Business Editors
TORONTO--(BUSINESS WIRE)--Feb. 27, 2001--Derlan Industries Limited
(TSE:DRL.) today reported fourth quarter earnings of $2.6 million or
$0.09 per share from continuing operations before unusual items and
income taxes and $5.5 million or $0.19 per share for the year ended
December 31, 2000.
The comparable earnings for 1999 were $3.7 million or $0.13 per
share for the fourth quarter and $7.3 million or $0.25 per share for
the year.
The following are highlights of Derlan's 2000 financial results
from operations:
-- Revenue increased 25%; Aerospace revenues increased 38%;
-- EBITDA from continuing operations before unusual items
increased 6%; Aerospace EBITDA increased 17%; and
-- Backlog was $251 million at December 31, 2000 up from $181
million at December 31, 1999.
After income taxes and recognizing charges of $2.0 million in the
quarter for impairment in the net carrying values on certain
investments and corporate restructuring costs, Derlan reported
earnings of $0.2 million or $0.01 per share for the fourth quarter.
The loss for the year was $11.8 million or $0.41 per share after
recognizing charges for unusual items and a loss from discontinued
operations. The loss per share after discontinued operations for 1999
was $0.05 per share.
Revenue from continuing operations for the three months ended
December 31, 2000 rose 50% to $53.4 million from $35.6 million in the
fourth quarter of 1999. The improvement was largely the result of
Derlan's acquisition at March 31, 2000 of Boeing Precision Gear Inc.,
now carrying on business as Derlan Precision Gear. The acquisition
gave Derlan sole source manufacturing rights for gears and
transmissions on a number of aircraft. Revenue in the Aerospace sector
increased 77% to $42.2 million from $23.9 million in the fourth
quarter a year ago. Revenue in the Pump sector was $11.2 million,
compared to $11.8 million a year ago.
Effective January 1, 2000, Derlan retroactively applied, without
restatement of prior year financial statements, the new accounting
standard for employee future benefits issued by the Canadian Institute
of Chartered Accountants. The effect of adopting the standard was to
increase both the deficit and non-current liabilities by $3.9 million
as at January 1, 2000.
On December 19, 2000, Derlan Industries Limited announced that it
terminated all divestment discussions concerning its Aerospace
operations, completing a process that began two years ago. D-Velco
Manufacturing of Arizona, Inc. is being integrated into the existing
aerospace operations and will no longer be accounted for as a
discontinued business. Consequently, amounts previously included in
discontinued operations in respect of D-Velco have been reclassified
to results of continuing operations.
The results for 2001 will continue to be affected by a strike of
unionized employees at the Company's Derlan Precision Gear division in
Bedford Park, Illinois. The strike began on the expiration of the
union's contract on June 14, 2000. Derlan continues to have the
support of its customers, and the Company continues to ship product
from the facility at reduced levels. Discussions with the union
continue with the involvement of a mediator.
Derlan announced in December that the Company's Board of Directors
had determined that the best course of action to achieve maximum value
for shareholders is to build upon the established trend of earnings
and revenue growth in Derlan's existing Aerospace operations. At the
same time, Derlan will continue to seek opportunities for the sale of
its investment in its Pump Group. This would further reduce the
Company's debt and would represent the final step in making Derlan a
pure aerospace company.
Donald Jackson was appointed President and CEO effective January
1, 2001. Derlan intends to create value and liquidity for Derlan
shareholders through a reduction in overheads, a disciplined operating
approach and a strategic focus on its aerospace operations.
Derlan is an industrial corporation, manufacturing products for
the aerospace and pump industries. The Company has operations in
Canada, the United States, Mexico and Germany. Its shares are listed
on the Toronto Stock Exchange under the symbol DRL.
Attachments:
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Derlan Industries Limited
Consolidated Income Statement
for the years ended December 31, 2000 and 1999
(thousands of dollars except per share amounts) Year ended
December 31
2000 1999
-------------------
Sales $189,914 $152,288
-------------------
Manufacturing expenses 138,130 107,279
Selling, general and administration expenses 27,046 21,654
Depreciation and amortization 8,670 7,158
Interest 10,530 8,903
-------------------
Income from continuing operations before
income taxes and unusual items 5,538 7,294
Unusual items (11,187) -
-------------------
Income (loss) from continuing operations
before income taxes (5,649) 7,294
Provision for income taxes 1,217 1,107
-------------------
Income (loss) from continuing operations (6,866) 6,187
Discontinued operations (4,965) (7,586)
-------------------
Net income (loss) $(11,831) $(1,399)
-------------------
-------------------
See accompanying notes to consolidated financial statements.
Derlan Industries Limited
Consolidated Balance Sheet
as at December 31, 2000 and 1999
December 31 December 31
(thousands of dollars) 2000 1999
------------------------------
Assets
Current assets
Cash $ - $34,941
Accounts receivable 42,359 32,515
Inventories 70,110 55,789
Prepaid expenses and other 2,879 2,681
------------------------------
115,348 125,926
Fixed assets, net 73,565 57,304
Future income taxes 7,688 6,864
Goodwill, net 7,542 4,440
Other assets, net 10,316 14,137
------------------------------
$214,459 $208,671
------------------------------
------------------------------
Liabilities
Current liabilities
Bank indebtedness $ 3,293 $ -
Accounts payable and accrued
liabilities 46,057 42,058
Current portion of long-term debt 1,190 1,101
------------------------------
50,540 43,159
Long-term debt 100,676 97,214
Other non-current liabilities 19,115 8,416
------------------------------
170,331 148,789
Shareholders' Equity
Share capital 152,625 152,625
Currency translation adjustment (12,882) (12,826)
Retained earnings (Deficit) (95,615) (79,917)
------------------------------
44,128 59,882
------------------------------
$214,459 $208,671
------------------------------
------------------------------
See accompanying notes to consolidated financial statements.
Derlan Industries Limited
Consolidated Statement of Cash Flows
for the years ended December 31, 2000 and 1999
(dollars in thousands) 2000 1999
--------------------------------------------------------------------
Operating Activities
Income (loss) from continuing operations $(6,866) $6,187
Add: Non-cash items
Depreciation and amortization 8,670 7,158
Future income taxes (515) (516)
Non-cash unusual items 6,458 -
---------------------
7,747 12,829
Net change in non-cash working
capital balances
related to continuing operations (16,175) (6,026)
---------------------
(8,428) 6,803
Discontinued operations (3,209) (4,767)
---------------------
(11,637) 2,036
---------------------
Investing Activities
Acquisitions (15,073) -
Capital expenditures
Continuing operations (10,033) (12,911)
Discontinued operations - (4,528)
Net proceeds from sale of discontinued
operations - 81,136
Investment in joint ventures (4,122) (720)
Other 504 (3,577)
---------------------
(28,724) 59,400
---------------------
Financing Activities
Additions to long-term debt 1,421 2,267
Repayments of long-term debt (1,346) (72,338)
---------------------
75 (70,071)
---------------------
Effect of translation of foreign currency
amounts 2,052 (4,460)
---------------------
Decrease in cash during the year (38,234) (13,095)
Cash at beginning of year 34,941 48,036
---------------------
Cash (bank indebtedness) at end of year $(3,293) $34,941
---------------------
---------------------
See accompanying notes to consolidated financial statements.
Derlan Industries Limited
Notes to Consolidated Financial Statements
for the years ended December 31, 2000 and 1999
1. Earnings per share
Earnings per share from continuing operations before unusual items
and income taxes were $0.19 per share for the year ended December 31,
2000 (compared to $0.25 per share in 1999). The basic earnings per
share were a loss of $0.41 per share for the year ended December 31,
2000 (compared to a loss of $0.05 per share in 1999).
2.Segmented information
Years ended
December 31
(thousands of dollars) 2000 1999
--------------------------------------------------------------------
Sales
Aerospace $146,736 $106,385
Pumps 43,178 45,903
--------------------------------------------------------------------
$184,914 $152,288
--------------------------------------------------------------------
Earnings before interest, income taxes,
depreciation and
Amortization (EBITDA)
Aerospace $26,160 $22,375
Pumps 3,979 5,328
--------------------------------------------------------------------
$30,139 $27,703
Less:
Depreciation and amortization expenses 8,670 7,158
Corporate and other costs 5,401 4,348
Interest 10,530 8,903
--------------------------------------------------------------------
Income from continuing operations before
Income taxes and unusual items 5,538 7,294
--------------------------------------------------------------------
3.Unusual Items
(a) Severance and related costs
The Company recorded a $4.8 million charge to operations during
2000 for overhead reduction plans aimed at reducing future operating
costs. The charge included severance and related payments of
approximately $4.0 million, and pension costs of $0.8 million
resulting from the curtailment of the former Chairman's pension plan.
(b) Provisions for asset impairment
During 2000 the Company made a provision of $4.4 million to write
off deferred costs and certain fixed assets. Of this amount, $3.1
million related to the write off of deferred costs associated with a
product with limited current sales and for which the outlook for
future sales had deteriorated significantly. The remaining $1.3
million related to the write off of obsolete machinery and equipment.
Also, during 2000 the Company determined that the net carrying
values of certain of its investments were impaired. As a result, the
Company recorded a charge to operations of $2.0 million. The amount of
the impairment was established by comparing the estimated future
discounted net cash flow related to the investments with their
respective carrying amounts.
4.Discontinued Operations
During 1998 and 1999 the Company initiated plans to discontinue
certain of its operations in order to concentrate on two segments:
aerospace and pump manufacturing, servicing and distribution. The
results from discontinued operations have been reported separately in
these financial statements and include the operating loss to the
measurement dates, and the expected costs of discontinuance, net of
estimated disposal proceeds, to the expected disposal date.
Except for D-Velco Manufacturing of Arizona, Inc., the businesses
designated as discontinued were sold in 1998 and 1999. D-Velco had
been designated as discontinued in July 1999, but in December 2000,
the Company made the decision to retain D-Velco. Amounts previously
included in discontinued operations in respect of D-Velco have been
reclassified to results of continuing operations.
The expense from discontinued operations comprises the following:
2000 1999
---------------------
Losses on sale of discontinued operations $ - $ 7,586
Additional provision for the cost of discharging environmental
remediation and other obligations associated with discontinued
operations sold in
previous years 4,965 -
---------------------
$ 4,965 $ 7,586
---------------------
---------------------
CONTACT:
Derlan Industries Limited
C. John Mastrella, 416/364-5852
Original article: http://www.businesswire.com/webbox/bw.022701/210580432.htm
