EXHIBIT 99.1
DATE: July 27, 2006
FROM:
DURA Automotive Systems, Inc.
2791 Research Drive
Rochester Hills, Michigan 48309
Keith R. Marchiando (248) 299-7500
FOR IMMEDIATE RELEASE
DURA AUTOMOTIVE REPORTS SECOND QUARTER 2006 RESULTS
ROCHESTER HILLS, Mich., July 27-- DURA Automotive Systems, Inc.
(Nasdaq: DRRA), today reported revenues of $573.3 million for the second quarter
ended July 2, 2006 compared to $623.8 million in the prior year's quarter. Net
loss for the quarter was $131.3 million, or $6.96 per diluted share, compared to
net income of $3.0 million, or $0.16 per diluted share, for the prior year's
quarter. Adjusted loss from continuing operations for the quarter, which
excludes facility consolidation charges and a deferred tax asset valuation
allowance totaled $38.3 million, or $2.03 per diluted share, compared to income
of $1.6 million, or $0.09 per diluted share, in the prior year's quarter.
Adjusted EBITDA for the quarter was $21.4 million compared to $50.2 million in
the prior year's quarter. A reconciliation of adjusted income from continuing
operations and adjusted EBITDA to the most directly comparable GAAP measures is
set forth below.
"While we haven't begun to experience material financial improvements
to date, our operational restructuring plan is off to an excellent start," said
Larry Denton, Chairman and Chief Executive Officer of DURA Automotive. "Our
management team is committed to meeting our restructuring goals and our entire
organization is aligned to deliver this program."
The decrease in second quarter revenue from the prior year was driven
primarily by lower North American and European automotive production,
unfavorable vehicle platform mix and the loss of the GMT 800 seat adjuster
business. Partially offsetting these decreases was the benefit received from
foreign currency exchange. The decrease in second quarter income from continuing
operations from the prior year reflects the impact of lower automotive
production, the loss of the GMT 800 seat adjuster business and higher raw
material prices.
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July 27, 2006
Page 6
Denton continued, "We need to match our overhead structure to the
market share of our major customers. While our 50 cubed restructuring plan is
focused on structuring our operations for the future, we must take action
immediately to address the current industry conditions. To support this effort,
we will reduce our labor force by 510 employees by year end."
The $2.9 million facility consolidation charge for the quarter relates
primarily to actions associated with the previously announced 50 cubed
operational restructuring plan. Approximately $2.3 million of the charge relates
to employee severance costs and $0.6 million was for facility closure and asset
impairment charges.
In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 109 "Accounting for Income Taxes", DURA's second quarter 2006 provision for
income taxes includes the recording of a $90.8 million valuation allowance for
U.S. deferred tax assets recorded as of December 31, 2005. DURA determined the
need for a valuation allowance based upon its updated quarterly analysis of its
U.S. operations taxable income together with the extended impact of elevated raw
material prices on the automotive and recreation vehicle industries.
SIX-MONTH RESULTS
For the six month period ended July 2, 2006, revenue totaled $1.2
billion compared to $1.2 billion for the same period in 2005. Net loss for the
six month period was $138.3 million, or $7.35 per diluted share, compared to a
net loss of $1.9 million, or $0.10 per diluted share, in the prior year. DURA's
adjusted loss from continuing operations for the six months ended July 2, 2006,
which excludes facility consolidation and other charges, net and the deferred
tax asset valuation allowance totaled $44.7 million, or $2.37 per diluted share,
compared to adjusted loss from continuing operations of $2.1 million, or $0.11
per diluted share, in the same period last year.
POTENTIAL MATERIAL GOODWILL IMPAIRMENT CHARGE
In accordance with SFAS No. 142, "Goodwill and Other Intangible
Assets," DURA periodically evaluates the carrying value of its goodwill for
indicators of impairment. SFAS No. 142 requires the Company to evaluate the
carrying value of its goodwill for potential impairment on an annual basis or on
an interim basis if there are indicators of potential impairment. As in prior
quarters, DURA performed this assessment during the second quarter of 2006.
Based on
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July 27, 2006
Page 7
the second quarter analysis, it has been determined that due to continued
unfavorable operating results, primarily as a result of continued higher raw
material costs, lower production volumes on key platforms and insufficient
customer pricing, DURA's Control Systems reporting unit's goodwill may be
materially impaired. At July 2, 2006, the total amount of recorded goodwill in
Dura's Control Systems reporting unit is approximately $626.3 million. At this
time, DURA is unable to make a good-faith estimate of the potential amount or
range of amounts of the impairment charge. Such impairment charge will not
result in future cash expenditures. DURA will file a report on Form 8-K pursuant
to Item 2.06 within four business days after it makes an estimate of such amount
or range of amounts.
CONFERENCE CALL
A conference call to review the second-quarter results is scheduled for
July 27, 2006 at 11:30 a.m. ET. Interested participants may listen to the live
conference call or replay over the Internet by logging onto the investor
relations section of the company's Web site, www.duraauto.com. A telephone
recording of this call also will be available until 6 p.m. ET on Thursday,
August 3, 2006 by dialing (303) 590-3000, passcode 11066077.
ABOUT DURA AUTOMOTIVE SYSTEMS, INC.
DURA Automotive Systems, Inc., is a leading independent designer and
manufacturer of driver control systems, seating control systems, glass systems,
engineered assemblies, structural door modules and exterior trim systems for the
global automotive industry. The company is also a leading supplier of similar
products to the recreation vehicle (RV) and specialty vehicle industries. DURA
sells its automotive products to every North American, Japanese and European
original equipment manufacturer (OEM) and many leading Tier 1 automotive
suppliers. DURA is headquartered in Rochester Hills, Mich. Information about
DURA and its products is available on the Internet at www.duraauto.com.
Use of Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles
generally accepted in the United States ("GAAP") included throughout this news
release, the Company has provided information regarding "adjusted income (loss)
from continuing operations" and "adjusted EBITDA" (non-GAAP financial measures).
Adjusted income from continuing operations represents income from continuing
operations adjusted for facility consolidation and other charges, net, the
deferred tax asset valuation allowance, the favorable settlement of certain
environmental matters and gain on retirement of debt, net. Adjusted EBITDA
represents income from continuing operations adjusted for facility consolidation
and other charges, the deferred tax asset valuation allowance, a gain on
retirement of debt, the favorable resolution of certain environmental matters,
interest, amortization, depreciation and taxes. Management believes that
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July 27, 2006
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adjusted income from continuing operations and adjusted EBITDA are useful to
both management and investors in their analysis of the Company's ability to
analyze operational performance. Adjusted income (loss) from continuing
operations and adjusted EBITDA should not be considered in isolation or as a
substitute for net income or other income statement data prepared in accordance
with GAAP, or as a measure of profitability or liquidity. Also, adjusted income
(loss) from continuing operations and adjusted EBITDA, as determined and
presented by the Company, may not be comparable to related or similarly titled
measures reported by other companies.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to risks
and uncertainties. These statements often include words such as "believe",
"expect", "anticipate", "intend", "plan", "estimate", or similar expressions.
These statements are based on certain assumptions that the company has made in
light of its experience in the industry as well as its perspective of historical
trends, current conditions, expected future developments and other factors it
believes are appropriate in the circumstances. Actual results may differ
materially from the anticipated results because of certain risks and
uncertainties, including but not limited to (i) expected synergies, economies of
scale and cost savings from the company's acquisitions not being fully realized
or realized within the expected times frames; (ii) unanticipated difficulties
servicing the indebtedness of the company; (iii) costs or operational
difficulties related to integrating the operations of the acquired entities with
those of the company being greater than expected; (iv) labor disputes involving
the company or its significant customers; (v) risks associated with conducting
business in foreign countries, and (vi) general economic or business conditions
affecting the automotive industry, either nationally or regionally, being less
favorable than expected.
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July 27, 2006
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS - UNAUDITED)
Three Months Ended Six Months Ended
July 2, July 3, July 2, July 3,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Revenues $ 573,326 $ 623,834 $ 1,157,704 $ 1,243,813
Cost of sales 535,056 545,478 1,065,472 1,104,876
----------- ----------- ----------- -----------
Gross profit 38,270 78,356 92,232 138,937
Selling, general and administrative expenses 37,850 41,025 74,779 83,198
Facility consolidation, asset impairments and other
charges 2,878 2,624 5,450 4,290
Amortization expense 105 104 210 216
----------- ----------- ----------- -----------
Operating income (2,563) 34,603 11,793 51,233
Interest expense, net 28,831 24,907 55,005 49,877
Loss on early extinguishment of debt -- 3,349 -- 3,349
----------- ----------- ----------- -----------
Income (loss) from continuing operations before
provision for income taxes and minority interest (31,394) 6,347 (43,212) (1,993)
Provision (benefit) for income taxes 99,614 3,391 95,781 (226)
----------- ----------- ----------- -----------
Income (loss) from continuing operations before
minority interest (131,008) 2,956 (138,993) (1,767)
Minority interests in income (155) -- (210) --
----------- ----------- ----------- -----------
Income (loss) from continuing operations (131,163) 2,956 (139,203) 2,956
Gain (loss) from discontinued operations, net (105) 3 (105) (106)
Cumulative effect of change in accounting principle -- -- 1,020 --
----------- ----------- ----------- -----------
Net income (loss) $ (131,268) $ 2,959 $ (138,288) $ (1,873)
=========== =========== =========== ===========
Basic earnings (loss) per share:
Income (loss) from continuing operations $ (6.95) $ 0.16 $ (7.39) $ (0.09)
Discontinued operations (0.01) -- (0.01) (0.01)
Cumulative effect of change in accounting principle -- -- 0.05 --
----------- ----------- ----------- -----------
Net income (loss) $ (6.96) $ 0.16 $ (7.35) $ (0.10)
=========== =========== =========== ===========
Basic shares outstanding 18,861 18,704 18,834 18,683
=========== =========== =========== ===========
Diluted earnings (loss) per share:
Income (loss) from continuing operations $ (6.95) $ 0.16 $ (7.39) $ (0.09)
Discontinued operations (0.01) -- (0.01) (0.01)
Cumulative effect of change in accounting principle -- -- 0.05 --
----------- ----------- ----------- -----------
Net income (loss) $ (6.96) $ 0.16 $ (7.35) $ (0.10)
=========== =========== =========== ===========
Diluted shares outstanding 18,861 18,818 18,834 18,683
=========== =========== =========== ===========
Capital expenditures $ 20,825 $ 13,326 $ 43,942 $ 27,604
Depreciation $ 20,971 $ 21,057 $ 41,269 $ 41,492
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July 27, 2006
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
ADJUSTED INCOME FROM CONTINUING OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS - UNAUDITED)
Three Months Ended Six Months Ended
July 2, July 3, July 2, July 3,
2006 2005 2006 2005
--------- --------- --------- ---------
ADJUSTED INCOME (LOSS) FROM CONTINUING OPERATIONS
Income (loss) from continuing operations before
minority interest $(131,008) $ 2,956 $(138,993) $ (1,767)
Facility consolidation and other charges, net 1,927 1,767 3,565 2,777
Valuation allowance for U.S. deferred taxes 90,773 -- 90,773 --
Loss on early extinguishment of debt, net -- 2,143 -- 2,143
Favorable settlement of environmental matter, net -- (5,243) -- (5,243)
--------- --------- --------- ---------
Adjusted income (loss) from continuing operations $ (38,308) $ 1,623 $ (44,655) $ (2,090)
========= ========= ========= =========
Basic earnings (loss) per share:
Adjusted income (loss) from continuing operations $ (2.03) $ 0.09 $ (2.37) $ (0.11)
========= ========= ========= =========
Basic shares outstanding 18,861 18,704 18,834 18,683
========= ========= ========= =========
Diluted earnings (loss) per share:
Adjusted income (loss) from continuing operations $ (2.03) $ 0.09 $ (2.37) $ (0.11)
========= ========= ========= =========
Diluted shares outstanding 18,861 18,818 18,834 18,683
========= ========= ========= =========
ADJUSTED EBITDA
Operating income $ (2,563) $ 34,603 $ 11,793 $ 51,233
Amortization 105 104 210 216
Depreciation 20,971 21,057 41,269 41,492
Favorable settlement of environmental matter -- (8,192) -- (8,192)
Facility consolidation, asset impairment and other charges 2,878 2,624 5,450 4,290
--------- --------- --------- ---------
Adjusted EBITDA $ 21,391 $ 50,196 $ 58,722 $ 89,039
========= ========= ========= =========
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July 27, 2006
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DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<Table>
<Caption>
July 2, December 31,
Assets 2006 2005
----------- -----------
Current assets:
Cash and cash equivalents $ 123,042 $ 101,889
Accounts receivable, net 332,563 291,119
Inventories, net 142,625 132,148
Other current assets 113,917 107,650
----------- -----------
Total current assets 712,147 632,806
----------- -----------
Property, plant and equipment, net 473,233 458,258
Goodwill, net 887,870 854,296
Deferred income taxes and other assets, net 72,233 129,849
----------- -----------
$ 2,145,483 $ 2,075,209
=========== ===========
Liabilities and Stockholders' Investment
Current liabilities:
Accounts payable $ 250,960 $ 265,560
Accrued liabilities 197,908 180,622
Current maturities of long-term debt 3,042 3,473
----------- -----------
Total current liabilities 451,910 449,655
----------- -----------
Long-term debt, net of current maturities 278,809 171,577
Senior unsecured notes 400,000 400,000
Senior subordinated notes 532,519 523,906
Convertible trust preferred securities subject to
mandatory redemption 55,250 55,250
Senior notes - derivative instrument adjustment (22,968) (10,781)
Minority interests 5,122 4,864
Other noncurrent liabilities 190,454 141,031
Stockholders' investment:
Common stock -- Class A 189 188
Additional paid-in capital 352,271 351,994
Treasury stock (1,781) (1,948)
Accumulated deficit (229,816) (91,528)
Accumulated other comprehensive income 133,524 81,001
----------- -----------
Total stockholders' investment 254,387 339,707
----------- -----------
$ 2,145,483 $ 2,075,209
=========== ===========
</Table>
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