Towers Revenues Dip 31 Million

October 31, 2003
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GRAND RAPIDS — Tower Automotive Inc. (NYSE: TWR) reported revenues of $623 million for the third quarter ended Sept. 30, a decrease of $31 million from the third quarter of 2002.

The company also reported a net loss of $101 million, or $1.78 per diluted share, for the just passed quarter, compared with a net income of $10 million, or 15 cents per share, for the year-ago quarter.

Kathleen Ligocki, president and CEO, said challenges during the quarter included lower sales volumes related to labor disruptions at Hyundai and Kia facilities in South Korea.

Third-quarter results also reflect an asset impairment charge of $122.7 million to align the company’s balance sheet with its current business plan, she said.

For the first nine months of 2003, revenues were $2.1 billion, about equal to last year’s third quarter.

Tower reported a net loss of $92 million, or $1.62 per diluted share, for the first nine months, vs. a net loss of $115 million, or $2.01 per share, in the 2002 period.

Ligocki said the company is currently at a crossroads in its evolution.

A couple days before releasing its financial results, Tower also announced plans to consolidate its Rochester Hills and Novi, Mich., technical centers and to relocate corporate headquarters from Grand Rapids to Novi.

The move to Novi will bring Tower closer to its major technical center and closer to customers, Ligocki said.

Ligocki said she expects that in the next few years Tower will see “tremendous” revenue growth in all of its regions.

“To deliver on that promise of profitable growth expected by our shareholders and operationally excellent performance demanded by our customers, we must better leverage our scale and facilitate our ability to share learning and experiences across the enterprise.”

She said the strategy is designed to streamline Tower’s North American operations by building a single, unified North American team.

The move affects about 170 workers.

The strategy is to extend the customer base from the traditional Ford, DaimlerChrysler and General Motors to include the Asian OEMs, she said.

“If you look at the Nissan business, this is going to grow five-fold in the next couple of years and Toyota will more than double. We have enhanced our strategy to complement key customers in the southern part of the United States, as that manufacturing base grows with the automakers.

“If we look at each of the regions in Europe and South America, for example, we have a constant strategy to target luxury programs — Volvo, DaimlerChrysler, BMW. Europe is growing on a very strong leadership and operating foundation. We have a wonderful customer reputation there. This is a region for strong growth potential in the future.”

With the exception of two large competitors, most of Tower’s competitors in the European market are small, regional, undercapitalized players in vehicle structures systems, she said.

Tower anticipates fourth-quarter revenues between $678 million and $700 million, which would bring revenues for the full year to approximately $2.8 billion.

After revising its outlook for capital expenditures, Tower now anticipates capital expenditures for 2003 will be about $240 million, rather than the $200 million previously estimated.

The increase is primarily due to additional spending for the company’s new facility in Chicago’s Millennium Park, just down the road from Ford’s assembly plant.

The Ford 500 Freestyle launch in Chicago next year will be one of the company’s largest launches in the body structure business to date, Ligocki noted.

Tower continues to anticipate revenues will grow between 12 percent and 15 percent from 2003 to 2005.    

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