A number of the large auto glass chains are facing financial difficulties as Standard
and Poors (S&P) has placed Diamond Triumph Auto Glass Inc. of Kingston, PA, on
CreditWatch with negative implications. In addition, S&P has given its single B-plus
corporate credit and bank loan ratings and single B-minus subordinated debt rating for
Safelite Glass Corporation of Columbus, OH, on CreditWatch with negative implications.
S&P says the rating was a result of Diamonds weaker-than-expected operating performance, which led to a failure to achieve expected debt reduction measures. S&Ps attributes part of Diamonds operating results to competitive pricing in the auto glass industry.
For the first nine months of the year, the company reported a 21 percent drop in earnings before interest, taxes, depreciation and amortization (EBITDA) compared with the same period in 1998. S&P is particularly concerned about the drop in EBITDA due to the companys leveraged capital structure from an aggressive growth structure and recapitaliztion in 1998. The companys debt to EBITDA is currently more than five times and its cash interest coverage is estimated to be about 1.6 times.
Weak industry conditions have caused our 1999 results to be lower than anticipated, said Ken Levine, co-chief executive officer of Diamond Triumph. This resulted in S&Ps decision to put their ratings on CreditWatch pending a formal review with senior management sometime in early 2000. Diamond Triumph will continue its expansion program and remains one of the most profitable enterprises in the glass replacement industry.
S&Ps Safelite announcement follows Allstate Insurance Companys decision not to renew its Best Effort Agreement with the company for automotive, repair, replacement and administrative services. According to S&P, the loss of Allstates revenues, which totaled about $120 million or 14 percent of Safelites total sales during the fiscal year that ended in March 1999, could have an adverse impact on the companys financial profile (see November 1999 USGlass, page 16).
Both Harmon Auto Glass of Minneapolis, and Harding Glass of Overland Park, KS, are also having difficulty. Apogee said its recent third quarter losses were mainly due to difficult industry conditions in auto glass (see page 23). Additionally, Harding recently announced plans to close 17 of its locations in various areas of the country due to a lack of profitability, according to chief executive officer Bud Cornelius.
In what the company says is an effort to focus on its core business segments,
International Aluminum Corporation of Monterey Park, CA, announced the sale of the
operating assets of its two glass fabrication subsidiaries, International California Glass
Corporation and International Carolina Glass Corporation. The subsidiaries were sold to
the Oldcastle Glass Group (OGC) for an undisclosed amount. According to Olcastle, the
newly acquired businesses, with operations in Fontana, CA, and Rock Hill, SC, will be
known as Oldcastle Specialty Glass.
These acquisitions add new capabilities and market segments to OGC, said Ted Hathaway, chief operating officer. We will invest more than $1.5 million in these new companies to install state-of-the-art glass processing equipment and information systems technology.
OGC acquired Freestate Glass, through a cash transaction with the owner. According to Hathaway, Freestate, an architectural glass fabricator, will continue to operate as Freestate Glass Industries. The company is located in Warrenton, VA.
And on the window manufacturing end, it looks as if one of the large window manufacturing giants, Pella Corporation, based in Pella, IA, will expand its size and strength even further. The company recently announced its acquisition of Pease Industries, a manufacturer of entrance doors.
Pilkington LOF of Toledo, OH, announced recently that its original equipment
manufacturing operation is being shut down. The Lathrop, CA-based operation employs 175
employees and produces automotive glass components. The company is eliminating 150
positions due to the closure.
Existing production will be transferred to other Pilkington North American operations, according to the company. The float glass manufacturing operation, also located in Lathrop, will continue.
Did you ever admire a buildings architecture and think, Thats one of
the most memorable buildings Ive ever seen? Chances are, your list wasnt
published. But, Michael J. Crosbie, an associate with the architectural research and
consulting firm of Steven Winter Associates in Norwalk, CT, has compiled his list of the
ten most interesting, influential and memorable buildings constructed this century. His
list was published in the November issue of The Construction Specifier.
Building Location Architect Date
Unity Temple Oak Park, IL Frank Lloyd Wright 1908
Chrysler Building New York, NY William Van Alen 1930
Fallingwater Bear Run, PA Frank Lloyd Wright 1936
Gropius House Lincoln, MA Walter Gropius 1938
Bavinger House Norman, OK Bruce Goff 1950
TWA Terminal New York, NY Eero Saarinen 1962
U.S. Air Force Academy Chapel Colorado Springs, CO Skidmore, Owings & Merrill 1962
Salk Institute La Jolla, CA Louis Kahn 1966
Thorncrown Chapel Eureka Springs, AR E. Fay Jones 1980
Vietnam Veterans Memorial Washington, DC Maya Lin 1982
At its September 12-17 meeting in St. Louis, the Building Officials and Code
Administrators International (BOCA), International Conference of Building Officials (ICBO)
and Southern Building Code Congress International (SBCCI) met to develop a single group of
comprehensive and coordinated model construction codes. The three organizations, which
comprise the International Code Council (ICC), will publish the 2000 edition of the
International Codes early next year.
This is a great accomplishment and shows the commitment of the three model code groups to work together, speaking with one voice to improve public safety in the built environment through the production of a single comprehensive and coordinated family of model codes, said ICC president Jon Traw.
Many existing international residential codes have been updated. One of these, code RB223-99, adds stair enclosures to the list of hazardous areas where humans can impact glass. For determining allowable loads on glass, RB225-99 has removed glass load charts and tables.
Russ Huffer, chief executive officer of Apogee Enterprises Inc., described the
companys current financial status recently. Were in a slump, he
said in a letter to employees and shareholders, which was recently published in
Apogees fall newsletter.
According to Huffer, with the exception of Harmon Inc., Curvlite and Tru Vue, none of Apogees companies are performing as expected this year. All of our other companies are not measuring up to the expectations set at the beginning of the year, he said.
The cumulative effect is a serious slump in delivering value to various stakeholders.
Despite the downfalls, Huffer said the company is optimistic that each business is currently in a position to improve. Opportunities are plentiful for us to improve our results, he said. Each of our businesses has significant capacity available to do more business, and each has identified customers, products, and services that will begin to fill those capacities. It is clear that the opportunities to satisfy all of our stakeholders are within our control and capabilities. This is good newssuccess is ours to achieve.
Following the newsletters release, the company issued a press release on November 23 concerning Apogees third quarter and FY 2000 outlook. According to the company, it expects a third-quarter loss from continuing operations in the range of $0.15 to $0.20 per dilluted share compared with earnings from continuing operations of $0.20 per share in last years third quarter. For the fourth quarter, Apogee says it expects a slight loss and fiscal 2000 dilluted earnings from continuing operations ranging between $0.10 and $0.16 per share.
This is compared to diluted earnings of $0.71 per share in fiscal 1999. Huffer said Apogees reduced third and fourth quarter earnings expectations were due in part to difficult industry conditions in the auto glass market. Huffer said the reduced earning expectations are particularly disappointing given the strong demand in the Glass Technologies segment. Demand is strong in Glass Technologies, but our execution at Viracon and Viratec has not met our expectations, he said. Therefore we are sharpening the focus of our senior management team. According to Huffer, Larry Stordahl, executive vice president, will concentrate on Viracon and Viratec, while Bob Barbieri, vice president, finance and chief financial officer, will take responsibility for Wausau and TruVue. At both Glass Technologies and Glass Services, we have brought in new segment CFOs to more closely monitor progress and improve financial performance. We are very determined to produce bottom-line results that reflect our top-line strength, said Huffer.
Auburn Hill, MI-based Guardian Industries has pledged $20 million to the Weizmann
Institute of Science in Rehovot, Israel, to create the Davidson Institute for Science
Education. The new institute is aimed at improving the level of science teaching through
curricula development, innovative educational methods and new teaching materials. This
gift is the largest private donation the Weizmann Institute has ever received.
The new building will be named for William Davidson, Guardians president and chief executive officer, who has a long history with the institute. He has made annual donations for the past 14 years and supports the Weizmann Institutes programs promoting education, developing market economies throughout the world, improving Michigans quality of life and promoting Jewish leadership.
Companies in the glass industry united together to assist UBM Inc. of Chicago in the
effort to rebuild Hales Franciscan High School, Chicagos sole Catholic high school
for African-American boys, which had deteriorated in the past 20 years.
UBM helped coordinate the rebuild effort and the companys chairman, Paul King, served as chair of the schools building committee. With his leadership, King was able to convince area contractors to donate almost $700,000 in materials, services and money necessary to fix the school.
Many industry companies decided to lend a hand and donate labor and materials. These include: Carolina Mirror, North Wilkesboro, NC; Glass America, Chicago; Klein-Dickert, Madison, WI; MTH Industries, Chicago; Salem Distributing, Clemmons, NC; and U.S. Aluminum, Waxahachie, TX. The donation effort was organized by Lyle Hill, president of MTH Industries.
The Office of Industrial Technologies (OIT) Glass Team has announced that it signed a
cooperative agreement with the Glass Manufactur-ers Industry Council (GMIC). As part of
the agreement, GMIC will help the OIT Team build relationships with the industry that are
in line with its strategic mission and goals.
Michael Greenman, GMICs acting executive director, said, The agreement formalizes our relationship and helps assure this will be a long-term partnership that will benefit all sectors of the American glass industry.
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