Eagle-Picher Holdings, Inc. Announces Audited Results for Fiscal Year 2002 and Reaffirms Outlook for 2003
PHOENIX, Jan. 31 -- Eagle-Picher Holdings, Inc. announces its
audited Fiscal Year ("FY") 2002 financial results, which ended November 30,
2002, and reports net sales of $707.1 million, down $18.7 million, or 2.6%,
from $725.8 million in FY 2001. These amounts include reclassifications,
aggregating an increase of $25.9 million for FY 2002 and $33.3 million for FY
2001, to restate sales and cost of sales for transportation and tooling
expenses billed to customers, which previously had been netted in the reported
amounts. These reclassifications were made to conform our 2001 presentation
to our 2002 presentation, and had no impact on our previously reported 2001
operating income, net income, or cash flows.
We report operating income of $5.3 million, compared to FY 2001 operating
income of $4.3 million, and a net loss of $(36.8) million in FY 2002, compared
to a net loss in FY 2001 of $(54.0) million, including $(32.1) million
relating to discontinued operations in FY 2001. Our net loss applicable to
common shareholders after accretion of preferred stock is $(51.7) million in
FY 2002, compared to a net loss applicable to common shareholders of $(67.3)
million in FY 2001. In our press release, dated January 16, 2003, we reported
preliminary estimated unaudited operating income of $22.0 million. The
difference of $16.7 million between the preliminary estimated unaudited
operating income of $22.0 million and actual reported operating income of
$5.3 million is non-cash amortization of goodwill, and is due to the fact that
we were not able to adopt FASB 142, Goodwill and Other Intangible Assets, in
FY 2002 as we had expected. We have adopted this standard in the first
quarter of FY 2003, effective December 1, 2002, and will not recognize any
goodwill amortization expense in FY 2003. In addition, we have completed our
initial impairment test required by this accounting standard and will not
recognize an impairment charge related to the adoption of this accounting
standard. If we were able to adopt this accounting standard in FY 2002, our
reported operating income would have been consistent with the preliminary
estimated unaudited operating income released in our January 16, 2003 press
release.
We also announce that our earnings before interest, taxes, depreciation
and amortization ("EBITDA") for FY 2002 were $71.0 million. This compares to
EBITDA of $68.5 million in FY 2001. Additionally, we announce EBITDA,
determined under our senior secured credit facility ("Credit Agreement
EBITDA"), of $96.7 million. This compares to Credit Agreement EBITDA of
$87.1 million in FY 2001. FY 2002 Credit Agreement EBITDA excludes the
following items:
* $6.1 million in special legal expenses and settlement costs, primarily
related to an arbitration with Isonics Corporation that has been
settled.
* $5.9 million of restructuring charges primarily to exit our Gallium-
based specialty materials business in our Technologies Segment.
* $3.1 million of insurance related losses, primarily due to a fire claim
as described in Note G of our Form 10-Q for the quarter ended August 31,
2002.
* $3.5 million for certain special management compensation expenses
primarily related to a settlement with our former CEO, as well as
severance for various former officers.
* $6.5 million in charges related to former divested businesses, including
the sale of our Precision Products business in our Technologies Segment
during FY 2002 ($2.8 million loss) and various legal settlements and
provisions related to divested business legal matters.
* Approximately $0.6 million of other charges.
EBITDA and Credit Agreement EBITDA, as used herein, may not be comparable
to similarly titled measures reported by other companies and should not be
construed as an alternative to operating income or to cash flows from
operating activities, as determined by accounting principles generally
accepted in the United States of America, as a measure of our operating
performance or liquidity, respectively. Funds depicted by EBITDA are not
available for management's discretionary use to the extent they are required
for debt service and other commitments.
We also report net cash generated from operating activities in FY 2002 of
approximately $81.0 million, including approximately $46.5 million provided
from the securitization of accounts receivable, and uses of $6.6 million in
investing activities and $69.6 million in financing activities.
We also report the following as of November 30, 2002:
* Total indebtedness for borrowed money, including the net capital
investment in our receivables securitization, of $420.2 million.
* Cash on hand of $31.5 million.
* Availability of $39.3 million under our various credit facilities.
We were in compliance with all covenants under our various credit
facilities as of November 30, 2002.
We reaffirm our January 16, 2003 sales projection for FY 2003 to be in the
range of $670 million - $700 million, compared to $707.1 million in FY 2002.
The FY 2003 sales range is primarily attributed to the current uncertainty
regarding industry forecasted Automotive builds for FY 2003. Also, the sales
estimate for FY 2003 reflects the anticipated decrease in sales of
approximately $20 million related to the phase-out of an automotive
transmission pump program, as well as the anticipated sale of our Hillsdale
U.K. Automotive operation, which had sales of approximately $13.9 million in
FY 2002.
We are projecting FY 2003 EBITDA to be in the range of approximately
$99 million to $103 million and our Credit Agreement EBITDA to be
approximately $102 million to $106 million. FY 2003 projected Credit
Agreement EBITDA excludes approximately $3 million of non-cash provisions
related to a recently adopted long term bonus program. Despite anticipated
lower sales, we project EBITDA improvement in FY 2003 compared to FY 2002, due
to cost reductions and productivity initiatives, and improved sales mix. On
the basis of these projections, we believe we will be in compliance with all
covenants under our various credit facilities in FY 2003.
This news release contains statements which, to the extent that they are
not recitations of historical fact, constitute "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
Section 21E of the Securities Exchange Act of 1934. Such forward-looking
information involves risks and uncertainties that could cause actual results
to differ materially from those expressed in any such forward-looking
statements. These risks and uncertainties include, but are not limited to,
our ability to maintain existing relationships with customers, demand for our
products, our ability to successfully implement productivity improvements
and/or cost reduction initiatives, our ability to develop, market and sell new
products, our ability to obtain raw materials, increased government regulation
or changing regulatory policies resulting in higher costs and/or restricting
output, increased price competition, currency fluctuations, general economic
conditions, acquisitions and divestitures, technological developments and
changes in the competitive environment in which we operate, as well as factors
discussed in our filings with the U.S. Securities and Exchange Commission.
All of our operations are conducted through our wholly-owned subsidiary
Eagle-Picher Industries, Inc. ("EPI") and its subsidiaries. EPI, founded in
1843, is a diversified manufacturer of industrial products for the automotive,
defense, aerospace and other industrial markets worldwide.