Prestolite Electric Reports Results for 2001
ANN ARBOR, Mich.--Feb. 28, 2002--Prestolite Electric Incorporated and its parent, Prestolite Electric Holding, Inc., today announced that 2001 sales from continuing operations of $159.3 million generated earnings before interest, taxes, depreciation, amortization and the special items discussed below (EBITDA) of $19.1 million. While sales declined 7.3% from 2000, EBITDA rose 13.2%.P. Kim Packard, Prestolite President and CEO commented, "We faced extremely difficult market conditions during 2001 -- especially the economic crisis in Argentina and the ongoing decline in the North American heavy truck market. Good aftermarket performance, strong cost reduction and product development results, and success in China all helped offset negative factors in the original equipment marketplace and in Argentina." Mr. Packard continued, "Our North American sales dropped slightly in the fourth quarter. However, we were pleased to be awarded standard position with the International Truck subsidiary of Navistar, and we enjoyed strong military orders during the quarter. Both will enhance our 2002 performance."
Prestolite's Argentine sales dropped from $20.2 million in the first half of 2001 to $10.5 million in the second half of the year (and to $3.6 million for the fourth quarter). Despite cost-cutting actions, EBITDA in Argentina fell from $2.0 million in the first half to a $0.9 million loss in the second half. Although the devaluation of the Argentine peso from $1.00 to $.61 per peso did not result in a significant charge to the income statement, Prestolite did record in 2001 a $6.2 million debit to the cumulative translation adjustment component of equity. "While the peso devaluation and monetary crisis in Argentina is creating short term difficulty, in the longer run the devaluation will help make our Argentine operation much more competitive," said Mr. Packard.
Prestolite also recorded a $1.5 million charge for anticipated bad debt expense associated with the economic crisis in Argentina. Other special items included a $4.6 million charge for severance, a $0.4 million charge for foreign exchange losses, a $0.6 million charge because of the extension of management stock options, and a $0.5 million charge resulting from changing the company's method of estimating inventory reserves in the United Kingdom. The company also recorded two extraordinary items, a $0.4 million net-of-tax gain from the repurchase and retirement of senior notes with a $1.8 million face value and a $1.6 million reduction in the previously-reported gain-on-sale of three businesses in 2000, principally to reduce the carrying value of an idle facility previously used by the businesses sold. No tax benefit was recorded on the gain-on-sale adjustment.
Prestolite finished 2002 with total debt of $112.2 million, not including $0.3 million of discounted checks received from customers in Argentina treated as the sale of receivables. The company had $10.7 million available on its North American bank line (based on the level of inventory and receivables) after deducting float of $0.8 million and outstanding letters of credit of $1.7 million.
Prestolite Electric Incorporated manufactures alternators and starter motors. These are supplied under the Prestolite Electric, Leece-Neville, and Indiel brand names for original equipment and aftermarket application on a variety of vehicles and industrial equipment. Genstar Capital Corporation controls 96.7% of the outstanding shares; management owns the balance.
EBITDA is a widely accepted financial indicator of a company's ability to service debt, but is not calculated the same by all companies. EBITDA should not be considered by an investor as an alternative to net income as an indicator of a company's operating performance or as an alternative to cash flow as a measure of liquidity. This release contains forward-looking statements that involve risks and uncertainties regarding the anticipated financial and operating results of the Company. The Company undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release. The Company's actual results may differ materially from those projected in forward-looking statements made by, or on behalf of, the Company.
Prestolite Electric Holding, Inc.
Consolidated Unaudited Statement of Operations
(In thousands of dollars)
1999 2000 2001
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Income Statement
----------------
Net sales from continuing
operations $187,874 $171,890 $159,295
Cost of goods sold 151,613 139,641 127,025
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Gross profit 36,261 32,249 32,270
Selling, general &
administrative 28,462 24,713 22,253
Costs associated with option
repurchase & extension 2 173 647
Special charges - see note - 3,450 1,500
Severance 450 2,226 4,599
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Operating income 7,347 1,687 3,271
Other (income) expense (1,024) (618) 78
Loss on foreign exchange - 1,121 461
Interest expense 15,816 15,025 13,241
Minority interest - - 950
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Pretax (loss), before
items below (7,445) (13,841) (11,459)
Income tax provision (benefit) (715) (4,485) (1,647)
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(Loss) from continuing
operations (6,730) (9,356) (9,812)
Income from discontinued
operations, net 2,839 2,290 -
Gain (loss) on sale of
discontinued operations, net (2,300) 14,488 (1,600)
Gain on senior note
transactions, net - 4,063 391
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Net income (loss) $(6,191) $11,485 $ (11,021)
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Income Statement Reconciliation
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Operating income $ 7,347 $ 1,687 $ 3,271
Other income 1,024 618 (78)
Costs associated with option
repurchase & extension 2 173 647
Special charges - see note - 3,450 1,500
U.K. inventory reserve change - - 520
Severance 450 2,226 4,599
Depreciation 7,946 7,329 7,385
Amortization 1,619 1,395 1,235
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EBITDA from continuing
operations $18,388 $16,878 $19,079
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Special charges
---------------
In 2000: Charge and write down associated with investment in Ecoair
Corp. and two specialty alternator projects.
In 2001: $1,500k additional charge for bad debt expense in Argentina.
Prestolite Electric Holding, Inc. and Subsidiaries
Consolidated Balance Sheet
(in thousands, except share amounts)
December 31, December 31,
2001 2000
Assets
Current assets
Cash $ 2,907 $ 10,181
Accounts receivable, net of allowance
for doubtful accounts of $2,138 and
$2,447 at December 31, 2001 and 2000,
respectively 24,900 31,098
Inventories, net 40,889 42,293
Prepaid and other current assets 4,280 2,938
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Total current assets 72,976 86,510
----------- -----------
Property, plant and equipment
Land, building and improvements 17,463 21,249
Machinery and equipment 47,482 44,823
Construction in progress 1,957 3,435
----------- -----------
66,902 69,507
Less - accumulated depreciation (33,071) (31,990)
----------- -----------
33,831 37,517
Deferred tax asset - 528
Investments 577 577
Intangible assets, net 4,521 4,882
Deferred financiang fees 2,570 3,088
Long-term receivables and pension assets 4,184 5,224
Net assets related to discontinued
operations 5,714 5,993
----------- -----------
Total assets $ 124,373 $ 144,319
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Liabilities
Current liabilities
Revolving credit $ 6,834 $ 5,747
Current portion of long-term debt 402 555
Accounts payable 18,351 18,744
Accrued liabilities 14,007 14,835
----------- -----------
Total current liabilities 39,594 39,881
Long-term debt 105,008 106,733
Other non-current liabilities 1,754 2,321
Deferred tax liabilities - 2,467
----------- -----------
Total liabilities 146,356 151,402
Minority interest 3,367 -
Stockholders' Equity (Deficit)
Common stock, par value $.01; 5,000,000
shares authorized; 1,985,000 shares
issued and outstanding at December 31,
2001 and 2000 2 2
Paid-in capital 17,269 16,623
Retained earnings (accumulated deficit) (6,131) 4,890
Notes receivable, employees' stock
purchase, 7.74% due 2002 (395) (446)
Foreign currency translation adjustment (11,470) (3,527)
Treasury stock, 1,318,000 shares at
December 31, 2001 and 2000 (24,625) (24,625)
----------- -----------
Total stockholders' equity (deficit) (25,350) (7,083)
----------- -----------
Total liabilities and stockholders'
equity (deficit) $ 124,373 $ 144,319
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Prestolite Electric Incorporated
Sales and Profit by Quarter
$ Millions
2 0 0 1
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Sales 2000 Q1 Q2 Q3 Q4 Total
------- ------- ------- ------- ------- -------
United States $ 79.7 $ 19.9 $ 19.9 $ 19.3 $ 17.6 $ 76.7
United Kingdom 44.1 11.1 8.9 9.0 7.9 36.9
Argentina 37.5 8.7 11.5 6.9 3.6 30.7
South Africa 10.5 2.3 1.9 1.5 1.3 7.0
China (net) - - - 2.4 5.6 8.0
------- ------- ------- ------- ------- -------
Continuing $171.8 $ 42.0 $ 42.2 $ 39.1 $ 36.0 $159.3
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EBITDA
United States $ 12.2 $ 3.1 $ 3.3 $ 3.6 $ 3.3 $ 13.3
United Kingdom 5.6 1.7 1.5 1.4 1.2 5.8
Argentina 2.4 0.7 1.3 (0.1) (0.7) 1.2
South Africa 0.7 0.1 0.2 - 0.2 0.5
China (net) - - - 0.7 1.3 2.0
Corporate & Other (4.0) (0.8) (1.0) (0.9) (1.0) (3.7)
------- ------- ------- ------- ------- -------
Continuing $ 16.9 $ 4.8 $ 5.3 $ 4.7 $ 4.3 $ 19.1
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Net Income
EBITDA $ 16.9 $ 4.8 $ 5.3 $ 4.7 $ 4.3 $ 19.1
Depreciation
& Amort (8.7) (2.2) (1.9) (2.3) (2.2) (8.6)
Severance (2.2) (0.3) (0.8) (2.1) (1.4) (4.6)
Foreign Exchange
(Loss) (1.1) (0.1) - - (0.3) (0.4)
Investment Write
Off (3.5) - - - - -
Stock Option
Actions (0.2) - - - (0.6) (0.6)
Special Bad Debt
Provision - - - (1.5) - (1.5)
UK Inventory
Policy Change - - - - (0.5) (0.5)
------- ------- ------- ------- ------- -------
Pre-Interest 1.2 2.2 2.6 (1.2) (0.7) 2.9
Interest (15.0) (3.1) (3.3) (3.4) (3.5) (13.3)
Minority Interest - - - (0.4) (0.6) (1.0)
Income Tax Benefit 4.4 - 0.1 0.4 1.1 1.6
Discontinued
operations 2.3 - - - - -
Gain (loss) on
Discon. Opns. 14.5 - - - (1.6) (1.6)
Bond Repurchase 4.1 - 0.4 - - 0.4
------- ------- ------- ------- ------- -------
Net Income $ 11.5 $ (0.9) $ (0.2) $ (4.6) $ (5.3) $(11.0)
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