QUINCY, Ill., Sept. 17 /PRNewswire-FirstCall/ -- Gardner Denver, Inc.
(NYSE: GDI) announced today that, over the next 60 days, its largest supplier
of iron castings, Atchison Casting Corporation, intends to downsize its
LaGrange, Missouri foundry, ceasing production and focusing the facility on
pattern repair, maintenance and storage. As previously disclosed by Gardner
Denver in its most recent quarterly report filed with the SEC on Form 10-Q,
Atchison had informed the Company of its intention to sell or, if a sale was
not consummated, to potentially close the LaGrange Foundry. Atchison utilizes
this foundry to meet its casting supply commitments to Gardner Denver.
The LaGrange Foundry was previously owned by Gardner Denver and was sold
to Atchison in 1995. As part of the sale agreement, the Company entered into
a five-year agreement for the supply of certain cast iron products from the
LaGrange Foundry. Since the expiration of the agreement in 2000, Gardner
Denver has entered into more favorable arrangements for some of these castings
from other suppliers, as part of ongoing material cost reduction initiatives.
In the process, the Company has achieved significant cost reductions and
diminished its reliance on the LaGrange Foundry. Nevertheless, it remains the
Company's largest supplier of castings.
The Company does not anticipate that the downsizing of the LaGrange
Foundry will materially impact its long-term financial performance. During
the downsizing period, however, Gardner Denver will be required to secure
alternative supply sources over a short-term transition period. Management is
assessing the impact on the Company's future financial performance as Atchison
clarifies its delivery commitments. A negative impact on the Company's
financial performance is anticipated in the short-term, primarily in the
fourth quarter of 2002 and the first quarter of 2003, as alternative supply
sources are secured. A previously developed contingency plan, designed to
mitigate the severity of the impact on the operations relying on this
supplier, has been implemented. However, the ultimate success of this plan and
the near-term impact on the Company's financial results will depend in large
part on the skill, commitment and availability of alternate suppliers and the
Company's ability to effectively manage the transition.
The impact on the Company's financial performance in the three-month
period that will end on September 30, 2002, as a result of this supply
disruption, is not anticipated to be significant. However, as a result of
lower demand than previously anticipated, the Company has lowered its earnings
expectations for the third quarter of 2002 and currently anticipates that
diluted earnings per share will be in the range of $0.30 to $0.35 for the
three-month period, as compared to earlier expectations of $0.33 to $0.39.
Gardner Denver, with 2001 revenues of $420 million, is a leading
manufacturer of reciprocating, rotary and vane compressors and blowers for
various industrial applications and pumps used in the petroleum and industrial
markets. Gardner Denver's news releases are available by facsimile (800-758-
5804, extension 303875) or by visiting the Company's website
( http://www.gardnerdenver.com ).
All of the statements in this release, other than historical facts, are
forward-looking statements made in reliance upon the safe harbor of the
Private Securities Litigation Reform Act of 1995. As a general matter,
forward-looking statements are those focused upon anticipated events or trends
and expectations and beliefs relating to matters that are not historical in
nature. Such forward-looking statements are subject to uncertainties and
factors relating to Gardner Denver's operations and business environment, all
of which are difficult to predict and many of which are beyond the control of
the Company. These uncertainties and factors could cause actual results to
differ materially from those matters expressed in or implied by such forward-
looking statements. A list, and related discussion, of these uncertainties
and factors is contained in Gardner Denver's Form 10-Q filed with the
Securities and Exchange Commission on August 13, 2002 and is incorporated
herein by this reference.
SOURCE Gardner Denver, Inc.
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Related links:
http://www.gardnerdenver.com
Company News On-Call:
http://www.prnewswire.com/comp/303875.html
CONTACT:
Helen W. Cornell, Vice President, Strategic
Planning and Operations Support of Gardner Denver, Inc.,
+1-217-228-8209
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