Document MG4K5r0vQQD6zvqgO6JwNXL6k

THE ECHLIN MANUFACTURING CO 173 NORTH BRANFORD ROAD BRANFORD CONNECTICUT 06405 OAVIO H SPIULER Vice MCHOIMT SCCMCtAMT GCMeAC COUMSKe June 4, 1981 Securities & Exchange Commission 500 North Capitol Street Washington, D.C. 20549 Gentlemen: We have filed as of today a revised preliminary proxy statement in connection with the meeting of stockholders of The Echlin Manufacturing Company to be held on July 7, 1981. In our transmittal letter we had indicated that we were enclosing a copy of a letter from Peat, Marwick, Mitchell & Co., certified public accountants for BorgWarner Corporation, giving justification for our request for relief under Rule 4950. Unfortunately, the Peat, Marwick, Mitchell & Co. letter was not included in our filing. We are, therefore, submitting that letter to be attached to our letter request for relief under Rule 4950. We hope that this will be a satisfactory pro cedure . DHSrdc Enclosure E00228 Bsat, Marwick,Mitchell &Ca Certified Public Accountants Peat Marwick Plaza 303 East Wacker Drive Chicago, Ulioois 60601 (312) 938-1000 May 28, 1981 Mr. Robert F. Tobey, Manager Special Projects The Echlin Manufacturing Company 175 North Branford Road Branford, Connecticut 06405 Dear Mr. Tobey: Audits of the financial statements of the Automotive Aftermarket Operations of Borg-Warner Corporation for periods prior to January 1, 1980 have not been undertaken at this time. We have, however, considered the problems which would exist if such audits were requested. You have sought information relating to your request for exemption from the requirements of Regulation 14A under the Securities Exchange Act of 1934 to the extent they would require certified financial statements for the Automotive Aftermarket Operations of Borg-Warner Corporation for years ended prior to January 1, 1980. At this time there can be no assurance that sufficient records exist for each of the units comprising the Automotive Aftermarket Operations to permit the completion of the auditing procedures required under Generally Accepted Auditing Standards. The following paragraphs describe the major reasons why there can be no such assurance. Background The Automotive Aftermarket Operations consist of five operating divisions of Borg-Warner Corporation. These units have been subjected to audit coverage as five individual parts of Borg-Warner Corporation by Peat, Marwick, Mitchell & Co. on a rotational basis. Due to the materiality of the operations to Borg-Warner Corporation, only very limited scope audit examinations had been conducted during 1978 and 1979. Physical Inventory Observations Peat, Marwick, Mitchell & Co. has not observed the physical inventory taking at any of the five units which comprise the Automotive Aftermarket Operations for any period prior to 1980 with the exception of one interim observation at one division during 1979. E00229 ptat, MarwickMitchell &Ca Mr. Robert F. Tobey fhe Echlin Manufacturing Company May 28, 1981 Two retailed Inventory Records Detailed Inventory Records do not exist at four of the five units of the Automotive Aftermarket Operations for years prior to 1980. While records could possibly be recreated through review of customer order files, invoice records, etc., such an effort would be difficult and cumbersome. Further more, the completeness of records so developed would be extremely difficult to verify. Inventory Cost Systems During the subject period, two of the five units underwent inventory cost system conversions. The Ottawa operation changed from a manual average cost system to an automated standard cost system during 1978. Prior to October, 1979, no inventory costing system existed at the Ballwin/Washington unit. Verification of inventory values, and therefore the results of opera tions of these units would be impracticable for periods prior to these con versions . Conclusion The factors described above represent the major uncertainties as to the feasability of successfully completing an audit of the financial statements of the Automotive Aftermarket Operations for the periods in question. Essentially, since physical inventories were not observed, the verification of inventory levels and cut-offs would have to be accomplished via alternative methods, such as the testing of a roll-back through detailed accounting records. As has been discussed above, these records would have to be recreated from other sources to permit such testing. These factors, together with certain other less significant matters that we have discussed, suggest certification of the financial statements of the Auto motive Aftermarket Operations of Borg-Wamer-Corporation for years ending prior to January 1, 1980 would be impracticable. We would be pleased to clarify any of these-points for you or explain further the rationale behind our conclusions. Very truly yours, PEAT, MARWICK, MITCHELL & CO. MEL:cmm Michael E. Lavin, Partner E00230 Exhibit D Leased Real Properties (1) Franklin Park Warehouse and Adjacent Vacant Property Parcel A, B, and C (as more fully described at page 3 of the lease) located in the County of Cook, State of Illinois commonly known as 11045 Gage Avenue, Franklin Park, Illinois. Lessor: Stephen 0. Nardi, as agent for Tri-State Industrial Park Annual Net Rent: One Hundred Forty-Six Thousand One Hundred Nine Dollars and Fifty-Three Cents ($146,109.53), payable in equal monthly installments in advance on or before the first day of each calendar month-. Terms: The lease expires on March 31, 1991. It may be extended at lessees written request for a period of 5 years, at a rental payment to be agreed upon by the parties. Lessee has the right of first refusal pursuant to paragraph three of Lease. Supplement No. 1 executed by the parties on January 5, 1971. (2) Elkridge, Maryland Distribution Center That portion of the building located on Parcels E and F of Block D, Route One Hundred Business Park, Howard County, Maryland, as detailed in the plat attached to the lease as Exhibit A. Lessor: Elkridge Development Company, Inc. Monthly Installment on Annual Rent: Eleven Thousand One Hundred and Sixty-One Dollars and Sixty Seven Cents ($11,161.67). Terms: The lease expires August 31, 1987. The tenant has the right to renew the lease fot an additional five (5) year term running to August 31, 1992 at an annual rent of $148,420.00, payable in equal monthly installments or Twelve Thousand Three Hundred Sixty Eight Dollars and Thirty Four Cents ($12,368.34). The tenant has the further right to .renew the lease for an additional 5 year term to run till August 31, 1997 at an annual rent of ($162,900.00), payable in equal monthly installments of Thirteen Thousand Five Hundred Seventy Five Dollars ($13,575.00). E00231 (3) Jackson, Tennessee Distribution Center The premises, together with the building and improvements erected thereon, located in the Seventh Ward of the City of Jackson, Madison County, Tennessee, being more particularly described at page one of the Lease Agreement. Lessor: National Development Company, a joint venture composed of Dave W. Baggett, Jr., James E. Cambell, F. W. Hamilton, Roy - Johnson, S. M. Lawrence, Jr., and William S. Lawrence. Monthly Rent: Four Thousand Five Hundred Dollars ($4,500.00), payable on the first day of each month. Terms: The lease expires September 30, 1990. The lessee has the right to extend the lease for a period of' five (5) years at terms stated in the lease. If the lessee exercises said option, the lessee shall then be granted the additional right to extend to lease for another successive five (5) year period at terms stated in the lease. (4) Marietta, Georgia Distribution Center The parcel of property located at Land Lots 947 and 998 of the 16th District, 2nd Section, Cobb County, Georgia, being Lots 3-D and 2-D (designated "Lot 2-D"), as shown on "General Plan, Cobb-Marietta Industrial Parks," attached as Exhibits A and B of the lease. Lessor: The Georgia Marietta Company, Inc. Monthly Rent: Five Thousand One Hundred Eighty Five Dollars ($5,185.00), payable on the first day of each month. Terms: The lease expires on July 31, 1989. tenant has two successive options to the lease for an additional five (5) period at terms stated in the lease. The renew year E00232 (5) Milwaukie, Oregon Distribution Center: 43,200 square feet of space located at 3305 International Way, Milwaukie, Oregon, County of Clackamus. Lessor: Lincoln Property Company N.C., Inc. Monthly Rent: Five Thousand One Hundred and Eighty Four Dollars ($5,184.00), payable on the first day of each month. Terms: - The lease expires on May 31, 1981. The tenant has the right, upon written notice 90 days prior to May 31, 1981, to renew the lease for a period of five years effective June 1, 1981 at the prevailing market rate. Tenant has the right of first refusal to lease the adjacent 21,00 square feet within 30 days after notification by the landlord of a bona fide offer by a third party. (6) Pico Rivera, California Distribution Center Premises located at the 4700 Block on Gregg Road, County of Los Angeles, State of California, more particularly described in Exhibit A of the lease. Lessor: ABC0 Investment Co. Monthly Rent: Three Thousand Seven Hundred Forty Dollars ($3,740.00), payable on the first day of each month. Terms:. The lease expires on April 30, 1986. The tenant has the option to extend the lease for an additional five (5) year period, provided the tenant gives the lessor (six) 6 months written notice of its election to exercise the option. The terms of such extension are set forth at Article 34 of the lease. (7) Mesquite, Texas Distribution Center Located in Skyline Industrial Village, City of Mesquite, County of Dallas, State of Texas, and described in Exhibit A of the lease. Lessor : McFadden and Miller Construction Company Monthly Rental: Three Thousand Three Hundred Five Dollars ($3,305.00), payable on the first day of the month. Terms: The lease expires on January 31, 1987. E00233 (8) Virginia Beach, Virginia Warehouse: 51,000 square feet-, industrial building located at Diamond Springs Road, Virginia Beach, Virginia. Lessor: C.P.I. Associates VII Monthly Rent: Eight Thousand Seventy Five Dollars ($8,075.00). Terms: The lease expires on March 31, 1985. (9) Office Space, Philadelphia, PA Units 964-66, Public Ledger Building, City of Philadelphia, PA. Lessor: Massachusettes Mutual Life Insurance Company doing business as the Public Ledger Building. Monthly Payment: Five Hundred Eiqhty-One Dollars ($581.00). Terms: The lease expires on Auqust 31, 1981. (10) Washington, Missouri Manufacturing Plant Part of Sections 8, 9, and 16, Township 44 North, Ranqe 1 West of the 5th P.M., in Franklin County, Missouri, more fully described in the lease agreement. Lessor: City of Washington Yearly Payment: Such amounts as Lessor shall require in order to pay the principal amount of the bonds issued by Lessor as they become due, those amounts being more specifically set forth in the Schedule -of Principal and Interest Required. Terms: The original term of the lease and the options to renew the rights thereunder, may continue for a period not to exceed 79 years. The Lessee has the option to purchase the property at any time during the term of the agreement pursuant to the relevant provisions contained there in. E00234 Other Leased Properties The following lease commitments require aggregate monthly paymen fit exceed $10,000 per year or commit the Automotive Aftermarket Ope [ons to perform thereunder for a period of time in excess of one yea fssor Description and Location of Leased Property ) Automotive Parts Division International Term of Lease Monthly Payment ferox Xerox 2600 Copier Virginia Beach facil ity 2 years 127.5 lontgomery Leasing Company Sharp-811 Copier Philadelphia facility 3 years 320.0 tHoneywe11 Security/Burglary and Sprinkler System Virginia Beach facility 2 years 86.5 (2) Automotive Parts Division VNSCC Leasing Peotone Bank & Trust vPeotone, Illinois MIS Computer 5 years 11,050.0 JB-W Leasing KSchaumburg, Illinois P Leasemar k Cor p. K Schaumburg, Illinois Xerox Copier Rolm Telephone System- 5 years 7 years 860.0 1,815.0 BWAC f BWAC BWAC Tapes (3) Disk Control 1er (1) D isks (3) 7 years 7 years 7 years 1,353.0 2,256.0 1i i BWAC CPU 7 years 13,116.0 (estimate BWAC Printer 7 years 554.0 f BWAC Air Conditioner 7 years 709.6 Memor ex 1270 Comm. Control 2 years 1,035.0 Memo rex 1377 Terminal 5 years 60.0 Does not include lease payments for employee automobi1es described i Exhibit G(d) hereof. E00235 'I ssor Description and Location of Leased Property Term of Lease ) Bal1 win/Washinqton Division AC Two Xerox 7000 copiers located at Ballwin and Washington facili ties 1 AC IBM 370/125 Computer located at Ballwin faci1ity BM IBM Computer 4331 located at Ballwin facility WAC Executone Phone System located at the Washington facility yder Truck Rental International Harvester Tractor located at the Ballwin facility AC Wang System located at Ballwin facility 5 years 5 years 2 years 5 years 5 years 3 years Ottawa Division WAC ell --Mill .i'str i but or s Xerox 3100 Copier Core Storaqe Ware house facility located at Commercial Street, Marseilles, Illinois 5 years 3 years 5) Automotive Parts Division (Canada) rox Xerox 2600 copier located at the Mississauga facility yster Credit ni ted Fork-lift truck located at the Mississauga facility 2 years 5 years Monthly Payment $ 1,123.35 2,531.80 2,697.00 665.15 337.31 per week plus $.06 per mile 3,611.97 216.59 550.00 47.25 720.58 E00236