Rouge Industries, Inc. Posts Q2 Earnings
22 July 1998
Rouge Industries, Inc. Posts $6.1 Million Second Quarter Earnings
DEARBORN, Mich., July 22 -- Rouge Industries, Inc.
reported net income of $6.1 million and earnings per share of
$0.28 for the second quarter of 1998, compared to net income of $10.6 million
and earnings per share of $0.48 for the second quarter of 1997. Steel product
shipments totaled 692,000 tons, 13.8% lower than the second quarter of 1997.
Raw steel production totaled 795,000 tons, 63,000 tons higher than the second
quarter of 1997.
"While we are not pleased with our second quarter manufacturing and
financial performance, we are continuing to make important progress on
lowering our costs through a stable and balanced steel making operation and
providing expanded product offerings through our downstream joint ventures,"
said Carl L. Valdiserri, chairman and chief executive officer. "Looking
forward, the blast furnace production issues that plagued us through the first
half of the year are largely resolved and we expect that only minor repairs
will be required in the third quarter to return these units to their full
production capability. Furthermore, we are hopeful that a speedy resolution
of the General Motors and UAW situation can be achieved as General Motors is
one of our important customers."
During the second quarter, Rouge Industries commenced operations at two
joint venture companies. Bing Blanking, an automotive supplier of first
operation steel blanks and rollformed parts, began operation on April 1 and
has been operating at near full capability during the quarter. Spartan Steel
Coating, a new hot dipped galvanizing line targeted at automotive
applications, began operation in late May and is further along on its launch
curve than originally planned. "Bing Blanking and Spartan Steel Coating are
doing everything that we expected they would do -- add product capability,
produce high quality products and add value for our customers," said Mr.
Valdiserri.
Rouge Industries, Inc. is a producer of premium-quality flat rolled sheet
steel and processed steel products and is the parent holding company of Rouge
Steel Company. Rouge Industries 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 or demand for and the 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 STATEMENTS OF OPERATIONS
(amounts in thousands except per share amounts)
Unaudited
For the For the
Quarter Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
Total Sales $306,001 $355,205 $624,953 $689,377
Costs and Expenses
Costs of Goods Sold 288,240 332,810 589,478 646,413
Depreciation and
Amortization 4,240 3,671 9,370 7,218
Selling and Administrative
Expenses 6,744 6,197 12,670 11,782
Amortization of Excess of
Net Assets Acquired
Over Cost (1,449) (1,449) (2,898) (2,898)
Total Costs and Expenses 297,775 341,229 608,620 662,515
Operating Income 8,226 13,976 16,333 26,862
Net Interest Income/(Expense) 982 473 608 764
Other - Net (380) 335 (766) 705
Income Before Income Taxes and
Unconsolidated Subsidiaries 8,828 14,784 16,175 28,331
Income Tax Provision (2,236) (3,638) (4,448) (7,718)
Equity in Unconsolidated
Subsidiaries (442) (524) (1,506) (707)
Net Income $6,150 $10,622 $10,221 $19,906
Earnings Per Share $0.28 $0.48 $0.46 $0.91
Weighted Average Shares
Outstanding 22,005 21,922 22,001 21,918
Shipments (000)NT 692 803 1,420 1,547
Raw Steel Production (000)NT 795 732 1,592 1,480
ROUGE INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
June 30 December 31
1998 1997
Assets
Current Assets
Cash and Cash Equivalents $27,398 $12,570
Accounts Receivable 131,844 111,466
Inventories 215,316 248,317
Other Current Assets 2,884 8,562
Total Current Assets 377,442 380,915
Net Property, Plant, and Equipment 261,864 268,562
Investment in Unconsolidated Subsidiaries 64,305 50,936
Deferred Charges and Other 27,281 28,096
Total Assets $730,892 $728,509
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $172,802 $166,841
Accrued Liabilities 40,098 36,898
Total Current Liabilities 212,900 203,739
Long-Term Debt - 17,900
Other Liabilities 61,756 56,969
Excess of Net Assets Acquired Over Cost 8,382 11,280
Stockholders' Equity 447,854 438,621
Total Liabilities and
Stockholders' Equity $730,892 $728,509