J.L. French Automotive Castings, Inc., Announces Fourth-Quarter and Year-End Results
MINNEAPOLIS--March 26, 2003--J.L. French Automotive Castings, Inc., today announced fourth quarter revenues of $136.7 million, an increase of $15.7 million, or 13.0 percent, over the $121.0 million reported in the same period last year. Earnings before interest, taxes, depreciation and amortization (EBITDA), a fourth quarter restructuring charge and the impact of loss contract reserves were $25.4 million for the fourth quarter of 2002 compared to $21.3 million in the same period last year."Our fourth quarter results reflect the financial impact from our continuing execution of our cost reduction plan," said David S. Hoyte, J.L. French president and chief executive officer. "These efforts, combined with our low-cost industry position, our strong book of new business and the completion of our recent refinancing gives us the ability to meet our long-term growth objectives."
Operating income before the company's restructuring charge totaled $14.7 million compared to $17.2 million reported last year.
On a reported basis, the company recorded a net loss of $70.5 million after charges related to the early retirement of debt, deferred tax assets and the cumulative effect of accounting changes. Results for the fourth quarter of 2002 and the year ended 2002 include the impact of the following:
| -- | On December 31, 2002, the company announced it would be closing its Grandville, Mich. plant by the end of 2003 and moving the production to its facilities in Sheboygan, Wis. and Glasgow, Ky. As a result, the company recorded a restructuring charge of $21.3 million in the fourth quarter, $18.0 million of which relates to a non-cash impairment of fixed assets. |
| -- | In connection with the $190 million debt refinancing completed on December 27, 2002, the company wrote-off deferred financing fees of $13.5 million. This write off is reflected as an extraordinary item in the fourth quarter of 2002 and does not impact the Company's future cash flows. |
| -- | The company wrote off deferred tax assets of $38.0 million. This non-cash write off is included in the provision for income taxes in the fourth quarter of 2002. |
As a result of these items, the company has presented an adjusted consolidated statement of operations for the three months and year ended December 31, 2002 that exclude the impact of these non-recurring charges for comparative purposes.
Full Year Results
For the year ended December 31, 2002, revenues increased 8.8 percent to $550.4 million from $505.7 million in 2001. Operating income was $33.7 million compared to $49.3 million reported last year. EBITDA before restructuring charge for 2002 was $101.2 million compared to $106.1 million in 2001.
On an adjusted basis, operating income for the full year was $55.0 million, EBITDA was $101.2 million. EBITDA before the restructuring charge and the impact of loss contracts increased approximately 24% from $76.7 million in 2001 to $95.0 million in 2002.
Effective January 1, 2002, the company adopted the new rules for accounting for goodwill. As a result, the company wrote off $202.6 million of goodwill that was determined to be impaired under the new rules. This non-cash charge has been retroactively recorded in the first quarter of 2002.
On a recorded basis, the net loss for the full year after charges related to the early retirement of debt, the write-off of deferred tax assets and the cumulative effect of accounting changes totaled $272.1 million.
The following table reconciles operating income as reported to operating income before restructuring charge, to EBITDA before restructuring charge and to EBITDA before restructuring charge and the impact of loss contracts for the three months and years ended December 31, 2002 and 2001:
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Operating income as reported $(6,623) $17,222 $33,691 $49,251
Restructuring charge 21,308 -- 21,308 --
--------- --------- --------- ---------
Operating income before
restructuring charge 14,685 17,222 54,999 49,251
Depreciation and amortization 11,755 17,089 46,228 56,847
--------- --------- --------- ---------
EBITDA before restructuring
charge 26,440 34,311 101,227 106,098
Loss contract reserve reversals (1,043) (13,046) (6,249) (29,418)
--------- --------- --------- ---------
EBITDA before restructuring
charge and the impact of
loss contract reserves $25,397 $21,265 $94,978 $76,680
========= ========= ========= =========
About J.L. French Automotive Castings, Inc.
J.L. French Automotive Castings, Inc., is a leading global designer and manufacturer of highly engineered aluminum die cast automotive parts including oil pans, engine front covers and transmission cases. The company has manufacturing facilities in Sheboygan, Wis.; Grandville and Benton Harbor, Mich.; Glasgow, Ky.; San Andres de Echevarria, Spain; Saltillo, Mexico; as well as five plants in the United Kingdom. The company is based in Sheboygan, Wis., and has its corporate office in Minneapolis, Minn.
This press release contains forward-looking statements that are subject to risks and uncertainties. These statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," or similar expressions. These statements are based on certain assumptions that the company has made in light of its experience in the industry as well as its perspective of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Actual results may differ materially from the anticipated results because of certain risks and uncertainties, including but not limited to (i) expected synergies, economies of scale and cost savings from the company's acquisitions not being fully realized or realized within the expected time frames; (ii) unanticipated difficulties servicing the level of indebtedness at the company, (iii) costs or operational difficulties related to integrating the operations of the acquired entities with those of the company being greater than expected; (iv) labor disputes involving the company or its significant customers, (v) risks associated with conducting business in foreign countries, and (vi) general economic or business conditions affecting the automotive industry, either nationally or regionally, being less favorable than expected.
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands - unaudited)
Three Months Ended
Dec. 31, Year Ended Dec. 31,
2002 2001 2002 2001
--------- --------- ---------- ---------
Revenues $136,708 $121,027 $550,447 $505,709
Cost of sales 113,503 91,919 467,437 414,310
--------- --------- ---------- ---------
Gross profit 23,205 29,108 83,010 91,399
Selling, general and
administrative expenses 8,505 5,516 27,954 27,413
Restructuring charge 21,308 -- 21,308 --
Amortization expense(1) 15 6,370 57 14,735
--------- --------- ---------- ---------
Operating income (loss) (6,623) 17,222 33,691 49,251
Interest expense, net(1) 13,168 13,071 51,147 53,618
--------- --------- ---------- ---------
Income (loss) before
provision for income taxes,
cumulative effect of change
in accounting principle and
extraordinary item (19,791) 4,151 (17,456) (4,367)
Provision for income taxes 37,213 3,702 38,528 2,555
--------- --------- ---------- ---------
Income (loss) before
cumulative effect of change
in accounting principle and
extraordinary loss (57,004) 449 (55,984) (6,922)
Cumulative effect of change
in accounting principle -- -- 202,622 --
Extraordinary loss on early
retirement of debt 13,507 -- 13,507 --
--------- --------- ---------- ---------
Net income (loss) $(70,511) $449 $(272,113) $(6,922)
========= ========= ========== =========
(1) Amortization of debt issue costs of $674 and $2,308 for the three
months and year ended December 31, 2001 are included in
amortization expense. For the three months and year ended December
31, 2002, such costs were $631 and $2,414 and are included in
interest expense.
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
ADJUSTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands - unaudited)
Three Months Ended Year Ended
December 31, 2002 December 31, 2002
Reported Adjusted Reported Adjusted
----------- ---------- ------------ ----------
Revenues $136,708 $136,708 $550,447 $550,447
Cost of sales 113,503 113,503 467,437 467,437
--------- --------- ---------- ---------
Gross profit 23,205 23,205 83,010 83,010
Selling, general and
administrative expenses 8,505 8,505 27,954 27,954
Restructuring charge 21,308 (a) -- 21,308 (a) --
Amortization expense 15 15 57 57
--------- --------- ---------- ---------
Operating income (loss) (6,623) 14,685 33,691 54,999
Interest expense, net 13,168 13,168 51,147 51,147
--------- --------- ---------- ---------
Income (loss) before
provision for income
taxes, cumulative
effect of change in
accounting principle
and extraordinary item (19,791) 1,517 (17,456) 3,852
Provision for income
taxes 37,213 (b) 546 38,528 (b) 1,387
--------- --------- ---------- ---------
Income (loss) before
cumulative effect of
change in accounting
principle and
extraordinary loss (57,004) 971 (55,984) 2,465
Cumulative effect of
change in accounting
principle -- -- 202,622 (c) --
Extraordinary loss on
early retirement of
debt 13,507 (d) -- 13,507 (d) --
--------- --------- ---------- ---------
Net income (loss) $(70,511) $971 $(272,113) $2,465
========= ========= ========== =========
J.L. French Automotive Castings, Inc. and Subsidiaries
Additional Disclosures
(Amounts in Millions)
The company has included Adjusted financial information because
management believes that the information may be useful to investors in
assessing the company's financial performance on a comparable basis.
However, the Adjusted financial information should not be viewed as a
substitute for financial measures determined under generally accepted
accounting principles.
Notes:
(a) The "Adjusted" results for the three months and year ended
December 31, 2002 exclude the $21.3 million restructuring charge
related to the closure of the Grandville, Mich. facility.
(b) The "Adjusted" resulted for the three months and year ended
December 31, 2002 reflect the income tax provision at the
Company's effective income tax rate of 36%.
(c) The "Adjusted" results for the year ended December 31, 2002
exclude the $202.6 million cumulative effect of change in
accounting related to the adoption of SFAS No. 142, effective
January 31, 2002. This amount was retroactively applied to the
first quarter of 2002 in accordance with SFAS No. 142, "Goodwill
and Other Intangible Assets."
(d) The "Adjusted" results for the three months and year ended
December 31, 2002 exclude the $13.5 extraordinary item related to
costs associated with the debt financing transactions completed on
December 27, 2002.
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
December 31, December 31,
Assets 2002 2001
------ ------------ ------------
Current assets:
Cash and cash equivalents $3,337 $1,055
Accounts receivable, net 49,574 43,713
Inventories 35,357 31,097
Other current assets 13,437 17,479
------------ ------------
Total current assets 101,705 93,344
Property, plant and equipment, net 250,969 275,142
Intangible and other assets, net 112,265 332,423
------------ ------------
$464,939 $700,909
============ ============
Liabilities and Stockholders' Investment
----------------------------------------
Current liabilities:
Current maturities of long-term debt $12,342 $47,306
Accounts payable 56,187 61,678
Accrued liabilities 31,107 33,167
------------ ------------
Total current liabilities 99,636 142,151
Long-term debt, net of current maturities 398,221 328,935
Subordinated notes 175,000 175,000
Other noncurrent liabilities 26,593 21,519
------------ ------------
Total liabilities 699,450 667,605
Redeemable common stock 60,000 60,000
Stockholders' investment (deficit):
Common stock -- --
Additional paid-in capital 87,538 90,476
Retained earnings (deficit) (371,333) (106,295)
Accumulated other comprehensive loss -
cumulative translation adjustment (10,716) (10,877)
------------ ------------
Total stockholders' investment (deficit) (294,511) (26,696)
------------ ------------
$464,939 $700,909
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