Gleason Reports Third Quarter and Nine-Month Results
15 October 1998
Gleason Reports Third Quarter and Nine-Month Results
ROCHESTER, N.Y.--Oct. 15, 1998---- Operating income for the third quarter increased 20% compared to
the 1997 quarter
-- Diluted earnings per share for the third quarter increased 15%
compared to the 1997 quarter
(Dollars in millions, Summary Results
except per share amounts)
Third Quarter Nine Months
Ended Ended
Sept. 30, % Sept. 30, %
1998 1997 Change 1998 1997 Change
Sales $96.9 $89.7 8% $300.4 $212.4 41%
Operating income $10.0 $ 8.3 20% $ 32.4 $ 24.9 30%
Net income $ 6.0 $ 5.0 20% $ 17.8 $ 15.8 13%
Earnings per share:
Basic $ .57 $ .50 14% $ 1.69 $ 1.59 6%
Diluted $ .55 $ .48 15% $ 1.63 $ 1.53 7%
Gleason Corp. today reported that third quarter
diluted earnings per share were $.55, an increase of 15% compared to
the 1997 third quarter. Net income and operating income (earnings
before interest and taxes) for the third quarter increased 20%
compared to the 1997 third quarter to $6.0 million and $10.0 million,
respectively. The Company's Pfauter operations, which were acquired on
July 31, 1997, were included in the Company's 1998 results and for the
two months of the 1997 third quarter.
Net income for the 1998 nine-month period increased 13% (or 20%
excluding a 1998 second quarter non-cash charge) compared to 1997.
Operating income for the nine-month period was 30% higher than the
comparable 1997 period primarily due to increased sales resulting from
the Pfauter acquisition.
Sales for the three and nine-month periods increased 8% and 41%,
respectively, compared to the 1997 periods. On a comparable
year-over-year basis, excluding Pfauter operations, sales for these
periods decreased 13% and 3%, respectively, primarily due to lower
shipments of bevel gear production machines.
Order levels for the third quarter totaled $88.1 million compared
to $79.7 million in the 1997 third quarter. Order levels, excluding
Pfauter operations, increased $4.6 million, or 9%, over the 1997 third
quarter. Approximately $2 million of this increase resulted from a
favorable foreign exchange translation effect from the weaker U.S.
dollar versus the German mark. For the nine-month period, order
volumes were $269.7 million compared to $209.6 million in 1997. Order
levels, excluding Pfauter, decreased 12% compared to the 1997
nine-month period due to lower incoming orders for gear production
machines. This decline was primarily due to fewer significant orders
from automotive customers in 1998 and depressed economic conditions in
Asia.
Backlog was $146.9 million at Sept. 30, 1998 compared to $177.7
million at Dec. 31, 1997 and $194.9 million at Sept. 30, 1997. The
decline in backlog from the 1997 year-end level was due to a reduction
in orders for gear production machines compared to the prior year.
James S. Gleason, Chairman and President, said, "Order levels in
our third quarter are usually somewhat lower than other quarters
during the year due to summer shutdown periods at many of our
customers' facilities. Order activity from European customers,
particularly in Germany, was reasonably strong during the quarter,
accounting for 53% of total orders. While order levels from Europe
have been increasing during the year, the rate of incoming orders from
U.S. customers has declined from earlier in the year. Our current
lower backlog, the recent softening in the U.S. market, and the
dormant market demand from Asia, will likely result in lower annual
sales in 1999 compared to this year."
Gleason added, "The Company continues to pursue cost-saving
opportunities, including those from integration and restructuring
activities related to the Pfauter operations, which should favorably
affect 1999 results."
Gleason Corp. is a world leader in the manufacture of machines
and tooling used in the production of all forms of gears.
More information about Gleason Corp. is
available on the World Wide Web at http://www.gleason.com.
This press release includes forward looking statements related to
future demand for the company's products and future benefits from
cost-saving activities including those related to the Pfauter
acquisition. Forward looking statements are subject to a number of
factors that could cause actual results to differ materially from
those expected. Factors which may affect demand for the company's
products include, but are limited to, economic conditions in the
markets the company serves, currency fluctuations, the success of new
product introductions and competitors' actions. Factors which may
affect future benefits from cost-savings initiatives include, but are
not limited to, the risk of not realizing fully the anticipated cost
reductions and operating efficiencies, the ability to implement
changes in a manner that does not unduly disrupt business operations,
and changing market trends or competitors' actions that may affect
product distribution strategies.
Comparative results are as follows:
(Dollar amounts in thousands,
except per share amounts)
Third Quarter Nine Months
Ended Ended
Sept. 30, Sept. 30,
1998 1997 1998 1997
Sales $ 96,879 $ 89,713 $300,447 $212,432
Cost of sales 65,531 63,084 207,271 146,783
Gross margin 31,348 26,629 93,176 65,649
Selling, general &
administrative expenses 18,788 16,159 53,318 35,781
Research & development
expenses 2,869 1,994 7,775 5,628
Other (income) expense-net (273) 146 (344) (679)
Operating income 9,964 8,330 32,427 24,919
Interest expense-net 137 403 779 282
Loss on settlement of
pension plan -- -- 2,031 --
Income before taxes 9,827 7,927 29,617 24,637
Tax provision 3,846 2,932 11,867 8,871
Net income $ 5,961 $ 4,995 $17,750 $15,766
Earnings per common share:
Basic $ 0.57 $ 0.50 $ 1.69 $ 1.59
Diluted $ 0.55 $ 0.48 $ 1.63 $ 1.53
Weighted average number of
common shares outstanding:
Basic 10,479,530 9,945,336 10,482,297 9,945,091
Diluted 10,832,950 10,388,997 10,885,535 10,326,069
Cash dividends declared $ 0.0625 $ 0.0625 $ 0.1875 $ 0.1875
Supplemental information:
Depreciation and
amortization expense $ 5,345 $ 3,992 $ 16,004 $ 9,527
Capital expenditures 7,227 2,772 17,835 8,196
Condensed Balance Sheet
(Dollar amounts in thousands)
Sept. 30, Dec. 31,
1998 1997
Cash and equivalents $ 12,815 $ 12,478
Trade accounts receivable 92,278 101,024
Inventories 61,633 55,991
Other current assets 14,638 13,367
Total current assets 181,364 182,860
Total assets $ 346,126 $ 345,653
Total current liabilities $ 113,340 $ 122,437
Long-term debt 31,127 38,244
Other liabilities 75,924 70,751
Total liabilities 220,391 231,432
Total stockholders' equity 125,735 114,221
Total liabilities and stockholders'
equity $ 346,126 $ 345,653