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Prestolite Electric Reports Record Results for 1998

24 February 1999

Prestolite Electric Reports Record Results for 1998

    ANN ARBOR, Mich.--Feb. 23, 1999--Prestolite Electric Incorporated and its parent, Prestolite Electric Holding, Inc., today announced that consolidated 1998 net sales of $282.8 million had generated earnings before interest, taxes, depreciation, amortization and special charges (EBITDA) of $31.4 million. Both were at record levels for the company. Net sales increased 65% from 1997 while EBITDA rose more than 96%. Operating income for 1998 was $16.8 million, producing net income of $0.2 million.
    The net sales increase resulted from Prestolite's January 1998 acquisition of three business units (located in the United Kingdom, Argentina, and South Africa) from LucasVarity. With the acquired operations included on a pro forma basis, 1997 net sales, EBITDA, and net income would have been $300.3 million, $24.8 million, and a $4.0 million loss, respectively. Net sales declined 5.8% from pro forma results for 1997, while EBITDA increased 26.7%. An improved gross margin and reduced selling, general and administrative expense both contributed to the profit improvement.
    Net income for the year totaled $3.3 million before three one-time adjustments. Those include a pretax charge of $2.1 million related to the repurchase of options, a pre-tax charge of $0.7 million for restructuring and an after-tax charge of $1.3 million associated with the first quarter debt refinancing. Net income for the year after those three items was $0.2 million.
    Company President Kim Packard commented, "We are pleased with our results for 1998. In addition to our record sales and profit performance, EBITDA before special items was 11.1% of sales, also a record for the company. With the integration of the Lucas acquisition generally finished and a number of exciting product development efforts nearing completion, we look forward to an excellent year in 1999."
    Prestolite Electric Incorporated manufactures alternators, starter motors, direct current motors, battery chargers and switching devices. These are supplied under the Prestolite, Leece-Neville, and Butec brand names for original equipment and aftermarket application on a variety of vehicles and industrial equipment. Genstar Capital Corporation and management own the equity of the company.
    Prestolite Electric Holding, Inc. changed its name from "PEI Holding, Inc." on December 31, 1998.
    EBITDA is a widely accepted financial indicator of a company's ability to service debt, but is not calculated the same by all companies. EBITDA should not be considered by an investor as an alternative to net income as an indicator of a company's operating performance or as an alternative to cash flow as a measure of liquidity. This release contains forward-looking statements that involve risks and uncertainties regarding the anticipated financial and operating results of the Company. The Company undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release. The Company's actual results may differ materially from those projected in forward-looking statements made by, or on behalf of, the Company.


Prestolite Electric Holding, Inc.
Consolidated Unaudited Financial Highlights
(In thousands of dollars)

                                                 1997
                                     1997         Pro         1998
                                    Actual       Forma       Actual
                                   ---------   ----------  ----------
Statement of Operations
-----------------------
    Sales                          $171,700     $300,287    $282,801
    Cost of goods sold              137,792      246,649     224,561
                                   ---------   ----------  ----------
      Gross profit                   33,908       53,638      58,240

    Selling, general & 
     administrative                  23,188       40,992      38,648
    Costs associated with option 
     repurchase                           -            -       2,101
    Restructuring and redundancy          -        1,656         711
                                   ---------   ----------  ----------
      Operating income               10,720       10,990      16,780

    Other income (expense)             (210)         454         197
    Income (loss) from 
     unconsolidated affiliates            -            -        (133)

    Interest expense                  5,384       12,642      13,494
                                   ---------   ----------  ----------
    Income from continuing 
     operations before income 
     taxes and extraordinary item     5,126       (1,198)      3,350

    Provision for income taxes        2,303        1,159       1,845
                                   ---------   ----------  ----------
      Income from continuing 
       operations                     2,823       (2,357)      1,505
    Income from discontinued 
     operation, net                  (1,673)      (1,673)          -
    Extraordinary item                    -            -      (1,275)
                                   ---------   ----------  ----------
      Net income (loss)             $ 1,150     $ (4,030)      $ 230
                                   ---------   ----------  ----------
                                   ---------   ----------  ----------
    Operating income                $10,720      $10,990     $16,780
    Other income (expense)             (210)         454         197
    Income (loss) from 
     unconsolidated affiliates            -            -        (133)
    Depreciation                      4,930       11,225      10,316
    Amortization                        571          518       1,470
                                   ---------   ----------  ----------
                                     16,011       23,187      28,630
    Costs associated with option 
     repurchase                           -            -       2,101
    Restructuring and redundancy          -        1,656         711
                                   ---------   ----------  ----------
      EBITDA                        $16,011      $24,843     $31,442
                                   ---------   ----------  ----------
                                   ---------   ----------  ----------