Hastings Manufacturing Company (Amex: HMF - news) today announced comparable sales and earnings performance and improved margins in the second quarter ended June 30, 2000.

The Hastings, Mich.-based manufacturer of piston rings and other automotive products reported net income of $228,811, or $0.31 per diluted share, on net sales of $9.6 million in the second quarter of 2000, compared with net income of $255,572, or $0.33 per diluted share, on net sales of $9.7 million in the second quarter of 1999.

Hastings said increased export sales in the second quarter helped offset decreased volume of its private brand and original equipment products and lower sales in the Canadian aftermarket. Second-quarter sales to the domestic aftermarket were comparable to the year-ago period.

"Despite lower sales figures, I am pleased with the progress we made in the second quarter of 2000," said Andrew F. Johnson, co-chief executive officer of Hastings Manufacturing. "We have been focused on adapting our sales and marketing strategy to match changes in the marketplace. Likewise, we continue to focus our manufacturing to improve efficiency and meet customer expectations for quality and delivery."

Hastings' gross margin improved to 30.8 percent in the second quarter of 2000, compared with 29.4 percent in last year's second quarter. As such, gross profit increased 3 percent to $3.0 million in the second quarter of 2000, versus the same period a year-ago, despite the lower sales level. This gain reflects improvements in operating processes and the absence of charges incurred during 1999 to fund the initial conversion to lean manufacturing.

Operating income decreased 3 percent versus the year-ago period, due to a 4.8 percent increase in operating expenses. Hastings attributed the rise in expenses to increases in performance-based personnel costs, employee training and insurance costs. Legal and professional fees also increased over the second quarter of 1999 due to the class-action lawsuit brought by the Company's retirees. The Company has denied any wrongdoing in this suit, and intends to defend it and any related class certification.

"The investments we made last year to improve processes, reduce scrap and enhance efficiency are helping us toward the transition into a 'lean manufacturing' environment," Johnson said. "Our gross profit margin has returned to our historic levels, and our focus on cost-management has helped Hastings post sharply higher profitability in the first half of 2000."

Hastings reported net income of $511,362, or $0.68 per diluted share, on net sales of $18.5 million in the first six months of 2000, compared with net income of $301,215, or $0.39 per diluted share, on net sales of $18.7 million in the first six months of 1999.

Net income improved 70 percent for the six-month period, reflecting improved gross margin and higher operating income. Gross margin improved to 31 percent in the first half of 2000, versus 28 percent in the year-ago period. Hastings said operating income grew 51 percent to $1.2 million for the first six months of 2000, primarily reflecting the increase in gross margins.

"We are encouraged that we have been able to improve margins while also improving our manufacturing processes," said Mark R.S. Johnson, co-chief executive officer. "These improvements, combined with the absence of the various production issues that negatively affected the Company's financial results in 1999, should result in improved cash flow for the remainder of 2000. Additionally, our joint venture company, Casite Intraco, LLC, has introduced new automotive additive products that are allowing us to leverage the respected Casite® brand name. We expect Casite will have a positive impact on our results in 2000."

"We need to build on the momentum we are creating. We are determined to maintain our levels of productivity and profitability through lean manufacturing principles, and will continue to focus on additional sales opportunities in the second half of 2000."

Hastings Manufacturing Company serves the automotive parts market with piston rings, mechanics' specialty tools and additives for engines, transmissions and fuel systems. The piston rings and mechanics' specialty tools, available under the "HASTINGS" brand name, are marketed primarily through independent warehouse distributors, retailers, and on a limited basis, direct to original equipment manufacturers. The additives products available under the "CASITE" brand name are marketed through The Casite Company, a joint venture that markets both directly and through independent representatives. Canadian distribution of all products is handled through a wholly owned subsidiary, Hastings, Inc., located in Barrie, Ontario. During 1999, Hastings, Inc. began to distribute and administer products for other U.S. based suppliers into the Canadian market. These products complement the current piston ring offerings as to both distribution channels and customer base.

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 laws. These statements involve a number of important risks and uncertainties that could cause actual results to differ materially, including but not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices.

For the Three Months Ended    For the Six Months Ended
June 30, June 30,
2000 1999 2000 1999

Net Sales 9,610,963 9,738,166 18,513,186 18,697,297
Cost of Sales 6,651,316 6,870,929 12,770,053 13,468,483
Gross Profit 2,959,647 2,867,237 5,743,133 5,228,814

Operating Expenses:
Advertising 64,143 84,306 126,853 154,607
Selling 798,531 781,863 1,584,270 1,518,573
General &
Administrative 1,538,703 1,425,072 2,865,877 2,785,112
Total Operating
Expenses 2,401,377 2,291,241 4,577,000 4,458,292

Operating Income 558,270 575,996 1,166,133 770,522

Other Expenses (Income):
expense 179,227 153,705 330,999 300,792
Interest Income - - - -
Other, net (4,768) (4,281) (23,228) (41,485)
Total Other
Expenses 174,459 149,424 307,771 259,307

Income Before
Taxes 383,811 426,572 858,362 511,215

Income Tax
Expense 155,000 171,000 347,000 210,000
Net Income 228,811 255,572 511,362 301,215

Net Income Per
Share of
Common Stock:
Basic 0.31 0.33 0.68 0.39
Diluted 0.31 0.33 0.68 0.39

Average Shares
Basic 745,046 775,046 752,299 775,046
Diluted 745,046 775,046 752,299 775,046

Dividends Per
Share of Common
Stock 0.080 0.080 0.160 0.160