Exhibit 1
FOR RELEASE: IMMEDIATELY
FOR ADDITIONAL INFORMATION CONTACT: THOMAS R. PILHOLSKI - 602.923.7200
EAGLE-PICHER HOLDINGS, INC. ANNOUNCES
AUDITED RESULTS FOR FISCAL YEAR 2002 AND REAFFIRMS
OUTLOOK FOR 2003
PHOENIX, ARIZONA, JANUARY 31, 2003 - Eagle-Picher Holdings, Inc.
announces its audited Fiscal Year ("FY") 2002 financial results, which ended
November 30, 2002, and reports net sales of $707.1 million, down $18.7 million,
or 2.6%, from $725.8 million in FY 2001. These amounts include
reclassifications, aggregating an increase of $25.9 million for FY 2002 and
$33.3 million for FY 2001, to restate sales and cost of sales for transportation
and tooling expenses billed to customers, which previously had been netted in
the reported amounts. These reclassifications were made to conform our 2001
presentation to our 2002 presentation, and had no impact on our previously
reported 2001 operating income, net income, or cash flows.
We report operating income of $5.3 million, compared to FY 2001
operating income of $4.3 million, and a net loss of $(36.8) million in FY 2002,
compared to a net loss in FY 2001 of $(54.0) million, including $(32.1) million
relating to discontinued operations in FY 2001. Our net loss applicable to
common shareholders after accretion of preferred stock is $(51.7) million in FY
2002, compared to a net loss applicable to common shareholders of $(67.3)
million in FY 2001. In our press release, dated January 16, 2003, we reported
preliminary estimated unaudited operating income of $22.0 million. The
difference of $16.7 million between the preliminary estimated unaudited
operating income of $22.0 million and actual reported operating income of $5.3
million is non-cash amortization of goodwill, and is due to the fact that we
were not able to adopt FASB 142, Goodwill and Other Intangible Assets, in FY
2002 as we had expected. We have adopted this standard in the first quarter of
FY 2003, December 1, 2002, and will not recognize any goodwill amortization
expense in FY 2003. In addition, we have completed our initial impairment test
required by this accounting standard and will not recognize an impairment charge
related to the adoption of this accounting standard. If we were able to adopt
this accounting standard in FY 2002, our reported operating income would have
been consistent with the preliminary estimated unaudited operating income
released in our January 16, 2003 press release.
We also announce that our earnings before interest, taxes, depreciation
and amortization ("EBITDA") for FY 2002 were $71.0 million. This compares to
EBITDA of $68.5 million in FY 2001. Additionally, we announce EBITDA, determined
under our senior secured credit facility ("Credit Agreement EBITDA"), of $96.7
million. This compares to Credit Agreement EBITDA of $87.1 million in FY 2001.
FY 2002 Credit Agreement EBITDA excludes the following items:
- $6.1 million in special legal expenses and settlement costs,
primarily related to an arbitration with Isonics Corporation
that has been settled.
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- $5.9 million of restructuring charges primarily to exit our
Gallium-based specialty materials business in our Technologies
Segment.
- $3.1 million of insurance related losses, primarily due to a
fire claim as described in Note G of our Form 10-Q for the
quarter ended August 31, 2002.
- $3.5 million for certain special management compensation
expenses primarily related to a settlement with our former
CEO, as well as severance for various former officers.
- $6.5 million in charges related to former divested businesses,
including the sale of our Precision Products business in our
Technologies Segment during FY 2002 ($2.8 million loss) and
various legal settlements and provisions related to divested
business legal matters.
- Approximately $0.6 million of other charges.
EBITDA and Credit Agreement EBITDA, as used herein, may not be
comparable to similarly titled measures reported by other companies and should
not be construed as an alternative to operating income or to cash flows from
operating activities, as determined by accounting principles generally accepted
in the United States of America, as a measure of our operating performance or
liquidity, respectively. Funds depicted by EBITDA are not available for
management's discretionary use to the extent they are required for debt service
and other commitments.
We also report net cash generated from operating activities in FY 2002
of approximately $81.0 million, including approximately $46.5 million provided
from the securitization of accounts receivable, and uses of $6.6 million in
investing activities and $69.6 million in financing activities.
We also report the following as of November 30, 2002:
- - Total indebtedness for borrowed money, including the net capital
investment in our receivables securitization, of $420.2 million.
- - Cash on hand of $31.5 million.
- - Availability of $39.3 million under our various credit facilities.
We were in compliance with all covenants under our various credit
facilities as of November 30, 2002.
We reaffirm our January 16, 2003 sales projection for FY 2003 to be in
the range of $670 million - $700 million, compared to $707.1 million in FY 2002.
The FY 2003 sales range is primarily attributed to the current uncertainty
regarding industry forecasted Automotive builds for FY 2003. Also, the sales
estimate for FY 2003 reflects the anticipated decrease in sales of approximately
$20 million related to the phase-out of an automotive transmission pump program,
as well as the anticipated sale of our Hillsdale U.K. Automotive operation,
which had sales of approximately $13.9 million in FY 2002.
We are projecting FY 2003 EBITDA to be in the range of approximately
$99 million to $103 million and our Credit Agreement EBITDA to be approximately
$102 million to $106 million. FY 2003 projected Credit Agreement EBITDA excludes
approximately $3 million of non-cash provisions related to a recently adopted
long term bonus program. Despite anticipated lower sales, we project EBITDA
improvement in FY 2003 compared to FY 2002, due to cost reductions and
productivity initiatives, and improved sales mix. On the basis of these
projections, we believe we will be in compliance with all covenants under our
various credit facilities in FY 2003.
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This news release contains statements which, to the extent that they
are not recitations of historical fact, constitute "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
Section 21E of the Securities Exchange Act of 1934. Such forward-looking
information involves risks and uncertainties that could cause actual results to
differ materially from those expressed in any such forward-looking statements.
These risks and uncertainties include, but are not limited to, our ability to
maintain existing relationships with customers, demand for our products, our
ability to successfully implement productivity improvements and/or cost
reduction initiatives; our ability to develop, market and sell new products, our
ability to obtain raw materials, increased government regulation or changing
regulatory policies resulting in higher costs and/or restricting output,
increased price competition, currency fluctuations, general economic conditions,
acquisitions and divestitures, technological developments and changes in the
competitive environment in which we operate, as well as factors discussed in our
filings with the U.S Securities and Exchange Commission.
All of our operations are conducted through our wholly-owned subsidiary
Eagle-Picher Industries, Inc. ("EPI") and its subsidiaries. EPI, founded in
1843, is a diversified manufacturer of industrial products for the automotive,
defense, aerospace and other industrial markets worldwide.
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January 31, 2003
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