Aeroquip-Vickers To Change Its Segment Reporting
26 January 1999
Aeroquip-Vickers To Change Its Segment Reporting
MAUMEE, Ohio--Jan. 25, 1999--Aeroquip-Vickers, Inc. announced today that it is changing its segment reporting effective with the release of its fourth-quarter and full-year 1998 results on January 28, 1999.Results will be segmented by Aeroquip-Vickers' two operating companies - Aeroquip Corporation and Vickers, Incorporated. Each company accounts for approximately half of Aeroquip-Vickers' sales. "These two segments reflect the way Aeroquip-Vickers is organized and how we manage and measure the performance of our businesses," said Darryl F. Allen, Aeroquip-Vickers chairman, president and chief executive officer.
While both Aeroquip and Vickers serve many of the same customers and markets, they are managed as separate companies because of their significantly different product technologies and manufacturing processes and the differing dynamics required to serve their customers. For example, Vickers is typically involved in the earliest phases of the design and development of a customer's products, while Aeroquip's fluid connectors more typically will enter at the end of the design cycle. This means they may work with different customer interfaces.
In addition to the new segment reporting, Aeroquip-Vickers will supply sales and operating income by markets served - industrial, aerospace and automotive. These are the markets served by Aeroquip and Vickers, and each market has distinct characteristics. They differ in their economic cycles, their geographic potential, their product life cycles, the asset intensity required to serve them and the nature of competition. "This market information, combined with our segment reporting for Aeroquip and Vickers, will provide more complete and useful information to the investment community than in the past," Mr. Allen said.
Aeroquip and Vickers
Aeroquip designs, manufactures and distributes fluid connectors and plastic products for industrial, aerospace and automotive markets. Fluid connectors include all pressure ranges of hose and hose assemblies; fittings, adapters, couplings and swivels; automotive air conditioning, power steering, and oil and transmission cooler components and systems; tube fittings and assemblies; refrigeration/air conditioning connectors; clamps and V-band couplings; fuel-handling products; noise-reduction products; chemical containment products; and electronic fluid system products. Plastic products include molded, extruded and co-extruded products.
Vickers designs, manufactures and distributes power and motion control products for industrial and aerospace markets. Vickers products include hydraulic, electrohydraulic, pneumatic and electronic control devices; piston and vane pumps and motors; open architecture machine controls; hydraulic and pneumatic cylinders; hydraulic power packages; electric motors and drives; fuel pumps; electric motorpumps and generator packages; electrohydraulic and electromechanical actuators; sensors and monitoring devices; hydraulic and lubrication filtration; and fluid-evaluation products and services.
Three Years of Restated Results
Results have been restated on a quarterly basis for the years 1996 and 1997 and for the first nine months of 1998 to reflect the new segments and a reclassification that more appropriately accounts for Corporate costs. Restated results for these periods are attached.
Aeroquip-Vickers, Inc. is two companies, Aeroquip Corporation and Vickers, Incorporated, world leaders in the design, manufacture and distribution of engineered components and systems to industrial, aerospace and automotive markets.
Aeroquip-Vickers, Inc.
Business Segments and Markets Served
September 30, 1998
Quarterly Results Year To
1st 2nd 3rd Date
------- ------- ------- -------
Net Trade Sales
Aeroquip Consolidated 265,981 280,800 255,705 802,486
Vickers Consolidated 281,074 293,514 253,269 827,857
------- ------- ------- -------
547,055 574,314 508,974 1,630,343
Operating Income
Aeroquip Consolidated 32,397 38,545 28,065 99,007
Vickers Consolidated 32,654 33,497 21,187(1) 87,338(1)
Aeroquip-Vickers
Corporate Group (7,281) (6,978) (6,919) (21,178)
------- ------- ------- -------
57,770 65,064 42,333(1) 165,167(1)
Operating Margin
Aeroquip Consolidated 12.2% 13.7% 11.0% 12.3%
Vickers Consolidated 11.6% 11.4% 8.4%(1) 10.5%(1)
Aeroquip-Vickers
Consolidated 10.6% 11.3% 8.3%(1) 10.1%(1)
Net Trade Sales
Industrial Market 310,447 323,296 275,476 909,219
Automotive Market 101,734 108,236 100,322 310,292
Aerospace Market 134,874 142,782 133,176 410,832
------- ------- ------- -------
547,055 574,314 508,974 1,630,343
Operating Income
Industrial Market 27,267 33,494 12,956(1) 73,717(1)
Automotive Market 13,063 12,033 10,324 35,420
Aerospace Market 24,721 26,515 25,972 77,208
Net Corporate (7,281) (6,978) (6,919) (21,178)
------- ------- ------- -------
57,770 65,064 42,333(1) 165,167(1)
Operating Margin
Industrial Market 8.8% 10.4% 4.7%(1) 8.1%(1)
Automotive Market 12.8% 11.1% 10.3% 11.4%
Aerospace Market 18.3% 18.6% 19.5% 18.8%
(1) Third-Quarter operating income includes $2.0 million of
non-recurring charges.
Aeroquip-Vickers, Inc.
Business Segments and Markets Served
December 31, 1997
1997 Quarterly Results
1st 2nd 3rd
------- ------- -------
Net Trade Sales
Aeroquip Consolidated 283,253 284,960 237,858
Vickers Consolidated 255,173 271,318 256,919
------- ------- -------
538,426 556,278 494,777
Full
4th Year
------- ---------
Net Trade Sales
Aeroquip Consolidated 259,117 1,065,188
Vickers Consolidated 263,695(3) 1,047,105(3)
------- ---------
522,812(3) 2,112,293(3)
1997 Quarterly Results
1st 2nd 3rd
------- ------- -------
Operating Income
Aeroquip Consolidated 28,198(1) 35,509 26,506
Vickers Consolidated 28,404 33,723 33,921
Aeroquip-Vickers
Corporate Group (7,904) (7,654) (7,342)
------- ------- -------
48,698(1) 61,578 53,085
Full
4th Year
------- ---------
Operating Income
Aeroquip Consolidated 29,245(2) 119,458(1),(2)
Vickers Consolidated 36,551(3) 132,599(3)
Aeroquip-Vickers
Corporate Group (7,517) (30,417)
------- -------
58,279(2),(3) 221,640(1),(2),(3)
1997 Quarterly Results
1st 2nd 3rd
------- ------- -------
Operating Margin
Aeroquip Consolidated 10.0%(1) 12.5% 11.1%
Vickers Consolidated 11.1% 12.4% 13.2%
Aeroquip-Vickers
Consolidated 9.0%(1) 11.1% 10.7%
Full
4th Year
------- ---------
Operating Margin
Aeroquip Consolidated 11.3%(2) 11.2%(1),(2)
Vickers Consolidated 13.9%(3) 12.7%(3)
Aeroquip-Vickers
Consolidated 11.1%(2),(3) 10.5%(1),(2),(3)
1997
Full
Year
-------
Return on Assets
Aeroquip Consolidated 22.3%(1)
Vickers Consolidated 18.6%
1997 Quarterly Results
1st 2nd 3rd
------- ------- -------
Net Trade Sales
Industrial Market 291,839 317,454 278,131
Automotive Market 127,930 117,278 97,416
Aerospace Market 118,657 121,546 119,230
------- ------- -------
538,426 556,278 494,777
Full
4th Year
------- ---------
Net Trade Sales
Industrial Market 282,768 1,170,192
Automotive Market 111,472 454,096
Aerospace Market 128,572(3) 488,005(3)
------- ---------
522,812(3) 2,112,293(3)
1997 Quarterly Results
1st 2nd 3rd
------- ------- -------
Operating Income
Industrial Market 25,751 33,732 29,033
Automotive Market 11,797(1) 13,450 10,341
Aerospace Market 19,054 22,050 21,053
Net Corporate (7,904) (7,654) (7,342)
------ ------ ------
48,698(1) 61,578 53,085
Full
4th Year
------- ---------
Operating Income
Industrial Market 22,181(2) 110,697(2)
Automotive Market 14,419 50,007(1)
Aerospace Market 29,196(3) 91,353(3)
Net Corporate (7,517) (30,417)
------ -------
58,279(2),(3) 221,640(1),(2),(3)
1997 Quarterly Results
1st 2nd 3rd
------- ------- -------
Operating Margin
Industrial Market 8.8% 10.6% 10.4%
Automotive Market 9.2%(1) 11.5% 10.6%
Aerospace Market 16.1% 18.1% 17.7%
Full
4th Year
------- ---------
Operating Margin
Industrial Market 7.8%(2) 9.5%(2)
Automotive Market 12.9% 11.0%(1)
Aerospace Market 22.7%(3) 18.7%(3)
1997
Full
Year
-------
Return on Assets
Industrial Market 14.0%
Automotive Market 28.6%(1)
Aerospace Market 31.9%
(1) The first quarter and total year are before a special charge of
$30 million to exit the company's automotive interior plastics
business.
(2) The fourth quarter includes a charge of $2.6 million to recognize
a product liability claim from an industrial customer for a
unique product that is no longer manufactured.
(3) The fourth quarter includes income of $4.3 million from recovery
of previously incurred development and pre-production costs with
an aerospace customer arising from termination of a component
design and production supply contract.
Aeroquip-Vickers, Inc.
Business Segments and Markets Served
December 31, 1996
1996 Quarterly Results
1st 2nd 3rd
------- ------- -------
Net Trade Sales
Aeroquip Consolidated 280,470 286,752 262,267
Vickers Consolidated 231,643 231,172 230,716
------- ------- -------
512,113 517,924 492,983
Full
4th Year
------- ---------
Net Trade Sales
Aeroquip Consolidated 270,425 1,099,914
Vickers Consolidated 239,470 933,001
--------- ---------
509,895 2,032,915
1996 Quarterly Results
1st 2nd 3rd
------- ------- -------
Operating Income
Aeroquip Consolidated 21,493 31,261 19,885
Vickers Consolidated 25,852 28,030 29,065
Aeroquip-Vickers
Corporate Group (7,217) (7,547) (7,273)
------ ------ ------
40,128 51,744 41,677
Full
4th Year
------- ---------
Operating Income
Aeroquip Consolidated 23,545 96,184
Vickers Consolidated 27,624 110,571
Aeroquip-Vickers
Corporate Group (8,143) (30,180)
------ -------
43,026 176,575
1996 Quarterly Results
1st 2nd 3rd
------- ------- -------
Operating Margin
Aeroquip Consolidated 7.7% 10.9% 7.6%
Vickers Consolidated 11.2% 12.1% 12.6%
Aeroquip-Vickers
Consolidated 7.8% 10.0% 8.5%
Full
4th Year
------- ---------
Operating Margin
Aeroquip Consolidated 8.7% 8.7%
Vickers Consolidated 11.5% 11.9%
Aeroquip-Vickers
Consolidated 8.4% 8.7%
1996
Full
Year
-------
Return on Assets
Aeroquip Consolidated 16.8%
Vickers Consolidated 18.4%
1996 Quarterly Results
1st 2nd 3rd
------- ------- -------
Net Trade Sales
Industrial Market 291,905 292,625 275,786
Automotive Market 124,089 129,876 118,602
Aerospace Market 96,119 95,423 98,595
------- ------- -------
512,113 517,924 492,983
Full
4th Year
------- ---------
Net Trade Sales
Industrial Market 278,185 1,138,501
Automotive Market 131,214 503,781
Aerospace Market 100,496 390,633
------- ---------
509,895 2,032,915
1996 Quarterly Results
1st 2nd 3rd
------- ------- -------
Operating Income
Industrial Market 25,649 33,163 27,917
Automotive Market 9,133 12,289 4,895
Aerospace Market 12,563 13,839 16,138
Net Corporate (7,217) (7,547) (7,273)
------ ------ ------
40,128 51,744 41,677
Full
4th Year
-------- ---------
Operating Income
Industrial Market 22,733 109,462
Automotive Market 10,035 36,352
Aerospace Market 18,401 60,941
Net Corporate (8,143) (30,180)
------ -------
43,026 176,575
1996 Quarterly Results
1st 2nd 3rd
------- ------- -------
Operating Margin
Industrial Market 8.8% 11.3% 10.1%
Automotive Market 7.4% 9.5% 4.1%
Aerospace Market 13.1% 14.5% 16.4%
Aeroquip-Vickers
Consolidated 7.8% 10.0% 8.5%
Full
4th Year
------- ---------
Operating Margin
Industrial Market 8.2% 9.6%
Automotive Market 7.6% 7.2%
Aerospace Market 18.3% 15.6%
Aeroquip-Vickers
Consolidated 8.4% 8.7%
1996
Full
Year
-------
Return on Assets
Industrial Market 15.1%
Automotive Market 16.4%
Aerospace Market 26.8%
Aeroquip-Vickers, Inc.
Sales By Businesses Acquired/Sold
(in thousands)
The following companies were acquired in the quarters noted and
provided incremental volumes as follows: Electronic Systems Division
of Milacron, Inc. - fourth quarter 1995; Summa Manufacturing
Corporation - second quarter 1996; Electrical Engineering &
Manufacturing Company - fourth quarter 1996; Precision Hydraulics,
Inc. and Wooster Hydrostatics, Inc. - first quarter 1998; and Aerotech
(South Africa) Proprietary Limited, Hydrokraft GmbH and Finimpresa
S.r.l. - second quarter 1998.
Nine
Year Year Months
1996 1997 1998
------- ------- -------
Business Segment
Aeroquip $ - $ - $ 10,958
Vickers 102,917 49,017 9,399
Markets Served
Industrial 102,917 8,049 11,606
Automotive - - 8,751
Aerospace - 40,968 -
Aeroquip sold or closed eight facilities during 1997 that had
combined sales of $131,798 in 1996 and $67,568 in 1997.