Global Industrial Technologies Announces Divestiture of Non-Core Businesses, Earnings Outlook
Global said The Marion Power Shovel Company, British Jeffrey Diamond of the United Kingdom and a partnership interest in Komdresco of South Africa will be sold. These actions combined with previously announced divestitures -- including a heavy equipment joint venture with Komatsu, Jeffrey Underground mining equipment company and Jeffrey-Brazil -- will complete Global's exit from the heavy equipment and mining equipment businesses. It is the Company's intention to dispose of the remaining operations within six months.
"It is management's responsibility to constantly review the prospects and potential of each of our existing business units and this decision is a result of that process. We have concluded that the value represented by the assets of these companies will make a stronger contribution to our overall strategy if deployed elsewhere," said Global's Chairman and Chief Executive Officer, J. L. Jackson. "We intend to apply the proceeds from these divestitures to fund further growth by investing in existing businesses, making acquisitions with high growth potential, repurchasing undervalued shares or reducing debt."
In connection with these divestitures, the Company has recognized a $20.5 million pre-tax charge to earnings during the first quarter of its 1997 fiscal year -- which includes a cumulative foreign exchange loss on the investments of $7.7 million -- and estimates a loss for the quarter ranging from $11.3 to $12 million, or $0.50 to $0.53 per share.
Excluding the effect of the charge-off, Global expects to report earnings for the first quarter of $0.15 to $0.18 per share. For the full fiscal year, the Company estimates that earnings, excluding the effect of the charge-off, should exceed $2.00 per share. These estimates include no contribution to earnings from Marion, Komdresco or British Jeffrey Diamond, which together generated approximately $0.21 per share during fiscal 1996.
The Company also said the first quarter's operating results have been affected by lower than expected production at its Ameri-Forge subsidiary, due to software and robotic problems with recently installed production equipment, and to delayed shipments at Harbison-Walker Refractories. Management believes prospects are good that much of the delayed business will be made up in subsequent quarters.
Forward-looking statements concerning divestitures, earnings and results from operations are contained in this announcement. The following important factors could cause actual results to differ materially from those described in such statements: the timing of completion of a divestiture transaction and its resultant value to the Company; recouping delayed business on a schedule different than anticipated; and significant variances in sales or costs at a major business unit.
Global Industrial Technologies is a major manufacturer of technologically advanced industrial products that support high-growth markets worldwide.
SOURCE Global Industrial Technologies, Inc.
/CONTACT: Investor Relations, George Pasley, 214-953-4510, or Media, Joe Stroop, 214-953-4518, both of Global Industrial Technologies, Inc./
CO: Global Industrial Technologies, Inc.; The Marion Power Shovel Company,
British Jeffrey Diamond of the United Kingdom; Komdresco of South Africa ST: Texas IN: MAC MNG SU: RCN ERN
MM-MW -- NYTH012 -- 1296 01/23/97 09:04 EST http://www.prnewswire.com