INTERMET CORPORATION
5445 Corporate Drive
Troy, MI 48098-2683
Tel: 248-952-2500
Fax: 248-952-2501
INTERMET
EXHIBIT 99.1
NEWS RELEASE
For IMMEDIATE Release
Contact: Bytha Mills
INTERMET Corporation
248-952-2500
INTERMET REPORTS 2003 FOURTH-QUARTER AND YEAR-END RESULTS
RESTRUCTURING LEADS TO $84.6 MILLION NON-CASH CHARGES FOR WRITE-DOWN OF GOODWILL
AND DEFERRED TAX ASSETS, PLUS ASSET-IMPAIRMENT CHARGES MAINLY RELATED TO THE
CLOSURE OF HAVANA, ILLINOIS, PLANT
TROY, Mich., February 5, 2004 -- INTERMET Corporation (Nasdaq: INMT), one of the
world's leading manufacturers of cast-metal automotive components, today
reported a 2003 fourth-quarter loss of $92.8 million, or $3.63 per diluted
share, compared with a 2002 fourth-quarter net income of $430 thousand, or 2
cents per diluted share. INTERMET's results include an after-tax charge of $84.6
million for the write-down of goodwill and deferred tax assets, plus
asset-impairment charges mainly related to the previously announced closure of
the Havana Foundry in Illinois. The non-cash charge of $84.6 million consists
of:
- write-down of goodwill - $46.4 million
- deferred tax expense for continuing operations - $25.0 million
- deferred tax expense for discontinued operations - $7.0 million
- Havana Foundry restructuring and asset impairment - $5.3 million
- other asset impairment - $0.9 million
Excluding these charges, the net loss for the fourth quarter would have been
$8.2 million, or 32 cents per diluted share. This information is being provided
to permit an evaluation of operating performance and to present a comparison
with the $9.0-million net loss guidance provided by the company on December 15,
2003. For continuing operations, sales for the quarter were reported at $183
million, up from $180 million for the fourth quarter of 2002.
For the year ended December 31, 2003, INTERMET reported a net loss of $96.3
million, or $3.76 per diluted share. This compared with a 2002 net income of
$9.0 million, or 35 cents per diluted share. INTERMET's full-year results also
include the after-tax charge of $84.6 million for the write-down of goodwill and
deferred tax assets, plus the asset-impairment charges mainly related to the
closure of the Havana Foundry. Excluding these charges, the full-year net loss
would have been $11.7 million, or 46 cents per diluted share. For continuing
operations only, the full-year net loss, excluding these charges, would have
been $2.1 million, or 8 cents per diluted share. As stated in the company's
December 15, 2003, guidance, operational issues, such as higher scrap-steel
prices associated with the steel tariffs and steel exports, lower sales, and
costs associated with new product launches were factors negatively affecting
performance. For continuing operations, full-year 2003 sales were $731 million,
down $25 million compared with full-year 2002 sales.
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INTERMET Corporation
February 5, 2004
Page 2
Commenting on the quarter and year-end results, Gary F. Ruff, President and
Chief Executive Officer, said, "We have taken many significant actions in 2003
that were necessary to position INTERMET for the future. Operationally, we
reorganized by closing an obsolete plant, selling a non-core business, and
consolidating U.S.-based ductile-iron production to improve capacity utilization
by announcing the closing of our Havana, Illinois, foundry in December. At the
same time, we secured majority ownership of our Porto, Portugal, foundry and are
beginning construction of a foundry in Mexico, all targeted to increase our
global presence. We also refinanced our debt by entering into a new long-term
bank agreement. Finally, we dealt with the write-down of goodwill and deferred
tax assets, and asset impairment, which had the major impact on the fourth
quarter and entire year."
INTERMET reported total debt of $293.5 million in 2003 compared with $280.1
million in 2002. The increase was a result of the consolidation of the Porto
foundry, which amounted to $18.0 million. Total capital spending for 2003 was
$19.7 million, reflecting investment for new business, including upgrades of
certain facilities. Depreciation and amortization for 2003 was reported at $50.3
million.
The INTERMET Board of Directors voted to approve a quarterly dividend of 4 cents
per share, payable April 1, 2004, to shareholders of record as of March 1, 2004.
Ruff continued, "We made significant improvements to our manufacturing
operations during the last half of 2003, with particular attention given to
program start-ups. INTERMET's new programs are launching successfully at our
plants in both the U.S. and Europe and the company's focus on growth through
technology leadership has led to increased PCPC(TM) sales, as well as the
introduction of Blue Sand(TM) production beginning in the second half of 2004.
As the cornerstone of our LASIK strategy, we believe technology will be the
driver in a successful future for the company."
FIRST-QUARTER 2004 OUTLOOK -- SCRAP STEEL PRICES CONTINUE TO RISE
The unprecedented rise in the cost of scrap steel, which is a primary melt
component in the manufacture of cast ductile-iron automotive components,
contributed to the fourth-quarter loss. According to Ruff, metal price
adjustments are now in place with the majority of the company's customers to
cover raw material increases that occurred in the fourth quarter. "But scrap
steel has taken another significant jump in the first quarter," he said. "The
most recent metals-market forecasts indicate that prices are expected to peak
during the first half of 2004 and then stabilize for the remainder of the year,
which means that trailing metal-price increase adjustments will most likely not
catch up to the market until later this year. Based on this still-uncertain
steel scrap market, we do not feel comfortable about providing first-quarter
earnings guidance at this time."
Commenting on the company's 2004 sales outlook, Terry C. Graessle, INTERMET's
Vice President of Sales and Marketing, remains positive. "As previously noted in
our guidance given December 15, revenue is currently predicted to increase
approximately seven percent this year at current economic levels, with a sales
target set at $820 million."
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INTERMET Corporation
February 5, 2004
Page 3
INTERMET will hold a Conference Call today at 3:00 p.m. ET to discuss
fourth-quarter and year-end results as well as the outlook for the first quarter
and 2004. Investors and interested parties can listen to a live webcast by
visiting www.intermet.com and clicking on the "Financial/Investor Information"
link on the home page. A slide presentation also will be available on the web
site. It is recommended that access to the live webcast be established 10-15
minutes prior to the scheduled start time. A replay of the webcast briefing also
is expected to be available on the company's web site beginning two hours after
completion of the briefing through March 5, 2004.
With headquarters in Troy, Michigan, INTERMET Corporation is a manufacturer of
powertrain, chassis/suspension and structural components for the automotive
industry. INTERMET's strategy is to be the world's leading supplier of
cast-metal automotive components. The company has approximately 6,000 employees
at facilities in North America and Europe. More information is available on the
Internet at www.intermet.com.
This news release includes forward-looking statements about INTERMET, including
statements about the outlook for INTERMET for 2004 and beyond. Projections and
other forward-looking statements are subject to risks and uncertainties that can
cause actual results to differ materially from anticipated results. These risks
and uncertainties include production volumes at INTERMET's customers and the
cost of raw materials, particularly scrap steel, which could remain at high
levels or increase even further. Continued high material costs or lower volumes,
or both, could have a significant negative impact on INTERMET's earnings and
liquidity. Other risks and uncertainties that could have negative impacts on the
results anticipated by our forward-looking statements, including the outlook for
2004, are detailed in the preface to the Management's Discussion and Analysis of
Financial Condition and Results of Operations section of our Annual Report for
the year ended December 31, 2002.
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INTERMET Corporation
February 5, 2004
Page 4
INTERMET CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS *
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Twelve Months Ended
(Unaudited) (Unaudited)
DECEMBER 31, December 31, DECEMBER 31, December 31,
2003 2002 2003 2002
------------ ------------ ------------ ------------
(Note 1) (Note 1)
Net sales $183,309 $180,478 $731,167 $755,737
Cost of sales 174,888 165,172 668,853 683,234
--------- --------- --------- ---------
Gross profit 8,421 15,306 62,314 72,503
Selling, general and administrative 10,989 6,999 36,020 31,373
Goodwill impairment charge 51,083 - 51,083 -
Restructuring and impairment charges 9,968 - 9,968 -
Other operating expense, net 1,188 853 1,783 1,453
--------- --------- --------- ---------
Operating (loss) profit (64,807) 7,454 (36,540) 39,677
Interest expense, net 7,249 7,421 29,895 28,270
Other (income) expense, net (645) 149 (1,959) (161)
--------- --------- --------- ---------
(Loss) income before income tax (71,411) (116) (64,476) 11,568
Income tax (expense) benefit (12,993) 7 (15,990) (2,665)
Equity interest in a joint venture - 881 752 1,573
--------- --------- --------- ---------
(Loss) income from continuing operation (84,404) 772 (79,714) 10,476
Loss from discontinued operations, net of tax:
Loss from operations (8,399) (342) (16,535) (1,954)
Loss on sale - - (41) -
--------- --------- --------- ---------
(Loss) income before cumulative effect of change
in accounting (92,803) 430 (96,290) 8,522
Cumulative effect of change in accounting, net of
tax - - - 481
--------- --------- --------- ---------
Net (loss) income $(92,803) $430 $(96,290) $9,003
========= ========= ========= =========
(Loss) earnings per common share:
Basic
(Loss) earnings from continuing operation $(3.30) $0.03 $(3.12) $0.41
Loss from discontinued operations, net of tax (0.33) (0.01) (0.64) (0.08)
Cumulative effect of change in accounting, net of
tax - - - 0.02
--------- --------- --------- ---------
(Loss) earnings per common share - basic $(3.63) $0.02 $(3.76) $0.35
========= ========= ========= =========
Diluted
(Loss) earnings from continuing operation $(3.30) $0.03 $(3.12) $0.40
Loss from discontinued operations, net of tax (0.33) (0.01) (0.64) (0.07)
Cumulative effect of change in accounting, net of
tax - - - 0.02
--------- --------- --------- ---------
(Loss) earnings per common share - diluted $(3.63) $0.02 $(3.76) $0.35
========= ========= ========= =========
Weighted average shares outstanding:
Basic 25,593 25,473 25,581 25,441
Diluted 25,593 25,783 25,581 25,878
* Subject to final audit.
Note 1: Certain amounts for the year ended December 31, 2002 were
reclassified to conform with current year presentation.
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INTERMET Corporation
February 5, 2004
Page 5
INTERMET CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS *
(IN THOUSANDS)
DECEMBER 31, December 31,
2003 2002
------------ ------------
(Unaudited) (Note 1)
Assets:
Current assets:
Cash and cash equivalents $1,035 $3,298
Accounts receivable 84,721 81,908
Inventory 76,982 59,980
Other current assets 8,595 24,463
Current assets of discontinued operations 2,995 10,759
-------- --------
Total current assets 174,328 180,408
Property, plant and equipment, net 323,407 317,939
Goodwill 165,933 217,016
Other non-current assets 25,390 34,640
Non-current assets of discontinued operations 673 14,095
-------- --------
Total assets $689,731 $764,098
======== ========
Liabilities and shareholders' equity:
Current liabilities:
Accounts payable $80,246 $65,586
Accrued liabilities 54,724 62,270
Long term debt due within one year 14,295 1,567
Current liabilities of discontinued
operations 2,102 8,282
-------- --------
Total current liabilities 151,367 137,705
Non-current liabilities:
Long term debt due after one year 279,248 278,536
Other non-current liabilities 89,889 88,480
Non-current liabilities of discontinued
operations 4,467 1,808
-------- --------
Total non-current liabilities 373,604 368,824
Shareholders' equity 164,760 257,569
-------- --------
Total liabilities and shareholders' equity $689,731 $764,098
======== ========
* Subject to final audit.
Note 1: Certain balance sheet amounts at December 31, 2002 were reclassified to
conform with current year presentation.
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INTERMET Corporation
February 5, 2004
Page 6
INTERMET CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW *
(IN THOUSANDS)
Year Ended
----------------------------
DECEMBER 31, December 31,
2003 2002
------------ ------------
(UNAUDITED) (Note 1)
Cash provided by continuing operating activities $30,157 $86,429
Cash provided by discontinued operations 2,950 2,946
--------- ---------
Cash provided by operating activities 33,107 89,375
Additions to property, plant and equipment by continuing
operation (19,533) (8,427)
Additions to property, plant and equipment by
discontinued operations (145) (1,018)
Purchase of shares of a subsidiary (5,571) -
Proceeds from sale of assets of a subsidiary 3,925 -
Proceeds from sale of property, plant and equipment 1,700 -
--------- ---------
Cash used in investing activities (19,624) (9,445)
Net decrease in revolving credit facility (3,000) (85,000)
Proceeds from debt offering - 175,000
Repayments of term loan - (171,750)
Repayments of other debts (4,417) (1,646)
Payments of debt issuance costs (2,110) (6,022)
Issuance of common stock - 374
Dividends paid (4,096) (4,075)
--------- ---------
Cash used in financing activities (13,623) (93,119)
Effect of exchange rate changes on cash and cash
equivalents (2,123) 2,621
--------- ---------
Net decrease in cash and cash equivalents (2,263) (10,568)
Cash and cash equivalents, beginning of year 3,298 13,866
--------- ---------
Cash and cash equivalents, end of year $1,035 $3,298
========= =========
* Subject to final audit.
Note 1: Certain amounts for the year ended December 31, 2002 were reclassified
to conform with current year presentation.