DALLAS, Oct. 30 /PRNewswire/ -- Global Industrial Technologies, Inc.
(NYSE: GIX), a Dallas-based manufacturing company, today reported a net loss
from continuing operations of $7.7 million, or $.35 per basic share, before
pre-tax charges of $59.1 million for restructuring and asset impairments. For
the nine months ended September 30, 1998 the Company reported a net loss of
$5.5 million, or $.25 per basic share, from continuing operations, before
pre-tax charges of $62.7 million for restructuring, asset impairments, and
British Jeffrey Diamond (BJD) shutdown charges. Giving effect to these
charges, for the nine months ended September 30, 1998, Global reported a net
loss of $54.5 million or $2.47 per basic share for the quarter and net
earnings of $35.7 million or $1.62 per basic share, including the gain on the
sale of INTOOL which was completed in March. The INTOOL gain more than
offsets the cumulative year-to-date write-downs and pre-tax charges.
These results reflect the change of the Company's fiscal period from an
October 31 year end to a December 31 year end, to more closely align Global's
reporting processes with its customers' business cycles and reduce
administrative costs.
Rawles Fulgham, Global's Chairman and Chief Executive Officer, said,
"During the past 90 days we have undertaken a comprehensive review of each
operating unit, as well as the overall corporate support organization. We
have taken decisive action in every area of the company, starting with an 18%
reduction in staff at corporate headquarters, to improve profitability in 1999
and beyond.
The pre-tax charges taken during the third quarter of 1998 consist
primarily of charges incurred to facilitate the Company's integration and
rationalization plans associated with the A. P. Green acquisition; the
termination of a Harbison-Walker joint venture associated with its Minerals
Operations; and an impairment of goodwill related to the Corrosion Technology
International, Inc. (CTI) acquisition. Charges taken for the nine-month
period also contained a $2.4 million provision for closing the Company's
processing equipment operations, BJD, in Wakefield, England during the
three-month period ended April 30, 1998.
"From an operating perspective, we are pleased to report that we are
realizing expense savings from the integration of A. P. Green into our
Harbison-Walker refractory products division at a faster-than-expected rate,"
Mr. Fulgham continued. He noted that the original A. P. Green integration
plan called for closing six manufacturing plants and reducing employment by
500 persons by mid 1999. Global has sold, closed, or is in the process of
closing ten plants and eliminating additional positions, which through
September, have resulted in annualized savings of $24 million placing us ahead
of our original schedule. Mr. Fulgham continued, "We attribute this success
to the very hard work of our employees."
"The cement, industrial and projects groups of our refractories business
are performing well in a difficult market. Notably, we are experiencing
strong growth in requests for quotation and a growing backlog in our project
business, while the cement and industrial groups are holding firm despite
signs of weakness in the global markets for these commodities. At the same
time, a dramatic increase in competition from imported steel has weakened
demand for refractory products serving the steel industry. We do not see this
picture changing in the near-term, and so we have reduced levels of employment
within the refractories business beyond the job eliminations which have taken
place as a result of the Green acquisition," said Mr. Fulgham.
"We feel strongly that the acquisition of Green will enable us to maintain
critical mass in this business even as we scale back operations to reflect the
current market pressures. We expect to see improved performance in our
refractories division in 1999, even if these negative conditions persist,"
said Mr. Fulgham.
Mr. Fulgham reported that Ameri-Forge saw continued pressure on operating
margins within the flange segment of the business but initial market response
to the new American-made undercarriage product line was encouraging. "The
flange segment has been affected by softness in the oil and gas industry and,
to a lesser extent, by imports from India and Korea. We have stepped up our
marketing program to maintain production and sales levels and implemented cost
reduction programs resulting in lower raw material costs, primarily steel,"
Mr. Fulgham said.
"Our results in the undercarriage segment continue to lag our original
expectations primarily because the installation of manufacturing equipment has
been more costly and continues to take longer than anticipated. Although we
now have in place the capacity to produce a wide variety of undercarriage
components, significant start-up, marketing and engineering costs were
incurred based upon expected earlier achievement of planned sales levels. As
our sales efforts come to fruition, we expect to begin to penetrate the
substantial market for these products in a meaningful way," Mr. Fulgham said.
Mr. Fulgham reported that results in the Specialty Equipment division
continued to be negatively affected by the impact of ongoing weakness in
copper and other non-ferrous metals prices. As a result, Global's polymer
concrete business, comprised of CTI Ancor and Polymer Pipe Technologies,
recognized a third quarter $22 million pre-tax write-down of goodwill.
Effective January 1, 1999, these businesses will report to the Vice President-
International Operations of Harbison-Walker. Mr. Fulgham stated, "This change
is being made to realize worldwide manufacturing synergies between these
businesses." Declines in this business helped offset good results in the
recycling and processing area. Mr. Fulgham noted that Jeffrey Woodruff and
Shred-Tech continue to experience strong demand across a broad range of
products.
Although Global's Minerals Division has generated substantial sales
through the third quarter, the downturn in the global steel market has
impacted both volumes and margins as excess worldwide capacity for magnesite
is chasing a smaller demand. "Although there has been recent improvement in
the exchange rate, many customers have resorted to spot purchases due to the
current oversupply and are expected to continue in this mode until there is a
pickup in overall steel demand. Demand for our new family of spinel products
is increasing and we expect it to grow throughout 1999," said Mr. Fulgham.
The Lime operation Global purchased in the A. P. Green acquisition
contributed positive earnings and cash flow in the quarter. This segment,
which has operating plants located in Virginia, Texas, and a joint venture in
South Carolina scheduled to ramp-up production early next year, serves various
industries including steel, environmental, construction and paper.
Global is a major manufacturer of technologically advanced industrial
products that support high-growth markets around the world. Products include
forged flanges; undercarriage parts for track-mounted vehicles; modular cells
for refining non-ferrous metals; premium refractories for lining heat-
containing industrial vessels such as steel furnaces; raw materials used to
make refractory products, processing and recycling equipment.
Statements the Company may publish, including those in this announcement,
that are not strictly historical are "forward-looking" statements under the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Although the Company believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, it can give no
assurance that its expectations will be realized. Forward-looking statements
involve known and unknown risks which may cause the Company's actual results
and corporate developments to differ materially from those expected. Factors
that could cause results and developments to differ materially from the
Company's expectations include, without limitation, changes in manufacturing
and shipment schedules, delays in completing acquisitions, divestitures and
plant construction, currency exchange rates, new product and technology
developments, competition within each business segment, cyclicality of the
markets for the products of a major segment, litigation, significant cost
variances, the effects of acquisitions and divestitures, and other risks
described from time to time in the Company's SEC reports including quarterly
reports on Form 10-Q, annual reports on Form 10-K and reports on Form 8-K.
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
SEGMENT INFORMATION
MILLIONS
Three Months Ended Nine Months Ended
Sept. 30, July 31, Sept. 30, July 31,
1998 1997 1998 1997
Refractory Products
Sales and Operating
Revenues 122.4 88.8 297.9 246.5
Operating Profit (Loss) (2.2) 8.9 14.3 22.3
Minerals
Sales and Operating
Revenues 9.3 12.3 31.2 39.0
Operating Profit (Loss) (0.4) 1.3 (0.4) 4.9
Lime
Sales and Operating
Revenues 13.0 0.0 13.0 0.0
Operating Profit (Loss) 0.7 0.0 0.7 0.0
Specialty Equipment
Products
Sales and Operating
Revenues 13.5 18.6 39.4 50.5
Operating Profit (Loss) (0.1) (1.2) (0.7) 0.3
Forged Products
Sales and Operating
Revenues 14.1 12.1 41.7 39.6
Operating Profit (Loss) (3.2) 2.0 (4.2) 8.2
Partnership Operations
Operating Profit(Loss) (0.6) ---- (1.2) ----
Total Continuing
Operations
Sales and Operating
Revenues 172.3 131.8 423.2 375.6
Inter-Segment Sales (3.3) (5.8) (9.6) (16.2)
----- ----- ----- -----
Consolidated Sales 169.0 126.0 413.6 359.4
Other Revenues 0.5 0.4 1.5 1.0
----- ----- ----- -----
Consolidated Revenues 169.5 126.4 415.1 360.4
Operating Profit (Loss) (5.8) 11.0 8.5 35.7
General Corporate
Expense (11.2) (6.5) (24.9) (19.1)
Special Charges --- (23.0) --- (43.5)
Restructuring Charges (31.0) --- (31.7) ---
Impairment of Long
Lived Assets (23.3) --- (23.3) ---
Continuing Operations
Loss Before Income
Taxes (71.3) (18.5) (71.4) (26.9)
Income Tax Benefit 26.8 0.6 27.4 2.8
---- ---- ---- ----
Loss from Continuing
Operations (44.5) (17.9) (44.0) (24.1)
Continuing Operations
Basic Loss per Common
Share ($2.02) ($0.80) ($2.00) ($1.07)
Average Common Shares
Outstanding 22,039 22,429 21,979 22,555
GLOBAL INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In millions except per share data)
Three months ended Nine months ended
September 30, July 31, September 30, July 31,
1998 1997 1998 1997
(Unaudited) (Unaudited)
Revenues
Net sales and
operating revenues $169.0 $126.0 $413.6 $359.4
Other 0.5 0.4 1.5 1.0
Total Revenues 169.5 126.4 415.1 360.4
Costs and Expenses
Cost of sales 143.7 96.8 335.7 270.4
Selling, engineering,
administrative and
general expenses 35.6 22.3 80.8 66.1
Interest expense 6.2 2.7 10.7 7.8
Special charges --- 23.0 --- 43.5
Restructuring charges 31.0 --- 31.7 ---
Impairment
of long lived assets 23.3 --- 23.3 ---
Other - net 1.0 0.1 4.3 (0.5)
Total Costs and Expenses 240.8 144.9 486.5 387.3
Loss from continuing
operations before
income taxes (71.3) (18.5) (71.4) (26.9)
Income tax benefit 26.8 0.6 27.4 2.8
Loss from continuing
operations (44.5) (17.9) (44.0) (24.1)
Discontinued operations:
Earnings (loss) from discontinued
operations less applicable income
taxes of $.8, $1.1,
$1.9 and $2.8 (0.8) 3.5 2.8 8.5
Gain (loss) on disposal
of discontinued operations
less applicable income
taxes of $9.2
and $49.4 (9.2) --- 76.9 ---
Net earnings (loss) $(54.5) $(14.4) $ 35.7 $(15.6)
Basic earnings (loss)
per common share:
Continuing operations $(2.02) $(0.80) $(2.00) $(1.07)
Discontinued operations $(0.45) $ 0.16 $ 3.62 $ 0.38
Net earnings (loss) $(2.47) $(0.64) $ 1.62 $(0.69)
Diluted earnings (loss)
per common share:
Continuing operations $(2.02) $(0.80) $(2.00) $(1.07)
Discontinued operations $(0.45) $ 0.16 $ 3.62 $ 0.38
Net earnings (loss) $(2.47) $(0.64) $ 1.62 $(0.69)
GLOBAL INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in millions)
ASSETS September 30, October 31,
1998 1997
(Unaudited)
Current Assets
Cash and cash equivalents $23.7 $14.9
Notes and accounts receivable
Public 153.7 92.7
Unconsolidated affiliates 0.2 5.1
153.9 97.8
Less allowance for doubtful accounts 7.2 3.2
146.7 94.6
Inventories
Finished products and work in process 92.6 36.7
Raw materials and supplies 78.1 40.3
170.7 77.0
Deferred income taxes 44.3 56.1
Assets held for sale 7.3 66.2
Asbestos insurance recoveries receivable 112.6 65.1
Prepaid expenses 7.8 3.6
Total Current Assets 513.1 377.5
Investments in Unconsolidated Affiliates 4.3 5.1
Noncurrent Deferred Income Taxes 36.4 28.7
Goodwill - net 62.8 56.3
Noncurrent Asbestos Insurance Receivable 208.4 51.3
Other Assets 63.4 39.0
Property, Plant and Equipment - at cost
Land, land improvements and mineral deposits 50.4 33.3
Buildings 126.8 74.4
Machinery and equipment 464.2 317.3
641.4 425.0
Less accumulated depreciation,
depletion and amortization 220.8 201.0
Total properties - net 420.6 224.0
Total Assets $1,309.0 $781.9
GLOBAL INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in millions)
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, October 31,
1998 1997
(Unaudited)
Current Liabilities
Accounts payable $60.3 $42.6
Notes payable and current portion
of long-term debt 15.4 47.2
Advances from customers on contracts 1.7 5.0
Accrued compensation and benefits 21.5 21.6
Insurance reserves 14.1 10.6
Income taxes currently payable 10.7 9.0
Current deferred income taxes 15.3 14.1
Asbestos related liabilites 98.8 56.9
Other accrued liabilities 67.4 13.3
Total Current Liabilities 305.2 220.3
Long-term Debt 355.7 151.8
Pension Plans and Other Retiree Benefits 66.5 47.6
Noncurrent Deferred Income Taxes 51.4 17.0
Noncurrent Asbestos Related Liabilities 208.9 56.8
Other Liabilities 15.8 4.3
Shareholders' Equity
Common stock 6.8 6.8
Capital in excess of par value 381.5 382.1
Retained earnings 53.7 25.5
Cumulative translation adjustment (57.2) (50.3)
Treasury stock, at cost (73.7) (73.7)
Other (5.6) (6.3)
Total Shareholders' Equity 305.5 284.1
Total Liabilities and
Shareholders' Equity $1,309.0 $781.9
SOURCE Global Industrial Technologies, Inc.
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Related links:
http://www.prnewswire.com/gix
CONTACT:
George Pasley, V. P. Communications of Global
Industrial Technologies, 214-953-4510
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