J.L. French Automotive Castings, Inc. Announces Second Quarter Results
MINNEAPOLIS--Aug. 6, 2003--J.L. French Automotive Castings, Inc., today announced results for its second quarter and six months ended June 30, 2003.For the second quarter of 2003, revenues were $133.0 million compared to $146.4 million in the 2002 period. Operating income was $12.8 million versus $16.6 million in the prior-year quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased to $24.5 million from $28.1 million in the second quarter of 2002. EBITDA before the impact of loss contract reserves was $23.5 million in the second quarter of 2003 compared to $26.6 million in the 2002 period. Cash interest expense was $14.5 million, up from $12.0 million in the second quarter of 2002 as a result of higher weighted average interest rates in the 2003 period. During the second quarter, the company recorded non-cash income of $2.3 million related to exchange rates on debt denominated in foreign currencies.
For the first half of 2003, revenues were $276.6 million, a decrease of $4.5 million compared to the 2002 period. Operating income was $27.4 million compared to $29.4 million in the first half of 2002. Before the impact of loss contract reserves, EBITDA increased to $49.0 million, or 17.7 percent of sales, in the six months of 2003 compared to $47.6 million, or 16.9 percent of sales, in the same period last year. As a result of the higher weighted average interest rates in the 2003 period, cash interest expense increased to $29.0 million versus $23.9 million in the first half of 2002. During the first six months, the company recorded non-cash income of $0.6 million related to exchange rates on debt denominated in foreign currencies.
"While our revenues decreased from last year, we have continued to reduce our breakeven point," said Anthony A. Barone, chief financial officer of J.L. French Automotive Castings. "In addition, as a result of both lower production volumes and productivity improvements, we have generated open capacity at our Sheboygan facilities. We are aggressively seeking new business to utilize this available capacity."
The following table reconciles net (loss) income to EBITDA and EBITDA before the impact of loss contract reserves for the three and six months ended June 30, 2003, and 2002:
Three months ended Six months ended
($ in thousands) June 30, June 30,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Income (loss) before
cumulative effect of
accounting change $(3,716) $2,752 $(9,276) $2,647
Provision for income taxes 29 1,416 97 1,779
Interest expense, net 18,810 12,462 37,187 25,018
Other (income) (2,313) - (617) -
Depreciation and amortization 11,731 11,462 23,330 22,705
--------- --------- --------- ---------
EBITDA(1) 24,541 28,092 50,721 52,149
Loss contract reserve
reversals (1,059) (1,466) (1,722) (4,500)
--------- --------- --------- ---------
EBITDA before the impact
of loss contract reserve
reversals(1) $23,482 $26,626 $48,999 $47,649
========= ========= ========= =========
(1) EBITDA and EBITDA before the impact of loss contract reserve
reversals do not represent and should not be considered as
alternatives to net income or cash flow from operations, as
determined by accounting principles generally accepted in the
United States, or GAAP, and our calculations thereof may not be
comparable to that reported by other companies. EBITDA and EBITDA
before the impact of loss contract reserve reversals are included
in this press release because they are a basis upon which we
assess our liquidity position and because certain covenants in our
borrowing arrangements are tied to similar measures. We also
believe that it is widely accepted that EBITDA provides useful
information regarding a company's ability to service and/or incur
indebtedness. This belief is based on our negotiations with our
lenders who have indicated that the amount of indebtedness we will
be permitted to incur will be based, in part, on our EBITDA.
EBITDA and EBITDA before the impact of loss contract reserve
reversals do not take into account our working capital
requirements, debt service requirements and other commitments and,
accordingly, is not necessarily indicative of amounts that may be
available for discretionary use.
J.L. French Automotive Castings, Inc., a privately held automotive supplier, 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.; 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) unanticipated difficulties servicing the level of indebtedness at the company, (ii) costs or operational difficulties related to integrating the operations of the acquired entities with those of the company being greater than expected; (iii) labor disputes involving the company or its significant customers, (iv) risks associated with conducting business in foreign countries, and (v) 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 Six Months Ended
June 30, June 30,
------------------- --------------------
2003 2002 2003 2002
--------- --------- --------- ----------
Sales $132,963 $146,421 $276,584 $281,135
Cost of sales (1) 116,453 125,196 241,415 243,404
--------- --------- --------- ----------
Gross profit 16,510 21,225 35,169 37,731
Selling, general and
administrative expenses (1) 3,758 4,595 7,836 8,287
Restructuring charges (58) - (58) -
--------- --------- --------- ----------
Operating income 12,810 16,630 27,391 29,444
Cash interest expense 14,525 12,013 28,980 23,874
Deferred interest and
amortization of debt issue
costs 4,285 449 8,207 1,144
--------- --------- --------- ----------
Interest expense, net 18,810 12,462 37,187 25,018
Other (income) (2,313) - (617) -
--------- --------- --------- ----------
Income (loss) before
provision (benefit) for
income taxes and
cumulative effect of
change in accounting
principle (3,687) 4,168 (9,179) 4,426
Provision for income taxes 29 1,416 97 1,779
--------- --------- --------- ----------
Income (loss) before
cumulative effect of change
in accounting principle (3,716) 2,752 (9,276) 2,647
Cumulative effective of
change in accounting
principle -- writeoff of
goodwill -- -- -- (202,622)
--------- --------- --------- ----------
Net income (loss) $(3,716) $2,752 $(9,276) $(199,975)
========= ========= ========= ==========
(1) Beginning in 2003, the Company began classifying certain plant
related expenses as a cost of sales. Previously, these costs were
classified as selling, general and administrative expenses.
Results for the three and six months ended June 30, 2002 have been
restated to conform to the new presentation. The restatement had
no impact on previously reported operating income or net income.
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands - unaudited)
June 30, December 31,
Assets 2003 2002
------ --------- ------------
Current assets:
Cash and cash equivalents $2,277 $3,337
Accounts receivable, net 46,698 49,574
Inventories 36,980 35,357
Assets held for sale 4,463 --
Other current assets 20,208 13,437
--------- ------------
Total current assets 110,626 101,705
Property, plant and equipment, net 255,662 250,969
Intangible and other assets, net 111,935 112,265
--------- ------------
$478,223 $464,939
========= ============
Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Current portion of long-term debt $15,323 $12,342
Accounts payable 66,730 56,187
Accrued liabilities 31,684 31,107
--------- ------------
Total current liabilities 113,737 99,636
Long-term debt, net of current portion 406,733 398,221
Subordinated notes 175,000 175,000
Other noncurrent liabilities 24,339 26,593
--------- ------------
Total liabilities 719,809 699,450
--------- ------------
Redeemable common stock 60,000 60,000
Stockholders' deficit:
Additional paid-in capital 87,538 87,538
Accumulated deficit (380,609) (371,333)
Accumulated other comprehensive loss (8,515) (10,716)
--------- ------------
Total stockholders' deficit (301,586) (294,511)
--------- ------------
$478,223 $464,939
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