DURA Automotive Systems, Inc. (Nasdaq:DRRA), today reported
revenues of $573.3 million for the second quarter ended July 2,
2006 compared to $623.8 million in the prior year's quarter. Net
loss for the quarter was $131.3 million, or $6.96 per diluted
share, compared to net income of $3.0 million, or $0.16 per diluted
share, for the prior year's quarter. Adjusted loss from continuing
operations for the quarter, which excludes facility consolidation
charges and a deferred tax asset valuation allowance totaled $38.3
million, or $2.03 per diluted share, compared to income of $1.6
million, or $0.09 per diluted share, in the prior year's quarter.
Adjusted EBITDA for the quarter was $21.4 million compared to $50.2
million in the prior year's quarter. A reconciliation of adjusted
income from continuing operations and adjusted EBITDA to the most
directly comparable GAAP measures is set forth below. "While we
haven't begun to experience material financial improvements to
date, our operational restructuring plan is off to an excellent
start," said Larry Denton, chairman and chief executive officer of
DURA Automotive. "Our management team is committed to meeting our
restructuring goals and our entire organization is aligned to
deliver this program." The decrease in second quarter revenue from
the prior year was driven primarily by lower North American and
European automotive production, unfavorable vehicle platform mix
and the loss of the GMT 800 seat adjuster business. Partially
offsetting these decreases was the benefit received from foreign
currency exchange. The decrease in second quarter income from
continuing operations from the prior year reflects the impact of
lower automotive production, the loss of the GMT 800 seat adjuster
business and higher raw material prices. Denton continued, "We need
to match our overhead structure to the market share of our major
customers. While our 50 cubed restructuring plan is focused on
structuring our operations for the future, we must take action
immediately to address the current industry conditions. To support
this effort, we will reduce our labor force by 510 employees by
year end." The $2.9 million facility consolidation charge for the
quarter relates primarily to actions associated with the previously
announced 50 cubed operational restructuring plan. Approximately
$2.3 million of the charge relates to employee severance costs and
$0.6 million was for facility closure and asset impairment charges.
In accordance with Statement of Financial Accounting Standards
("SFAS") No. 109 "Accounting for Income Taxes", DURA's second
quarter 2006 provision for income taxes includes the recording of a
$90.8 million valuation allowance U.S. deferred tax assets recorded
as of December 31, 2005. DURA determined the need for a valuation
allowance based upon its updated quarterly analysis of its U.S.
operations taxable income together with the extended impact of
elevated raw material prices on the automotive and recreation
vehicle industries. Six-month Results For the six month period
ended July 2, 2006, revenue totaled $1.2 billion compared to $1.2
billion for the same period in 2005. Net loss for the six month
period was $138.3 million, or $7.35 per diluted share, compared to
a net loss of $1.9 million, or $0.10 per diluted share, in the
prior year. DURA's adjusted loss from continuing operations for the
six months ended July 2, 2006, which excludes facility
consolidation and other charges, net and the deferred tax asset
valuation allowance totaled $44.7 million, or $2.37 per diluted
share, compared to adjusted loss from continuing operations of $2.1
million, or $0.11 per diluted share, in the same period last year.
Potential Material Goodwill Impairment Charge In accordance with
SFAS No. 142, "Goodwill and Other Intangible Assets," DURA
periodically evaluates the carrying value of its goodwill for
indicators of impairment. SFAS No. 142 requires the company to
evaluate the carrying value of its goodwill for potential
impairment on an annual basis or on an interim basis if there are
indicators of potential impairment. As in prior quarters, DURA
performed this assessment during the second quarter of 2006. Based
on the second quarter analysis, it has been determined that due to
continued unfavorable operating results, primarily as a result of
continued higher raw material costs, lower production volumes on
key platforms and insufficient customer pricing, DURA's Control
Systems reporting unit's goodwill may be materially impaired. At
July 2, 2006, the total amount of recorded goodwill in DURA's
Control Systems reporting unit is approximately $626.3 million. At
this time, DURA is unable to make a good-faith estimate of the
potential amount or range of amounts of the impairment charge. Such
impairment charge will not result in future cash expenditures. DURA
will file a report on Form 8-K pursuant to Item 2.06 within four
business days after it makes an estimate of such amount or range of
amounts. Conference Call A conference call to review the
second-quarter results is scheduled for July 27, 2006 at 11:30 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 telephone
recording of this call also will be available until 6 p.m. ET on
Thursday, August 3, 2006 by dialing (303) 590-3000, passcode
11066077. 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 deferred tax asset valuation allowance, 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, the deferred tax asset valuation allowance, 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 Six Months Ended
--------------------- ----------------------- July 2, July 3, July
2, July 3, 2006 2005 2006 2005 ---------- --------- -----------
----------- Revenues $573,326 $623,834 $1,157,704 $1,243,813 Cost
of sales 535,056 545,478 1,065,472 1,104,876 ---------- ---------
----------- ----------- Gross profit 38,270 78,356 92,232 138,937
Selling, general and administrative expenses 37,850 41,025 74,779
83,198 Facility consolidation, asset impairments and other charges
2,878 2,624 5,450 4,290 Amortization expense 105 104 210 216
---------- --------- ----------- ----------- Operating income
(2,563) 34,603 11,793 51,233 Interest expense, net 28,831 24,907
55,005 49,877 Loss on early extinguishment of debt - 3,349 - 3,349
---------- --------- ----------- ----------- Income (loss) from
continuing operations before provision for income taxes and
minority interest (31,394) 6,347 (43,212) (1,993) Provision
(benefit) for income taxes 99,614 3,391 95,781 (226) ----------
--------- ----------- ----------- Income (loss) from continuing
operations before minority interest (131,008) 2,956 (138,993)
(1,767) Minority interests in income (155) - (210) - ----------
--------- ----------- ----------- Income (loss) from continuing
operations (131,163) 2,956 (139,203) 2,956 Gain (loss) from
discontinued operations, net (105) 3 (105) (106) Cumulative effect
of change in accounting principle - - 1,020 - ---------- ---------
----------- ----------- Net income (loss) $(131,268) $2,959
$(138,288) $(1,873) ========== ========= =========== ===========
Basic earnings (loss) per share: Income (loss) from continuing
operations $(6.95) $0.16 $(7.39) $(0.09) Discontinued operations
(0.01) - (0.01) (0.01) Cumulative effect of change in accounting
principle - - 0.05 - ---------- --------- ----------- -----------
Net income (loss) $(6.96) $0.16 $(7.35) $(0.10) ==========
========= =========== =========== Basic shares outstanding 18,861
18,704 18,834 18,683 Diluted earnings (loss) per share: Income
(loss) from continuing operations $(6.95) $0.16 $(7.39) $(0.09)
Discontinued operations (0.01) - (0.01) (0.01) Cumulative effect of
change in accounting principle - - 0.05 - ---------- ---------
----------- ----------- Net income (loss) $(6.96) $0.16 $(7.35)
$(0.10) ========== ========= =========== =========== Diluted shares
outstanding 18,861 18,818 18,834 18,683 Capital expenditures
$20,825 $13,326 $43,942 $27,604 Depreciation $20,971 $21,057
$41,269 $41,492 DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
ADJUSTED INCOME FROM CONTINUING OPERATIONS (Amounts in thousands,
except per share amounts - unaudited) Three Months Ended Six Months
Ended ------------------- ------------------- July 2, July 3, July
2, July 3, 2006 2005 2006 2005 ---------- -------- ----------
-------- Adjusted income (loss) from continuing operations
------------------------------ Income (loss) from continuing
operations before minority interest $(131,008) $2,956 $(138,993)
$(1,767) Facility consolidation and other charges, net 1,927 1,767
3,565 2,777 Valuation allowance for U.S. deferred taxes 90,773 -
90,773 - Loss on early extinguishment of debt, net - 2,143 - 2,143
Favorable settlement of environmental matter, net - (5,243) -
(5,243) ---------- -------- ---------- -------- Adjusted income
(loss) from continuing operations $(38,308) $1,623 $(44,655)
$(2,090) ========== ======== ========== ======== Basic earnings
(loss) per share: Adjusted income (loss) from continuing operations
$(2.03) $0.09 $(2.37) $(0.11) Basic shares outstanding 18,861
18,704 18,834 18,683 Diluted earnings (loss) per share: Adjusted
income (loss) from continuing operations $(2.03) $0.09 $(2.37)
$(0.11) Diluted shares outstanding 18,861 18,818 18,834 18,683
Adjusted EBITDA ------------------------------ Operating income
$(2,563) $34,603 $11,793 $51,233 Amortization 105 104 210 216
Depreciation 20,971 21,057 41,269 41,492 Favorable settlement of
environmental matter - (8,192) - (8,192) Facility consolidation,
asset impairment and other charges 2,878 2,624 5,450 4,290
---------- -------- ---------- -------- Adjusted EBITDA $21,391
$50,196 $58,722 $89,039 ========== ======== ========== ========
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (Amounts in thousands) July 2, December
31, Assets 2006 2005 --------------------------------------------
----------- ------------- Current assets: Cash and cash equivalents
$123,042 $101,889 Accounts receivable, net 332,563 291,119
Inventories, net 142,625 132,148 Other current assets 113,917
107,650 ----------- ------------- Total current assets 712,147
632,806 ----------- ------------- Property, plant and equipment,
net 473,233 458,258 Goodwill, net 887,870 854,296 Deferred income
taxes and other assets, net 72,233 129,849 -----------
------------- $2,145,483 $2,075,209 =========== =============
Liabilities and Stockholders' Investment
-------------------------------------------- Current liabilities:
Accounts payable $250,960 $265,560 Accrued liabilities 197,908
180,622 Current maturities of long-term debt 3,042 3,473
----------- ------------- Total current liabilities 451,910 449,655
----------- ------------- Long-term debt, net of current maturities
278,809 171,577 Senior unsecured notes 400,000 400,000 Senior
subordinated notes 532,519 523,906 Convertible trust preferred
securities subject to mandatory redemption 55,250 55,250 Senior
notes - derivative instrument adjustment (22,968) (10,781) Minority
interests 5,122 4,864 Other noncurrent liabilities 190,454 141,031
Stockholders' investment: Common stock - Class A 189 188 Additional
paid-in capital 352,271 351,994 Treasury stock (1,781) (1,948)
Accumulated deficit (229,816) (91,528) Accumulated other
comprehensive income 133,524 81,001 ----------- ------------- Total
stockholders' investment 254,387 339,707 ----------- -------------
$2,145,483 $2,075,209 =========== ============= *T
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