Bonded Motors Announces Fourth Quarter Results
11 February 2000
Bonded Motors Announces Fourth Quarter Results; Revenues Decline 25 Percent From Prior-Year Levels; Losses for the Quarter Total $1.2 Million
LOS ANGELES--Feb. 10, 2000--Bonded Motors today announced operating results for the fourth quarter ended Dec. 31, 1999.
Revenues declined 24.5 percent from the corresponding 1998 fourth quarter, to $5.7 million. Pre-tax loss for the quarter was $1,177,081, versus a pre-tax loss of $3,470,332 for the corresponding 1998 quarter.
Also during the quarter ended Dec. 31, 1999, production at both manufacturing plants was limited in order to reduce finished goods inventory, and to adjust for current demand for the company's products.
This reduced manufacturing activity caused plant inefficiencies, resulting in higher per-unit costs. The higher costs associated with fourth quarter 1999 production is expected to adversely impact gross margins in the first quarter 2000.
Selling, general and administrative expenses continued to decline in the fourth quarter, but at a rate slower than the revenue decline.
The company has been advised by its independent auditors, KPMG LLP, that it expects to issue a "going concern" opinion on the company's Dec. 31, 1999 fiscal statements, based on the company's current financial position.
Bonded Motors' board of directors recently appointed an outside board member as interim chief operating officer. He has full authority from the board of directors to assess the company's operations and to make any changes to operations that are in the best interests of the company.
In accordance with the company's plan to cut costs, Bonded Motors recently closed its distribution centers in Albany, N.Y., and Salida, Calif. Closure of a third distribution center is contemplated for the near future.
In addition, the company has recently reduced its workforce by approximately 8 percent, and repositioned other personnel in order to reduce expenses. These personnel actions are designed to reduce costs without impacting plant productivity.
The company intends to issue a news release in the near future announcing additional changes to operations, and to schedule an investor conference call at that time.
As reported Nov. 15, 1999, Bonded Motors is in violation of certain bank covenants, and continues to work with Comerica Bank and its trade suppliers in order to work through this difficult period. If the company is unable to reach an agreement with the bank and/or its trade suppliers, the company's business, financial and operating results may be materially adversely affected.
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, Texas, Minnesota, Illinois and Georgia.
The company's principal customers are automotive parts chain stores, such as Pep Boys - Manny, Moe & 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, including, 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 INC.
Condensed Balance Sheet
Dec. 31, 1999
(Unaudited)
Assets
Current Assets:
Cash $ 739,565
Trade accounts receivable (less allowance
for doubtful accounts of $537,345) 2,743,388
Inventories:
Parts 2,140,839
Work in process 1,375,377
Finished goods 5,398,400
8,914,616
Prepaid expenses and other current assets 262,804
Prepaid income taxes 13,216
Total current assets 12,673,589
Restricted investment, IDB 4,645,477
Property and equipment, at cost:
Machinery and equipment 3,798,249
Furniture and fixtures 651,511
4,449,760
Less accumulated depreciation 1,953,238
Net property and equipment 2,496,522
Goodwill, less accumulated
amortization of $50,321 161,558
Cost of issuance, IDB less accumulated
amortization of $5,801 242,830
$20,219,976
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of note
payable to related parties $ 19,500
Notes payable to bank 396,918
Short-term debt 6,300,850
Accounts payable 3,525,735
Accrued expenses 403,276
Accrued warranty obligations 683,076
Current installments of capital
lease obligations 9,160
Total current liabilities 11,338,515
IDB obligation 5,130,000
Capital lease obligations,
excluding current installments 4,931
Deferred rent liability 68,457
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 deficit (1,366,646)
Notes receivable from exercise of stock options (100,000)
Total shareholders' equity 3,678,073
$20,219,976
BONDED MOTORS INC.
Condensed Statement of Operations
(Unaudited)
For the For the
Three Months Ended Twelve Months Ended
Dec. 31 Dec. 31
1999 1998 1999 1998
Net sales $ 5,661,856 7,500,929 $ 33,197,973 38,118,596
Cost of sales 5,546,032 8,418,689 28,972,526 32,859,045
Gross profit 115,824 (917,760) 4,225,447 5,259,551
Selling, general
and administrative
expenses 1,114,956 2,402,520 5,287,439 6,605,809
Earnings (loss)
from operations (999,132) (3,320,280) (1,061,992) (1,346,258)
Other (expense)
income:
Interest expense (239,643) (150,108) (781,490) (514,690)
Interest income 61,694 2,082 115,435 8,341
Other - (2,026) - (3,922)
Earnings (loss)
before income
taxes (1,177,081) (3,470,332) (1,728,047) (1,856,529)
Income tax
benefit
(expense) - 1,092,218 (2,054,071) 561,154
Net earnings
(loss) $ (1,177,081) (2,378,114) $ (3,782,118) (1,295,375)
Basic earnings
(loss)
per share $ (0.38) (0.78) $ (1.23) (0.42)
Diluted earnings
(loss)
per share (0.38) (0.78) (1.23) (0.42)
Weighted average
common shares
outstanding
- basic 3,067,000 3,066,000 3,067,000 3,055,000
Weighted average
common and
common equivalent
shares outstanding
- diluted 3,067,000 3,066,000 3,067,000 3,055,000