Rouge Posts a $47.8M Loss for 1999 And a $10.5M Loss for the Q4
3 February 2000
Rouge Industries Posts a $47.8 Million Loss for 1999 And a $10.5 Million Loss for the Fourth Quarter
DEARBORN, Mich., Feb. 3 -- Rouge Industries, Inc.
reported a 1999 net loss of $47.8 million, or $2.16 per share on steel
shipments of 2.3 million tons. Steel shipments were down by 11.8% from 1998
due primarily to the Rouge Complex Powerhouse explosion that occurred on
February 1, 1999. Sales in 1999 were $967.6 million, down 16.8% from 1998 due
to lower shipments and steel selling prices.
For the fourth quarter of 1999, Rouge Industries reported a net loss of
$10.5 million or $0.47 per share compared to net income of $7.6 million or
$0.35 per share during the fourth quarter of 1998. Shipments in the fourth
quarter were 734,000 tons, 122,000 tons or 19.9% higher than the fourth
quarter of 1998. Sales in the fourth quarter of 1999 were $299.3 million, up
11.5% from a year ago. Raw steel production in the quarter totaled 813,000
tons, 37,000 tons higher than the fourth quarter of 1998.
The Company's operating income in the fourth quarter was adversely
impacted by $35.2 million of direct and indirect costs attributable to the
Powerhouse explosion. This total includes $33.2 million of business
interruption, including temporary facility costs, $1.8 million of property
damage and $200,000 of insurance claim related professional services costs not
covered by the Company's insurance policy. The business interruption and
property damage costs have been partially offset by $28.2 million of income
for anticipated insurance recovery. This recovery is net of a $6.8 million
reserve, which the Company believes is appropriate given the complexity of the
insurance claim issues and insurance recovery process.
For the full year 1999, the Company has recorded costs of $221.4 million
directly and indirectly attributable to the Powerhouse explosion. Insurance
recoveries of $177.4 million have been recorded in 1999 for property damage,
business interruption and temporary facility costs of $217.4 million. The
recovery amount is net of a $40.0 million reserve and $4.0 million of
insurance claim related professional services and other non-recoverable costs.
Through year-end 1999, the Company has been advanced $159.0 million by its
insurers. The Company will continue to record Powerhouse-related costs and
insurance recovery amounts until the final disposition of the Rouge Complex
Powerhouse is resolved and the replacement plant is providing the Company its
electricity and steam requirements.
Rouge Steel Company will continue to rely on temporary facilities and
equipment for its electricity and steam requirements through the start-up of
the new Dearborn Industrial Generation power plant, now projected to be in
mid-August 2000. The new power plant is expected to provide a lower cost and
a more reliable supply of electricity and steam for Rouge Steel operations.
"I think it's safe to say that our entire Rouge Industries family is happy
to have 1999 behind us," said Carl L. Valdiserri, the Company's chairman and
chief executive officer. "We spent the better portion of the year recovering
from the effects of the tragic Powerhouse explosion and fire. But despite all
the distractions, our employees have made outstanding progress in the fourth
quarter including the achievement of quarterly production records in our Blast
Furnaces, Basic Oxygen Furnaces, Continuous Caster and Tandem Mill operations
and the attainment of other key performance objectives."
Spartan Steel Coating, Rouge Industries' joint venture hot dipped
galvanizing line, continues to exceed the Company's expectations and has
contributed importantly to the rise in coated steel shipments from 136,000
tons in the fourth quarter of 1998 to 174,000 tons in the fourth quarter of
1999. Spartan is now concentrating on facility enhancements to further
improve its product mix and better serve its customers.
"We are pleased with our strong production and shipment levels during the
fourth quarter, and we are hopeful that we can continue the momentum that we
are building," continued Mr. Valdiserri. "Demand for flat rolled steel
products continues to be strong and steel prices in the spot market have been
increasing. This momentum coupled with the benefits coming from the new
Powerhouse and our cost cutting initiatives will enable the Company to meet
its profit objectives in 2000."
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
(amounts in thousands)
December 31 December 31
1999 1998
Assets
Current Assets
Cash and Cash Equivalents $ 1,861 $ 2,418
Accounts Receivable 181,316 136,268
Inventories 269,808 275,811
Other Current Assets 27,530 7,075
Total Current Assets 480,515 421,572
Net Property, Plant, and Equipment 278,610 258,121
Investment in Unconsolidated Subsidiaries 71,258 64,646
Deferred Charges and Other 37,223 24,548
Total Assets $867,606 $768,887
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $201,627 $166,891
Deferred Insurance Recovery 24,671 -
Current Portion of Long-Term Debt 4,800 -
Accrued Liabilities 51,119 42,262
Total Current Liabilities 282,217 209,153
Long-Term Debt 100,000 29,000
Other Postretirement Benefits 63,936 54,301
Other Liabilities 11,678 11,327
Excess of Net Assets Acquired Over Cost - 5,484
Stockholders' Equity 409,775 459,622
Total Liabilities and Stockholders'
Equity $867,606 $768,887
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
1999 1998 1999 1998
Total Sales $299,339 $268,556 $967,642 $1,163,189
Costs and Expenses
Costs of Goods Sold 316,374 249,212 1,137,151 1,090,032
Depreciation and
Amortization 22,325 5,006 63,267 19,993
Selling and Administrative
Expenses 6,166 5,921 26,772 23,875
Amortization of Excess of
Net Assets Acquired
Over Cost (1,137) (1,449) (5,484) (5,796)
Total Costs and
Expenses 343,728 258,690 1,221,706 1,128,104
Operating Income (Loss) (44,389) 9,866 (254,064) 35,085
Net Interest Income (Expense) (972) 125 (2,093) 698
Insurance Recovery 28,165 - 177,414 -
Other - Net (25) (274) (1,214) (2,722)
Income (Loss) Before Income
Taxes and Equity in
Unconsolidated
Subsidiaries (17,221) 9,717 (79,957) 33,061
Income Tax (Provision)
Benefit 5,258 (3,046) 30,494 (8,705)
Equity in Unconsolidated
Subsidiaries 1,511 957 1,652 (964)
Net Income (Loss) $(10,452) $7,628 $(47,811) $23,392
Earnings Per Share $ (0.47) $ 0.35 $ (2.16) $ 1.06
Weighted Average Shares
Outstanding 22,132 22,068 22,122 22,025
Shipments (000)NT 734 612 2,320 2,630
Raw Steel Production (000)NT 813 776 2,169 3,112