National-Standard Company Reports Third Quarter Results
29 July 1999
National-Standard Company Reports Third Quarter Results
NILES, Mich., July 28 -- National-Standard Company
announced net income for the third quarter of fiscal year 1999 of
$2.4 million or $.40 per diluted share versus a net income of $.2 million or
$.04 per diluted share for the same period last year. The $2.2 million
increase in income over last year is partially due to the net positive impact
of the sale of the Kidderminster, U.K. wire operations and the 1998
restructuring in North American operations, including a $.7 million post
retirement benefit gain related to the restructuring.
During the third quarter last year, the Kidderminster operation lost
$.3 million. As previously reported, the Company sold 100% of the wire
operation at Kidderminster on March 12, 1999. The sale of Kidderminster had
no effect on the Company's current quarter net income. Net income for the
current year's nine-month period includes $.6 million of loss, the net result
of Kidderminster's $1.2 million loss from operations up to the date of sale,
and the gain of $.6 million on the sale of the operation. During the third
quarter and nine-month period last year, Kidderminster lost $.3 million.
Sales from Kidderminster in the current three- and nine-month periods were
$6.5 million and $10.6 million lower than in the prior fiscal year.
Changes to the Company's retiree health benefits made in 1998 resulted in
unrecognized gains from salaried employees' prior service costs of
$3.5 million. As a result of the restructuring and the corresponding
reduction in the North American workforce, approximately 20% of the
unrecognized gain, $.7 million will be recognized in the current period. The
net result of these health care benefit changes and workforce reductions is
expected to reduce the accumulated postretirement benefit obligation for
benefits other than pensions by $5.4 million with a corresponding increase in
the unrecognized gain and prior service cost benefit related to post
retirement benefits other than pensions of $4.6 million. The unrecognized
gain and prior service cost benefit will be amortized over future periods.
"While we're delighted to report very positive results in the third
quarter, we're convinced we can do even better," said Michael B. Savitske,
President and Chief Executive Officer. "Both wire plants suffered in the
period from unscheduled downtime due to weather and equipment failures. The
Niles plant, while continuing to improve, has not yet achieved the level of
carbon steel weld wire production anticipated after the closing of the Guelph,
Ontario plant.
"While sales of the new TRU-COR(TM) cored weld wire products continue to
increase, penetration of this market has been slower than expected. Marketing
resources have been focused on servicing existing weld wire customers during
the restructuring of North American capacity.
"Another area of opportunity for improved performance relates to our air
bag materials business. A number of new air bag related products that were
expected to begin production at the end of the third quarter will now commence
at the end of the fourth quarter, ramping up following the automotive
changeovers in the summer.
"The new GridShield(TM) product line continues to generate great interest
but, as of today, no sales. A number of automotive EMI/RFI shielding
application opportunities are being pursued. We expect to see limited sales
of the product commencing in Fiscal Year 2000 with the opportunity to be
significant in 2001 or 2002.
"Even with the impact of lower sales in July for automotive and tire plant
customer vacation shutdowns and the delay in air bag programs, we expect to
report $.21 to $.25 per diluted share for the fourth quarter and approximately
$1.10 per diluted share for the 1999 fiscal year ending September 30. At this
point, based on realizing the full year benefits of the 1998 restructuring,
we expect 2000 fiscal year results to be about 20% better, potentially in the
range of $1.35 per diluted share, barring any unforeseen changes in our
markets that would affect sales."
For the first nine months of 1999, net income was $4.9 million or $.86 per
diluted share versus $.5 million, or $.10 per diluted share in the same period
last year. During the period, the Company incurred $1.0 million of expense
for relocating the Guelph plant's wire manufacturing capacity to other North
American facilities. Without the $1.0 million of nonrecurring cost of
equipment moves, the impact of Kidderminster's $.6 million net loss, and the
$.7 million recognized gain on retiree healthcare, the Company would have
reported $5.8 million of net income in the current nine-month period compared
to $.8 million in the comparable period last year.
Sales for the third quarter of Fiscal 1999 were $41.6 million compared to
$55.7 million for the same period last year. Sales for the nine-month period
ended July 4, 1999 were $144.3 million compared to $170.6 million in the same
period last year. In addition to the impact of lower Kidderminster sales,
sales from other operations continue to be adversely affected by the depressed
agricultural equipment market, and lower sales of certain low margin wire
cloth for automotive air bag filtration applications.
Founded in 1907, National-Standard is a Niles, Michigan based firm with
annual sales of approximately $200 million. In eight operating facilities in
the United States and England, the Company manufactures and distributes a
broad range of wire and wire-related products, including tire bead wire and
welding wire, in addition to wire cloth, fabricated filters and inflator
housings for the automotive air bag industry.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, relating to future
improvements in the Company's results based upon actions taken with respect to
its former U.K. wire facility, North American restructuring, plant continuous
improvement programs, acceptance of the GridShield(TM) product line, the
changes made to postretirement benefits other than pensions, and estimates of
future earnings. The ability of the Company to achieve such future
improvements, however, is subject to risks and uncertainties, including, but
not limited to, the impact of competitive products and pricing, changes in
product demand by customers, industry overcapacity, availability and cost of
raw materials, and changes in economic conditions. Should any one or more of
these risks or uncertainties materialize, actual performance results may vary
materially. The Company does not intend to update these forward-looking
statements.
Financial Highlights
National-Standard Company and Subsidiaries
(Dollars in thousands except per share amounts)
For three months ended:
July 4 June 28
1999 1998
Net Sales $41,632 $55,695
Operating Income 3,016 1,097
Net Income 2,360 199
Basic Earnings Per Share .41 .04
Diluted Earnings Per Share .40 .04
Basic Average Shares Outstanding 5,728,801 5,235,395
Diluted Average Shares Outstanding 5,883,415 5,235,395
For nine months ended:
July 4 June 28
1999 1998
Net Sales $144,255 $170,595
Operating Income 7,570 2,976
Net Income 4,924 532
Basic Earnings Per Share .87 .10
Diluted Earnings Per Share .86 .10
Basic Average Shares Outstanding 5,646,258 5,232,509
Diluted Average Shares Outstanding 5,734,045 5,232,509