Tower Automotive Results for the Second Quarter and Six Months Ended June 30, 2002
GRAND RAPIDS, Mich.--July 18,2002--Tower Automotive, Inc. , today announced its operating results for the second quarter and six months ended June 30, 2002.For the second quarter of 2002, revenues were $751 million, compared with $642 million in the 2001 period. Net income for the second quarter of 2002, adjusted for the one-time items described below, was $25 million, or $0.40 per diluted share. Including the after-tax effect of the one-time items, the reported net income was $23 million for the second quarter of 2002, or earnings of $0.37 per diluted share. This compares with reported net income of $17 million, or earnings of $0.35 per diluted share, in the second quarter of 2001.
For the six months ended June 30, 2002, revenues were $1.4 billion, compared with $1.3 billion in the 2001 period. Net income for the six months ended June 30, 2002, adjusted for the one-time items described below, was $37 million, or $0.66 per diluted share. Including the after-tax effect of these one-time items, the reported net loss was $124 million for the six months ended June 30, 2002, or a loss of $2.35 per diluted share. This compares with reported net income of $30 million, or earnings of $0.63 per diluted share, in the same period for 2001.
In commenting on second-quarter and six-month results, Dug Campbell, president and chief executive officer of Tower Automotive, said, "The end of the second quarter marks the end of the journey which started in October 2000 toward the financial strengthening and mitigation of risk associated with the business. The current strong backlog, geographic dispersion of sales driven by this growth, addition of new customers in Europe and Asia, and reduction of financial leverage are all the results of this risk mitigation effort. Operational performance is improving as reflected in the second-quarter results, and the continued positive cash flow generation and reduction of leverage in the future are expected. I attribute these results to the dedication, determination and perseverance by Tower Automotive colleagues all over the world."
During the second quarter of 2002, the company amended its senior credit facility and permanently reduced its borrowing capacity by $425 million, as previously announced. As a result of the permanent reduction of borrowing capacity, the company recorded a $2.0 million non-cash charge for the write-off of deferred financing costs associated with the credit facility. In addition, the company also recognized a non-cash charge of approximately $0.9 million associated with the write-off of its investment in a former prototype joint venture. On an after-tax basis, these charges reduced earnings in the second quarter of 2002 by approximately $0.03 per diluted share.
Also during the second quarter of 2002, the company completed the transitional impairment test of goodwill as required by Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets", and as a result, has recognized an after-tax impairment loss of $113 million recorded as of January 1, 2002 as a cumulative effect of change in accounting principle. This charge was retroactive to the first quarter of 2002. In conjunction with adopting the requirements of SFAS No. 142 as of the first quarter of 2002, the company no longer records amortization expense of its goodwill. Net income during the second quarter of 2001 and six months ended June 30, 2001 included an after-tax charge of $3.2 million and $6.3 million, respectively, related to goodwill amortization expense.
The first quarter of 2002 included previously announced restructuring and asset impairment charges of $75 million (or a charge of $1.01 per diluted share after-tax) and a gain of $3.8 million (or income of $0.05 per diluted share after-tax) on the sale of its Iwahri, Korea plant to a Hyundai affiliate.
The company's conference call to recap the earnings report will be Webcast at 11:00 a.m. Eastern Time today. To access the Webcast, go to www.streetevents.com, search for Tower Automotive on July 18, and click on the microphone icon. If you are unable to listen to the live Webcast, a postview archive will be available beginning at approximately 2:00 p.m. Eastern, Thursday, July 18.
Tower Automotive, Inc., is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including Ford, DaimlerChrysler, GM, Honda, Toyota, Nissan, Fiat, Hyundai/Kia, BMW, and Volkswagen Group. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The company is based in Grand Rapids, Mich. Additional company information is available at www.towerautomotive.com.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the anticipated results as a consequence of certain risks and uncertainties, including but not limited to general economic conditions in the markets in which Tower Automotive operates, and other risks detailed from time to time in the company's Securities and Exchange Commission filings.
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts - unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- -----------------------
2002 2001 2002 2001
--------- ----------- ----------- -----------
Revenues $750,872 $642,407 $1,418,979 $1,270,783
Cost of sales 657,956 557,146 1,257,054 1,106,251
--------- ----------- ----------- -----------
Gross profit 92,916 85,261 161,925 164,532
Selling, general
and administrative
expenses 37,367 35,020 70,274 70,319
Amortization expense 1,120 6,130 2,099 12,208
Restructuring and asset
impairment charge -- -- 75,407 --
--------- ----------- ----------- -----------
Operating income 54,429 44,111 14,145 82,005
Interest expense, net 16,278 20,121 33,418 39,843
Other expense 2,939 -- 2,939 --
Gain on sale of plant -- -- (3,839) --
--------- ----------- ----------- -----------
Income (loss) before
provision for income
taxes, equity in
earnings of joint
ventures and minority
interest 35,212 23,990 (18,373) 42,162
Provision (benefit) for
income taxes 12,324 9,444 (6,432) 16,472
--------- ----------- ----------- -----------
Income (loss) before
equity in earnings of
joint ventures and
minority interest 22,888 14,546 (11,941) 25,690
Equity in earnings of
joint ventures, net 4,277 4,790 8,662 9,171
Minority interest, net (4,274) (2,664) (8,347) (5,328)
--------- ----------- ----------- -----------
Income (loss) before
cumulative effect of
change in accounting
principle 22,891 16,672 (11,626) 29,533
Cumulative effect of
change in accounting
principle -- -- 112,786 --
--------- ----------- ----------- -----------
Net income (loss) $22,891 $16,672 $(124,412) $29,533
========= =========== =========== ===========
Basic earnings (loss)
per common share:
Income (loss) before
cumulative effect $0.40 $0.38 $(0.22) $0.67
Cumulative effect of
change in accounting
principle -- -- (2.13) --
--------- ----------- ----------- -----------
Net income (loss) $0.40 $0.38 $(2.35) $0.67
========= =========== =========== ===========
Basic shares
outstanding 57,841 44,416 53,047 44,263
========= =========== =========== ===========
Diluted earnings (loss)
per common share:
Income (loss) before
cumulative effect $0.37 $0.35 $(0.22) $0.63
Cumulative effect of
change in accounting
principle -- -- (2.13) --
--------- ----------- ----------- -----------
Net income (loss) $0.37 $0.35 $(2.35) $0.63
========= =========== =========== ===========
Diluted shares
outstanding 74,130 60,816 53,047 60,737
========= =========== =========== ===========
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
June 30, December 31,
Assets 2002 2001
------------------------------------------ ------------ ------------
(unaudited)
Current assets:
Cash and cash equivalents $28,647 $21,767
Accounts receivable 330,617 216,638
Inventories 104,180 112,536
Prepaid tooling and other 122,401 89,229
------------ ------------
Total current assets 585,845 440,170
------------ ------------
Property, plant and equipment, net 994,887 1,120,259
Investments in joint ventures 252,883 243,198
Deferred income taxes 77,186 61,461
Goodwill and other assets, net 589,357 668,348
------------ ------------
$2,500,158 $2,533,436
============ ============
Liabilities and Stockholders' Investment
----------------------------------------------------------------------
Current liabilities:
Current maturities of long-term
debt and capital lease
obligations $132,980 $172,083
Accounts payable 419,522 368,910
Accrued liabilities 282,155 278,962
------------ ------------
Total current liabilities 834,657 819,955
------------ ------------
Long-term debt, net of current
maturities 434,230 601,084
Obligations under capital leases,
net of current maturities 11,955 4,620
Convertible subordinated notes 199,984 199,984
Other noncurrent liabilities 193,995 201,635
------------ ------------
Total noncurrent liabilities 840,164 1,007,323
------------ ------------
Mandatorily redeemable trust
convertible preferred securities 258,750 258,750
Stockholders' investment:
Preferred stock -- --
Common stock 658 481
Additional paid-in capital 680,955 456,627
Retained earnings (83,980) 40,432
Deferred compensation plans (13,889) (15,571)
Accumulated other comprehensive loss (17,157) (34,561)
------------ ------------
Total stockholders' investment 566,587 447,408
------------ ------------
$2,500,158 $2,533,436
============ ============
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands - unaudited)
Six Months Ended June 30,
--------------------------
2002 2001
----------- -----------
OPERATING ACTIVITIES:
Net income (loss) $(124,412) $29,533
Adjustments required to reconcile net
income (loss) to net cash provided
by (used in) operating activities -
Depreciation and amortization 67,471 81,025
Deferred income tax provision
(benefit) (15,090) 7,463
Deferred compensation plans 1,223 --
Gain on sale of plant (3,839) --
Equity in earnings of joint
ventures, net (8,662) (9,171)
Restructuring and asset
impairment charge 75,407 --
Cumulative effect of change in
accounting principle 112,786 --
Change in working capital and
other operating items (85,576) 182,389
----------- -----------
Net cash provided by operating activities 19,308 291,239
----------- -----------
INVESTING ACTIVITIES:
Acquisitions, divestitures and
investment in joint ventures (38,039) (4,364)
Capital expenditures, net (69,042) (102,073)
Proceeds from sale of fixed assets 50,313 --
----------- -----------
Net cash used in investing activities (56,768) (106,437)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from borrowings 986,256 1,181,978
Repayments of debt (1,166,819) (1,359,880)
Net proceeds from issuance of stock 224,903 912
----------- -----------
Net cash provided by (used for)
financing activities 44,340 (176,990)
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 6,880 7,812
CASH AND CASH EQUIVALENTS:
Beginning of period 21,767 3,373
----------- -----------
End of period $28,647 $11,185
=========== ===========