SPX Reports Second Quarter EPS of $1.53 and Internal Revenue Growth of 8.9%
25 July 2000
SPX Reports Second Quarter EPS of $1.53 and Internal Revenue Growth of 8.9%
MUSKEGON, Mich. - SPX Corporation today announced second quarter 2000
financial results. Second quarter 2000 results include $695.1 million in
revenues, diluted earnings per share of $1.53, and EVA improvement of $23.4
million.
John B. Blystone, Chairman, President and Chief Executive Officer of SPX
said, "The technology in our businesses continues to expand our competitive
advantages, accelerating internal revenue growth. We continue to identify
opportunities for growth and productivity improvement in our businesses and we
are very confident we will achieve our commitment of $5.90 earnings per share
for the year."
Earnings Per Share -- Reported second quarter 2000 diluted earnings per
share of $1.53 compares with second quarter 1999 diluted earnings per share of
$1.34. Reported second quarter diluted earnings per share include a net
after-tax unusual gain of $0.43 per share and $0.40 per share of special
charges described below.
-- The reported earnings per share include a $23.2 million gain ($13.7
million after-tax) or $.43 per share. This gain is attributable to the
company's settlement of its patent infringement suit against American Power
Conversion Corporation and is net of legal fees and other costs associated
with the settlement.
-- The reported earnings per share also include special charges of $21.7
million ($12.8 million after-tax) or $.40 per share. The charges include
costs for restructuring, the write-off of certain software license fees and
the write-off of goodwill associated with a previous acquisition.
Revenues -- Revenues for the second quarter were $695.1 million compared
to second quarter 1999 revenues of $671.4 million. Reported revenues reflect
the net effect of acquisitions and divestitures. The second quarter 1999
revenues include the results of Best Power and Acutex. Internal growth for
the quarter, which excludes acquisitions and divestitures, was 8.9%.
Second Quarter 2000 First 6 Months 2000
Revenue Growth By Segment Reported Internal Reported Internal
Technical Products
and Systems -20.5% 8.5% -24.4% 7.8%
Industrial Products
and Services 19.5% 4.2% 14.4% 3.2%
Service Solutions 17.3% 17.3% 15.2% 15.2%
Vehicle Components -7.1% 4.7% -5.6% 6.7%
Consolidated 3.5% 8.9% 0.3% 8.0%
-- Technical Products and Systems: International demand for fire
detection and building life-safety products combined with sales of automated
transit fare collection systems and growth in the cable pressurization product
line generated internal growth in this segment.
-- Industrial Products and Services: Sales of medium and large-power
transformers and industrial ovens, along with improvement in the market for
hydraulic systems contributed to internal growth in the quarter.
-- Service Solutions: New electronic diagnostic tools and sales of new
warranty tools provided robust internal revenue growth for Service Solutions.
-- Vehicle Components: In the vehicle components segment, new
opportunities for P-2000 die-castings continue to generate internal growth.
Operating Margins -- Second quarter operating margins excluding special
charges improved by 30 points to 13.6%, compared to 13.3% for the second
quarter 1999 and 130 points compared to 12.3% in the first quarter of 2000.
Second Quarter First 6 Months
Operating Margin By Segment 2000 1999 2000 1999
Technical Products and Systems 17.1% 17.1% 16.8% 12.7%
Industrial Products and Services 17.2% 17.0% 17.1% 17.0%
Service Solutions 12.2% 8.8% 10.3% 8.8%
Vehicle Components 12.1% 14.2 11.8% 14.1%
Consolidated 13.6% 13.3% 13.0% 12.1%
EVA -- EVA improvement was $23.4 million for the second quarter 2000 and
$30.4 million for the first six months. During the quarter, SPX turned EVA
positive.
Cash Flow -- The company generated EBIT of $104.8 million and EBITDA of
$134.0 million for the second quarter 2000, compared to EBIT of $97.9 million
and EBITDA of $123.6 million for the second quarter 1999.
-- Second quarter 2000 EBITDA margins were 19.3% compared to 18.4% for
second quarter 1999.
-- Cash from operations for the first six months of the year was $100.4
million before taxes on Best Power, and capital spending was $60.0 million.
-- Cash restructuring spending for the quarter was $6.2 million.
-- During the first six months of the year, the company purchased 474,600
shares of its stock in the open market for a total consideration of $37.7
million.
-- During the first six months of the year, the company completed several
business investments and acquisitions for $90.6 million.
Inrange IPO -- On June 5, 2000, the company announced that its Inrange
Technologies subsidiary filed a registration statement with the U.S.
Securities and Exchange Commission for a proposed initial public offering of its
common stock.
SPX Corporation is a global provider of technical products and systems,
industrial products and services, service solutions and vehicle components.
SPX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in millions)
June 30, December 31,
2000 1999
ASSETS (Unaudited)
Current assets:
Cash and equivalents $30.0 $78.8
Accounts receivable 509.5 473.7
Inventories 298.5 274.0
Prepaid and other current assets 58.8 39.2
Deferred income taxes and refunds 115.4 110.8
Total current assets 1,012.2 976.5
Property, plant and equipment 853.5 799.8
Accumulated depreciation (388.1) (355.1)
Net property, plant and equipment 465.4 444.7
Goodwill and intangible assets, net 1,148.9 1,103.6
Investment in EGS 83.2 82.6
Other assets 261.6 238.6
Total assets $2,971.3 $2,846.0
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
maturities of long-term debt $117.9 $97.7
Accounts payable 266.3 238.3
Accrued expenses 341.1 343.5
Income taxes payable 27.4 75.4
Total current liabilities 752.7 754.9
Long-term debt, less current maturities 1,090.3 1,017.0
Deferred income taxes 329.4 322.4
Other long-term liabilities 195.6 199.4
Total long-term liabilities 1,615.3 1,538.8
Shareholders' equity:
Common stock 356.9 354.9
Paid-in capital 499.4 489.7
Retained earnings (deficit) 65.8 (11.7)
Unearned compensation (13.4) (19.1)
Accumulated other comprehensive income (16.4) (13.0)
Common stock in treasury (289.0) (248.5)
Total shareholders' equity 603.3 552.3
Total liabilities and shareholders'
equity $2,971.3 $2,846.0
SPX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
($ in millions)
Six months ended
June 30,
2000 1999
Cash flows from operating activities:
Net income $77.5 $72.5
Adjustments to reconcile net income to net
cash from operating activities -
Special charges 21.7 20.1
Earnings of EGS, net of distributions (0.6) 0.2
Loss on early extinguishment of debt, net of tax 8.8 -
Gain on business divestitures - (29.0)
Deferred income taxes 2.5 18.8
Depreciation 34.2 31.2
Amortization of goodwill and intangibles 21.8 21.0
Employee benefits (14.2) (7.8)
Other, net (3.4) 8.1
Changes in operating assets and liabilities, net of
effects from acquisitions and divestitures:
Accounts receivable (21.9) (16.8)
Inventories (14.8) (13.1)
Accounts payable 20.1 14.7
Accrued expenses (24.1) (53.1)
Other, net (7.2) 18.4
Net cash from operating activities before taxes on
sale of Best Power 100.4 85.2
Taxes paid on the sale of Best Power (69.0) -
31.4 85.2
Cash flows from (used in) investing activities:
Business divestitures - 64.2
Business acquisitions and investments (90.6) -
Capital expenditures (60.0) (54.1)
Other, net - 6.6
Net cash from (used in) investing activities (150.6) 16.7
Cash flows from (used in) financing activities:
Net borrowings (payments) under revolving credit
agreement 35.0 (10.0)
Borrowings under other debt agreements 503.7 -
Purchases of common stock - -
Payments under other debt agreements (445.2) (145.1)
Treasury stock purchased (37.7) -
Common stock issued under stock incentive programs 14.6 3.7
Treasury stock issued to defined benefit plans - 28.5
Net cash from (used in) financing activities 70.4 (122.9)
Net increase (decrease) in cash and equivalents (48.8) (21.0)
Cash and equivalents, beginning of period 78.8 70.3
Cash and equivalents, end of period $30.0 $49.3
SPX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
($ in millions, except per share data)
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
Revenues $695.1 $671.4 $1,322.9 $1,318.3
Costs and expenses:
Cost of products sold 461.8 446.5 883.4 879.4
Selling, general and
administrative 129.0 125.3 248.4 258.1
Goodwill/intangible
amortization 9.5 10.4 19.1 21.0
Special charges 21.7 5.5 21.7 20.1
Operating income 73.1 83.7 150.3 139.7
Other (expense) income, net 23.6 8.0 23.5 38.3
Equity in earnings of EGS 9.6 8.3 18.9 17.6
Interest expense, net (24.1) (30.0) (46.4) (62.1)
Income before income taxes 82.2 70.0 146.3 133.5
Provision for income taxes (33.7) (28.4) (60.0) (61.0)
Income before loss on early
extinguishment of debt 48.5 41.6 86.3 72.5
Loss on early extinguishment of
debt, net of tax - - (8.8) -
Net income $48.5 $41.6 $77.5 $72.5
Basic income per share of common stock
Income before loss on early
extinguishment of debt $1.57 $1.35 $2.79 $2.37
Loss on early extinguishment
of debt - - (0.28) -
Net income per share $1.57 $1.35 $2.51 $2.37
Weighted average number of common
shares outstanding 30.896 30.702 30.908 30.588
Diluted income per share of common stock
Income before loss on early
extinguishment of debt $1.53 $1.34 $2.73 $2.35
Loss on early extinguishment
of debt - - (0.28) -
Net income per share $1.53 $1.34 $2.45 $2.35
Weighted average number of common
shares outstanding 31.690 31.083 31.639 30.895
SPX CORPORATION
STATEMENTS OF OPERATING INCOME BY SEGMENT
(Unaudited)
($ in millions)
Three months ended Six months ended
June 30, June 30,
2000 1999 % 2000 1999 %
Technical Products
and Systems
Revenues $149.8 $188.5 -20.5% $285.7 $377.7 -24.4%
Gross profit 64.3 77.6 122.5 148.8
Selling, general &
administrative 38.3 43.6 73.6 97.3
Goodwill/intangible
amortization 0.4 1.8 0.8 3.7
Operating income $25.6 $32.2 -20.5% $48.1 $47.8 0.6%
as a percent of
revenues 17.1% 17.1% 16.8% 12.7%
Industrial Products
and Services
Revenues $247.8 $207.3 19.5% $472.7 $413.1 14.4%
Gross profit 87.2 74.5 167.6 148.4
Selling, general &
administrative 42.0 37.2 81.3 73.9
Goodwill/intangible
amortization 2.6 2.1 5.3 4.2
Operating income $42.6 $35.2 21.0% $81.0 $70.3 15.2%
as a percent of
revenues 17.2% 17.0% 17.1% 17.0%
Service Solutions
Revenues $199.7 $170.3 17.3% $368.6 $319.9 15.2%
Gross profit 60.1 49.3 107.3 95.7
Selling, general &
administrative 31.7 30.2 61.2 59.3
Goodwill/intangible
amortization 4.1 4.1 8.2 8.2
Operating income $24.3 $15.0 62.0% $37.9 $28.2 34.4%
as a percent of
revenues 12.2% 8.8% 10.3% 8.8%
Vehicle Components
Revenues $97.8 $105.3 -7.1% $195.9 $207.6 -5.6%
Gross profit 21.7 23.5 42.1 46.0
Selling, general &
administrative 7.5 6.2 14.2 11.9
Goodwill/intangible
amortization 2.4 2.4 4.8 4.9
Operating income $11.8 $14.9 -20.8% $23.1 $29.2 -20.9%
as a percent of
revenues 12.1% 14.2% 11.8% 14.1%
Corporate expenses $9.5 $8.1 $18.1 15.7
SPX CORPORATION
RECONCILIATION OF
RESULTS ON A COMPARABLE BASIS EXCLUDING UNUSUAL ITEMS
(Unaudited)
($ in millions, except per share amounts)
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
Income before income taxes $82.2 $70.0 $146.3 $133.5
Special charges and gains:
Restructuring and other special
charges 21.7 5.5 21.7 20.1
(Gain) on disposition of Dual-
Lite/Koyo - - - (29.0)
Gain on sale of marketable
securities - (7.6) - (7.6)
Gain on settlement of APC
litigation (23.2) - (23.2) -
Pretax income excluding unusual
items 80.7 67.9 144.8 117.0
Income taxes (33.1) (27.5) (59.4) (47.4)
Net income from continuing
operations excluding unusual
items $47.6 $40.4 $85.4 $69.6
Diluted EPS from continuing
operations excluding unusual
items $1.50 $1.30 $2.70 $2.25
Shares Outstanding 31.690 31.083 31.639 30.895