IFCO Systems Second Quarter 2001 Results.

Business Editors

AMSTERDAM, Netherlands--(BUSINESS WIRE)--Aug. 28, 2001

(Nasdaq:IFCO)(Frankfurt:IFE)

-- EBITDA margin improved, despite lower revenues and EBITDA

-- Initiatives to cut costs and implement efficiencies again effective

-- U.S. economy downturn continues to affect performance

-- Sale of Pallet Manufacturing -- closing expected in Q3

IFCO Systems N.V. ("IFCO Systems", "IFCO" or the "company), a global leader in round-trip logistic systems and services announced its second quarter 2001 results.

IFCO Systems reports a net profit of US$3.0mm in the second quarter 2001, resulting in a net profit of US$14.5mm for the first half of 2001. The income statement includes a currency gain of US$10.3mm (US$29.1mm in the first half 2001). As in the previous quarter the gain reflects the change in the value of the euro denominated debt when translated into US$. US$24.3mm of the YTD figure is non cash.

Sales from continuing operations totalled US$122.5mm compared to pro forma revenues of US$129.5mm in the prior year, which is 5.4% below the prior year. Sales YTD 2001 were US$249.1mm, compared to pro forma revenues of US$253.7mm for the same period in the previous year, which is 1.8% lower. The overall decrease in revenues was primarily caused by the continued economic downturn in the U.S. economy, which affected our U.S. pallet services and drum reconditioning businesses.

As a result of this revenue shortfall, EBITDA from continuing operations resulted in US$16.2mm in Q2 2001 compared to US$19.9mm in the prior year. Consequently the EBITDA YTD 2001 of US$31.2mm was also down compared to US$38.8mm in the prior year. However, the overall EBITDA margin in Q2 2001 of 13.2% improved significantly by 10.9% or 1.3% points since Q4 2000.

The initiatives started in Q4 2000 to cut SGA/Overhead expenses resulted in US$2.1mm lower SGA expenses in Q2 2001 compared to the previous quarter. The positive development in decreasing overhead expenses continued in Q2 2001 and now stand at US$4.9mm YTD, resulting into a forecast for full year 2001 of below US$10mm. This will be an improvement of overhead expenses of more than US$11mm compared to full year 2000 (pro forma).

RTC revenues grew by 3.0% (YTD 7.4%) to US$37.8mm. The currency effect on the European business performance by converting the results into USD was once again significant. Which means that the currency adjusted growth is 9.2% (YTD 13,6 %) compared to the same quarter in the previous year. RTC trips increased by 8.0% (YTD 9.2%) to 58.1 million trips. Pool-size of 70.7 million crates at the end of Q2 remained unchanged since year end 2000, due to the company's decision not to grow the current pool in order to improve utilization. Q2 2001 EBITDA for the RTC business totalled US$7.9mm, compared to US$10.6mm in the prior year. Positive EBITDA margin development continued in Q2 2001 with 20.8% compared to 19.9% in Q1 2001. The YTD 2001 EBITDA margin of 20.4% was further improved by 1.8% points compared to 18.6% average EBITDA margin for full year 2000.

Pallet Services revenues were US$54.3mm (YTD US$ 108.3mm) compared to pro forma revenues of US$59.0mm (US$113.9mm) in the prior year, mainly the result of the U.S. economic downturn. Due to continuing improvement in the management structure and business practices, the EBITDA for the Pallet Services business shows a positive development. With US$4.9mm in Q2 2001 EBITDA is 11.9% better than the prior year and 22.0% better compared to Q1 2001. This led to an improved EBITDA margin of 9.0% in Q2 2001.

Pallet Pooling Services (Canadian pallet rental pool) revenues grew 21.1% to US$4.8mm (YTD US$9.1mm). EBITDA for the pallet pooling business grew to US$0.5mm in Q2 2001 from breakeven in the prior year. The EBITDA margin improved from Q1 2001 by 7.2% points to 9.5% in Q2 2001.

Drum Reconditioning revenues were US$25.7mm (YTD US$51.3mm), which is 14.1% below the prior year, however, stable compared to Q1 2001. Q2 2001 EBITDA of US$3.0mm was impacted by the shortfall in revenues due to the U.S. economic downturn, as well as continuing higher natural gas prices compared to last year. As a result of this, EBITDA was down by US$2.0mm compared to Q2 2000, but nevertheless showed an improvement of 24.0% compared to Q1 2001. The EBITDA margin also improved in Q2 to 11.6% from 9.4% in the previous quarter.

Debt as of June 30, 2001 totalled US$364.0mm against US$374.4mm at the end of first quarter 2001. Bank debt was unchanged. Liquidity, defined as cash plus availability under the senior credit facility minus borrowings, was US$21.9mm. IFCO Systems was in compliance with its bank covenants as of June 30, 2001.

Compared to Q1 2001 IFCO was able to reduce significantly its accounts receivables, day sales outstanding and inventory. Due to a reduction of accounts payables and a seasonal decrease in the refundable deposit, working capital of continuing businesses was reduced by US$4.5mm in Q2 2001.

IFCO Systems is continuing to work on the completion of the definitive agreement for the sale of the pallet manufacturing business with an undisclosed third party and expects respective cash proceeds upon closing of the sale in Q3 2001. We have been informed that the buyer has received commitments for the financing for the transaction. The proceeds will be used to pay down debt under the company's senior credit facility and to pay related transactions expenses.

The second quarter report 2001 will be filed this week with the Frankfurt Stock Exchange and will be available on our homepage www.ifcosystems.de or www.ifcosystems.com.

The statements in this press release regarding management's expectations, estimates and projections constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are subject to risks and uncertainties that could cause IFCO Systems' results to differ materially from those expectations. Such risks and uncertainties include, but are not limited to: (1) the results of internal and independent reviews of projected financial results and condition; (2) the competitive nature of the container businesses, including RTCs, pallets, and industrial containers; (3) customer demand and economic cycles; (4) the ability to finance operations, capital expenditures and growth and comply with covenants contained in credit agreements to which IFCO Systems is a party; (5) conditions in lumber markets; (6) seasonality; (7) weather conditions; (8) changes in national or international politics and economics; (9) currency exchange rate fluctuations; and (10) change in capital and financial markets, including the performance of companies listed on the Frankfurt Stock Exchange and the Nasdaq National Market.

This announcement should be read in conjunction with the filings made by the company with the Securities and Exchange Commission and the Frankfurt Stock Exchange. These filings disclose risk factors and other information that could cause actual results to materially differ from management's expectations.