Denali Announces a Major Cost Reduction Plan.

HOUSTON--(BUSINESS WIRE)--Oct. 11, 1999--

Denali Incorporated (Nasdaq:DNLI) today announced a plan to reduce annual operating expense by $4.5 million. The plan should be fully implemented by January 2000 and will result in a restructuring charge of approximately $3.0 million before tax in the first half of fiscal year 2000.

"Denali is resizing its Containment Solutions business because of a sharp decline in market activity in the Petroleum Equipment Industry ("PEI"), and the company is continuing to focus on integration within its businesses, particularly in the European-based Welna, our most recent and largest acquisition," commented Edward de Boer, president and chief executive officer. "Denali is committed to manage its operations under two tenets: (1) sizing our businesses to fit their markets and (2) integrating businesses into cohesive operations. The cost reduction plan addresses these two points."

The savings and restructuring charge will be the result of the closure of a domestic manufacturing facility, a reduction in overhead costs and integration of other businesses to improve operating and administrative efficiencies. Denali is the world's largest manufacturer of specialty-engineered, corrosion-resistant fiberglass reinforced plastic ("FRP") products serving the chemical, petrochemical, water/wastewater, power generation, pulp and paper, and other process industries.

The PEI market has undergone a dramatic shift recently. The need to comply with EPA regulations mandating upgrades or replacement of all underground storage tanks led to a surge in market activity in fiscal year 1999 for Containment Solutions, the Denali business that manufactures FRP underground storage tanks and steel aboveground storage tanks. However, with the vast majority of tank owners having met this requirement, market activity has diminished. Anticipating this shift, the company has invested in upgrades at Containment Solutions facilities in California and Pennsylvania that will facilitate the consolidation of manufacturing and administrative capabilities, and has announced the closing of the tank production facility in Texas. These actions are components of the company's cost reduction plan and consistent with its original business strategy.

Integration, in terms of strategy, structure, and productivity, is a key element of Denali's operating plan. Since its inception and as of the close of fiscal year 1999, the company has acquired 11 businesses, including Welna, growing revenue by 44% per year and earnings before interest, income taxes, depreciation, and amortization ("EBITDA") by 65% per year. Welna itself has made five major acquisitions in the last three years, which has created opportunities to achieve synergies. The cost reduction plan affects both European and domestic operations and is consistent with Denali's original integration strategy.

"Execution of the plan will make Denali a stronger, more efficient and responsive organization, providing an even stronger base upon which to build," continued Mr. de Boer. "Going forward, our earnings growth will be from acquisitions, internal growth, and the increased operational efficiencies stemming from implementing this plan."

This cost reduction plan, focusing on integration and right-sizing, involves less than eight percent of the company's 1,800 employees. Denali has over twenty manufacturing locations around the world.

Denali Incorporated is a provider of fluid handling products, specializing in corrosion-resistant applications in process industries. The company is a manufacturer of engineered fiberglass-composite products, including tanks, vessels, and piping systems, as well as steel, aboveground storage tanks. The company also distributes a wide range of engineered products and systems. Denali Incorporated is headquartered in Houston, Texas, and markets its products worldwide through its subsidiaries Containment Solutions (Houston); the Specialty Solutions companies (headquartered in Tulsa) of Ershigs, Fibercast, Belco, and SEFCO; and the Welna companies of Plasticon and Welna Trade (The Netherlands and Germany), Metalchem (Poland), Garlway (The United Kingdom), and Sovap (France).

For more information on Denali Incorporated, please contact Mel Carter, vice president of business development, at 713/627-0933, or visit the Denali Incorporated Website at http://www.denaliincorporated.com.

NOTE: This news release contains certain forward-looking statements as such term is defined in the Private Securities Litigation Reform Act of 1995 and information relating to the company and its subsidiaries that are based on the beliefs of the company's management as well as assumptions made by and information currently available to the company management. When used in this report, the words, "anticipate", "believe", "estimate", "expect", and "intend" and words or phrases of similar import, as they relate to the company or its subsidiaries or company management, are intended to identify forward-looking statements. Such statements reflect the current risks, uncertainties and assumptions related to certain factors including, without limitations, competitive factors, general economic conditions, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, seasonality, distribution networks, product introductions and acceptance, technological change, changes in industry practices, onetime events and other factors described herein. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended.