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July/August  2003

AGRReports
    breaking news

LEGAL
Safelite Serves Subpoena to IGA as Part of Diamond Triumph Suit

Safelite Glass Corp. hAS served a subpoena on the Independent Glass Association (IGA) to request to review information created and collected by the IGA as part of Safelite’s defense against claims made by Diamond Triumph Auto Glass and Safelite’s counterclaim against Diamond Triumph for disparaging conduct.

Among the items requested in the subpoena are those relating to the IGA’s efforts to track Safelite’s behavior in the assignment of auto glass jobs as part of its role as a third-party administrator of auto glass claims for many of the nation’s leading insurers, as well as certain communications between the IGA and Diamond Triumph counsel, Charles J. Lloyd, postings from the IGA’s discussion boards and IGA meeting and seminar materials.

“We are committed to the examination of the facts concerning Diamond Triumph’s claims and conduct. The IGA has publicly stated that it is assisting Diamond Triumph’s attorneys in the litigation. The subpoena seeks to discover what they have done and what kind of information they have collected,” said Antonio Dias of Jones Day, which was recently appointed counsel for Safelite.

Tim Smale, chief executive officer of the IGA, said the association is looking into its options concerning the subpoena.

“The IGA is investigating this matter with legal counsel and will comment at an appropriate time,” Smale said.

Man Pleads Guilty in Nogales, Ariz., Fraud Case
The former manager of Newman’s Auto Center in Nogales, Ariz., has agreed to plead guilty to fraudulent schemes and artifices, a class-two felony, and illegally 
conducting an enterprise for allegedly billing insurance companies for auto glass installations that were not performed. According to the Nogales International, James Kovacs was indicted for all three crimes on May 15, 2003.

Kovacs plead guilty in a plea bargain in which he will be required to pay restitution in the amount of $128, 484 to the insurance company from which his shop allegedly took unnecessary payment. However, Kovacs said he committed no wrongdoing and it should be the shop that pays the restitutions, not him. 

In addition, Kovacs has been placed on intensive probation for seven years and must serve 360 days in jail.

Newman’s Auto Glass could not be reached for comment at press time. 

Commerce Department Charges Japan, et Al., with Dumping 
The U.S. Commerce Department has preliminarily ruled that imports of polyvinyl alcohol products, which are used to make the adhesive film in automotive glass, are being dumped on the U.S. market by importers in Japan, China, South Korea and Germany. The ruling was issued April 20.

The original complaint was filed in September 2002 by Celanese Chemicals Ltd., based in Dallas, and E.I. du Pont de Nemours and Co., based in Wilmington, Del.
 
The U.S. International Trade Commission is scheduled to make its final ruling in June. If it determines that the imports of foreign polyvinyl alcohol products are hurting the U.S. industry, anti-dumping duties will be imposed on those importing from the aforementioned countries.

AGRSS
Connecticut Requires Licensing to AGRSS Standard
The Connecticut Auto Glass Work and Flat Glass Work Examining Board decided in December to make the Auto Glass Replacement Safety Standard (AGRSS) the official standard for its new licensing program, effective January 1. The program has been approved by the state’s Department of Consumer Protection, according to Bob Steben, a member of the Connecticut Glass Dealers Board who worked on the licensing program development. The program will license both flat glass and auto glass installers as licensed journeypersons, just as tradespersons in other industries are often licensed.
AGRSS Logo
At press time, the board had not yet decided how it would enforce the standard.

In other AGRSS news, at the council’s May meeting, contamination sub-committee chairman Russ Corsi of PPG announced that he is working on drafting language with Bill Ives, AGRSS counsel, from Michael Best & Freidrich LLC, to present to the federal government as a suggested change to ANSI Z26.1 (see May/June 2003 AGRR, page 18, for related story).

At press time, the total number of shops registered with AGRSS had risen to more than 500. At the Council’s next meeting in Scottsdale, Ariz., in September, the Audit Committee will have developed recommendations for implementing levels within the registration program, along with recommendations for dealing with non-compliance issues.

 

KUDOS
Guardian Automotive Earns Green Designation
Auburn Hills, Mich.-based Guardian Automotive has announced that its ten North American glass and trim manufacturing and fabricating plants have earned ISO 14001 certification. Jim Davis, chief executive officer and president of Guardian Automotive, made the announcement. Guardian Automotive is comprised of a group of companies owned by Guardian Industries Corp.

“Guardian Automotive is committed to sustainable manufacturing,” Davis said. “The ISO 14001 designation is the result of employee efforts to meet stringent certification requirements and demonstrates Guardian’s dedication to sound environmental production practices.”


EXPANSIONS
Omni Auto Glass Expands to Appleton, Wis.
Omni Auto Glass, which is based in Oshkosh, Wis., has opened a new service center in Appleton, Wis. The facility will offer both auto glass repair and replacement.

According to general manager Mike Synon, the company considered a variety of locations for the new facility before settling on Appleton.

“We conducted an assessment of seven cities in Wisconsin to determine which market was the best choice,” Synon said. “Favorable economic and demographic trends led us to set our sites on opening a location in Appleton. We are looking forward to providing safe auto glass repair and installation to the community.”

Auto Glass Specialists Expands
Madison, Wis.-based Auto Glass Specialists has opened a satellite service center in Grand Forks, S.D. The facility is staffed by customer service representative/sales representative Kristi Moffett, general manager Bob Robb and technician Paul Czapiewski.

In addition, the company opened a second new facility in Sterling Heights, Mich., in April. Sales specialist Ron Devers is working from the new facility.

ABRA Opens 80th Repair Center
Minneapolis-based ABRA Auto Body & Glass has announced that it has acquired Express Auto Body of Aurora, Colo. This acquisition represents ABRA’s eightieth repair center, 60 of which are corporate-owned, along with 20 franchise locations.

The purchase of Express Auto Body in Aurora brings the total number of ABRA Auto Body & Glass repair centers in Colorado to eight. Other locations include Boulder, Denver-Parker Road, Denver-West Evans Avenue, Littleton, Longmont, Westminster and Wheat Ridge.

Ron Stone, the former owner of Express Auto Body, will serve as manager of the facility. He said he expected the acquisition to help the business grow.

“I recognized a need for additional support in order to achieve operational and employee growth,” Stone said. “ABRA brings a wealth of experience, technological expertise and insurance relationships to our center that will clearly make us the leader in our geographic area. Our current and future team members will greatly benefit by being members of the ABRA team.”

The Aurora repair center consists of 27,000 square feet. 

“ABRA is embarking on an extensive growth strategy which includes expansion in our existing markets,” said David Call, vice president ABRA-Colorado. “We consider our new Aurora repair center and our new team members a tremendous step forward in our growth in the Denver metro. We look forward to a mutually beneficial sharing of knowledge among all parties.”

Asahi Moves Auto Glass Operations
Japan-based Asahi Glass Co. Ltd. has announced that it will move part of its production line in the Philippines to Thailand as a way of rationalizing its regional operations. According to the company, the move came as a result of low factory runs and soft demand in the market in the Philippines. Completion of the transfer was expected by the end of the first quarter of 2003.

Trade secretary Manuel Roxas said the local unit of Asahi Glass supplies about 80 percent of the tempered glass requirement of vehicle assemblers in the Phillippines, but production lines for tempered auto glass were running at below 50 percent capacity.

ASSOCIATIONS
IGA Provides Public Service Announcement about Unsafe Windshields
The Independent Glass Association (IGA) is offering its members access to a Public Service Announcement (PSA) that warns about the risks involved with improperly installed windshields. The 60-second radio spot begins with the sound of emergency sirens with the following warning:

“According to the National Highway Traffic Safety Administration, 82 people are killed or severely injured every day from being ejected from their vehicle in an accident. What you may not know is that if your windshield has been replaced improperly ...”

The message goes on to warn that some installers think speed and profits are more important than their safety, and consumers have a right to choose which company does the installation.

The PSA recommends choosing a glass shop that follows the ANSI standards and is endorsed by the IGA, and concludes with, “this important safety message is brought to you by the Independent Glass Association and this station.”

The IGA wrote the PSA and hired Archer Communication to produce it. Copies of the PSA are now available to IGA members for a fee of $15 for an MP3 by e-mail or $20 for a CD copy. In addition, an instruction sheet titled “How to Get a Public Service Announcement Aired” comes with the file. 

“Many of our members have told us that the public needs to be more informed about the safety issues involved with windshield installations,” said Jenna Smale, IGA marketing director. “They asked us to help by producing a safety PSA that they can take to their local radio stations. Stations are more likely to air PSAs at no charge if they come from a nationally recognized authority and provide information that is of community interest, such as a safety concern. They won’t air a PSA if it concludes with ‘brought to you by (an auto glass shop)’ because it would be considered an advertisement.”

FINANCIAL
Huffer’s Salary Rises, Bonus Decreases
Russell Huffer, chief executive officer of Apogee Enterprises Inc., which owns Harmon Auto Glass, received a small raise in salary in 2002, while the amount of his bonus plunged, according to an article from the May 15 Minneapolis Business Journal.

The company raised his regular salary by 3.8 percent, to $597,231, up from $575,539 in 2001, according to the company’s proxy statement, filed on May 13 with the Securities and Exchange Commission. 

However, his bonus dropped from $622,000 in 2001 to $226,448 in 2002.
Huffer received a total of 80,000 stock options, worth between $657,772 and $1.7 million depending on the assumed annual rates of stock price appreciation, according to the Business Journal.

The company’s shares lost 42.4 percent of their value over the year, dropping from an adjusted price of $15.36 on December 31, 2001, to an adjusted $8.84 on December 31, 2002. 

Mary Ann Jackson, the company’s director of communications, told the Business Journal that there was no direct connection between Huffer’s bonus and the company’s stock price. According to Jackson, the chief executive officer’s bonus is based on a number of factors, including performance of the company as a whole. 

“Earnings were up, but the earnings goal wasn’t met,” Jackson said.

Diamond Triumph Auto Glass Announces First-Quarter 2003 Results 
Kingston, Pa.-based Diamond Triumph Auto Glass Inc. announced today that net sales for the three months ended March 31, 2003, increased $5.9 million, or 12.4 percent, to $54.1 million as compared to $48.2 million for the three months ended March 31, 2002. Net income for the three months ended March 31, 2003, increased by $0.5 million, or 25 percent, to $0.7 million from $0.2 million for the three months ended March 31, 2002. EBITDA for the first three months of 2003 increased by $0.8 million, or 21.3 percent, to $4.3 million from $3.5 million for the first three months of 2002.

“We are pleased that we were able to capitalize on an upturn in industry demand during the first quarter. We feel our results are a testament to our employees’ leadership and performance, as well as the company’s sound operating structure. Our challenge as a company will be to sustain the positive business momentum we have experienced during the last three months,” said Norm Harris, chief executive officer for the company.
Michael Sumsky, president and chief financial officer, agreed.

“Our operating performance during the first quarter of 2003 enabled us to build additional cash reserves as of March 31, 2003,” Sumsky said. “Subsequent to March 31, 2003, the company repurchased approximately $11 million in aggregate principal amount of senior notes at a financial statement gain. We will continue to explore opportunities to de-lever the company and enhance our cash flow by reducing our interest expense.”

Three Months Ended March 31

  2003 2002
  (unaudited)
Net Sales $54.1 $48.2
Cost of Sales 16.2 13.7
Gross Profit 37.9 34.5
Operating Expenses 34.4 31.7
Income from Operations $3.5 $2.8
     
Net Income $0.7 $0.2
EBITDA (1) $4.3 $3.5
Total Long-Term Debt $93 $100

 

Diamond Triumph’s
Three Months Ended March 31

  2003 2002

(dollars in millions)

Income from operations $3.5 $2.8
Depreciation and amortization 0.8 0.6
Interest Income 0 0.6
EBITDA $4.3 $0.1



MANUFACTURING
Pilkington North America’s Lease Nears End
Pilkington North America, which is based in Toledo, Ohio, is approaching the end of the lease for its office in downtown Toledo, according to an article that appeared in the Toledo Blade on May 9. Pilkington was to decide by July 1 whether to vacate its North American headquarters on Madison Avenue. According to the Blade, the firm has looked at other sites downtown and in the suburbs.

Some in Toledo worry that with the possibility of a move from Pilkington—and two other major companies whose leases are also up soon—the city could lose its image.

‘‘It’s more than that they just occupy office space,” said Dave Ball, a downtown developer who is an owner of the building occupied by Pilkington, in an interview with the Toledo Blade.

“Their people occupy homes, they spend money [and] it makes a real impact on your community. These companies support the arts and other things that are more important to your community,” he told the Blade.

Pilkington occupies all 12 floors at 811 Madison Ave. and must decide by July 1 whether to sign a new lease or vacate by year’s end. 

However, company spokesperson Roberta Steedman told the Blade that she expects the company will stay in its current location for at least seven more years.

‘‘Our preference continues to be remaining as part of downtown Toledo,’’ said Steedman, ‘‘so we’re in the final stages of negotiating a new lease for another seven years.’’

CORRECTIONS

In the May/June 2003 issue of AGRR, Mark Furth was named incorrectly in his byline on page 56.

In addition, the percentage off NAGS in "Price Points" on page 48 for Shops #2 and #4 in Okalahoma City should have been 63 percent and 72 percent, respectively.

Also, in the January/February 2003 issue, an incorrect web address was provided for DCM Companies. The actual correct address is www.evanpartestimator.com

AGRR

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