Rouge Industries, Inc. Posts $23.4 Million Earnings for 1998
4 February 1999
Rouge Industries, Inc. Posts $23.4 Million Earnings for 1998 And $7.6 Million for Fourth Quarter
DEARBORN, Mich., Feb. 4 -- Rouge Industries, Inc.
reported 1998 net income of $23.4 million, or $1.06 per share on steel
shipments of 2.6 million tons. Steel shipments were down 13.2% from 1997 and
sales of $1.2 billion were down 13.3%. Earnings per share were slightly
higher than the $1.02 result in 1997.
For the fourth quarter of 1998, Rouge Industries reported net income of
$7.6 million or $0.35 per share as compared to a net loss of $4.5 million
during the fourth quarter of 1997, which was adversely impacted by a blast
furnace reline.
Shipments in the fourth quarter were 612,000 tons, down 144,000 tons or
19.0% from the fourth quarter of 1997. Total sales at $268.6 million were
also lower than last year by 19.0%, reflecting lower shipments. The effect of
lower selling prices was offset by improved product mix.
"Given some of the most formidable market conditions in memory, we were
pleased to have been profitable in all four quarters of 1998 and to have moved
forward with the initiatives we considered critical to our long-term
viability," said Carl L. Valdiserri, chairman and chief executive officer.
"The unprecedented level of dumped steel flowing into our markets from
economically distressed countries caused us to scale back our blast furnace
production rate in the last half of the year to balance production with demand
and product pricing.
"We launched Spartan Steel Coating in mid 1998 allowing us to enter the
high quality, hot dipped galvanized market segment with a variety of
galvanized and galvannealed products. Product quality has been exceptional,
productivity continues to improve and our customers have been pleased with the
product. We recently secured product approval and order commitments from our
major automotive customers for a substantial level of hot dipped galvanized
steel in 1999 and beyond," continued Mr. Valdiserri.
"We, like all Rouge area employees, are heartsick at the human suffering
of the Ford employees injured in the recent explosion in the Rouge Complex
Powerhouse. We have had a chance to complete the preliminary assessment of
our finishing facilities and have determined that we could be ready to resume
production in a matter of days. We have not yet determined when production in
our primary operations will resume. We believe that we have adequate
insurance coverage," concluded 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 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
1998 1997
Assets
Current Assets
Cash and Cash Equivalents $ 2,418 $ 12,570
Accounts Receivable 136,268 111,466
Inventories 275,811 248,317
Other Current Assets 7,075 8,562
Total Current Assets 421,572 380,915
Net Property, Plant, and Equipment 258,121 268,562
Investment in Unconsolidated Subsidiaries 64,646 50,936
Deferred Charges and Other 24,548 28,096
Total Assets $768,887 $728,509
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $166,891 $166,841
Accrued Liabilities 42,262 36,898
Total Current Liabilities 209,153 203,739
Long-Term Debt 29,000 17,900
Other Liabilities 65,628 56,969
Excess of Net Assets Acquired Over Cost 5,484 11,280
Stockholders' Equity 459,622 438,621
Total Liabilities and Stockholders'
Equity $768,887 $728,509
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
1998 1997 1998 1997
Total Sales $268,556 $331,476 $1,163,189 $1,341,560
Costs and Expenses
Costs of Goods Sold 249,212 327,974 1,090,032 1,278,351
Depreciation and
Amortization 5,006 4,537 19,993 15,563
Selling and Administrative
Expenses 5,921 4,455 23,875 21,760
Amortization of Excess
of Net Assets Acquired
Over Cost (1,449) (1,449) (5,796) (5,796)
Total Costs and
Expenses 258,690 335,517 1,128,104 1,309,878
Operating Income/
(Loss) 9,866 (4,041) 35,085 31,682
Net Interest Income/
(Expense) 125 (184) 698 788
Other - Net (274) (1,648) (2,722) (1,244)
Income/(Loss) Before
Income Taxes and Equity
in Unconsolidated
Subsidiaries 9,717 (5,873) 33,061 31,226
Income Tax (Provision)
Benefit (3,046) 1,011 (8,705) (8,094)
Equity in Unconsolidated
Subsidiaries 957 391 (964) (718)
Net Income/(Loss) $ 7,628 $(4,471) $ 23,392 $ 22,414
Net Income Per Share -
Basic and Diluted $ 0.35 $ (0.20) $ 1.06 $ 1.02
Weighted Average Shares
Outstanding 22,068 21,977 22,025 21,939
Shipments (OOO)NT 612 756 2,630 3,029
Raw Steel Production (OOO)NT 776 648 3,112 2,837