UNOVA Reports Third Quarter Results
22 October 1998
UNOVA Reports Third Quarter Results
BEVERLY HILLS, Calif.--Oct. 22, 1998--UNOVA, Inc. today announced its results for the third quarter ended September 30, 1998. Revenues for the three-month period were $405.7 million, compared to $361.8 million for the comparable period last year, an increase of 12.1 percent. Third-quarter net earnings grew to $13.3 million from $11.7 million in last year's comparable quarter, up 13.2 percent. Earnings per share for the respective third quarters were $0.24 in 1998 and $0.22 in 1997. In an earlier release, the Company indicated that it expected third-quarter earnings to range between $0.22 and $0.26 per share.
Third-quarter performance was better than the comparable quarter last year, and represents a continuing improvement over both the first and second quarters of 1998. UNOVA's Automated Data Systems (ADS) segment is benefiting from improved competitiveness as a result of acquisitions made during 1997. The Industrial Automation Systems (IAS) segment is building momentum based on its strong backlog.
UNOVA revenues for the first nine months of 1998 amounted to $1,084.3 million and net earnings were $30.3 million.
Automated Data Systems
ADS segment revenues for the third quarter of 1998 were $217.0 million, including the recently acquired Amtech operations, or 21.2 percent higher than the $179.1 million revenues for the same quarter last year. Segment operating income jumped to $12.2 million, compared to the $4.8 million reported for the third quarter of 1997, driven by the revenue increase and margin improvement.
As announced several weeks ago, third-quarter segment results were impacted by information systems problems at Intermec Technologies. Intermec added more employees and additional manual processes to augment major shortfalls in its information systems associated with the larger volume of business from the integration of Norand and UBI. The limited capabilities of these interim systems affected the segment's sales, order and production processes during the third quarter. The development of an automated enterprise resource planning (ERP) system for Intermec in North America, designed to resolve these problems, is progressing as planned. The new system is expected to become operational by the end of the year.
Nine-month revenues for the ADS segment reached $599.0 million and operating profit amounted to $37.7 million. Revenues and operating profit for the comparable period in 1997 were $461.0 million and $16.3 million, respectively, excluding a $203.3 million charge for acquired in-process research and development.
Industrial Automation Systems
Third-quarter revenues for the IAS segment reached $188.7 million, slightly ahead of the $182.7 million reported for the comparable period last year. IAS segment operating profits were $20.5 million compared to $25.4 million for the 1997 third quarter. The three-month period last year benefited from a high percentage of contracts that had reached their installation and delivery phases, which generally carry higher profit margins. However, this year's third-quarter results represent a major improvement over both the first and second quarters of 1998 as major systems projects, won earlier this year, move closer to their systems integration phases with higher revenues and profits.
The positive bookings trend in the IAS segment, which began in the first quarter of this year, continued into the third quarter. Backlog, which also benefited from the inclusion of the R&B Machine Tool operations, reached $585 million at the end of September, an increase of over 75 percent from the beginning of this fiscal year.
For the first three quarters of 1998, IAS reported $485.4 million in revenues and $46.6 million in operating profits. This compares to $633.1 million and $74.5 million, respectively, for the same nine-month period last year.
Revised Fourth-Quarter Outlook
While the Company enjoys a strong backlog in its IAS segment, unexpected project changes by customers in the last few weeks are now likely to negatively impact segment performance for the rest of the year. The change orders and contract slippages have caused delays in the engineering phase of these systems, preventing an acceleration in manufacturing originally planned for the fourth quarter. Production capacity, therefore, will remain partially underutilized during this period, impacting profitability and delaying further margin improvement.
While the quarter-to-quarter improvements for the Company should continue in the fourth quarter, the interim delays in the IAS segment will prevent UNOVA from reaching its original profit targets for the year.
Cincinnati Machine Acquisition
During the third quarter UNOVA announced an agreement under which it would acquire the machine tool operations of Cincinnati Milacron for $180 million in cash, subject to post-closing adjustments. The transaction closed shortly after the end of the third quarter and was financed by the Company using funds available under its bank credit agreement. The new division has been named Cincinnati Machine - A UNOVA Company.
This acquisition extends UNOVA's IAS activities into non-automotive markets and creates expansion opportunities for the segment, utilizing Cincinnati Machine's global distribution network.
Headquartered in Southern California, UNOVA is a $2 billion industrial technologies company. It has global leadership positions in manufacturing systems and machine tools for the automotive, aerospace and general metalworking industries and in automated data collection, mobile computing, bar code and radio frequency identification systems for industrial, distribution, transportation, logistics and government applications.
Certain forward-looking statements in this release (as defined by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934) relate to matters that are not historical facts. They include, but are not limited to, statements about the demand for the Company's products and services, the Company's ability to profitably exploit new technologies acquired or developed, and the Company's ability to realize its intentions with respect to the future performance of operations being acquired. Such forward-looking statements involve and are dependent upon certain risks and uncertainties. These include, but are not limited to, the following which are beyond the Company's control: the presence of competitors with greater financial and other resources; technological changes and developments; regulatory uncertainties; worldwide political stability and economic conditions; operating risks associated with international activities; the risk that the Company's due diligence procedures may have failed to reveal undisclosed material information concerning acquired operations; and other risks and uncertainties described more fully in the Company's filings with the Securities and Exchange Commission.
http://www.unova.com UNA-148
UNOVA, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (Preliminary)
Three Months and Nine Months Ended September 30, 1998 and 1997
(thousands of dollars, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------------------ ------------------
Sales and Service
Revenues $ 405,688 $ 361,761 $1,084,315 $1,094,104
----------- ----------- ----------- -----------
Costs and Expenses
Cost of sales 265,417 240,813 705,496 753,329
Selling, general
and administrative 94,185 82,271 269,283 234,942
Acquired in-process
R&D charge 203,300
Depreciation and
amortization 17,413 13,482 41,982 30,517
Interest, net 6,571 5,672 16,345 12,771
----------- ----------- ----------- -----------
Total Costs
and Expenses 383,586 342,238 1,033,106 1,234,859
----------- ----------- ----------- -----------
Earnings (Loss) before
Taxes on Income 22,102 19,523 51,209 (140,755)
Taxes on Income (8,841) (7,810) (20,950) (25,018)
----------- ----------- ----------- -----------
Net Earnings (Loss) $ 13,261 $ 11,713 $ 30,259 $ (165,773)
=========== =========== =========== ===========
Basic and Diluted
Earnings (Loss)
per Share $ 0.24 $ 0.22 $ 0.55 $ (3.07)
=========== =========== =========== ===========
Shares Used in
Computing Basic
Earnings per Share 54,726,511 53,962,845 54,583,884 53,920,058
Shares Used in
Computing Diluted
Earnings per Share 54,734,899 53,962,845 54,694,104 53,920,058
UNOVA, INC.
CONSOLIDATED BALANCE SHEETS (Preliminary)
(thousands of dollars)
September 30, December 31,
1998 1997
------------- -------------
Assets
Current Assets
Cash and cash equivalents $ 28,947 $ 13,685
Accounts receivable, net 497,468 448,079
Inventories, net
of progress billings 218,744 150,537
Deferred tax assets 121,587 106,694
Other current assets 15,704 30,072
------------- -------------
Total Current Assets 882,450 749,067
Property, Plant and Equipment, Net 213,015 157,680
Goodwill and Other Intangibles, Net 398,858 366,098
Other Assets 91,550 83,513
------------- -------------
Total Assets $ 1,585,873 $ 1,356,358
============= =============
Liabilities and
Shareholders' Investment
Current Liabilities
Accounts payable $ 313,786 $ 311,759
Payrolls and related expenses 80,942 72,909
Notes payable and current portion
of long-term obligations 243,303 86,645
------------- -------------
Total Current Liabilities 638,031 471,313
------------- -------------
Long-term Obligations 215,993 216,938
------------- -------------
Deferred Taxes and
Other Long-term Liabilities 82,428 78,618
------------- -------------
Shareholders' Investment
Common stock 547 545
Additional paid-in capital 631,720 603,743
Retained earnings (deficit) 22,218 (8,041)
Accumulated other comprehensive
income - cumulative currency
translation adjustment (5,064) (6,758)
------------- -------------
Total Shareholders' Investment 649,421 589,489
------------- -------------
Total Liabilities and
Shareholders' Investment $ 1,585,873 $ 1,356,358
============= =============
UNOVA, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (Preliminary)
Nine Months Ended September 30, 1998
(thousands of dollars)
Cash and Cash Equivalents
at Beginning of Period $ 13,685
-------------------
Cash Flows from Operating Activities:
Net earnings 30,259
Adjustments to reconcile net earnings
to net cash used in operating activities:
Depreciation and amortization 41,982
Changes in working capital
and other operating activities (73,476)
-------------------
Net Cash Used in Operating Activities (1,235)
-------------------
Cash Flows from Investing Activities:
Acquisition of businesses net
of cash acquired (92,854)
Capital expenditures (56,075)
Other investing activities 6,458
-------------------
Net Cash Used in Investing Activities (142,471)
-------------------
Cash Flows from Financing Activities:
Net increase in borrowings 155,713
Other financing activities 3,255
-------------------
Net Cash Provided by Financing Activities 158,968
-------------------
Resulting in Increase in Cash and Cash Equivalents 15,262
-------------------
Cash and Cash Equivalents at End of Period $ 28,947
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