracts with steel producers and market purchases. In some cases, the Company may be unable to either avoid increases in steel prices or pass through any price increases to its customers. Customer agreements generally do not permit an increase in selling prices for increases in raw material inputs.

Other raw materials purchased by the Company include small- and medium-sized stampings, fasteners, tubing and rubber products, all of which are available from numerous sources.

Colleagues

As of December 31, 2005, the Company had 11,850 colleagues worldwide, of whom approximately 7,100 are covered under collective bargaining agreements: 3,500 in the North American operations and 3,600 in the international operations. These collective bargaining agreements expire between January 2006 and January 2010. In February 2004, the Company entered into a neutrality agreement with the United Auto Workers Union (“UAW”), which covers six facilities. The neutrality agreement facilitates the organization of these facilities as it provides for expedited bargaining and requires that the Company take a neutral position in any organizing efforts by the UAW. The Company has been in negotiations with the unions representing current and retired employees since October 2005 seeking concessions from the bargaining units in the wage rate structure of its membership as well as the benefits offered by the Company. Health insurance coverage for employees and retirees has resulted in significant cost increases for vehicle manufacturers and suppliers for the past several years and puts domestic auto makers and

suppliers at a significant disadvantage with their foreign based competitors. While the Company has reached consensual outcomes with certain of its retirees, negotiations with its active unions are ongoing. As part of its Chapter 11 process, the Company sought the approval of the Bankruptcy Court to reject its union contracts. The Court has not issued a ruling while the parties continue to negotiate; however, the union members have approved a strike vote in the event the Bankruptcy Court rules in the Company’s favor. While the Company has not experienced any work stoppages since its inception in 1993, a strike or slow-down by one of the Company’s unions could have a material adverse effect on the Company’s business. The challenge for the Company over the coming year will be to maintain its good relations with colleagues while it works with its unions to amend the current collective bargaining agreements through the Debtors’ Chapter 11 process. At the same time, the Company must continue to recruit, retain and motivate qualified personnel at all levels of the Company.

Patents and Trademarks

The Company has a limited number of patents worldwide. By the nature of its business, no single patent or group of patents is material to the Company’s business.

The Company has trademarks pertaining to its name, Tower Automotive^®, which are registered in various countries, allowing it to market its products on a global basis. This trademark is widely recognized in the global automotive industry.

Backlog

The Company’s products are not sold on a firm backlog basis. The Company does not believe that its backlog of expected product sales covered by issued purchase orders is a meaningful indicator of future sales since orders may be rescheduled or canceled by its customers at any time. Product sales are dependent upon the number of vehicles that the Company’s customers actually produce as well as the timing of such production.

Seasonality

The Company’s business is somewhat seasonal. The Company typically experiences decreased revenues and operating income during the third quarter of each year due to the impact of scheduled OEM plant shutdowns in July and August for vacations and new model changeovers. Shutdowns by OEMs of approximately one and one-half weeks in December also have a negative impact on revenues and operating income during the fourth quarter of each year and the resulting negative cash flow impact during January of the following year.

Environmental Matters

The Company is required to comply with federal, foreign, state and local laws and regulations governing the protection of the environment and occupational health and safety, including laws regulating the generation, storage, handling, use and transportation of hazardous materials; the emission and discharge of hazardous materials into soil, air or water; and the health and safety of its colleagues. The Company is also required to obtain permits from governmental authorities for certain operations. The Company has taken steps to assist in the compliance with the numerous and sometimes complex regulations, such as holding environmental and safety training sessions for representatives from its domestic facilities. The Company has achieved TS 16949 registration for substantially all of its facilities. The Company conducts third party or internal audits for environmental, health, and safety compliance, and uses outside expertise to assist in the filing of permits and reports when required.

Compliance with federal, state and local provisions relating to the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material impact on the Company’s capital expenditures, earnings or competitive position. The Company is not currently aware of any significant liability exposure with respect to laws imposing liability for the cleanup of contaminated property to which it may have sent wastes for disposal.

The Company owns properties which have been impacted by environmental releases. At some of these properties, the Company is liable for costs associated with investigation and/or remediation of contamination in one or more environmental media. The Company is currently actively involved in investigation and/or remediation at several of these locations. At certain of these locations, costs incurred for environmental investigation and/or remediation are

being paid partly or completely out of funds placed into escrow by previous property owners. Nonetheless, total costs associated with remediating environmental contamination at these properties could be substantial and may be material to the Company’s financial condition, results of operations or cash flows. At December 31, 2005 and 2004, the Company had recorded liabilities of $11.4 million and $16.3 million for environmental remediation liabilities.

1A. Risk Factors.

The general economic and/or business conditions affecting the automotive industry may adversely impact the Company.

The automotive industry in the United States as a whole is facing a downturn in economic and business conditions. The number of automotive parts suppliers filing for protection under Chapter 11 of the Bankruptcy Code has increased during 2005 and many other companies in the industry have announced significant restructuring plans in order to remain viable. Both GM and Ford are trying to return their North American automotive operations to profitability through a combination of strict cost control, capacity rationalization (plant closings) and the acceleration of new product/technology introductions. Unless they can stem their ongoing market share declines, further production cuts will have a ripple effect throughout the supply chain and impact the profitability of those suppliers most dependent on these domestic manufacturers, including the Company.

The Company is dependent on Ford, GM and DaimlerChrysler as its largest customers and on selected vehicle programs.

Revenues from Ford, GM, and DaimlerChrysler represented approximately 30%, 13%, and 11% respectively, of the Company’s revenues in 2005. Also, the Company’s typical contracts with its customers provide for supplying that customer’s requirements for a particular model, rather than manufacturing a specific quantity of components. These contracts range from one year to the life of the platform or model, usually three to ten years, and do not require the purchase by the customer of any minimum number of components. Therefore, the loss of any one of these customers, or a significant reduction in demand for vehicles for which the Company produces components and assemblies, would have a material adverse effect on the Company’s existing and future revenues and net income.

The Company may be adversely impacted by the inability to reduce costs.

There is substantial, continuing pressure from the major OEMs to reduce costs, including the cost of products and services purchased from outside suppliers. Repeated spikes in steel prices have become a significant risk factor for many companies in the automotive industry. Suppliers and automakers alike have had difficulty passing on these increased costs to consumers in the current highly competitive environment. Oil and gas prices have reached record highs and the oil price spikes that continued into 2006 started to have a measurable impact on vehicle purchase behavior. The Company’s inability to pass through increased materials pricing may result in lower profit margins for the Company.

In addition, the Company’s business is very capital intensive. Therefore, profitability is dependent, in part, on the Company’s ability to spread fixed production costs over increasing product sales. If the Company is unable to generate sufficient production cost savings in the future to offset price reductions and any reduction in customer demand for automobiles, the Company’s profitability would be adversely affected. In addition, the Company’s customers often require engineering, design, or production changes. In some circumstances, the Company may not be able to achieve price increases sufficient in amounts to cover the costs of these changes.

The Company is subject to certain risks associated with its foreign operations.

The Company has significant international operations, specifically in Europe, Asia, and South America. Certain risks are inherent in international operations, including:

	•		difficulty in enforcing agreements and collecting receivables through certain foreign legal systems;
	•		foreign customers may have longer payment cycles than customers in the United States;
	•		tax rates in certain foreign countries may exceed those in the United States, and foreign earnings may be subject to withholding requirements or the imposition of tariffs, exchange controls, or other restrictions;
	•		general economic and political conditions in countries where the Company operates may have an adverse affect on operations in those countries; and
	•		the Company may find it difficult to manage a large organization spread throughout various countries.

The occurrence of any of the foregoing risks could have a significant effect on the Company’s international operations and, as a result, overall revenues and profitability.

Currency exchange rate fluctuations could have an adverse effect on revenues and financial results.

The Company generates a significant portion of its revenues and incurs a significant portion of its expenses in currencies other than U.S. dollars. To the extent the Company is unable to match revenues received in foreign currencies with costs paid in the same currency, exchange rate fluctuations in any such currency could have an adverse effect on revenues and financial results. During times of a strengthening U.S. dollar, the Company reported sales and earnings from international operations will be reduced because the applicable local currency will be translated into fewer U.S. dollars.

The Company’s business may be disrupted by work stoppages and other labor matters.

Many OEMs and their suppliers have unionized work forces. Work stoppages or slow-downs experienced by OEMs or their suppliers could result in slow-downs or closures of assembly plants where the Company’s products are included in assembled vehicles. Also, a number of large Tier I suppliers to the automotive industry have filed for Chapter 11 protection. These actions create greater uncertainty as to the potential for work stoppages by unionized work forces. In the event that one or more of the Company’s customers or suppliers experiences a material work stoppage, such a work stoppage could have a material adverse effect on the Company’s business.

In addition, a significant number of the Company’s employees are covered under collective bargaining agreements. The Company has been in negotiations with the unions representing current and retired employees since October 2005 seeking concessions from the bargaining units in the wage rate structure of its membership as well as the benefits offered by the Company. Health insurance coverage for employees and retirees has resulted in significant cost increases for vehicle manufacturers and suppliers for the past several years and puts domestic auto makers and suppliers at a significant disadvantage with their foreign based competitors. While the Company has reached consensual outcomes with certain of its retirees, negotiations with its active unions are ongoing. As part of its Chapter 11 process, the Company sought the approval of the Bankruptcy Court to reject its union contracts. The Court has not issued a ruling while the parties continue to negotiate; however, the union members have approved a strike vote in the event the Bankruptcy Court rules in the Company’s favor. While the Company has not experienced any work stoppages since its inception in 1993, a strike or slow-down by one of the Company’s unions could have a material adverse effect on the Company’s business.

The Company’s ability to obtain new program awards.

The automotive component supply industry remains competitive. Despite a number of Chapter 11 filings, some of the Company’s competitors are companies, or divisions or subsidiaries of companies, that are larger and have greater financial and other resources than the Company. In addition, with respect to certain products, the Company competes with divisions of OEM customers. The Company’s products may not be able to compete successfully with the products of these other companies, which could result in the loss of customers and, as a result, decreased revenues and profitability.

The Company principally competes for new business both at the beginning of the development of new models and upon the redesign of existing models by major customers. New model development generally begins two to five years prior to the marketing of such models to the public. The failure to obtain new business on new models or to retain or increase business on redesigned existing models, could adversely affect the Company’s business and financial results. In addition, as a result of the relatively long lead times required for many of the Company’s complex structural components, it may be difficult in the short term for the Company to obtain new sales to replace any unexpected decline in the sale of existing products. Also, the Company may incur significant expense in preparing to meet anticipated customer requirements which may not be recovered for various reasons, including fluctuation in the anticipated volume of production from new and planned supply programs.

The Company may incur material losses as a result of product liability and warranty and recall claims.

Many of the Company’s products are critical to the structural integrity of a vehicle. As such, the Company faces an inherent business risk of exposure to product liability claims in the event that the failure of its products to perform to specifications results, or is alleged to result, in property damage, bodily injury and/or death. In addition, if any Company designed products are, or are alleged to be, defective, the Company may be required to participate in a recall involving those products. Each OEM has its own policy regarding product recalls and other product liability actions relating to its suppliers. However, as suppliers become more integrally involved in the vehicle design process and assume more vehicle assembly functions, OEMs are increasingly looking to suppliers for contribution when faced with product recalls and product liability or warranty claims. Accordingly, the Company may be adversely impacted by product recalls and product liability or warranty claims.

The Company is subject to government regulations, including environmental regulations, and any changes in current regulations may adversely impact the Company.

The automotive industry is regulated by various government bodies and constituencies. The implementation of or changes in the laws, regulations or policies governing the automotive industry that could negatively affect the automotive components supply industry may adversely impact the Company.

Prolonged continuation of the Chapter 11 Cases may harm the Company’s businesses.

The prolonged continuation of the Chapter 11 Cases could adversely affect the Company’s businesses and operations. So long as the Chapter 11 Cases continue, senior management of the Company will be required to spend a significant amount of time and effort dealing with the Company’s reorganization instead of focusing exclusively on business operations. Prolonged continuation of the Chapter 11 Cases will also make it more difficult to attract and retain management and other key personnel necessary to the success and growth of the Company’s businesses. In addition, the longer the Chapter 11 Cases continue, the more likely it is that the Company’s customers and suppliers will lose confidence in the Company’s ability to successfully reorganize their businesses and seek to establish alternative commercial relationships. Furthermore, so long as the Chapter 11 Cases continue, the Company will be required to incur substantial costs for professional fees and other expenses associated with the proceedings. The prolonged continuation of the Chapter 11 Cases may also require the Company to seek additional financing, either as part of the DIP credit facility or otherwise, in order to service their debt and other obligations. It may not be possible for the Company to obtain additional financing during the pendency of the Chapter 11 Cases on commercially favorable terms or at all. If the Company were to require additional financing during the Chapter 11 Cases and were unable to obtain the financing on favorable terms or at all, the Company’s chances of successfully reorganizing its businesses may be seriously jeopardized.

The Company may not be able to obtain confirmation of its Chapter 11 plan.

In order to successfully emerge from Chapter 11 bankruptcy protection as a viable entity, the Company believes that it must develop, and obtain requisite court and creditor approval of, a viable Chapter 11 Plan of Reorganization (the “Plan”). This process requires the Company to meet certain statutory requirements with respect to adequacy of disclosure with respect to the Plan, soliciting and obtaining creditor acceptances of the Plan, and fulfilling other statutory conditions for confirmation. The Company may not receive the requisite acceptances to confirm the Plan. Even if the requisite acceptances of the Plan are received, the Bankruptcy Court may not confirm the Plan. A dissenting holder of a claim against the Company may challenge the balloting procedures and results as not being in compliance with the Bankruptcy Code. Even if the Bankruptcy Court determined that the balloting procedures and results were appropriate, the Bankruptcy Court could still decline to confirm the Plan if it found that any of the statutory requirements for confirmation had not been met, including that the terms of the Plan are fair and equitable to non-accepting classes. Section 1129 of the Bankruptcy Code sets forth the requirements for confirmation and requires, among other things, a finding by the Bankruptcy Court that (i) the Plan “does not unfairly discriminate” and is “fair and equitable” with respect to any non-accepting classes, (ii) confirmation of the Plan is not likely to be followed by a liquidation or a need for further financial reorganization and (iii) the value of distributions to non-accepting holders of claims within a particular class under the Plan will not be less than the value of distributions such holders would receive if the Company was liquidated under Chapter 7 of the Bankruptcy Code. The

Bankruptcy Court may determine that the Plan does not satisfy one or more of these requirements, in which case it would not be confirmable by the Bankruptcy Court.

If the Plan is not confirmed by the Bankruptcy Court, it is unclear whether the Company would be able to reorganize its businesses and what, if any, distributions holders of claims against the Company ultimately would receive with respect to their claims. If an alternative reorganization could not be agreed upon, it is possible that the Company would have to liquidate its assets, in which case it is likely that holders of claims would receive substantially less favorable treatment than they would receive if the Company was to emerge as a viable, reorganized entity.

1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

The Company’s operations are conducted in both owned and leased facilities. The Company believes that these facilities are suitable and adequate for its activities as currently conducted. The principal facilities in which the Company’s operations are currently conducted are as follows:

		Square
North American Locations		Footage				Type of Interest		Description of Use
Elkton, Michigan			1,100,000			Owned		Manufacturing
Milan, Tennessee			531,000			Leased		Manufacturing
Chicago, Illinois			480,000			Leased		Manufacturing
Granite City, Illinois			458,000			Leased		Manufacturing
Clinton Township, Michigan			385,000			Leased		Manufacturing
Toronto, Ontario			329,400			Owned		Manufacturing
Bardstown, Kentucky			300,000			Owned		Manufacturing
Plymouth, Michigan			294,000			Leased		Manufacturing
Smyrna, Tennessee			254,000			Leased		Manufacturing
Lansing, Michigan			250,000			Leased		Manufacturing
Bluffton, Ohio			218,000			Leased		Manufacturing
Bellevue, Ohio (2 locations)			200,000			Owned		Manufacturing
Madison, Mississippi			200,000			Leased		Manufacturing
Traverse City, Michigan			170,000			Owned		Manufacturing
Greenville, Michigan			156,000			Owned		Manufacturing
Auburn, Indiana			132,000			Leased		Manufacturing
Kendallville, Indiana			131,000			Leased		Manufacturing
Novi, Michigan			113,500			Leased		Corporate Office/Technical Center
Upper Sandusky, Ohio			56,000			Leased		Manufacturing
Grand Rapids, Michigan			13,600			Leased		Office
International Locations
Caserta, Italy (2 locations)			751,000			Owned		Manufacturing
Turin, Italy			455,000			Owned		Manufacturing/Office
Wuhu, Anhui Province, China			455,000			(2)		Manufacturing /Office
Malacky, Slovakia			453,600			Owned		Manufacturing
Zwickau, Germany			409,000			Owned		Manufacturing
Gent, Belgium			376,000			Leased		Manufacturing
Hwaseong-si, Gyeonggi-do, Korea			223,000			Owned		Manufacturing
Sao Paolo, Brazil			193,000			Owned		Manufacturing/Office
Changchun, China			179,200			(1)		Manufacturing
Duisburg, Germany			125,900			Owned		Manufacturing
Kwangju Metropolitan City, Pyeongdong, Korea			121,000			(3)		Manufacturing
Kwangju Metropolitan City, Hanam, Korea			107,000			Owned		Manufacturing
Bergisch-Gladbach, Germany			102,000			Owned		Manufacturing/Technical Center
Shiheung-si, Gyeonggi-do, Korea			100,000			Owned		Manufacturing
Ansan-si, Gyeonggi-do, Korea			70,000			Owned		Manufacturing
Minas Gerais, Brazil			59,000			Owned		Manufacturing
Buchholz, Germany			54,000			Owned		Manufacturing
Opole, Poland			54,000			Owned		Manufacturing
Yeongcheon-si, Korea			50,000			Owned		Manufacturing
Ulsan Metropolitan City, Korea			44,000			Owned		Manufacturing
Gunpo-si, Gyeonggi-do, Korea			36,000			Owned		Office/Technical Center
Hyderabad, India			2,800			Leased		Engineering/Design
Yokohama, Japan			1,000			Leased		Sales/Engineering

(2)		Facility is utilized by a joint venture in which the Company holds an 80% equity interest. The building is owned and the land is leased.
(3)		The building is owned and the land is leased.

The facilities were specifically designed for the manufacturing of the Company’s products. The utilization of such facilities is dependent upon the mix of products produced and the timing of the supply requirements pertaining to product programs with customers.

Item 3. Legal Proceedings.

From time-to-time, the Company is subject to claims or litigation incidental to its business. The Company is not currently involved in any legal proceedings that, individually or in the aggregate, are expected to have a material effect on its business, financial condition, results of operations or cash flows.

As indicated in Note 2 to the Consolidated Financial Statements and in Item 1, “Business” of this Form 10-K, on February 2, 2005, Tower Automotive, Inc. and 25 of its United States subsidiaries each filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court Southern District of New York (“Bankruptcy Court”). The cases are jointly consolidated for administrative purposes as Case No. 05-10578 (ALG). 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 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 and the Bankruptcy Court approved an extension of the due date to June 27, 2006.

See Item 10. “Directors and Executive Officers of the Registrant,” under the caption, “Legal Proceedings,” for additional information on litigation associated with the Company’s bankruptcy involving the Company’s officers and for information on litigation associated with the Company’s operations in Mexico that are conducted through a joint venture, Metalsa, S. de R.L. de C.V. (“Metalsa”) which is 40 percent owned by the Company’s 100% owned Mexican subsidiary (“Tower Mexico”).

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the fourth quarter of 2005.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The Company’s common stock has been traded over the counter on the Pink Sheets Electronic Quotation Service (“Pink Sheets”) maintained by the Pink Sheets LLC under the symbol “TWRAQ.” since February 7, 2005. On February 3, 2005, the New York Stock Exchange (“NYSE”) suspended trading of the Company’s common stock and de-listed its common stock shortly thereafter. The following table sets forth, for the periods indicated, the high and low closing sale prices of the Company’s common stock on the Pink Sheets and on the NYSE as applicable.

		Low				High
2004
First quarter		$	4.35			$	7.53
Second quarter			3.33				5.83
Third quarter			2.08				3.72
Fourth quarter			1.20				2.40
2005
First quarter		$	0.18			$	2.69
Second quarter			0.06				0.18
Third quarter			0.06				0.25
Fourth quarter			0.05				0.15

The last reported sale price of the common stock on May 31, 2006 on the Pink Sheets was $0.14. As of May 31, 2006, there were 2,581 holders of record of the Company’s outstanding common stock.

Dividend policy and restrictions

Since the Company’s formation in April 1993, the Company has never paid any cash dividends. The Company is currently prohibited from paying dividends to shareholders by both the U.S. Bankruptcy Code and the DIP Financing Agreement.

Equity Repurchases

The Company did not repurchase any equity securities during the fourth quarter of 2005.

Item 6. Selected Financial Data.

The following table sets forth the Company’s summary historical consolidated financial data for each of the years in the five-year period ended December 31, 2005, which were derived from the Company’s consolidated financial statements. The information for the year ended December 31, 2004 has been restated to reflect adjustments discussed in Note 1 to the consolidated financial statements included elsewhere in this report on Form 10-K. The Company’s consolidated financial statements as of December 31, 2005 and 2004 and for each of the three years in the period ended December 31, 2005 have been audited by Deloitte & Touche LLP, independent registered public accounting firm. The consolidated financial statements as of December 31, 2005 and 2004 and for each of the years in the three-year period ended December 31, 2005 and the Report of Independent Registered Public Accounting Firm thereon are included elsewhere in this report. The consolidated financial statements as of December 31, 2003, 2002, and 2001, and for the years ended December 31, 2002 and 2001 are not included herein. This selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and the Company’s Consolidated Financial Statements and Notes to Consolidated Financial Statements, included elsewhere in this report.

		Years Ended December 31,
		2005 (1)				2004				2003				2002				2001
						(as restated)			(in thousands)
						(9)
Statement of Operations Data:
Revenues		$	3,283,653			$	3,178,724			$	2,815,749			$	2,754,464			$	2,467,433
Cost of sales			3,102,853				2,953,041				2,560,689				2,456,380				2,190,248
Selling, general and administrative expenses			149,723				145,217				155,500				143,822				139,203
Amortization expense (2)			—				—				—				—				24,804
Restructuring and asset impairment charges, net			129,591				(713	)			157,532				61,125				383,739
Other income			(7,748	)			—				—				—				—
Goodwill impairment charge (8)			—				337,230				—				—				—
Operating income (loss)			(90,766	)			(256,051	)			(57,972	)			93,137				(270,561	)
Interest expense, net (3)			103,037				141,978				92,747				70,267				73,765
Chapter 11 and related reorganization items			167,438				—				—				—				—
Unrealized gain on derivative			—				(3,860	)			—				—				—
Provision (benefit) for income taxes (8)			16,438				174,798				(50,811	)			7,636				(73,312	)
Income (loss) before cumulative effect of change in accounting principle (2) (4)			(365,520	)			(551,619	)			(124,675	)			15,180				(267,524	)
Net (loss)			(373,372	)			(551,619	)			(124,675	)			(97,606	)			(267,524	)
Basic earnings (loss) per share before cumulative effect of change in accounting principle		$	(6.24	)		$	(9.50	)		$	(2.20	)		$	0.26			$	(5.87	)
Diluted earnings (loss) per share before cumulative effect of change in accounting principle		$	(6.24	)		$	(9.50	)		$	(2.20	)		$	0.26			$	(5.87	)
Basic earnings (loss) per share		$	(6.37	)		$	(9.50	)		$	(2.20	)		$	(1.70	)		$	(5.87	)
Diluted earnings (loss) per share		$	(6.37	)		$	(9.50	)		$	(2.20	)		$	(1.70	)		$	(5.87	)

		Dec. 31,				Dec. 31,				Dec. 31,				Dec. 31,				Dec. 31,
		2005 (1)				2004				2003				2002				2001
						(as restated)
						(9)
Balance Sheet Data:
Working capital (deficit)		$	38,091			$	(278,432	)		$	(366,904	)		$	(305,466	)		$	(379,785	)
Total assets			2,291,226				2,563,338				2,846,409				2,557,885				2,533,436
Current liabilities not subject to compromise			699,819				1,057,536				1,105,601				822,647				819,955
Liabilities subject to compromise			1,284,217				—				—				—				—
Long-term debt and capital leases, net (5)			669,131				1,398,108				1,103,657				764,935				805,688
Other long-term obligations (6)			125,682				214,782				223,641				199,477				201,635
Mandatorily redeemable trust convertible preferred securities (7)			—				—				—				258,750				258,750
Stockholders’ investment (deficit)			(487,623	)			(107,088	)			413,510				512,076				447,408

		combination of valuation techniques including the discounted cash flow approach and the market multiple approach, a transitional impairment loss of $112.8 million was recorded in the first quarter of 2002 as a cumulative effect of change in accounting principle.
(3)		Effective February 2, 2005, the Company ceased recognizing interest expense on debt included in liabilities subject to compromise.
(4)		In accordance with Financial Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations”, effective December 31, 2005, the Company recognized an after tax transition charge of $7.9 million, reflecting the cumulative effect of an accounting change related to asset retirement obligations.
(5)		Long-term debt and capital leases, net as of December 31, 2005 excludes $819 million of debt classified as subject to compromise in accordance with Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code” (“SOP 90-7”), as a result of the Company’s bankruptcy filing.
(6)		Other long-term obligations as of December 31, 2005 excludes $3.4 million of obligations classified as subject to compromise in accordance with SOP 90-7 as a result of the Company’s bankruptcy filing.
(7)		Includes $258.8 million due to Tower Automotive Capital Trust, or “Trust.” In June 1998, the Trust sold $258.8 million in aggregate liquidation preference of 63/4% Trust Convertible Preferred Securities (the “Trust Preferred Securities”). The sole assets of the Trust are approximately $266.8 million in aggregate principal amount of the Issuer’s 63/4% convertible subordinated debentures due June 30, 2018, such amount being the sum of the stated liquidation preference of the Trust Preferred Securities and the capital contributed by the Issuer in exchange for the common securities of the Trust. During the third quarter of 2003, the Company elected to adopt the current provisions of FASB Interpretation Number (FIN) 46, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51 as it relates to the Trust Preferred Securities, prior to the required effective date. Under FIN 46, the Trust, which was previously consolidated by the Company, is no longer consolidated. As a result, Tower Automotive no longer presents the Trust Preferred Securities as mezzanine financing, but instead records a debt obligation for the proceeds, which are owed to the Trust by the Company. Interest was recorded at 63/4% on the amount owed by the Issuer to the Trust, which is equal to the amount that was previously presented as minority interest (net of tax) for the amounts paid on the Trust Preferred Securities. Interest expense increased by $8.8 million in each of 2003 (representing six months of interest) and by $8.8 million for the six months ended June 30, 2004 related to this reclassification. Pursuant to the guidance in FIN 46, the Issuer has not reclassified the presentation in prior periods. The $258.8 million of debt associated with the Trust Preferred Securities is classified in “Liabilities Subject to Compromise” on the Company’s Consolidated Balance Sheet at December 31, 2005.
(8)		During 2004, the Company recorded an impairment charge of $337.2 million to write off the goodwill associated with its North American segment. In addition, the Company recorded a valuation allowance of $148.4 million to fully reserve for its U.S. Federal and state deferred tax asset.
(9)		As discussed in Note 1 to the financial statements, the accompanying 2004 consolidated financial statements have been restated.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

Tower Automotive, Inc. (“the Company”) produces a broad range of assemblies and modules for vehicle frames, upper body structures and suspension systems for the global automotive industry. Including 100% owned subsidiaries and investments in joint ventures, the Company has production and/or engineering facilities in the United States, Canada, Mexico, Germany, Belgium, Italy, Slovakia, Poland, France, Spain, Brazil, India, South Korea, Japan and China.

Since February 2, 2005, Tower Automotive, Inc. and 25 of its U.S. subsidiaries (collectively, the “Debtors”) are operating under Chapter 11 of the Bankruptcy Code. The Debtors sought protection as a result of a deterioration in liquidity early in 2005. This deterioration was the result of the following factors, among others:

	•		Significant capital expenditures and spending on product launch activities;
	•		High interest costs
	•		Declining gross margins;
	•		Termination of accelerated payment programs by key customers;
	•		Lower production volumes at the Company’s largest customers; and,
	•		Significant raw material price increases.

Details regarding the ongoing impact of these items on the Company is included below in “Key Factors Affecting Financial Results.”

Continuation of the Company as a going concern is contingent upon, among other things, the Debtors’ ability to:

	•		Restructure the Company’s North American operations;
	•		Comply with the terms and conditions of the DIP financing agreement described in Note 8 to the Consolidated Financial Statements;
	•		Obtain confirmation of a plan of reorganization under the Bankruptcy Code;
	•		Reduce unsustainable debt and simplify the Company’s complex and restrictive capital structure through the bankruptcy process; and,
	•		Obtain financing sources to meet the Company’s future obligations.

Details regarding the Company’s plans to restructure its North American operations is included in “Restructuring and Asset Impairments.” These matters raise substantial doubt regarding the Company’s ability to continue as a going concern. See Notes 1, 2 and 8 to the accompanying Consolidated Financial Statements for additional information.

Key Factors Affecting Financial Results

The Company’s results of operations, financial position and cash flows are impacted by various external and internal factors. The following are the factors which have historically had a significant impact on the Company and which the Company believes will continue to have a significant impact in the future.

Capital Expenditures

The Company is awarded new business two to five years prior to the launch of the program. During this time, the Company invests significant resources in: product design; dies and tooling, design, testing and fabrication; and design, testing, purchase and installation of the machinery and equipment necessary to manufacture the related products. These activities all require significant liquidity availability prior to generating any revenue from the program.

Program launch execution

The Company’s operating costs are higher during a product launch period relative to when the vehicle has reached normal production volumes. During 2004, the Company was adversely impacted by a significant amount of new

product launch activity. These launches, which were significant both in terms of number and relative size, reduced gross profit significantly during 2004. However, the Company’s launch activities during 2005 decreased to a significant degree due to a number of product programs in the launch stage during 2004 going into full production. Launch costs, which are included in operating expenses, decreased during 2005, by approximately $52.7 million in comparison to 2004.

Cost reduction programs

The Company’s gross margins have been declining since 1999. High raw material and other costs, including health care, energy, and general inflation have had a negative impact on results of operations and are expected to do so for the foreseeable future. Generally, the Company’s customers require the reduction of selling prices of the Company’s products for each year during the respective lives of such product programs, generally five to seven years. The Company’s ability to improve its profit margins is directly linked to its ability to more than offset these price reductions with reduced operating costs.

To address the deterioration in operating performance, management has initiated plans to: (a) centralize and standardize processes which were previously performed on a decentralized basis, including purchasing, customer quoting and product costing, product engineering and accounting; (b) rationalize and reduce capital expenditures to more closely align capital spending with expected product returns; (c) use centralization and standardization to leverage cost improvement ideas across the Company’s operating facilities globally; (d) pursue recoveries of significant steel price increases; and, (e) a number of other cost reduction initiatives. If the Company is not successful in implementing these actions, the Company may continue to experience declining gross margins.

Global automotive production and market share

The Company’s financial results are directly impacted by automotive production. In addition, the Company’s operating results are impacted by the commercial success of the vehicles to which it is a supplier as well as the market share of the Company’s customers. The Company’s operations are geographically diverse including a significant presence in Europe and Asia. The Company has a strategic customer portfolio strategy to leverage relationships with key customers across geographic boundaries to diversify its customer base and increase penetration with existing key customers, including the “New Domestics” (Nissan, Toyota and Honda). Since 2000, the proportion of revenue from the “Detroit 3” (Ford, DaimlerChrysler and General Motors) has declined from approximately 66% of revenue in 2002 to 46% of revenue in 2005. The Company expects this trend to continue as a result of its anticipated organic growth outside the U.S. and recent awards to supply the New Domestics in the U.S.

North American vehicle production remained almost flat compared to 2004 levels. North American truck production declined by approximately 200,000 units, or 2.1%, during 2005 in comparison to 2004, while automobile production increased by 205,000 units or 3.3%, essentially offsetting each other. Among major customers of the Company, Ford Motor Company (“Ford”) cut overall production from 2004 by 225,000 units (6.2%) while General Motors Corporation (“GM”), cut overall production from 2004 by 381,000 units (7.5%). The declines were primarily due to losses in market share to the New Domestic automakers. From 2004 to 2005, the New Domestics increased their market share by 11.2%, while the Detroit 3 lost 4.3% of market share. This trend is expected to continue in 2006. Production is also expected to remain flat compared to 2005 levels. In addition, relatively high fuel prices are expected to continue to have an adverse impact on North American truck production. The Company’s high concentration of revenues associated with large vehicle platforms exposes the Company to a significant adverse impact from reductions in OEM production levels of these vehicles.

Raw material prices

The Company’s products are manufactured utilizing steel and various purchased steel assemblies. A byproduct of the production process is scrap steel, which is sold. The price of steel increased significantly in 2004 compared to historical periods due to a shortage of certain raw materials necessary to produce steel, and to increased global demand, primarily in China. The Company purchases a substantial portion of its steel from its customers through customers’ repurchase programs. The purchases through customers’ repurchase programs have somewhat mitigated the severity of price increases associated with the procurement of steel. In addition, scrap steel sales prices increased in 2004, which somewhat mitigated the increase in steel purchase prices. The remainder of the Company’s steel purchasing requirements is met through contracts with steel producers and market purchases. Prices associated with such purchases increased rapidly in 2004. The Company’s agreements with its customers generally do not permit the Company to increase selling prices for increases in prices of raw material inputs.

During 2005, steel prices declined relative to 2004 levels, but still remain high relative to historical levels. However, the price for scrap steel declined more significantly than steel. The adverse impact of higher steel prices and lower recovery for scrap steel are expected to continue in 2006. Higher average steel prices during the year ended December 31, 2005, reduced gross profit by $53.7 million in comparison to the comparable period in 2004. In addition, lower recovery from sales of scrap steel reduced gross profit by $5.6 million during the year ended December 31, 2005. The Company is pursuing several initiatives to mitigate the impact of such raw material price increases on its results of operations. Such initiatives include moving more steel purchases to customer repurchase programs, pursuing selling price increases from customers and reducing other operating costs, among other initiatives. The Company can provide no assurances that such initiatives will be successful. However, during the year ended December 31, 2005, the Company realized approximately $50.1 million more in steel price recoveries from certain customers in comparison to 2004.

Other inflationary factors

For a more detailed description of other factors that have had, or may in the future have, a significant impact on the Company’s business, please refer to “Forward Looking Statements,” “Market Risks” and “Opportunities” contained in this Management’s Discussion and Analysis for insight on opportunities, challenges and risks, such as those presented by known material trends and uncertainties, on which the Company’s management is most focused for both the short term and long term, as well as the actions management is taking to address these opportunities, challenges and risks.

Critical Accounting Policies

The Company’s discussion and analysis of its financial condition and results of operations is based upon its consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect amounts reported in those statements. The Company has made its best estimates of certain amounts contained in these consolidated financial statements. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. However, application of the Company’s accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. Management believes that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest impact on the Company’s consolidated financial statements.

Use of Estimates — The preparation of consolidated 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 as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Generally matters subject to estimation and judgment include amounts related to accounts receivable realization, inventory obsolescence, unsettled pricing discussions with customers and suppliers, pension and other postretirement benefit plan assumptions, restructuring reserves, self-insurance accruals, asset valuation reserves and accruals related to environmental remediation costs, asset retirement obligations and income taxes. Actual results may be materially different than estimates recorded in the consolidated financial statements.

Reserves — The Company has recognized accruals in relation to restructuring reserves and purchase accounting reserves, which require the use of estimates and judgment regarding risk, loss exposure and ultimate liability. Reserves for restructuring activities are estimated primarily for activities associated with the discontinuation and consolidation of certain of the Company’s operations. Reserves for loss contracts are estimated by determining which products are being sold pursuant to loss contracts, the estimated loss per unit and expected sales volumes over the life of each contract. Other reserves are estimated using consistent and appropriate methods based upon estimated risk and loss exposure. Changes to these assumptions and estimates could materially affect the recorded liabilities and related loss.

Revenue Recognition — The Company recognizes revenue as its products are shipped to its customers at which time title and risk of loss passes to the customer. The Company participates in certain customers’ steel repurchase programs. Under these programs, the Company purchases steel directly from a customer’s designated steel supplier for use in manufacturing products for such customer. The Company takes delivery and title to such steel and bears risk of loss and obsolescence. The Company invoices its customers based upon annually negotiated selling prices,

which include a component for steel under such repurchase programs. For sales for which the Company participates in a customer’s steel repurchase program, revenue is recognized on the entire amount of such sale, including the component for purchases under that customer’s steel repurchase program. The Company is generally asked to provide annual price reductions by its customers. The Company accrues for such amounts as a reduction of revenue as products are shipped. The Company records adjustments to those accruals in the period in which the pricing is finalized with the customer or if it becomes probable and estimable that pricing negotiated with customers will vary from previous assumptions.

The Company enters into agreements to produce products for its customers at the beginning of a given vehicle program term. Once such agreements are entered into by the Company, fulfillment of the customers’ purchasing requirements is the obligation of the Company for the entire production periods of the vehicle programs, which range from three to ten years, and the Company has no provisions to terminate such contracts. In certain instances, the Company may be committed under existing agreements to supply product to its customers at selling prices which are not sufficient to cover the variable cost to produce such product. In such situations, the Company records a liability for the estimated future amount of such losses. Such losses are recognized at the time that the loss is probable and reasonably estimable and is recorded at the minimum amount necessary to fulfill the Company’s obligations to its customers. Losses are recognized at discounted amounts, which are estimated based upon information available at the time of the estimate, including future production volume estimates, term of the program, selling price and production cost information.

Goodwill — The Company tests goodwill for impairment at least annually and when conditions indicate that impairment may exist. The Company utilizes a third party specialist to perform these tests. A combination of valuation techniques including the discounted cash flow approach and the market multiple approach is utilized. The data utilized by the specialist is subject to significant judgment and assumptions. Estimates of future cash flows are based on internal plans based on recent sales data, independent automotive production volume estimates as well as other assumptions related to the Company’s future cost structure. Future events or changes in business circumstances may result in actual results which are materially different than the information utilized for the impairment test. If changes occur, a significant charge may be required in the Company’s Statement of Operations. In the fourth quarter of 2004, the Company recognized a goodwill impairment charge of $337.2 million in the North American operating unit. This charge was precipitated by declining estimates of forecasted results and cash flows given current economic and market conditions within the automotive supplier industry. The Company recognized no impairment charges for the year ended December 31, 2005.

Income Taxes — The Company makes estimates of the amounts to recognize for income taxes in each tax jurisdiction in which the Company operates. This process incorporates an assessment of current taxes payable and/or receivable with temporary differences between the tax bases of assets and liabilities and the corresponding reported amounts in the financial statements. These differences result in deferred tax assets and deferred tax liabilities included in the Company’s Consolidated Balance Sheets. The Company is required to estimate whether recoverability of its deferred tax assets are more likely than not based on forecasts of taxable earnings in each tax jurisdiction. As disclosed in Note 9 to the Consolidated Financial Statements, a large portion of the Company’s deferred tax assets are comprised of net operating loss carryforwards and tax credits. The Company uses historical and projected future operating results, including a review of the eligible carryforward period, tax planning opportunities and other relevant considerations in determining recoverability. Due to the significant judgment involved in determining whether deferred tax assets will be realized, the ultimate resolution of these items may be materially different from the previously estimated outcome. As of December 31, 2005, valuation allowances have been established for all U.S. Federal and state deferred tax assets of the Company. The Company has restated its December 31, 2004, consolidated financial statements to correct certain errors in accounting for income taxes (see Note 1 to the consolidated financial statements).

Impairment and Depreciation of Long-Lived Assets — The Company’s long-lived assets are reviewed for impairment whenever adverse events or changes in circumstances indicate a possible impairment. An impairment loss is recognized when the carrying value of the long-lived assets exceeds its fair value based upon undiscounted future cash flows generated by the asset. Significant judgments and estimates used by management when evaluating long-lived assets for impairment include:

	•		Program product volumes and remaining production life for parts produced on the assets being reviewed
	•		Product pricing over the remaining life of the parts including an estimation of future customer price reductions which may be agreed
	•		Product cost information including an assessment of the success of the Company’s cost reduction activities
	•		Assessments of future alternative application of specific long-lived assets based on awarded programs

In addition, the Company follows its established accounting policy for estimated useful lives of long-lived assets. This policy is based upon significant judgments and estimates as well as historical experience. Actual future experience with those assets may indicate different useful lives resulting in a significant impact on depreciation expense.

Pension and Other Post-Retirement Benefits — The determination of the obligation and expense for pension and other postretirement benefits is dependent on the selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions are described in Note 11 to the Consolidated Financial Statements and include, among others, the discount rate, expected long-term rate of return on plan assets, as well as expected increases in compensation and healthcare costs. In accordance with generally accepted accounting principles, actual results that differ from these assumptions are accumulated and amortized over future periods and therefore, generally affect the recognized expense and recorded obligation in such future periods. While the Company believes that its current assumptions are appropriate based on available information, significant differences in the actual experience or significant changes in the assumptions may materially affect the pension and other postretirement obligations and the future expense.

Pension and other post retirement costs are calculated based on a number of actuarial assumptions, most notably the discount rates used in the calculation of the Company’s pension benefit obligations of 5.50%, 5.50% and 5.95% and the discount rates used in the calculation of the Company’s post-retirement benefit obligations of 5.25 %, 5.00% and 5.95% as of the Company’s September 30 measurement date in 2005, 2004 and 2003, respectively. The discount rates used by the Company are developed based on a hypothetical portfolio of high quality instruments with maturities that mirror the timing and amounts of future benefits.

The expected rate of return on pension plan assets under SFAS 87 of 7.25% and 8.50%, respectively, as of December 31, 2005 and 2004 represents the Company’s expected long-term rate of return on plan assets. The rate of return assumptions selected by the Company reflect the Company’s estimate of the average rate of earnings expected on the funds invested or to be invested in order to provide for future participant benefits to be paid out over time. As part of this estimate, the Company reviewed the existing allocation of invested assets against expectations about future performance of similar asset allocations. Future expectations were obtained from readily available public sources, such as Morningstar^®. Expected future returns were adjusted for expectations regarding future investment and other expenses.

Results of Operations

The following management discussion and analysis gives effect to the restatement discussed in Note 1 to the Consolidated Financial Statements.

Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004

Revenues. Revenues increased by $104.9 million, or 3.3%, during 2005 to $3.3 billion from $3.2 billion during 2004. Pricing and favorable foreign exchange effects increased revenues by $9.7 million and $58.3 million, respectively. In addition, steel price recoveries from certain customers exceeded net selling price reductions by $50.1 million. These positive impacts were partially offset by an unfavorable volume/ product mix effect of $13.2 million.

Gross Profit and Gross Margin. Gross margin for 2005 was 5.5% compared to 7.1% for 2004. Gross profit decreased by $44.9 million, or 19.9%, to $180.8 million during 2005 compared to $225.7 million during 2004. The decrease in gross profit resulted primarily from the negative impacts of volume/product mix, steel costs and other economic factors (i.e. higher health care expenses, higher energy costs, general labor rate increases), operating inefficiencies and other miscellaneous items (i.e. asset write offs, inefficiencies associated with plant closings) of $17.8 million, $96.1 million, $20.3 million and $21.0 million, respectively. These negative impacts were partially offset by a significant decline in launch costs, foreign exchange effects, favorable pricing and steel price recoveries from certain customers exceeding net selling price reductions in the amounts of $46.1 million, $4.4 million, $9.7 million and $50.1 million, respectively.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $4.5 million, or 3.1%, to $149.7 million during 2005 from $145.2 million for 2004. Selling, general and administrative expenses represented 4.6% of revenues during both 2005 and 2004. The $4.5 million increase resulted from foreign exchange impacts, general economic factors and other items of $6.9 million, $7.8 million and $1.4 million, respectively. This impact was partially offset by operating efficiencies and cost reductions of $11.6 million.

Other Income. Other income for the year ended December 31, 2005 represents the gain on the settlement of a dispute between the Company and a vendor.

Interest Expense Net of Interest Income. Interest expense, net of interest income, decreased by $38.9 million, or 27.4 %, to $103.0 million in 2005 compared to $142.0 million in 2004. The decline was attributable to: (i) $65.0 million related to debt that has been classified as subject to compromise for which no interest is being accrued effective February 2, 2005; (ii) $6.3 million related to interest savings associated with the repayment of 5.0% convertible subordinated notes in May 2004; (iii) interest savings of $4.4 million in association with an interest rate swap contract; and (iv) $5.5 million related to other decreases. These declines were partially offset by: (i) increased interest of $18.8 million related to the Company’s DIP financing facilities; (ii) $7.2 million related to a decrease in capitalized interest during 2005; (iii) higher expenses of $14.9 million in relation to the amortization of deferred financing costs; and (v) $1.4 million of other increases. In accordance with SOP 90-7, “Reorganization Under the Bankruptcy Code,” interest expense during the Company’s bankruptcy has been recognized only to the extent that it will be paid during the Company’s bankruptcy proceedings or that it is probable that it will be an allowed priority, secured or unsecured claim. Interest expense recognized by the Company is lower than the Company’s stated contractual interest for the year ended December 31, 2005 by $72.4 million.

Chapter 11 and Related Reorganization Items. During the year ended December 31, 2005, Chapter 11 and related reorganization expenses were $167.4 million. These expenses primarily related to professional fees and lease rejection costs associated with the Company’s bankruptcy proceedings. See Note 2 to the Consolidated Financial Statements.

Provision for Income Taxes. The Company recognized provisions for income taxes of $16.4 million and $174.8 million, respectively, in 2005 and 2004 despite pre-tax losses. The provision for income taxes in 2005 resulted from earnings on the Company’s non-US operations and not recognizing the tax benefit of U.S. losses.

Equity in Earnings of Joint Ventures. Equity earnings of joint ventures, net of tax, increased by $3.8 million, or 28.3%, from $13.4 million during 2004 to $17.2 million during 2005. The increase resulted from increased earnings of Metalsa. This increase was partially offset by the elimination of equity earnings from the Company’s ownership interest in Yorozu Corporation, which was sold in March 2004. Equity earnings from Metalsa increased by $5.2 million, while the partial offset attributable to Yorozu was $1.4 million.

Minority Interest. Minority interest, net of tax, decreased by $0.8 million, or 13.2%, to $5.0 million during 2005 from $5.8 million during 2004. The decrease resulted from lower earnings at the Company’s joint venture in China, Tower Golden Ring, of $1.9 million. The effect of this decrease was partially offset by a $1.1 million increase in earnings in the Company’s other subsidiaries in which a minority interest is held.

Cumulative Effect of Accounting Change, Net of Tax. Effective December 31, 2005, the Company recognized a transition charge of $7.9 million in relation to the adoption of FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations”

Year Ended December 31, 2004 Compared to the Year Ended December 31, 2003

Revenues. Revenues for 2004 increased by $363.0 million, or 12.9%, to $3.18 billion from $2.82 billion during 2003. Higher volume and favorable product mix increased revenues by $275.1 million while foreign exchange effects increased revenues by $70.2 million. In addition, revenues were increased by steel price recoveries from certain foreign customers exceeding net selling price reductions by $17.7 million.

Gross Profit and Gross Margin. Gross margin was 7.1% in 2004 compared to 9.0% for 2003. Gross profit declined by $29.4 million, or 11.5%, to $225.7 million during 2004 compared to $255.1 million during 2003. The decreases in gross margin and gross profit were primarily attributable to increased costs associated with the Company’s product launch activities of $14.2 million and higher operating expenses of $71.9 million, which includes the effects of higher material costs, primarily steel ($46.1 million), higher health care expenses ($10.4 million) and general adverse economic factors (i.e. general labor rate increases, higher energy costs, etc.) impacting the Company ($15.4 million). In addition, the Company recognized $3.6 million in property, plant and equipment write offs and $12.7 million of additional expenses associated with insurance accruals and certain leases. These declines were partially

offset by operating efficiencies of $4.8 million, favorable foreign currency effects of $6.0 million, volume and product mix effects of $44.5 million and steel price recoveries from certain foreign customers exceeding net selling price reductions by $17.7 million.

Selling, General and Administrative Expenses. Selling, general and administrative expenses declined by $10.3 million, or 6.6%, to $145.2 million during 2004 from $155.5 million in 2003. Selling, general and administrative expenses represented 4.6% of revenues during 2004 compared to 5.5% during 2003. The decline is primarily attributable to lower expenses resulting from the Company’s 2003 Restructuring Plan involving the Company’s corporate consolidation activities.

Goodwill Impairment Charge. During the fourth quarter of 2004, the Company recognized a goodwill impairment charge of $337.2 million. There was no tax impact associated with this charge because the Company recognized a valuation allowance in relation to that impact. This charge was precipitated by declining estimates of forecasted results and cash flows given current economic and market conditions within the automotive suppler industry.

Interest Expense, Net. Interest expense, net increased by $49.2 million, or 53.1%, to $142.0 million for 2004 from $92.7 million in 2003. The increase was attributable to: (i) increased interest of $14.0 million related to the 12% senior notes issued in June 2003; (ii) $8.8 million related to the Trust Preferred Securities, which was recorded as minority interest during the first six months of 2003; (iii) the write off of deferred financing fees of $3.3 million related to debt repaid in the second quarter of 2004; (iv) $1.4 million associated with a call premium pertaining to $200 million convertible subordinated notes, which were repaid in June 2004; (v) $4.8 million attributable to the 5.75% Convertible Debentures issued in May 2004; (vi) $17.6 million attributable to the Company’s $375 million term loan and $50 million revolver borrowing associated with the credit agreement entered into in May 2004 (vii) $3.2 million pertaining to a decrease in capitalized interest during 2004; (viii) $1.0 million associated with an increase in the amortization of deferred financing costs; and (ix) a decline in interest income in the amount of $0.5 million. These expenses were partially offset by $5.0 million in relation to interest savings associated with the repayment of 5.0% convertible subordinated notes, which were repaid in May 2004 and $0.4 million in relation to a decrease in foreign interest expense.

Unrealized Gain on Derivative. The Company recognized an unrealized gain on derivative of $3.9 million during 2004. The embedded conversion option associated with the 5.75% Convertible Debentures, issued in May 2004, was required to be bifurcated from the host debt contract. This bifurcated derivative was being marked to market during the period of May 24, 2004 through September 19, 2004. On September 20, 2004, the Company’s stockholders approved the issuance of the Convertible Debentures and the associated shares of common stock, thereby, eliminating the characterization of the embedded conversion option as a derivative and no longer requiring mark to market adjustments. See Note 9 to Consolidated Financial Statements.

Provision (Benefit) for Income Taxes. The Company recognized a provision for income taxes of $174.8 million for 2004 compared to the recognition of a benefit for income taxes of $50.8 million in 2003. The provision for income taxes, despite a pre tax loss, resulted primarily from an increase to the Company’s valuation allowance associated with the Company’s deferred tax assets of $227.5 million, the recognition of foreign income taxes in the approximate amount of $7.9 million and $70.7 million relating to a certain portion of the goodwill impairment charge not being deductible for tax return purposes. The above- mentioned amounts were partially offset by the benefit related to the statutory tax rate applied to the Company’s pre tax loss resulting in a tax benefit of $137.9 million. The effect of other permanent differences resulted in $6.7 million of tax provision.

Write-Down of Joint Venture Investment to Market Value. The Company’s results of operations for 2003 were adversely affected by an impairment charge of $27.4 million in relation to the Company’s investment in Yorozu.

Equity in Earnings of Joint Ventures. Equity in earnings of joint ventures increased by $0.1 million in 2004 to $13.4 million in 2004 from $13.3 million during 2003. The increase primarily resulted from the Company’s share of earnings from its joint venture interest in Metalsa in the amount of $4.3 million more than offsetting a decline in the Company’s share of earnings from its joint venture interest in Yorozu in the amount of $4.2 million. The Company sold its investment in Yorozu in March 2004. See Note 7 to the Consolidated Financial Statements.

Minority Interest. Minority interest declined by $4.9 million, or 45.9%, to $5.8 million in 2004 from $10.6 million in 2003. The year 2003 included dividends, net of income tax benefit on the Company’s Trust Preferred Securities,

in the amount of $5.8 million, which is now classified as interest expense. This decrease was partially offset by an increase of $0.9 million associated with improved earnings at Tower Golden Ring.

Gain on Sale of Joint Venture, Net of Tax. The gain on sale of joint venture of $9.7 million for 2004 represents the Company’s sale of its 30.76% ownership interest in Yorozu. See Note 6 to the Consolidated Financial Statements.

RESTRUCTURING AND ASSET IMPAIRMENT

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 Company’s accounting policies, which are consistent with accounting principles generally accepted in the United States, define whether costs are included in restructuring and asset impairment charges or in other captions in the statement of operations. Generally, costs directly associated with exit, consolidation or disposal activities are included in restructuring and asset impairments charges. In addition, asset impairment charges recorded based on the Company’s accounting policies governing recovery of long-lived assets are included in restructuring and asset impairment charges in the statement of operations, regardless of whether such impairment charges are directly related to a restructuring action. A summary of costs and where they are included in the statement of operations follows.

Cost Type				Caption in the Statement of Operations
1.		Employee severance and termination costs related to disposal, exit or consolidation activities		1.		Restructuring and asset impairment charges
2.		Impairment charges related to disposal, exit or consolidation activities		2.		Restructuring and asset impairment charges
3.		Costs associated with maintaining closed facilities prior to disposition		3.		Restructuring and asset impairment charges
4.		Impairment charges not related to specific disposal, exit or consolidation activities		4.		Restructuring and asset impairment charges
5.		Estimated damages associated with rejected contracts		5.		Chapter 11 and related reorganization items
6.		Gains or losses on disposal of previously impaired assets		6.		Restructuring and asset impairment charges
7.		Gains or losses on disposal of excess assets directly related to a disposal, exit or consolidation activities		7.		Restructuring and asset impairment charges
8.		Gains or losses on disposal of assets in the ordinary course of business.		8.		Cost of goods sold or Selling, General and Administrative Expense
9.		Cost to relocate colleagues and equipment associated with disposal, exit or consolidation activities		9.		Restructuring and asset impairment charges
10.		Cost to train employees related to disposal, exit or consolidation activities		10.		Cost of goods sold
11.		Cost to launch programs re-located as a result of disposal, exit or consolidation activities		11.		Cost of goods sold

During the year ended December 31, 2005, the Company recognized restructuring and asset impairment charges, net of $129.6 million. During the year ended December 31, 2004, restructuring and asset impairment charges, net reflected a reversal of a pension curtailment loss in the amount of $6.3 million, which more than offset restructuring and asset impairment charges of $5.6 million. Details of each significant restructuring action taken by the Company during 2005, 2004 and 2003 are contained in Note 7 to the Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

The following discussion gives effect to the restatement discussed in Note 1 to the Consolidated Financial Statements.

During 2005, the Company’s cash requirements were met through operations and borrowings under available credit facilities. At December 31, 2005, the Company had available liquidity in the amount of $242.7 million, which consisted of $65.8 million of cash on hand and $176.9 million available for borrowing under facilities which expire upon the earlier of the Company’s emergence from bankruptcy or in February 2007.

Net cash utilized by operating activities was $59.9 million during 2005 compared to net cash provided of $34.8 million during 2004. The amount utilized in 2005 primarily resulted from an increase in accounts receivable of $91.0 million and a decrease in accounts payable and accrued liabilities of $120.2 million. These utilization amounts were partially offset by proceeds of a receivables securitization, a decline in inventories and net provisions of cash from other operating accounts of $74.0 million, $35.6 million and $41.7 million, respectively.

Net cash utilized in investing activities was $152.6 million during 2005 compared to net cash utilized of $140.6 million in 2004. The utilization for 2005 resulted entirely from cash disbursed for purchases of property, plant and equipment.

Net cash provided by financing activities was $129.3 million during 2005 compared to $94.0 million in 2004. During 2005, borrowings related to the DIP facility more than offset repayments by $573.9 million. The effect of this provision of cash was partially offset by $444.6 million in repayments of the Company’s non-DIP debt exceeding borrowings associated with that debt.

At December 31, 2005, the Company’s balance sheet reflected working capital of $38.1 million. In addition, the Company classified approximately $1.3 billion of contractual liabilities as liabilities subject to compromise.

The Company’s business has significant liquidity requirements. In the “Key Factors Affecting Financial Results” section beginning on page 22 is a summary of the factors inherent in the Company’s business which have significant impacts on the Company’s liquidity and results of operations. In addition, a summary of the liquidity factors which forced the Company to seek Chapter 11 bankruptcy protection is included as well as the Company’s plans regarding these matters related to improving liquidity and operating results.

Certain foreign subsidiaries of the Company are subject to restrictions on their ability to dividend or otherwise distribute cash to the Company because they are subject to financing arrangements that restrict them from paying dividends.

Capital expenditures for 2006 are expected to be between $150-$160 million.

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 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 under the Convertible Debentures, Senior Notes, Senior Euro Notes, and the amount due to the Tower Automotive Capital Trust. As a result, such indebtedness became immediately due and payable.

The ability of the creditors of the Debtors to seek remedies to enforce their rights under the credit 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 conjunction with its Chapter 11 filing, the Debtors entered into a DIP Financing Agreement in February 2005. The DIP Agreement provides for $725 million 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. Additional details regarding the terms and covenants of the DIP Financing Agreement are included in Note 8 to the Consolidated Financial Statements. The proceeds of the term loan have been used to payoff the Company’s outstanding balance of $425 million associated with its pre-petition credit agreement. The Company believes that the existing DIP Agreement along with cash generated from operations are adequate to provide for its future liquidity needs through the Debtors’ Chapter 11 bankruptcy.

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 Agreements in an aggregate amount not to exceed $155 million.

At December 31, 2005, issuances of second lien letters of credit amounted to $109.4 million. Draws were made against the second lien letters of credit in the amount of $41.0 million as of December 31, 2005.

Off Balance Sheet Arrangements

See Notes 4, 11 and 14 to the Consolidated Financial Statements for descriptions of the Company’s accounts receivable securitization facility, post retirement plans and operating leases, respectively.

Contractual Obligations and Commercial Commitments

The Company’s contractual obligations and commercial commitments not subject to compromise as of December 31, 2005 are summarized below (in thousands). Payments associated with liabilities subject to compromise have been excluded from the table below, as the Company cannot accurately forecast the future level or timing of payments given the inherent uncertainties associated with the ongoing Chapter 11 process. See Note 2 to the accompanying consolidated financial statements for further disclosure concerning liabilities subject to compromise.

		Payments Due by Period
						Less than												After
Contractual Obligations		Total				1 Year				1- 3 Years				4- 5 Years				5 Years
Long-term debt		$	254,671			$	148,486			$	55,904			$	6,516			$	43,765
Cash interest payments			51,000				51,000				—				—				—
DIP financing			531,000				—				531,000				—				—
Pension contributions			30,400				30,400				—				—				—
Capital and tooling purchase obligations			157,600				157,600				—				—				—
Capital lease obligation			45,429				7,775				18,870				2,281				16,503
Operating leases			230,993				38,435				99,205				21,788				71,565
Total contractual obligations at December 31, 2005		$	1,301,093			$	433,696			$	704,979			$	30,585			$	131,833

The Company’s purchase orders for inventory are “requirements” based, which do not require the Company to purchase minimum quantities. The Company’s commercial commitments included up to $155.0 million of standby letters of credit of which $109.4 million were issued as of December 31, 2005. Draws pertaining to these letters of credit amounted to $41.0 million at December 31, 2005.

Stock Options

The Company accounted for stock options granted to employees in accordance with APB 25, “Accounting for Stock Issued to Employees” until January 1, 2006, when SFAS 123 (R), “Share Based Payment” becomes effective. See Note 3 to the Consolidated Financial Statements.

On September 20, 2005, the Company fully vested the entire unvested portion of its outstanding stock options. The Company accelerated the vesting of these options because it is the Company’s opinion that expensing the remaining unvested portion of the options in accordance with SFAS 123(R) does not represent the economic cost to the Company given the Company’s Chapter 11 status.

MARKET RISK

The Company is exposed to various market risks, including changes in foreign currency exchange rates, interest rates, steel prices and scrap steel prices. Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange rates, interest rates, steel prices and scrap steel prices. The Company’s policy is to not enter into derivatives or other financial instruments for trading or speculative purposes. The Company periodically enters into derivative instruments to manage and reduce the impact of changes in interest rates.

At December 31, 2005, the Company had total debt not subject to compromise in the bankruptcy proceedings of $821 million. The debt is composed of fixed rate debt of $96 million (11.7%) and floating rate debt of $725 million (88.3%). The pre-tax earnings and cash flow impact for the next year resulting from a one percentage point increase in interest rates on variable rate debt not subject to compromise would be approximately $7.25 million, holding other variables constant. A one-percentage point increase in interest rates would not materially impact the fair value of the fixed rate debt not subject to compromise.

A portion of the Company’s revenues is derived from manufacturing operations in Europe, Asia and South America. The results of operations and financial position of the Company’s foreign operations are principally measured in their respective currency and translated into U.S. dollars. The effects of foreign currency fluctuations in Europe, Asia and South America are somewhat mitigated by the fact that expenses are generally incurred in the same currency in which revenues are generated. The reported income of these subsidiaries will be higher or lower depending on a weakening or strengthening of the U.S. dollar against the respective foreign currency.

A portion of the Company’s assets are based in its foreign operations and are translated into U.S. dollars at foreign currency exchange rates in effect as of the end of each period, with the effect of such translation reflected as a separate component of stockholders’ investment (deficit). Accordingly, the Company’s consolidated stockholders’ investment (deficit) will fluctuate depending upon the weakening or strengthening of the U.S. dollar against the respective foreign currency.

The Company’s strategy for management of currency risk relies primarily upon conducting its operations in a country’s respective currency and may, from time to time, also involve hedging programs intended to reduce the Company’s exposure to currency fluctuations. Management believes the effect of a 100 basis point movement in foreign currency rates versus the dollar would not materially affect the Company’s financial position, results of operations or cash flows for the periods presented.

OPPORTUNITIES

The Company’s operations are geographically diverse including a significant presence in Europe, South America, and Asia. The Company has a strategic customer portfolio strategy to leverage relationships with key customers across geographic boundaries to diversify its customer base and increase penetration with existing key customers, including the “New Domestics” (Nissan, Toyota and Honda). Since 2002, the proportion of revenue from the North American based operations of the “Detroit 3” (Ford, DaimlerChrysler and General Motors) has declined from approximately 66% of revenue to 46% of revenue in 2005. The Company expects this trend to continue as a result of its anticipated organic growth outside the U.S. and recent awards to supply the New Domestics in the U.S.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

All statements, other than statements of historical fact, included in this Form 10-K or incorporated by reference herein, are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used in this Form 10-K, the words “anticipate,” “believe,” “estimate,” “expect,” “intends”, “project”, “plan” and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Company’s management as well as on assumptions made by and information currently available to the Company at the time such statements were made. Various economic and competitive factors could cause actual results to differ materially from those discussed in such forward-looking statements, including factors which are outside the control of the Company, such as risks relating to: (i) confirmation of a plan of reorganization under the Bankruptcy Code, which would allow the Company to reduce unsustainable debt and other liabilities and simplify the Company’s complex and restrictive capital structure; (ii) the Company’s reliance on major customers and selected vehicle platforms; (iii) the cyclicality and seasonality of the automotive market; (iv) the failure to realize the benefits of acquisitions and joint ventures; (v) the Company’s ability to obtain new business on new and redesigned models; (vi) the Company’s ability to achieve the anticipated volume of production from new and planned supply programs; (vii) the general economic or business conditions affecting the automotive industry (which is dependent on consumer spending), either nationally or regionally, being less favorable than expected; (viii) the Company’s failure to develop or successfully introduce new products; (ix) increased competition in the automotive components supply market; (x) unforeseen problems associated with international sales, including gains and losses from foreign currency exchange; (xi) implementation of or changes in the laws, regulations or policies governing the automotive industry that could negatively affect the automotive components supply industry; (xii) changes in general economic conditions in the United States, Europe and Asia; and (xiii) various other factors beyond the Company’s control. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by such cautionary statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

See “Market Risk” section of Item 7.

Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page (s)
Tower Automotive, Inc. Financial Statements
Report of Independent Registered Public Accounting Firm			35
Consolidated Balance Sheets at December 31, 2005 and 2004 (as restated)			38
Consolidated Statements of Operations for the years ended December 31, 2005, 2004 (as restated) and 2003			39
Consolidated Statements of Stockholders’ Investment (Deficit) for the years ended December 31, 2005, 2004 (as restated) and 2003			40
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 (as restated) and 2003			41
Notes to Consolidated Financial Statements			42

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Tower Automotive, Inc.
Novi, Michigan

We have audited the accompanying consolidated balance sheets of Tower Automotive, Inc. and Subsidiaries (Debtor-in-Possession) (the “Company”) as of December 31, 2005 and 2004, and the related consolidated statements of operations, stockholders’ investment (deficit) and cash flows for each of the three years in the period ended December 31, 2005. 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 audits. We did not audit the consolidated financial statements of Metalsa S. de R.L. and subsidiaries (“Metalsa”), the Company’s investment in which is accounted for by the use of the equity method. The Company’s equity of $227,136,000 and $210,425,313 in Metalsa’s net assets at December 31, 2005 and 2004, respectively, and of $17,626,400, $13,833,200 and $6,318,000 in that company’s net income for each of the three years in the period ended December 31, 2005 are included in the accompanying financial statements. The consolidated financial statements of Metalsa were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Metalsa, is based solely on the report of such other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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. As of December 31, 2005, the Company has determined that it is not required to have nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits 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 as of December 31, 2005. 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, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other auditors, such consolidated financial statements present fairly, in all material respects, the financial position of Tower Automotive, Inc. and Subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the financial statements, the accompanying 2004 consolidated financial statements have been restated.

As discussed in Note 1 to the financial statements, effective December 31, 2005 the Company changed its method of accounting for conditional asset retirement obligations to conform with Financial Accounting Standards Board Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations.”

As discussed in Notes 1 and 2 to the financial statements, Tower Automotive, Inc. and certain subsidiaries have filed for reorganization under Chapter 11 of the Federal Bankruptcy Code. The accompanying financial statements do not purport to reflect or provide for the consequences of the bankruptcy proceedings. In particular, such financial statements do not purport to show (a) as to assets, their realizable value on a liquidation basis or their availability to satisfy liabilities; (b) as to prepetition liabilities, the amounts that may be allowed for claims or contingencies, or the status and priority thereof; (c) as to stockholder accounts, the effect of any changes that may be made in the capitalization of the Company; or (d) as to operations, the effect of any changes that may be made in its business.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Notes 1 and 2, the Company’s recurring losses from operations, negative working capital, a significant amount of indebtedness and stockholders’ deficit raise substantial doubt about its ability to continue as a

going concern. Management’s plans concerning these matters are discussed in Note 1. It is not certain that management’s plan of emergence from bankruptcy will ultimately be approved or consummated. Should management’s plan not be approved or consummated, there is uncertainty as to the Company’s emergence from bankruptcy. The uncertainty raises substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include adjustments that might result from the outcome of this uncertainty.

DELOITTE & TOUCHE LLP

Detroit, Michigan

June 26, 2006

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Managers
Metalsa, S. de R.L.:

We have audited the accompanying consolidated balance sheets of Metalsa, S. de R.L. and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of earnings, comprehensive income, and cash flows for each of the three-year period ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Metalsa, S. de R.L. and subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for the three-years period ended, in conformity with U.S. generally accepted accounting principles.

KPMG Cardenas Dosal, S.C.

S/ Jaime Garcia Gareiatorres

Jaime Garcia Gareiatorres
Monterrey, N.L., Mexico
March 17, 2006

TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except for per share amounts)

		December 31,
		2005				2004
						(as restated, see Note 1)
ASSETS
Current Assets:
Cash and cash equivalents		$	65,791			$	149,101
Accounts receivable			363,040				346,031
Inventories			123,433				159,034
Prepaid tooling and other			185,646				124,938
Total current assets			737,910				779,104
Property, plant and equipment, net			1,038,794				1,205,640
Investments in joint ventures			228,634				227,740
Goodwill			153,037				174,563
Other assets, net			132,851				176,291
		$	2,291,226			$	2,563,338
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities, not subject to compromise:
Current maturities of long-term debt and capital lease obligations		$	151,755			$	133,156
Accounts payable			378,816				638,118
Accrued liabilities			169,248				286,262
Total current liabilities			699,819				1,057,536
Liabilities subject to compromise			1,284,217				—
Non-current liabilities, not subject to compromise:
Long-term debt, net of current maturities			107,823				1,239,562
Debtor-in-possession borrowings			531,000				—
Convertible senior debentures			—				121,723
Obligations under capital leases, net of current maturities			30,308				36,823
Other noncurrent liabilities			125,682				214,782
Total noncurrent liabilities			794,813				1,612,890
Commitments and contingencies			—				—
Stockholders’ deficit:
Preferred stock, par value $1; 5,000 shares authorized; no shares issued or outstanding			—				—
Common stock, par value $.01; 200,000 shares authorized; 66,627 issued and 58,529 outstanding in 2005; 66,579 issued and 58,481 outstanding in 2004			666				666
Additional paid-in capital			681,102				681,084
Retained deficit			(1,106,840	)			(733,468	)
Deferred compensation plans			(6,798	)			(7,636	)
Accumulated other comprehensive income (loss)			(6,429	)			1,590
Treasury stock, at cost: 8,098 shares in 2005 and 2004			(49,324	)			(49,324	)
Total stockholders’ deficit			(487,623	)			(107,088	)
		$	2,291,226			$	2,563,338

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

TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share amounts)

		Years Ended December 31,
		2005				2004				2003
		(as restated, see Note 1)
Revenues		$	3,283,653			$	3,178,724			$	2,815,749
Cost of sales			3,102,853				2,953,041				2,560,689
Gross profit			180,800				225,683				255,060
Selling, general and administrative expenses			149,723				145,217				155,500
Restructuring and asset impairment charges, net			129,591				(713	)			157,532
Other income			(7,748	)			—				—
Goodwill impairment charges			—				337,230				—
Operating loss			(90,766	)			(256,051	)			(57,972	)
Interest expense (Contractual interest of $175,404 in 2005)			104,513				143,745				95,222
Interest income			(1,476	)			(1,767	)			(2,475	)
Unrealized gain on derivative			¾				(3,860	)			¾
Chapter 11 and related reorganization items			167,438				¾				¾
Loss before provision for income taxes, equity in earnings of joint ventures and minority interest			(361,241	)			(394,169	)			(150,719	)
Provision (benefit) for income taxes			16,438				174,798				(50,811	)
Loss before equity in earnings of joint ventures, minority interest and gain on sale of joint venture			(377,679	)			(568,967	)			(99,908	)
Write-down of joint venture investment to market value, net of tax			—				—				(27,436	)
Equity in earnings of joint ventures, net of tax			17,153				13,370				13,298
Minority interest, net of tax			(4,994	)			(5,754	)			(10,629	)
Gain on sale of joint venture			—				9,732				—
Income before cumulative effect of accounting change			(365,520	)			(551,619	)			(124,675	)
Cumulative effect of accounting change, net of tax			(7,852	)			¾				¾
Net loss		$	(373,372	)		$	(551,619	)		$	(124,675	)
Basic and diluted loss per share:
Loss before cumulative effect of accounting change			(6.24	)			(9.50	)			(2.20	)
Cumulative effect of accounting change			(0.13	)			¾				—
Net loss		$	(6.37	)		$	(9.50	)		$	(2.20	)
Weighted average basic and diluted shares outstanding			58,645				58,077				56,703

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

TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT (DEFICIT)
(amounts in thousands, except share data)

																						Accumulated
																						Other												Total
										Additional				Retained				Deferred				Comprehensive												Stockholders’
		Common Stock								Paid-in				Earnings				Compensation				Income				Treasury Stock								Investment
		Shares				Amount				Capital				(Deficit)				Plans				(Loss)				Shares				Amount				(Deficit)
BALANCE, December 31, 2002			65,878,655			$	659			$	683,072			$	(57,174	)		$	(10,746	)		$	(43,875	)			(9,827,800	)		$	(59,860	)		$	512,076
Sales of stock under Employee Stock Discount Purchase Plan			252,156				2				650				—				—				—				—				—				652
Deferred Income Stock Plan deferrals			—				—				3,395				—				(3,395	)			—				—				—				—
Deferred Income Stock Plan forfeitures			—				—				(199	)			—				199				—				—				—				—
Deferred Income Stock Plan distributions			—				—				—				—				2,999				—				—				—				2,999
Deferred Income Stock Plan funding			—				—				(6,310	)			—				—				—				1,035,874				6,310				—
Restricted stock grants earned and forfeited			—				—				—				—				1,316				—				—				—				1,316
Restricted stock grant distributions			2,920				—				—				—				18				—				—				—				18
Net loss			—				—				—				(124,675	)			—				—				—				—
Other comprehensive income (loss):
Foreign currency translation adjustment			—				—				—				—				—				28,609				—				—
Unrealized gain on qualifying cash flow hedges, net of tax of $2,362			—				—				—				—				—				4,586				—				—
Minimum pension liability, net of tax of $6,218			—				—				—				—				—				(12,071	)			—				—
Total comprehensive loss																																			(103,551	)
Balance, December 31, 2003			66,133,731				661				680,608				(181,849	)			(9,609	)			(22,751	)			(8,791,926	)			(53,550	)			413,510
Exercise of options			23,750				—				72				—				—				—				—				—				72
Sales of stock under Employee Stock Discount Purchase Plan			15,912				—				28				—				—				—				—				—				28
Deferred Income Stock Plan deferrals			—				—				636				—				(636	)			—				—				—				—
Deferred Income Stock Plan forfeitures			—				—				(74	)			—				74				—				—				—				—
Deferred Income Stock Plan distributions			—				—				—				—				1,524				—				—				—				1,524
Deferred profit-sharing funding			—				—				(181	)			—				—				—				693,873				4,226				4,045
Restricted stock grants earned and forfeited			—				—				—				—				1,011				—				—				—				1,011
Restricted stock grant distributions			405,569				5				(5	)			—				—				—				—				—				—
Net loss (as restated, see Note 1)			—				—				—				(551,619	)			—				—				—				—
Other comprehensive income (loss):
Foreign currency translation adjustment			—				—				—				—				—				19,760				—				—
Unrealized gain on qualifying cash flow hedges (as restated, see Note 1)			—				—				—				—				—				8,020				—				—
Minimum pension liability (as restated, see Note 1)			—				—				—				—				—				(3,439	)			—				—
Total comprehensive income (as restated)																																			(527,278	)
Balance, December 31, 2004 (as restated)			66,578,962				666				681,084				(733,468	)			(7,636	)			1,590				(8,098,053	)			(49,324	)			(107,088	)
Sales of stock under Employee Stock Discount Purchase Plan			27,645				—				51				—				—				—				—				—				51
Deferred Income Stock Plan forfeitures			—				—				(34	)			—				34				—				—				—				—
Restricted stock grants earned and forfeited			—				—				—				—				804				—				—				—				804
Restricted stock grant distributions			20,000				—				—				—				—				—				—				—				—
Debt conversion to common stock			231				—				1				—				—				—				16				—				1
Net loss			—				—				—				(373,372	)			—				—				—				—
Other comprehensive income (loss):
Foreign currency translation adjustment			—				—				—				—				—				(18,340	)			—				—
Unrealized gain on qualifying cash flow hedges			—				—				—				—				—				217				—				—
Minimum pension liability			—				—				—				—				—				10,104				—				—
Total comprehensive income																																			(381,391	)
Balance, December 31, 2005			66,626,838			$	666			$	681,102			$	(1,106,840	)		$	(6,798	)		$	(6,429	)			(8,098,037	)		$	(49,324	)		$	(487,623	)