Williams Controls Reports Third Quarter Results
17 August 1999
Williams Controls Reports Third Quarter Results
Writes off remaining assets in Kenco unit
and sells related plant facility
PORTLAND, Ore., Aug. 16 -- Williams Controls, Inc.
announced its results for the fiscal third quarter ended
June 30, 1999. Sales for the third quarter of 1999 reached $16,262,000, an
increase of 10% compared to the $14,767,000 reported in the third quarter of
1998. For the nine months ended June 30, 1999, sales increased $4,750,000, or
11%, to $47,828,000, compared to $43,078,000 in the prior year period. The
increase in sales was primarily driven by the solid increases in the sales of
electronic throttle controls.
After a writedown for the impairment of the remaining assets in Kenco
Williams, the net loss was $2,378,000 or $.14 per diluted share for the
quarter ended June 30, 1999 compared to net earnings of $1,129,000, or $.05
per diluted share reported in the third quarter of the prior year. Excluding
the impairment loss, net earnings for the quarter declined $256,000 from
$1,129,000 to $873,000. The prior year net earnings included a net loss from
discontinued operations of $336,000, or $.02 per diluted share.
Earnings for the quarter and nine-month period were affected by a
$5,278,000 pre-tax writedown of all remaining Kenco assets. On an after-tax
basis, the writedown was effectively $3,251,000, or $.18 per diluted share.
Included in the writedown was a $528,000 pre-tax impairment loss resulting
from the July 1999 sale of the plant facilities previously used by Kenco.
Net earnings for the nine months ended June 30, 1999 were $130,000, or a
loss of $.02 per diluted share after preferred dividends, compared to net
earnings of $2,910,000, or $.15 per diluted share reported in the prior year
period. The prior year net earnings included a net loss from discontinued
operations of $799,000, or $.04 per diluted share. Excluding the impairment
loss, net earnings for the nine months increased $471,000 from $2,910,000 to
$3,381,000.
Additional R&D expenditures made by the Company were primarily directed
toward Williams' move into the automotive and light truck market segments, as
the Company seeks to penetrate that market with its electronic throttle
control technologies. Research and development expenses increased 41% or
$297,000 in the quarter and as a percent of sales increased from 4.9% in the
third quarter of fiscal 1998 to 6.3% in the current fiscal quarter.
Williams Controls chief financial officer Gerard A. Herlihy stated, "While
we have made significant progress penetrating the automotive and small truck
electronic throttle control market during the last year, the discontinued
operations in both the Kenco and agriculture equipment units have been a
significant drain on management time and financial resources. Protecting the
Kenco assets would have required financial commitments which the Company was
unwilling to make. Management made the decision to concentrate on
strategically related new business opportunities in the truck and automotive
markets."
Mr. Herlihy added, "We increased our research and development expenditures
to over $.03 per share in the quarter. This increase was made to support our
long-term strategic investment plan in the automotive and light truck markets,
and recent contract awards are justifying this increased investment. Our
recent acquisition of ProActive Pedals combined with the Company's twelve
years of ETC experience in the heavy truck market positions the Company to win
a significant market share in the pedal systems markets as the automotive
companies adopt the electronic and adjustable foot pedal technologies at an
increasingly rapid rate."
Williams Controls is a manufacturer and integrator of sensors, controls
and communications systems for the transportation and communication
industries. For more information, you can find the Company at http://www.wmco.com on
the World Wide Web.
The statements included in this press release concerning predictions of
economic performance and management's plans and objectives constitute
forward-looking statements made pursuant to the safe harbor provisions of
Section 21E of the Securities Exchange Act of 1934, as amended, and Section
27A of the Securities Act of 1934, as amended. These statements involve risks
and uncertainties that could cause actual results to differ materially from
the forward-looking statements. Factors which could cause or contribute to
such differences include, but are not limited to, factors detailed in the
Company's Securities and Exchange Commission filings; economic downturns
affecting the operations of the Company or any of its business operations; and
the unavailability of financing to complete management's plans and objectives.
The forward-looking statements contained in this press release speak only as
of the date hereof and the Company disclaims any intent or obligation to
update these forward-looking statements.
Williams Controls, Inc.
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
Three months Three months Nine months Nine months
ended ended ended ended
6/30/99 6/30/98 6/30/99 6/30/98
Net sales $16,262 $14,767 $47,828 $43,078
Cost of sales 11,879 10,068 33,885 29,770
Gross margin 4,383 4,699 13,943 13,308
Operating expenses 2,520 2,324 7,068 6,268
Loss from impairment of
assets 5,278 - 5,278 -
Earnings (loss) from
continuing operations (3,415) 2,375 1,597 7,040
Interest and other
expenses 445 271 1,386 1,271
Earnings (loss) from continuing
operations before income
taxes (3,860) 2,104 211 5,769
Income tax expense
(benefit) (1,482) 639 81 2,060
Net earnings (loss) from
continuing operations (2,378) 1,465 130 3,709
Loss from discontinued
operations - (336) - (799)
Net earnings (loss) (2,378) 1,129 130 2,910
Preferred dividends 149 120 449 120
Net earnings (loss) allocable
to common
stockholders $(2,527) $1,009 $(319) $2,790
Earnings (loss) per share information:
Earnings (loss) per share from
continuing operations
-- basic $(0.14) $0.08 $(0.02) $0.20
Loss per share from discontinued
operations -- basic - $(0.02) - $(0.04)
Net earnings (loss) per
share -- basic (0.14) 0.06 (0.02) 0.16
Earnings (loss) per share from continuing
operations -- diluted (0.14) 0.07 (0.02) 0.19
Loss per share from discontinued
operations -- diluted - (0.02) - (0.04)
Net earnings (loss) per
share -- diluted $(0.14) $0.05 $(0.02) $0.15
Basic weighted shares
outstanding 18,363 17,875 18,314 17,855
Diluted weighted shares
outstanding 18,363 21,094 18,314 19,310