J.L. French Automotive Castings, Inc. Announces Second-Quarter Results
MINNEAPOLIS, July 27 -- J.L. French Automotive Castings, Inc. today announced revenues for its second quarter ended June 30, 2004 of $140.0 million, an increase of 5.3 percent compared with revenues of $133.0 million in the 2003 period.
Operating income before restructuring and impairment charges totaled $16.0 million compared to $12.8 million in the prior-year quarter, a 25.0 percent increase. Earnings before interest, taxes, depreciation and amortization (EBITDA) before restructuring and impairment charges increased 11.4 percent to $27.3 million from $24.5 million in the second quarter of 2003. During the second quarter of 2004, the company recorded restructuring and impairment charges of $1.7 million, which represents costs related to the closure of facilities in Grandville, MI, and the United Kingdom.
For the first half of 2004, revenues were $287.1 million, an increase of $10.5 million compared to the 2003 period. EBITDA before restructuring and impairment charges increased 10.5 percent to $56.0 million from $50.7 million in the first half of 2003. Interest expense decreased $0.7 million from $37.2 million in the first half of 2003 to $36.5 million. During the first six months of 2004, the company recorded restructuring and impairment charges of $3.3 million, which represents $2.1 million in costs related to the closure of facilities in Grandville, MI, and the United Kingdom, and a $1.2 million non-cash charge to reduce the carrying value of the Grandville facility to estimated fair value.
On July 14, 2004, the company announced a tender offer to acquire its outstanding 11.5 percent senior subordinated notes. The tender offer is being commenced in connection with a refinancing of the company's current senior credit facility and an offering of $165 million of preferred equity. The tender offer expires on August 10, 2004.
The following table reconciles the reported net loss to operating income before restructuring and impairment charges and EBITDA before restructuring and impairment charges for the three and six months ended June 30, 2004 and 2003:
(In thousands) Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
Net loss $(3,829) $(3,716) $(6,915) $(9,276)
Provision (benefit)
for income taxes (205) 29 350 97
Restructuring and
impairment charges 1,721 (58) 3,253 (58)
Interest expense 18,343 18,810 36,490 37,187
Other income -- (2,313) -- (617)
Operating income before
restructuring and
impairment charges(A) 16,030 12,752 33,178 27,333
Depreciation and
amortization 11,309 11,731 22,844 23,330
EBITDA before
restructuring and
impairment charges(A) $27,339 $24,483 $56,022 $50,663
(A) Operating income before restructuring and impairment charges and
EBITDA before restructuring and impairment charges 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 of America, or GAAP, and our
calculations thereof may not be comparable to that reported by other
companies. EBITDA before restructuring and impairment charges is
included in this press release because it is 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 before
restructuring and impairment charges does 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.
About J.L. French Automotive Castings, Inc.
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, WI; Glasgow, KY; Benton Harbor, MI; San Andres de Echevarria, Spain; Saltillo, Mexico; as well as three plants in the United Kingdom. The company is based in Sheboygan, WI, and has its corporate office in Minneapolis, MN.
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 or achieving compliance with debt covenants, (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,
2004 2003 2004 2003
Sales $140,049 $132,963 $287,101 $276,584
Cost of sales 120,469 116,453 246,718 241,415
Gross profit 19,580 16,510 40,383 35,169
Selling, general and
administrative expenses 3,550 3,758 7,205 7,836
Restructuring and
impairment charges 1,721 (58) 3,253 (58)
Operating income 14,309 12,810 29,925 27,391
Cash interest expense 15,259 14,525 30,284 28,980
Non-cash interest
expense 3,084 4,285 6,206 8,207
Interest expense 18,343 18,810 36,490 37,187
Other income -- (2,313) -- (617)
Loss before income
taxes (4,034) (3,687) (6,565) (9,179)
Provision (benefit)
for income taxes (205) 29 350 97
Net loss $(3,829) $(3,716) $(6,915) $(9,276)
J.L. FRENCH AUTOMOTIVE CASTINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands - Unaudited)
June 30, December 31,
2004 2003
Assets
Current assets:
Cash and cash equivalents $788 $1,497
Accounts receivable, net 50,695 46,550
Inventories 34,802 32,623
Assets held for sale 3,516 4,677
Other current assets 12,251 12,742
Total current assets 102,052 98,089
Property, plant and equipment, net 244,552 251,993
Other assets, net 15,184 16,599
$361,788 $366,681
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $47,628 $52,332
Accrued liabilities 32,025 33,485
Current portion of long-term debt 21,780 23,333
Total current liabilities 101,433 109,150
Long-term debt, net of current maturities 429,840 419,192
Subordinated notes 175,000 175,000
Other noncurrent liabilities 20,225 21,680
Total liabilities 726,498 725,022
Redeemable common stock 60,000 60,000
Stockholders' deficit:
Common stock 1 1
Additional paid-in capital 87,072 87,144
Accumulated deficit (510,937) (504,022)
Accumulated other comprehensive loss (846) (1,464)
Total stockholders' deficit (424,710) (418,341)
$361,788 $366,681