Document B5VvVOXzpGnkN7Xnjeb0qmZ9j

THE ROCKBESTOS COMPANY INTERNAL MEMORANDUM ]l ^flAlNTffFS ^IXHIBIT "3- ^38' . c v.v .-jr' v --;-1 TO: G. I*. Evans FROM: D. R, Bafundo DATE: March 11, 1987 SUBJECT: FINANCIAL COMMENTARY--FEBRUARY, 1987 cc: RC Gluth A Michael RA Pritzker GT Shannon JW Wellnausen Net Income was $9,000 for February. Forecast ($000's) Actual ($000*s) Net Sales 3,740 3,586 Cost of Sales at Standard Manufacturing Variance Warehouse Expense Other Total Cost of Goods Sold 2,961 60 58 95 3717? 2,848 (45) 55 67 2,925 Gross Profit Other Revenues 566 661 58 Net Operating Expenses 567 653 Pretax Income . 4 16 Provision for Taxes (2) (7) Net Income .2 9 Shipments were below forecast by $154,000 ($62,000 Rockbestos products $92,000 Cerro Armored products) which was offset uy favorable manufacturing variance of $45,000. Although total Rockbestos products shipments were $62,000 below forecast, stock shipments were $233,000 below forecast. Orders for Cerro Armored products were being refused in February because prices liad fallen below the acceptable range. The forecast for March is: SALES Rockbestos Cerro Armored TOTAL Net Sales ($000*s) 2,816 1,158 3,974 Manufacturing Variance x0 Net Income (Loss) (35) RBB 03047 SC-ELEC-09240 G. L. Evans Page 2 March 11, 1987 The volume for Rockbestos continues to reflect our below average booking from prior months. Although bookings in February improved to nearly 3 million, this is not sufficient enough to offset the prior months. The Net Loss of $35,000 for torch is the result of additional reserves required for asbestos lawsuits received in the first week of torch, expected relocation expenses, and a warranty return from G.P.U. The total iirpact will be $123,000 of additional expenses. Our forecast net income would have been $44,000 without this additional expense. INVENTORIES Inventories increased by $1,958,000 in February. Our inventory turnover decreased from 3.9 to 3.2. A comparison of January and February shows: January ($000's) February Differen Raw Material 3,179 3,412 233 W.I.P. Finished Goods Rockbestos Cerro Armored TOTAL 2,956 4,301 2,859 7,160 4,059 4,656 3,126 7,782 1,103 355 267 622 Obsolesence & LIFO Reserve (4,511) (4,511) - TOTAL 8,784 10,742 i,958 The Raw Material increase was primarily due to copper purchases. These purchases are based on contractual requirements which will be adjusted in March and April. Finished Goods increased by $622,000 ($355,000 Rockoestos, $267,000 Cerro Armored). The Rockbestos increase is related to the build up of tne P.N.R. product line. This is a market Rockbestos served in the past and we are now going to re-enter. In addition, a build up of stock iias been in process for the last two months. We have been losing a substantial amount of stock orders due to our depleted inventories. Our normal montlily sales volume for stock products should be in excess of $1,000,000. For the last four months our sales have been approximately $800,000. During the first week of March stock sales were $330,000 primarily because of availability. The dramatic increase in W.I.P. is related to a large Railroad order (approx. $500,000). currently in process and production requirements for April (both stock and specials). RBB 03048 G. L. Evans Page 3 March 11, 1987 ACCOUNTS RECEIVABLE Accounts Receivable outstanding days increased in February froia 58 days to 65 days. One order (PECO) for $2,000,000 is responsible for the increase. At the end of February PECO had $1,158,000 past due. The problem, a normal one when dealing with utilities, was getting the paperwork started. During the first week of March $440,000 has been collected. The major portion of trie outstanding balance is expected to be collected by the end of March. GOALS FOR MARCH 1. Finalize Cerro Armored's profitability. 2. Finalize the department's organization and begin implementation. DRB/ddm RBB 03049 AT3.BB64v ` 09-Mar-87 12:29 PH SALES fiockbestos Gross Sales Less fieturns A Allowances Bochbestos Set Sales Cerro Anored Gross Sales Less Beturns 1 Allowances Cerro Anored Bet Sales TOTAL BET SALES COST OF GOODS SOLD Cost of Sales at Standard fiockbestos Cerro Anored Products Total Cost of Sales at Standard Manufacturing Expense Variance Material Variance Physical inventory Adjustment Earehouse Expense fiockbestos Varebouse Erp. Cerro Anored Freight Intercoapany Sales Bet Total Cost of Goods Sold GBOSS PROFIT Other Revenues OPERATING REVENUE OPERATING I3PENSBS Field Selling Rockbestos Other Selling fiockbestos Selling Cerro Anored Products General A Adiin. fiockbestos General A Adnin. Cem Anored Engineering, SAD Hone Office Total Operating Expenses Incoie Before Extraordinary Iteis Extraordinary Iteas .retax Incoie Provision for Taxes NET INCOMB THE EOCEBESTOS CO. FORECAST MARCH 1987 {$000*8} BE* HAVEN 2 E. GEAMfi! 2 TOTAL 2 2,010 101.32 26 1.31 1,984 100.01 1,200 103.62 42 3.62 1,158 100.02 3,142 100.02 843 101.32 2,853 101.32 11 1.32 37 1.32 832 100.02 2,818 100.02 0 0.02 1,200 103.62 0 0.02 42 3.62 0 0.02 1,158 100.02 832 100.02 3,974 100.02 1,550 78.12 558 67.12 2,108 74.92 1,042 90.02 0 0.02 1,042 90.02 2,592 82.52 558 67.12 3,150 79.32 0 0.02 0 0.02 0 0.02 0 0.02 0 0.02 0 0.02 0 0.02 0 0.02 0 0.02 24 0.82 16 1.92 40 1.02 20 0.62 0 0.02 20 0.52 75 2.42 20 2.42 95 2.42 0 0.02 0 0.02 0 0.02 2,711 86.32 594 71.42 3,305 83.22 430 13.72 238 28.62 669 16.82 0 0.02 0 0.02 0 0.02 430 13.72 238 28.62 669 16.82 57 1.82 84 2.72 65 2.12 185 5.92 29 0.92 45 1.42 7 0.22 472 15.02 (42} -1.32 0 0.02 (42) -1.32 15 0.52 (27) -0.82 38 4.62 56 6.72 0 0.02 123 14.82 0 0.02 30 3.62 5 0,62 252 30.32 (14) -1.72 0 0.02 (H) -1.72 5 0.62 (9) -1.12 95 2.42 140 3.52 65 1.62 308 7,82 29 0.72 75 1.92 12 0.32 724 18.22 (55) -1.42 0 0.02 (55) -1.42 20 0.52 (35) -0.92 RBB 03050 AA3.AQ43 ll-Har-87 09:11 AH Bookings Order Forecast Bockbestos Cerro Arsored Total Bookings Acknowledged Orders Bockbestos Net Sales Gross Margin Percent S Standard Cerro Ariored Net Sales Gross Kargin Percent 1 Standard Total Net Sales Gross Kargin Percent i Standard Manufacturing Expense Variance Gross Profit Net Operating Expenses Extraordinary Iteas Incoie Before Taxes TEE B0CEBEST03 FORECAST KABCH UNO'S) January February March Actual Actual Forecast 1st Qtr 2d Qtr 3d'Qtr 4th Qtr Total 2,318 1,001 3,31B 2,949 1,175 4,124 3,000 1,200 4,200 8,267 3,376 11,643 10,145 4,027 14,172 8,725 3,452 12,177 10,345 3,836 14,181 37,482 14,691 52,173 2,714 2,511 22.61 882 7.61 3,333 18.71 (120) 575 568 0 13 2,929 2,531 25.41 1,056 9.01 3,587 20.61 (45) 662 654 0 16 2,816 24.21 7,858 24.41 9,600 25.51 9,023 25.61 9,914 36,395 25.51 25.31 1,158 10.01 3,096 9.01 3,959 11.01 3,393 11.01 3,770 14,218 11.01 10.61 3,974 10,954 13,559 12,416 13,684 50,613 20.71 20.01 21.31 21.61 21.51 21.21 0 (165) 80 70 70 55 669 1,906 2,326 2,204 2,418 8,854 724 1,946 2,013 1,726 1,915 7,600 000000 (55) (26) 313 478 503 1,268 RBB 03051