Tower Automotive Announces Fourth-Quarter and Year-End Results
1 February 2001
Tower Automotive Announces Fourth-Quarter and Year-End Results
GRAND RAPIDS, Mich., Jan. 31 Tower Automotive, Inc. , today announced results for the fourth
quarter and year ended December 31, 2000.
On October 2, 2000, Tower Automotive announced that it would record a
fourth-quarter restructuring charge to phase out its heavy truck rail
manufacturing and related activities in Milwaukee, Wis.; reduce its stamping
capacity by closing its Kalamazoo, Mich., facility and consolidate related
support activities across the enterprise. The $141 million charge recorded in
the fourth-quarter is consistent with the range previously announced. For the
fourth quarter, revenues were $629 million, a 4 percent increase, compared
with $605 million in the 1999 period. Of the $629 million total revenues,
approximately $151 million was contributed by the Dr. Meleghy, Seojin
Industrial Company, Caterina, and Algoods acquisitions. Operating income for
the fourth quarter, excluding the restructuring charge, was $38 million, a
41 percent decrease from operating income of $64 million reported during the
1999 period. Net income for the fourth quarter, excluding the fourth-quarter
charge, was $15 million, or 31 cents per fully diluted share outstanding.
This compares with net income of $33 million, or 58 cents per fully diluted
share outstanding, in the 1999 period.
For the year ended December 31, 2000, revenues were $2,532 million, a
17 percent increase, compared with $2,170 million in the 1999 period. The
revenue increase of $362 million was primarily due to the acquisitions of
Dr. Meleghy, Seojin Industrial Company, Caterina, and Algoods, which totaled
approximately $290 million in 2000. Operating income for the year, excluding
the fourth-quarter restructuring charge, was $213 million, a 5 percent
decrease from operating income of $225 million reported during the 1999
period. Net income for the year, excluding the fourth-quarter charge, was
$98 million, or $1.81 per fully diluted share outstanding. This compares with
net income of $117 million, or $2.10 per fully diluted share outstanding, in
the 1999 period.
Fourth-quarter results, including the $141 million restructuring charge
reflected an operating loss of $104 million, a net loss of $70 million, and a
loss per fully diluted share outstanding of $1.54. Full-year results,
including the effect of the fourth-quarter charge, showed operating income of
$72 million, net income of $13 million, and earnings per fully diluted share
outstanding of 28 cents. As a result of the restructuring charge, the
anti-dilutive effects of the Convertible Trust Preferred Securities and the
Convertible Notes, fully diluted shares and basic weighted average shares are
substantially equivalent in the fourth-quarter and year ending
December 31, 2000 periods.
In commenting on the fourth-quarter and year-end results, Dug Campbell,
president and chief executive officer of Tower Automotive, said, "We
successfully expanded the company's presence during the year in Europe, Asia
and South America, increasing our scale by over $150 million in sales in
Europe, creating an Asian presence with significant interests in businesses
with revenues in excess of $1 billion, primarily in Korea and Japan and
acquiring the remaining 60 percent of our Brazilian affiliate, Caterina. We
also responded quickly to changing business conditions while being consistent
with our plans to reduce the capital intensity of our business and rationalize
our asset base.
"Our efforts to deal with the current difficult industry situation began
with the restructuring announcement in October. These difficult and
unpleasant tasks are necessary to properly match the resources deployed with
the business scale anticipated. Even though necessary, it does not lessen the
colleague pain of which we are very mindful.
"As everyone knows, the near-term outlook for the first quarter of 2001 is
significantly down. We are estimating a run rate equivalent to 14 million
units for the quarter on a SAAR basis. This reality, along with significant
launch activity in the first quarter for the new Ford Explorer and significant
launch activity related to the new Dodge Ram which will be fully reflected in
the second and third quarters of this year, makes the 2001 year the most
challenging in the brief history of Tower Automotive. Add to this, the
pressure for price reductions that have received much publicity, along with
the continued customer demand for capital investment by suppliers, and it
becomes clear that the business model must be changed to focus on the
fundamental principle of business: cash return on invested capital.
"The leadership and colleagues of Tower Automotive are steadfastly
resolved and zealously energized to use these circumstances to strengthen the
company for the long term without losing sight of the values that make Tower
Automotive unique. Our focus this year will be to ensure that we pay for
required capital investments with operating cash flow, reduce debt and
continue to be comfortably in compliance with our debt obligations."
On November 1, 2000, Tower Automotive increased its equity ownership in
Seojin Industrial Company Limited from 49 percent to 66 percent. The
ownership increase was acquired through the conversion of the $19 million
variable rate convertible bonds of Seojin Industrial Company Limited and an
additional cash investment of $1.2 million.
On November 30, 2000, Tower Automotive completed the acquisition of
Strojarne Malacky, a.s., a manufacturer of upper body structural assemblies
for Volkswagen, Porsche and Skoda, located in Bratislava, Slovakia. The
company paid total consideration of approximately $10 million for the
acquisition and intends to use the investment to further support Volkswagen's
Bratislava assembly operation.
On December 7, 2000, Tower Automotive completed the sale of its Roanoke,
Va., heavy truck rail manufacturing business to its joint venture partner,
Metalsa S. de R.L., which is based in Monterrey, Mexico. The business was
sold for $55 million, which is the approximate book value, plus an earn out to
Tower Automotive of up to $30 million based on Metalsa heavy truck achieving
certain profit levels over the next three years.
On January 29, 2001, Tower Automotive announced its intention to exercise
its right to acquire an additional 13.76 percent equity interest in Yorozu
Corporation ("Yorozu"), a supplier of suspension modules and structural parts
to the Asian and North American automotive markets, from Nissan Motor Co. Ltd.
Tower Automotive acquired a 17 percent interest in Yorozu during the third
quarter of 2000. Annual sales of Yorozu are approximately $600 million.
Yorozu is based in Japan and is publicly traded on the first tier of the Tokyo
Stock Exchange. Its principal customers include Nissan, Auto Alliance,
General Motors, Ford, and Honda. Tower Automotive will pay Nissan
approximately $31 million over the next two and a half years to acquire this
interest.
During the second quarter of 2000, the board of directors of Tower
Automotive approved a plan to purchase up to $100 million of company shares
from time to time if authorized by the executive committee. During the fourth
quarter and year ending December 31, 2000, the company purchased approximately
4.1 million shares of its common stock at an average purchase price of $9.77.
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts - unaudited)
Three Months Ended Year Ended
December 31, December 31,
2000 1999 2000 1999
Revenues $629,359 $604,599 $2,531,953 $2,170,003
Cost of sales 548,586 506,476 2,160,359 1,823,103
Gross profit 80,773 98,123 371,594 346,900
Selling, general
and administrative
expenses 37,381 29,564 137,003 105,950
Amortization
expense 5,724 4,161 21,517 15,803
Restructuring
charge 141,326 -- 141,326 --
Operating
income (loss) (103,658) 64,398 71,748 225,147
Interest expense,
net 21,575 12,810 64,711 37,981
Income (loss)
before provision
for income
taxes (125,233) 51,588 7,037 187,166
Provision for
income taxes (50,289) 20,635 2,619 74,866
Income (loss)
before equity in
earnings of joint
ventures and
minority
interest (74,944) 30,953 4,418 112,300
Equity in earnings
of joint ventures 7,616 4,309 22,480 15,268
Minority interest _
dividends on trust
preferred
securities, net (2,619) (2,619) (10,476) (10,480)
Income (loss)
before
extraordinary
item (69,947) 32,643 16,422 117,088
Extraordinary
loss on early
extinguishments
of debt, net -- -- 2,988 --
Net
income
(loss) ($69,947) $32,643 $13,434 $117,088
Basic earnings
(loss) per
common share:
Income (loss)
before
extraordinary
loss ($1.54) $0.70 $0.35 $2.50
Extraordinary
loss -- -- (0.06) --
Net income
(loss) ($1.54) $0.70 $0.29 $2.50
Basic shares
outstanding 45,381 46,879 47,100 46,751
Diluted earnings
(loss) per common
share:
Income (loss)
before
extraordinary
loss ($1.54) $0.58 $0.34 $2.10
Extraordinary
loss -- -- (0.06) --
Net
income
(loss) ($1.54) $0.58 $0.28 $2.10
Diluted
shares
outstanding 45,381 63,864 47,561 63,974
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
December 31, December 31,
Assets 2000 1999
Current assets:
Cash and cash equivalents $3,373 $3,617
Accounts receivable 278,707 353,351
Inventories 132,478 110,897
Prepaid tooling and other 133,935 90,191
Total current
assets 548,493 558,056
Property, plant and equipment, net 1,199,964 1,075,861
Investments in joint ventures 267,217 290,705
Goodwill and other assets, net 880,063 627,928
$2,895,737 $2,552,550
Liabilities and Stockholders' Investment
Current liabilities:
Current maturities of long-
term debt and capital
lease
obligations $149,066 $13,876
Accounts payable 248,389 276,673
Accrued liabilities 175,219 140,567
Total current
liabilities 572,674 431,116
Long-term debt, net of current
maturities 933,442 699,678
Obligations under capital leases,
net of current maturities 8,458 21,543
Convertible subordinated notes 200,000 200,000
Deferred income taxes 33,884 50,736
Other noncurrent liabilities 185,444 163,592
Total noncurrent liabilities 1,361,228 1,135,549
Mandatorily redeemable trust
convertible preferred securities 258,750 258,750
Stockholders' investment:
Preferred stock -- --
Common stock 435 469
Additional paid-in capital 413,308 437,210
Retained earnings 307,956 294,522
Warrants to acquire common
stock - 2,000
Deferred income stock plan (8,942) (4,484)
Accumulated other
comprehensive loss (9,672) (2,582)
Total
stockholders'
investment 703,085 727,135
$2,895,737 $2,552,550