Standard Motor Products, Inc. Announces First Quarter 2002 Results and a Quarterly Dividend
NEW YORK--April 25, 2002--Standard Motor Products, Inc. automotive replacement parts manufacturer and distributor, reported net sales for the first quarter of 2002, the three months ended March 31, 2002, of $126.1 million, as compared to net sales of $154 million during the comparable quarter of a year ago.The net loss for the first quarter of 2002 was $18.2 million or $1.54 per diluted share, as compared to net earnings of $619,000 or 5 cents per diluted share in the first quarter of 2001. Excluding $16 million for the cumulative effect of accounting changes related to the measurement of goodwill, the net loss was $2.2 million or 19 cents per diluted share.
The Company adopted Statement of Financial Accounting Standards No. 142, a new accounting requirement that changes the way companies account for goodwill and certain intangible assets. As a result of the change in accounting, the Company eliminated goodwill amortization and recorded a one-time, non-cash charge of $16 million, net of taxes, during the first quarter. In accordance with the new accounting standard, the remaining goodwill will no longer be amortized, but will be subject to an annual review for potential impairment. The first quarter 2001 included approximately $608,000, after tax, for goodwill amortization.
In addition, in the first quarter of 2002, the Company adopted new EITF guidelines for the treatment of certain marketing expenses, transferring them from SG&A to reductions from gross sales. The impact of this change does not affect net earnings. However, sales, gross margin and SG&A expenses have been restated for 2001 and 2002 comparison purposes.
Mr. Lawrence Sills, Chief Executive Officer, commented, "The first quarter represented a combination of disappointing sales and satisfactory results in gross margin, expenses, and cash flow."
"The sales shortfall was primarily in Temperature Control products. In the first quarter of 2001, there was a large opening order to a new retail account not repeated in 2002; there was a partial loss of business at another major retailer; and some shortfall in other pre-season orders as distributors continue to work off inventories carried forward from previous cool summers. However, our major accounts are showing increases in their own sales and the recent spike of hot weather has led to an `up-tick' in our April orders."
"In Engine Management, sales were slightly below 2001 for the first quarter. However, in April we began shipping opening pipeline orders for two previously announced new accounts and net sales should be back on track."
"We are pleased with the improvement in gross margin. As a result of price increases and higher production levels, our gross margin (excluding the impact of reclassifications discussed above) improved by 1.3 percentage points over 2001. Gross margins should continue to improve as production levels are more closely aligned to shipping levels as compared to the significant inventory reduction program in 2001."
Mr. Sills further commented, "The inventory reduction effort of 2001 continues to bear fruit. Our inventory at the end of March was $34 million below March 2001, and our debt levels as of March 2002 were $43 million below the prior year figure. Cash flow remains a top priority."
Mr. Sills concluded, "Despite the slight operating loss in the first quarter, we head into our strong air conditioning months with gross margins improving, and expenses and inventory under control. We remain optimistic for the balance of the year."
The Board of Directors has approved payment of a quarterly dividend of nine cents per share on the common stock outstanding. The dividend will be paid on June 3, 2002 to stockholders of record on May 15, 2002.
Standard Motor Products, Inc. will hold a conference call at 10:00 AM, Eastern Standard Time, on Friday, April 26, 2002. The dial in number is 800-540-0559. The playback number is 800-839-4202 and the ID # is J405.
This news release contains certain forward-looking statements that involve risks and uncertainties. Actual results, events and performance could differ materially from those contemplated by these forward looking statements. Among the factors that could cause actual results, events and performance to differ materially are risks and uncertainties discussed in this release and those detailed from time-to-time in prior public statements and the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K and the Company's quarterly reports on Form 10-Q.
STANDARD MOTOR PRODUCTS, INC.
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
THREE-MONTHS ENDED
MARCH 31,
2002 2001
NET SALES $ 126,080 $ 153,960
COST OF SALES 95,345 117,032
GROSS PROFIT 30,735 36,928
SELLING, GENERAL & ADMINISTRATIVE EXPENSES 31,053 32,492
OPERATING INCOME (LOSS) (318) 4,436
OTHER INCOME (EXPENSE), NET 668 597
INTEREST EXPENSE 3,462 4,127
EARNINGS (LOSS) BEFORE TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE (3,112) 906
INCOME TAXES (872) 287
EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE (2,240) 619
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (15,985) -
NET EARNINGS (LOSS) $ (18,225) $ 619
NET EARNINGS (LOSS) PER COMMON SHARE:
BASIC EARNINGS (LOSS) PER SHARE BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ (0.19) $ 0.05
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (1.35) -
NET EARNINGS (LOSS) PER COMMON SHARE
- BASIC $ (1.54) $ 0.05
DILUTED EARNINGS (LOSS) PER SHARE BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ (0.19) $ 0.05
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (1.35) -
NET EARNINGS (LOSS) PER COMMON SHARE
- DILUTED $ (1.54) $ 0.05
Weighted Average Number of Common Shares 11,827,636 11,714,346
Weighted Average Number of Common and
Dilutive Shares 11,827,636 11,728,569
STANDARD MOTOR PRODUCTS
CONDENSED CONSOLIDATING BALANCE SHEETS
(Dollars in thousands)
ASSETS
March, 31 December, 31
2002 2001
Cash and investments $ 2,520 $ 7,496
Accounts receivable, gross 152,711 122,327
Allowance for doubtful accounts 5,131 4,362
Accounts receivable, net 147,580 117,965
Inventories 187,391 177,291
Other current assets 27,722 26,197
Total current assets 365,213 328,949
Property, plant and equipment, net 100,224 101,646
Goodwill 20,017 38,040
Other assets 37,597 40,794
Total assets $ 523,051 $ 509,429
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 826 $ 4,075
Current portion of long term debt 1,766 1,784
Accounts payable trade 43,785 26,110
Accrued customer returns 18,486 18,167
Other current liabilities 47,308 50,457
Total current liabilities 112,171 100,593
Long-term debt 220,260 200,066
Postretirement & other liabilities 23,369 23,083
Total liabilities 355,800 323,742
Total stockholders' equity 167,251 185,687
Total liabilities and stockholders' equity $ 523,051 $ 509,429