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REXNORD CORPORATION REPORTS GROWTH IN SALES AND EARNINGS

 MILWAUKEE, Jan. 26 /PRNewswire/ -- Rexnord Corporation (NYSE: REX), a Wisconsin-based, worldwide manufacturing company, today reported operating profit for the second quarter ended Dec. 31, 1992 of $17.9 million, up 24 percent from $14.5 million in the corresponding quarter last year. Sales for the current quarter of $125.6 million reflect an increase of 1.2 percent over the prior quarter's sales of $124.1 million. Net earnings before preferred stock dividends totaled $4.4 million or $.24 per share as compared to $.1 million or $.01 per share last year. Preferred stock dividends of $5.4 million paid in last year's quarter reduced earnings available to common stockholders to a loss of $5.4 million or $1.07 per share last year.
 Commenting on the company's second quarter, James R. Swenson, chairman, president and CEO, stated: "Rexnord's U.S.-based industrial businesses continued to recover in both their domestic and export markets; on a year-over-year basis, sales to these markets were up 3.2 percent in the first quarter and 5.7 percent in the second quarter. However, these gains were partially offset by weaknesses in our commercial aerospace and foreign-based industrial businesses resulting in an increase in total company sales year-to-date of 2.1 percent over last year.
 "Our improved profitability is a result of our continuing commitment to cost reduction as well as the volume improvements in our domestic industrial businesses. Late last year we completed the closing of three manufacturing locations, and we've reduced overall employment by 425 positions in the past 12 months. In addition, current quarter profits include a pretax gain of $1.6 million related to restructuring of a pension plan for certain non-U.S. employees."
 Net earnings for the first six months before nonrecurring extraordinary expenses related to the company's recent recapitalization and preferred stock dividends totaled $8.7 million or $.50 per share as compared to net earnings of $.2 million or $.03 per share last year. The first quarter of fiscal 1993 included the completion of a comprehensive recapitalization of the company. In connection with the recapitalization, the company incurred certain extraordinary charges to earnings resulting from the premiums paid to retire the Subordinated Notes and the write-off of unamortized deferred loan costs. These charges amounted to $27.3 million or $1.56 per share. After considering this nonrecurring charge and dividends on preferred stock, the company reported a net loss for the current six-month period of $1.13 per share compared to a loss of $2.14 per share on a historical basis last year.
 Pro Forma Results
 The recapitalization completed July 9, 1992 had the effect of significantly reducing the interest cost of the company, eliminating all preferred stock dividends and increasing the number of common shares outstanding. Accordingly, earnings and earnings per share data for the current quarter are not comparable to results reported under the previous capital structure. To achieve comparative numbers, pro forma results for fiscal 1992 and 1993 include adjustments for interest expense, preferred stock dividends and the number of common shares outstanding. Net earnings for the current quarter of $4.4 million or $.24 per share represent a 71 percent increase over the last year's pro forma net earnings of $2.4 million or $.14 per share. For the first six months, net earnings on a pro forma basis this year of $9.0 million or $.50 per share was 78 percent higher than last year's net earnings of $5.1 million or $.29 per share.
 Swenson concluded, "Through six months, incoming orders are up 4.5 percent over last year. Our domestic industrial businesses continue to recover while our foreign-based businesses are trailing last year's rates due principally to soft European markets. Commercial aerospace orders are strong thus far this year due to favorable order placement patterns; we expect orders in the second half to more accurately mirror existing difficulties in the commercial aircraft industry. Given these diverse, uncertain market conditions, we continue to exercise caution and concentrate on controlling costs while remaining enthusiastic about the company's prospects as the overall economic recovery gains momentum."
 Rexnord is a leading worldwide manufacturer and supplier of mechanical power transmission components and related products. Rexnord employs approximately 4,820 persons at 18 domestic and seven international manufacturing locations and at other offices, service centers and warehouses throughout the world.
 REXNORD CORPORATION
 Condensed Consolidated Financial Data
 (Unaudited)
 (Dollars in thousands, except per share data)
 INCOME STATEMENT DATA: Second Quarter Ended
 Historical Pro Forma(a)
 12/31/92 12/31/91 12/31/92 12/31/91
 Net sales $125,602 $124,102 $125,602 $124,102
 Cost of goods sold 82,741 83,648 82,741 83,648
 S, G & A expense 25,234 24,394 25,234 24,394
 Goodwill amortization 2,107 2,107 2,107 2,107
 Other (income) expense (2,421) (568) (2,421) (568)
 Operating profit 17,941 14,521 17,941 14,521
 Operating profit pct. 14.3 11.7 14.3 11.7
 Interest expense, net 9,877 14,421 9,877 9,681
 Pretax profit 8,064 100 8,064 4,840
 Tax provision 3,710 54 3,710 2,424
 Earnings before extraordinary
 loss and dividends on
 preferred stock $4,354 $46 $4,354 $2,416
 Dividends on preferred stock (b) -- (5,425) -- --
 Extraordinary loss -
 recapitalization (c) -- -- -- --
 Net earnings (loss) applicable
 to common stockholders $4,354 $(5,379) $4,354 $2,416
 Earnings per share:
 Earnings before extraordinary
 loss and dividends on
 preferred stock $0.24 $0.01 $0.24 $0.14
 Dividends on preferred
 stock (b) -- (1.08) -- --
 Extraordinary loss -
 recapitalization (c) -- -- -- --
 Net earnings (loss) per share $0.24 $(1.07) $0.24 $0.14
 Shares used in EPS
 calculation (000s) 18,120 5,010 18,120 17,289
 EBITDA $23,746 $20,176 -- --
 Net new orders $135,395 $129,832 -- --
 Six Months Ended
 Historical Pro Forma(a)
 12/31/92 12/31/91 12/31/92 12/31/91
 Net sales $252,220 $247,150 $252,220 $247,150
 Cost of goods sold 164,669 166,191 164,669 166,191
 S, G & A expense 50,172 48,574 50,172 48,574
 Goodwill amortization 4,214 4,214 4,214 4,214
 Other (income) expense (3,239) (1,468) (3,239) (1,468)
 Operating profit 36,404 29,639 36,404 29,639
 Operating profit pct. 14.4 12.0 14.4 12.0
 Interest expense, net 20,146 29,304 19,727 19,484
 Pretax profit 16,258 335 16,677 10,155
 Tax provision 7,561 184 7,672 5,086
 Earnings before extraordinary
 loss and dividends on
 preferred stock $8,697 $151 $9,005 $5,069
 Dividends on preferred stock (b)(1,158) (10,852) -- --
 Extraordinary loss -
 recapitalization (c) (27,303) -- -- --
 Net earnings (loss) applicable
 to common stockholders $(19,764) $(10,701) $9,005 $5,069
 Earnings per share:
 Earnings before extraordinary
 loss and dividends on
 preferred stock $0.50 $0.03 $0.50 $0.29
 Dividends on preferred
 stock (b) (0.07) (2.17) -- --
 Extraordinary loss -
 recapitalization (c) (1.56) -- -- --
 Net earnings (loss) per share $(1.13) $(2.14) $0.50 $0.29
 Shares used in EPS
 calculation (000s) 17,544 5,010 18,113 17,289
 EBITDA $48,107 $40,895 -- --
 Net new orders $264,697 $253,170 -- --
 REXNORD CORPORATION
 Condensed Consolidated Financial Data
 (Unaudited)
 (Dollars in thousands, except per share data)
 BALANCE SHEET DATA: 12/31/92 6/30/92
 Pro forma(d) Historical
 Current assets $192,711 $194,661 $184,167
 Other noncurrent assets 25,091 19,627 24,843
 Goodwill 301,215 305,429 305,429
 Property, net 144,939 148,784 148,784
 Total assets $663,956 $668,501 $663,223
 Current liabilities $97,128 $85,686 $98,464
 Long-term debt 377,278 387,047 404,573
 Long-term accrued liabilities 56,814 66,706 66,706
 Deferred income taxes 11,655 14,128 14,128
 Preferred stock issued
 by subsidiary -- -- 4,866
 Stockholders' equity 121,081 114,934 74,486
 -- $663,956 $668,501 $663,223
 (a) Pro forma adjusts interest expense and preferred stock dividends as if the recapitalization occurred on July 1, 1992 for fiscal 1993 data, and on July 1, 1991 for fiscal 1992 data.
 (b) In connection with the recapitalization, all outstanding preferred stock was retired. The final dividend on the preferred stock amounted to $1,158 and was paid during the first quarter of 1993 fiscal.
 (c) In connection with the recapitalization during the first fiscal quarter ended September 1992, extraordinary charges related to the premium paid to retire the Subordinated Notes and the write-off of unamortized loan costs were incurred. These nonrecurring charges amounted to $27.3 million ($1.56 per share), net of income tax benefits of $10.6 million. )? The company completed a major recapitalization on July 9, 1992. Pro forma balance sheet information as of June 30, 1992 is presented as if the recapitalization had occurred on June 30, 1992.
 -0- 1/26/93
 /CONTACT: Thomas Jansen of Rexnord, 414-643-2252/
 (REX)


CO: Rexnord Corporation ST: Minnesota IN: SU: ERN

KH -- MN013 -- 9289 01/26/93 16:52 EST
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Date:Jan 26, 1993
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