Tower Automotive Announces Results for the Third Quarter and Nine Months Ended September 30, 2003
GRAND RAPIDS, Mich.--Oct. 2, 20033, 2003--Tower Automotive, Inc. today announced third-quarter revenues of $623 million, compared with $654 million in the third quarter of 2002. The company reported a net loss of $101 million, or $1.78 per diluted share, for the quarter versus net income for the third quarter of 2002 of $10 million, or $0.15 per diluted share. Third-quarter 2003 results include a previously disclosed non-cash asset impairment charge of $122.7 million pre-tax and restructuring charges of $1.9 million pre-tax, with a combined after-tax impact of $1.45 per share."Tower Automotive faced several challenges during the third quarter, including the impact of lower sales volumes related to labor disruptions at Hyundai and Kia facilities in South Korea. We also recorded significant asset impairment charges to align the company's balance sheet with our current business plan," said Kathleen Ligocki, President and Chief Executive Officer of Tower Automotive. "We are in the midst of several major program launches, which underlie our revenue growth over the next few years, and our top priority for our customers and shareholders is to deliver on the promise that growth represents."
As previously disclosed, the company's third-quarter earnings were also impacted by expenses of $4.4 million pre-tax, or $0.05 per share on an after-tax basis, related to executive leadership retirement and recruitment, as well as costs of $3.3 million pre-tax, or $0.04 per share on an after-tax basis, associated with an equipment failure that temporarily affected production at the company's Plymouth, MI facility. The company also increased its litigation reserves during the quarter by $1.2 million pre-tax, or $0.02 per share on an after-tax basis.
For the nine months ended September 30, 2003, revenues were $2.1 billion, approximately equivalent to revenues for the same period in 2002. The company reported a net loss of $92 million, or $1.62 per diluted share, for the nine months ended September 30, 2003 versus a net loss of $115 million, or $2.01 per diluted share, in the 2002 period. Several significant items occurred in the nine months ended September 30, 2003 and 2002 that reduced reported results by $1.77 and $2.80 per diluted share, respectively. The following tables summarize the impact of significant items in both the three-month and nine-month periods ended September 30, 2003 and September 30, 2002.
Three Months Ended
September 30, September 30,
2003 2002
--------------- --------------
($ in thousands, except per share
amounts)
Net of Per Net of Per
tax share tax share
-------- ------ ------- ------
Restructuring and asset impairment
charges $82,206 $1.45 -- --
Litigation reserves 792 0.02 -- --
------ ------
Total impact per diluted share $1.47 $0.00
====== ======
Nine Months Ended
September 30, September 30,
2003 2002
--------------- ---------------
($ in thousands, except per share
amounts)
Net of Per Net of Per
tax share tax share
-------- ------ -------- ------
Restructuring and asset impairment
charges $97,430 $1.72 $49,015 $0.86
Litigation reserves 1,452 0.03 -- --
Production interruption costs 769 0.01 -- --
Write-off of debt issuance costs 292 0.01 1,296 0.02
Write-off of assets at equity joint
venture -- -- 443 0.01
Cumulative effect of SFAS 142 adoption -- -- 112,786 1.97
Gain on sale of plant -- -- (2,495) (0.04)
Dilution effect -- -- -- (0.02)
------ ------
Total impact per diluted share $1.77 $2.80
====== ======
Fourth-Quarter and Full-Year 2003 Guidance
The company expects fourth-quarter revenues to be between $680 million and $700 million, which would result in revenues for the full year 2003 of approximately $2.8 billion. The company expects a net loss in the fourth quarter of approximately $0.26 per share on a GAAP basis, including pre-tax asset impairment and restructuring charges of $12.0 million, or $0.14 per share on an after-tax basis, that the company expects to record during the quarter. For the full year 2003, the company expects a net loss of $1.88 per share on a GAAP basis.
The company expects fourth-quarter EBITDA, a non-GAAP measure the company defines as earnings before interest, taxes, depreciation and amortization, and non-cash restructuring and asset impairment charges, of between $50 and $60 million, which would result in full-year 2003 EBITDA of between $240 and $250 million (a reconciliation of EBITDA to net income is attached in Table A).
In addition, Tower Automotive revised its outlook for capital expenditures. The company now anticipates capital expenditures for 2003 will be approximately $240 million, compared to previous estimates of approximately $200 million. This increase is primarily associated with additional spending at the company's new facility in Ford's supplier park in Chicago. Tower Automotive continues to anticipate that revenues will grow between 12 percent and 15 percent from 2003 to 2005.
Accessing the Conference Call Webcast and PowerPoint Presentation
A conference call of the third-quarter and nine-month results is scheduled today at 10 a.m. ET. Investors may access the Webcast and online presentation by logging onto www.towerautomotive.com, selecting "Investors" and clicking on the Webcast icon.
Tower Automotive, Inc., is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment 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.
Forward-Looking Statements
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts - unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- -----------------------
2003 2002 2003 2002
----------- --------- -----------------------
Revenues $623,013 $653,841 $2,098,770 $2,072,820
Cost of sales 587,167 587,467 1,909,952 1,844,743
---------- --------- ----------- -----------
Gross profit 35,846 66,374 188,818 228,077
Selling, general and
administrative expenses 41,770 35,347 115,581 105,709
Restructuring and asset
impairment charge 124,555 -- 147,621 75,407
---------- --------- ----------- -----------
Operating income (130,479) 31,027 (74,384) 46,961
Interest expense, net 27,268 17,366 62,120 52,573
Other income -- -- -- (900)
---------- --------- ----------- -----------
Income (loss) before
provision for income
taxes (157,747) 13,661 (136,504) (4,712)
Provision (benefit) for
income taxes (53,634) 4,797 (46,412) (1,635)
---------- --------- ----------- -----------
Income (loss) before
equity in earnings of
joint ventures and
minority interest (104,113) 8,864 (90,092) (3,077)
Equity in earnings of
joint ventures, net 4,393 4,061 8,181 12,723
Minority interest, net (1,070) (3,380) (9,730) (11,727)
---------- --------- ----------- -----------
Income (loss) before
cumulative effect of
change in accounting
principle (100,790) 9,545 (91,641) (2,081)
Cumulative effect of
change in accounting
principle -- -- -- 112,786
---------- --------- ----------- -----------
Net income (loss) $(100,790) $9,545 $(91,641) $(114,867)
========== ========= =========== ===========
Basic earnings (loss) per
common share:
Income (loss) before
cumulative effect of
change in accounting
principle $ (1.78) $ 0.15 $ (1.62) $ (0.04)
Cumulative effect of
change in accounting
principle -- -- -- (1.97)
---------- --------- ----------- -----------
Net income (loss) $(1.78) $0.15 $(1.62) $(2.01)
========== ========= =========== ===========
Weighted average basic
shares outstanding 56,720 65,525 56,490 57,206
========== ========= =========== ===========
Diluted earnings (loss)
per common share:
Income (loss) before
cumulative effect of
change in accounting
principle $ (1.78) $ 0.15 $ (1.62) $ (0.04)
Cumulative effect of
change in accounting
principle -- -- -- (1.97)
---------- --------- ----------- -----------
Net income (loss) $(1.78) $0.15 $(1.62) $(2.01)
========== ========= =========== ===========
Weighted average diluted
shares outstanding 56,720 65,612 56,490 57,206
========== ========= =========== ===========
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
September December
30, 31,
Assets 2003 2002
---------------------------------------------- ----------- -----------
(unaudited)
Current assets:
Cash and cash equivalents $135,257 $13,699
Accounts receivable 315,504 249,341
Inventories 123,361 133,074
Deferred income taxes, net 16,903 20,634
Prepaid tooling and other 197,763 100,433
----------- -----------
Total current assets 788,788 517,181
----------- -----------
Property, plant and equipment, net 978,801 1,073,619
Investments in joint ventures 266,945 260,898
Deferred income taxes, net 164,363 105,699
Goodwill 488,734 472,967
Other assets, net 165,273 127,521
----------- -----------
$2,852,904 $2,557,885
=========== ===========
Liabilities and Stockholders' Investment
----------------------------------------------
Current liabilities:
Current maturities of long-term debt and
capital lease obligations $ 308,680 $ 120,470
Accounts payable 583,834 417,727
Accrued liabilities 284,197 284,450
----------- -----------
Total current liabilities 1,176,711 822,647
----------- -----------
Long-term debt, net of current maturities 996,577 535,220
Obligations under capital leases, net of
current maturities 29,233 29,731
Convertible subordinated notes -- 199,984
Other noncurrent liabilities 221,944 199,477
----------- -----------
Total noncurrent liabilities 1,247,754 964,412
----------- -----------
Mandatorily redeemable trust convertible
preferred securities 258,750
Stockholders' investment:
Preferred stock -- --
Common stock 661 659
Additional paid-in capital 686,979 683,072
Retained deficit (148,815) (57,174)
Deferred compensation plans (10,036) (10,746)
Accumulated other comprehensive loss (40,490) (43,875)
Treasury stock (59,860) (59,860)
----------- -----------
Total stockholders' investment 428,439 512,076
----------- -----------
$2,852,904 $2,557,885
=========== ===========
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands - unaudited)
Nine Months Ended
September 30,
-----------------------
2003 2002
----------- -----------
OPERATING ACTIVITIES:
Net loss $(91,641) $(114,867)
Adjustments required to reconcile net loss
to net cash provided by operating
activities -
Cumulative effect of change in accounting
principle -- 112,786
Non-cash restructuring and asset
impairment charge 145,724 75,407
Customer recovery related to program
cancellation 15,600 --
Depreciation 119,639 102,208
Deferred income tax benefit (50,259) (12,661)
Deferred compensation plans 1,142 1,631
Gain on sale of plant -- (3,839)
Equity in earnings of joint ventures, net (8,181) (12,723)
Change in working capital and other
operating items 8,118 (128,837)
----------- -----------
Net cash provided by operating activities 140,142 19,105
----------- -----------
INVESTING ACTIVITIES:
Capital expenditures, net (180,126) (108,364)
Acquisitions, including joint venture
interests, earnout payments and dividends 3,506 (35,888)
Proceeds from sale of fixed assets -- 50,313
----------- -----------
Net cash used in investing activities (176,620) (93,939)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from borrowings 1,548,797 1,585,606
Repayments of debt (1,391,411) (1,713,995)
Net proceeds from issuance of stock 650 224,751
Payments for repurchase of common shares -- (17,371)
----------- -----------
Net cash provided by financing activities 158,036 78,991
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 121,558 4,157
CASH AND CASH EQUIVALENTS:
Beginning of period 13,699 21,767
----------- -----------
End of period $135,257 $25,924
=========== ===========
TABLE A
----------------------------------------------------------------------
Reconciliation of
EBITDA to Net
Income (Loss)
----------------------------------------------------------------------
Actual Actual Actual Estimate Act + Est
----------------------------------------------------------------------
($ in thousands) Q1 2003 Q2 2003 Q3 2003 Q4 2003 2003
----------------------------------------------------------------------
----------------------------------------------------------------------
EBITDA $75,239 $78,156 $36,035 $53,100 $242,530
----------------------------------------------------------------------
Less: Interest
expense 16,769 18,083 27,268 31,600 93,720
----------------------------------------------------------------------
Less: Provision
(benefit) for
income taxes 7,847 (625) (53,634) (9,500) (55,912)
----------------------------------------------------------------------
Less: Depreciation
expense 39,051 40,055 40,533 39,200 158,839
----------------------------------------------------------------------
Less: Non-cash
restructuring &
asset impairment
charges - 23,066 122,658 6,300 152,024
----------------------------------------------------------------------
Net income (loss) $11,572 $(2,423) $(100,790) $(14,500) $(106,141)
----------------------------------------------------------------------