Margate Reports First-Quarter Results

Company's sales, profits affected by auto-related slowdown in early 2001



Apr 24, 2001, 01:00 ET from Margate Industries, Inc.

    YALE, Mich., April 24 /PRNewswire Interactive News Release/ -- Feeling the
 effects of the automotive industry slowdown, Margate Industries, Inc.
 (Nasdaq:   CGUL) today announced lower sales and earnings for its first quarter
 ended March 31, 2001.  The Company also reiterated an earlier warning that it
 expects to report lower results compared to last year's second quarter.
     The Yale, Mich.-based provider of specialty services to the foundry
 industry reported net income of $38,729, or $0.02 per share, on net sales of
 $2.1 million in the first quarter of 2001, compared with net income of
 $218,223, or $0.14 per share, on net sales of $2.4 million in the first
 quarter of 2000.  Lower sales, combined with ongoing fixed cost levels,
 contributed to the decrease in profitability.  The Company said higher
 interest and other income helped partially offset lower sales and comparable
 fixed costs compared with prior-year.
     Margate also reported that it received payment in full on past due
 accounts and notes receivables of approximately $900,000 that had been in
 default.  The Company received the payment from New Haven Foundry in mid-April
 2001, including interest and related costs.
     In reporting first-quarter results, Margate attributed its decrease in
 sales to the slowdown in the North American automotive industry.  Margate,
 which cleans and finishes automotive and other foundry castings, said it
 generated lower first-quarter service revenues from its largest customer, auto
 supplier New Haven Foundry.  Gross profit decreased to $198,686, reflecting
 lower sales and absorption of fixed overhead costs.  Increased use of
 automated equipment as well as improved productivity on the part of Margate's
 employees helped the Company reduce costs in the first quarter.  Continued
 efforts to manage operating expenses helped Margate reduce selling, general
 and administrative expenses by 2 percent versus the year ago quarter.
     "Like virtually all other automotive-related suppliers, the slowing
 economy and drop in vehicle sales has reduced demand for our services," said
 William H. Hopton, president and chief executive officer of Margate
 Industries.  "While we will continue to feel the impact of this downturn,
 Margate is well-positioned to weather these difficult market conditions.  We
 have a solid balance sheet, with virtually no debt and a strong cash position.
 Additionally, we are aggressively bidding on new cleaning work with other
 foundries, though current market conditions have made winning new business
 difficult."
     Margate said it expects to post a pre-tax loss of between $100,000 and
 $200,000 on lower service revenues from its automotive related customers
 during the next quarter.  The Company said it has increased its sales efforts
 and has sharpened its focus on managing costs to help offset lower revenue
 levels that are expected in the quarter ending June 30, 2001.
     Margate also reported that it continues to move forward with its
 previously announced strategy to merge with c-Spectra, Inc., a New York City-
 based provider of broadband wireless telecommunications and Internet access
 systems.  c-Spectra is developing a technologically advanced global wireless
 network capable of providing "last mile" Internet access in underdeveloped
 regions of the globe where wire-based telecommunications infrastructure is
 lacking.  Initial deployment of its network has begun in Buenos Aires,
 Argentina and, after the merger is completed, c-Spectra plans to expand its
 network in major South American markets.
     Margate Industries employs approximately 200 at two wholly owned
 subsidiaries, Yale Industries and Fort Atkinson Industries, which provide
 cleaning, grinding, chipping and finishing of iron castings.
     Safe Harbor Statement under the Private Securities Litigation Reform Act
 of 1995: The statements contained in this news release include certain
 predictions and projections that may be considered forward-looking statements
 under securities law.  These statements involve a number of important risks
 and uncertainties that could cause actual results to differ materially
 including, but not limited to, the performance of the automotive industry,
 certain customers and affiliated companies, as well as other economic,
 competitive and technological factors involving the Company's operations,
 markets, services, products and prices.
 
                   MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
                         CONSOLIDATED INCOME STATEMENTS
                                  (unaudited)
 
                                                       Three Months Ended
                                                            March 31,
                                                     2001              2000
 
 
     NET SALES                                   $2,111,090        $2,467,217
 
     COST OF SALES                                1,912,404         1,972,200
 
     GROSS PROFIT                                   198,686           495,017
 
     SELLING, GENERAL AND
          ADMINISTRATIVE EXPENSES                   241,261           245,195
 
 
     OPERATING INCOME (LOSS)                        (42,575)          249,822
 
     OTHER INCOME (EXPENSE):
       Dividend and interest income                  24,465            37,977
       Interest expense                              (1,491)           (3,399)
       Other Income                                  79,330            48,823
                                                    102,304            83,401
     INCOME FROM CONTINUING OPERATIONS
      BEFORE
       PROVISION FOR INCOME TAXES                    59,729           333,223
 
     PROVISION FOR FEDERAL INCOME TAXES              21,000           115,000
 
     NET INCOME                                     $38,729          $218,223
                                                  ==========       ===========
 
     BASIC EARNINGS PER COMMON SHARE                 $0.021            $0.137
 
     WEIGHTED AVERAGE SHARES
          OUTSTANDING                             1,879,542         1,595,445
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X56035810
 
 

SOURCE Margate Industries, Inc.
    YALE, Mich., April 24 /PRNewswire Interactive News Release/ -- Feeling the
 effects of the automotive industry slowdown, Margate Industries, Inc.
 (Nasdaq:   CGUL) today announced lower sales and earnings for its first quarter
 ended March 31, 2001.  The Company also reiterated an earlier warning that it
 expects to report lower results compared to last year's second quarter.
     The Yale, Mich.-based provider of specialty services to the foundry
 industry reported net income of $38,729, or $0.02 per share, on net sales of
 $2.1 million in the first quarter of 2001, compared with net income of
 $218,223, or $0.14 per share, on net sales of $2.4 million in the first
 quarter of 2000.  Lower sales, combined with ongoing fixed cost levels,
 contributed to the decrease in profitability.  The Company said higher
 interest and other income helped partially offset lower sales and comparable
 fixed costs compared with prior-year.
     Margate also reported that it received payment in full on past due
 accounts and notes receivables of approximately $900,000 that had been in
 default.  The Company received the payment from New Haven Foundry in mid-April
 2001, including interest and related costs.
     In reporting first-quarter results, Margate attributed its decrease in
 sales to the slowdown in the North American automotive industry.  Margate,
 which cleans and finishes automotive and other foundry castings, said it
 generated lower first-quarter service revenues from its largest customer, auto
 supplier New Haven Foundry.  Gross profit decreased to $198,686, reflecting
 lower sales and absorption of fixed overhead costs.  Increased use of
 automated equipment as well as improved productivity on the part of Margate's
 employees helped the Company reduce costs in the first quarter.  Continued
 efforts to manage operating expenses helped Margate reduce selling, general
 and administrative expenses by 2 percent versus the year ago quarter.
     "Like virtually all other automotive-related suppliers, the slowing
 economy and drop in vehicle sales has reduced demand for our services," said
 William H. Hopton, president and chief executive officer of Margate
 Industries.  "While we will continue to feel the impact of this downturn,
 Margate is well-positioned to weather these difficult market conditions.  We
 have a solid balance sheet, with virtually no debt and a strong cash position.
 Additionally, we are aggressively bidding on new cleaning work with other
 foundries, though current market conditions have made winning new business
 difficult."
     Margate said it expects to post a pre-tax loss of between $100,000 and
 $200,000 on lower service revenues from its automotive related customers
 during the next quarter.  The Company said it has increased its sales efforts
 and has sharpened its focus on managing costs to help offset lower revenue
 levels that are expected in the quarter ending June 30, 2001.
     Margate also reported that it continues to move forward with its
 previously announced strategy to merge with c-Spectra, Inc., a New York City-
 based provider of broadband wireless telecommunications and Internet access
 systems.  c-Spectra is developing a technologically advanced global wireless
 network capable of providing "last mile" Internet access in underdeveloped
 regions of the globe where wire-based telecommunications infrastructure is
 lacking.  Initial deployment of its network has begun in Buenos Aires,
 Argentina and, after the merger is completed, c-Spectra plans to expand its
 network in major South American markets.
     Margate Industries employs approximately 200 at two wholly owned
 subsidiaries, Yale Industries and Fort Atkinson Industries, which provide
 cleaning, grinding, chipping and finishing of iron castings.
     Safe Harbor Statement under the Private Securities Litigation Reform Act
 of 1995: The statements contained in this news release include certain
 predictions and projections that may be considered forward-looking statements
 under securities law.  These statements involve a number of important risks
 and uncertainties that could cause actual results to differ materially
 including, but not limited to, the performance of the automotive industry,
 certain customers and affiliated companies, as well as other economic,
 competitive and technological factors involving the Company's operations,
 markets, services, products and prices.
 
                   MARGATE INDUSTRIES, INC. AND SUBSIDIARIES
                         CONSOLIDATED INCOME STATEMENTS
                                  (unaudited)
 
                                                       Three Months Ended
                                                            March 31,
                                                     2001              2000
 
 
     NET SALES                                   $2,111,090        $2,467,217
 
     COST OF SALES                                1,912,404         1,972,200
 
     GROSS PROFIT                                   198,686           495,017
 
     SELLING, GENERAL AND
          ADMINISTRATIVE EXPENSES                   241,261           245,195
 
 
     OPERATING INCOME (LOSS)                        (42,575)          249,822
 
     OTHER INCOME (EXPENSE):
       Dividend and interest income                  24,465            37,977
       Interest expense                              (1,491)           (3,399)
       Other Income                                  79,330            48,823
                                                    102,304            83,401
     INCOME FROM CONTINUING OPERATIONS
      BEFORE
       PROVISION FOR INCOME TAXES                    59,729           333,223
 
     PROVISION FOR FEDERAL INCOME TAXES              21,000           115,000
 
     NET INCOME                                     $38,729          $218,223
                                                  ==========       ===========
 
     BASIC EARNINGS PER COMMON SHARE                 $0.021            $0.137
 
     WEIGHTED AVERAGE SHARES
          OUTSTANDING                             1,879,542         1,595,445
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X56035810
 
 SOURCE  Margate Industries, Inc.