Williams Controls Reports Fiscal Year End Results
30 December 1999
Williams Controls Reports Fiscal Year End Results; PPT Subsidiary Awarded $16 Million in New Business
PORTLAND, Ore., Dec. 29 -- Williams Controls, Inc.
reported its results for the fourth quarter and full year ended
September 30, 1999. The Company reported a net loss for the fiscal year ended
September 30, 1999 of $9,539,000 or $0.54 per share compared to net earnings
of $312,000, or $0.00 per share in the prior year. Sales increased 6.6% to
$61.4 million for the year ended September 30, 1999 compared to $57.6 million
in the prior year. The Company reported a loss from continuing operations of
$3,928,000 or $0.24 per diluted share for the year ended September 30, 1999
compared to net earnings from continuing operations of $4,611,000 or $0.23 per
share in the prior year. The Company reported a net loss for the fourth
quarter ended September 30, 1999 of $9,669,000 or $0.51 per share compared to
a net loss of $2,598,000, or $0.15 per share in the prior year quarter.
The loss from continuing operations for the year includes pre-tax charges
of $5,278,000 for the writedown of all remaining investment in the
discontinued automotive accessories business unit recorded in the third fiscal
quarter and $1,750,000 of charges for acquired in-process research and
development costs arising from the acquisition of ProActive Pedals completed
during the fourth quarter. Excluding these charges, operating income was
$3,997,000 for the year ended September 30, 1999 compared to $8,991,000 for
the prior year.
The decline in operating income was primarily attributable to operating
losses at the Premier Plastics Technology, Inc. ("PPT") plastic injection
molding subsidiary of $4,445,000 for the year ended September 30, 1999
compared to losses of $772,000 in the prior year. PPT's losses, which
included losses of $1.7 million for costs associated with terminated contracts
and the closing of the tooling operation which occurred in September 1999,
were a result of below breakeven sales combined with losses from low margin,
low volume jobs, excess scrap experience from customer-provided molds, and
operating problems. PPT has terminated certain negative margin contracts and
new management has been correcting operating problems since joining PPT in
September 1999. PPT has recently received new orders for high volume
taillight business that commenced in December 1999 and that are expected to
reach a $16 million annual sales rate when in full production by April 2000.
The Company also recorded a fourth quarter additional loss on the
disposition of the Agriculture Equipment segment of $5,611,000 which reflects
a revised estimate of the write down of certain assets expected to be sold and
the full write down of all other assets that the Company believes cannot be
readily sold. The Company continues to negotiate the sale of the Agriculture
Equipment segment with several possible buyers. The additional loss is
reflected in loss from discontinued operations.
The expensing of acquired in-process research and development costs is
required for acquisitions of companies that have extensive research and
development activities and are accounted for using the purchase method of
acquisition accounting. In July of 1999, the Company acquired ProActive
Pedals, which had extensive in-process research and development activities
currently under way on a number of adjustable foot pedal systems for cars and
mini vans.
Williams Controls Chief Financial Officer, Gerard Herlihy, stated, "The
recent rapid consumer acceptance of adjustable foot pedals and the automotive
industry's introduction of electronic throttle controls proves that our
strategic redirection during the last 18 months was right. Management must
now devote its time and financial resources to capture this large emerging
market. The decision to take significant writedowns of previously
discontinued operations reflects the diminution of those assets' values and
frees management to focus on the future opportunities before us."
Mr. Herlihy continued, "Despite a large loss in the fourth quarter from
unprofitable business and writedowns at PPT, PPT's new management team has
received large orders for high volume business that should show improvement in
operating results in the second quarter and profitability in the third quarter
of fiscal 2000."
Williams Controls is a leading manufacturer and integrator of innovative
sensors, controls and communications systems for the transportation and
communication industries. You can reach us on the Web at http://www.wmco.com .
The statements included in this news 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; the ability of
new management at PPT to attain profitability; the realization of the
estimated value from the sale of the Agriculture Equipment segment, 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.
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
Three months Three months Twelve months Twelve months
ended 9/30/99 ended 9/30/98 ended 9/30/99 ended 9/30/98
Net sales $15,017 $14,568 $61,422 $57,646
Cost of sales 14,841 10,707 47,303 40,129
Gross margin 176 3,861 14,119 17,517
Operating expenses
3,054 1,911 10,122 8,526
Acquired in process
research and
development 1,750 - 1,750 -
Loss from impairment of
assets - 5,278 -
Earnings (loss) from
continuing
operations before
interest and taxes
(4,628) 1,950 (3,031) 8,991
Interest and other
expenses 998 742 2,384 2,014
Earnings (loss) from
continuing
operations before
income taxes (5,626) 1,208 (5,415) 6,977
Income tax expense
(benefit) (1,568) 306 (1,487) 2,366
Net earnings (loss)
from continuing
operations (4,058) 902 (3,928) 4,611
Net loss from
discontinued
operations --
Agriculture
Equipment (5,611) (2,035) (5,611) (2,674)
Net loss from
discontinued
operations --
Automotive
Accessories - (1,465) - (1,625)
Net earnings
(loss) (9,669) (2,598) (9,539) 312
Preferred dividends (146) (150) (596) (270)
Net earnings (loss)
allocable to common
shareholders $(9,815) $(2,748) $(10,135) $42
Earnings per share information:
Earnings (loss) per
share from continuing
operations -- basic
$(0.22) $0.04 $(0.24) $0.24
Loss per share from
discontinued operations
-- basic (0.29) (0.19) (0.30) (0.24)
Net earnings (loss) per
share -- basic (0.51) (0.15) (0.54) 0.00
Earnings (loss) per
share from continuing
operations - diluted
(0.22) 0.04 (0.24) 0.23
Loss per share from
discontinued operations
-- diluted (0.29) (0.19) (0.30) (0.23)
Net earnings (loss) per
share - diluted
$(0.51) $(0.15) $(0.54) $0.00
Weighted common shares
outstanding -- basic
19,418,618 17,642,040 18,603,057 17,922,558
Weighted common shares
outstanding -- diluted
19,418,618 18,354,908 18,603,057 19,808,460
Williams Controls, Inc.
Consolidated Balance Sheets
(Dollars in thousands)
Sept. 30, 1999 Sept. 30, 1998
Assets
Current Assets:
Cash $2,323 $1,281
Accounts receivable, net 11,187 11,765
Inventories 9,828 10,693
Deferred taxes and other 4,325 2,190
Net assets held for disposition 360 5,787
Total current assets 28,023 31,716
Property, plant and equipment,
net 20,775 20,013
Investment in and note
receivable from affiliate 6,152 6,140
Note receivable - 3,200
Net assets held for disposition 500 3,424
Goodwill and intangible assets 5,764 716
Deferred income taxes 3,025 167
Other assets 265 3,189
Total assets $64,504 $68,565
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $9,223 $5,727
Accrued expenses 3,449 3,673
Current portion of long-term
debt and leases 5,193 1,417
Estimated loss on disposal 1,000 2,550
Total current liabilities 18,865 12,767
Long-term debt and capital
leases 24,743 29,186
Other liabilities 2,690 2,201
Shareholders' Equity:
Preferred stock 1 1
Common stock 199 183
Additional paid-in capital 21,574 17,917
Retained earnings
(accumulated deficit) (2,691) 7,444
Unearned ESOP shares - (73)
Treasury stock (130,200 shares) (377) (377)
Note Receivable (500) (500)
Pension liability adjustment - (184)
Total shareholders' equity 18,206 24,411
Total liabilities and
shareholders' equity $64,504 $68,565