NEW YORK (April 5) — Lexington Precision Corp. fell $3.78 million into the red in fiscal 2005 and management has cautioned investors it may not be able to meet it debt obligations this year, which could force the company to seek Chapter 11 bankruptcy protection.
Sales fell 12.2 percent to $96.8 million, with lower sales by the rubber group accounting for all of the decline and more. Pre-tax operating earnings fell 2.6 percent to $12.8 million.
Rubber group operating earnings fell 15.1 percent to $14.3 million as sales fell 14.7 percent to $84.9 million, primarily on a 42-percent drop in business with Delphi Corp., the firm´s largest customer. Delphi itself is in Chapter 11 and seeking to reorganize.
Regarding its financial position, Lexington Precision said it operates with "substantial financial leverage and limited liquidity." Aggregate indebtedness as of Dec. 31 was $67.5 million, including a revolving line of credit valued at $25.1 million that comes due June 30. The firm is negotiating new loan terms with existing and other lenders.
During the year Lexington Precision sold two properties, including its closed rubber molding plant in LaGrange, Ga., for $4.5 million. The net pre-tax gain was $1.67 million.