DRRA Dura Automotive Systems

DURA Automotive Systems, Inc. (Nasdaq:DRRA), today reported revenues of $564.4 million for the fourth quarter ended December 31, 2005 compared to $582.8 million in the prior year quarter. Net income for the quarter was $10.3 million, or $0.54 per diluted share, compared to net income of $1.9 million, or $0.10 per diluted share, in the prior year quarter. DURA's adjusted income from continuing operations for the quarter, which excludes facility consolidation charges, a gain on retirement of debt and the favorable settlement of certain environmental matters totaled $0.9 million, or $0.05 per diluted share, compared to income of $4.8 million, or $0.26 per diluted share, in the prior year quarter. Adjusted EBITDA for the quarter was $46.6 million compared to $46.5 million in the prior year quarter. A reconciliation of adjusted income from continuing operations and adjusted EBITDA to the most directly comparable GAAP measures is set forth below. "Although our fourth quarter and full year results came in within our expectations, these results are not acceptable and we need to continue to focus our efforts on changing DURA going forward," said Larry Denton, chairman and chief executive officer of DURA Automotive. The decrease in fourth quarter revenue from the prior year was driven primarily by lower North American automotive production by the domestic OEM's and the negative impact of foreign currency exchange. Partially offsetting these decreases was the strength of the recreation vehicle industry. Fourth quarter income from continuing operations increased from the prior year as net raw material cost improvements and the favorable resolution of certain environmental matters offset the impact of the lower domestic OEM automotive volumes. The $5.2 million pre tax facility consolidation charge for the quarter relates primarily to the previously announced headcount reductions associated with DURA's plan to migrate to one enterprise resource planning system and the continuation of the restructuring actions in North America and Germany. During the fourth quarter of 2005, DURA took the opportunity to reduce its Subordinated Notes by $49 million. This decision is consistent with its long-term debt reduction strategy. DURA spent $31 million of cash, resulting in a gain on retirement of debt of $18 million in the quarter. Full-Year Results For the year ended December 31, 2005, revenue totaled $2.3 billion compared to $2.5 billion in 2004. Net income for the year ended December 31, 2005 was $1.8 million, or $0.10 per diluted share, compared to net income of $11.7 million, or $0.62 per diluted share, in the prior year. DURA's adjusted loss from continuing operations for the year ended December 31, 2005, which excludes facility consolidation charges, a net gain on retirement of debt and the favorable resolution of certain environmental matters, totaled $6.4 million, or $0.34 per diluted share; as compared to adjusted income from continuing operations of $29.4 million, or $1.56 per diluted share, in the same period last year. Adjusted EBITDA for the year ended December 31, 2005 was $170.9 million compared to $210.9 million in the prior year. This was within the range of DURA's previously released guidance. Restructuring Plan Denton continued, "We have made progress toward achieving our organic growth and worldwide cost leadership goals over the past three years, however, we are not moving fast enough. We must accelerate our growth and profitability enhancement plans to meet our strategic goals by 2008. Over the next two years, DURA will complete a significant restructuring of our worldwide operations designed to enhance performance optimization, worldwide efficiency and financial results." The restructuring plan will impact over 50 percent of DURA's worldwide operations either through product movement or facility closures. DURA will complete this action by year end 2007. In addition, DURA's purchasing organization will aggressively cut costs throughout its supply chain resulting in a significant reduction of annual purchasing costs. Cash costs for the restructuring plan are expected to be approximately $100 million. These costs will relate primarily to employee severance, capital investment, facility closure and product move costs. The majority of these expenditures will occur by year end 2007. DURA expects a three year payback on the investment. The savings are expected primarily through a lower average global wage rate, lower cost of purchased materials and operating efficiencies gained as a result of the facility consolidations and reorganizations. "We will finance the restructuring plan with cash on hand and availability under our existing revolving credit facility," said Keith Marchiando, chief financial officer of DURA Automotive. "The liquidity package that we put in place in May 2005 gives us ample liquidity to fund this necessary restructuring plan along with our on going operating cash requirements." Conference Call A conference call to review the fourth-quarter and full-year results is scheduled for February 9, 2006 at 11 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 recording of this call also will be available until 6 p.m. ET on Thursday, February 16, 2006 by dialing (303) 590-3000, passcode 11050774. 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 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, a gain on retirement of debt, the favorable resolution of certain environmental matters, interest, amortization, depreciation and taxes. Management believes that 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. -0- *T DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts - unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ------------------- ----------------------- 2005 2004 2005 2004 --------- --------- ----------- ----------- Revenues $564,404 $582,802 $2,344,139 $2,492,543 Cost of sales 496,827 521,624 2,086,421 2,214,113 --------- --------- ----------- ----------- Gross profit 67,577 61,178 257,718 278,430 Selling, general and administrative expenses 36,860 33,156 155,901 150,489 Facility consolidation, asset impairments and other charges 5,247 3,730 11,397 21,817 Amortization expense 117 111 434 445 --------- --------- ----------- ----------- Operating income 25,353 24,181 89,986 105,679 Interest expense, net 25,631 22,840 100,021 89,535 Gain on retirement of debt (18,154) - (14,805) - --------- --------- ----------- ----------- Income from continuing operations before provision for income taxes and minority interest 17,876 1,341 4,770 16,144 Provision (benefit) for income taxes 7,551 (621) 2,687 3,672 --------- --------- ----------- ----------- Income from continuing operations before minority interest 10,325 1,962 2,083 12,472 Minority interests in income (67) - (177) - --------- --------- ----------- ----------- Income from continuing operaitons 10,258 1,962 1,906 12,472 Income(loss) from discontinued operations 14 (50) (92) (749) --------- --------- ----------- ----------- Net income $10,272 $1,912 $1,814 $11,723 ========= ========= =========== =========== Basic earnings per share: Income from continuing operations $0.55 $0.10 $0.10 $0.67 Discontinued operations - - - (0.04) --------- --------- ----------- ----------- Net income $0.55 $0.10 $0.10 $0.63 ========= ========= =========== =========== Basic shares outstanding 18,769 18,626 18,709 18,508 ========= ========= =========== =========== Diluted earnings per share: Income from continuing operations $0.54 $0.10 $0.10 $0.66 Discontinued operations - - - (0.04) --------- --------- ----------- ----------- Net income $0.54 $0.10 $0.10 $0.62 ========= ========= =========== =========== Diluted shares outstanding 20,068 18,828 18,849 18,868 ========= ========= =========== =========== Capital expenditures $33,891 $23,245 $78,581 $67,208 Depreciation $17,615 $18,519 $79,078 $82,943 DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES ADJUSTED INCOME FROM CONTINUING OPERATIONS ADJUSTED EBITDA (Amounts in thousands, except per share amounts - unaudited) Three Months Twelve Months Ended Ended December 31, December 31, ----------------- ------------------- 2005 2004 2005 2004 -------- -------- --------- --------- Adjusted income (loss) from continuing operations -------------------------------- Income from continuing operations before minority interest $10,325 $1,962 $2,083 $12,472 Facility consolidation and other charges, net 3,320 2,876 7,326 16,951 Favorable settlement of environmental matters, net (1,132) - (6,375) - Gain on retirement of debt, net (11,619) - (9,476) - -------- -------- --------- --------- Adjusted income (loss) from continuing operations $894 $4,838 $(6,442) $29,423 ======== ======== ========= ========= Basic earnings (loss) per share: Adjusted income (loss) from continuing operations $0.05 $0.26 $(0.34) $1.59 ======== ======== ========= ========= Basic shares outstanding 18,769 18,626 18,709 18,508 ======== ======== ========= ========= Diluted earnings (loss) per share: Adjusted income (loss) from continuing operations $0.05 $0.26 $(0.34) $1.56 ======== ======== ========= ========= Diluted shares outstanding 18,779 18,828 18,709 18,868 ======== ======== ========= ========= Adjusted EBITDA -------------------------------- Operating Income $25,353 $24,181 $89,986 $105,679 Amortization expense 117 111 434 445 Depreciation expense 17,615 18,519 79,078 82,943 Facility consolidation and other charges 5,247 3,730 11,397 21,817 Favorable settlement of environmental matters (1,768) - (9,960) - -------- -------- --------- --------- Adjusted EBITDA $46,564 $46,541 $170,935 $210,884 ======== ======== ========= ========= DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) December 31, December 31, Assets 2005 2004 -------------------------------------------- ------------ ------------ Current assets: Cash and cash equivalents $101,889 $191,568 Accounts receivable, net 291,119 273,956 Inventories, net 132,148 149,834 Current portion of derivative instruments - 7,746 Other current assets 107,650 92,016 ------------ ------------ Total current assets 632,806 715,120 ------------ ------------ Property, plant and equipment, net 458,258 487,106 Goodwill, net 854,296 903,584 Noncurrent portion of derivative instruments - 10,601 Deferred income taxes and other assets, net 129,212 107,510 ------------ ------------ $2,074,572 $2,223,921 ============ ============ Liabilities and Stockholders' Investment ------------------------------------------- Current liabilities: Accounts payable $265,560 $270,341 Accrued liabilities 178,150 187,254 Current maturities of long-term debt 3,473 2,968 ------------ ------------ Total current liabilities 447,183 460,563 ------------ ------------ Long-term debt, net of current maturities 171,577 150,898 Senior notes 400,000 400,000 Subordinated notes 523,906 589,469 Mandatorily redeemable convertible trust preferred securities 55,250 55,250 Senior notes - hedging mark-to-market value adjustment (10,781) 18,347 Minority Interests 4,864 - Other noncurrent liabilities 142,859 141,903 Stockholders' investment: Common stock - Class A 188 186 Additional paid-in capital 351,994 351,571 Treasury stock (1,948) (2,513) Retained deficit (91,528) (93,342) Accumulated other comprehensive income 81,008 151,589 ------------ ------------ Total stockholders' investment 339,714 407,491 ------------ ------------ $2,074,572 $2,223,921 ============ ============ *T