ANDERSON, IN — Delco Remy International announced that fourth quarter 2003 Adjusted EBITDA increased 62.9 percent to $27.7 million on a net sales increase of 4.2 percent to $261 million as compared to EBITDA of $17 million and net sales of $250.5 million for the same period in the prior year.
In the fourth quarter of 2003, cash provided by operating activities of continuing operations increased 9.2 percent to $39.1 million versus $35.8 million in the comparable period of 2002. The company reported an operating loss of $85.1 million in the fourth quarter of 2003 compared with operating income of $9.6 million in the fourth quarter of 2002. The loss in the fourth quarter of 2003 reflects the $104.1 million special charge discussed below and restructuring charges of $2.2 million.
In the fourth quarter of 2003, the company changed its estimate for the valuation of its core inventory from primarily customer core acquisition cost to primarily core broker prices and recorded a special charge of $104.1 million. The company said it believes this change better reflects current market and competitive conditions as well as the company’s continued emphasis on cash generation and liquidity. The new values of cores brings the inventory more inline with the appraised values under the asset based lending arrangement, said the company
In accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” the company recorded in the fourth quarter of 2003 a non-cash charge to provide a deferred tax valuation allowance of $28.3 million for all unreserved domestic income tax net assets established prior to 2003. Of this total, $24.7 million was charged to income tax provision and $3.6 million was charged to other comprehensive loss.
For the year, which ended December 31, 2003, net sales of $1,053.2 million increased $26.2 million, or 2.6 percent, primarily due to competitive wins in the market place. Adjusted EBITDA increased 16.3 percent to $113.7 million from $97.8 million for the prior year, reflecting higher sales and the success of cost reduction efforts. An operating loss of $64.5 million in 2003 reflects the $104.1 million special charge discussed above and restructuring charges of $49.5 million and compares with operating income of $74.9 million in 2002.
Restructuring charges of $49.5 million in 2003 were for the closure of facilities in Michigan, Indiana, Mississippi and Florida. A $4.4 million post-employment benefit curtailment gain was recorded in 2002.
For more about Delco Remy, visit: www.delcoremy.com.
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