Williams Controls Reports Second Quarter Results
PORTLAND, Ore., May 18 Williams Controls, Inc.
today announced its results for the second quarter of fiscal
2001 ended March 31, 2001. Sales for the second quarter decreased 15% to
$15,030,000 compared to $17,596,000 reported in the first quarter of fiscal
2000. For the six months ended March 31, 2001, sales decreased 10% to
$30,009,000 compared to the prior year's first six months sales of
$33,473,000. The reduced sales were caused primarily by the overall
reductions in sales volumes in the automotive and heavy truck industries.
Additionally, during the second quarter of 2001, the Company's plastic
injection molding business, Premier Plastic Technologies, ceased operations.
The net loss allocable to common shareholders for the three months ended
March 31, 2001 was $6,919,000 or $.35 per diluted share compared to a net loss
of $1,138,000 or $.06 per diluted share during the comparable period one year
ago. The net loss allocable to common shareholders for the six months ended
March 31, 2001 was $11,560,000, or $.58 per diluted share, compared to a loss
of $2,597,000, or $.13 per diluted share in last year's comparable period.
The financial statements for the three and six months ended March 31, 2000
have been restated to reflect the application in the fourth quarter of fiscal
2000 of the provisions of the Financial Accounting Standards Board Emerging
Issues Task Force 99-10 relating to its affiliate, Ajay Sports, Inc. As a
result of applying EITF 99-10, the Company recorded an additional $717,000
equity interest in loss of affiliate for the three months ended March 31, 2000
and $1,863,000 for the six months ended March 31, 2000.
The net loss for the three and six months of fiscal 2001 includes
recognition of certain unusual charges related to the Company's adjustable
pedal and plastic injection molding businesses. An impairment loss of
$4,366,000, or $.22 per diluted share, related to the goodwill and intangible
assets of the Company's adjustable pedal business, ProActive Pedals, was
recognized in the second quarter of fiscal 2001. For a number of reasons the
company has not been as successful in penetrating the adjustable pedal market
as it had hoped and limited interest in ProActive has been expressed by
potential buyers of that business. Accordingly, management determined that
ProActive's current business level was not sufficient to recover the carrying
value of ProActive's goodwill and other intangibles. The operations of the
Company's injection molding business, PPT, were terminated during the second
quarter of fiscal 2001. During the first quarter of fiscal 2001, the Company
recognized $2,600,000, or $.13 per diluted share, of expenses for an estimated
impairment loss and reserves related to the assets of PPT and during the
second quarter the Company recognized additional losses of $807,000, or $.04
per diluted share, related to the remaining assets of PPT.
Excluding the impact of the unusual charges related to the ProActive and
PPT operations, the Company's Net Loss Allocable to Common Shareholders was
$1,746,000, or $.09 per diluted share for the second quarter of fiscal 2001
and $3,787,000 or $.19 per diluted share for the first six months of fiscal
2001. Gross margins declined from the prior year due to a combination of
lower sales levels and production and shipping inefficiencies caused by the
Company's liquidity constraints. Cost relating to obtaining additional
financing resulted in higher interest expense in the three and six months
ended March 31, 2001 compared to last year's corresponding periods.
The Company remained out of compliance with the covenants of its credit
agreement at March 31, 2001. In February 2001, the Company obtained
additional debt financing, of approximately $4,600,000, net of expenses, from
a group of lenders and a forbearance agreement from its secured lender to
assist the Company in pursuing a sale of the Company or its individual
operating subsidiaries. The $4,600,000 was used to pay down bank debt
obligations and support the Company's ongoing operations. The forbearance
agreement continues through the original term of the loan, which expires on
July 11, 2001. Although a firm commitment has not been reached with the
Company's lender to extend beyond that date, the Company is in discussions
with the lender to obtain the necessary financing to complete the sale
process. The Company announced the sale plans in a February 22, 2001 press
release.
The Company also recently appointed Douglas Hailey to the vacant Board of
Directors position. Mr. Hailey is a Vice President of the Investment Banking
Division of the investment banking firm of Taglich Brothers, Inc. As part of
the Placement Agent Agreement for the funding obtained in February, 2001
Taglich Brothers was permitted one board seat.
Williams Controls President and CEO Thomas K. Ziegler stated, "Although
the loss for the quarter was significant, the majority of the loss came from
the impairment and other reserves related to the Pro Active Pedal and PPT
businesses, financing costs to generate additional operating capital to assist
the Company in its previously announced sale process and losses from PPT,
which was shut down during the quarter. Overall, our core operations in
Oregon and Florida have remained profitable despite the industry wide slowdown
in the heavy truck and automotive markets."
Mr. Ziegler concluded, "We are continuing to pursue the sale plans
announced in our mid-February press release. We are making good progress on
the sale process, and, although no terms have been agreed upon, we are
currently in discussions with several potential buyers and anticipate
completing a sale, or sales, as is reasonably prudent to do so, subject to
customary regulatory approvals.
Williams Controls, Inc.
Unaudited Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
Three Months Three Months Six Months Six Months
Ended 3/31/01 Ended 3/31/00 Ended 3/31/01 Ended 3/31/00
(as restated) (as restated)
Sales $15,030 $17,596 $30,009 $33,473
Cost of sales 12,207 13,089 24,831 24,475
Gross margin 2,823 4,507 5,178 8,998
Research and
development 1,022 1,474 1,967 3,171
Selling 339 425 767 865
Administration 2,362 2,404 4,777 4,256
Loss on impairment
of assets - PPT - - 1,996 -
Loss on impairment of assets
- ProActive 4,366 - 4,366 -
Total operating
expenses 8,089 4,303 13,873 8,292
Earnings (loss) from
operations (5,266) 204 (8,695) 706
Other expenses 1,051 1,361 2,116 3,278
Loss before income
taxes (6,317) (1,157) (10,811) (2,572)
Income tax benefit - (169) - (272)
Net Loss (6,317) (988) (10,811) (2,300)
Dividends on
preferred stock (602) (150) (749) (297)
Net loss allocable to common
shareholders $(6,919) $(1,138) $(11,560) $(2,597)
Net loss per common share
- basic $(0.35) $(0.06) $(0.58) $(0.13)
Net loss per common share
- diluted $(0.35) $(0.06) $(0.58) $(0.13)
Weighted avg. shares used in
per share calculation
- basic and
diluted 19,790,914 19,786,742 19,790,914 19,782,585
