Hayes Lemmerz Reports Operating Profit In Quarter After Emerging from Chapter 11
Results Significantly Improved From Year-Earlier
NORTHVILLE, Mich., Sept. 15 -- Hayes Lemmerz International, Inc. (BULLETIN BOARD: HAYZ) announced today that it posted operating income of $51.6 million (including the impact of certain gains and expenses related to emergence from Chapter 11 reorganization) for the second quarter ended July 31, 2003(1). This is sharply improved from a year earlier loss of $12.6 million, which also includes certain expenses related to the Company's Chapter 11 reorganization. Earnings from operations excluding these items was $20.4 million in the current quarter, compared with a year earlier loss of $7.2 million(2). Gross profit margin increased to 11.2% in the second quarter of 2003 from 7.6% in 2002.
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For the three months ended July 31, 2003, Hayes Lemmerz, a leading global supplier to the automotive industry, reported sales of $502.8 million, compared with year-earlier sales of $504.0 million. Based on industry reports, North American light vehicle production fell 8% from the same period a year earlier.
"Our significantly improved operating results reflect the thought and effort we have put into reshaping Hayes Lemmerz so that it can compete profitably in today's automotive industry marketplace," said Curt Clawson, Chairman, President and CEO. "Our ability to improve operating income despite flat sales demonstrates the benefits of the many operational and management changes we have made in the last year."
"We have a new management team in place with significant auto industry and 'best practices' management experience, final closure of an unprofitable plant in Bowling Green, Kentucky, and significant improvements at the Company's Montague, Michigan facility. The Company also has more than 150 'Operational Excellence' initiatives under way," Mr. Clawson said. "These have resulted in reduced mold changeover times, improved uptime, reduced scrap, better flow through plants and work cells, and freed-up floor space, all of which contribute to improved profitability," he noted.
"Hayes Lemmerz emerged from Chapter 11 with a strong balance sheet and ample liquidity to support its operations and future growth," Mr. Clawson said. Through the Chapter 11 reorganization process, the Company significantly reduced its level of indebtedness. As of July 31, 2003, the Company had $782.3 million of net debt compared to $2.06 billion as of January 31, 2003. Additionally, the Company has no loans outstanding under its $100 million revolving credit facility and a cash balance of $140.6 million.
Hayes Lemmerz will host a telephone conference call to discuss the Company's 2003 second quarter financial results on Tuesday, September 16, 2003, at 8:30 a.m. (ET). To participate by phone, please dial 10 minutes prior to the call: (800) 399.3882 from the United States and Canada; and (706) 634.4552 from outside the United States. Callers should ask to be connected to Hayes Lemmerz earnings conference call, Conference ID#2515025. The conference call will be accompanied by a slide presentation, which can be accessed that morning through the Company's web site in the Investor Kit/ presentations section at http://www.hayes-lemmerz.com/ investor_kit/html/presentations.html
Hayes Lemmerz International, Inc. is a leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company has 43 plants, 3 joint venture facilities and 11,000 employees worldwide.
More information about Hayes Lemmerz International, Inc. is available at our website which is www.hayes-lemmerz.com.
(1) For the purpose of comparing the results of the Successor
(post-emergence) Company with those of the Predecessor (pre-emergence)
Company, the Company collectively refers to the Predecessor one month
ended May 31, 2003, and the Successor two months ended July 31, 2003
as the second quarter ended July 31, 2003.
(2) See attached reconciliation for this non-GAAP measure to a GAAP
measure.
HAYES LEMMERZ INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Millions of dollars, except share amounts)
(Unaudited)
Successor Predecessor
Two Months One Month Three Months Four Months Six Months
Ended Ended Ended Ended Ended
July 31, May 31 July 31 May 31 July 31
2003 2003 2002 2003 2002
Net sales $328.3 $174.5 $504.0 $689.8 $990.7
Cost of goods
sold 298.9 147.8 465.7 611.3 907.3
Gross profit 29.4 26.7 38.3 78.5 83.4
Marketing,
general and
administration 20.7 6.0 23.0 33.5 50.6
Engineering and
product
development 4.2 1.7 5.5 8.1 10.5
Asset impairments
and other
restructuring
charges -- 2.3 18.1 6.4 25.3
Other (income)
expense, net 2.1 (1.3) (1.1) (1.9) (3.7)
Reorganization
items -- 31.9 5.4 45.0 27.9
Fresh start
accounting
adjustments -- (63.1) -- (63.1) --
Earnings (loss)
from operations 2.4 49.2 (12.6) 50.5 (27.2)
Interest expense,
net 8.1 5.8 17.9 22.7 34.7
Earnings (loss)
before subsidiary
preferred stock
dividends, taxes
on income,
minority
interest,
cumulative
effect of change
in accounting
principle and
extraordinary
gain on debt
discharge (5.7) 43.4 (30.5) 27.8 (61.9)
Subsidiary
preferred stock
dividends 0.1 -- -- -- --
Earnings (loss)
before taxes on
income, minority
interest,
cumulative
effect of change
in accounting
principle and
extraordinary
gain on debt
discharge (5.8) 43.4 (30.5) 27.8 (61.9)
Income tax
provision
(benefit) 2.6 54.4 (3.3) 60.3 (2.4)
Loss before
minority interest,
cumulative effect
of change in
accounting
principle and
extraordinary
gain on debt
discharge (8.4) (11.0) (27.2) (32.5) (59.5)
Minority interest 0.8 0.2 0.8 1.2 1.5
Loss before
cumulative effect
of change in
accounting
principle and
extraordinary
gain on
debt discharg (9.2) (11.2) (28.0) (33.7) (61.0)
Cumulative effect
of change in
ccounting
principle,
net of tax of $0 -- -- -- -- (554.4)
Extraordinary gain
on debt discharge,
net of tax $0 -- 1,076.7 -- 1,076.7 --
Net income
(loss) $(9.2) $1,065.5 $(28.0) $1,043.0 $(615.4)
Basic net loss
per share:
Loss before
cumulative
effect of
change in
accounting
principle and
extraordinary
gain on debt
discharge $(0.31)
Cumulative effect
of change in
accounting
principle, net
of tax --
Extraordinary gain
on debt discharge,
net of tax --
Basic net loss
per share $(0.31)
Diluted net
loss per share:
Loss before
cumulative
effect of change
in accounting
principle and
extraordinary gain
on debt
discharge $(0.31)
Cumulative
effect of
change in
accounting
principle, net
of tax --
Extraordinary
gain on debt
discharge, net
of tax --
Diluted net loss
per share $(0.31)
Hayes Lemmerz International, Inc. And Subsidiaries
Consolidated Balance Sheets
(Millions Of Dollars,
Except Share Amounts)
Successor Predecessor
July 31, January 31,
2003 2003
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $140.6 $66.1
Receivables 275.3 276.6
Inventories 186.6 176.6
Prepaid expenses and other 21.1 32.5
Total current assets 623.6 551.8
Property, plant and equipment, net 922.6 951.2
Goodwill 392.9 191.3
Intangible assets, net 228.4 102.6
Other assets 76.6 49.7
Total assets $2,244.1 $1,846.6
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
DIP Facility $ -- $49.9
Bank borrowings and other notes 12.2 15.8
Current portion of long-term debt 14.6 40.1
Accounts payable and accrued liabilities 349.0 268.7
Total current liabilities 375.8 374.5
Long-term debt, net of current portion 755.5 61.9
Pension and other long-term liabilities 536.6 334.4
Series A Warrants and Series B Warrants 4.8 --
Redeemable preferred stock of subsidiary 10.1 -
Minority interest 13.4 16.4
Liabilities subject to compromise -- 2,133.8
Commitments and contingencies
Stockholders' equity (deficit):
Successor preferred stock, 1,000,000 shares authorized,
none issued or outstanding at July 31, 2003 -- --
Predecessor preferred stock, 25,000,000 shares
authorized, none issued or outstanding at
January 31, 2003 -- --
Common stock, par value $0.01 per share:
Successor Voting - 100,000,000 shares authorized;
30,000,000 issued and outstanding at July 31, 2003 0.3 --
Predecessor Voting - 99,000,000 shares authorized;
27,708,419 shares issued; 25,806,969 shares
outstanding at January 31, 2003 -- 0.3
Predecessor Nonvoting - 5,000,000 shares authorized;
2,649,026 shares issued and outstanding at January 31,
2003 -- --
Additional paid in capital 544.1 235.1
Predecessor common stock in treasury at cost,
1,901,450 shares at January 31, 2003 -- (25.7)
Accumulated deficit (9.2) (1,176.9)
Accumulated other comprehensive income (loss) 12.7 (107.2)
Total stockholders' equity (deficit) 547.9 (1,074.4)
Total liabilities and stockholders' equity
(deficit) $2,244.1 $1,846.6
Hayes Lemmerz International, Inc. and Subsidiaries
Non-GAAP Reconciliation Of Earnings From Operations
Excluding Fresh Start And Reorganization Items
(Millions Of Dollars)
Second Second
Quarter Quarter
2003 2002
Net income (loss) $1,056.3 $(28.0)
Excluding:
Gain on discharge of debt (1,076.7) --
Interest, taxes and minority interest 72.0 15.4
Earnings (loss) from operations $ 51.6 $(12.6)
Excluding:
Fresh start accounting adjustments (63.1) --
Reorganization items 31.9 5.4
Earnings (loss) from operations excluding
fresh start accounting adjustments and
reorganization items $ 20.4 $ (7.2)
Earnings (loss) from operations excluding fresh start and reorganization items is used as a non-GAAP measure of the Company's primary profitability measure because it excludes fresh start accounting adjustments and reorganization items, which do not represent normal operating performance of the Company as these items relate only to the Company's Chapter 11 filings and emergence.