PRESS RELEASE
Imo Industries Announces First Quarter Sales, Earnings
17 April 1997
Imo Industries Announces First Quarter Sales, Earnings
LAWRENCEVILLE, N.J., April 17 -- Imo Industries Inc.
today reported net income of $58,000 on sales of $119.5 million in
the first quarter of 1997, compared with income of $1.9 million or 11 cents a
share on sales of $121.4 million in the first quarter of the previous year.
Segment operating income of $10.5 million for the quarter was down
$1.5 million or 12% from last year's first quarter, due primarily to a gain
recorded in 1996 from the elimination of certain employee benefits.
First quarter segment operating income comparisons with 1996 were
adversely impacted by the completion, in December 1996, of the phase-out of
certain post-retirement benefits. This non-cash gain, created when the
Company amended its policy regarding retiree medical and life insurance
benefits in 1994, was amortized to income over the phase-out years 1994-1996.
The first quarter of 1996 benefited by $1.1 million as a result of the
phase-out.
"Our Pumps and Instrumentation segments continue to post strong sales and
earnings performances, particularly in North American operations," said Donald
K. Farrar, Imo chairman and chief executive officer.
"We are beginning to see returns from the investments we have made in
restructuring and operations improvement programs," Farrar said. "Our Warren
Pumps unit returned to profitability in the first quarter, and our European
Instrumentation unit, which had a $2 million operating loss in 1996, broke
even. Roltra-Morse also recorded positive operating income in the first
quarter, after suffering a $8.5 million operating loss for fiscal 1996,"
he said.
"We remain cautiously optimistic about prospects for the year as
a whole," he concluded.
Power Transmission
Sales of $23 million in the first quarter were 3% below last year's
comparable period. The first quarter of 1996 was a particularly strong period
for the power transmission business. Industry sales began to turn down in the
second quarter of last year and have not yet returned to historic levels.
Segment operating income of $2 million was $.8 million below the first quarter
of 1996, which included a $.5 million credit related to the employee benefit
phase-out. Additionally, lower sales volume, a change in product mix and
price pressures affected results in 1997. The segment introduced an important
new line of low-cost micro inverters in the first quarter, used to control the
speed and torque of fractional horsepower AC motors in hundreds of different
applications. The segment also introduced a new line of hollow shaft worm gear
speed reducers for the material handling industry, the power transmission
business' largest market. Initial sales of both new products have been
excellent.
Pumps
Segment operating income of $3.6 million was 5% ahead of last year's first
quarter on a 4% increase in sales to $27.4 million. North American operations
posted a particularly strong quarter, with operating income 12% over the first
quarter of last year and new orders booked running nearly 8% ahead of 1996,
its best-ever first quarter bookings. Warren Pumps returned to profitability.
Although its sales were lower than last year's comparable quarter, bookings
improved dramatically over the fourth of 1996. The Pumps segment booked
important new orders during the quarter for projects involving power
generation, crude oil transfer, pulp and papermaking and commercial
shipbuilding. Highly competitive market conditions combined with negative
currency translation weakened European operating results.
Instrumentation
Segment operating income of $2.4 million was 10% ahead of last year's
first quarter. Total sales declined 6% to $18.2 million, largely as a result
of the European operation's decision to withdraw from the marginally
profitable production of flight data recording systems, which it had been
fabricating under a private branding agreement. The recent strengthening of
the British pound also adversely impacted both sales and income. The North
American operation recorded a 31% increase in operating income on a 12%
sales increase for the quarter.
Morse Controls
Segment operating income of $2.1 million was down $.6 million on a
$1.5 million decline in sales to $28.5 million in the first quarter. The
downturn in both sales and income was attributable to unfavorable foreign
exchange rate changes and continuing poor economic conditions in Europe, one
of Morse's key markets. U.S. sales rose 4% in the quarter, largely due to new
orders for throttle control systems for personal watercraft. Industrial
sales for agricultural and construction vehicles rose for the quarter,
offsetting the dip in leisure marine sales.
Roltra-Morse
As anticipated, sales at Roltra-Morse rose strongly in the first quarter,
boosted by the impact of government incentives to auto buyers intended to prod
the stagnant Italian economy into recovery. This stimulus has increased auto
sales in Italy by more than 20%. Roltra-Morse sales of $22 million were 2%
ahead of the comparable period of 1996 and more than 20% ahead of fourth
quarter sales, despite a 4% unfavorable shift in exchange rates. This
improved volume was a primary factor in enabling Roltra to post segment
operating income of $.4 million for the quarter.
Imo Industries, with 1996 sales of $469 million, is a diversified
manufacturer of pumps, fluid sensors, motion control products, remote control
systems and automotive components, with operations worldwide.
IMO INDUSTRIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Amounts in thousands, except per share data)
Three Months Ended March 31
(Unaudited)
1997 1996 (a)
Net Sales (a) $119,546 $ 121,415
Gross Profit 35,459 35,558
Segment Operating Income(a) (c) 10,513 12,005
Income From Continuing Operations Before
Income Taxes and Minority Interest (a) 688 2,906
Income Taxes 655 948
Minority Interest (25) 18
Income From Continuing Operations 58 1,940
Discontinued Operations, Net of Taxes: (a)(b)
Income from Operations --- ---
Net Income $58 $1,940
Earnings Per Share:
Continuing Operations
Before Extraordinary Item $--- $0.11
Discontinued Operations $--- $---
Net Income $--- $0.11
Average Shares Outstanding 17,125 17,085
Bookings: (a)
Power Transmission $ 23,949 $24,668
Pumps 30,587 29,170
Instrumentation 18,580 22,175
Morse Controls 28,133 28,373
Roltra-Morse 20,609 18,421
Sub-total $121,858 $ 122,807
Backlog $106,238 $ 111,790
IMO INDUSTRIES INC. AND SUBSIDIARIES
Segment Information and Financial Highlights
Excludes Discontinued Operations
(Dollars in thousands)
Three Months Ended March 31
(Unaudited)
1997 1996 (a)
Net Sales: (a)
Power Transmission $23,037 $23,697
Pumps 27,412 26,346
Instrumentation 18,216 19,350
Morse Controls 28,478 30,019
Roltra-Morse 22,403 22,003
Total Net Sales 119,546 121,415
Segment Operating Income: (a)(c)
Power Transmission 1,964 2,766
Pumps 3,626 3,466
Instrumentation 2,366 2,145
Morse Controls 2,139 2,733
Roltra-Morse 418 895
Total Segment Operating Income 10,513 12,005
Equity in Income (Loss) of
Unconsolidated Companies (178) 25
Corporate Expense (1,530) (1,231)
Net Interest Expense (b) (8,117) (7,893)
Income From Continuing Operations Before
Income Taxes and Minority
Interest (a)(b)(c) $688 $2,906
Memo:
Income Before Interest, Taxes, Depreciation
and Amortization (EBITDA):
Income From Continuing Operations Before
Income Taxes and Minority Interest $688 $2,906
Add Back: Interest Expense (b) 8,402 8,290
Depreciation and Amortization 4,781 4,673
EBITDA $13,871 $15,869
IMO INDUSTRIES INC. AND SUBSIDIARIES
(a) As shown on the Segment Information and Financial Highlights, the
Company's Continuing Operations are comprised of the Power Transmission,
Pumps, Instrumentation, Morse Controls, and Roltra-Morse business segments.
Prior year amounts have been restated to reflect the Roltra-Morse business
segment as a continuing operation due to its withdrawal from potential sale in
November 1996.
The Company sold substantially all of its Electro-Optical Systems business
segment and its Turbomachinery business segment in 1995. These business
segments have been accounted for as discontinued operations and, accordingly,
their operations are shown in the Condensed Consolidated Statements of Income
as Discontinued Operations.
(b) Interest amounts included in income from continuing operations
exclude interest allocated to the Discontinued Operations of $.4 million and
$.5 million for the three months ended March 31, 1997 and 1996, respectively.
The amounts allocated are included in income from operations of discontinued
operations.
Amounts indicated as net are net of interest income of $.3 million and
$.4 million for the three months ended March 31, 1997 and 1996, respectively.
(c) The three months ended March 31, 1996 benefited from a favorable
adjustment related to the Company phase-out of accumulated postretirement
benefit obligations of $1.1 million ($.5 million in the Power Transmission
segment, $.3 million in the Pumps segment, $.2 million in the Instrumentation
segment, $.1 million in the Morse Controls segment). In March 1994, the
Company amended its policy regarding retiree medical and life insurance plans.
This amendment, which affected all current retirees and future retirees,
phased out the Company subsidy for retiree medical and life insurance over the
three-year period ended December 31, 1996.
SOURCE Imo Industries Inc.
CONTACT: R.A. Derr II, VP & Treasurer, Director, Investor
Relations of Imo, 609-896-7632