Exhibit 99.1
Delco Remy International Announces First Quarter Operating Results
Anderson, Indiana, May 13, 2003 /PRNewswire/ -- Delco Remy
International, Inc., a leading worldwide manufacturer and remanufacturer of
automotive electrical and drivetrain/powertrain products, today announced its
financial performance for the first quarter ended March 31, 2003.
In the first quarter of 2003, the Company reported Net Sales of $256.6
million, an increase of $7.8 million, or 3.1 percent, over the first quarter of
2002. A Net Loss From Continuing Operations of $47.8 million in the first
quarter of 2003 compares with income of $4.2 million in the first quarter of
2002. The loss in the first quarter of 2003 reflects a $45.1 million
restructuring charge, and income in the first quarter of 2002 reflects a $4.4
million restructuring credit and related income tax effect of $1.7 million.
Commenting on these results, Thomas J. Snyder, President and CEO,
stated: "Operating results slightly exceeded our expectations and were
substantially improved from the fourth quarter of 2002. We are also very pleased
with the solid progress made on the closure and consolidation of operations, the
successful sale of non-core businesses and other structural cost reductions.
These initiatives will substantially strengthen the competitive position of the
Company."
Performance Highlights:
Sales growth in the first quarter of 2003 compared with 2002
principally reflects higher industry volume in the North American Automotive and
Heavy Duty OE markets. However, the continuing softness experienced in the
retail Electrical Aftermarket partially offset these gains.
An Operating Loss of $28.1 million in the first quarter of 2003
includes the restructuring charge of $45.1 million and Operating Income of $24.5
million in the first quarter of 2002 includes the restructuring credit of $4.4
million. The year over year decline also reflected increased costs in 2003
arising from the shutdown and move of operations and investments in marketing
and product engineering programs primarily related to incremental business
awarded in the alternator product line.
Cash used in operating activities was $16.8 million in the first
quarter of 2003. This was driven almost entirely by higher receivables due to
increased sales, the normal seasonal increase in aftermarket inventory and
additional inventory build-up to facilitate the completion of the Anderson
shutdown.
In accordance with the provisions of Statement of Financial Accounting
Standards No. 142, the Company recorded a $74.2 million charge in the first
quarter of 2002 to write down goodwill in certain of its operations. This charge
was reported as the cumulative effect of a change in accounting principle.
Other Items:
In March 2003, the Company completed the acquisition of 51 percent of
Hubei Delphi Automotive Generators Company, Ltd., a manufacturer of automotive
and heavy duty generators for the OE and aftermarket based in China with annual
sales of approximately $10.0 million. Net assets acquired were $8.0 million
($3.8 million net of minority interest), including cash of $3.6 million.
In January 2003, the Company announced the closure of its starter and
alternator manufacturing operations in Anderson, Indiana. Production at these
plants was absorbed by other Company plants globally. In March 2003, the Company
announced it would close its electrical remanufacturing and distribution
facilities in Reed City, Michigan by the end of 2003. The activities at these
facilities will also be absorbed by other Company locations. A total of
approximately 600 employees will be affected by these actions. The Company also
completed plans in the first quarter to restructure its alternator and starter
remanufacturing operations in Mississippi. A pre-tax charge of $45.1 million was
recorded in the first quarter of 2003 related to these actions. Included in this
charge was $29.1 million for the write down of assets, $7.6 million for employee
severance costs (net of a post-employment benefit and pension curtailment gain)
and $8.4 million for future costs associated with the operating and capital
leases for the affected facilities. Cash payments of approximately $12.0 million
for employee termination and facility costs will be made during the balance of
2003 relative to the $45.1 million charge. It is expected that additional
charges of approximately $5.0 million to $8.0 million will be recorded during
the remainder of 2003 as the restructuring actions are implemented in the
Michigan and Mississippi operations.
During the first quarter, the Company completed the sale of two
non-core businesses - Tractech, Inc. and Kraftube, Inc. Net cash proceeds on the
sales were $27.9 million and a gain of $2.4 million was recorded in the first
quarter. Results for these two businesses are reported as discontinued
operations in both 2003 and 2002.
Following the sale of non-core businesses and the initiation of
restructuring actions in the first quarter, the Company amended the covenants
under its Senior Credit Facility, providing it with greater flexibility.
Commenting on the outlook for the remainder of 2003, Snyder stated: "As
previously indicated, we have launched new initiatives to improve the
competitive position of the Company. We are making good progress, but still have
significant work to do on the implementation of these plans. We expect to
realize the initial benefits on some of these actions starting in the second
quarter. Based on this, we expect improved profitability in the second quarter
of 2003 compared to the first quarter on similar sales as
the first quarter. However, the full benefit of these actions will not be
realized until the end of 2004. New business wins and additional progress on the
light duty alternator business should contribute to continued year over year
sales growth and the remainder of 2003 is expected to show gradual improvements
in operational results."
First Quarter Conference Call
Delco Remy's executive management team will conduct a live conference
call on Wednesday May 14, 2003 at 9:00 a.m. Eastern Daylight Time to discuss
additional details regarding the Company's performance for the first quarter and
the outlook for 2003. The call may be accessed by dialing 888-273-9889 ten
minutes prior to the start of the presentation. A replay of the conference will
be archived for two weeks, and may be accessed by dialing 800-475-6701 (USA),
320-365-3844 (International), Access Code 684410.
About Delco Remy:
Delco Remy International, Inc., headquartered in Anderson, Indiana, is
a leading designer, manufacturer, remanufacturer and distributor of electrical,
drivetrain/powertrain and related products and core exchange service for
automobiles and light trucks, medium- and heavy-duty trucks and other heavy-duty
off-road and industrial applications. It was formed in 1994 as a partial
divestiture by General Motors Corporation of the former Delco Remy division,
which traces its roots to Remy Electric, founded in 1896.
Caution Regarding Forward-Looking Statements:
Statements in this press announcement, which are not historical, are
forward-looking statements that involve certain risks and uncertainties,
including, but not limited to risks associated with the uncertainty of future
financial results, acquisitions, additional financing requirements, development
of new products and services, the effect of competitive products or pricing, the
effect of economic conditions, and other uncertainties detailed from time to
time in the Company's filings with the Securities and Exchange Commission.
DELCO REMY INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(in millions)
Three Month Period
Ended March 31
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2003 2002
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Net sales $ 256.6 $ 248.7
Cost of goods sold 213.2 205.6
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Gross profit 43.4 43.1
Selling, general and administrative expenses 26.4 23.0
Restructuring charge (credit) 45.1 (4.4)
------------------
Operating income (loss) (28.1) 24.5
Interest expense (14.1) (13.9)
Other non-operating income 0.2 -
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Income (loss) from continuing operations before
income taxes, minority interest, loss from unconsolidated
joint ventures and cumulative effect of change in
accounting principle (42.0) 10.6
Income tax expense 5.3 3.4
Minority interest 0.2 (1.8)
Loss from unconsolidated joint ventures (0.7) (1.2)
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Net income (loss) from continuing operations before
cumulative effect of change in accounting principle (47.8) 4.2
Discontinued operations:
Loss from discontinued operations before income
tax (including estimated gain on disposal of $2.4 million
in 2003) (1.3) (5.4)
Income tax benefit - (2.1)
------------------
Net loss from discontinued operations (1.3) (3.3)
Cumulative effect of change in accounting
principle, net - (74.2)
------------------
Net loss (49.1) (73.3)
Preferred dividends 7.5 6.7
------------------
Loss attributable to common stockholders $ (56.6) $ (80.0)
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EBITDA:
Income (loss) before tax $ (42.0) $ 10.6
Interest expense 14.1 13.9
Depreciation and amortization 7.5 6.4
Restructuring charge (credit) 45.1 (4.4)
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EBITDA $ 24.7 $ 26.5
==================
EBITDA is not a measure of performance under accounting principles generally
accepted in the United States (GAAP). The Company believes EBITDA is a
meaningful measure of performance that is commonly utilized in the industry to
analyze operating performance, liquidity and entity valuation. EBITDA should not
be construed as income from operations, net income or net cash flow from
operating activities as determined by GAAP.
DELCO REMY INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
March 31 December 31
2003 2002
----------- -----------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 12.9 $ 12.4
Trade accounts receivable, net 170.3 143.0
Inventories 309.6 281.0
Assets of discontinued operations 3.3 40.5
Other current assets 43.6 41.3
----------- -----------
Total Current Assets 539.7 518.2
Property and equipment, net 128.5 157.0
Goodwill, net 120.8 119.0
Deferred financing costs 16.4 17.3
Other assets 37.9 41.3
----------- -----------
Total Assets $ 843.3 $ 852.8
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 158.5 $ 138.5
Accrued restructuring charges 16.5 5.2
Other accrued liabilities 95.0 75.1
Liabilities of discontinued operations 6.9 17.2
Short-term debt 28.8 30.2
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Total Current Liabilities 305.7 266.2
Long-term debt 597.6 596.4
Accrued restructuring 8.3 4.6
Other noncurrent liabilities 45.2 50.3
Minority interest in subsidiaries 19.4 17.9
Redeemable preferred stock 281.6 274.1
Stockholders' Deficit (414.5) (356.7)
----------- -----------
Total Liabilities and Stockholders' Deficit $ 843.3 $ 852.8
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DELCO REMY INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(in millions)
Three Months
Ended March 31
---------------------------
2003 2002
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Operating activities:
Net loss $ (49.1) $ (73.3)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Cumulative effect of change in accounting principle - 74.2
Loss from discontinued operations 3.7 3.3
Gain on disposal of discontinued operations (2.4) -
Depreciation and amortization 7.5 6.4
Change in net working capital excluding
acquisitions and restructuring charges (credits) (9.1) 0.3
Restructuring charges (credits) 45.1 (4.4)
Cash payments for restructuring charges (7.0) (6.9)
Other, net (5.5) 2.1
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Net cash provided by (used in) operating activities
of continuing operations (16.8) 1.7
Investing activities:
Acquisitions, net of cash acquired (4.8) (7.3)
Net proceeds on sale of businesses 27.9 -
Purchases of property and equipment (5.3) (3.5)
Investments in joint ventures - (2.0)
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Net cash provided by (used in) investing activities
of continuing operations 17.8 (12.8)
Financing activities:
Net borrowings under revolving line of credit
and other 0.2 5.4
Deferred financing costs - (1.4)
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Net cash provided by financing activities
of continuing operations 0.2 4.0
Effect of exchange rate changes on cash (0.1) (0.1)
Cash flows of discontinued operations (0.6) (4.4)
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Net increase (decrease) in cash and cash equivalents 0.5 (11.6)
Cash and cash equivalents at beginning of year 12.4 22.6
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Cash and cash equivalents at end of period $ 12.9 $ 11.0
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Web site: http://www.delcoremy.com
CONTACT: Investor Relations, David E. Stoll, +1-765-778-6523, or Keri Webb,
+1-765-778-6602, both of Delco Remy International, Inc.