Gleason Reports Fourth Quarter and Full Year Results
5 February 1999
Gleason Reports Fourth Quarter and Full Year Results
ROCHESTER, N.Y.--Feb. 4, 1999---- Record sales and operating income for the 1998 year
-- Operating income for the full year increased 18%
-- Diluted earnings per share for the full year up 5%
-- Acquires remaining interest in its Japanese sales and service
representative
(Dollars in millions, Summary Results
except per share amounts)
Fourth Quarter Ended Year Ended
Dec. 31, % Dec. 31, %
1998 1997 Change 1998 1997 Change
Sales $108.9 $126.2 (14%) $409.3 $338.7 21%
Operating income $ 13.9 $ 14.4 (4%) $ 46.3 $ 39.3 18%
Net income $ 8.4 $ 8.3 -% $ 26.1 $ 24.1 8%
Earnings per share:
Basic $ .84 $ .83 1% $ 2.52 $ 2.41 5%
Diluted $ .81 $ .79 3% $ 2.43 $ 2.32 5%
Gleason Corp. today reported that net income for the fourth quarter ended Dec. 31, 1998 was $8.4 million, or .81 per diluted share, compared to $8.3 million, or $.79 per diluted share, for the 1997 fourth quarter.
For the 1998 full year, net income was $26.1 million, or $2.43 per diluted share, which included a non-cash after-tax charge of $1.2 million, or $.11 per diluted share, related to the settlement of a pension plan. Excluding this charge, diluted earnings per share increased 9% compared to 1997. Operating income for 1998 was 18% higher than in 1997 primarily due to the inclusion of the company's Pfauter operations for the entire year. The Pfauter operations, which were acquired on July 31, 1997, were included in the company's results for the last five months of 1997.
Sales for the 1998 fourth quarter decreased 14% compared to the 1997 quarter. Sales for the quarter were lower than the 1997 period primarily due to lower shipments of gear production machines to U.S. customers. On a comparable year-over-year basis, excluding Pfauter operations, sales for the full year decreased 6%, primarily due to lower shipments of bevel gear production machines to the Asian market.
Order levels for the 1998 fourth quarter totaled $94.4 million, a 13% decrease from the 1997 fourth quarter. For the 1998 full year, order volumes were $364.1 million, compared to $318.7 million in 1997. Order levels on a comparable year-over-year basis, excluding Pfauter, decreased 14% compared to 1997. Order levels for the fourth quarter and the full year, excluding Pfauter, were lower compared to 1997 due to decreased demand from Asia and fewer significant orders from major automotive customers.
Backlog was $132.5 million at Dec. 31, 1998 compared to $177.7 million at Dec. 31, 1997. The decline in backlog from the 1997 year-end level was primarily due to lower demand for cylindrical gear production machines from U.S. customers during 1998.
James S. Gleason, chairman and president, said, "1998 was the fifth consecutive year in which the company had a double-digit percentage increase in operating income over the previous year. In 1998 we posted both record annual sales and operating income. We are also pleased with the steady improvement we have seen in our operating margins as we complete steps in our restructuring and integration of our Pfauter acquisition. Because of improved operating margins, net income was higher in the fourth quarter compared to 1997, even though sales for the quarter were 14% lower than in the 1997 quarter."
Gleason added, "As we begin 1999, we face challenges created by already weak or weakening economic conditions in many of our important global markets. However, we remain optimistic about market opportunities over the next year and beyond given the new products and technical advancements we have introduced in the past year, which we believe offer significant advantages to our customers. We are well-positioned in terms of the breadth of our product offerings and the geographical reach of our operations to capitalize on these opportunities within our core markets."
The company also reported that on Feb. 1, 1999 it purchased for cash the remaining 80% ownership interest in OGA Corp., its sales and service representative in Japan and Taiwan. Gleason purchased initial its 20% ownership interest in OGA Corp. in 1994.
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. 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 not limited to, economic conditions in the markets the company serves, currency fluctuations, the success of new product introductions and competitors' actions.
Comparative results are as follows:
(Dollar amounts in thousands,
except per share amounts)
Fourth Quarter Ended Year Ended
Dec. 31, Dec. 31,
1998 1997 1998 1997
Sales $108,879 $126,241 $409,326 $338,673
Cost of sales 72,838 86,712 280,109 233,495
Gross margin 36,041 39,529 129,217 105,178
Selling, general &
administrative expenses 19,443 22,622 72,761 58,603
Research & development
expenses 2,783 2,511 10,558 8,139
Other (income) - net (40) (191) (384) (870)
Operating income 13,855 14,387 46,282 39,306
Interest expense - net 200 845 979 1,127
Loss on settlement of pension
plan -- -- 2,031 --
Income before taxes 13,655 13,542 43,272 38,179
Tax provision 5,288 5,213 17,155 14,084
Net income $ 8,367 $ 8,329 $ 26,117 $ 24,095
Earnings per common share:
Basic $ 0.84 $ 0.83 $ 2.52 $ 2.41
Diluted $ 0.81 $ 0.79 $ 2.43 $ 2.32
Weighted average number of
common shares outstanding:
Basic 9,992,549 10,077,911 10,358,854 9,978,569
Diluted 10,290,580 10,535,141 10,737,697 10,382,628
Cash dividends declared $0.0625 $0.0625 $ 0.25 $ 0.25
Condensed Balance Sheet
(Dollar amounts in thousands)
December 31, December 31,
1998 1997
Cash and equivalents $ 13,229 $ 12,478
Trade accounts receivable 89,095 101,024
Inventories 58,614 55,991
Other current assets 16,094 13,367
Total current assets 177,032 182,860
Total assets $ 340,469 $ 345,653
Total current liabilities $ 104,557 $ 122,437
Long-term debt 28,906 38,244
Other liabilities 79,035 70,751
Total liabilities 212,498 231,432
Total stockholders' equity 127,971 114,221
Total liabilities and stockholders'
equity $ 340,469 $ 345,653
(Dollar amounts in thousands)
Fourth Quarter Ended Year Ended
December 31, December 31,
1998 1997 1998 1997
Supplemental Information:
Capital Expenditures $7,919 $7,717 $25,754 $15,913
Depreciation/Amortization 4,944 4,642 20,948 14,169
Year Ended December 31,
Sales by Region: 1998 % of Sales
North America $ 165,281 40%
South America 23,904 6%
Europe/Africa 187,662 46%
Asia/Pacific 32,479 8%
$ 409,326 100%
Sales by Industry:
Automotive/Truck $ 237,260 58%
Non-Automotive/Truck 172,066 42%
$ 409,323 100%