JPE Inc. Reports Net Loss for Q2
14 August 1998
JPE Inc. Reports Net Loss for Second Quarter
ANN ARBOR, Mich.--(AutomotiveWire)--Aug. 14, 1998--JPE Inc. (OTC BB:JPEI) today reported operating results for the second quarter and six months ended June 30, 1998.For the quarter ended June 30, 1998, JPE Inc. reported a net loss of $7.4 million or $1.62 per share as compared to a net loss of $990,000 or $0.22 per share for the second quarter of 1997. The second quarter loss included a previously announced $4.5 million charge to write down JPE Canada related assets to the carrying amount which will be used to settle JPE Canada's obligations to its lenders. The loss excluding this non-cash charge was $2.9 million which was partially attributable to the strike at General Motors Corporation and higher interest expense.
Net sales for the second quarter of 1998 were $66.6 million, a decrease of 13 percent as compared to $77 million reported for the second quarter of 1997. The sales decrease is attributable to lost sales of approximately $4.2 million due to the General Motors strike and lower sales for JPE Canada car models that will be replaced by new car models for which JPE Canada does not have the replacement business.
Operating profit for the U.S. businesses in the second quarter of 1998 improved to $2.4 million as compared with $685,000 for the first quarter ended March 31, 1998. The JPE Canada operating loss for the second quarter ended June 30, 1998 was $1.4 million as compared to $2.2 million in the first quarter of 1998. The improvement in the U.S. businesses was attributable to lower scrap rates at Plastic Trim Inc. and improved margins in the Company's aftermarket businesses. The improvement in JPE Canada was attributable to solving the issues surrounding the launch of a new truck trim program and lower scrap rates. The operating profits of both the U.S. and Canadian businesses were negatively impacted by the General Motors strike, which the Company estimates negatively impacted operating profits by approximately $425,000 and $750,000, respectively.
Interest expense for the second quarter ended June 30, 1998 was $3.6 million compared to $2.7 million for the same period as last year. The higher interest expense is the result of the defaults on the Company's debt arrangements, raising the effective interest rate to approximately 11 percent. JPE, Inc. has reached a forbearance agreement with its U.S. lenders and continues to negotiate with its lenders concerning financing for continued operations.
Dr. John Psarouthakis, Chairman and Chief Executive Officer, stated, "We have decided to focus our management and financial resources to improve the value of the U.S. businesses. It was disappointing that JPE Canada could not be turned around quickly enough for us to benefit from it becoming a profitable business venture. The exceptional charge to earnings was necessary under proper accounting rules. At the same time, we are pleased with operating improvements at other operations."
The net loss for the six months ended June 30, 1998 was $10.7 million or $2.33 per share as compared to a net loss of $1.1 million or $0.24 per share reported for the six months ended June 30, 1997. The net sales for the six months ended June 30, 1998 were $136.1 million as compared to $145 million for the same period last year.
The statements contained in this press release which are not historical facts are forward looking statements. The company's actual results may differ materially from those projected in its forward looking statements, including, but not limited to: sales levels; product mix; launch difficulties; scrap rates; customer reimbursement; the ability to obtain price increases; the cooperation from and continued funding by the company's and JPE Canada's respective lenders; and the timing of and proceeds from the company's sale of its businesses. In addition, various factors discussed in the Company's various reports filed with the Securities and Exchange Commission may affect such forward looking statements.
JPE, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Quarter Ended Six Months Ended
June 30 June 30
_____________ ________________
1998 1997 1998 1997
____ ____ ____ ____
Net Sales $66,643 $77,006 $136,067 $145,031
Gross Profit 8,247 11,453 14,439 20,414
Operating Profit (Loss) (a) 930 1,595 (575) 3,773
Other Expenses 3,122 104 2,987 176
Net Loss (a) (7,436) (990) (10,704) (1,105)
Loss Per Share ($1.62) ($0.22) ($2.33) ($0.24)
Weighted Average Shares 4,602 4,602 4,602 4,606
(a) Includes a charge of $2,250 for the discontinuance of the
stamping business.