Safety Components International, Inc. Announces Fiscal Results
8 June 1998
Safety Components International, Inc. Announces Fiscal 1998 Fourth Quarter and Year End Results
FORT LEE, N.J., June 8 -- Safety Components International,
Inc. , one of the world's leading manufacturers of automotive
airbag fabric and cushions, today reported results for the fourth quarter and
fiscal year ended March 28, 1998. Sales for the fourth quarter increased to
$52,583,000 from $24,247,000 in the previous year's comparable quarter. The
company reported net income of $1,905,000, or $0.38 per share, for the
quarter, compared to net income of $425,000, or $0.09 per share, for the same
period in the prior year.
Sales for the fiscal year ended March 28, 1998 were $170,310,000 compared
to $83,958,000 for the previous year. Safety Components reported net income
of $6,008,000, or $1.20 per share, for the year compared to $2,204,000, or
$0.44 per share, for the previous year.
For fiscal 1998, the company wrote-off certain capitalized costs
associated with reorganization and relocation of its foreign operations of
approximately $1.8 million. Exclusive of these one-time charges in fiscal
1998 and the charges related to a change in accounting principle and the
extraordinary item recorded in fiscal 1997, the company's earnings per share
would have been $1.43 for fiscal 1998 versus $0.98 for fiscal 1997 and $0.61
for the fourth quarter of fiscal 1998, versus $0.30 for the fourth quarter of
fiscal 1997. "These investments, incurred to move production to our low-cost
foreign operations, will allow us to compete as a low-cost provider of airbag
related products for years to come," stated Robert A. Zummo, president and
chief executive officer of Safety Components International, Inc.
During the fourth quarter of fiscal 1998, revenues of approximately $7.8
million were recognized from defense systems contracts. These revenues are
not indicative of future results.
Exclusive of the impact from the one-time items in fiscal years 1998 and
1997, earnings before interest, taxes, depreciation and amortization (EBITDA)
increased $13,253,000 to $26,009,000 or $5.17 per share, for fiscal 1998,
compared to $12,756,000 or $2.54 per share, in the prior year. For the fourth
quarter of fiscal 1998, EBITDA was $9,405,000 or $1.87 per share, versus
$4,281,000, or $0.85 per share, in the comparable 1997 quarter.
It should be noted that for the quarter ended March 28, 1998, interest
expense as a percentage of revenue increased to five percent from three
percent for the fourth quarter of fiscal 1997. Interest expense as a
percentage of revenue for the year ended March 28, 1998, increased to five
percent from two percent for fiscal 1997. The increase in interest expense
for both the quarter and year is attributable to the issuance of $90 million
in senior subordinated debt in connection with the company's July 1997
acquisition of the Air Restraint and Industrial Fabrics Division of JPS
Automotive, L.P., now Safety Components Fabric Technologies, Inc.
"We are pleased to report these strong results despite the challenges our
European Automotive Group faced in the form of price pressures and the
devaluation of the mark. However, domestic results were strong due to the
company's vertical integration efforts and management's focus on cost
reductions and quality," added Zummo. "With the fiscal 1998 acquisitions and
successful integrations of Valentec International and Safety Components Fabric
Technologies, each accretive, we are now in a strong position to take full
advantage of the recent significant awards from our new and existing
customers."
In April 1998, the company announced that its North American Automotive
Group was awarded orders for two million airbag cushions from a major module
supplier. These orders now aggregate 3.1 million airbag cushions and $39
million in annual revenues once full production commences. Production for
orders with the new customer began in the fourth quarter of fiscal 1998, while
production for the April awards is scheduled to commence in the third quarter
of fiscal 1999 with start up efforts continuing into the first quarter of
fiscal 2000.
"Safety Components continues to believe we are well positioned to expand
the awards from this new supplier to an annual volume in excess of 3.5 million
airbag cushions by the end of our 1999 fiscal year. We also believe we can
broaden our relationship with this customer to include European business,"
said Zummo.
In addition, Safety Components has received significant additional airbag
cushion orders from an existing European customer to increase annual volumes
from this module supplier to five million airbag cushions annually from
approximately three million airbag cushions delivered in fiscal 1998. "With
the establishment and facilitation of our low-cost operations, we feel we are
well positioned to successfully provide this important module supplier with
the additional volume during fiscal 1999 and beyond," Zummo continued.
This release contains forward looking statements. There are certain
important factors that could cause results to materially differ from those
anticipated from the statements above. These factors include, but are not
limited to: dependence of revenues upon several major module suppliers; the
continued performance by the Safety Components Fabric Technologies division at
or above historical levels; worldwide economic conditions; automotive industry
trends; approval of automobile manufacturers of airbag cushions currently in
production; pricing pressures; and the ability to satisfy our customers on
timeliness and quality. Additional information on these and other factors
that could potentially affect the company's financial results may be found in
the company's filings with the Securities and Exchange Commission.
Safety Components International, Inc. is a leading, low-cost supplier of
automotive airbag fabric and cushions with operations in North America, Europe
and Asia. The company is also a leading manufacturer of value-added synthetic
fabrics used in a variety of niche industrial and commercial applications. In
addition, Safety Components supplies metal airbag components to its airbag
customers utilizing its machining and stamping capabilities gained from years
of experience as a military ordnance manufacturer and continues as a systems
integrator and manufacturer for ordnance programs.
Safety Components International, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended
March 28, 1998 March 31, 1997
Net sales $52,583 $24,247
Cost of sales, excluding
depreciation 39,940 17,312
Depreciation 1,346 798
Deferred product launch costs --- 1,761
Gross profit 11,297 4,376
Selling and marketing expenses 561 176
General and administrative
expenses 2,677 2,478
Relocation and reorganization 1,789 ---
Amortization of goodwill 679 (38)
Income from operations 5,591 1,760
Other expense (income), net (46) 252
Interest expense 2,374 624
Income before taxes 3,263 884
Provision for income taxes 1,358 459
Net income $1,905 $425
Net income per share $0.38 $0.09
Weighted average number of
shares outstanding 5,027 5,025
EBITDA $9,405 $4,281
EBITDA per share $1.87 $0.85
Safety Components International, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
Years Ended
March 28, 1998 March 31, 1997
Net sales $170,310 $83,958
Cost of sales 133,572 64,130
Depreciation 5,001 2,043
Deferred product launch costs --- 1,761
Gross profit 31,737 16,024
Selling and marketing expense 1,829 1,375
General and administrative
expense 8,900 5,697
Relocation and reorganization
costs 1,789 --
Amortization of goodwill 1,742 348
Income from operations 17,477 8,604
Other expense 33 208
Interest expense 7,747 1,555
Income before taxes 9,697 6,841
Provision for income taxes 3,689 2,995
Income before extraordinary
item and cumulative
effect of accounting change 6,008 3,846
Extraordinary item - deferred
financing costs
(less tax benefit of $255) --- 383
Cumulative effect of change in
accounting for deferred
product launch costs
(less tax benefit of $718) --- 1,259
Net income $6,008 $2,204
Earnings per common share:
Income before extraordinary item
and cumulative effect of
accounting change $1.20 $0.77
Extraordinary item --- (0.08)
Cumulative effect of change in
accounting for deferred
product launch costs --- (0.25)
Net income per share $1.20 $0.44
Weighted average number of
shares outstanding 5,027 5,027
EBITDA $26,009 $12,756
EBITDA per share $5.17 $2.54