1st Quarter Results.Business Editors UK REGULATORY reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. NEWS LONDON--(BUSINESS WIRE)--April 15, 2002 Eaton Eaton may refer to: Buildings
Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before of 93 Cents Per Share Diversified diversified (di·verˑ·s industrial manufacturer Eaton Corporation This article is about an industrial manufacturer. For other meanings see Eaton. Eaton Corporation (NYSE: ETN) is a diversified industrial manufacturer with 2006 sales of $12.4 billion, putting it at 198 on the Fortune 500 for 2007. (NYSE NYSE See: New York Stock Exchange :ETN ETN Eaton Corporation (stock symbol) ETN Exchange Traded Note (investing) ETN European Travel Network ETN Electronic Tandem Network ETN Educational Telephone Network ) today announced operating earnings per share of 93 cents for the first quarter of 2002, 11 percent below comparable results one year earlier. Sales in the quarter were $1.72 billion, 13 percent below last year. Net income before unusual items was $66 million compared to $73 million in 2001. During the quarter, the company recognized pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of $49 million related to the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of its operations. After all unusual items in both periods, first quarter net income was $33 million with earnings per share of $.47, compared to $50 million and $.72 per share last year. Alexander M. Cutler, Eaton chairman and chief executive officer, said, "Eaton's Eaton's was once Canada's largest department store retailer. Founded in 1869 in Toronto by Timothy Eaton, an Irish immigrant, Eaton's first advertisement read "We propose to sell our goods for CASH ONLY – In selling goods, to have only one price. first quarter earnings are in line with our expectations. Our end markets remain depressed, much as we had anticipated. In this period of weak end market demand, our improving results demonstrate the effectiveness of our aggressive actions to resize Verb 1. resize - change the size of; make the size more appropriate size - make to a size; bring to a suitable size rescale - establish on a new scale the corporation. "We remain convinced that the restructuring actions taken during 2001 and in the first quarter of this year will deliver $130 million of savings in 2002. We also continue to benefit from the broad implementation of the Eaton Business System, with results evident in the continued reduction in working capital and capital expenditure levels that have contributed to a further strengthening of our balance sheet. "Our overall forecast for our end markets has not changed. We had expected our markets to bottom out in the first quarter, and not to recover materially until the end of the third quarter. We are beginning to see limited signs of strengthening at this time, which appear to validate To prove something to be sound or logical. Also to certify conformance to a standard. Contrast with "verify," which means to prove something to be correct. For example, data entry validity checking determines whether the data make sense (numbers fall within a range, numeric data our earlier forecast. "We continue to maintain tight control of all expenditures and are fully implementing the additional restructuring activities that we announced at the beginning of this year. We also continue to believe that our full year restructuring expenses will be in the range of $59 million, $49 million of which was incurred in the first quarter. "We are maintaining our full-year operating earnings guidance of $4.25 to $4.50 per share. We anticipate that second quarter operating earnings per share will be in the $1.15 to $1.25 range. Eaton will remain significantly cash flow positive in 2002," said Cutler. Results for 2002 will be favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by $.87 per share related to adoption of Statement of Financial Accounting Standards No. 142, which discontinues amortization of goodwill and certain intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ; $.22 per share of that impact relates to the first quarter. Results for 2002 will be reduced by $.56 per share due to lower pension income; the first quarter effect amounts to $.17 per share compared to 2001. Business Segment Results First quarter sales of Eaton's largest business segment, Fluid Power, were $597 million, 11 percent below one year earlier. This compares to a decline of about 11 percent in Fluid Power's markets, with North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. fluid power industry shipments off about 9 percent, and aerospace markets off about 17 percent. Segment profits before restructuring costs were $60 million, down 13 percent from a year ago. "While we are beginning to see the early signs of very modest strengthening in the traditional mobile and industrial hydraulics hydraulics, branch of engineering concerned mainly with moving liquids. The term is applied commonly to the study of the mechanical properties of water, other liquids, and even gases when the effects of compressibility are small. markets, we do not anticipate a significant recovery in these markets until the middle of the second half of 2002," said Cutler. "The Aerospace market has weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. and we anticipate that it will
weaken further during the balance of this year. Our earlier forecast for
a 25 to 30 percent decline in the commercial markets this year, offset
by a 5 percent improvement in military markets, still seems about right.
In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding.See also: Spite the overall weakness in these end markets, we are seeing the benefits of our comprehensive restructuring activities. And the Fluid Power segment has won more new business, in addition to the Lockheed Martin For the former company, see . Lockheed Martin (NYSE: LMT) is a leading multinational aerospace manufacturer and advanced technology company formed in 1995 by the merger of Lockheed Corporation with Martin Marietta. , GE, Airbus and BMW BMW in full Bayerische Motoren Werke AG German automaker. Founded as an aircraft engine manufacturer in 1916, the company assumed the name Bayerische Motoren Werke and became known for its high-speed motorcycles in the 1920s. programs announced previously, for a total of $1.3 billion in multi-year program wins in the first quarter." In the Industrial & Commercial Controls segment, first quarter sales were $486 million, down 13 percent from last year, compared to an estimated 24 percent decline in the North American markets for this business. Segment profits were $31 million before restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , down 37 percent from one year ago. End markets for our electrical business remain very soft," said Cutler. "We expect that the long-cycle, large-project portion of this business will continue to soften through the balance of this year, with a recovery not expected until year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . The residential market is one of the real bright spots for our electrical business, with United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. housing starts holding steady at a 1.7 million rate during the first quarter, which was stronger than we had anticipated. Eaton's strong performance in the residential segment, fueled by our successful new Fire-Guard(TM) arc fault circuit interrupter product line, helped our electrical business outgrow outgrow verb To change the relationship with a condition or structure by dint of ↑ age or size; while children outgrow clothing, and certain behaviors, they rarely outgrow diseases–eg, asthma its overall end market demand. We also continue to be pleased with the growth and improved profitability of our Cutler-Hammer Engineering Services and Systems (C-H ESS (1) (Electronic Switching System) A large-scale computer from Lucent used to route telephone calls in a telephone company office. The 5ESS is a Class 5 central office switch, and the 4ESS is a Class 4 tandem office switch. ) business." During the quarter, the company announced the formation of its new Performance Power Solutions organization and a significant new business relationship with Johnson Controls Johnson Controls, Inc. (NYSE: JCI) is a United States company, based in Milwaukee, Wisconsin, specializing in the design, manufacturing, and installation of automotive systems, automotive batteries (Optima[1] based in Denver, Colorado) and climate control systems. , Inc. This expansion of the C-H ESS business is expected to result in $300 million of new business revenue over the next four years. Additionally, the company will benefit from a new three-year, $80 million agreement with Caterpillar caterpillar (kăt`əpĭl'ər, kăt`ər–), common name for the larva of a moth or butterfly. Caterpillars have distinct heads and are segmented and wormlike. to be the exclusive supplier of electrical switchgear The term switchgear, used in association with the electric power system, or grid, refers to the combination of electrical disconnects, fuses and/or circuit breakers used to isolate electrical equipment. for the self-contained self-con·tained adj. 1. Constituting a complete and independent unit in and of itself: A self-contained dictionary defines every word contained within it. 2. a. mobile generator generator, in electricity, machine used to change mechanical energy into electrical energy. It operates on the principle of electromagnetic induction, discovered (1831) by Michael Faraday. set systems known as Caterpillar Power Modules. Eaton will provide Cutler-Hammer power distribution equipment to protect and control the generator sets contained in the modules. First quarter Automotive segment sales of $385 million were identical to those a year ago. NAFTA NAFTA in full North American Free Trade Agreement Trade pact signed by Canada, the U.S., and Mexico in 1992, which took effect in 1994. Inspired by the success of the European Community in reducing trade barriers among its members, NAFTA created the world's automotive production was up 1 percent, while European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. production declined approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 4 percent compared to the same period last year. Segment profits before unusual items were $57 million, up 6 percent from a year ago. "Our Automotive segment recorded an exceptional quarter," said Cutler. "The continued strong record of new product introductions and market share gain is demonstrated by this quarter's strong performance." During the quarter, the company announced that Mercedes-Benz  This article may be too long.Please discuss this issue on the talk page and help summarize or split the content into subarticles of an article series. selected Eaton to provide key components for the new M-271 engine. Eaton will provide superchargers, intake intake /in·take/ (in-tak´) the substances, or the quantities thereof, taken in and utilized by the body. intake, n the substance or quantities thereof taken in and used by the body. and exhaust Exhaust may refer to: In mathematics:
Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. arms and lash adjusters. Sales of these components are expected to exceed $375 million over the multi-year contract. Production is scheduled to begin later this year. First quarter Truck segment sales of $255 million were 9 percent below those in the same period last year. Before restructuring expenses, segment operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. were $4 million compared to a breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations quarter a year ago. NAFTA heavy-duty heav·y-dut·y adj. Made to withstand hard use or wear. heavy-duty Adjective made to withstand hard wear, bad weather, etc. Adj. 1. truck production was down 8 percent, NAFTA medium-duty truck production was down 9 percent, European truck production was down 16 percent and South American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of production decreased by approximately 4 percent. "We are increasingly confident that our Truck business has bottomed, as both NAFTA industry order levels and our own orders have started to climb substantially," said Cutler. "We expect that second quarter heavy-duty truck production could increase as much as 20 to 25 percent from current levels, giving us further confidence in our full-year forecast for 150,000 units of heavy-duty truck production in 2002. The positive impact of our restructuring actions is very evident in the first quarter results for this segment. We will realize additional earnings leverage as volumes continue to strengthen." Eaton is a global $7.3 billion diversified industrial manufacturer that is a leader in fluid power systems; electrical power quality, distribution and control; automotive engine Automotive engine The component of the motor vehicle that converts the chemical energy in fuel into mechanical energy for power. The automotive engine also drives the generator and various accessories, such as the air-conditioning compressor and power-steering air management and fuel economy; and intelligent truck systems for fuel economy and safety. Eaton has 48,000 employees and sells products in more than 50 countries. For more information, visit www.eaton.com. Notice of Conference Call: Eaton's conference call to discuss its first quarter results is available to all interested parties via live audio webcast today at 10 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Eaton's Investor Relations Investor relations The process by which the corporation communicates with its investors. website at www.eaton.com. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. concerning the second quarter 2002 and the full year 2002 operating earnings per share, our worldwide markets, expenses and benefits of our restructuring programs, cash flow and volumes from new business awards and relationships. These statements are subject to various risks and uncertainties, many of which are outside the company's control. The following factors could cause actual results to differ materially from those in the forward-looking statements: unanticipated changes in the markets for the company's business segments; failure to implement restructuring plans; unanticipated downturns in business relationships with customers or their purchases from us; competitive pressures on sales and pricing; increases in the cost of material and other production costs, or unexpected costs that cannot be recouped in product pricing; the introduction of competing technologies; unexpected technical or marketing difficulties; unexpected claims or charges; and unanticipated further deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of economic and financial conditions in the United States and around the world. We do not assume any obligation to update these forward-looking statements. Financial Results The company's comparative financial results for the three months ended March 31, 2002 follow:
Eaton Corporation
Comparative Financial Summary
Three months ended
March 31
------------------
(Millions except for per share data) 2002 2001
---- ----
Net sales $1,723 $1,983
Income before income taxes 48 104
Net income 33 50
Net income per Common Share assuming dilution $ 0.47 $ 0.72
Average number of Common Shares outstanding 71.2 70.1
Net income per Common Share basic $ 0.48 $ 0.73
Average number of Common Shares outstanding 70.1 69.0
Cash dividends paid per Common Share $ 0.44 $ 0.44
Reconciliation of net income to operating earnings
--------------------------------------------------
Net income $ 33 $ 50
Excluding (after-tax)
Unusual charges 33 30
Gain on sales of businesses (7)
------ ------
Operating earnings $ 66 $ 73
====== ======
Net income per Common Share assuming dilution $ 0.47 $ 0.72
Per share impact of unusual items 0.46 0.33
------ ------
Operating earnings per Common Share $ 0.93 $ 1.05
====== ======
See accompanying notes.
Eaton Corporation
Statements of Consolidated Income
Three months ended
March 31
------------------
(Millions except for per share data) 2002 2001
---- ----
Net sales $1,723 $1,983
Costs & expenses
Cost of products sold 1,286 1,497
Selling & administrative 310 321
Research & development 55 68
------ ------
1,651 1,886
------ ------
Income from operations 72 97
Other income (expense)
Interest expense-net (27) (42)
Gain on sales of businesses 38
Other-net 3 11
------ ------
(24) 7
------ ------
Income before income taxes 48 104
Income taxes 15 54
------ ------
Net income $ 33 $ 50
====== ======
Net income per Common Share assuming dilution $ 0.47 $ 0.72
Average number of Common Shares outstanding 71.2 70.1
Net income per Common Share basic $ 0.48 $ 0.73
Average number of Common Shares outstanding 70.1 69.0
Cash dividends paid per Common Share $ 0.44 $ 0.44
See accompanying notes.
Eaton Corporation
Business Segment Information
Three months ended
March 31
------------------
(Millions) 2002 2001
---- ----
Net sales
Fluid Power $ 597 $ 673
Industrial & Commercial Controls 486 559
Automotive 385 385
Truck 255 281
------ ------
Total ongoing operations 1,723 1,898
Divested operations 85
------ ------
Total net sales $1,723 $1,983
====== ======
Operating profit (loss)
Fluid Power $ 43 $ 62
Industrial & Commercial Controls 18 50
Automotive 56 54
Truck (10) (38)
------ ------
Total ongoing operations 107 128
Divested operations 7
Amortization of goodwill & other intangible assets (6) (24)
Interest expense-net (27) (42)
Gain on sales of businesses 38
Corporate & other-net (26) (3)
------ ------
Income before income taxes 48 104
Income taxes 15 54
------ ------
Net income $ 33 $ 50
====== ======
See accompanying notes.
Eaton Corporation
Condensed Consolidated Balance Sheets
March 31, December 31,
2002 2001
---- ----
(Millions)
Assets
Current assets
Cash & short-term investments $ 262 $ 311
Accounts receivable 1,096 1,070
Inventories 668 681
Deferred income taxes & other current assets 345 325
------ ------
2,371 2,387
Property, plant & equipment 1,999 2,050
Goodwill & other intangible assets 2,433 2,435
Other assets 747 774
------ ------
$7,550 $7,646
====== ======
Liabilities & Shareholders' Equity
Current liabilities
Short-term debt & current portion of
long-term debt $ 197 $ 188
Accounts payable 356 418
Accrued compensation 148 158
Accrued income & other taxes 254 258
Other current liabilities 714 647
------ ------
1,669 1,669
Long-term debt 2,144 2,252
Postretirement benefits other than pensions 669 670
Deferred income taxes & other liabilities 561 580
Shareholders' equity 2,507 2,475
------ ------
$7,550 $7,646
====== ======
See accompanying notes.
Eaton Corporation
Notes to the First Quarter 2002 Earnings Release
Dollars in millions, except per share data (per share data assume
dilution)
Unusual Charges
---------------
As the extraordinarily weak economic conditions of 2001 continued into
2002, Eaton undertook additional restructuring actions in the first
quarter to further reduce fixed operating costs across all business
segments, as well as certain corporate functions. The operational
restructuring charges are included in the Statements of Consolidated
Income in Income from operations and reduced operating profit of the
related business segment. The corporate charges are included in the
Statements of Consolidated Income in Income from operations and in
Business Segment Information in Corporate & other-net.
A summary of unusual charges recorded in each year follows:
Three months ended
March 31
------------------
2002 2001
---- ----
Operational restructuring charges
Fluid Power $ 17 $ 7
Industrial & Commercial Controls 13
Automotive 1
Truck 14 38
Corporate charges 4
---- ----
Pretax $ 49 $ 45
==== ====
After-tax $ 33 $ 30
Per Common Share .46 .43
New Accounting Pronouncement - Adoption of SFAS Statement No. 142
-----------------------------------------------------------------
Effective January 1, 2002, Eaton adopted Statement of Financial
Accounting Standards (SFAS) No. 142 "Goodwill and Other Intangible
Assets". Upon adoption, the Company discontinued the amortization of
goodwill and indefinite life intangible assets recorded in connection
with previous business combinations. First quarter 2002 results were
impacted favorably by the reduction in amortization expense for
goodwill and indefinite life intangible assets of $18 ($16 after-tax,
or $.22 per Common Share).
Pension and Other Postretirement Benefit Expense
------------------------------------------------
Pretax income in 2002 was reduced by $19 ($12 after-tax, or $.17 per
Common Share) in comparison to 2001 due to the effect on pension
income of the recent dramatic decline in stock market valuations on
Eaton's pension fund, coupled with lower discount rates associated
with pension and other postretirement benefit liabilities.
Gains on Sales of Businesses
----------------------------
During the first quarter of 2001, in separate transactions the Company
sold the Vehicle Switch/Electronics Division (VS/ED) and certain
assets of the Truck business. The sales of these businesses resulted
in a pretax gain of $38 ($7 after-tax, or $.10 per Common Share). In
Business Segment Information, the operating results of VS/ED are
included in divested operations for all periods presented.
Income Taxes
------------
The effective income tax rate for the first quarter of 2002 was 31.0%
compared to 51.7% for the same period in 2001. The higher rate in 2001
was primarily the result of the tax effect of book/tax basis
differences related to businesses sold in the first quarter of 2001
which increased tax expense by $18. Excluding the negative tax
consequences related to the sales of businesses in 2001, the effective
tax rate for the first quarter of 2001 was 34.0% compared to 31.0% in
2002.
Financial Presentation Changes
------------------------------
Certain amounts for 2001 have been reclassified to conform to the
current year presentation.
www.eaton.com Short Name: Eaton Corp. Category Code: QRT QRT Quick Response Team QRT Quick Response Training QRT quick reaction team (US DoD) QRT Stop Transmitting (used in CW communications) QRT Quick Reaction Test (US DoD) Sequence Number: 00000001 Time of Receipt (in Greenwich Mean Time Greenwich mean time or Greenwich meridian time (GMT), the former name for mean solar time at the original site of the Royal Observatory in Greenwich, England, which is located on the prime meridian. ): 15-APR-2002 01:34 PM GMT (Greenwich Mean Time) See UTC. GMT - Universal Time 1 |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion