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KEENE REPORTS THIRD QUARTER RESULTS

 NEW YORK, Oct. 8 /PRNewswire/ -- Keene Corporation (NASDAQ: KEEN) announced third quarter results today. Investment income in the third quarter of 1993 declined 42 percent to $1,139,000 compared with investment income of $1,966,000 in the third quarter of 1992 as a result of a smaller investment portfolio coupled with lower interest rates. No capital gains were realized in 1993's third quarter while capital gains of $139,000 were realized in the third quarter of 1992. During the third quarter of 1993, the average yield on investments was 5.5 percent compared with 7.1 percent for 1992's third quarter. General and administrative expenses decreased to $998,000 in the third quarter of 1993 compared with general and administrative expenses of $1,008,000 in the comparable quarter of 1992.
 By utilizing a portion of the deferred tax asset relating to unreimbursed asbestos-related expenditures, the income tax provision for the third quarter of 1993 was $30,000. The prior year's third quarter income tax provision was $381,000. Income from continuing operations totaled $111,000, or l cent per share, in 1993's third quarter compared with $577,000, or 5 cents per share, in the prior year's third quarter.
 Because substantially all of the asbestos-related expenses are now being paid directly by Keene, no dividend was declared in the third quarter of 1993.
 For the first nine months of 1993, investment income declined 22 percent to $4,905,000 compared with investment income of $6,282,000 in 1992's first nine months. During the first nine months of 1993, the average yield on investments was 6.3 percent compared with 7.1 percent for 1992's first nine months. General and administrative expenses were $3,605,000 in the first nine months of 1993 compared with $3,215,000 in the first nine months of 1992. Income from continuing operations totaled $1,210,000, or 12 cents per share, in 1993's first nine months compared with $1,856,000, or 17 cents per share, in the prior year's first nine months.
 Keene has previously reported its plan to sell its Reinhold Industries, Inc., subsidiary, a custom manufacturer of advanced composite components and sheet molding compounds for a variety of defense, aerospace and commercial applications for fair value through a rights offering. Consequently, Reinhold has been accounted for as an operation to be sold and Reinhold's results are not included in Keene's income from continuing operations. Reinhold's actual results for the third quarter of 1993 included sales of $2,305,000 compared with $2,866,000 in 1992. Net income in 1993's third quarter was $88,000 compared with $108,000 in 1992's third quarter. For the first nine months of 1993, sales declined 7 percent to $8,533,000 from $9,146,000 in 1992. Net income increased to $562,000 from $449,000 in 1992's first nine months.
 Keene is continuing to re-evaluate the Reinhold rights offering in light of the limited fund, mandatory class action proceedings previously reported.
 Mandatory Settlement Class Action
 As reported in the second quarter, Keene filed a limited fund, mandatory settlement class action on May 13, 1993, in federal court in New York before Senior Judge Jack B. Weinstein in an effort to fairly allocate Keene's remaining assets among all competing asbestos-related claims. Such a settlement would end all asbestos-related litigation against Keene for all time and preserve a sufficient amount of assets for Keene to develop operating businesses.
 On July 1, 1993, Judge Weinstein entered a preliminary injunction stopping the prosecution of virtually all asbestos-related claims against Keene in state courts, federal courts and any forum for alternative dispute resolution. The outcome of the limited fund, mandatory settlement class action will depend upon the response of the representatives of the competing asbestos-related claims and their willingness to work with Judge Weinstein to forge a fair settlement with Keene which would maximize the amount available for sick claimants and leave Keene with the opportunity to look toward the future with sufficient assets to develop operating businesses. If a fair settlement cannot be reached, Keene may be forced to return to litigating asbestos cases one at a time in the courts.
 Asbestos Litigation
 As a result of the preliminary injunction, asbestos-related expenditures incurred in the third quarter of 1993 declined to approximately $2.4 million, substantially all for defense legal costs. These costs were paid by Keene and charged to the asbestos-related contingent liability. By comparison, in the third quarter of 1992, approximately $10.8 million in asbestos-related expenditures were incurred, of which $3.1 million were for indemnity costs and $7.7 million were for defense legal costs. Substantially all of the costs in the third quarter of 1992 were paid by Keene's insurers. During the third quarter of 1993, Keene received proceeds of approximately $15 million from the settlement of previously disputed insurance coverage which were credited to the asbestos-related contingent liability.
 For the first nine months of 1993, Keene incurred $38.3 million in asbestos-related expenditures, of which $25.8 million were for indemnity costs and $12.5 million were for defense legal costs. Substantially all of these costs were paid by Keene and charged to the asbestos-related contingent liability. In the first nine months of the prior year, $40.2 million in asbestos-related expenditures were incurred, of which $17.8 million were for indemnity costs and $22.4 million were for defense legal costs. In 1992, substantially all of these costs were paid by Keene's insurers. Indemnity costs reflect the payment of a few large verdicts in certain jurisdictions after unsuccessful appeals prior to the preliminary injunction. The substantial decline in defense costs is primarily a result of the management system Keene has developed to control legal costs and the halting of virtually all trial-related activity after the preliminary injunction was entered.
 At Sept. 30, 1993, approximately $64 million of jury verdicts were outstanding against Keene and on appeal to higher courts in approximately 200 cases. During the appeals process, Keene is required to secure these verdicts by pledging marketable securities approximately equal to the verdict amounts. Keene's capacity to continue paying asbestos-related expenses and securing future potential verdicts it may seek to appeal is limited to those assets not pledged to secure appeals. Assets available to satisfy potential future bonding requirements totaled approximately $15 million at Sept. 30, 1993.
 KEENE CORPORATION
 Statements of Income
 (In Thousands Except Per Share Data)
 Three Months Nine Months
 For the periods ended Sept. 30, 1993 1992 1993 1992
 Investment income $1,139 $1,966 $4,905 $6,282
 General and administrative
 expenses 998 1,008 3,605 3,215
 Income before taxes 141 958 1,300 3,067
 Income tax provision 30 381 90 1,211
 Income from continuing
 operations 111 577 1,210 1,856
 Income from operation to be sold,
 net of tax -- 108 -- 449
 Income before cumulative
 effect of change in
 accounting principle 111 685 1,210 2,305
 Cumulative effect of change
 in accounting principle
 (SFAS No. 109) -- -- -- 2,445
 Net income $111 $685 $1,210 $4,750
 Average common shares 10,442 10,442 10,442 10,442
 Earnings per share:
 Continuing operations $0.01 $0.05 $0.12 $0.17
 Discontinued operations -- 0.01 -- 0.05
 Change in accounting principle -- -- -- 0.23
 Net income $0.01 $0.06 $0.12 $0.45
 -0- 10/8/93
 /CONTACT: Timothy E. Coyne of Keene Corporation, 212-486-3200, ext. 227/
 (KEEN)


CO: Keene Corporation ST: New York IN: SU: ERN

GK-TW -- NY051 -- 0279 10/08/93 15:51 EDT
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Date:Oct 8, 1993
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