Tower Automotive Announces Fourth-Quarter and Full-Year 2003 Results, Provides 2004 Outlook
NOVI, Mich.--Feb. 1, 20042, 2004--Tower Automotive, Inc. today announced fourth-quarter revenues of $717 million, compared with $682 million in the fourth quarter of 2002. The company reported a net loss of $25 million, or $(0.43) per diluted share, for the quarter versus net income for the fourth quarter of 2002 of $17 million, or $0.29 per diluted share. Earnings in the fourth quarter of 2003 were reduced by items with a net impact of approximately $25.2 million, or $0.44 per share, including a write-down of $27.4 million of the company's Yorozu joint venture investment to market value; charges of $6.9 million after-tax related primarily to restructuring and impairment charges from previously announced actions; and an extraordinary gain at its Metalsa joint venture of $9.1 million.Fourth quarter 2003 earnings were impacted positively by approximately $6 million ($0.07 per share) related primarily to additional depreciation savings associated with asset write-downs. Fourth quarter 2002 results were increased by a net of $0.11 per share for reversal of restructuring charges of $9.3 million after-tax offset by other charges of $2.8 million after-tax.
"In the fourth quarter, we saw stronger volumes overall, which led to better than expected operating results. While our operating performance exceeded expectations, our reported results were impacted by several items, including a write-down to market value of a publicly traded joint venture," stated Kathleen Ligocki, President & CEO, Tower Automotive. "Looking forward, our top priorities for 2004 continue to be keeping our launches on-track while focusing on cash flow and continuing to make fundamental improvements in operations."
Tower Automotive generated EBITDA (a non-GAAP financial measure the company defines as earnings before interest, taxes, depreciation and amortization, as well as non-cash restructuring and asset impairment charges, joint venture asset impairment charges and extraordinary gains) of approximately $61 million in the fourth quarter of 2003 (a reconciliation of EBITDA to net income is attached in Table A). The company incurred net capital expenditures of $50 million in the quarter, and had cash on hand of $160.9 million at December 31, 2003.
For the twelve months ended December 31, 2003, revenues were $2.8 billion, approximately equivalent to revenues for the same period in 2002. The company reported a net loss of $116 million, or $2.05 per diluted share, for the twelve months ended December 31, 2003 versus a net loss of $98 million, or $1.70 per diluted share, in the 2002 period. Several significant items occurred in the twelve months ended December 31, 2003 and 2002 that reduced reported results by $2.21 and $2.68 per diluted share, respectively. The following tables summarize the impact of significant items in both the three-month and twelve-month periods ended December 31, 2003 and December 31, 2002.
Three Months Ended
December 31, December 31,
2003 2002
----------------- ----------------
($ in thousands, except per share
amounts)
Net of Per Net of Per
tax share tax share
---------- ------ -------- -------
Restructuring and asset impairment
charges $6,541 $0.11 $(9,283) $(0.16)
Write-down of JV investment to
market value 27,436 0.48 -- --
Write-off of debt issuance costs at
JV 396 0.01 -- --
Extraordinary gain (9,100) (0.16) -- --
Write-off of assets of equity joint
venture -- -- 884 0.02
Other expense -- -- 1,884 0.03
------ -------
Total impact per diluted share $0.44 $(0.11)
====== =======
Twelve Months Ended
December 31, December 31,
2003 2002
----------------- ----------------
($ in thousands, except per share
amounts)
Net of Per Net of Per
tax share tax share
---------- ------ -------- -------
Restructuring and asset impairment
charges $103,971 $1.84 $39,732 $0.69
Write-down of JV investment to
market value 27,436 0.48 -- --
Litigation reserves 1,452 0.03 -- --
Production interruption costs 769 0.01 -- --
Write-off of debt issuance costs 688 0.01 1,296 0.02
Extraordinary gain (9,100) (0.16) -- --
Write-off of assets at equity joint
venture -- -- 884 0.02
Cumulative effect of SFAS 142
adoption -- -- 112,786 1.96
Gain on sale of plant -- -- (2,495) (0.04)
Other expense -- -- 1,884 0.03
------ -------
Total impact per diluted share $2.21 $2.68
====== =======
EBITDA for the full year 2003 was $250 million. Net capital expenditures were $230 million for the year compared to $159 million in 2002, reflecting the company's current investment in new business with Ford, Nissan and Volvo.
Full Year 2004 and First Quarter Guidance
The company expects an increase in full-year 2004 revenues to approximately $3.2 billion, up from $2.8 billion in 2003, reflecting the addition of several new programs. Earnings per share are expected to be in the range of $0.25 to $0.40 per share for 2004. First quarter 2004 revenues are expected to be between $760 and $770 million, and earnings are expected to be a loss of between $(0.07) and $(0.03) per share for the quarter.
The company anticipates that EBITDA for the full year 2004 will be between $270 million and $285 million, including EBITDA of approximately $55-60 million in the first quarter of 2004. Net capital expenditures are expected to be approximately $195 million for the full year 2004.
The company's estimates for earnings per share and EBITDA exclude restructuring charges, which are expected to be approximately $0.01 to $0.02 per share per quarter based on previously announced restructuring activities.
Accessing the Conference Call Webcast and PowerPoint Presentation
A conference call of the fourth-quarter and twelve-month results is scheduled today at 11 a.m. Eastern Time. 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 Novi, Mich. Additional company information is available at www.towerautomotive.com.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 that are subject to risks and uncertainties. You should not place undue reliance on those statements because they only speak as of the date of this press release. Forward-looking statements include information concerning our possible or assumed future results of operations. These statements often include words such as "believe," "expect," "project," "anticipate," "intend," "plan," "estimate," or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this press release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions.
Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include: (i) the degree to which we are leveraged and our ability to generate sufficient cash flow from operations to meet our future liquidity needs; (ii) our reliance on major customers and selected vehicle platforms; (iii) the cyclicality and seasonality of the automotive market; (iv) our ability to obtain new business on new and redesigned models; (v) our ability to achieve the anticipated volume of production from new and planned supply programs; (vi) general economic or business conditions affecting the automotive industry (which is dependent on consumer spending), either nationally or regionally, being less favorable than expected; (vii) increased competition in the automotive components supply market; (viii) unforeseen problems associated with international sales, including gains and losses from foreign currency exchange; (ix) changes in general economic conditions in the United States and Europe; and (x) various other factors beyond our control. Except for our ongoing obligations to disclose material information as required by the federal securities laws, we do not have any obligation or intention to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events.
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts - unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------- -----------------------
2003 2002 2003 2002
---------- --------- ----------- -----------
Revenues $716,979 $681,644 $2,815,749 $2,754,464
Cost of sales 650,737 611,637 2,560,689 2,456,380
--------- --------- ----------- -----------
Gross profit 66,242 70,007 255,060 298,084
Selling, general and
administrative expenses 39,919 38,113 155,500 143,822
Restructuring and asset
impairment charge, net 9,911 (14,282) 157,532 61,125
--------- --------- ----------- -----------
Operating income (loss) 16,412 46,176 (57,972) 93,137
Interest expense, net 30,627 17,694 92,747 70,267
Other expense, net -- 1,952 -- 1,052
--------- --------- ----------- -----------
Income (loss) before
provision for income
taxes (14,215) 26,530 (150,719) 21,818
Provision (benefit) for
income taxes (4,833) 9,271 (51,245) 7,636
--------- --------- ----------- -----------
Income (loss) before
equity in earnings of
joint ventures and
minority interest (9,382) 17,259 (99,474) 14,182
Write-down of joint
venture investment to
market value, net (27,436) -- (27,436) --
Equity in earnings of
joint ventures, net 3,877 4,099 12,058 16,822
Minority interest, net (899) (4,097) (10,629) (15,824)
--------- --------- ----------- -----------
Income (loss) before
extraordinary gain and
cumulative effect of
change in accounting
principle (33,840) 17,261 (125,481) 15,180
Extraordinary gain, net 9,100 -- 9,100 --
Cumulative effect of
change in accounting
principle, net -- -- -- (112,786)
--------- --------- ----------- -----------
Net income (loss) $(24,740) $17,261 $(116,381) $(97,606)
========= ========= =========== ===========
Basic earnings (loss) per
common share:
Income (loss) before
extraordinary gain and
cumulative effect of
accounting change $ (0.59) $ 0.30 $ (2.21) $ 0.26
Extraordinary gain 0.16 -- 0.16 --
Cumulative effect of
change in accounting
principle -- -- -- (1.96)
--------- --------- ----------- -----------
Net income (loss) $(0.43) $0.30 $(2.05) $(1.70)
========= ========= =========== ===========
Weighted average basic
shares outstanding 57,342 57,697 56,703 57,329
========= ========= =========== ===========
Diluted earnings (loss)
per common share:
Income (loss) before
extraordinary gain and
cumulative effect of
accounting change $ (0.59) $ 0.29 $ (2.21) $ 0.26
Extraordinary gain 0.16 -- 0.16 --
Cumulative effect of
change in accounting
principle -- -- -- (1.96)
--------- --------- ----------- -----------
Net income (loss) $(0.43) $0.29 $(2.05) $(1.70)
========= ========= =========== ===========
Weighted average diluted
shares outstanding 57,342 65,442 56,703 57,329
========= ========= =========== ===========
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
December December
31, 31,
Assets 2003 2002
---------------------------------------------- ----------- -----------
Current assets:
Cash and cash equivalents $160,899 $13,699
Accounts receivable 325,599 249,341
Inventories 130,004 133,074
Deferred income taxes, net 20,116 20,634
Prepaid tooling and other 91,662 100,433
----------- -----------
Total current assets 728,280 517,181
----------- -----------
Property, plant and equipment, net 1,055,873 1,073,619
Investments in joint ventures 260,693 260,898
Deferred income taxes, net 142,678 105,699
Goodwill 498,663 472,967
Other assets, net 168,516 127,521
----------- -----------
$2,854,703 $2,557,885
=========== ===========
Liabilities and Stockholders' Investment
----------------------------------------------
Current liabilities:
Current maturities of long-term debt and
capital lease obligations $ 99,597 $ 120,470
Convertible subordinated notes 199,984 --
Accounts payable 556,036 417,727
Accrued liabilities 249,984 284,450
----------- -----------
Total current liabilities 1,105,601 822,647
----------- -----------
Long-term debt, net of current maturities 1,060,859 535,220
Obligations under capital leases, net of
current maturities 42,798 29,731
Convertible subordinated notes -- 199,984
Other noncurrent liabilities 223,641 199,477
----------- -----------
Total noncurrent liabilities 1,327,298 964,412
----------- -----------
Mandatorily redeemable trust convertible
preferred securities -- 258,750
Stockholders' investment:
Preferred stock -- --
Common stock 661 659
Additional paid-in capital 680,608 683,072
Retained deficit (173,555) (57,174)
Deferred compensation plans (9,609) (10,746)
Accumulated other comprehensive loss (22,751) (43,875)
Treasury stock (53,550) (59,860)
----------- -----------
Total stockholders' investment 421,804 512,076
----------- -----------
$2,854,703 $2,557,885
=========== ===========
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands - unaudited)
Years Ended December
31,
-----------------------
2003 2002
----------- -----------
OPERATING ACTIVITIES:
Net loss $(116,381) $(97,606)
Adjustments required to reconcile net loss
to net cash provided by operating
activities -
Cumulative effect of change in accounting
principle, net -- 112,786
Extraordinary gain, net (9,100) --
Non-cash restructuring and asset
impairment charge 155,750 61,125
Customer recovery related to program
cancellation 15,600 --
Depreciation 151,198 136,698
Deferred income tax expense (benefit) (37,316) 2,107
Gain on sale of plant -- (3,839)
Write-down of joint venture investment to
market value, net 27,436 --
Equity in earnings of joint ventures, net (12,058) (16,822)
Change in working capital and other
operating items 9,689 (63,497)
----------- -----------
Net cash provided by operating activities 184,818 130,952
----------- -----------
INVESTING ACTIVITIES:
Capital expenditures, net (230,126) (158,964)
Acquisitions, including joint venture
interests, earnout payments and dividends 8,503 (40,802)
Net proceeds from divestitures -- 4,004
Proceeds from sale of fixed assets -- 50,313
----------- -----------
Net cash used in investing activities (221,623) (145,449)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from borrowings 1,664,567 2,038,037
Repayments of debt (1,481,212) (2,197,449)
Net proceeds from issuance of common stock 650 225,701
Payments for repurchase of common stock -- (59,860)
----------- -----------
Net cash provided by financing activities 184,005 6,429
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 147,200 (8,068)
CASH AND CASH EQUIVALENTS:
Beginning of period 13,699 21,767
----------- -----------
End of period $160,899 $13,699
=========== ===========
TABLE A
----------------------------------------------------------------------
Reconciliation of EBITDA to Net Income (Loss)
----------------------------------------------------------------------
Actual Actual Actual Actual Actual
----------------------------------------------------------------------
($ in thousands) Q1 2003 Q2 2003 Q3 2003 Q4 2003 2003
----------------------------------------------------------------------
----------------------------------------------------------------------
EBITDA $75,239 $78,156 $36,150 $60,860 $250,405
----------------------------------------------------------------------
Less: Interest
expense 16,769 18,083 27,268 30,627 92,747
----------------------------------------------------------------------
Less: Provision
(benefit) for
income taxes 7,847 (625) (53,634) (4,833) (51,245)
----------------------------------------------------------------------
Less: Depreciation
expense 39,051 40,055 40,533 31,559 151,198
----------------------------------------------------------------------
Less: Non-cash
restructuring &
asset impairment
charges - 23,066 122,773 9,911 155,750
----------------------------------------------------------------------
Less: Write-down of
joint venture
investment to
market value - - - 27,436 27,436
----------------------------------------------------------------------
Add: Extraordinary
gain - - - (9,100) (9,100)
----------------------------------------------------------------------
Net income (loss) $11,572 $(2,423) $(100,790) $(24,740) $(116,381)
----------------------------------------------------------------------
----------------------------------------------------------------------
Reconciliation of EBITDA to Net Income (Loss)
----------------------------------------------------------------------
Forecast Forecast
----------------------------------------------------------------------
($ in thousands) Q1 2004 2004
----------------------------------------------------------------------
----------------------------------------------------------------------
EBITDA $60,000 $285,000
----------------------------------------------------------------------
Less: Interest expense 31,000 120,000
----------------------------------------------------------------------
Less: Provision (benefit) for income taxes (3,700) 1,000
----------------------------------------------------------------------
Less: Depreciation expense 37,000 148,000
----------------------------------------------------------------------
Less: Non-cash restructuring & asset impairment
charges - -
----------------------------------------------------------------------
Net income (loss) $(4,300) $16,000
----------------------------------------------------------------------