Tower Automotive Reports Higher Fourth Quarter and Year-End Results - Provides Outlook for 2003
GRAND RAPIDS, Mich.--Feb. 14, 2003--Tower Automotive, Inc. , today announced results for the fourth quarter and year ended December 31, 2002. The company reported increased sales and earnings for both periods and an improved balance sheet versus the prior year.For the fourth quarter of 2002, revenues were $681.6 million, a 6.7 percent increase, compared with $638.9 million in the 2001 period. Reported net income for the fourth quarter was $17.3 million, or $.29 per diluted share, which compares with a reported net loss of $295.7 million, or $6.15 per diluted share, in the fourth quarter of 2001. As summarized in the table below, the operating results for both periods included certain items that impact their comparability. Excluding the after-tax effect of these items, adjusted net income for the fourth quarter of 2002 was $10.2 million, or $.18 per diluted share, compared to adjusted net income for the fourth quarter of 2001 of $6.5 million, or $.13 per diluted share. The improved operating results on an adjusted basis reflect stronger revenues and the effects of cost reduction efforts. The company reduced its operating working capital (accounts receivable, inventories and accounts payable) approximately $23 million in the fourth quarter. Capital expenditures were $51 million in the quarter.
For the fiscal year ended December 31, 2002, revenues were $2.75 billion, an increase of $287 million, or 11.6 percent, compared with revenues in the 2001 period. The reported net loss for fiscal 2002 was $97.6 million, or $1.70 per diluted share, versus a reported net loss for the prior year of $267.5 million, or $5.87 per diluted share. As summarized in the table below, the operating results for both periods included certain items that impact comparability between periods. Excluding the after-tax effect of these items, adjusted net income for fiscal 2002 was $56.5 million, or $.98 per diluted share, compared to adjusted net income for 2001 of $44.3 million, or $.95 per diluted share. Operating working capital increased approximately $4 million for the 2002 fiscal year, due primarily to higher volumes in 2002 compared to 2001, and capital expenditures were $159 million for the year compared to $194 million in 2001. Net repayments of debt approximated $159 million in 2002, resulting in a 53% leverage ratio at December 31, 2002 compared to 58% at December 31, 2001. The company had unutilized capacity under its credit lines of approximately $423 million as of December 31, 2002, and available liquidity of approximately $253 million under its most restrictive lending covenants (including cash and cash equivalents of $14 million).
In commenting on the fourth quarter and year-end results, Dug Campbell, president and chief executive officer of Tower Automotive, said, "Our long-term enterprise objectives continue to be the generation of free cash flow to strengthen our balance sheet, to improve our returns on the capital we employ in the business, and to win attractive new business. When we take a look at 2002 as a whole, although we have made significant improvements, we are not completely satisfied with our progress to date on some of these objectives. We will continue to focus on reducing our capital intensity and generating additional cash. We maintain a backlog of $1.4 billion of new business, two-thirds of which will be launched by the middle of 2004, and over half of which will run on existing capacity."
"For 2003, we anticipate a year that includes launch activity related to several of the new projects in this backlog, with capital expenditures of approximately $200 million. We are confident that the successful launches of these new platforms and their relatively lower capital requirements will result in improved operating results and increasing returns on capital for Tower Automotive in the coming years. We expect sales and operating earnings for the first quarter 2003 and full year 2003 to remain relatively consistent with 2002 levels. We expect ample liquidity to fund our capital investments and other cash requirements in 2003."
As indicated above, the periods presented include certain restructuring, impairment, and other items that affect comparability. The fourth quarter of 2002 includes $3.3 million of pre-tax asset write-offs at Seojin and Metalsa. The fourth quarter of 2002 also includes pre-tax income of $14.3 million associated with the favorable legal settlement of employee benefit obligations that had been accrued as part of a fourth quarter 2001 restructuring charge. Adjusted net income for the fourth quarter of 2002 excludes the impact of these items, while adjusted net income for other periods excludes other items previously announced. The following reconciles reported net income (loss) to adjusted net income for the periods presented, including per share amounts:
Three Months Ended
December 31, 2002 December 31, 2001
-------------------- ---------------------
($ in millions, except per
share amounts)
Net of tax Per share Net of tax Per share
---------- --------- ---------- ----------
Reported net income (loss) $17.3 $0.29 $(295.7) $(6.15)
---------- --------- ---------- ----------
Net restructuring and asset
impairment charges (9.3) 299.0
Write-off of assets at
equity joint venture 0.9 -
Other expense 1.3 -
Goodwill amortization effect
of SFAS 142 adoption - 3.2
---------- ----------
Adjusted net income $10.2 $0.18 $6.5 $0.13
---------- --------- ---------- ----------
Year Ended
December 31, 2002 December 31, 2001
-------------------- ---------------------
($ in millions, except per
share amounts)
Net of tax Per share Net of tax Per share
---------- --------- ---------- ----------
Reported net loss $(97.6) $(1.70) $(267.5) $(5.87)
---------- --------- ---------- ----------
Net restructuring and asset
impairment charges 39.7 299.0
Cumulative effect of SFAS
142 adoption 112.8 -
Gain on sale of plant (2.5) -
Write-off of assets at
equity joint venture 0.9 -
Other expense 3.2 -
Goodwill amortization effect
of SFAS 142 adoption - 12.8
---------- ----------
Adjusted net income $56.5 $0.98 $44.3 $0.95
---------- --------- ---------- ----------
Accessing the Conference Call Webcast and PowerPoint Presentation - A conference call of the fourth quarter results is scheduled today at 11 a.m. ET (10 a.m. CT). Individual investors may listen to the conference call and view a PowerPoint presentation over the Internet by logging onto www.companyboardroom.com and searching for Tower Automotive. Institutional Investors may access the Webcast and presentation by logging onto www.streetevents.com.
Tower Automotive, Inc., is a global designer and producer of vehicle structural components and assemblies used by every major automotive original 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
-------------------- -----------------------
2002 2001 2002 2001
--------- ---------------------- -----------
Revenues $681,644 $638,865 $2,754,464 $2,467,433
Cost of sales 611,305 581,631 2,455,577 2,190,248
--------- ---------- ----------- -----------
Gross profit 70,339 57,234 298,887 277,185
Selling, general and
administrative expenses 38,201 35,882 143,822 139,203
Amortization expense 1,040 6,364 4,161 24,804
Restructuring and asset
impairment charge, net (14,282) 383,739 61,125 383,739
--------- ---------- ----------- -----------
Operating income (loss) 45,380 (368,751) 89,779 (270,561)
Interest expense, net 16,898 14,840 66,909 73,765
Other expense, net 1,952 - 1,052 -
--------- ---------- ----------- -----------
Income (loss) before
provision for income
taxes 26,530 (383,591) 21,818 (344,326)
Provision for income
taxes 9,271 (87,013) 7,636 (73,312)
--------- ---------- ----------- -----------
Income (loss) before
equity in earnings of
joint ventures and
minority interest 17,259 (296,578) 14,182 (271,014)
Equity in earnings of
joint ventures 4,099 4,959 16,822 17,250
Minority interest (4,097) (4,074) (15,824) (13,760)
--------- ---------- ----------- -----------
Income (loss) before
cumulative effect of
change in accounting
principle 17,261 (295,693) 15,180 (267,524)
Cumulative effect of
change in accounting
principle - - (112,786) -
--------- ---------- ----------- -----------
Net income (loss) $17,261 $(295,693) $(97,606) $(267,524)
========= ========== =========== ===========
Basic earnings (loss) per
common share:
Income (loss) before
cumulative effect of
change in accounting
principle $ 0.30 $ (6.15) $ 0.26 $ (5.87)
Cumulative effect of
change in accounting
principle - - (1.96) -
--------- ---------- ----------- -----------
Net income (loss) $0.30 $(6.15) $( 1.70) $(5.87)
========= ========== =========== ===========
Basic shares outstanding 57,697 48,077 57,329 45,597
========= ========== =========== ===========
Diluted earnings (loss)
per common share:
Income (loss) before
cumulative effect of
change in accounting
principle $ 0.29 $ (6.15) $ 0.26 $ (5.87)
Cumulative effect of
change in accounting
principle - - (1.96) -
--------- ---------- ----------- -----------
Net income (loss) $0.29 $(6.15) $(1.70) $(5.87)
========= ========== =========== ===========
Diluted shares
outstanding 65,442 48,077 57,329 45,597
========= ========== =========== ===========
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
December 31, December 31,
Assets 2002 2001
-------------------------------------------- ------------ ------------
Current assets:
Cash and cash equivalents $13,699 $21,767
Accounts receivable 249,341 216,638
Inventories 133,074 112,536
Deferred income taxes, net 20,634 26,323
Prepaid tooling and other 100,433 62,906
------------ ------------
Total current assets 517,181 440,170
------------ ------------
Property, plant and equipment, net 1,073,619 1,120,259
Investments in joint ventures 260,898 243,198
Deferred income taxes, net 105,699 61,461
Goodwill, net 472,967 567,080
Other assets, net 127,521 101,268
------------ ------------
$2,557,885 $2,533,436
============ ============
Liabilities and Stockholders' Investment
--------------------------------------------
Current liabilities:
Current maturities of long-term debt and
capital lease obligations $ 120,470 $ 172,083
Accounts payable 417,727 368,910
Accrued liabilities 284,450 278,962
------------ ------------
Total current liabilities 822,647 819,955
------------ ------------
Long-term debt, net of current maturities 535,220 601,084
Obligations under capital leases, net of
current maturities 29,731 4,620
Convertible subordinated notes 199,984 199,984
Other noncurrent liabilities 199,477 201,635
------------ ------------
Total noncurrent liabilities 964,412 1,007,323
------------ ------------
Mandatorily redeemable trust convertible
preferred securities 258,750 258,750
Stockholders' investment:
Preferred stock - -
Common stock 659 481
Additional paid-in capital 683,072 456,627
Retained earnings (deficit) (57,174) 40,432
Deferred compensation plans (10,746) (15,571)
Accumulated other comprehensive loss (43,875) (34,561)
Treasury stock, at cost (59,860) -
------------ ------------
Total stockholders' investment 512,076 447,408
------------ ------------
$2,557,885 $2,533,436
============ ============
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Year Ended December 31,
-----------------------
2002 2001
----------- -----------
OPERATING ACTIVITIES:
Net loss $(97,606) $(267,524)
Adjustments required to reconcile net loss
to net cash provided by (used in) operating
activities -
Cumulative effect of change in accounting
principle 112,786 --
Restructuring and asset impairment charge 61,125 383,739
Depreciation and amortization 140,859 159,893
Deferred income tax benefit (38,549) (80,758)
Deferred compensation plans 1,966 --
Gain on sale of plant (3,839) --
Equity in earnings of joint ventures, net (16,822) (17,250)
Change in working capital and other
operating items (28,968) 335,715
----------- -----------
Net cash provided by operating activities 130,952 513,815
----------- -----------
INVESTING ACTIVITIES:
Acquisitions, divestitures and investment in
joint ventures (36,798) (5,418)
Capital expenditures, net (158,964) (193,955)
Proceeds from sale of fixed assets 50,313 --
----------- -----------
Net cash used for investing activities (145,449) (199,373)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from borrowings 2,038,037 2,308,821
Repayments of debt (2,197,449) (2,643,860)
Net proceeds from issuance of stock 225,701 38,991
Payments for repurchase of common shares (59,860) --
----------- -----------
Net cash provided by (used for) financing
activities 6,429 (296,048)
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (8,068) 18,394
CASH AND CASH EQUIVALENTS:
Beginning of period 21,767 3,373
----------- -----------
End of period $13,699 $21,767
=========== ===========