UCAR Reports 1999 Second Quarter Results.NASHVILLE Nashville, city (1990 pop. 487,969), state capital, coextensive with Davidson co., central Tenn., on the Cumberland River, in a fertile farm area; inc. as a city 1806, merged with Davidson co. 1963. , Tenn.--(BUSINESS WIRE)--July 15, 1999-- UCAR UCAR University Corporation for Atmospheric Research UCAR Unmanned Combat Armed Rotorcraft UCAR Utility Cost Analysis Report International Inc. (NYSE NYSE See: New York Stock Exchange : UCR (Under Color Removal) A method for reducing the amount of printing ink used. It substitutes black for gray color (equal amounts of cyan, magenta and yellow). Thus black ink is used instead of the three CMY inks. See GCR and dot gain. ) today announced financial results for the second quarter ended June June: see month. 30, 1999. Second Quarter Highlights -- Earnings were $0.47 per 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, a 38 percent increase over the 1999 first quarter and ahead of First Call consensus estimates. -- 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 during the quarter was very strong at $78 million (before antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. fines and net settlement and expense payments of $17 million and 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). payments of $9 million). -- Cost savings programs generated savings of $21.0 million in the quarter and $31 million for the first six months of 1999, running ahead of the annual target of $64 million. -- Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. was $51 million, a 21 percent increase over the 1999 first quarter. Operating profit margin Operating profit margin The ratio of operating profit to net sales. increased from 21 percent of 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 in first quarter 1999 to 24 percent of sales in second quarter 1999. -- Total debt decreased by $93 million to $747 million at the end of the second quarter from $840 million at the end of the first quarter. Net debt at June 30, 1999 was $722 million, a decrease of $43 million from March 31, 1999. -0-
Summary Financial Table
(Dollars in millions, except per share data)
Three Months Three Months Three Months
Ended Ended Ended
June 30, 1998 March 31, 1999 June 30, 1999
------------- -------------- -------------
Net sales $248 $202 $211
Gross profit $96 $63 $73
Net income $31 $16 $22
Earnings per diluted share $0.67 $0.34 $0.47
Cost Savings and Restructuring Initiatives Gilbert Gil·bert , Walter Born 1932. American biologist. He shared a 1980 Nobel Prize for developing methods of mapping the structure and function of DNA. E. Playford Playford may refer to:
n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. run rate of $80 million. Gross margin percent for the graphite graphite (grăf`īt), an allotropic form of carbon, known also as plumbago and black lead. It is dark gray or black, crystalline (often in the form of slippery scales), greasy, and soft, with a metallic luster. electrode electrode, terminal through which electric current passes between metallic and nonmetallic parts of an electric circuit. In most familiar circuits current is carried by metallic conductors, but in some circuits the current passes for some distance through a business segment and company wide operating profit margin percent are returning to 1997 and 1998 levels of 38.3 percent and 24.2 percent respectively, despite depressed Depressed A description of a market, security, or product that is experiencing weak demand and lowering prices. Notes: A depressed market, security, or product implies that prices and volume are low. There are many reasons for a depressed market, security, or product. volumes, reduced selling prices and the negative impact of a stronger U.S. dollar on selling prices. Our recovery in earnings and strong generation of cash flow is largely attributed to internal programs undertaken by the new management. We are well positioned to continue with earnings growth from further cost savings and the apparent recovery in volume in the graphite electrode industry." UCAR measures cost savings based on 1998 measurement bases as detailed in the following chart: -0-
Savings Savings
for for
Three Six
Months Months 1999
Ended Ended Estimated 1999 Basis
June 30, June 30, Annual Annual of
Cost Item 1999 1999 Savings Targets Measurement
--------- ----------- ----------- ----------- ----------- -----------
Cost of $13.0 $15.5 $36.0 $165 per 1998 fourth
Sales million million million metric ton quarter
(graphite ($250 per ($160 per reduction average
electrodes) metric ton) metric ton) ($1,785 graphite
average electrode
graphite cost per
electrode metric ton
cost per of $1,950
metric ton)
-----------------------------------------------------------------------
Cost of $1.5 $3.0 $9.0 5 percent 1998 fourth
Sales million million million reduction quarter
(other (3 percent (3 percent average
graphite of Cost of of Cost of Cost of
and carbon Sales) Sales) Sales
products)
-----------------------------------------------------------------------
Total $5.5 $11.5 $16.0 $104.0 1998 total
Overhead million million million million overhead
(SG&A, R&D, of $120
and other million
income and
expenses)
-----------------------------------------------------------------------
Interest $0 $0 $0 $80.0 1998 fourth
Expense million quarter
annualized
interest
expense
-----------------------------------------------------------------------
Income Tax $1.0 $1.0 $3.0 27 percent 1998
Expense million million million effective effective
tax rate tax rate
of 29
percent
-----------------------------------------------------------------------
Total $21.0 $31.0 $64.0
Savings million million million
-----------------------------------------------------------------------
Our global workforce has been reduced to 4,576 at the end of the 1999 second quarter from 4,952 at year-end 1998. This was largely due to the reduction of employees at our Welland Welland (wĕl`ənd), city (1991 pop. 47,914), SE Ont., Canada, on the Welland Ship Canal. It is a canal port and an industrial center. Cotton, iron, steel, and many other goods are made in Welland. , Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of graphite electrode plant which was permanently closed in April, 1999, two months ahead of schedule, and the closure of our Berlin, Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). graphite electrode extrusion and machining operations at the end of 1998. These plant closures coupled with the downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing of our Vyazma Vyazma (vyäz`mə), city (1989 pop. 59,000), N central European Russia, on the Vyazma River, a tributary of the Dnieper. Founded in the 9th cent. , Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). graphite electrode plant have reduced UCAR's higher cost graphite electrode manufacturing capacity by 30,000 metric tons (Transparent Optical Networking Services) A marketing term for providing dark fiber to a customer. The customer is responsible for generating the transmission signal and interpreting it at the other end. See dark fiber. . 1999 Second Quarter Results vs. 1999 First Quarter Results Graphite Electrode Business Segment: Graphite electrode net sales increased to $141 million in the 1999 second quarter, up 7 percent over net sales in 1999 first quarter of $132 million. Volume of graphite electrodes Electrodes Tiny wires in adhesive pads that are applied to the body for ECG measurement. Mentioned in: Electrocardiography sold in the second quarter increased 10 percent to 51,300 metric tons from the 1999 first quarter level of 46,600 metric tons. The increased volume sold added $12 million of net sales. This was partially offset by lower average sales revenue per metric ton of graphite electrodes that reduced net sales by $3 million. This lower average sales revenue was primarily due to the strengthening of the U.S. dollar as compared to the Euro and other currencies in which we sell our graphite electrodes. The average sales revenue per metric ton in U.S. dollars of graphite electrodes in the second quarter of 1999 was $2,691 as compared to the average in first quarter of 1999 of $2,757. Gross profit for graphite electrodes in the second quarter of 1999 was $54 million (38.3 percent of net sales) as compared to gross profit in the first quarter of 1999 of $44 million (33.3 percent of net sales). The increase in gross profit was largely due to $13.0 million of cost savings which has reduced our average cost of sales (including depreciation expense) of graphite electrodes per metric ton to $1,700 in the second quarter of 1999 as compared to $1,900 in the first quarter of 1999. Graphite and Carbon Products Business Segment: Net sales of graphite and carbon products were $70 million in the 1999 second quarter with volumes and prices stable in all product groups as compared to the 1999 first quarter. We do not expect any substantial change in the graphite and carbon products business segment net sales levels for the remainder of the year. Gross profit for graphite and carbon products in the 1999 second quarter was also consistent with 1999 first quarter results at $19 million (27.1 percent of net sales) and our gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. continues to perform above the industry average. Cost savings continued on target at $1.5 million in the 1999 second quarter with $3.0 million realized year to date. Strong cash flow was generated by the graphite and carbon products segment. Other Items: Total overhead, including research and development, selling and administration, and other income and expense, was $22 million in the 1999 second quarter as compared to $21 million in the 1999 first quarter. Selling, administrative and other expenses were higher by $1 million primarily due to increased variable expenses from higher sales activity, including selling commissions and certain other variable expenses. In the 1999 first quarter, we had a benefit of $3 million ($.04 per share) in foreign currency translation gain from Brazilian currency devaluation Currency devaluation A deliberate downward adjustment in the official exchange rates established, or pegged, by a government against a specified standard, such as another currency or gold. . In the 1999 second quarter, we had a gain of $2 million ($.03 per share) from the sale of the assets of our spray (networking) spray - A Unix command that sends packets to a host and reports performance statistics. The number of packets, delay between packets and packet length can all be specified. cooled systems business. Interest expense in the 1999 second quarter was $20 million as compared to $19 million in the 1999 first quarter. The increase in interest expense resulted from higher interest rates and higher average total debt balances during the early part of the 1999 second quarter when compared to the 1999 first quarter. Net debt (total debt less cash and cash equivalents and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments) was $722 million at the end of the 1999 second quarter, down from net debt of $765 million at the end of the 1999 first quarter. Cash flow from net working capital was $38 million in the 1999 second quarter before antitrust fines and net settlement and expense payments of $17 million and restructuring payments of $9 million. This was an improvement of $67 million over the 1999 first quarter. "The improvement in working capital is a direct result of our cash flow management team's efforts to discount and reduce accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and reduce inventories. Their efforts, along with tighter management of cash, have resulted in major reductions of total debt by $93 million from $840 million at the end of the first quarter to $747 million at the end of this quarter," stated Mr. Playford. "It's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have quite remarkable," he added, "that our total debt is lower than one year ago despite having paid out $180 million for antitrust fines and net settlement and expense payments during one of the most depressed periods in the graphite and carbon industry." Income taxes in the 1999 second quarter were $8 million as compared to $6 million in the 1999 first quarter. This increase was due to the increase in net income before tax, as our effective income tax rate remained at 27 percent. Outlook We continue to see signs of recovery in the worldwide electric arc furnace An electric arc furnace (EAF) is a furnace that heats charged material by means of an electric arc. Arc furnaces range in size from small units of approximately one ton capacity (used in foundries for producing cast iron products) up to about 400 ton units used for secondary steel sector. We believe that price increases of various steel end products are being implemented and operating rates Operating rate The percentage of total production capacity of a company, industry, or country that is being used. operating rate The portion of capacity at which a business operates. of electric arc furnace steelmakers are increasing. We believe this could increase second half graphite electrode shipments to about 15 percent over a rather weak first half of the year. Mr. Playford stated, "Our graphite electrode order book for the second half is stronger than the first half of the year with the fourth quarter expected to be higher than the third quarter due to seasonal order patterns. We continue to improve the quality of earnings with higher productivity aided by lower costs and increasing volumes. While we remain conservative in our outlook for the rest of the year, we are to be optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the year 2000. The areas of caution are the continued strengthening of the U.S. dollar, softer prices in certain parts of the world and the lack of any signs of graphite electrode price improvement in the export markets." NOTE: This news release contains 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. as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These include statements about such matters as future production of steel in electric arc furnaces, future prices and sales of and demand for graphite electrodes and other products, future operational and financial performance of various businesses, strategic plans and programs, impacts of regional and global economic conditions, divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). , joint venture, operating, global integration and capital projects, legal matters and related fees and costs, consulting fees and related projects, and future costs, cost savings and reductions, margins and earnings. We have no duty to update such statements. Actual future events and circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or (including future performance, results and trends) could differ materially from those set forth in these statements due to various factors. These factors include the possibility that announced additions to capacity for producing steel in electric arc furnaces or announced reductions in graphite electrode manufacturing capacity may not occur, the possibility that increased production of steel in electric arc furnaces may not result in increased demand for or prices or sales of graphite electrodes, the occurrence of unanticipated events or circumstances relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc pending antitrust investigations or pending antitrust, shareholder derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. or securities lawsuits, the commencement of new investigations or lawsuits relating to the same subject matter of these pending investigations or lawsuits, the occurrence of unanticipated events or circumstances relating to businesses acquired within the past three years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time occurrence of unanticipated events or circumstances relating to strategic plans or divestiture, joint venture, operating, capital, global integration or other projects, changes in interest or currency exchange rates, changes in global or regional economic and competitive conditions, technological developments, and other risks and uncertainties, including those detailed in our filings with the Securities and Exchange Commission. The statements contained in this news release shall not be deemed to constitute an admission as to any liability in connection with any claim or lawsuit lawsuit: see procedure; tort. . For news releases via fax dial 1-800-239-5323. For additional information on UCAR call 1-615-760-7700. (Four tables follow) -0-
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
December 31, June 30,
ASSETS 1998 1999
---- ----
Current assets: (Unaudited)
Cash and cash equivalents $ 58 $ 18
Short-term investments 11 7
Notes and accounts receivable 198 190
Inventories:
Raw materials and supplies 58 54
Work in process 150 137
Finished goods 56 52
------- -------
264 243
Prepaid expenses 47 28
------- -------
Total current assets 578 486
------- -------
Property, plant and equipment 1,220 1,144
Less: accumulated depreciation 752 716
------- -------
Net fixed assets 468 428
Other assets 91 92
------- -------
Total assets $ 1,137 $ 1,006
======= =======
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Accounts payable $ 67 $ 78
Short-term debt 19 3
Payments due within one year on
long-term debt 63 70
Accrued income and other taxes 28 30
Other accrued liabilities 198 144
------- -------
Total current liabilities 375 325
------- -------
Long-term debt 722 674
Other long-term obligations 266 241
Deferred income taxes 48 47
Minority stockholders' equity in
consolidated entities 13 12
Stockholders' (deficit):
Preferred stock -- --
Common stock -- --
Additional paid-in capital 521 523
Accumulated other comprehensive
income (loss) (157) (201)
Retained (deficit) (566) (528)
Less: cost of common stock
held in treasury (85) (87)
------- -------
Total stockholders' (deficit) (287) (293)
------- -------
Total liabilities and
stockholders' (deficit) $ 1,137 $ 1,006
======= =======
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per share data)
(Unaudited)
Three Months Ended
June 30, March 31, June 30,
1998 1999 1999
-------- -------- --------
Net sales $ 248 $ 202 $ 211
Cost of sales 152 139 138
-------- -------- --------
Gross profit 96 63 73
Research and development 2 2 2
Selling, administrative
and other expenses 26 22 23
Other (income) expense, net -- (3) (3)
-------- -------- --------
Operating profit 68 42 51
Interest expense 19 19 20
-------- -------- --------
Income before provision
for income taxes 49 23 31
Provision for income taxes 17 6 8
-------- -------- --------
Income of consolidated
entities 32 17 23
Less: minority stockholders'
share of income 1 1 1
-------- -------- --------
Net income $ 31 $ 16 $ 22
======== ======== ========
Basic earnings per common share:
Net income per share $ 0.70 $ 0.35 $ 0.48
======== ======== ========
Weighted average common shares
outstanding (in thousands) 44,961 45,192 45,083
======== ======== ========
Diluted earnings per common share:
Net income per share $ 0.67 $ 0.34 $ 0.47
======== ======== ========
Weighted average common
and common equivalent
shares outstanding
(in thousands) $ 46,708 46,501 46,507
======== ======== ========
UCAR INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(Unaudited)
Three Months Six Months
-------------- --------------
Ended June 30, Ended June 30,
-------------- --------------
1998 1999 1998 1999
---- ---- ---- ----
Cash flow from operating activities:
Net Income: $ 31 $ 22 $ 66 $ 38
Non-cash charges to net income:
Depreciation and amortization 12 11 26 23
Deferred income taxes -- 2 1 6
Other non-cash charges (4) 9 3 14
Working capital(a) (30) 12 (95) (40)
Long-term assets and liabilities 4 (4) 7 (2)
----- ----- ----- -----
Net cash provided by
operating activities 13 52 8 39
----- ----- ----- -----
Cash flow from investing activities:
Capital expenditures (16) (15) (29) (27)
Purchases of short-term
investments (8) (4) (27) (17)
Maturity of short-term
investments 8 5 12 21
Sale of assets 2 3 2 3
----- ----- ----- -----
Net cash (used in)
investing activities (14) (11) (42) (20)
----- ----- ----- -----
Cash flow from financing activities:
Short-term debt (reductions), net (36) (11) (31) (16)
Long-term debt borrowings 164 17 209 59
Long-term debt reductions (109) (98) (133) (98)
Sale of common stock 1 -- 1 --
Dividends paid to minority
interest -- (1) -- (1)
----- ----- ----- -----
Net cash provided by
(used in) financing
activities 20 (93) 46 (56)
----- ----- ----- -----
19 (52) 12 (37)
Net increase (decrease) in cash
and cash equivalents
Effect of exchange rate changes on
cash and cash equivalents -- 2 -- (3)
Cash and cash equivalents at
beginning of period 51 68 58 58
----- ----- ----- -----
Cash and cash equivalents at
end of period $ 70 $ 18 $ 70 $ 18
===== ===== ===== =====
Supplemental disclosures of cash
flow information:
Net cash paid during the
periods for:
Interest expense $ 13 $ 17 $ 33 $ 40
Income taxes 19 10 32 18
(a)Net change in working capital
due to the following components:
(Increase) decrease in
current assets:
Notes and accounts receivable $ (8) $ 23 $ (2) $ 4
Inventories (22) 10 (47) 6
Prepaid expenses (1) 2 -- --
Increase (decrease) in
accounts payable and accruals 14 3 (33) (1)
Antitrust investigations and
related lawsuits and
claims, net (13) (17) (13) (35)
Restructuring payments -- (9) -- (14)
----- ----- ----- -----
Working Capital $ (30) $ 12 $ (95) $ (40)
===== ===== ===== =====
Quarterly Segment Data Summary (dollars in millions)
Graphite Graphite and
Quarter Ended Total Electrodes Carbon Products
-------------- ----- ---------- ---------------
June 30, 1998
--------------
Graphite electrode volume 54.9
(1000's metric tons)
Net sales $248 $173 $75
Cost of sales $152 $107 $45
Gross profit $96 $66 $30
Gross profit margin 38.7 percent 38.2 percent 40.0 percent
Graphite Graphite and
Quarter Ended Total Electrodes Carbon Products
-------------- ----- ---------- ---------------
March 31, 1999
--------------
Graphite electrode volume 46.6
(1000's metric tons)
Net sales $202 $132 $70
Cost of sales $139 $88 $51
Gross profit $63 $44 $19
Gross profit margin 31.2 percent 33.3 percent 27.1 percent
Graphite Graphite and
Quarter Ended Total Electrodes Carbon Products
------------- ----- ---------- ---------------
June 30, 1999
-------------
Graphite electrode volume 51.3
(1000's metric tons)
Net Sales $211 $141 $70
Cost of Sales $138 $87 $51
Gross Profit $73 $54 $19
Gross Profit Margin 34.6 percent 38.3 percent 27.1 Percent
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