Sales in the fourth quarter of 1999 were $ 40,009,000 ; lower than in 1998 by $ 4,664,000 or 10.4% . The fourth quarter of 1998 included a second release of distribution transformers to the electrical utility in Puerto Rico due to hurricane damage . Sales of other products were also down slightly from 1998 . As a result the fourth quarter net earnings of $ 996,000 slipped from the 1998 net earnings of $ 1,201,000.

For the full year both sales and net earnings were close to the 1998 level which was an improvement over the forecast issued early in 1999 . We are entering the first quarter of 2000 with a stronger sales momentum than at this time in 1999.

Cash flow from operations in the fourth quarter of 1999 was $ 6.8 million reflecting the recovery of working capital ( collection of accounts receivable ) and was an improvement compared with an outflow of $ 1.5 million in the fourth quarter of 1998. For the full year , cash flow from operations generated $11.9 million and as a result total funded debt at December 31 , 1999 was $ 30 million , a decrease of $ 7 million from the end of 1998.

Robert F. Hammond, Chairman and CEO
Tel: (519) 822.2960
Fax: (519) 822.8987
Email: ir@hammfg.com