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HARSCO CORPORATION REPORTS RECORD NET INCOME ON DECREASED SALES FOR SECOND QUARTER

    HARRISBURG, Pa., July 29 /PRNewswire/ -- Malcolm W. Gambill, chairman and chief executive officer of Harsco Corporation (NYSE: HSC), today announced that the  company achieved record net income and earnings per share for the second quarter of 1993.
    Net income, reflecting improved profit margins in tracked vehicles, and, to a lesser extent, in pipe fittings, industrial grating products and metal reclamation and specialized steel mill services, was $22.3 million ($.89 per share on 25,056,000 average shares outstanding), vs. $18.8 million ($.72 per share on 26,104,000 average shares outstanding) for the similar period in 1992, despite an 8 percent decline in sales.  Sales were $354.6 million, as compared with $386.8 million for 1992's similar period, reflecting the planned reduction in the five-ton truck business.
    Second quarter sales for the Industrial Services and Building Products Group, at $77.3 million, were ahead of last year's second quarter, due to higher demand for all product classes.  Sales for the Engineered Products Group, at $140.9 million, were above those for 1992's comparable period, principally reflecting the acquisition made in railway maintenance equipment in June 1992.  Sales for the Defense Group, at $136.4 million, were well below those for the similar quarter in 1992, due to the phase down of the five-ton truck business.
    Operating profit for the second quarter for the Industrial Services and Building Products Group, at $8.7 million, was slightly above 1992's second quarter, reflecting the improved performance in metal reclamation and specialized steel mill services.  Operating profit for the Engineered Products Group, at $12.3 million, was well ahead of last year's similar period, aided by improved profits for most product classes, with the exception of gas containment products.  Operating profit for the Defense Group, at $21.1 million, was also well ahead of last year's second quarter, due to improved margins on tracked vehicle contracts.
    Net income for the six months ended June 30 was a record $53.2 million, materially assisted by an accounting change and by a gain on the sale of an investment, vs. $32.4 million for the comparable period in 1992, which was restated to reflect the adoption of an accounting change and also reflected a modest profit on the sale of a division and a product line.  Earnings per share were $2.11 on 25,190,000 average shares outstanding, as compared with $1.24 on 26,225,000 average shares outstanding for last year's first half.
    The company adopted, effective Jan. 1, 1993, Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which increased net income by $6.8 million ($.27 per share).  In the first half of 1993, the company also realized an after-tax gain of $5.4 million ($.21 per share) on the partial sale of an equity investment, which it purchased several years ago.  Results for the first six months of 1992 were restated to reflect the adoption, retroactive to Jan. 1, 1992, of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions", which had the effect of decreasing first six-month 1992 after-tax income by $7.2 million ($.27 per share).  The first half of 1992 also included after-tax profit of $2.3 million ($.09 per share) from the divestiture of the company's plastic pipe division and hydraulic tool product line, as previously reported.
    Sales for the first half were $700.4 million, compared with the $794.9 million recorded in the same period in 1992, principally due to the planned reduction of five-ton truck production.
    First half sales in the Industrial Services and Building Products Group, at $144.2 million, were slightly below those for the comparable period in 1992, due principally to the divestiture of the plastic pipe division in February 1992.  Sales for the Engineered Products Group, at $276.9 million, were ahead of 1992's first six months, reflecting higher volume in railway maintenance equipment from an acquisition made in June 1992 and increased sales in pipe fittings.  Sales for the Defense Group, at $279.3 million, were well below the level for the prior year's similar period, reflecting the planned reduction of five-ton truck production.
    Operating profit for the first half for the Industrial Services and Building Products Group, at $14.8 million, was below that for the comparable period in 1992, due to reduced earnings from metal reclamation and specialized steel mill services during the first quarter.  Results for 1992 included a modest profit on the sale of an unprofitable division.  The Engineered Products Group posted an operating profit of $20.0 million, slightly below 1992's level, reflecting lower demand for gas containment products.  Results for 1992 included a modest profit on the sale of a marginal product line.  The Defense Group posted an operating profit of $41.1 million, significantly ahead of the similar period for 1992, due to enhanced margins on contracts for tracked vehicles.
    Commenting on the outlook for the remainder of the year, Gambill stated, "We continue to expect that 1993 will be a solid year, and net income should surpass last year's record, excluding any effects of the proposed defense business partnership with FMC Corporation or the pending acquisition of MultiServ International, N.V.  It is likely, however, that 1993 net income excluding the effect of accounting changes and gains on sales of businesses and an investment will be lower than in 1992.  For 1994 and beyond, we see the prospect of steady growth in net income from 1993's level, excluding the effect of any accounting changes, nonrecurring gains and business combinations.  A key factor will be the rate of recovery from the worldwide recession, as we have yet to observe whether upturns made by the majority of our industrial businesses in the second quarter will be sustained."
    "Our total sales will decline this year, due primarily to the cessation, in June, of military truck production for the year.  Defense sales and earnings will decline in the second half of 1993 to about one half of their level for the first six months.  We anticipate defense sales and earnings continuing at least at this rate annualized through 1994.  We expect both our industrial and engineering groups' sales and earnings for the second six months of 1993 to exceed their performance for the first half.  Sales will decline should the proposed defense business partnership with FMC Corporation be consummated, as our statement of income would then include Harsco's 40 percent equity share of partnership earnings but none of the sales.  If the pending acquisition of MultiServ International, N.V. is consummated, sales will increase, but earnings for the year would be minimally diluted."
    Gambill added, "All of our divisions are poised to benefit from an economic upturn.  We continue to pursue multiple initiatives for earnings growth through acquisitions, internal expansion and global reach which we believe will sustain the trend of improving performance for the long-term.  The pending acquisition of MultiServ is a major strategic move in this pursuit."
    The Consolidated Financial Statements and Review of Operations by Group follow.
    Harsco Corporation is a diversified industrial manufacturing and service company headquartered in Camp Hill, Pa.  Harsco's 11 divisions provide products and services for defense, industrial, commercial and construction applications from over 100 major facilities in the United States and 13 foreign countries.
                          HARSCO CORPORATION
                   Consolidated Statements of Income
          (Unaudited; in thousands, except per-share amounts)
    Periods ended             Three months              Six months
    June 30                  1993       1992         1993        1992
    Net sales              $354,623   $386,751     $700,427    $794,892
    Operating expenses:
    Cost of sales           273,218    312,262      546,780     643,122
    Selling, administrative
      and general expenses   43,212     43,045       82,828      87,413
    Research and development  1,050      1,199        2,508       2,355
    Expense (income) for
      facility discontinuances
      or disposals              823       (475)         686      (4,073)
    Total                   318,303    356,031      632,802     728,817
    Profit from operations   36,320     30,720       67,625      66,075
    Other income (expense):
    Interest income           2,250      1,890        4,193       4,481
    Interest expense         (3,206)    (5,027)      (6,146)    (10,080)
    Equity in net income of
      unconsolidated companies  694      1,166        1,593       2,281
    Gain on sale of investment  ---        ---        8,971         ---
    Other, net                  395        929        1,162         999
    Total                       133     (1,042)       9,773      (2,319)
    Income before provision for
      income taxes and
      cumulative effect of
      accounting changes     36,453     29,678       77,398      63,756
    Provision for
      income taxes           14,172     10,916       30,960      24,180
    Income before cumulative
      effect of accounting
      changes                22,281     18,762       46,438      39,576
    Cumulative effect of
      accounting changes:
    Accounting for
      postretirement benefits
      other than pensions       ---        ---          ---      (7,184)
    Accounting for income taxes ---        ---        6,802         ---
    Net income              $22,281    $18,762      $53,240     $32,392
    Average shares of common
      stock outstanding      25,056     26,104       25,190      26,225
    Earnings per common share:
      Income before cumulative
      effect of accounting
      changes                  $.89       $.72        $1.84       $1.51
     Cumulative effect of
       changes in accounting    ---        ---         $.27       $(.27)
     Net income per share      $.89       $.72        $2.11       $1.24
     Cash dividends declared
      per share                $.35       $.33         $.70        $.66
    Note:  1992 was restated to reflect the adoption of SFAS 106 for postretirement benefits other than pensions.
                     Consolidated Balance Sheets
                     (Unaudited; in thousands)
                                      June 30, 1993   Dec. 31, 1992
    ASSETS:
    Current assets:
    Cash and cash equivalents           $140,229         $50,366
    Receivables                          263,118         317,319
    Inventories                          168,629         202,603
    Other current assets                  15,204          27,995
     Total current assets                587,180         598,283
    Property, plant and equipment, net   272,076         278,686
    Cost in excess of net assets of
      companies acquired, net             12,769          13,527
    Other assets                         104,520         100,729
    Total assets                        $976,545        $991,225
    LIABILITIES:
    Current Liabilities:
    Notes payable and current maturities $14,759         $11,227
    Accounts payable                      60,328          72,082
    Advances on long-term contracts       82,093          74,112
    Accrued long-term contract costs      10,185           9,583
    Other current liabilities            109,279         114,361
     Total current liabilities           276,644         281,365
    Long-term debt                       119,468         119,841
    Other liabilities                     85,430          94,916
    Total                                481,542         496,122
    SHAREHOLDERS' EQUITY:
    Common stock and additional
     paid-in capital                     125,088         119,977
    Cumulative adjustments               (14,742)         (8,688)
    Retained earnings                    586,259         550,486
    Treasury stock                      (201,602)       (166,672)
     Total shareholders' equity          495,003         495,103
     Total liabilities and
      shareholders' equity              $976,545        $991,225
                Consolidated Statements of Cash Flows
                    (Unaudited; in thousands)
    Period ended                     Three months     Six months
    June 30                         1993     1992    1993     1992
    Cash flows from operating
     activities:
    Net income                   $22,281   $18,762  $53,240  $32,392
    Adjustments to reconcile net
     income to net cash provided
     by operating activities:
    Depreciation                  14,306    14,464   28,794   28,903
    Cumulative effect of change in
     accounting principles           ---       ---   (6,802)   7,184
    Gain on sale of investment       ---       ---   (8,971)     ---
    Other, net                       351        33     (189)  (3,088)
    Changes in assets and
     liabilities, net of acquisition
     and dispositions of businesses:
    Receivables                   32,045    (1,234)  53,360  (16,331)
    Inventories                   29,094       (24)  35,304  (16,901)
    Accounts payable              (5,762)    7,489   (8,657) (10,718)
    Accrued long-term contract
     costs                           123    (5,031)     602  (10,371)
    Advances on long-term
     contracts                    (5,643)   12,505    7,938   17,151
    Other assets and liabilities (11,311)   (7,414)  (5,641)  (5,841)
    Net cash provided by operating
     activities                   75,484    39,550  148,978   22,380
    Cash flows from investing
     activities:
    Capital expenditures, net of
     disposals                   (14,037)   (9,957) (21,772) (19,448)
    Purchase of business, net of
     cash acquired                   ---   (26,993)  (2,100) (26,993)
    Proceeds from sales of
     operating units                 ---       ---      ---   44,466
    Proceeds from sale of investment ---       ---   11,471      ---
    Other investing activities       (58)    1,188       (2)   1,275
    Net cash (used) by investing
     activities                  (14,095)  (35,762) (12,403)    (700)
    Cash flows from financing
     activities:
    Short-term and long-term
     debt, net                     4,479   (11,448)   3,597  (12,706)
    Cash dividends paid on common
     stock                        (8,851)   (8,719) (17,725) (17,377)
    Common stock issued-options      880     1,581    3,823    8,161
    Common stock acquired for
     treasury                    (25,479)  (19,950) (36,322) (24,486)
    Net cash (used) by financing
     activities                  (28,971)  (38,536) (46,627) (46,408)
    Effect of exchange rate changes
     on cash                        (108)      (78)     (85)     (79)
    Net increase (decrease) in cash
     and cash equivalents         32,310   (34,826)  89,863  (24,807)
    Cash and cash equivalents
     at beginning of period      107,919   130,217   50,366  120,198
    Cash and cash equivalents at
     end of period               140,229    95,391  140,229   95,391
    Note:  1992 was restated to reflect the adoption of SFAS 106 for postretirement benefits other than pensions.
                  Review of Operations by Group
                     (Unaudited, in millions)
    Periods ended              Three months             Six months
    June 30                  1993         1992        1993      1992
    SALES:
    Industrial services
      and building products $77.3         $72.8      $144.2     $148.4
    Engineered products     140.9         137.8       276.9      271.7
    Defense                 136.4         176.2       279.3      374.8
    Total                  $354.6        $386.8      $700.4     $794.9
    INCOME BEFORE TAX:
    Group operating profit:
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Date:Jul 29, 1993
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