Bonded Motors Announces Second Quarter Results
30 July 1999
Bonded Motors Announces Second Quarter Results; Company Returns to Profitability as Gross Margins Improve; Two New Regional Distribution Centers Planned
LOS ANGELES--July 29, 1999--Aaron Landon, Chairman of the Board and Chief Executive Officer of Bonded Motors Inc. Thursday announced operating results for the second quarter ended June 30, 1999.Revenues remained steady from the first quarter, 1999 at $9.6 million versus $9.8 million in the quarter ended March 31, 1999. Gross margins improved from 12.5% during the first quarter, 1999 to 20.8% for the quarter ended June 30, 1999. Net earnings for the second quarter were $226,134 or $.07 per share, versus a net loss during the preceding quarter of $270,265, or $.09 per share.
Commenting on the results, Landon noted, "The quality improvement and cost reduction programs we have put in place are continuing to show progress. Much of the credit goes to Bill Robinson, Bonded's Executive Vice President, who joined our Company late last year. This is the first full quarter that Bill has had complete charge of manufacturing operations, and we are very gratified with the results of his efforts.
"Under Bill's supervision we have seen significant improvement in both product quality and plant management. Actual warranty costs declined significantly for the quarter just ended, and unit cost of production also declined for the period. As a result, gross margins improved significantly.
"In addition, it is worth note that Bill Robinson has recently been asked to serve on the Board of Directors of PERA (Production Engine Remanufacturer's Association), an industry trade organization. I think this request acknowledges Bill's stature within our industry.
"As stated previously, management's primary focus in 1999 has been to return to profitability by absorbing the revenue growth levels we've achieved over the past few years. These efforts seem to be improving our gross margins. In addition, current plans call for opening two additional Regional Distribution Centers this year, one in the Minneapolis area and another in the Dallas/Fort Worth area.
"These plans are primarily at the request of two of our larger customers, Genuine Parts/NAPA and CSK Automotive . We expect these two new distribution centers to be operational in the third quarter, 1999.
"Selling and Distribution expense per unit sold for the quarter was higher than we initially targeted, due primarily to lower unit sales. General and Administrative expense for the quarter was within expectations."
Safe Harbor statement under the Private Securities Litigation Reform Act of 1995: The statements in this release regarding operational improvements, future revenue and earnings expectations and the expansion of the company's facilities and markets are subjective or forward looking statements that include risks and uncertainties, included but not limited to product demand and development, technological advancements, impact of competitive products and pricing, growth in targeted markets, manufacturing capacity, risks of foreign operations and other information detailed from time to time in the Company's Securities and Exchange Commission filings.
Bonded Motors (www.bondedmotors.com) is a remanufacturer of car and light truck engines with headquarters in Los Angeles, manufacturing facilities in California and Georgia, and Distribution Centers in California, Washington, Colorado, Ohio, New York, and Georgia.
The Company's principal customers are automotive parts chain stores, such as Pep Boys - Manny, Moe and Jack ; CSK Automotive (Checker, Schucks, Kragen) ; Paccar Automotive (Grand's and Al's Auto Parts) ; and Genuine Parts/NAPA .
BONDED MOTORS INC.
Balance Sheets
June 30, 1999
(Unaudited)
Assets
Current assets:
Cash $ 342,631
Trade accounts receivable (less allowance
for doubtful accounts of $408,597) 3,423,289
Inventories:
Parts 2,229,699
Work in process 1,242,102
Finished goods 6,090,613
9,562,414
Deferred tax assets 715,478
Prepaid expenses and other current assets 381,947
Prepaid income taxes 13,216
Total current assets 14,438,975
Restricted investment, IDB 5,200,520
Property and equipment, at cost:
Machinery and equipment 3,730,200
Furniture and fixtures 648,377
4,378,577
Less accumulated depreciation 1,765,537
Net property and equipment 2,613,040
Goodwill, less accumulated amortization of $ 39,727 172,151
Cost of issuance, IDB 248,631
Deferred tax assets 1,672,897
Other assets 2,595
$24,348,809
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of notes payable to bank $ 447,248
Short-term debt 5,683,447
Accounts payable 3,479,103
Accrued expenses 596,530
Accrued warranty obligations 861,087
Current installments of capital lease obligations 9,160
Total current liabilities 11,076,575
Notes payable to bank, excluding current installments 715,608
IDB issuance 5,130,000
Capital lease obligations, excluding current
installments 10,566
Shareholders' equity:
Preferred stock, no par value. Authorized
1,000,000 shares; none issued and outstanding -
Common stock, no par value. Authorized
10,000,000 shares; issued and outstanding
3,067,140 shares 5,040,719
Additional paid-in capital 104,000
Retained earnings 2,371,341
Notes receivable from exercise of stock options (100,000)
Total shareholders' equity 7,416,060
$ 24,348,809
BONDED MOTORS INC.
Statement of Earnings
(Unaudited)
For the For the
Three Months Ended Six Months Ended
June 30 June 30
1999 1998 1999 1998
Net sales $ 9,628,485 $11,302,610 $19,395,459 $19,810,652
Cost of sales 7,627,690 8,833,411 16,172,773 15,817,648
Gross profit 2,000,795 2,469,199 3,222,686 3,993,004
Selling, general and
administrative
expenses 1,495,017 1,783,905 2,963,783 2,866,501
Earnings (loss)
from operations 505,778 685,294 258,903 1,126,503
Other (expense) income:
Interest expense (171,080) (145,255) (335,776) (255,679)
Interest income 7,929 2,086 10,008 4,171
Other - - - (1,896)
Earnings (loss) before
income taxes 342,627 542,125 (66,865) 873,099
Income tax benefit
(expense) (116,493) (143,283) 22,734 (268,563)
Net earnings (loss) $ 226,134 $ 398,842 $ (44,131) $ 604,536
Basic earnings (loss)
per share $ 0.07 $ 0.13 $ (0.01) $ 0.20
Diluted earnings (loss)
per share 0.07 0.13 (0.01) 0.19
Weighted average common shares
outstanding - basic 3,067,000 3,053,000 3,067,000 3,040,000
Weighted average common and
common equivalent shares
outstanding - diluted 3,067,000 3,187,000 3,067,000 3,181,000