Denali news & news releases                                                                                      

  Contacts:

R. Kevin Andrews
Chief Financial Officer
713-627-0933

Ken Dennard / kdennard@easterly.com
Lisa Elliott / lisae@easterly.com

Easterly Investor Relations
713-529-6600

 

	FOR IMMEDIATE RELEASE 00-08
	DENALI REPORTS THIRD QUARTER RESULTS MAY 16, 2000 - HOUSTON, TEXAS - Denali Incorporated (NASDAQ:DNLI) today announced results for the three months and nine months ended April 1, 2000. Revenues for the fiscal third quarter of 2000 increased 27 percent to $46,142,000, up from $36,328,000 during the third quarter of fiscal 1999. Net loss for the third quarter was $1,650,000, or $0.30 loss per share, excluding the impact of a restructuring charge in fiscal year 2000, compared to net income of $476,000, or $0.10 earnings per share, for the third quarter of 1999, excluding an extraordinary item. U.S. operations were below plan primarily due to less demand for storage tanks in the petroleum equipment industry. European operations were below plan primarily due to slowness in capital spending by European chemical companies as well as weakness in the Euro currency. Revenues for the first nine months of fiscal 2000 increased 30.7 percent to $144,063,000, compared with revenues of $110,216,000 in the first nine months of fiscal 1999. Net loss for the first nine months was $1,493,000, or $0.27 loss per share, excluding the impact of a restructuring charge and warrant valuation adjustments in fiscal year 2000, compared to net income of $3,100,000, or $0.64 earnings per share, for the first nine months of 1999, excluding a non-recurring compensation charge and an extraordinary item. The Company recorded restructuring and non-recurring charges of $2,681,000 in the first nine months of fiscal year 2000, of which $190,000 was recorded in the third quarter.  "We are pleased to be proceeding forward under our letter of intent with William Blair Mezzanine Capital Fund III, L.P. ("Blair") in which Blair proposes to invest $28 million in Denali," stated Richard W. Volk, Denali's Chairman and CEO. "We anticipate signing a definitive agreement before the end of May, assuming satisfactory completion of various conditions, including finalization of Blair's due diligence." Denali Incorporated, with pro forma trailing twelve month revenues of approximately $200 million, is a global provider of fluid handling products specializing in corrosion-resistant applications in process industries such as: chemical, power, pulp and paper, petroleum equipment, and water/wastewater. The Company manufactures engineered fiberglass-composite tanks, vessels, and piping systems, as well as steel, aboveground storage tanks. The Company also distributes a wide range of engineered products and systems. Headquartered in Houston, Texas, Denali Incorporated has over 20 manufacturing facilities in the United States, the Netherlands, Germany, the United Kingdom, Poland, France, and Chile and joint ventures in Venezuela and Thailand. For more information on the Company, please visit its Website at www.denaliincorporated.com. This press release does not constitute an offer of any securities for sale. The Company may elect not to register the equity securities that it is required to sell by the terms of its bank agreement amendment. The Company will not offer or sell any such securities in the United States absent registration or an applicable exemption from registration under applicable securities laws. This news release contains certain forward-looking statements as such term is defined in the Private Securities Litigation Reform Act of 1995 and information relating to the company and its subsidiaries that are based on the beliefs of the company's management as well as assumptions made by and information currently available to the company management. When used in this report, the words, "anticipate", "believe", "estimate", "expect", and "intend" and words or phrases of similar import, as they relate to the company or its subsidiaries or company management, are intended to identify forward-looking statements. Such statements reflect the current risks, uncertainties and assumptions related to certain factors including, without limitations, competitive factors, general economic conditions, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, seasonality, distribution networks, product introductions and acceptance, technological change, changes in industry practices, onetime events and other factors described herein. Based upon changing conditions, should any one or more of these risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. - Table to Follow - DENALI INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months ended Nine months ended   April 1, 2000 March 27, 1999 April 1, 2000 March 27, 1999   (In thousands, except per share amounts) Net revenues $46,142 $36,328 $144,063 $110,216 Cost of revenues 37,161 27,667 110,702 82,649 Gross profit 8,981 8,661 33,361 27,567 Selling, general and administrative expenses 8,962 7,065 28,882 20,571 Restructuring and non-recurring charges 190 -       2,681 -       Non-recurring compensation expense       -              -             -             682 Operating income (loss) (171) 1,596 1,798 6,314 - Interest expense 2,426 925 6,646 2,210 Interest income -       (23) (170) (35) Other (income) expense, net 96 (66) (35) (173) Put warrant valuation adjustment       -             -       (1,198)       -       Income (loss) before income taxes and minority interest (2,693) 760 (3,445) 4,312 Income tax (benefit) expense     (983)     284   (1,701)    1,635 Net income (loss) before minority interest and extraordinary item (1,710) 476 (1,744) 2,677 Extraordinary loss on early extinguishment of debt, net -        (281) -        (281) Minority interest          61       -              253       -       Net income (loss)  $(1,771) ======        $195 ======  $(1,997) ======       $2,396 ====== Net income (loss) per common share - basic and diluted: Income (loss) before extraordinary item $(0.32) $0.10 $(0.36) $0.55 Extraordinary item       -           (0.06)       -           (0.06) Net income (loss) per common share   $(0.32) ======      $0.04 ======    $(0.36) ======      $0.49 ====== Average shares outstanding: basic and diluted      5,559 ======      4,918 ======      5,504 ======      4,869 ====== ###

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