SPX Corporation Fourth Quarter EPS Before Unusual Items Up 159%, Pro Forma Revenues Up 26%
17 February 1998
SPX Corporation Fourth Quarter EPS Before Unusual Items Up 159%, Pro Forma Revenues Up 26%
MUSKEGON, Mich., Feb. 17 -- SPX Corporation today
announced fourth quarter and full year 1997 financial results. Earnings per
share for the year were $3.01 (diluted), before unusual items. This 71%
improvement over comparable 1996 results marks the company's eighth
consecutive quarter of improved earnings. SPX shareholders benefited from the
78% increase in the value of SPX stock in 1997. Highlights follow:
NET INCOME
Fourth quarter net income, before unusual items increased 126% over
comparable fourth quarter 1996.
. Fourth quarter 1997 net income was $10.4 million, or $0.83 per share
before unusual items.
. Fourth quarter 1996 net income was $4.6 million or $0.32 per share
before unusual items.
Full year 1997 net income, before unusual items increased 63% over 1996.
. Net income for 1997, before unusual items was $40.0 million, or $3.01
per share.
. Net income for 1996, before unusual items was $24.6 million, or $1.76
per share.
REVENUES
Revenues for the fourth quarter were $241.7 million, a 26% improvement
over last year's pro forma revenues.
. Service Solutions revenues increased 35% while Vehicle Components
revenues improved 8% pro forma.
. The strong revenue growth is largely attributable to strong sales of
program tools and emissions testing equipment.
Pro forma revenues for the year were $898.8 million, a 7% improvement over
1996 pro forma revenues.
. Service Solutions revenues increased 7%, while Vehicle Components pro
forma revenues improved 8%.
OPERATING MARGIN
Fourth quarter consolidated operating margin increased to 7.7% compared to
5.2% for 1996 before unusual items.
Consolidated operating margin improved 25% from 6.4% in 1996 to 8% for
1997 before unusual items.
EVA
EVA improvement accelerated to $9.1 million for the fourth quarter,
bringing total EVA improvement for 1997 to $18.8 million.
. Total EVA improvement is over $45 million since EVA was introduced in
January 1996.
The company reported a net loss of $60.0 million or $4.77 per share for
the fourth quarter 1997 after the impact of a $70.4 million, or $5.60 per
share special charge that was announced in December 1997. For the full year
1997, the company reported a net loss of $3.4 million, or $.26 per share,
before an extraordinary item and after the impact of $43.4 million in unusual
items. Unusual items for the full year 1997 include a special charge of $74.6
million, or $5.61 per share, and a $31.2 million, or $2.34 per share, gain on
the sale of a business.
Commenting on the company's financial results, John B. Blystone, Chairman,
President and Chief Executive Officer of SPX Corporation said, "1997 was a
great year for SPX in every aspect of our business. We met each and every one
of our commitments. We are very proud of these accomplishments and believe
they provide a solid foundation for continued growth and profitability in the
years ahead."
1997 HIGHLIGHTS
SPX stock more than quadrupled in value since the turnaround began in
January 1996, closing Friday at $75 1/16 per share.
The company completed several strategic actions during 1997.
. These actions include the sale of Sealed Power division, an alliance
with Hewlett-Packard, the acquisition of A.R. Brasch, the company's work with
the Enterprise Alliance to develop Passport(TM) Standards, and the on-time
completion of the Pierceton, Indiana die-casting facility.
SPX aligned its business with changing market dynamics by combining its OE
and Aftermarket Tool and Equipment groups.
. The reported results include a $110 million pretax charge, $70 million
after-tax, associated with these actions.
. The company believes the actions taken will save $.15 per share in 1998
and an additional $.35 per share in 1999.
During the year the company aligned its financial strategy and capital
policies with its EVA discipline.
. SPX purchased 17% of its outstanding shares of stock through a
leveraged Dutch auction and open market purchases.
The company's shareholder-oriented actions underscore its commitment to
creating wealth for its shareholders.
. Nearly 80% of SPX associates participated in an EVA compensation plan
during the year.
. SPX's Board of Directors voted to change their compensation to an EVA
based plan. The Board also voted to relax the Shareholder Rights Plan
threshold to 20% from 15%.
Mr. Blystone added, "After eight consecutive quarters of improved
earnings, we look forward to the challenge of producing even better results in
1998."
SPX Corporation is a global provider of Vehicle Service Solutions to
franchised dealers and independent service locations, Service Support to
Vehicle Manufacturers, and Vehicle Components to the worldwide motor vehicle
industry. The Internet address for SPX Corporation's home page is
http://www.spx.com.
Statements in this press announcement that are not strictly historical are
"forward-looking" statements within the meaning of the Safe Harbor provisions
of the federal securities laws. Investors are cautioned that such statements
are solely predictions and speak only as of the date of this release. Actual
results may differ materially due to risks and uncertainties that are
described in the Company's Form 10-K for 1996, the 1996 Annual Report to
Shareholders, and Form 10-Q for the first, second and third quarters of 1997.
SPX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
Three months ended Year ended
December 31 December 31
1997 1996 1997 1996
Revenues $241,719 $251,512 $922,316 $1,109,422
Costs and expenses:
Cost of products sold 176,466 194,365 669,048 850,160
Selling, general and
administrative 45,664 43,526 175,314 186,477
Goodwill/Intangible
amortization 847 1,747 3,449 7,179
Minority and equity
interests 131 (1,263) 360 (5,288)
Special charges and
write-off of goodwill 110,000 71,980 116,500 87,863
Operating income
(loss) $(91,389) $(58,843) $(42,355) $ (16,969)
Other expense
(income), net (1,059) (1,228) (74,190) (702)
Interest expense, net 3,399 6,902 13,966 31,767
Income (loss) before
income taxes $(93,729) $(64,517) $ 17,869 $ (48,034)
Provision for income
taxes (33,742) 1,255 21,287 7,610
Income (loss) before
extraordinary item $(59,987) $(65,772) $ (3,418) $ (55,644)
Extraordinary item,
net of tax - (5,474) (10,330) (6,627)
Net income (loss) $(59,987) $(71,246) $(13,748) $ (62,271)
Basic income (loss) per share:
Before extraordinary
item $ (5.02) $ (4.69) $ (0.27) $ (4.04)
Extraordinary item,
net of tax - (0.39) (0.81) (0.48)
Net income $ (5.02) $ (5.08) $ (1.08) $ (4.52)
Weighted average number of
common shares
outstanding 11,943 14,029 12,754 13,785
Diluted income (loss) per share:
Before extraordinary
item $ (4.77) $ (4.58) $ (0.26) $ (3.98)
Extraordinary item,
net of tax - (0.38) (0.77) (0.47)
Net income $ (4.77) $ (4.96) $ (1.03) $ (4.45)
Weighted average number of
common shares
outstanding 12,564 14,359 13,305 13,998
SPX CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
(unaudited)
Reconciliation of Unusual Items:
Three months ended December 31,
1997 1996
Pretax After-tax EPS (diluted) EPS (diluted)
(in millions, except per share)
Actual (reported) (1) $(93.7) $(60.0) $(4.77) $(4.58)
Unusual items:
Special charges 110.0 70.4 5.60 0.18
Write-off goodwill - - - 4.72
Excluding unusual
items $ 16.3 $ 10.4 $ 0.83 $ 0.32
Year ended December 31,
1997 1996
Pretax After-tax EPS (diluted) EPS (diluted)
(in millions, except per share)
Actual (reported) (1) $ 17.9 $ (3.4) $(0.26) $(3.98)
Unusual items:
Gain on sale of SPD (71.9) (31.2) (2.34) -
Snap-On legal costs 6.5 4.2 0.32 -
Special charges 110.0 70.4 5.29 0.90
Write-off goodwill - - - 4.84
Excluding unusual
items $ 62.5 $40.0 $ 3.01 $ 1.76
(1) Actual reported income (loss) before extraordinary item.
Business Segments:
Three months ended Year ended
December 31 December 31
1997 1996 1997 1996
Revenues (in millions)
Service Solutions $ 176.5 $ 130.7 $ 633.4 $ 594.2
Vehicle Components 65.2 120.8 288.9 515.2
Total $ 241.7 $ 251.5 $ 922.3 $1,109.4
Operating income (loss):
Service Solutions $ (89.7) $ (63.2) $ (53.2) $ (37.2)
Vehicle Components 8.9 9.9 38.8 41.9
General Corporate (10.6) (5.6) (28.0) (21.7)
Total $ (91.4) $ (58.9) $ (42.4) $ (17.0)
SOURCE SPX Corporation