Delco Remy International Announces Operating Results for Second Quarter 2002 and Disposal of Gas Engine Business
ANDERSON, Ind., Aug. 8 -- Delco Remy International, Inc., a
leading worldwide manufacturer and remanufacturer of automotive electrical and
drivetrain/powertrain products, today announced its financial performance for
the second quarter and six months ended June 30, 2002.
For the second quarter, the Company reported Net Sales of $282.5 million,
Operating Income of $23.1 million and Income from Continuing Operations before
tax of $7.8 million, compared to Operating Income of $23.8 million and Income
from Continuing Operations before tax of $10.0 million on Net Sales of
$255.6 million in the second quarter of last year.
In the second quarter, the Company completed plans to dispose of its
retail aftermarket gas engine business. As a result of this action, the
Company has recorded a charge of $33.5 million to write down the remaining
assets, including goodwill. Results in both 2002 and 2001 have been adjusted
to reflect the classification of the Company's gas engine business as a
discontinued operation.
Other significant events include the completion of the refinancing of our
senior credit facility, led by Wachovia Bank, National Association. The new
credit facility, which is a $250 million secured, asset based facility
extending through March 31, 2006, substantially enhances cash availability and
operating flexibility as compared to the previous $200 million revolving
credit facility.
Year-to-date, the Company reported Net Sales of $541.1 million, up
$39.9 million from last year, Operating Income of $48.4 million and Income
from Continuing Operations before tax of $17.9 million versus Operating Income
of $37.0 million and Income from Continuing Operations before tax of
$7.4 million last year.
Commenting on these results and initiatives, Thomas J. Snyder, President
and CEO, stated:
"The results for the quarter continue to reflect improvements from the
second half of last year and we expect that trend to continue as we focus on
deleveraging the Company. Our plan to exit the retail aftermarket gas engine
business will provide a seamless transition for our customers and result in
additional resources for our core businesses. We expect to complete the
transition during the last half of this year."
Performance Highlights:
In the second quarter, the Company reported Net Sales of $282.5 million,
up $26.9 million, Operating Income of $23.1 million, down $.7 million and Net
Income from Continuing Operations of $3.0 million, down $1.1 million from the
second quarter of last year.
The increase in sales reflects higher industry volume in the Automotive OE
market, market share gains in the Electrical Aftermarket and the impact of
last year's acquisitions. Operating Income was down for the quarter due to
increased costs of starting up new electrical aftermarket programs in addition
to weaker results in our heavy-duty aftermarket businesses domestically and
also in Europe.
The Company made progress in improving working capital efficiency and cash
generation in the first half of the year. Cash from Operating Activities
excluding restructuring payments was $12.0 million versus a net cash usage of
$.9 million last year.
About Delco Remy
Delco Remy International, Inc., headquartered in Anderson, Indiana, is a
leading designer, manufacturer, remanufacturer and distributor of electrical,
drivetrain/powertrain and related products and core exchange service for
automobiles and light trucks, medium- and heavy-duty trucks and other heavy-
duty off-road and industrial applications. It was formed in 1994 as a partial
divestiture by General Motors Corporation of the former Delco Remy division,
which traces its roots to Remy Electric, founded in 1896.
Caution Regarding Forward-Looking Statements
Statements in this press announcement, which are not historical, are
forward-looking statements that involve certain risks and uncertainties,
including, but not limited to risks associated with the uncertainty of future
financial results, acquisitions, additional financing requirements,
development of new products and services, the effect of competitive products
or pricing, the effect of economic conditions, and other uncertainties
detailed from time to time in the Company's filings with the Securities and
Exchange Commission.
DELCO REMY INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(in millions)
Three Month Period Six Month Period
Ended June 30 Ended June 30
2002 2001 2002 2001
Net sales $282.5 $255.6 $541.1 $501.2
Cost of goods sold 233.5 204.6 442.5 407.0
Special charges -
cost of goods sold - 2.2 - 4.3
Gross profit 49.0 48.8 98.6 89.9
Selling, general and
administrative expenses 25.8 23.4 50.1 49.8
Amortization of
goodwill and
intangibles 0.1 1.6 0.1 3.1
Operating income 23.1 23.8 48.4 37.0
Interest expense (15.0) (14.3) (30.2) (26.8)
Non-recurring merger
and tender offer
expenses - - - (3.7)
Other non-operating
income (expense) (0.3) 0.5 (0.3) 0.9
Income from continuing
operations before
income taxes, minority
interest in income of
subsidiaries and loss
from unconsolidated
joint ventures 7.8 10.0 17.9 7.4
Income tax expense 2.8 3.3 5.7 2.6
Minority interest in
income of subsidiaries (1.7) (2.5) (3.5) (4.3)
Loss from unconsolidated
joint ventures (0.3) (0.1) (1.5) (0.5)
Net income from
continuing operations
before extraordinary
items 3.0 4.1 7.2 -
Discontinued operations:
Loss from discontinued
operations (including
estimated loss on
disposal of $33.5
million in 2002) (41.5) (1.4) (46.3) (4.1)
Income tax benefit (5.0) (0.6) (6.6) (1.5)
Loss on discontinued
operations (36.5) (0.8) (39.7) (2.6)
Extraordinary items:
Gain (loss) on early
extinguishment of debt,
net of income tax (1.1) 0.7 (1.1) 0.7
Net income (loss) (34.6) 4.0 (33.6) (1.9)
Preferred dividends 7.6 7.4 14.4 7.4
Loss attributable to
common stockholders $(42.2) $(3.4) $(48.0) $(9.3)
EBITDA:
Income from continuing
operations before tax $7.8 $10.0 $17.9 $7.4
Interest expense 15.0 14.3 30.2 26.8
Depreciation 7.4 6.8 14.7 13.8
Amortization 0.1 1.6 0.1 3.1
EBITDA 30.3 32.7 62.9 51.1
Tender offer and
merger expenses - - - 3.7
Special charges - 2.2 - 4.3
Adjusted EBITDA $30.3 $34.9 $62.9 $59.1
DELCO REMY INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
June 30 December 31
2002 2001
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $34.8 $23.9
Trade accounts receivable, net 187.0 155.4
Inventories 288.4 284.8
Assets of discontinued operations 9.2 41.5
Other current assets 47.8 43.0
Total Current Assets 567.2 548.6
Property and equipment, net 171.5 175.8
Goodwill, net 185.3 179.5
Deferred financing costs 16.1 12.6
Other assets 38.6 30.9
Total Assets $978.7 $947.4
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $160.4 $128.7
Other accrued liabilities 68.9 66.5
Accrued restructuring charges 18.4 28.3
Liabilities of discontinued operations 5.8 8.6
Short-term debt 23.0 6.8
Total Current Liabilities 276.5 238.9
Long-term debt 614.4 593.2
Other noncurrent liabilities 74.7 63.7
Minority interest in subsidiaries 30.3 30.1
Stockholders' Equity (17.2) 21.5
Total Liabilities and Stockholders' Equity $978.7 $947.4
DELCO REMY INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(in millions)
Six Month Period
Ended June 30
2002 2001
Operating activities:
Net loss $(33.6) $(1.9)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Loss on disposal of discontinued operations 29.9 -
Extraordinary items 1.1 (0.7)
Depreciation 14.7 13.8
Amortization 0.1 3.1
Change in net working capital excluding
restructuring and special charges (8.4) (28.9)
Cash payments for restructuring charges (11.7) (1.6)
Non-cash special charges - 4.3
Other, net 8.2 9.4
Net cash provided by (used in) operating activities 0.3 (2.5)
Investing activities:
Acquisitions, net of cash acquired (7.4) (22.7)
Purchases of property and equipment (9.6) (8.5)
Investments in joint ventures (3.0) (1.1)
Net cash used in investing activities (20.0) (32.3)
Financing activities:
Net borrowings under revolving line of credit
and other 37.0 43.0
Deferred financing costs (6.8) (5.5)
Merger and tender offer costs - (4.6)
Distributions to minority interests (1.8) (0.8)
Net cash provided by financing activities 28.4 32.1
Effect of exchange rate changes on cash 2.2 (0.8)
Net increase (decrease) in cash and cash
equivalents 10.9 (3.5)
Cash and cash equivalents at beginning of period 23.9 24.4
Cash and cash equivalents at end of period $34.8 $20.9
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