Philip Services Reports 1999 First Quarter Results.HAMILTON, Ontario--(BUSINESS WIRE)--May 13, 1999-- Philip Services Corp. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :PHV PHV Plug-in Hybrid Vehicle PHV Peak Height Velocity PHV Peak Hour Volume (traffic & transportation engineering) PHV Protocol Handler (CDMA voice) PHV Protocol Handler for Voice ) (ME:PHV) today announced its financial results for the first quarter ended March 31, 1999. All currency figures are stated in US dollars. Results have been presented according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. US generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . "Although we are seeing a gradual return to stability, our first quarter financial results continued to be impacted by general concern over our financial uncertainty," said Allen Fracassi, interim Chief Executive Officer. "Since the end of the first quarter, we have executed a lock-up agreement Lock-Up Agreement A legally binding contract between the underwriters and insiders of a company prohibiting these individuals from selling any shares of stock for a specified period of time. with our secured lenders and are moving ahead with a plan of reorganization that will ensure business as usual throughout our financial restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). . "The improvement in cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses reflects the success of our cash conservation initiatives. Our management and our employees are focused on revenue and margin enhancement as we continue to normalize normalize to convert a set of data by, for example, converting them to logarithms or reciprocals so that their previous non-normal distribution is converted to a normal one. our businesses after a very difficult year."
Statements of Earning Information
(000s of $, except EPS)
Three Months Ended March 31
(Unaudited)
1999 1998
------------------------------
From continuing operations:
Revenue 379,014 547,675
Other income - net (1,655) (16,129)
Income (loss) from operations (12,789) 18,496
Net earnings (loss) (41,897) 14,221
Earnings (loss) per share
(basic and diluted) (0.32) 0.11
Revenue for the first quarter of 1999 was $169 million less than the revenue reported in the same period in 1998. The Industrial Services Group revenue for the first quarter of 1999 was $280.4 million, compared with revenue of $286.8 million in the first quarter of 1998. The Metals Services Group revenue for the first quarter of 1999 was $98.6 million, compared with $260.9 for the first quarter in 1998. The decrease in revenue from the metals operations was primarily attributable to the sale of the Company's steel distribution business in July 1998 and a 35 percent drop in ferrous ferrous (fĕr`əs), iron in the +2 valence state. Containing or having to do with iron. The difference between ferrous and ferric is the number of valence electrons they contain (ferrous contains two and ferric contains three), which scrap average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. in the first quarter of 1998. The consolidated gross margin in the first quarter of 1999 was 15 percent, compared to a gross margin of 17 percent reported in the same period in the prior year. Income from operations (before corporate expenses) was $2.2 million in the first quarter of 1999 compared with income of $25.9 million in the first quarter of 1998. Corporate costs for the first quarter of 1999 were $15.0 million, of which extraordinary costs for professional fees relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's financial restructuring and Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 costs were $8.7 million. The net loss for the first quarter of 1999 was $41.9 million ($0.32 per share) and compares with net earnings in the first quarter of 1998 of $14.2 million which included other income of $14.7 million relating to the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). received on the termination of the merger agreement to acquire Safety-Kleen Corp. Results of Operations The following table shows the results of operations of Philip's business segments for the first quarter of 1999 and 1998 and the fourth quarter of 1998:
Three Months Ended
March 31, 1999 ($millions)
---------------------------------------------------
Industrial Industrial
Ferrous Metals By-Products Utilities Outsourcing
Services Services Recovery Management Services
---------------------------------------------------
Revenue 92.7 5.9 40.0 22.1 218.3
Income(loss)
from
operations(1)0.5 (1.2) 0.1 (1.4) 4.2
Three Months Ended
March 31, 1998 ($millions)
---------------------------------------------------
Industrial Industrial
Ferrous Metals By-Products Utilities Outsourcing
Services Services Recovery Management Services
---------------------------------------------------
Revenue 252.6 8.3 44.6 9.5 232.7
Income(loss)
from
operations(1)14.6 0.5 (3.3) 0.2 13.9
1 - includes other income and expenses and excludes special
charges
Metals Services For the first quarter of 1999, the Metals Services revenue decreased by $162 million compared with the same period in 1998. The decrease was primarily due to the sale of the Company's steel distribution business in July 1998 and a reduction in the average selling price of ferrous scrap from $147 per ton in the first quarter of 1998 to $98 per ton in the first quarter of 1999. The gross margin for the Metals Services Group was 9 percent for the first quarter of 1998 compared with 11 percent reported in the same period of the prior year reflecting a gradual improvement in the ferrous market since the fourth quarter of 1998. The income from operations also indicated the same trend. Industrial Services Although customers in the oil and gas industry continue to postpone post·pone tr.v. post·poned, post·pon·ing, post·pones 1. To delay until a future time; put off. See Synonyms at defer1. 2. To place after in importance; subordinate. significant maintenance and capital projects, revenue for the Industrial Services Group did not change materially when compared with the same period in 1998. The gross margin for the Industrial Services Group was 17 percent in the first quarter of 1999 compared with 21 percent in the first quarter of 1998. The decline in gross margin was largely reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of competitive pressures on pricing in the first quarter of 1999 as a result of the Company's continued financial uncertainty. Cashflow In the first quarter of 1999, the cash flow from operations was $4 million (after removing the effect of interest accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. but not paid) which was used to acquire fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → . Comparatively, in the first quarter of 1998 the operations used $34 million of cash for operating activities and $21 million to acquire fixed assets. Cumulative Effect of the Change in Accounting Policy The results of operations for the first quarter of 1999 include a charge of $1.8 million relating to the Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities" issued by the American Institute of Certified Public Accountants With over 330,525 CPA members (in August 2006), the American Institute of Certified Public Accountants (AICPA) is the largest professional organization of Certified Public Accountants (CPAs) in the United States of America. which requires that all pre-operating costs be expensed as incurred. The statement also requires that any existing pre-operating costs recorded on the balance sheet be expensed and recorded as a cumulative effect of a change in accounting principle. Class Action Suit Ruling The United States District Court United States District Court In the U.S., any of the 94 trial courts of general jurisdiction in the federal judicial system. Each state, as well as the District of Columbia and the Commonwealth of Puerto Rico, has at least one federal district court. , Southern District of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , has ruled in favour of Philip's motion to dismiss the U.S. plaintiffs' Consolidated and Amended Class Action Complaint on forum non conveniens forum non conveniens (for-uhm nahn cahn-veen-nee-ehns) n. Latin for a forum which is not convenient. This doctrine is employed when the court chosen by the plaintiff (the party suing) is inconvenient for witnesses or poses an undue hardship on the defendants, who grounds. In reaching its decision, the US court declined to assume jurisdiction over the complaint on the grounds that Ontario provides an adequate alternative forum for litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. of the class action plaintiff's claims, and ruled that adjudication The legal process of resolving a dispute. The formal giving or pronouncing of a judgment or decree in a court proceeding; also the judgment or decision given. The entry of a decree by a court in respect to the parties in a case. in Ontario would be more convenient and best serve the public interest. Philip Services is an integrated metals recovery and industrial services company with operations throughout 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. , Canada and Europe. Philip provides diversified diversified (di·verˑ·s metals services, together with by-product by·prod·uct or by-prod·uct n. 1. Something produced in the making of something else. 2. A secondary result; a side effect. by-product Noun 1. management, utilities management and industrial outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. services, to all major industry sectors.
SCHEDULE 1
PHILIP SERVICES CORP.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands of US dollars, except share and per share amounts)
For the
Three Months Ended
--------------------------
March 31 March 31
1999 1998
--------------------------
Revenue $ 379,014 $ 547,675
Operating expenses 323,723 453,384
Selling, general and administrative
costs 52,517 50,272
Depreciation and amortization 15,563 25,523
----------- -----------
Income (loss) from operations (12,789) 18,496
Interest expense 26,853 15,015
Other income and expense - net (1,655) (16,129)
Cumulative effect of change in
accounting principle 1,775 --
----------- -----------
Earnings (loss) from continuing
operations before tax (39,762) 19,610
Income taxes 2,135 5,389
----------- -----------
Earnings (loss) from continuing
operations (41,897) 14,221
Discontinued operations (net of tax) -- (14,786)
----------- -----------
Net loss $ (41,897) $ (565)
----------- -----------
----------- -----------
Basic and diluted earnings
(loss) per share
Continuing operations $ (0.32) $ 0.11
Discontinued operations -- (0.11)
----------- -----------
$ (0.32) $ --
----------- -----------
----------- -----------
Weighted average number of common
shares outstanding (000's) 131,144 131,092
----------- -----------
----------- -----------
SCHEDULE 2
PHILIP SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands of US dollars)
March 31 December 31
1999 1998
----------- -----------
(Unaudited)
ASSETS
Current assets
Cash and equivalents $ 59,644 $ 61,564
Accounts receivable 323,228 325,509
Inventory for resale 34,653 32,633
Other current assets 181,817 181,314
----------- -----------
599,342 601,020
Fixed assets 426,529 435,164
Goodwill 22,286 21,871
Other assets 86,722 89,624
----------- -----------
$ 1,134,879 $ 1,147,679
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 99,514 $99,293
Accrued liabilities 191,055 188,936
Current maturities of long-term
debt 1,114,090 1,084,959
----------- -----------
1,404,659 1,373,188
Long-term debt 20,847 22,819
Deferred income taxes 16,003 17,349
Other liabilities 128,129 127,448
Contingencies
Shareholders' equity (deficit) (434,759) (393,125)
----------- -----------
$ 1,134,879 $ 1,147,679
----------- -----------
----------- -----------
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