Rouge Industries, Inc. Posts $5.5 Million Q3 Earnings
22 October 1998
Rouge Industries, Inc. Posts $5.5 Million Third Quarter Earnings
DEARBORN, Mich., Oct. 22 -- Rouge Industries, Inc.
reported net income of $5.5 million and earnings per share of
$0.25 for the third quarter of 1998, compared to net income of $7.0 million
and earnings per share of $0.32 for the third quarter of 1997. Steel product
shipments totaled 598,000 tons, 128,000 tons or 17.7% lower than the third
quarter of 1997. Sales in the third quarter totaled $269.7 million, down 16%
from the same period a year ago.
"The third quarter has been difficult for Rouge Industries and our
domestic competitors. The effects of the GM strike and substantially higher
levels of foreign imports into the domestic markets have caused inventories to
rise and sales volumes to decline," said Carl L. Valdiserri, chairman and
chief executive officer. "As a result, we have cut back the production rate
of our two blast furnaces to align our raw steel production with sales and
inventories. Although the demand for steel in the U.S. remains relatively
strong, oversupply will continue to be a problem for the next several months.
We are responding to these adverse market conditions by revamping production
schedules, instituting moratoriums on discretionary spending and implementing
reductions in overtime and personnel," continued Valdiserri.
"On a more positive note, we continue to be pleased with the improving
production and sales rate at Spartan Steel Coating, the Company's recently
launched joint venture hot dipped galvanizing line. Spartan has demonstrated
its capability to produce the full range of products it was designed to
produce at a quality level that is being well received by our customers.
Spartan and Double Eagle, our joint venture electrogalvanizing facility, allow
us to offer a full range of coated products," concluded 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 BALANCE SHEETS
(in thousands)
(Unaudited)
September 30 December 31
1998 1997
Assets
Current Assets
Cash and Cash Equivalents $7,761 $12,570
Accounts Receivable 135,199 111,466
Inventories 230,163 248,317
Other Current Assets 17,200 8,562
Total Current Assets 390,323 380,915
Net Property, Plant, and Equipment 261,117 268,562
Investment in Unconsolidated Subsidiaries 65,149 50,936
Deferred Charges and Other 20,038 28,096
Total Assets $736,627 $728,509
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $160,692 $166,841
Accrued Liabilities 45,946 36,898
Total Current Liabilities 206,638 203,739
Long - Term Debt 6,100 17,900
Other Liabilities 63,892 56,969
Excess of Net Assets Acquired Over Cost 6,936 11,280
Stockholders' Equity 453,061 438,621
Total Liabilities and Stockholders'
Equity $736,627 $728,509
ROUGE INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except per share amounts)
Unaudited
For the For the
Quarter Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
Total Sales $269,679 $320,707 $894,633 $1,010,084
Costs and Expenses
Costs of Goods Sold 251,827 303,964 841,309 950,377
Depreciation and Amortization 5,128 3,808 14,498 11,026
Selling and Administrative Expenses 5,285 5,523 17,954 17,305
Amortization of Excess of Net Assets
Acquired Over Cost (1,449) (1,449) (4,347) (4,347)
Total Costs and Expenses 260,791 311,846 869,414 974,361
Operating Income 8,888 8,861 25,219 35,723
Net Interest Income/(Expense) (36) 208 573 972
Other - Net (1,683) (301) (2,448) 404
Income Before Income Taxes and
Unconsolidated Subsidiaries 7,169 8,768 23,344 37,099
Income Tax Provision (1,211) (1,387) (5,659) (9,105)
Equity in Unconsolidated Subsidiaries (415) (402) (1,921) (1,109)
Net Income $5,543 $6,979 $15,764 26,885
Earnings Per Share $0.25 $0.32 $0.72 $1.23
Weighted Average Shares Outstanding 22,030 21,942 22,011 21,926
Shipments (000)NT 598 726 2,018 2,273
Raw Steel Production (000)NT 744 710 2,336 2,190