Margate Reports Improved 1999 Operating Results
24 March 2000
Margate Reports Improved 1999 Operating Results
Improved Productivity Boosts Operating Income Versus Year-Ago Loss
YALE, Mich., March 24 Fueled by the robust North American
automotive industry, as well as increased efficiency at its foundry-services
facilities, Margate Industries, Inc. today reported improved
operating results for the year ended December 31, 1999.
The Yale, Mich.-based holding company for foundry-related businesses
reported income of $331,839, or $0.22 per share, on net sales of $9.8 million
in 1999, compared with a loss of $20,098, or $0.01 per share, on net sales of
$9.8 million in 1998.
The 1998 results exclude an extraordinary gain of approximately $2.0
million related to the sale of the Company's equity stake in a gray-iron
foundry based in New Haven, Mich. Inclusive of the gain, Margate posted net
income of $2.0 million, or $1.31 per share, in 1998.
"I am pleased with our performance in 1999," said William Hopton,
president and CEO of Margate Industries. "We sharpened our focus on
efficiency and cost management at our Michigan and Wisconsin facilities and,
as a result, have seen significant improvement in profitability throughout the
course of 1999."
Margate's gross profit increased 33 percent to $1.2 million in 1999,
reflecting improved productivity levels at the Company's facilities, which
provide cleaning and finishing of foundry castings. Operating income grew
423 percent versus the year-ago period, due primarily to increased efficiency
and Margate's focus on cost management in 1999. Interest and other income
increased over 1998 levels, due primarily to earnings on cash generated from
the above-mentioned equity sale as well as other income from Margate's new
venture that provides powder-coating services to foundries.
"Our improvements in operations have generated better profitability and
new opportunities to serve customers," Hopton said. "We are continuing to
invest in resources that will help us improve efficiency, expand our
capabilities and sell our services to the Midwestern foundry industry. Our
quality and efficiency, combined with competitive pricing, makes Margate a
unique option for foundries looking to outsource their cleaning, testing and
painting work."
Hopton added: "We finished the year in profitable fashion and are off to
a strong start in 2000. New business, combined with continued improvement in
productivity, have put us on track to exceed the results we posted in last
year's first quarter."
Margate reported net income of $85,302, or $0.06 per share, on net sales
of $2.5 million in the first quarter of 1999.
"Our core business in foundry services offers us profitable growth
potential in the coming year. Additionally, the board of directors has
accelerated its pursuit of other strategic growth opportunities including our
agreement with B2B EUROwireless.com that was announced yesterday. This
proposed transaction represents an exceptional opportunity to enhance value
for Margate shareholders," Hopton said.
Margate Industries, Inc. announced yesterday that its board of directors
had unanimously approved a non-binding letter of intent with New York City-
based B2B EUROwireless.com, Inc. Following due diligence, receipt of a
fairness opinion, execution of definitive agreements and shareholder and
regulatory approval of the proposed transaction, B2B EUROwireless.com's
management and board will assume significant majority control of Margate
Industries, Inc. through a holding company structure whereby Margate
Industries will become a wholly-owned subsidiary of a newly formed entity.
Margate Industries employs approximately 200 at two wholly owned
subsidiaries: Yale Industries and Fort Atkinson Industries, which provide
cleaning, grinding, chipping, painting and finishing of iron castings used
primarily in the manufacture of automotive vehicles, heavy equipment and farm
equipment.
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995: The statements contained in this news release include certain
predictions and projections that may be considered forward-looking statements
under securities law. These statements involve a number of important risks
and uncertainties that could cause actual results to differ materially
including, but not limited to, the performance of the automotive industry,
certain customers and affiliated companies, as well as other economic,
competitive and technological factors involving the Company's operations,
markets, services, products and prices.
MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 and 1998
1999 1998
NET SALES (Including related
party sales and commissions of $0 and
$1,889,000 in 1999 and 1998, respectively) $9,788,555 $9,768,537
COST OF SALES 8,568,312 8,851,386
GROSS PROFIT 1,220,243 917,151
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 813,439 835,573
RELATED PARTY SERVICES AND SALES COMMISSIONS 1,966 4,232
OPERATING INCOME 404,838 77,346
OTHER INCOME (EXPENSE):
Dividend and interest income 103,643 87,893
Interest expense (31,445) (67,896)
Loss on abandonment of leasehold improvements - (143,214)
Other income 37,503 15,773
109,701 (107,444)
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 514,539 (30,098)
PROVISION FOR FEDERAL INCOME TAXES 182,700 10,000
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 331,839 (20,098)
EXTRAORDINARY ITEM gain on sale of equity
investee (net of applicable income tax
expense of $84,000) - 1,991,214
NET INCOME $331,839 $1,971,116
BASIC EARNINGS (LOSS) PER SHARE:
INCOME BEFORE EXTRAORDINARY ITEM $0.22 $(0.01)
EXTRAORDINARY ITEM 1.31
NET INCOME $0.22 $1.30