Document NG2G2KD9kw5LNyNaXDaLyJgXD

the echlin MANUFACTURING CO. 175 NORTH BRANFORD ROAD BRANFORD CONNECTICUT 06405 .avid h SPIU-ER ,Y .vice .e*IO*HT Securities fc Exchange Con 500 North Capitol Street. Washington, DD..CC . 20549 1981 Gentlemen: "- Enclosed herewith, pursuant to Rule 14 a-6 or Regulation 14A under the Securities Exchange Act ~f. 1934 , are five (5) preliminary copies of -the form of notice of meeting, proxy statement and proxy proposed to be mailed to shareholders of the Echlin Manufacturing Company in connection with a Special Meeting to be held July 7, 1981. Also enclosed is our check in the amount of $1,000 in payment of the filing fee. We should like to point out that shareholder approval of the transaction is not required under applicable laws, f ce sufficient shares have been authorized by Echlin s reholders. However, shareholder approval is required under the New York Stock Exchange policy because the transaction will involve an increase in excess of 20% of the outstanding shares of Echlin. The proxy soliciting material is intended to be released to shareholders on June 5, 1981. As we indicated in our telephone conversation, we are extremely short on time and would appreciate anything you might do to help us to meet our schedule. Very truly yours DHS : j p Enclosures cc: Charles C. Leber Branch Chief E00221 David H. Miller, Esq. page two jUP^-i trust Consideration - page 5 please indicate by what date Echlin and Borg-Warner intend to submit responses to the FTC's request for additional informa tion. Also, state whether Echlin or Borg-Warner believes that there is any reason for the FTC to prevent the two from proceed ing with the transaction. management's Discussion and Analysis - page 10 please provide an expanded description as to how the acqui sition of Blackstone Manufacturing Co., Inc. increased working capital requirements in the first six months of fiscal 1981. Please describe any capital expenditure commitments outstand ing as of February 28, 1981. Please quantify to the extent known, the degree to which revenue growth is attributable to price increases versus unit vo1ume growth. In the last sentence on page ten, please explain the nature of rising debt levels. New Products - page 23 Please provide more information about the Wiegand Effect, specifically its date and place of orgin as well as how the Company was able to obtain the exclusive rights to it. General Comments In several conversations with the staff, the Registrant has indicated that it intends to request a waiver, pursuant to Release No. 33-4950 of the Regulation S-X requirements as called for in Item 15 of Schedule 14-A. The Company is urged to provide this request prior to the mailing of proxy material to shareholders. E00222 lVid H. Spiller, Esq. ige three panrial Statements -r forma combined (Echlin and Automotive Aftermarket Operations) nancial statements Please include in the headnotes disclosures that, although Black Manufacturing and Blackstone Manufacturing were acquired ibsequent to August 31, 1981, the pro forma statements do not ldude these businesses and the reasons for the exclusion. ipnme statement - page 19 Please expand the disclosure relating to the allocated srporate charges not representing specific charges rendered r Borg-Warner and not to be incurred by Echlin. ilance Sheet - paces 20-21 Please explain in the first paragraph on page 21 the cirmistances under which an estimated fair value of $52,000,000 1,500,000 Echlin common shares) was used in determining the jtal purchase cost of the net assets of the Automotive Afterirket Operations. r? n Manufacturing Company pnsolidated Statement of Income - page 9 Please disclose gross interest expense separately on the face 5 the income statement as required by Rule 5.03(b) of Regulation -X. 3tes to Financial Statements 3te 1 Summary of Significant Accounting Policies - pace 36 Disclose either here, or on the face of the Income Statement, ne amounts of realized and unrealized gains and losses from trading n interest futures included in the determination of net income. E00223 Dvid H. Spiller, Esq. page four 2 - Business Acquired please state in a supplemental letter whether sales, net Income, total assets and stockholders* equity for Blackstone (and for M. Black Manufacturing as set forth in Note No. 21) are greater than 10% of the Registrant's corresponding balances. 17 - Business Segment Information - page 45 The table at the bottom of this page should reflect that the amounts shown are in thousands of dollars. Automotive Aftermarket Operation of Boro-Warner Income taxes It is understood that Borg-Wamer did not bill the Auto motive Aftermarket Operations for income taxes applicable to their activities (note 1 - Income taxes, page 52). However, since there is not reflected on the statement of combined income (page 13) income tax changes applicable to such activities and a corresponding liability (intercompany payable to Borg-Warner) on the combined balance sheet (page 50), the staff questions how the financial state ments can be considered to be in conformity with generally accepted accounting principles. Please furnish the staff a supplemental response to this matter prior to providing revised proxy material. We may have further comments. Accountants1 reports - pages 31 and 49 These reports should be signed in at least one copy of the revised proxy material furnished to the Commission. If you have any questions regarding the above comments, please contact James Daly at (202) 272-2668 or Roy Van Brunt at (202) 272-2671 regarding financial statements. E00224