Elsag Bailey Process Automation N.V. Reports Third Quarter 1998 Results.AMSTERDAM Amsterdam, city, Netherlands Amsterdam (ăm`stərdăm', Dutch ämstərdäm`), city (1994 pop. 724,096), constitutional capital and largest city of the Kingdom of the Netherlands, North Holland prov. , the Netherlands--(BUSINESS WIRE)--Oct. 28, 1998-- Elsag Bailey Bailey may refer to:
In the United Kingdom:
See: New York Stock Exchange :EBY EBY Ente Binacional Yaciretá (Argentina-Paraguay) ) today announced financial results for the third quarter ending September September: see month. 25, 1998. OPERATING RESULTS Net income recorded by Elsag Bailey in the third quarter, applicable to common shareholders, was $9.5 million or $0.25 per share, assuming conversion of the preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. . This compares to $6.4 million or $0.17 per share in the third quarter 1997, 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. and assuming conversion of the preferred shares. Bookings were $406 million this quarter, which compares to bookings of $317 million one year ago. Revenues were $360 million this quarter, compared to revenues of $365 million in the third quarter of 1997. Currency translation did not have an impact on the quarterly comparison of bookings and revenues, while divestitures negatively impacted both bookings and revenues by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $6 million. Bookings continue to show double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" growth, driven in the quarter by the Systems business unit and by electric utility market. Bookings grew in the Middle East, Central and Eastern Europe The term "Central and Eastern Europe" came into wide spread use, replacing "Eastern bloc", to describe former Communist countries in Europe, after the collapse of the Iron Curtain in 1989/90. and, to a lesser extent, in the Americas A·mer·i·cas , the See America. . After the fourth consecutive quarter reporting a book to bill ratio above 1, backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. increased to $863 million at the end of September from $792 million at the end of June June: see month. . Gross Margin increased from 33.6% in the previous quarter to 34.4%, equivalent to the margin reported in the third quarter of 1997. Continued price pressure within a challenging competitive environment was still affecting profit during the quarter. The Company's operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. continued to benefit from the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: reduction of selling, general, and administrative (SG&A) expenses and the continuing consolidation of R&D activities and spending, while also benefiting in the quarter from third party R&D funding. SG&A expenses this quarter were $82.2 million or 22.8 percent of revenues, compared to $87.5 million or 24.0 percent of revenues, before restructuring charges taken in the third quarter of 1997. During the quarter the Company reported as SG&A certain additional legal expenses associated with ongoing litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and the release of excess 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). reserves, each amounting to approximately $1 million. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , before amortization, was 7.9 percent, up from 5.4 percent one year ago. Earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ), including a $1 million gain related to the sale of a non operating investment in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , were $38.1 million, as compared to $29.8 million before restructuring charges in the same quarter one year ago. Net debt was $663.5 million as of September 25, compared to $680.4 million one year ago and to $591.1 million as of June 25, 1998. Exchange rate fluctuations resulted in increasing net debt by approximately $23 million from June to September 1998. The increase in net debt at the end of the third quarter is due primarily to inflated working capital as a result of the high level of activity experienced late in the quarter. NINE-MONTH SUMMARY For the nine months ending September 25, 1998, Elsag Bailey's net income applicable to common shareholders, before restructuring charges, was $29.7 million, compared to $22.0 million in the first nine months of 1997. Earnings per share, before non-recurring charges and assuming conversion of the preferred shares, were $0.78, compared to $0.58 in the same period last year. Restructuring charges taken during 1998 were $10.3 million before tax, and $6.9 million after tax. After the restructuring charges and dividends on preferred shares, net income applicable to common shareholders, was $11.0 million or $0.38 per share, calculated on 29,201,981 shares. This compares to a net loss of $2.8 million or $0.10 per share, on the same basis last year. Bookings were $1,190 million in the first nine months of 1998, compared to $1,068 million in the same period last year. Revenues were $1,064 million, compared to $1,113 million last year. Currency translation negatively impacted bookings and revenues in the first nine months of 1998 by approximately three percent. Adjusting for the effects of currency translation and the sale of non-core businesses, in a year-on-year comparison, bookings for the first nine months increased by $167 million or 16 percent. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , before amortization and restructuring charges, was $72.5 million or 6.8 percent, compared to $64.1 million or 5.8 percent in 1997. Mr. Vincenzo Vincenzo may refer to:
pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta levels and, most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , to improved earnings per share. We have achieved further reductions in SG&A spending; due in part to the restructuring actions of recent years and to ongoing cost-improvement initiatives such as our global sourcing program. "We are especially pleased with Elsag Bailey's continued strong bookings performance and its effect on the Company's backlog, which has now increased for four consecutive quarters. This bookings performance comes during a period of continued economic challenge in a number of key markets, and amidst a·midst prep. Variant of amid. [Middle English amiddes : amidde; see amid + -es, adverbial suffix; see -s3.] a well-publicized sale process involving the Company. The continued confidence of our customers, highlighted by a series of major orders announced during the quarter, is very gratifying grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. . These bookings successes span the full range of systems, instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. , and analytical analytical, analytic pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. product lines. Geographically, we are especially pleased by the response of customers in Germany, Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , and the Middle East, and by the steadiness of our
position in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Asia."
In a major recent action, the Company entered into a definitive agreement, on October October: see month. 14, 1998, with an affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. of Asea Brown Boveri Ltd. (ABB n. 1. Among weavers, yarn for the warp. Hence, Noun 1. ABB - an urban hit squad and guerrilla group of the Communist Party in the Philippines; formed in the 1980s ), under which ABB has offered to acquire Elsag Bailey Process Automation N.V. Pursuant to this offer, the Company reported on October 20 that ABB Transportation Participations B.V. has begun its tender offer for all outstanding common shares of the Company at US$39.30 per common share, and for all 5-1/2% preferred securities issued by the Elsag Bailey Financing Trust at US$61.21 per preferred security. Each of the Supervisory Board Supervisory board The board of directors that represents stakeholders in the governance of the corporation. and the Management Board of the Company has determined that this offer is fair to, and in the best interests of, shareholders of the Company and its other constituencies, and has recommended that the shareholders accept the offer and tender their shares accordingly. The tender offer is dependent, among other conditions, on a minimum of 75% of the fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share capital of the Company being validly tendered and not withdrawn, and on certain 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. approvals. The tender offer expires at midnight on November November: see month. 17, 1998 unless ABB extends the period of time during which the tender offer is open. Commenting on the acquisition agreement, Mr. Cannatelli stated, "We are very pleased by this commitment of business partnership from a quality industry leader such as ABB Group. We have worked hard to position Elsag Bailey as a leader in process automation, and we believe this marriage will bring significant benefits to our company, our customers, and our industry as a whole. We are very pleased with the excellent value which this transaction represents for our shareholders, and we are committed to consummating the sale in the most timely fashion permitted by the regulatory process. I am very grateful to our shareholders for their patience Patience, poem Patience: see Pearl, The. patience, card game patience: see solitaire. Patience See also Longsuffering. and their support during the sale process, and throughout the tenure of Elsag Bailey Process Automation." One of the world's leading process automation companies, Elsag Bailey Process Automation N.V., incorporated in the Netherlands Netherlands (nĕth`ərləndz), Du. Nederland or Koninkrijk der Nederlanden, officially Kingdom of the Netherlands, constitutional monarchy (2005 est. pop. 16,407,000), 15,963 sq mi (41,344 sq km), NW Europe. , has grown revenues to more than $1.5 billion by aggressively expanding its global markets and technologies. The Company employs some 11,000 employees in over 30 countries. Elsag Bailey's computer and electrical products -- control systems, instrumentation products, and analytical devices -- keep its customers on the cutting edge of productivity. Elsag Bailey's global customers are among the leading names in the process industries including electric utilities, oil and gas, chemicals and pharmaceuticals, pulp and paper, water and wastewater Wastewater is any water that has been adversely affected in quality by anthropogenic influence. It comprises liquid waste discharged by domestic residences, commercial properties, industry, and/or agriculture and can encompass a wide range of potential contaminants and , metals and ceramics ceramics (sərăm`ĭks), materials made of nonmetallic minerals that have been permanently hardened by firing at a high temperature, or objects made of such materials. , and other industrial companies. For copies of additional press releases or quarterly reports, call Elsag Bailey's Fax-on-Demand service at 1-888-329-2311, or visit the Company's web site at www.ebpa.com. Requests for information can also be made via e-mail at investorinfo@bailey.com. This document 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. subject to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. created by the Securities Litigation Reform Act of 1995. These include, without limitation, the statements related to Elsag Bailey's sale process and the definitive agreement entered into with ABB, and the conditions to closing of ABB's tender offer, outlook for the remainder of the year, the success of ongoing cost improvement and profitability initiatives, SG&A expenses, operating performance, earnings, results and liquidity needs, anticipated conditions in its markets, including investments by customers in the Company's product area; the effect of foreign currency fluctuations relative to the U.S. dollar, the ability of the Company to successfully and in a timely fashion complete its major projects, the ability of the Company to generate cash, secure adequate financing, reduce debt and grow, improve profitability and shareholder value, and any other statements concerning matters that are not historical facts. Actual results and performance could differ materially from those expressed in or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by these forward-looking statements as a result of a number of known and unknown risks. These and other risks and uncertainties affecting Elsag Bailey are discussed in greater detail in Elsag Bailey's Form 20-F filed with the 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. Securities and Exchange Commission for the year ended December December: see month. 31, 1997. -0-
Elsag Bailey Process Automation N.V.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Amounts in thousands, except share data)
For the quarter ended
_____________________
September 25,
1998 1997
____ ____
Revenues $ 359,920 $ 365,388
Cost of sales 236,000 240,347
____________ ____________
Gross profit 123,920 125,041
Selling, general and
administrative expenses 82,045 87,572
Research, development and
engineering expenses 13,244 18,942
Amortization of intangibles 7,925 10,284
____________ ____________
Operating income 20,706 8,243
Interest expense 10,422 8,988
Other income (1,646) (896)
____________ ____________
Income (loss) before
income taxes, minority
interest and extraordinary item 11,930 151
Income tax expense (benefit) 2,769 (9,908)
Minority interest in net income
(loss) of subsidiaries (266) (397)
Minority interest -
dividends on preferred securities 3,999 3,999
____________ ____________
Income (loss) before extraordinary item 5,428 6,457
Extraordinary item -
write-off deferred financing costs --- ---
____________ ____________
Net income (loss) $ 5,428 $ 6,457
____________ ____________
____________ ____________
Net income (loss) per share:
Basic $ 0.19 $ 0.22
____________ ____________
____________ ____________
Diluted $ 0.18 $ 0.22
____________ ____________
____________ ____________
Assuming conversion of
the preferred shares (1) $ 0.25 $ 0.27
____________ ____________
____________ ____________
Weighted average number of
shares outstanding:
Basic 29,201,981 29,201,981
____________ ____________
____________ ____________
Diluted 29,543,000 29,224,000
____________ ____________
____________ ____________
Assuming conversion of
the preferred shares (1) 38,140,000 38,140,000
____________ ____________
____________ ____________
For the nine months ended
_________________________
September 25,
1998 1997
____ ____
Revenues $ 1,064,272 $ 1,113,407
Cost of sales 705,942 733,439
____________ ____________
Gross profit 358,330 379,968
Selling, general and
administrative expenses 247,499 277,324
Research, development and
engineering expenses 44,529 58,013
Amortization of intangibles 21,927 29,493
____________ ____________
Operating income 44,375 15,138
Interest expense 27,993 26,472
Other income (15,163) (8,929)
____________ ____________
Income (loss) before
income taxes, minority
interest and extraordinary item 31,545 (2,405)
Income tax expense (benefit) 6,889 (10,343)
Minority interest in net income
(loss) of subsidiaries (304) (1,058)
Minority interest -
dividends on preferred securities 11,773 11,773
____________ ____________
Income (loss) before extraordinary item 13,187 (2,777)
Extraordinary item -
write-off deferred financing costs (2,167) ---
____________ ____________
Net income (loss) $ 11,020 $ (2,777)
____________ ____________
____________ ____________
Net income (loss) per share:
Basic $ 0.38 $ (0.10)
____________ ____________
____________ ____________
Diluted $ 0.37 $ (0.10)
____________ ____________
____________ ____________
Assuming conversion of
the preferred shares (1) $ 0.60 $ 0.24
____________ ____________
____________ ____________
Weighted average number of
shares outstanding:
Basic 29,201,981 29,201,981
____________ ____________
____________ ____________
Diluted 29,465,000 29,206,000
____________ ____________
____________ ____________
Assuming conversion of
the preferred shares (1) 38,140,000 38,140,000
____________ ____________
____________ ____________
The way in which the income statement is impacted by non-recurring
charges is outlined below. These charges are associated with
restructuring, both in 1998 and 1997.
Non-recurring charges
For the quarter ended
September 25, 1998 September 25, 1997
__________________ __________________
Cost of sales $ --- $ 650
Selling, general and
administrative expenses --- 248
Research, development
and engineering expenses --- 362
Other expenses --- ---
________ ________
Loss before income taxes,
minority interest and
extraordinary item --- 1,260
Income tax (benefit) 26 (5,289)
________ ________
Net loss/(income) related
to non-recurring charges $ 26 $ (4,029)
________ ________
________ ________
Non-recurring charges
For the nine months ended
September 25, 1998 September 25, 1997
__________________ __________________
Cost of sales $ 4,344 $ 8,611
Selling, general and
administrative expenses 2,284 8,245
Research, development
and engineering expenses 56 3,022
Other expenses 306 ---
________ ________
Loss before income taxes,
minority interest and
extraordinary item 6,990 19,878
Income tax (benefit) (2,238) (6,848)
________ ________
Net loss/(income) related
to non-recurring charges $ 4,752 $ 13,030
________ ________
________ ________
The above expenses are for severance expenses and the restructuring of
Hartmann & Braun.
(1) Preferred shares are anti-dilutive in all periods.
Elsag Bailey Process Automation N.V.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Amounts in thousands)
September 25, 1998 December 31, 1997
__________________ _________________
Cash and cash equivalents $ 12,781 $ 15,179
Accounts receivable 325,021 326,630
Costs in excess of billings
on uncompleted contracts 202,335 147,571
Inventory 282,613 263,069
Other current assets 96,641 89,519
Other assets 1,127,673 1,096,185
_________ _________
Total assets $2,047,064 $1,938,153
_________ _________
_________ _________
Notes payable $ 34,890 $ 58,628
Current maturities of
long-term debt 622,418 39,107
Billings in excess of
costs on uncompleted contracts 56,295 56,996
Other current liabilities 478,773 463,375
Long-term debt 18,820 520,968
Other liabilities 328,386 303,818
Minority equity 8,450 9,208
Minority equity -
company obligated preferred
securities of grantor trust 282,947 279,067
Total shareholders' equity 216,085 206,986
_________ _________
Total liabilities and
shareholders' equity $2,047,064 $1,938,153
_________ _________
_________ _________
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