Hayes Lemmerz Announces Third Quarter Results
12 December 2000
Hayes Lemmerz Announces Third Quarter Results
NORTHVILLE, Mich., Dec. 12 Hayes Lemmerz International,
Inc. today announced results for the third quarter ended October
31, 2000. Third quarter sales were $558 million compared to $599 million in
third quarter 1999. Third quarter diluted earnings per share before
consideration of certain one-time charges described below was $.12 (a diluted
loss per share of $1.62 including the impact of the one-time charges), versus
$.63 in the third quarter last year. Sales for the first nine months of 2000
were $1,696 million compared to $1,731 million in the first nine months of
1999, while 2000 diluted earnings per share before consideration of the one-
time charges was $.85 (a diluted loss per share of $.84 including the impact
of the one-time charges) compared to $1.55 per share last year.
Third quarter results were impacted by light vehicle volume declines
associated with certain new vehicle launch delays and auto plant shutdowns, a
further drop in sales to the North American heavy truck industry and the
translation impact of the weaker euro. The company expects these trends to
continue into fourth quarter 2000.
Hayes Lemmerz has initiated various restructuring programs to reduce
spending and to dispose of surplus assets. This resulted in non-recurring
pre-tax charges in the third quarter aggregating $88 million. The charges
include recognition of costs related to employee reductions, the write-off of
certain equipment and other assets, impairment charges on certain assets
including inventory, as well as the write-off of certain costs related to
cancelled transactions. The $88 million charge includes $5 million recorded
in cost of sales, $7 million recorded in marketing, general and administration
expenses, and the remainder in other income and expense. The $88 million of
pre-tax charges includes:
1) Cash costs related to workforce reductions in the United States, Europe
and Brazil of $8 million. The company is reducing its workforce by more than
1,200 employees globally as a result of various manufacturing restructuring
programs and to meet reduced sales volumes.
2) Non-cash items, primarily the write-off of excess and obsolete assets,
resulting from restructuring of steel wheel operations in Germany, Brazil and
the United States, as well as upgrades of manufacturing capacity in certain
other businesses, amounting to nearly $70 million. The company is currently
in the process of selling a portion of these excess and obsolete assets.
3) The remaining $10 million includes certain transaction costs, a write-
down of unamortized computer software costs for systems no longer being used
at certain company locations, and the write-down of one of the company's joint
venture investments.
"We have experienced continued softness in market demand in North America
this year, and we are taking actions to reduce costs in line with lower
volumes," stated Ron Cucuz, Chairman and C.E.O. "Heavy truck production in
the U.S. has continued to drop. We have also seen a softening of OEM light
vehicle volume in the second half of this year, as Ford has reduced production
and delayed the launch of the Ranger / Explorer vehicle due to the Firestone
tire recall. Chrysler has taken similar actions in the third quarter and we
continue to see several announcements of additional assembly plant shutdowns
by several auto producers in November and December."
"In addition, the euro has dropped further," said Ron Cucuz, "and although
this is a non-cash translation issue, and our European operations continue to
perform very well, it has impacted our earnings per share this year. Based on
the continued impact of these issues in the second half of 2000, we are taking
actions to reduce costs and to remove older, less productive capacity in
several of our facilities. These actions will better align expenses with
current sales levels and will also result in incremental cash generation from
reduced spending, sale of excess equipment and reduced capital spending. We
expect to continue this focus on reduced spending through 2001."
"We are optimistic about our ability to maintain healthy margins next
year," continued Ron Cucuz, "even in the face of expected soft vehicle
production. We will benefit from a strong book of business, especially in
aluminum components, coupled with the benefits from the restructuring programs
established in 2000. We expect to launch net incremental new business in
excess of $150 million in 2001, including the launch of our new VRC/PRC
aluminum foundry in Michigan and continued gains in aluminum wheels globally.
We also expect to deliver over $20 million of cost savings from restructuring
programs in 2001, including manufacturing rationalizations in Germany and
Brazil. We are also reducing marketing, general, and administrative costs in
Europe and the U.S. As part of this reduction, we have strategically
integrated our European Chassis Components operations into our North American
cast components group and closed its headquarters in Bonn, Germany. In 2001,
we will focus on organic growth and the successful launch of new aluminum
wheel and component business, cash generation and maintaining one of the
strongest margins in the industry."
Hayes Lemmerz International
Third Quarter Results
$ Millions Quarter Ended October 31
2000 1999
Sales $558.3 $598.5
Earnings from Operations before
non-recurring charge $ 48.7 $ 73.3
Non-recurring charge (87.8) --
------- ------
Earnings (loss) from Operations
after non-recurring charge $(39.1) $ 73.3
Net Income before non-recurring
charge $ 3.4 $ 19.9
Non-recurring charge (50.9) --
------- ------
Net Income (loss) after
non-recurring charge $(47.5) $ 19.9
======= ======
Per Share Data:
Basic earnings per share before
non-recurring charges $ 0.12 $ 0.66
Non-recurring charges (1.75) --
------- ------
Basic earnings (loss) per share $(1.63) $ 0.66
======= ======
Diluted earnings per share before
non-recurring charges $ 0.12 $ 0.63
Non-recurring charges (1.74) --
------- ------
Diluted earnings (loss) per share $(1.62) $ 0.63
======= ======
Basic weighted average
common shares (000's) 29,189 30,337
Diluted weighted average
common shares (000's) 29,237 31,678
Hayes Lemmerz International
Third Quarter Results
$ Millions Nine Months Ended October 31
2000 1999
Sales $1,695.9 $1,730.8
Earnings from Operations
before non-recurring charge $ 168.2 $ 204.7
Non-recurring charge (87.8) --
------- ------
Earnings (loss) from Operations
after non-recurring charge $ 80.4 $ 204.7
Net Income before
non-recurring charge $ 25.6 $ 49.5
Non-recurring charge (50.9) --
------- ------
Net Income (loss) after
non-recurring charge $ (25.3) $ 49.5
======= ======
Per Share Data:
Basic earnings per share
before non-recurring charges $ 0.85 $ 1.63
Non-recurring charges (1.70) --
------- ------
Basic earnings (loss) per share $ (0.85) $ 1.63
======= ======
Diluted earnings per share
before non-recurring charges $ 0.85 $ 1.55
Non-recurring charges (1.69) --
------- ------
Diluted earnings (loss) per share $ (0.84) $ 1.55
======= ======
Basic weighted average
common shares (000's) 29,965 30,333
Diluted weighted average
common shares (000's) 30,089 31,880
Please refer to Hayes Lemmerz International's website at
http://www.hayes-lemmerz.com for its Third Quarter 2000 Income Statement and Balance
Sheet.