Tower Automotive, Inc. (NYSE: TWR – news), today announced its operating results for the third quarter and nine months ended September 30, 2000.
On July 25, 2000, the company replaced its existing credit facility with a new six-year $1.15 billion senior unsecured agreement. As a result, the company recorded an extraordinary loss on the early extinguishment of debt, net of tax, of approximately $3 million during the third quarter.
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For both the third quarter of 2000 and 1999, revenues were $536 million. Operating income declined 42 percent to $28 million from $48 million reported last year. Net income before the extraordinary item charge for the third quarter of 2000 was $10 million, or 21 cents per diluted share outstanding, versus $24 million, or 44 cents per diluted share, in the comparable 1999 period.
For the nine months ended September 30, 2000, revenues were $1,903 million, a 22 percent increase, compared with $1,565 million in the same period for 1999. Operating income rose 9 percent to $175 million from $161 million reported last year. Net income before the extraordinary item charge for the nine months ended September 30, 2000 was $86 million, or $1.54 per diluted share outstanding, versus $84 million, or $1.52 per diluted share, in the comparable 1999 period.
In commenting on third-quarter and nine-month results, Dugald K. Campbell, president and chief executive officer of Tower Automotive, said, “Our third-quarter results were impacted by volume declines associated with the Ranger and Explorer programs, heavy truck sales declines, new product launches, and schedule disruptions created by irregular releases from our customers. These conditions have offset a portion of the gains made during the first six months to bring our nine-month results for 2000 to approximately the same level as the results of the comparable 1999 period.”
On July 7, 2000, the company announced that it completed the acquisition of the remaining 60 percent equity interest in Metalurgica Caterina S.A. (“Caterina”), a supplier of structural stampings and assemblies to the Brazilian automotive market. This remaining interest was acquired for consideration of approximately $42 million. Tower Automotive acquired the initial 40 percent equity interest in Caterina in March 1998.
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By GlobalDataOn September 21, 2000, the company announced that it acquired a 17 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. 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. The company will pay Nissan approximately $38 million over the next two and a half years to acquire the 17 percent interest. In addition, the company will have the opportunity to increase its holdings in Yorozu through the purchase of additional Yorozu shares.
On October 2, 2000, the company announced the signing of a definitive agreement to sell its Roanoke, Va., heavy truck rail manufacturing business to its joint venture partner, Metalsa S. de R.L., which is based in Monterrey, Mexico, for $55 million plus an earnout to Tower Automotive of up to $30 million based on Metalsa heavy truck achieving certain profit levels over the next three years. The transaction is expected to close by the end of December 2000. The company also announced plans 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. These restructuring activities will result in a pre-tax charge in the fourth quarter in the range of $140 million.
Tower Automotive, Inc., produces a broad range of assemblies and modules for vehicle structures and suspension systems for the automotive manufacturers, including Ford, DaimlerChrysler, GM, Honda, Toyota, Nissan, Auto Alliance, Fiat, BMW and Volkswagen. Products include body structural assemblies such as pillars and package trays, control arms, suspension links, engine cradles and full frame assemblies. The company is based in Grand Rapids, Mich., and has its corporate office in Minneapolis, Minn.
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts - unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues $536,210 $536,152 $1,902,594 $1,565,404
Cost of sales 471,482 453,851 1,611,773 1,316,627
Gross profit 64,728 82,301 290,821 248,777
Selling, general and
administrative expenses 31,535 29,382 99,622 76,386
Amortization expense 5,576 4,451 15,793 11,642
Operating income 27,617 48,468 175,406 160,749
Interest expense, net 16,405 10,642 43,136 25,171
Income before provision for
income taxes 11,212 37,826 132,270 135,578
Provision for income taxes 4,484 15,130 52,908 54,231
Income before equity in
earnings of joint ventures
and minority interest 6,728 22,696 79,362 81,347
Equity in earnings of joint
ventures 5,844 3,664 14,864 10,959
Minority interest -
dividends on trust
preferred securities, net (2,619) (2,619) (7,857) (7,861)
Income before extraordinary
item 9,953 23,741 86,369 84,445
Extraordinary loss on early
extinguishment of debt, net 2,988 -- 2,988 --
Net income $6,965 $23,741 $83,381 $84,445
Basic earnings per common share:
Income before extraordinary
loss $0.21 $0.50 $1.81 $1.80
Extraordinary loss (0.06) -- (0.06) --
Net income $0.15 $0.50 $1.75 $1.80
Basic shares outstanding 47,986 47,081 47,649 46,871
Diluted earnings per common share:
Income before extraordinary
loss $0.21 $0.44 $1.54 $1.52
Extraordinary loss (0.06) -- (0.05) --
Net income $0.15 $0.44 $1.49 $1.52
Diluted shares outstanding 48,411 64,099 64,284 64,010
TOWER AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
September 30, December 31,
Assets 2000 1999
(unaudited)
Current assets:
Cash and cash equivalents $1,404 $3,617
Accounts receivable 347,272 353,351
Inventories 116,506 110,897
Prepaid tooling and other 107,353 90,191
Total current assets 572,535 558,056
Property, plant and equipment, net 1,213,065 1,075,861
Investments in joint ventures 309,081 290,705
Goodwill and other assets, net 814,945 627,928
$2,909,626 $2,552,550
Liabilities and Stockholders' Investment
Current liabilities:
Current maturities of long-term debt and
capital lease
Obligations $20,660 $13,876
Accounts payable 235,110 276,673
Accrued liabilities 129,396 140,567
Total current liabilities 385,166 431,116
Long-term debt, net of current maturities 975,405 699,678
Obligations under capital leases, net of
current maturities 17,437 21,543
Convertible subordinated notes 200,000 200,000
Deferred income taxes 67,525 50,736
Other noncurrent liabilities 180,325 163,592
Total noncurrent liabilities 1,440,692 1,135,549
Mandatorily redeemable trust convertible
preferred securities 258,750 258,750
Stockholders' investment:
Preferred stock -- --
Common stock 475 469
Additional paid-in capital 452,403 437,210
Retained earnings 377,903 294,522
Warrants to acquire common stock -- 2,000
Deferred income stock plan (8,942) (4,484)
Accumulated other comprehensive income (loss) 3,179 (2,582)
Total stockholders' investment 825,018 727,135
$2,909,626 $2,552,550
