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RELIANCE ELECTRIC COMPANY ANNOUNCES SECOND QUARTER RESULTS

 CLEVELAND, July 19 /PRNewswire/ -- Reliance Electric Company (NYSE: REE) announced an 8 percent increase in net sales for the second quarter 1993 over the same period last year. Sales of $413 million for the quarter ended June 30, 1993 compared to 1992 second quarter sales of $383 million. Reliance had first quarter 1993 sales of $388 million.
 Earnings before interest and taxes of $26 million for the second quarter of 1993 compared to restated 1992 second quarter earnings of $36 million. Prior year earnings were restated to reflect the retroactive adoption of FAS 109 ("Accounting for Income Taxes"). Earnings before taxes were $19 million for the second quarter of 1993 versus $22 million for the same period last year. Earnings before extra-ordinary items were $9 million for the second quarter of 1993 compared to $12 million in the second quarter of 1992. Earnings per share before extraordinary items were $.19 versus $.18 in 1992. The per share increase in earnings reflects lower interest expense and preferred dividends resulting from the elimination of high-cost debt and preferred stock made possible by the recapitalization in May 1992.
 Reliance took a $4 million before tax charge to cover restructuring of its Electrical Group Drives Systems business. The restructuring charge primarily relates to the expense of consolidating some of the company's manufacturing capability and the related realignment and modernization of an engineering and business communication network to connect the company's central engineering resources with its Athens, Georgia manufacturing facility.
 Reliance also reported a $7 million extraordinary charge in the second quarter of 1993 due to the accelerated amortization of issuance fees and interest rate swap costs related to termination of the bank term loan facility which had been established during the May 1992 recapitalization. In April 1993, the Company issued $150 million principal amount of 6.8 percent Notes due April 15, 2003, the net proceeds of which were used to reduce outstanding borrowings under the term loan facility. The company also borrowed $209 million under a new bank credit facility and applied the proceeds to repay the remaining balances under the 1992 term loan and revolving credit facilities.
 "Despite disappointing levels of economic recovery in Europe, Japan and the United States, most of our business units are showing solid year-over-year performance. However, the continued postponement of large drive systems orders and the shifting of expenditures in the telecommunications industry to deployment of advanced fiber based technologies has shifted our current mix of orders and is requiring the realignment of resources to serve these sectors more cost effectively."
 Morley continued, "The challenge for 1993 has been clear. While we continue to extend a number of programs to set the base for Reliance's growth, we must do a better job of leveraging our existing base of sales and meeting profit expectations. To improve our operating leverage, we have undertaken a restructuring of our Drives Systems business through the consolidation of several regional drive centers and development of an expanded information and data communication network to link directly engineering with the Athens Control plant. These actions, along with other steps that do not involve a restructuring, will generate greater operating efficiencies and better serve our customers."
 Sales for the first half of 1993 were $801 million, a 6 percent increase over 1992 same period sales of $756 million. Earnings before extraordinary items for the 1993 first half were $21 million versus $18 million in 1992. Net earnings available for common stock were $14 million, or $.28 per share, for the first six months of 1993 compared to a loss of $13 million, or $.35 per share, for the same period in 1992.
 Reliance Electric Company, headquartered in Cleveland, Ohio designs, manufactures, sells and services a broad range of industrial and telecommunications equipment and had 1992 annual sales in excess of $1.5 billion. Reliance operates 47 manufacturing plants worldwide in 9 countries and employs approximately 14,000 people.
 Reliance Electric Company
 Earnings Information
 (unaudited)
 (in millions except share and per share data)
 Three Months Ended June 30
 1993 1992(A)
 Net sales $ 413 $ 383
 Cost and expenses:
 Cost of sales 314 283
 Selling, general and administrative 69 64
 Restructure 4 0
 Other 0 0
 Earnings before interest and taxes 26 36
 Interest expense 7 14
 Earnings before taxes 19 22
 Provision for income taxes 10 10
 Earnings before extraordinary items 9 12
 Extraordinary items, net of tax (7) (22)
 Net earnings $ 2 $ (10)
 Earnings from operations before
 extraordinary item $ 9 $ 12
 Less preferred stock dividends and
 accretion 0 5
 Earnings before extraordinary item
 for computation of net earnings
 per equivalent share of common stock 9 7
 Extraordinary item (7) (22)
 Net earnings available for common stock $ 2 $ (15)
 Net earnings per equivalent share of
 common stock (after preferred
 stock dividends and accretion):
 Earnings before extraordinary items $ .19 $ .18
 Extraordinary items (.14) (.51)
 Net earnings $ .05 $ (.33)
 Weighted average equivalent shares of
 common stock outstanding 50,738,710 42,873,978
 (A) - Restated to reflect retroactive adoption of FAS 109 Accounting for Income Taxes)
 Reliance Electric Company
 Earnings Information
 (unaudited)
 (in millions except share and per share data)
 Six Months Ended June 30
 1993 1992(A)
 Net sales $ 801 $ 756
 Cost and expenses:
 Cost of sales 606 559
 Selling, general and administrative 135 130
 Restructure 4 0
 Other 2 (1)
 Earnings before interest and taxes 54 68
 Interest expense 14 34
 Earnings before taxes 40 34
 Provision for income taxes 19 16
 Earnings before extraordinary items 21 18
 Extraordinary items, net of tax (7) (22)
 Net earnings $ 14 $ ( 4)
 Earnings from operations before
 extraordinary item $ 21 $ 18
 Less preferred stock dividends and
 accretion -0- 9
 Earnings before extraordinary item
 for computation of net earnings
 per equivalent share of common stock 21 9
 Extraordinary item (7) (22)
 Net earnings available for common stock $ 14 $ (13)
 Net earnings per equivalent share of
 common stock (after preferred
 stock dividends and accretion):
 Earnings before extraordinary items $ .42 $ .23
 Extraordinary items (.14) (.58)
 Net earnings $ .28 $ (.35)
 Weighted average equivalent shares of
 common stock outstanding 50,732,647 38,105,771
 (A) -- Restated to reflect retroactive adoption of FAS 109 (Accounting for Income Taxes)
 -0- 7/19/93
 /CONTACT: P. Kelly Tompkins of Reliance Electric, 216-266-5809/
 (REE)


CO: Reliance Electric Company ST: Ohio IN: MFG SU: ERN

AR -- CL015 -- 3044 07/19/93 12:23 EDT
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Date:Jul 19, 1993
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