Bonded Motors Announces Third-Quarter Revenue Decline
14 October 1999
Bonded Motors Announces Third-Quarter Revenue Decline; Expects Loss for Third Quarter to Establish Valuation Allowance Against Deferred Tax Assets
LOS ANGELES--Oct. 13, 1999--Aaron Landon, chairman of the board and chief executive officer of Bonded Motors Inc. , Wednesday announced a significant decline in revenues for the third quarter ended Sept. 30, 1999.Preliminary results indicate a decline of more than 26 percent from the corresponding 1998 third quarter.
"Revenues to a major customer declined over 50 percent in September alone, compared to 1998. This was unanticipated. Further, it appears likely that revenues for the fourth quarter will be short of expectations," Landon said.
"Due to the unanticipated revenue shortfall and third-quarter loss, it has been determined that a valuation allowance should be established against the deferred tax assets that Bonded had recognized on its balance sheet.
"Though these deferred tax assets may be used through the year 2015, the company can no longer support that it is more likely than not that such deferred tax assets will be realized in their entirety. This is due to the company's anticipated performance for the third quarter as well as internal projections for the fourth quarter, 1999," Landon noted.
"Bonded Motors expects to report a loss from operations for the third quarter, and anticipates a further reduction in revenues for the fourth quarter of 1999 as compared to the third quarter, 1999. Final results for the quarter ended Sept. 30, 1999, are expected to be reported on Nov. 11, 1999.
"The third-quarter operational losses as well as the recording of the valuation allowance against approximately $2.5 million of deferred tax assets will place the company in noncompliance with the covenants of our bank credit facility. We are working diligently with our bank to remedy this situation," Landon concluded.
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.
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.