SPX Q4 Exceeds Analysts' EPS Estimates
16 February 1999
SPX Q4 Exceeds Analysts' EPS Estimates; Raises 1999 Earnings Guidance
MUSKEGON, Mich., Feb. 16 -- SPX Corporation today
announced fourth quarter and full year 1998 financial results. Fourth quarter
operating performance exceeded First Call's consensus estimate of $0.62 per
share. The company also announced today that it is increasing its 1999
earnings guidance to $4.90 per share before one-time charges.
HIGHLIGHTS OF THE QUARTER:
The company's reported results include the October 6, 1998 merger with
General Signal Corporation. The merger was accounted for as a reverse
acquisition and accordingly General Signal was treated as the acquiror and SPX
Corporation as the acquiree. The 1998 annual results reflect General Signal's
business for all periods and reflect the addition of the SPX Corporation
businesses starting in the fourth quarter 1998.
EARNINGS PER SHARE
* The reported fourth quarter 1998 loss of $3.99 per share includes
previously announced pretax one-time charges totaling $204.4 million ($139.5
million after-tax), or $4.64 per share related to the General Signal merger:
- Merger related restructuring charges in the fourth quarter of 1998 were
$101.7 million pretax, ($63.1 million after-tax), or $2.10 per share.
- Additional one-time costs primarily related to the merger and
restructuring actions in the fourth quarter were $102.7 million pretax, ($76.4
million after-tax), or $2.54 per share.
* The restructuring charges and additional one-time costs for the fourth
quarter 1998 included:
- Costs to close approximately 25 manufacturing, sales and administrative
locations, and to close the General Signal headquarters,
- An early retirement program and other actions that will result in a
workforce reduction of approximately 1,000 employees, and
- Costs primarily related to certain asset valuations, in-process
technology and environmental costs arising from the merger with General Signal
and management's restructuring actions.
* The reported full year 1998 loss of $1.94 per share also includes the
fourth quarter restructuring charges and one-time costs totaling $204.4
million related to the General Signal merger.
REVENUES
* Revenues for the fourth quarter were $639.4 million compared with
fourth quarter 1997 revenues of $433.7 million. The fourth quarter of 1998
included combined revenues of the SPX and General Signal businesses.
* Reported 1998 annual revenues were $1.825 billion compared to 1997
annual revenues of $1.955 billion which included $353.1 million from
businesses divested or spun-off by General Signal in 1997.
INTEGRATION OF GENERAL SIGNAL:
* The company is rapidly applying its Value Improvement Process(TM) to
improve operating performance at the new businesses.
* The first phase of EVA(R) training is complete, improvement goals are
established, and the EVA based incentive compensation plan is in place for key
business leaders.
* Four strategic segments have been established: Industrial Products and
Services, Technical Products and Systems, Service Solutions and Vehicle
Components.
* The integration actions are on schedule. As of December 31, 1998, 30%
of the planned headcount reduction of approximately 1,000 was completed.
* The company expects the timing of savings to coincide with the
completion of restructuring and integration actions throughout the year.
* As previously announced, approximately $10 million of incremental costs
associated with these restructuring and integration actions will be incurred
in 1999. In addition, further restructuring actions for 1999 are now
estimated at $20 million.
Commenting on the company's year-end results, John B. Blystone, Chairman,
President and Chief Executive Officer said, "1998 was a remarkable year for
SPX. We are ahead of schedule with our integration actions and the businesses
are off to a good start in 1999. Based on our progress to date, we are
confident in our increased guidance of $4.90 per share for 1999 based on our
current complement of businesses. With the completion of the merger with
General Signal, we have entered a new chapter in the transformation of SPX
into a global multi-industry company."
SPX Corporation is a global provider of industrial products and services,
technical products and systems, service solutions and vehicle components. 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.
SPX Corporation and Subsidiaries
Summarized Consolidated Statements of Income
(unaudited)
Three months ended Twelve months ended
December 31, December 31,
1998 (1) 1997 1998 (1) 1997
(in millions, except per share)
Revenues $ 639.4 $433.7 $1,825.4 $1,954.6
Cost of sales (2) 494.6 283.3 1,271.9 1,313.6
Selling, general and
administrative
expense (2) 181.8 101.1 471.8 444.9
Goodwill/intangible
amortization 10.3 3.3 19.5 14.6
Special charges (3) 101.7 - 101.7 -
Operating income
(loss) $(149.0) $ 46.0 $ (39.5) $ 181.5
Other (expense)
income, net (4) (0.5) 9.0 (0.5) 72.7
Equity in earnings
of EGS (5) 9.8 9.9 40.2 11.8
Interest expense, net (32.3) (1.9) (45.1) (13.2)
Income (loss) from
continuing operations,
before income taxes $(172.0) $ 63.0 $ (44.9) $ 252.8
Income taxes (52.0) 26.7 (3.2) 121.8
Income (loss) from
continuing operations $(120.0) $ 36.3 $ (41.7) $ 131.0
Discontinued operations - - - 2.3
Cumulative effect of
accounting change - (3.7) - (3.7)
Net income (loss) $(120.0) $ 32.6 $ (41.7) $ 129.6
Diluted income (loss) per share:
From continuing
operations $ (3.99) $ 1.79 $ (1.94) $ 6.22
From discontinued
operations - - - 0.11
Cumulative effect of
accounting change - (0.18) - (0.18)
Net income (loss) $ (3.99) $ 1.61 $ (1.94) $ 6.15
Weighted average number
of common shares
outstanding 30.072 20.262 21.546 21.095
Notes to Summarized Consolidated Statements of Income
1. The statements of income reflect the reverse acquisition of the former
SPX business as of the beginning of the fourth quarter of 1998.
2. In the fourth quarter of 1998, the company recorded $102.7 of non-
recurring costs primarily related to certain asset valuations, in-process
technology and environmental costs arising from the merger and from
restructuring actions. These costs are included in cost of sales ($60.4) and
in selling, general and administrative expenses ($42.3).
3. In the fourth quarter of 1998, the company recorded $101.7 of
restructuring charges to close approximately 25 facilities, including the
General Signal corporate headquarters, and for an overall workforce reduction
of approximately 1,000 employees.
4. In 1997, the company recorded a $72.7 pretax gain for the sale of its
General Signal Pump Group and its equity interest in a Mexican company. The
gain on the sale of the equity interest, $9.0, was recorded in the fourth
quarter of 1997.
5. Reflects the company's equity in earnings of EGS, which was formed
near the end of the third quarter of 1997.