Safety Components Announces Fiscal 1999 Q4 And Year End Results
28 June 1999
Safety Components International, Inc. Announces Fiscal 1999 Fourth Quarter And Year End Results
FORT LEE, N.J., June 25 -- 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 27, 1999. Sales for the fourth quarter increased to
$55,715,000 from $52,583,000 in the previous year's comparable quarter. The
Company reported a net loss of $10,796,000, or $2.10 per diluted share, for
the quarter, compared to net income of $1,905,000, or $0.38 per diluted share,
for the same period in the prior year.
Sales for the fiscal year ended March 27, 1999 were $221,279,000 compared
to $170,310,000 for the previous year. Safety Components reported a net loss
of $12,866,000, or $2.52 per diluted share, for the year compared to net
income of $6,008,000, or $1.17 per diluted share, for the previous year.
The fourth quarter loss resulted from continued ramp-up costs associated
with the substantial growth in airbag cushion orders, lower revenues in the
metal components business and reduced orders from one of the Company's
European customers due to their internal production problems. One-time items
also contributed significantly to the fourth quarter loss. A charge
associated with the termination of a $28 million convertible preferred stock
agreement with a private investor group of approximately $2.5 million was
taken. Additional charges aggregating approximately $2.3 million were taken
to cover costs associated with the decision to close the Company's operation
in China, reserves against collection of certain trade receivables, research
and development costs associated with certain new products which are being
brought to market and certain severance costs and legal reserves.
Exclusive of the impact from the one-time items in fiscal year 1999
totaling approximately $11.0 million, earnings before interest, taxes,
depreciation and amortization (adjusted EBITDA) was $20,567,000, as compared
to EBITDA of $26,009,000, before one-time charges in fiscal 1998. One time
items in fiscal 1999 included the $4.8 million detailed above, the impact of
the General Motors strike ($1.3 million) and an aggregate of $5.0 million from
the transfer of the Company's labor-intensive passenger airbag manufacturing
operations from the Company's German facility to its lower labor cost facility
in the Czech Republic, a contract dispute and losses from the write-off of
certain assets. One-time items in fiscal 1998 included approximately $1.8
million of charges due to the write-off of certain capitalized costs
associated with the reorganization and relocation of the Company's foreign
operations. For the fourth quarter, exclusive of the one-time items, adjusted
EBITDA was ($466,000) as compared to EBITDA of $9,045,000, in the comparable
1998 quarter.
"While I am disappointed in these results, I believe we are back on course
toward growth and profitability of the Company," stated Mr. Zummo. "We
shipped 10.3 million airbag cushions during fiscal 1999 as compared to 6.6
million in fiscal 1998. Our annual production rate at the end of fiscal 1999
was 14 million airbag cushions. This growth came at the short-term cost of
high levels of scrap, excessive labor costs and expedited air freight shipment
costs. We did, however, meet our commitments to deliver quality product on a
timely basis to our customers. With the majority of the new platform
introductions behind us and the commencement of lean manufacturing techniques
at our plants, we are already beginning to see the positive results in our
first quarter of fiscal 2000," continued Zummo.
Mr. Zummo also stated that "I am confident that we will return to
profitability in fiscal 2000 with EBITDA exceeding 1998 levels. Our first
quarter results to date support my confidence level, although as I have stated
previously, there are many challenges that lie ahead of us. We are
restructuring our operations to improve financial performance. We have
implemented lean manufacturing programs at each of our facilities and have
begun to see tangible results, which among other benefits will allow us to
satisfy our customers' demand without further plant expansion in fiscal year
2000."
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. Those factors include, but are not
limited to: dependence of revenues upon several major module suppliers;
worldwide economic conditions; the results of cost-savings programs being
implemented; adequacy of capital; qualification on awarded programs; domestic
and international automotive industry trends; 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 and
Europe. 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)
Thirteen Three
Weeks Ended Months Ended
March 27, 1999 March 28, 1998
Net sales $55,715 $52,583
Cost of sales,
excluding depreciation 52,590 39,940
Depreciation 2,002 1,346
Gross profit 1,123 11,297
Selling and marketing expenses 610 561
General and administrative
expenses 3,855 2,677
Amortization of goodwill 615 679
Research and development
expenses 552 --
Terminated investment
agreement costs 2,500 --
Reorganization and relocation 838 1,789
(Loss) income from operations (7,847) 5,591
Other (income) expense, net 1,184 (46)
Interest expense 3,761 2,374
(Loss) income before
income taxes (12,792) 3,263
(Benefit) provision for
income taxes (1,996) 1,358
Net (loss) income $(l0,796) $1,905
Net (loss) income per share,
assuming dilution $(2.10) $0.37
Weighted average number of
shares outstanding, assuming
dilution 5,137 5,188
EBITDA (excluding certain costs) $(466) $9,045
Safety Components International, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
Fifty-two
Weeks Ended Year Ended
March 27,1999 March 28,1998
Net sales $221,279 $170,310
Cost of sales,
excluding depreciation 188,804 133,358
Depreciation 7,728 5,001
Gross profit 24,747 31,951
Selling and marketing expenses 3,122 1,686
General and administrative
expenses 12,976 8,900
Research and development
expenses 1,090 357
Terminated investment
agreement costs 2,500 --
Amortization of goodwill 2,362 1,742
Reorganization and relocation 3,238 1,789
(Loss) income from operations (541) 17,477
Other (income) expense, net 2,397 33
Interest expense 12,750 7,747
(Loss) income before income
taxes (15,688) 9,697
(Benefit) provision for
income taxes (2,822) 3,689
Net (loss) income $(12,866) $6,008
Net (loss) income per
share, assuming dilution $(2.52) $1.17
Weighted average number of
shares outstanding,
assuming dilution 5,112 5,147
EBITDA (excluding certain costs) $20,567 $25,696