Williams Controls Reports Fiscal Year End 2003 Results
PORTLAND, Ore., Dec. 29, 2003 -- Williams Controls, Inc. (the "Company") today announced its results for the fourth quarter and full year ended September 30, 2003. Net sales of $14,000,000 for the fourth quarter ended September 30, 2003 were 5.2% lower than the net sales of $14,771,000 recorded for the corresponding quarter last year. Net sales for the year ended September 30, 2003 decreased to $51,919,000 compared to $52,504,000 for the comparable period in fiscal 2002. The Company reported a net loss allocable to common shareholders of $908,000 or ($0.05) per share (diluted) for the fourth quarter 2003 compared to net income allocable to common shareholders of $1,704,000 or $0.03 per diluted share for the corresponding 2002 quarter. For the year ended September 30, 2003, net loss allocable to common shareholders was $1,075,000 or ($0.05) per share, compared to a net loss of $1,604,000 or ($0.08) per share for the year ended September 30, 2002. As previously announced, on September 30, 2003 the Company sold the assets of its passenger car and light truck product lines. Excluding the estimated losses related to these product lines, pro forma net income allocable to common shareholders for the fourth quarter ended September 30, 2003 was $1,046,000, or $0.03 per diluted share and $3,881,000, or $0.16 per diluted share for the full year ended September 30, 2003.
Net sales for heavy truck and transit bus product lines increased $992,000 for the year ended September 30, 2003; however, total net sales decreased in fiscal 2003 when compared to 2002, as a direct result of lower sales volumes in the passenger car and light truck product lines, which decreased $1,289,000.
Net income from continuing operations for the full year ended September 30, 2003 was $816,000 compared to a net loss from continuing operations of $2,345,000 in fiscal 2002. Included in income from continuing operations for fiscal 2003 is a $951,000 gain related to a settlement with a former customer, and beginning in the fourth quarter of 2003 Series B Preferred stock dividends and accretion, which totaled $731,000. These dividends and accretion are now classified as interest expense as a result of classification requirements required by the adoption of Statement of Financial Accounting Standards No. 150. Prior to the fourth quarter of 2003, these dividends and accretion were recorded after Net income (loss). Reflected in the loss from continuing operations for fiscal 2002 is a loss on impairment of a former investment with Ajay for $3,565,000. Excluding these items, net income from continuing operations for the year ended September 30, 2003 was $596,000 compared to income of $1,220,000 for the year ended September 30, 2002. The Company attributes the earnings decline to start-up problems related to several of the Company's passenger car and light truck contracts, higher warranty costs for passenger car, light truck and heavy truck electronic throttle control systems and higher manufacturing costs in heavy truck and transit bus related primarily to the strike by the Company's union employees at the Portland facility for most of fiscal 2003. A new five year agreement was reached in August, 2003 which settled the strike. Year to year declines in gross margin of $3,647,000 were partially offset by reduced administrative costs of $1,461,000.
Net sales in the fourth quarter 2003 were $771,000, or 5.2%, lower than the corresponding quarter in the prior year due to lower unit sales volumes in the heavy truck and transit bus product lines.
The net loss from continuing operations in the fourth quarter of fiscal 2003 was $908,000 compared to income from continuing operations of $498,000 for the same quarter of 2002. This decrease in fourth quarter net income from continuing operations resulted from higher than anticipated startup costs associated with product launches in the passenger car and light truck product lines, the recording of additional warranty reserves and as discussed above the $731,000 of Series B Preferred stock dividends and accretion being recorded as interest expense starting in the fourth quarter of fiscal 2003. Gross margins in the fourth quarter of fiscal 2003 were $1,642,000 lower than the margins in the fourth quarter of fiscal 2002. This gross margin reduction was partially offset by reduced research and development, selling and administrative costs of $552,000.
Net income (loss) allocable to common shareholders for the fourth quarter of 2003 was a loss of $908,000 or ($.05) per diluted share compared to income of $1,704,000 or $.03 per diluted share in the fourth quarter of fiscal 2002. Net income allocable to common shareholders for the fourth quarter of fiscal 2002 includes a charge for dividends and accretion on preferred stock of $684,000, or ($.01) per diluted share, whereas the fourth quarter ended September 30, 2003 does not include a charge for dividends and accretion as these are recorded as interest expense as explained above. For the year ended September 30, 2003, net loss allocable to common shareholders includes a charge for dividends and accretion on preferred stock of $2,011,000, or ($.10) per diluted share compared to $1,566,000 or ($.08) per diluted share for the corresponding period in fiscal 2002. Net income (loss) allocable to common shareholders for the quarter and year ended September 30, 2002 also include a $923,000 gain related to the conversion of Series A Preferred stock to Series A-1 Preferred stock. Net income (loss) allocable to common shareholders included gains from discontinued operations of $967,000 for the fourth quarter of 2002 and $120,000 and $1,384,000 for the years ended September 30, 2003 and 2002, respectively.
Williams Controls' Board Chairman Gene Goodson stated, "Unfortunately, we continued to have higher than expected passenger car and light truck launch costs and that combined with some lingering manufacturing problems in our heavy truck line kept our gross margins depressed." He continued, "Through the sale of our passenger car and light truck product lines and the settlement of the strike at our Portland facility we expect our gross margins to improve and our operating costs to decrease." He concluded, "Additionally, industry projections show an improvement in the truck market for next year, and we believe that we are positioned to take advantage of that improved market. We appreciate the continued support of our customers and suppliers as Williams positions itself for growth."
Williams Controls is a designer, manufacturer and integrator of sensors and controls for the motor vehicle industry. For more information, please visit the Company's website at www.wmco.com.
The statements included in this news release concerning predictions of economic performance and management's plans and objectives constitute forward-looking statements made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1934, as amended. These forward looking statements are based on management's assumptions and projections, and are sometimes identifiable by use of the words, "expect to," "plan," "will," "believe" and words of similar predictive nature. Because management's assumptions and projections are based on anticipation of future events, you should not place undue emphasis on forward-looking statements. You should anticipate that our actual performance may vary from these projections, and variations may be material and adverse. You should not rely on forward- looking statements in evaluating an investment or prospective investment in our stock, and when reading these statements you should consider the uncertainties and risks that could cause actual results to differ materially from the forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, factors detailed in the Securities and Exchange Commission filings of the Company; economic downturns affecting the operations of the Company or any of its business operations, competition, and the ability of the Company to successfully identify and implement any strategic alternatives. The forward-looking statements contained in this press release speak only as of the date hereof and the Company disclaims any intent or obligation to update these forward-looking statements.
Williams Controls, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except share and per share amounts)
Three Three Twelve Twelve
months months months months
ended ended ended ended
9/30/03 9/30/02 9/30/03 9/30/02
(unaudited) (unaudited) (unaudited) (unaudited)
Net sales $14,000 $14,771 $51,919 $52,504
Cost of sales 11,189 10,318 40,952 37,890
Gross margin 2,811 4,453 10,967 14,614
Research and
development expense 849 1,034 3,575 3,549
Selling expense 400 387 1,460 1,349
Administration expense 1,671 2,051 5,325 6,786
Gain on settlement
with customer -- -- (951) --
Loss on impairment
of investment - Ajay -- -- -- 3,565
Income (loss) from
continuing operations (109) 981 1,558 (635)
Interest expense -
Series B Preferred
Stock dividends
and accretion 731 -- 731 --
Interest and other
(income) expenses, net 73 383 316 1,841
Income (loss) from
continuing operations
before income taxes (913) 598 511 (2,476)
Income tax expense
(benefit) (5) 100 (305) (131)
Net income (loss)
from continuing
operations (908) 498 816 (2,345)
Discontinued Operations
- Gain from settlement
of obligations -- 967 120 1,384
Net income (loss) (908) 1,465 936 (961)
Adjustment for
redemption of
preferred stock -
Series A to A-1 -- 923 -- 923
Preferred dividends
and accretion for
Series B Preferred Stock -- (684) (2,011) (1,566)
Net income (loss)
allocable to
common shareholders $(908) $1,704 $(1,075) $(1,604)
Earnings per share
information:
Income (loss) per
common share from
continuing operations
- basic $(0.05) $0.04 $(0.06) $(0.15)
Income per common
share from
discontinued
operations - basic -- 0.05 0.01 0.07
Net income (loss)
per common share
- basic $(0.05) $0.09 $(0.05) $(0.08)
Weighted common
shares outstanding
- basic 20,125,492 19,928,522 20,104,986 19,927,667
Income (loss)
per common share
from continuing
operations
- diluted $(0.05) $0.01 $(0.06) $(0.15)
Income per common
share from
discontinued
operations - diluted -- 0.02 0.01 0.07
Net income (loss)
per common share
|- diluted $(0.05) $0.03 $(0.05) $(0.08)
Weighted common
shares outstanding
- diluted 20,125,492 50,200,522 20,104,986 19,927,667
Williams Controls, Inc.
Consolidated Balance Sheets
(Dollars in thousands)
September 30, September 30
2003 2002
(unaudited) (unaudited)
Assets
Current Assets:
Cash and cash equivalents $101 $829
Trade accounts receivable, net 7,015 8,280
Other accounts receivable 7,185 484
Inventories, net 4,053 4,940
Prepaid expenses and other current assets 330 624
Total current assets 18,684 15,157
Property, plant and equipment, net 5,647 10,530
Other assets, net 576 635
Total assets $24,907 $26,322
Liabilities and Shareholders' Deficit
Current Liabilities:
Accounts payable $4,027 $5,326
Accrued expenses 8,796 6,856
Current portion of long-term debt
and capital leases 4,658 4,084
Total current liabilities 17,481 16,266
Long-term Liabilities:
Long-term debt and capital lease obligations 402 1,483
Employee benefit obligations 8,095 6,293
Subordinated debt -- 2,139
Mandatory redeemable Convertible
Series B Preferred Stock, net 16,072 --
Mandatory redeemable Convertible
Series B Preferred Stock, net -- 13,109
Shareholders' Deficit:
Preferred stock (Series A and A-1) 1 1
Common stock 201 199
Additional paid-in capital 22,224 23,559
Accumulated deficit (33,400) (32,325)
Treasury Stock (377) (377)
Other Comprehensive Loss - Pension
liability adjustment (5,792) (4,025)
Total shareholders' deficit (17,143) (12,968)
Total liabilities and shareholders' deficit $24,907 $26,322