Veltri Metal Products, Inc. Reports First-Quarter Results; Extension of Senior Credit and New Tooling Credit Facilities

TROY, Mich., July 1 -- Automotive parts supplier, Veltri Metal Products, Inc., today announced a net loss of $2.0 million, after taking into consideration a $2.0 million charge for the closing costs of its J&R Manufacturing division, in the first quarter ended April 5, 2003, compared with net income of $1.6 million for the year-earlier quarter. Net sales for the first quarter were $68.3 million compared to $69.2 million in the year- earlier quarter. Higher interest charges ($0.4 million) and a higher effective income-tax rate ($0.6 million effect) adversely impacted the year- over-year earnings comparison.

The Company's earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter were $5.9 million, compared to $6.4 million during the year-earlier period.

The Company previously announced, in early March 2003, the closure of its J&R Manufacturing division, which produced prototype and low-volume production stampings. In connection with the closure, in the first quarter, the Company recorded a $2.0 million pre-tax charge for the estimated costs to close this division. Operations at J&R Manufacturing ceased on May 9, 2003.

Outstanding indebtedness, net of cash, at the end of the first quarter was $69 million, compared to $76 million at the end of the year-earlier quarter.

Michael Veltri, President and CEO stated, "We are pleased that we were able to maintain a solid EBITDA level in the first quarter, despite slightly lower sales and higher losses at J&R prior to its shut-down. This is indicative of the operating improvements and focus on continuous improvements that we have undertaken in the 18 months since our emergence from bankruptcy. We are disappointed that we were unable to turn around the losses at J&R Manufacturing, but the prototype market continues to be very soft. Fortunately, we do not expect this closure to affect our core business of high-volume, production stampings and assemblies."

In addition, the Company announced the successful extension of its senior credit facility led by Comerica Bank, as agent, and the closing on a new credit facility with Export Development Canada that provides financing of the acquisition of tooling required to fulfill contracts with vehicle manufacturings. Mr. Veltri said that, "These facilities will enhance our ability to fund our operations along with the capital and tooling requirements of the programs set to launch in early 2004."

Mr. Veltri further stated, "Looking ahead, the rest of 2003 will be challenging for the Company and for the entire industry. Strong sales continue into the second quarter ahead of plan but a downward trend is expected due to the extended model changeover at the DaimlerChrysler Brampton, Ontario plant from the 'LH' to the 'LX' platform scheduled for the second half of 2003. Also the second half will be affected by the balance out of the DaimlerChrysler 'AB' van at the Windsor Assembly plant, resulting in underutilized plant capacity during this period. Earnings may be impacted in the second half of the year due to pressure on the Company from the vehicle manufacturers' continued emphasis on cost-downs coupled with the potential for labor disruption at the vehicle manufacturers in September tied to labor contract talks. These factors are amplified by the capital-intensive nature of the metal stamping sector. On a more positive side, the Company was successful in refinancing its debt, in a very tight capital market due to support of its current bank group. It also continues to progress favorably and to budget on several key new launches, including the DaimlerChrysler 'LX' platform, as well as others. We continue to see strength in key platform sales for our DaimlerChrysler Pacifica, Jeep Liberty, General Motors GMT 800 and Honda Accord, Element and Civic product and are very excited about the launch of our new Lakeshore, Ontario facility set to open early 2004."

Veltri Metal Products, Inc. is a leading full-service Tier One designer and manufacturer of high quality, stamped metal components and complex assemblies used by North American automotive vehicle manufacturers including DaimlerChrysler, General Motors Corporation, Honda Motors Co., Ltd., Ford Motor Company and other Tier One suppliers. The Company specializes in underbody/chassis and unexposed body structure assemblies for passenger cars, light trucks and full-size vans. Veltri's products include frame rail assemblies, inner quarter panels, rear ladder modules, cross member assemblies and trailer hitch assemblies. The Company and its management team are highly respected within the automotive industry for their expertise in supplying multi-component, complex stamping assemblies, an outstanding new program launch record and strong customer and employee relationships. The Company employs over 1,600 people at seven manufacturing facilities in the United States and Canada and is headquartered in Troy, Michigan.

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 anticipated results as a consequence of certain risks and uncertainties, including but not limited to general economic conditions in the markets in which Veltri Metal Products, Inc. operates, the company's leverage and limited access to capital, the restrictions imposed by terms of the company's indebtedness, the company's reliance on major customers and selected models, the company's platform concentration, vehicle manufacturing industry cyclicality and seasonality, competition, increasing customer requirements, a unionized workforce, foreign operations and environmental risks. There is no organized market for the company's common stock, and none is likely to develop.