SPX Corporation 3rd Quarter EPS up 18% to $0.94 Per Share
21 October 1998
SPX Corporation 3rd Quarter EPS up 18% to $0.94 Per Share
MUSKEGON, Mich., Oct. 21 -- SPX Corporation today
announced third quarter 1998 financial results. Third quarter 1998 earnings
of $0.94 per share represent an 18% improvement over third quarter 1997 and
mark the eleventh consecutive quarter of year-over-year operational
improvement. Highlights follow:
EARNINGS PER SHARE -- Third quarter diluted earnings per share was $0.94
compared to $0.80 in the third quarter 1997.
* Earnings per share for the third quarter was impacted by reduced
shipments and incremental costs associated with the strike at General
Motors.
REVENUES -- Revenues for the third quarter were $231.9 million,
representing 9% growth over 1997 revenues of $213.7 million.
* Service Solutions revenues for the third quarter increased by 14% to
$172.5 million.
* For the nine months ended September 30, 1998, Service Solutions
revenues increased by 11% to $505.7 million over revenues of $456.9
million for the comparable period in 1997.
* Vehicle Components revenues for the third quarter, which were impacted
by the strike at General Motors, declined by 5% to $59.4 million.
* For the nine months ended September 30, 1998, Vehicle Components
revenues were $188.2 million, a 6% decrease from pro forma revenues of
$200.2 million for the comparable period in 1997.
OPERATING MARGIN -- Third quarter consolidated operating margin increased
to 9.5% compared to 8.4% in the third quarter of 1997.
* Service Solutions operating margin for the third quarter improved to
10.8% compared to 10.1% in the third quarter of 1997.
* For the first nine months of 1998, Service Solutions operating margin
was 10.9% compared to 9.4% for the comparable period in 1997, excluding
special charges.
* Vehicle Components operating margin for the third quarter, which was
impacted by lower sales and incremental costs associated with the
strike at General Motors, was 13.5% compared to 13.9% in the third
quarter of 1997.
* For the first nine months of 1998, Vehicle Components operating margin
was 13.8% compared to 13.4% for the comparable period in 1997.
GENERAL SIGNAL -- The merger with General Signal was completed on October
6, 1998. The company is aggressively applying the SPX Value Improvement
Process(TM) to reduce corporate costs, improve operating efficiencies, enhance
productivity, extend EVA-based incentive compensation and improve customer
quality and service.
* A new $1.650 billion credit facility was finalized and $1.4 billion was
funded for the close of the transaction. The blended interest rate on
the new financing is approximately 8.4% at current market interest
rates.
* General Signal third quarter revenues were $409.9 million and operating
earnings, including the equity earnings of EGS, were $43.3 million.
The operating earnings included approximately $5.5 million of unusual
or non-recurring charges for the terminated spin-off of INRANGE
Technologies and for costs incurred due to the merger with SPX.
* The former General Signal headquarters staff has been reduced by 75%
and the headquarters facility is scheduled to close in February 1999.
* The new operating units participated in their first SPX business review
and initial improvement actions were identified and are being
implemented.
* Initial EVA training has been completed at each business unit. This is
the first phase of an aggressive EVA implementation scheduled for
rollout on January 1, 1999.
John B. Blystone, Chairman, President and Chief Executive Officer of SPX
Corporation said, "SPX's third quarter performance represents the eleventh
straight quarter of improvement. We will drive improved performance and
growth at the former General Signal businesses just as we have at SPX over the
last two and a half years. We are especially encouraged by the potential of
these business units, and the cost savings and improvements their business
leaders have already identified. We are confident in our guidance of $4.85
per share for the full year 1999."
SPX Corporation is a global provider of industrial and vehicle solutions
including process and electrical controls, network technologies, service
solutions to franchised vehicle dealers, and components and service support to
vehicle manufacturers. 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 1997, the Company's Registration
Statement (Form S-4), and the Company's 1998 Third Quarter Form 10-Q which
will be filed within the next three weeks.
SPX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
Three months ended Nine months ended
September 30 September 30
1998 1997 1998 1997
Revenues $231,919 $213,672 $693,937 $680,597
Costs and expenses:
Cost of products sold 166,409 152,336 499,095 492,582
Selling, general and
administrative 42,022 42,420 125,428 129,650
Goodwill/intangible
amortization 1,398 822 2,961 2,602
Minority and equity
interests 79 132 236 229
Special charges and (gains) - - (7,092) 6,500
Operating income $ 22,011 $ 17,962 $ 73,309 $ 49,034
Other expense (income), net 23 (437) (1,450) (73,131)
Interest expense, net 4,377 3,315 12,301 10,567
Income before income
taxes $ 17,611 $ 15,084 $ 62,458 $111,598
Provision for income taxes 6,340 5,185 22,485 55,029
Income before extraordinary
item $ 11,271 $ 9,899 $ 39,973 $ 56,569
Extraordinary item, net
of tax - - - (10,330)
Net income $ 11,271 $ 9,899 $ 39,973 $ 46,239
Basic income (loss) per share:
Income before extraordinary
item $ 0.96 $ 0.83 $ 3.36 $ 4.34
Extraordinary item, net
of tax - - - (0.79)
Net income $ 0.96 $ 0.83 $ 3.36 $ 3.55
Weighted average number of
common shares
outstanding 11,793 11,931 11,912 13,024
Diluted income (loss) per share:
Income before extraordinary
item $ 0.94 $ 0.80 $ 3.27 $ 4.17
Extraordinary item, net
of tax - - - (0.76)
Net income $ 0.94 $ 0.80 $ 3.27 $ 3.41
Weighted average number of
common shares
outstanding 11,963 12,406 12,218 13,547
Business Segments Three months Nine months
ended September 30, ended September 30,
1998 1997 1998 1997
Revenues: (in millions) (in millions)
Service Solutions $ 172.5 $ 151.0 $ 505.7 $ 456.9
Vehicle Components 59.4 62.7 188.2 223.7
Total $ 231.9 $ 213.7 $ 693.9 $ 680.6
Operating income (loss):
Service Solutions $ 18.7 $ 15.3 $ 55.1 $ 36.5
Vehicle Components 8.0 8.7 26.0 29.9
General Corporate (4.7) (6.0) (7.8) (17.4)
Total $ 22.0 $ 18.0 $ 73.3 $ 49.0