Budd Canada Announces Year End Results

Wednesday 5:22 pm ET

KITCHENER, ONTARIO, November 13, 2002; Budd Canada Inc. announced a net loss of $19.7 million or $5.22 a share on sales of $127.9 million for the fourth quarter ended September 30, 2002. This compares to a net loss of $31.6 million or $8.37 a share on sales of $108.5 million for the same quarter in 2001.

Total sales for the year 2002 increased by $131.7 million to a total of $520.4 million, while pre-tax losses for the same period dropped by $15 million to $68.8 million. Product sales of traditional and new model SUV frames and other products increased to a record $518.5 million in 2002, up from $384.4 million in fiscal 2001. This increase in revenue was slightly offset by decreased tooling sales of $2.4 million. Improvements in productivity for the GMT 360 and 370 frame products helped reduce the total costs of manufacture in 2002, while reductions in manpower, overtime and indirect material costs have been targeted as the primary drivers to achieve further cost reductions in the future.

The Corporation reported a loss after taxes of $68.8 million or $18.27 a share for the current year compared to that of $94.2 million and $25.00 in fiscal 2001. A charge to income in the amount of $11.9 million or $3.17 a share was made in September 2002 to cover severance and other employee-related costs incurred while reducing approximately 350 employees at the Kitchener operation.

During 2002, cash was provided by increasing total debt to $276.3 million. This was an increase of $23.4 million from 2001's $252.9 million in outstanding debt. The additional cash was used mainly to cover net operations requirements.

As in 2001, no provision for income tax recovery on future earnings was made for losses in fiscal 2002. For tax purposes, these losses are recoverable from future earnings when the Corporation returns to profitability.

Dividends

At the Board of Director's meeting on November 13, 2002, the directors decided to continue the suspension of quarterly dividend payments until further notice. Dividends were suspended during fiscal 2002 to conserve cash for corporate operations.

Outlook

Favourable market acceptance of the new General Motors Sport Utility Vehicles should keep customer demand for the GMT 360 and 370 frames strong in 2003.

Implementation of initiatives to streamline the manufacturing operation and enhance overall productivity started towards the end of 2001 and continued throughout 2002. The Corporation together with the CAW will strive to eliminate losses in 2003.

Budd Canada Inc. is an automotive manufacturer specializing in the production of light truck and sport utility vehicle frames and chassis components.