Citation Corporation Forecasts Nine Percent Sales Shortfall in Its Fiscal Fourth Quarter Primarily Due to GM Strike.

BIRMINGHAM, Ala.--(BUSINESS WIRE)--July 28, 1998--Citation Corporation (Nasdaq: CAST) today announced that fiscal fourth quarter sales were forecast to be down approximately nine percent from prior expectations of $180 to $185 million, although slightly ahead of sales for the fourth quarter of fiscal 1997. Citation's fiscal fourth quarter includes the months of July, August, and September.

Of the shortfall, approximately two-thirds is due to the loss of direct and indirect shipments to General Motors because of the United Auto Workers' strike.

The remaining shortfall is caused by softness in oil tool, mining equipment, and construction equipment orders which the company previously indicated had initially occurred late in its fiscal third quarter.

Preliminary forecasts indicate that as a result of the sales shortfall, earnings per share (EPS) for the fourth quarter could be in the $0.12 to $0.16 range. This outlook assumes that Citation will be producing parts for General Motors by September. If the GM strike continues through September, an additional $0.06 to $0.10 EPS reduction is possible.

For the fourth quarter of fiscal 1997, Citation had sales of $160.2 million and earnings of $0.31. Through nine months of this fiscal year, Citation's sales were $559.8 million and EPS was $1.29, both all time records.

The temporary loss of business due to the strikes at General Motors principally affects Citation's High Volume Foundry Group which makes iron braking, steering and transmission parts, and its Aluminum Foundry Group which makes braking and engine castings. However, the company's Medium Products Group and Special Foundry Group also produce some specialized engine parts, sales of which are affected by the strike.

Several other Citation divisions including Interstate Forging and Texas Steel experienced sales reductions as a result of slowing orders for parts utilized in oil tools, construction equipment and mining equipment. Castwell Products and Oberdorfer Industries both had significant sales reductions that are expected to result in declines in operating performance from the year earlier period. Both completed major contracts and have not yet replaced the lost business. In addition, the Oberdorfer plant is being re-facilitized at significant cost.

Citation High Volume Iron Foundries have substantial new GM steering knuckle business that was expected to commence in its fiscal fourth quarter and has been delayed as a result of the strikes. For fiscal 1999, the new GM business is expected to be approximately $15 to $20 million.

T. Morris Hackney, Citation Chairman and CEO, said, "Obviously we are disappointed by the shortfall in the fourth quarter although we still expect a record year overall and our outlook for fiscal 1999 remains strong.

"Viewed on a longer term basis, General Motors is the most vertically integrated major customer we supply. A significant part of its need to become highly cost competitive will require the ability to source a portion of its parts requirements from efficient suppliers like Citation.

"Direct orders from General Motors do not place them as a Citation top ten customer today. However, when we include indirect business to other customers which ultimately winds up at GM and the substantial new GM business being developed by Citation, we expect it to represent nearly 10 percent of Citation shipments next year," he said.

Citation Corporation is a metal components supplier to capital and durable goods industries. The company currently operates 19 manufacturing divisions in 10 states and employs more than 6,500 employees. Sales for fiscal 1997 were $649 million.

Note: The statements in this news release that are not historical fact are forward-looking statements that involve risks and uncertainties including, but not limited to, work stoppages, customer demand, changes in the economy, pricing by competitors, entry of new competitors, and other risks detailed in the Company's 10-K for the year ended September 28, 1997, the 10-Q for the quarter ended June 28, 1998, and other filings with the Securities and Exchange Commission.

CONTACT: Citation Corp., Birmingham

Stanley B. Atkins, 205/871-5731