Due to the extent of management shareholders of a predecessor company continuing their ownership interest in the Company subsequent to a 1988 acquisition, the equity interest of these management shareholders was valued at the predecessor basis rather than at fair market value. Accordingly, the new basis of reporting for the Company’s net assets using fair market values at the date of the acquisition was reduced by $15,371,000 to reflect the carryover basis of the management shareholders.

In February 1993, the Company completed a public offering of 1,495,000 shares of $2.875 Series A Cumulative Convertible Exchangeable Preferred Stock at $50 per share. The total net proceeds to the Company were approximately $71.9 million and were used to repay a $50 million term loan. This transaction resulted in a loss on extinguishment of debt of $167,000 (net of income tax benefit of $103,000), which is reported as an extraordinary item in the accompanying consolidated financial statements.

The Company completed an initial public offering of 15.7 million shares of common stock at $14 per share (the “Offering”) on May 13, 1992. The Company sold 10.7 million shares with the remaining shares being sold by a shareholder. The total net proceeds to the Company as a result of the Offering were approximately $140.9 million and were used to repurchase $113.9 million of the Company’s outstanding 14% Senior Subordinated Notes due 1998 (the “Notes”) and to make premium and consent payments and pay certain other related expenses. This transaction resulted in a loss on extinguishment of debt of $15.9 million (net of income tax benefit of $9.7 million) which is reported as an extraordinary item in the accompanying consolidated financial statements. In 1993, the remaining notes outstanding were redeemed at a premium, which resulted in an extraordinary loss of $494,000 (net of income tax benefit of $310,000).

Treadco was organized in 1991 as the successor to the tire business previously conducted by another wholly owned subsidiary of the Company. Also in 1991, Treadco completed an initial public offering of 2,679,300 of its common shares. As of December 31, 1994, the Company’s percentage ownership of TREADCO was 46%. The Company’s consolidated financial statements reflect full consolidation of the accounts of TREADCO, with the ownership interests of the other stockholders reflected as minority interest, because the Company controls TREADCO through stock ownership, board representation and management services provided under a transition services agreement.

Summarized condensed financial information for TREADCO is as follows:

                                                     December 31
                                                  1994         1993   
                                                      ($ thousands)

Current assets                                 $  58,187    $  50,950
Property, plant and equipment, net                15,723       14,320
Other assets                                      15,673       16,162 
    Total assets                               $  89,583    $  81,432 

Current liabilities                            $  20,822    $  15,338
Long-term debt and other                           4,323        7,606
Stockholders’ equity                              64,438       58,488 
    Total liabilities and stockholders’ equity $  89,583    $  81,432 


                                      1994         1993         1992   
                                                ($ thousands)

Sales                              $ 140,678    $ 113,277    $  98,833
Operating expenses and costs         129,625      103,671       90,417
Interest expense                         270          195           51
Other (income) expense                     9         (252)        (377)
Income taxes                           4,265        3,832        3,471 
Net income                         $   6,509    $   5,831    $   5,271