Decoma completes review of its United Kingdom and continental Europe operations
December 10 2003 - 5:04PM
PR Newswire (US)
Decoma completes review of its United Kingdom and continental
Europe operations CONCORD, ON, Dec. 10 /PRNewswire-FirstCall/ --
Decoma International Inc. ("Decoma" or the "Company") (TSX:DEC.A;
NASDAQ:DECA) has completed its 2004 business planning process,
which included both its United Kingdom market review as well as an
evaluation of its existing operating facilities in continental
Europe. With respect to the Company's two U.K. facilities (Merplas
and Sybex), the Company identified a number of indicators of asset
impairment including the continuation of budgeted operating losses,
uncertain long-term production volumes for the U.K. market in
general, which affect certain of the Company's existing U.K.
programs, and excess paint capacity in the U.K. market. In
addition, Ford of Europe's decision to produce its 2006 Freelander
program at Ford facilities in Halewood, England, has caused the
Company to relocate its related 2006 fascia production from Sybex
to the closer Merplas facility. As a result of these indicators,
the Company was required to assess its U.K. asset base for
recoverability under generally accepted accounting principles. The
result of the assessment impairment test was the write-down of
approximately US$12 million of certain of the assets of the
Company's Sybex facility. This write-down will have no impact on
operations at either Merplas or Sybex, which will continue their
operations in the normal course. Decoma's review of its continental
European operating facilities included the consideration of paint
capacity utilization. A number of factors were considered,
including anticipated changes in the product mix for these
facilities over the planning period, the need for near and
long-term existing facility capital requirements, pending changes
in applicable emission standards and existing excess paint
capacity. Excess paint capacity has resulted primarily from
successful continuous improvement initiatives at existing
facilities and the launch of the Company's Belplas paint line.
Based on this analysis, the Company has determined that a
consolidation of its existing continental European operations is
advantageous for both Decoma and its customers. The consolidation
entails mothballing the Company's Decoform paint line and
transferring Decoform's painted trim and fascia business to the
Company's newer paint lines at its Decorate and Belplas facilities.
Decoform will continue to mold and assemble products for Decorate.
The consolidation necessitates the write-down of the carrying value
of the Decoform paint line and will result in severance costs
associated with a reduction of the Decoform workforce of
approximately 250 employees. The write- down and severance costs
are expected to be approximately US$11 million. Final severance
costs are subject to the completion of labour negotiations at the
Decoform facility. There will be no reduction in sales as a result
of the consolidation of these operations. The consolidation will
avoid the need for significant future capital expenditures at the
Decoform facility and Decoma believes that the consolidation will
reduce operating overheads and will improve long-term EBIT at the
facilities affected in 2005 and beyond. The U.K. impairment and
continental Europe paint consolidation will result in a charge to
income in the fourth quarter of 2003 of approximately US$23 million
and $0.22 to diluted earnings per share. The Company now expects
that diluted earnings per share for the full year 2003, excluding
the above- noted items, will be within the range of $0.95 to $1.04,
up from our previous outlook of $0.92 to $1.04.
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Decoma management will hold a conference call to discuss the matter
detailed above on Friday, December 12, 2003 at 3:00 p.m. The
dial-in numbers for the conference call are (416) 640-4127 (local)
or 1 (800) 814-4853 for out-of-town callers, with call-in required
10 minutes prior to the start of the conference call. The
conference call will be recorded and copies of the recording will
be made available by request. The conference call will also be
available by live webcast at http://www.newswire.ca/webcast and
will be available for a period of 90 days.
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Decoma designs, engineers and manufactures automotive exterior
components and systems which include fascias (bumpers), front and
rear end modules, plastic body panels, roof modules, exterior trim
components, sealing and greenhouse systems and lighting components
for cars and light trucks (including sport utility vehicles and
mini-vans). Decoma has approximately 15,000 employees in 49
manufacturing, engineering and product development facilities in
Canada, the United States, Mexico, Germany, Belgium, England,
France, Austria, Poland, the Czech Republic and Japan. This press
release contains "forward-looking statements" within the meaning of
applicable securities legislation. Readers are cautioned that such
statements are only predictions and involve important risks and
uncertainties that may cause actual results or anticipated events
to be materially different from those expressed or implied herein.
In this regard, readers are referred to the Company's Annual
Information Form for the year ended December 31, 2002, filed with
the Canadian securities commissions and as an annual report on Form
40-F with the United States Securities and Exchange Commission, and
subsequent public filings, and the discussion of risks and
uncertainties set out in the "Forward Looking Statements" section
of the MD&A for the three and nine month periods ended
September 30, 2003, published in the Company's Third Quarter
Report. Decoma disclaims any intention and undertakes no obligation
to update or revise any forward-looking statements to reflect
subsequent information, events or circumstances or otherwise.
DATASOURCE: Decoma International Inc. CONTACT: For further
information about this press release, please contact S. Randall
Smallbone, Executive Vice-President, Finance and Chief Financial
Officer of Decoma at (905) 669-2888; For further information about
Decoma, please visit the Company's website at
http://www.decoma.com/
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