Rouge Industries, Inc. Posts $22.4 Million Earnings For 1997
29 January 1998
Rouge Industries, Inc. Posts $22.4 Million Earnings For 1997
DEARBORN, Mich., Jan. 29 -- Rouge Industries, Inc.
reported 1997 net income of $22.4 million, or $1.02 per share, on
record shipments of 3.0 million tons. Total sales of $1.3 billion were 2.6%
higher than 1996. Earnings per share were slightly less than the $1.07 per
share earnings in 1996, primarily due to lower selling prices and higher costs
for purchased slabs. In 1997, the Company purchased 619,000 tons of slabs to
supplement its internal production capability during planned facility outages
and to increase its sales volume from 2.9 million tons in 1996 to 3.0 million
tons.
For the fourth quarter of 1997, Rouge Industries, Inc. reported a net loss
of $4.5 million compared to a net loss of $8.5 million in the fourth quarter
of 1996. The losses in both fourth quarters were due principally to costs
associated with the relines of Rouge Steel Company's blast furnaces. The
larger blast furnace was relined in the fourth quarter of 1996 while the
smaller blast furnace was relined in the fourth quarter of 1997. Raw steel
production in the fourth quarter of 1997 was 648,000 tons, up 128,000 tons, or
25%, from the fourth quarter of 1996, but down 62,000 tons, or 9%, from the
third quarter of 1997. The Company also completed a planned five-day outage
of its larger blast furnace in the fourth quarter of 1997 to complete the
installation of an automated raw material handling system which now feeds both
blast furnaces.
In addition to the blast furnace and raw material handling projects, the
Company partially rebuilt two blast furnace stoves, assumed operating
responsibility for its internal railroad operations from Ford Motor Company,
undertook considerable railroad infrastructure modifications and commenced two
major information systems projects related to year 2000 compliance.
"We are very pleased with the efforts of our employees who accomplished an
unprecedented amount of work in our primary operations in the fourth quarter,"
said Carl L. Valdiserri, chairman and chief executive officer of Rouge
Industries. "During the blast furnace outages, we were able to undertake
additional project work which will allow the Company to realize cost
reductions throughout all of 1998. We also elected to proceed earlier than
planned with some of the information systems work that we face for year 2000
compliance." Combined, these additional projects adversely impacted the
Company's fourth quarter operating income by $4.2 million.
Rouge Industries has now virtually completed its facilities upgrade and
expansion program which started in 1994 and permitted the Company to increase
its sales base from 2.5 million tons in 1995 to 3.0 million tons in 1997.
With the expected start up of the Company's joint venture hot dipped
galvanizing line, Spartan Steel Coating, in the second quarter of 1998, the
Company will provide a full range of flat rolled carbon steel products. The
new Waste Oxide Reclamation Facility, a more recent cost savings opportunity,
is expected to be operational in mid-1998 as well.
"With our upgraded and balanced steel making operations, we look forward
to record internal steel production levels in 1998. We appreciate our
customers who supported us during the last two years and look forward to
serving them even better as we move forward," said Valdiserri. "With these
many positive accomplishments behind us, and the new value-added products
offered by our expanding downstream joint venture companies, we are poised to
make 1998 a very positive year for our customers and shareholders."
Rouge Industries, Inc. is a producer of premium-quality flat rolled sheet
steel and processed steel products. It principally serves the automotive,
converter and service center markets.
Safe Harbor Statement
This press release contains forward-looking information about the Company.
A number of factors could cause the Company's actual results to differ
materially from those anticipated, including changes in the general economic
climate, the supply of and demand for and pricing of steel products in the
Company's markets, potential environmental liabilities and higher than
expected costs. For further information on these and other factors that could
impact the Company and the statements contained herein, reference should be
made to the Company's filings with the Securities and Exchange Commission.
ROUGE INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
December 31 December 31
1997 1996
Assets
Current Assets
Cash, Cash Equivalents
and Marketable Securities $ 12,570 $ 26,953
Accounts Receivable 111,466 112,588
Inventories 248,317 267,877
Other Current Assets 8,562 7,483
Total Current Assets 380,915 414,901
Net Property, Plant, and Equipment 268,562 209,162
Investment in Unconsolidated Subsidiaries 50,936 15,590
Deferred Charges and Other 28,096 42,300
Total Assets $728,509 $681,953
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $166,841 $162,526
Accrued Liabilities 36,898 35,744
Total Current Liabilities 203,739 198,270
Long - Term Debt 17,900 --
Other Liabilities 56,969 49,342
Excess of Net Assets Acquired Over Cost 11,280 17,076
Stockholders' Equity 438,621 417,265
Total Liabilities and Stockholders'
Equity $728,509 $681,953
ROUGE INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except per share amounts)
(Unaudited) For the
For the Quarter Ended Twelve Months Ended
December 31 December 31
1997 1996 1997 1996
Total Sales $331,476 $318,093 $1,341,560 $1,307,398
Costs and Expenses
Costs of Goods Sold 327,974 325,611 1,278,351 1,251,114
Depreciation and
Amortization 4,537 3,445 15,563 13,056
Selling and
Administrative
Expenses 4,455 5,322 21,760 24,339
Amortization of Excess
of Net Assets Acquired
Over Cost (1,449) (1,449) (5,796) (5,796)
Total Costs
and Expenses 335,517 332,929 1,309,878 1,282,713
Operating Income (4,041) (14,836) 31,682 24,685
Net Interest Income
(Expense) (184) 642 788 4,807
Other - Net (1,648) 143 (1,244) 728
Income Before Income
Taxes, Minority Interest,
and Equity in Income
of Unconsolidated
Subsidiaries (5,873) (14,051) 31,226 30,220
Income Tax Benefit
(Provision) 1,011 5,304 (8,094) (6,915)
Minority Interest in
Consolidated Subsidiary -- 229 -- 37
Equity in Income of
Unconsolidated
Subsidiaries 391 50 (718) 50
Net Income $ (4,471) $ (8,468) $ 22,414 $ 23,392
Earnings Per Share $ (0.20) $ (0.39) $ 1.02 $ 1.07
Weighted Average Shares
Outstanding (000) 21,977 21,834 21,939 21,845
Shipments (000)NT 756 699 3,029 2,876
Raw Steel Production
(000)NT 648 520 2,837 2,560
SOURCE Rouge Industries, Inc.