Genesis Announces Second Quarter Results.Business Editors DAYTON, Ohio--(BUSINESS WIRE)--Aug. 11, 2000 Genesis Worldwide Inc. (GWOW.OB) today reported a loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $3.1 million, or $.71 per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the quarter ended June 30, 2000 compared to income of $964,000, or $.25 per share, for the same quarter of 1999. For the first two quarters of 2000, the Company incurred a loss from continuing operations of $4.9 million, or $1.14 per share, compared to income of $1.1 million, or $.30 per share, realized in the first half of 1999. Results exclude the Company's Monarch machine tool and Busch paper coating and laminating lam·i·nate v. lam·i·nat·ed, lam·i·nat·ing, lam·i·nates v.tr. 1. To beat or compress into a thin plate or sheet. 2. To divide into thin layers. 3. segments, which are classified as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Amounts in 2000 include Herr-Voss, the coil processing equipment business which the Company acquired in June 1999. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight from continuing operations increased to $33.2 million and $66.6 million in the second quarter and first half of 2000, respectively, compared to $21.3 million and $38.9 million in the comparable periods of 1999. The increase was primarily due to sales generated by Herr-Voss. The loss from discontinued operations in 2000 was primarily the result of contract cost overruns Noun 1. cost overrun - excess of cost over budget; "the cost overrun necessitated an additional allocation of funds in the budget" cost - the total spent for goods or services including money and time and labor in completing the installation phase on certain Busch projects. The Company incurred a disproportionate tax provision in the first half of 2000, as costs for goodwill amortization ($1.67 million) and for excise taxes excise taxes, governmental levies on specific goods produced and consumed inside a country. They differ from tariffs, which usually apply only to foreign-made goods, and from sales taxes, which typically apply to all commodities other than those specifically exempted. related to a pension plan termination Plan termination for ERISA defined benefit pension plans, is either the voluntary act of a pension plan sponsor who no longer believes that the costs of providing the pension outweighs its benefits, or the involuntary termination by the PBGC when the federal pension agency believes ($2.8 million) are not allowable tax deductions Tax deduction An expense that a taxpayer is allowed to deduct from taxable income. tax deduction See deduction. . The Company has not generated an adequate level of revenues in 2000 to produce sufficient operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. to offset the amortization costs and interest expense associated with the debt incurred to finance the Herr-Voss acquisition. A prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. slowdown in orders for the Company's capital equipment has caused revenues to be below historical levels. However, revenues generated from the service and spares component of the Company's business have remained strong. Revenues for the first half of 2000 were $66.6 million, which on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis would be $133 million. This compares to pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma annual revenues of $146 million in 1998 and $156 million in 1999. Gross margin as a percentage of revenues was 19% in the second quarter of 2000 and 20% in the first half of the year, which is below the historical pro forma margins for the Company's businesses. The lower margins are principally due to the lower revenues realized and to cost overruns on certain contracts, including contracts in process at Herr-Voss at acquisition date. The Company now believes that it has resolved most issues related to those contracts and expects future margins to improve over that realized in the first half of 2000. The Company received $32.9 million and $61.0 million of orders in the second quarter and first half of 2000, respectively, while its backlog declined from $62.2 million at December 31, 1999 to $55.6 million at June 30, 2000. Until the Company can increase its monthly order rate and backlog to more historical levels ($12-$15 million of orders per month and over $70 million of backlog), it will likely not be able to achieve the performance levels expected from its businesses. During the second quarter of 2000, the Company's GenCoat subsidiary booked the largest coil processing equipment order in its history. The $7.2 million order, placed by Eagle Picher Corporation, Wolverine wolverine or glutton, largest member of the weasel family, Gulo gulo, found in the northern parts of North America and Eurasia, usually in high mountains near the timberline or in tundra. Gasket Division, includes equipment for uncoiling, cleaning, coating, curing and recoiling metal coils and is scheduled for delivery in January 2001. The end product from this line will be used in the automotive market for gasket material and brake components. Due to depressed market Depressed market Market in which supply overwhelms demand, leading to weak and lower prices. conditions, the Company has taken steps to reduce its operating costs operating costs npl → gastos mpl operacionales and improve its cash flow. These initiatives include personnel reductions and cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. programs. The Company estimates it has already reduced its annual operating costs by over $3.1 million through these steps, which began in the second quarter of 2000. Additional reductions as necessary to better align costs with sales volume will be implemented. The revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. line under the Company's credit agreement with ING (U.S.) Capital LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control has been increased from $30 million to $35 million through October 31, 2000 and certain covenants in the agreement have been modified. In addition, the Company granted to ING a warrant to purchase common shares of the Company. Under the warrant agreement, unless the Company achieves certain conditions by October 31, 2000, including reducing its term loans by at least $10 million and attaining a prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). maximum senior leverage ratio, ING will receive warrants to acquire 800,000 shares of the Company's common stock at an exercise price of $.01 per share, which warrants would become exercisable on February 1, 2001. Richard E. Clemens, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Genesis, stated, "Demand for our equipment continues to be well below historical levels. While we see potential for improvement in the markets for our products, we must continue to lower our cost of operations to enable us to improve our profitability under the current market conditions. By reducing our fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). , including increased use of outsourcing to provide both personnel and materials for our businesses, we expect to realize better margins. We continue to aggressively pursue sales opportunities and believe that we are well positioned to capture our historical market share as the market improves." Genesis Worldwide Inc. engineers and manufactures high quality metal coil processing, roll coating and electrostatic Stationary electrical charges in which no current flows. For example, laser printers and copier machines place a positive charge of the image on a drum, and negatively charged toner is attracted onto the drum. The toner is then transferred to positively charged paper and fused to the paper by heat. oiling equipment in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and the United Kingdom. The Company also provides mill roll reconditioning, texturing and grinding services in addition to its rebuild, repair and spare parts Spare parts, also referred to as Service Parts is a term used to indicate extra parts available and in proximity to the mechanical item, such as a automobile, boat, engine, for which they might be used. Spare parts are also called “spares. business. In addition to historical information, this press release contains various forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , involving risks and uncertainties, which could cause actual results to differ materially from these statements. These risks include, but are not limited to, changes in economic conditions, interest rates, price and product offering competition from domestic and foreign entities, customer purchasing patterns, labor costs, product liability issues and other legal claims and governmental regulatory issues. Words identifying forward-looking statements include "plan", "believe", "except", "anticipate", "project", "intend", "estimate" and other expressions which are predictions or indications of future events or trends which do not relate to historical matters. For further information contact Richard E. Clemens, CEO, or Karl Frydryk, CFO See Chief Financial Officer. , at (937) 910-9300.
Genesis Worldwide Inc.
Condensed Statements of Operations
(in thousands, except per share amounts)
Quarter Ended Two Quarters Ended
June 30, June 30,
---------------------- ---------------------
2000 1999 2000 1999
---- ---- ---- ----
Net Sales $ 33,233 $ 21,329 $ 66,616 $ 38,855
Cost of Sales 27,075 16,554 53,132 30,318
-------- -------- -------- --------
Gross Margin 6,158 4,775 13,484 8,537
Selling, General
& Administrative 5,703 3,042 12,002 6,225
Amortization of
Intangibles 833 104 1,665 204
-------- -------- -------- --------
Operating Income (378) 1,629 (183) 2,108
Interest (Expense) (2,114) (302) (4,415) (629)
Other (Expense) Income (344) 179 (143) 271
-------- -------- -------- --------
Income (Loss)
Before Income Taxes (2,836) 1,506 (4,741) 1,750
Income Taxes
(Provision) Benefit (215) (542) (124) (630)
-------- -------- -------- --------
Income (Loss)
from Continuing
Operations (3,051) 964 (4,865) 1,120
Income (Loss)
from Discontinued
Operations (544) (341) (576) 91
-------- -------- -------- --------
Net Income (Loss) $ (3,595) $ 623 $ (5,441) $ 1,211
-------- -------- -------- --------
-------- -------- -------- --------
Net Income (Loss)
per Share -
Basic and Diluted:
From Continuing $ (0.71) $ 0.25 $ (1.14) $ 0.30
From Discontinued (0.13) (0.09) (0.13) 0.02
-------- -------- -------- --------
Total $ (0.84) $ 0.16 $ (1.27) $ 0.32
Weighted Average Common
Shares Outstanding:
Basic 4,286 3,787 4,284 3,781
Diluted 4,286 3,809 4,284 3,794
End of Period Backlog -
from continuing
operations $ 55,602 $ 66,030 $ 55,602 $ 66,030
Genesis Worldwide Inc.
Condensed Balance Sheets
(in thousands)
June 30, December 31,
2000 1999
---- ----
ASSETS:
Current Assets:
Cash $ 105 $ 559
Accounts Receivable 23,764 22,107
Unbilled Contract Receivables 14,002 12,702
Inventories 10,975 10,016
Prepaids 1,859 1,783
Deferred Income Taxes 7,016 6,816
Net Current Assets of
Discontinued Operations (384) 8,077
--------- ---------
Total Current 57,337 62,060
Property, Plant & Equip. 28,557 27,770
Prepaid Pension Costs 9,135 19,849
Deferred Income Taxes 2,297 2,297
Intangible Assets 64,414 68,473
Other Assets 3,919 5,018
--------- ---------
Total $ 165,659 $ 185,467
--------- ---------
--------- ---------
LIABILITIES & SHAREHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable $ 18,058 $ 20,557
Accrued Liabilities 9,640 15,126
Progress Payments 12,771 6,962
Current Portion of Long-Term
Debt 6,040 5,540
--------- ---------
Total Current 46,509 48,185
Postretirement Benefits 3,107 3,054
Other Long-Term Liabilities 1,185 1,122
Long-Term Debt 80,813 94,034
--------- ---------
Total Liabilities 131,614 146,395
Shareholders' Equity 34,045 39,072
--------- ---------
Total $ 165,659 $ 185,467
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