- Proactive Restructuring Efforts Continue WARREN, Ohio, Feb. 25
/PRNewswire-FirstCall/ -- Stoneridge, Inc. (NYSE: SRI) today
announced net sales of $158.0 million and a net loss of $108.4
million, or $(4.63) per diluted share, for the fourth quarter ended
December 31, 2008. The loss for the quarter included an after-tax
non-cash goodwill expense and non-cash deferred tax asset valuation
allowance of $108.1 million or ($4.62) per share and $3.4 million
or $(0.14) per share for after-tax expenses associated with
previously announced restructuring initiatives. As indicated in the
Company's press release of February 11, 2009 announcing a delay in
its earnings release for the fourth quarter of 2008 to allow time
to complete an asset impairment analysis, including goodwill, the
effect of the goodwill impairment charges and deferred tax asset
valuation allowance ("other non-recurring items") was not included
in our previously affirmed guidance of $0.40 to $0.46. Excluding
the other non-recurring items, the Company would have reported
earnings of $0.45 per diluted share for 2008. The Company achieved
income from continuing operations (excluding restructuring and
other non-recurring items) in 2008 of $22.8 million, or $0.98 per
share, compared with $17.6 million, or $0.75 per share, in 2007.
The Company aggressively pursued restructuring efforts starting in
late 2007 and during 2008 to adjust its cost structure and
eliminate overhead centers to enhance profitability in robust
economic times and protect profitability when market adversity
occurs. The Company recorded after-tax restructuring expenses of
$12.3 million, or $0.53 per share in 2008, as a result of these
restructuring efforts. In accordance with SFAS 142 (Accounting for
Goodwill and Other Intangible Assets) and SFAS 109 (Accounting for
Income Taxes), the 2008 results also include an after-tax non-cash
goodwill impairment charge in the Company's control device segment
of $46.1 million, or $1.97 per share, and a non-cash valuation
allowance against deferred tax assets of $62.0 million or $2.65 per
share. The impact of the non-cash impairment charge and deferred
tax asset valuation allowance was driven by adverse equity market
conditions that caused a decrease in current market multiples and
the Company's stock price as of December 31, 2008. Net sales
decreased $27.5 million, or 14.8 percent, to $158.0 million,
compared with $185.5 million for the fourth quarter of 2007. The
decrease in net sales was primarily caused by significantly reduced
production volumes in the North American passenger car/light truck
market, lower production in the European and North American
commercial vehicle markets and the impact of foreign currency
translation. Foreign currency translation decreased fourth- quarter
net sales by approximately $15.0 million compared with the same
period in 2007. The sales decrease was partially offset by the
strength in the North American agricultural and off-road market.
Net income excluding the restructuring initiatives and the
after-tax non- cash goodwill expense and non-cash valuation
allowance for the fourth quarter was $3.1 million, or $0.13 per
diluted share, compared with net income excluding restructuring
charges of $7.3 million, or $0.31 per diluted share, in the fourth
quarter of 2007. The decrease in net income was due primarily to
the reduced sales volumes described above and the loss of overhead
recoveries because of lower production volumes which was the result
of restructuring inventories built in the first half of 2008.
"While we are not satisfied with our reported operating results,
given the volatility of the markets globally, we responded well in
adjusting to lower volumes," said John C. Corey, president and
chief executive officer. "In addition, we completed the two
significant restructuring initiatives announced in late 2007.
Beyond these, we further realigned our cost structure to the most
recent market conditions. Excluding restructuring costs and
after-tax non-cash goodwill expense and non-cash valuation
allowance in the fourth quarter, we earned $0.13 per share." Corey
added, "We are in an extremely volatile time for the transportation
industry globally. In this environment, we will continue to adjust
our cost structure and target near-term revenue opportunities.
Because of our efforts to improve our liquidity, we have $92.7
million in cash available for operating needs or other uses. While
the year has not produced the results we expected, I am proud of
the work our team has done in 2008." For the year ended December
31, 2008, net sales were $752.7 million, an increase of $25.6
million or 3.5 percent compared with $727.1 million for the year
ended December 31, 2007. The net loss for 2008 was $97.5 million,
or $(4.17) per diluted share, compared with net income of $16.7
million, or $0.71 of income per diluted share, in 2007. Earnings
per share for 2008 include $(5.15) per share for restructuring
expenses, an after-tax non-cash goodwill expense and non-cash
deferred tax asset valuation allowance. For the year ended December
31, 2008, the Company achieved income from continuing operations
(excluding restructuring and other non-recurring items) of $22.8
million compared with $17.6 million in 2007. Net cash provided by
operating activities for the year was $42.5 million, compared with
net cash provided of $33.5 million for the prior year. The increase
of $9.0 million in cash provided by operating activities was
primarily due to lower accounts receivable balances in the current
year. Stoneridge has $92.7 million in cash at the end of 2008
available to support operations as needed. The Company's $183.0
million 11.5% senior notes and asset backed credit facility mature
in May 2012 and November 2011, respectively. The Company's
asset-backed credit facility remains undrawn and does not contain
restrictive performance covenants. Use of Non-GAAP Financial
Measures A reconciliation of the Company's non-GAAP financial
measures to the corresponding GAAP measures, and an explanation of
the Company's use of non- GAAP measures, is included in the
exhibits to this press release. Outlook "The environment for 2009
will most likely be the most challenging the Company has ever
experienced," Corey said. "The same is true for the entire industry
given the interdependence of the supply chain to the OEMs. Although
we have positioned Stoneridge to weather the storm as we see it
now, we have decided not to provide specific earnings guidance at
this time, due to the uncertainty of market conditions. However, we
expect that Stoneridge should be both earnings and cash flow
positive in 2009 based on our expected sales in 2009." Conference
Call on the Web A live Internet broadcast of Stoneridge's
conference call regarding 2008 fourth-quarter results can be
accessed at 11 a.m. Eastern time on Wednesday, February 25, 2009,
at http://www.stoneridge.com/, which will also offer a webcast
replay. About Stoneridge, Inc. Stoneridge, Inc., headquartered in
Warren, Ohio, is an independent designer and manufacturer of highly
engineered electrical and electronic components, modules and
systems principally for the automotive, medium- and heavy-duty
truck, agricultural and off-highway vehicle markets. Additional
information about Stoneridge can be found at
http://www.stoneridge.com/. Forward-Looking Statements Statements
in this release that are not historical fact are forward- looking
statements, which involve risks and uncertainties that could cause
actual events or results to differ materially from those expressed
or implied in this release. Things that may cause actual results to
differ materially from those in the forward-looking statements
include, among other factors, the loss of a major customer; a
significant change in automotive, medium- and heavy-duty truck or
agricultural and off-highway vehicle production; disruption in the
OEM supply chain due to bankruptcies; a significant change in
general economic conditions in any of the various countries in
which the Company operates; labor disruptions at the Company's
facilities or at any of the Company's significant customers or
suppliers; the ability of the Company's suppliers to supply the
Company with parts and components at competitive prices on a timely
basis; customer acceptance of new products; and the failure to
achieve successful integration of any acquired company or business.
In addition, this release contains time-sensitive information that
reflects management's best analysis only as of the date of this
release. The Company does not undertake any obligation to publicly
update or revise any forward- looking statements to reflect future
events, information or circumstances that arise after the date of
this release. Further information concerning issues that could
materially affect financial performance related to forward-looking
statements contained in this release can be found in the Company's
periodic filings with the Securities and Exchange Commission.
STONERIDGE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share data) For the Three
Months For the Fiscal Years Ended December 31, Ended December 31,
2008 2007 2008 2007 (Unaudited) (Unaudited) (Unaudited) (Audited)
Net Sales $157,965 $185,476 $752,698 $727,120 Costs and Expenses:
Cost of goods sold 128,194 137,352 586,411 559,397 Selling, general
and administrative 31,687 34,573 136,563 133,708 Gain on sale of
property, plant and equipment, net (529) (245) (571) (1,710)
Goodwill impairment charge 65,175 - 65,175 - Restructuring charges
2,514 852 8,391 926 Operating Income (Loss) (69,076) 12,944
(43,271) 34,799 Interest expense, net 5,274 5,189 20,575 21,759
Equity in earnings of investees (2,284) (2,969) (13,490) (10,893)
Loss on early extinguishment of debt - - 770 - Other (income) loss,
net (395) (76) (351) 709 Income (Loss) Before Income Taxes (71,671)
10,800 (50,775) 23,224 Provision for income taxes 36,723 4,319
46,752 6,553 Net Income (Loss) $(108,394) $6,481 $(97,527) $16,671
Basic net income (loss) per share $(4.63) $0.28 $(4.17) $0.72 Basic
weighted average shares outstanding 23,407 23,215 23,367 23,133
Diluted net income (loss) per share $(4.63) $0.28 $(4.17) $0.71
Diluted weighted average shares outstanding 23,407 23,524 23,367
23,548 STONERIDGE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (in thousands) December 31, 2008 2007 ASSETS Unaudited
Current Assets: Cash and cash equivalents $92,692 $95,924 Accounts
receivable, less reserves of $4,204 and $4,736, respectively 96,535
122,288 Inventories, net 54,800 57,392 Prepaid expenses and other
9,069 15,926 Deferred income taxes 1,495 9,829 Total current assets
254,591 301,359 Long-Term Assets: Property, plant and equipment,
net 87,701 92,752 Other Assets: Goodwill 493 65,176 Investments and
other, net 39,652 39,454 Deferred income taxes - 29,028 Total
long-term assets 127,846 226,410 Total Assets $382,437 $527,769
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts
payable $50,719 $69,373 Accrued expenses and other 43,485 47,198
Total current liabilities 94,204 116,571 Long-Term Liabilities:
Long-term debt 183,000 200,000 Deferred income taxes 7,002 2,665
Other liabilities 6,473 2,344 Total long-term liabilities 196,475
205,009 Shareholders' Equity: Preferred Shares, without par value,
authorized 5,000 shares, none issued - - Common Shares, without par
value, authorized 60,000 shares, issued 24,772 and 24,601 shares
and outstanding 24,665 and 24,209 shares, respectively, with no
stated value - - Additional paid-in capital 158,039 154,173 Common
Shares held in treasury, 107 and 392 shares, respectively, at cost
(129) (383) Retained (deficit) earnings (59,155) 38,372 Accumulated
other comprehensive income (loss) (6,997) 14,027 Total
shareholders' equity 91,758 206,189 Total Liabilities and
Shareholders' Equity $382,437 $527,769 STONERIDGE, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in
thousands) For the Fiscal Years Ended December 31, 2008 2007
(Unaudited) (Audited) OPERATING ACTIVITIES: Net cash provided by
operating activities $42,456 $33,525 INVESTING ACTIVITIES: Capital
expenditures (24,573) (18,141) Proceeds from sale of fixed assets
1,652 12,315 Business acquisitions and other (980) - Net cash used
for investing activities (23,901) (5,826) FINANCING ACTIVITIES:
Repayments of long-term debt (17,000) - Share-based compensation
activity 1,322 2,119 Premiums related to early extinguishment of
debt (553) - Other financing costs - (1,219) Net cash provided by
(used for) financing activities (16,231) 900 Effect of exchange
rate changes on cash and cash equivalents (5,556) 1,443 Net change
in cash and cash equivalents (3,232) 30,042 Cash and cash
equivalents at beginning of period 95,924 65,882 Cash and cash
equivalents at end of period $92,692 $95,924 RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES To supplement Stoneridge's condensed
consolidated financial statements presented on a basis in
accordance with generally accepted accounting principles (GAAP) in
the United States, the Company's management also uses and discloses
certain non-GAAP financial measures. These non-GAAP financial
measures are not in accordance with, nor are they alternatives for,
GAAP-based financial measures. The Company includes these non-GAAP
financial measures because it believes they provide useful
information with which to evaluate the performance of the Company.
The non-GAAP measures included in this press release have been
reconciled to the comparable GAAP measures within the accompanying
table, as required under Securities and Exchange Commission (SEC)
rules regarding the use of non-GAAP financial measures. They should
not be considered in isolation or as a substitute for analysis of
the Company's results as reported under GAAP. A reconciliation of
GAAP net loss and EPS to adjusted net income before restructuring
related expenses and other non-recurring costs and EPS is presented
below: For the Three Months Ended December 31, 2008 2007 Dollars
EPS Dollars EPS (Unaudited) (Unaudited) Adjusted net income per
share before restructuring related expenses and other non-
recurring items Net income (loss) $(108,394) $(4.63) $6,481 $0.28
Total restructuring related expenses, net of tax benefits 3,386
0.14 867 0.04 Goodwill impairment, net of tax benefits 46,052 1.97
- - Deferred tax asset valuation allowance 62,006 2.65 - - Adjusted
net income before restructuring related expenses and other
non-recurring items $3,050 $0.13 $7,348 $0.31 Diluted weighted
average shares outstanding (1) 23,407 23,524 For the Fiscal Year
Ended December 31, 2008 2007 Dollars EPS Dollars EPS (Unaudited)
(Audited) Adjusted net income per share before restructuring
related expenses and other non- recurring items Net income (loss)
$(97,527) $(4.17) $16,671 $0.71 Total restructuring related
expenses, net of tax benefits 12,286 0.53 915 0.04 Goodwill
impairment, net of tax benefits 46,052 1.97 - - Deferred tax asset
valuation allowance 62,006 2.65 - - Adjusted net income before
restructuring related expenses and other non-recurring items
$22,817 $0.98 $17,586 $0.75 Diluted weighted average shares
outstanding (1) 23,367 23,548 (1) - Basic and Diluted weighted
average shares outstanding are the same for 2008 periods as a net
loss caused the dilutive shares to have an anti-dilutive effect.
DATASOURCE: Stoneridge, Inc. CONTACT: Kenneth A. Kure, Corporate
Treasurer and Director of Finance, +1-330-856-2443 Web site:
http://www.stoneridge.com/
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