Core Materials Reports Lower Earnings for the Second Quarter of 1999
3 August 1999
Core Materials Reports Lower Earnings for the Second Quarter of 1999
COLUMBUS, Ohio, Aug. 2 -- Core Materials Corporation
(Amex: CME) today announced results for the second quarter ended June 30,
1999.
Net income for the second quarter was $150,000, or $.02 per diluted share,
a decrease of $871,000, or 85%, over the $1,021,000, or $.10 per diluted
share, for the second quarter of 1998. Net sales for the second quarter of
1999 were $24,236,000, an increase of $5,086,000, or 27%, over the $19,150,000
of sales revenue for the second quarter of 1998.
Sales increases were primarily the result of sales to new customers added
in 1998 including: New Holland, Volvo and Peachtree Doors. In addition,
sales of personal watercraft products to Yamaha increased over 50%. Sales to
Navistar were consistent with the second quarter of 1998.
For the six months ended June 30, 1999, net income was $1,320,000, or $.13
per diluted share, a decrease of $824,000, or 38%, as compared to $2,144,000,
or $.21 per diluted share, reported for the six month period of the prior
year. Net sales for the six months were $46,668,000, an increase of
$6,929,000, or 17%, over the $39,739,000 reported for the first six months of
1998.
Core Materials has approximately $21 million of operating tax loss
carryforwards that do not begin to expire until the year 2007. If the benefit
of the Company's operating tax loss carryforwards were recorded as a reduction
in income tax expense, which is reflective of the actual cash treatment, net
income for the for the three months ended June 30, 1999 would have been
increased by $64,000, which would still result in a total of $.02 per diluted
share. The comparable 1998 net income would have been increased by $492,000,
or $.05 per diluted share, to a total of $.15 per diluted share.
Net income for the second quarter 1999 was reduced due to inefficiencies
associated with both the start-up of new products at our Columbus, Ohio and
Gaffney, South Carolina facilities and a labor shortage at our Columbus plant,
as previously announced.
The start-up of new customer products in Columbus and Gaffney has resulted
in higher usage of raw materials, increased scrap and higher labor costs
associated with inefficiencies.
Management also stated the Columbus facility experienced a shortage of
plant labor causing excessive overtime and ineffeciencies. In addition, the
company experienced unusual repair and maintenance downtime. The maintenance
downtime resulted in lost production which, increased the overtime and
inefficiencies in order to catch up with customer delivery expectations.
Going forward, management expects year-over-year comparisons to be
impacted into the fourth quarter. The Company is working through the start-up
problems and expects to minimize the impact of these events over the next
quarter or two.
Core Materials Corporation (Amex: CME) is a compounder and compression
molder of sheet molding composites (SMC). The company produces high quality
fiberglass reinforced molded products and SMC materials for varied markets,
including transportation, marine, agricultural and commercial products. Core
Materials, with its headquarters in Columbus, Ohio, operates plants in
Columbus and Gaffney, South Carolina.
This press release contains certain "forward-looking statements" which
involve certain risks and uncertainties. Core Materials' actual results may
differ significantly from those discussed in the forward-looking statements.
Factors that may cause such a difference include, but are not limited to:
business conditions in the plastics, transportation, recreation and consumer
products industries, the general economy, competitive factors, the dependence
on two major customers, new technologies, the year 2000 systems issue,
regulatory requirements, labor relations, the loss or inability to attract key
personnel, construction delays, the availability of capital and management's
decision to pursue new products or businesses which involve additional cost
risks or capital expenditures.
CORE MATERIALS CORPORATION
Condensed Income Statement
(in thousands, except per share data)
Three Months Ended Six Months Ended
06/30/99 06/30/98 06/30/99 06/30/98
(Unaudited) (Unaudited)
Net Sales $24,236 $19,150 $46,668 $39,739
Costs, Expenses &
Other Income 23,585 17,041 43,702 35,419
Income Before
Interest and Taxes $651 $2,109 $2,966 $4,320
Net Income * $150 $1,021 $1,320 $2,144
Net Income per
Common Share:*
Basic $ 0.02 $ 0.11 $0.13 $0.22
Diluted $ 0.02 $ 0.10 $0.13 $0.21
Weighted Average
Shares Outstanding:
Basic 9,779 9,654 9,779 9,634
Diluted 9,844 10,127 9,862 10,080
* If the benefit of the Company's operating tax loss carryforwards were
recorded as a reduction in income tax expense, the Company's net income
for the three months ended 06/30/99 and 06/30/98 would have been
$214,000 or $0.02 per diluted share, and $1,513,000 or $0.15 per diluted
share, respectively. For the six months ended 6/30/99 and 6/30/98, net
income would have been $1,881,000, or $.19 per share, and $3,178,000,
or $.32 per share, respectively.
Condensed Balance Sheet
(in thousands)
As of As of
06/30/99 12/31/98
(Unaudited)
Assets
Cash and Investments $5,159 $5,686
Accounts Receivable 19,138 17,729
Inventories 6,875 4,223
Other Current Assets 1,472 1,267
Property, Plant & Equipment - net 26,518 24,080
Deferred Tax Asset - net 11,539 12,101
Other Assets 336 352
Total Assets $ 71,037 $ 65,438
Liabilities and Stockholders' Equity
Current Portion of Long Term Debt $295 $285
Accounts Payable 12,045 7,361
Accrued Liabilities and Other 5,196 5,473
Long-term Debt 26,855 27,005
Deferred Long Term Gain 3,143 3,369
Post Retirement Benefits Liability 3,332 3,093
Stockholders' Equity 20,171 18,852
Total Liabilities and Stockholders' Equity $ 71,037 $ 65,438