Autocam Reports First Quarter Results
28 October 1998
Autocam Reports First Quarter Results
KENTWOOD, Mich., Oct. 28 -- Autocam Corporation
today reported its financial results for the first quarter
ended September 30, 1998. The Kentwood, Michigan-based manufacturer of
precision-machined parts reported net income for the three months ended
September 30, 1998 of $177,680, or 3 cents per diluted share on sales of
$24,019,951, versus net income of $1,135,523, or 19 cents per diluted share,
on sales of $17,429,456 for the first quarter of fiscal 1998. First quarter
1999 earnings include a 4 cent per share non-operating charge recognized in
connection with the dissolution of its domestic international sales
corporation as a result of the establishment of a foreign sales corporation.
"We are disappointed with our first quarter results," Autocam President
John C. Kennedy said. "We were hit real hard by the GM strike. Direct and
indirect sales to General Motors were lower than we expected, but our ability
to reduce costs, particularly labor, was largely dictated by the West Michigan
market for skilled machinists. With an area unemployment rate hovering around
2-3%, we feared that laying off quality machinists in answer to a short-term
demand decline could risk the Company's future if we were unable to retain our
skilled labor base."
The acquisition of Qualipart Industria E Comercio Ltda. (subsequently
renamed, "Autocam do Brasil") in January 1998 added $4 million in sales,
primarily of fuel system components, during the three months ended September
30, 1998 versus the same period in fiscal 1998. Sales of fuel system
components to customers other than Delphi were also higher when comparing the
two quarters reported. Unfortunately, the Company continues to experience
manufacturing difficulties resulting from the transfer of production for a key
customer of its Brazilian operation to the Kentwood facility. "The customer
has expedited the time table for this transfer of production which has caused
the Company to incur significantly more start-up costs than originally
anticipated," Kennedy commented.
The Company also reported strong gains in sales of components for other
transportation industry applications and medical device components. The
Company's Brazilian operations produce a number of precision-machined
components used in electric motors for vehicles. Sales of coronary stents
increased 88% during the first quarter of fiscal 1999 versus the same period
in fiscal 1998, which contributed significantly to earnings during the
quarter.
Kennedy indicated that he expects earnings during the remainder of fiscal
1999 will compare favorably with those of one year ago due to the acquisition
of Frank & Pignard ("F&P") on October 1, 1998 and the continuation of process
improvements being implemented on several fuel system programs in the early
stages of ramp up. "F&P has a strong base of business and manufacturing
capabilities which will allow us to expand and strengthen our relationship
with a key fuel systems customer, and F&P's power steering component business
will contribute significantly toward many corporate financial and marketing
objectives, Kennedy said. He added that the Company expects orders from
Delphi to exceed pre-strike levels over the balance of fiscal 1999 and the
production problems experienced on the Brazilian customer's program will be
solved soon resulting a profitable, important relationship with a leading
manufacturer of diesel fuel injectors.
The Company announced that, for the seventh consecutive year, it would
issue a 5% share dividend on November 16, 1998 to shareholders of record on
November 2, 1998.
The Company also announced that it would pay its regular quarterly cash
dividend of 2 cents per common share on November 16, 1998 to shareholders of
record on November 2, 1998. This dividend will be paid on the shares
outstanding prior to the issuance of the share dividend announced today.
Autocam manufactures precision-machined parts primarily used in fuel,
power steering and braking systems and electric motor assemblies for the
transportation industry, and ophthalmic and cardiovascular devices for the
medical industry. Autocam's common stock trades on the Nasdaq National Market
under the symbol "ACAM". For more information on the Company, visit our
Internet Web site at http://www.autocam.com.
This release may contain forward-looking statements relating to future
financial and other results. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or performance
and underlying assumptions and other statements that are other than statements
of historical facts. Such forward-looking statements may be identified by the
use of the words "anticipates," "estimates," "expects," "intends," "plans,"
"predicts," "projects," and similar expressions. These cautionary statements
and any other cautionary statements that may accompany the forward-looking
statements expressly qualify all such statements. Forward-looking statements
involve risk and uncertainties that could cause actual results or outcomes to
differ materially form those expressed in the forward-looking statements.
AUTOCAM CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the Three Months Ended
September 30,
1998 1997
$$ % $$ %
Sales $24,019,951 100.0% $17,429,456 100.0%
Cost of sales 20,579,418 85.7% 14,015,745 80.4%
Gross profit 3,440,533 14.3% 3,413,711 19.6%
Selling, general
and administrative 1,741,857 7.3% 1,000,698 5.7%
Other operating
expenses 51,875 0.2% 51,875 0.4%
Income from
operations 1,646,801 6.8% 2,361,138 13.5
Interest and other
expense, net 790,146 3.3% 607,815 3.5%
Minority interest
in net income 152,691 0.6%
Income before
tax provision 703,964 2.9% 1,753,323 10.0%
Tax provision 526,284 2.2% 617,800 3.5%
Net income $177,680 0.7% $1,135,523 6.5%
Basic net income
per share $0.03 $0.19
Diluted net income
per share $0.03 $0.19
Basic weighted
average shares
outstanding 6,105,224 6,007,107
Diluted weighted
average shares
outstanding 6,296,243 6,109,613
AUTOCAM CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
For the Three Months Ended
September 30, June 30,
1998 1998
Assets:
Cash $1,334,145 $1,643,539
Accounts receivable 12,911,443 11,679,824
Inventories 6,875,841 6,389,448
Prepaid expenses and other current assets 1,517,206 1,088,543
Total current assets 22,638,635 20,801,354
Fixed assets, net 66,788,944 64,421,470
Restricted cash and equivalents 4,240,355 5,007,524
Goodwill and other intangible assets 13,894,107 14,365,729
Other long-term assets 9,807,186 8,853,294
Total assets $117,369,227 $113,449,371
Liabilities and shareholders' equity:
Current maturities of long-term obligations $894,349 $6,553,588
Accounts payable 7,402,055 7,830,564
Accrued liabilities 3,569,627 3,291,195
Total current liabilities 11,866,031 17,675,347
Long-term obligations, net of current maturities 46,752,232 37,850,874
Deferred taxes 10,798,934 10,051,018
Deferred credits and other 506,467 561,288
Minority interest 2,520,197 2,249,935
Shareholders' equity 44,925,366 45,060,909
Total liabilities and shareholders' equity $117,369,227 $113,449,371