Scott Technologies Reports Record Results for Full Year and Fourth Quarter 1999 With Sales Up Approximately 14% and Earnings Per Share From Continuing Operations Up Approximately 103%.Business Editors CLEVELAND--(BUSINESS WIRE)--Feb. 1, 2000 Scott Technologies Reports Record Results for Full Year and Fourth Quarter 1999 With Sales Up Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 14% and Earnings Per Share From Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the Up Approximately 103% Company Enters 2000 'Focused, Strengthened and Growing' 2000 Sales Projection projection, in psychology: see defense mechanism. See rear-projection TV, front-projection TV and LCD panel. (theory) projection - In domain theory, a function, f, which is (a) idempotent, i.e. Increased To In Excess Of $230 Million Scott Technologies, Inc. (Nasdaq:SCTT SCTT Strong Church–Turing thesis ) today reported record results for 1999, with sales increasing approximately 14 percent and earnings from continuing operations soaring soaring: see flight; glider. soaring or gliding Sport of flying a glider or sailplane. The craft is towed behind a powered airplane to an altitude of about 2,000 ft (600 m) and then released. approximately 103 percent. &uot;1999 was a year of tremendous growth for Scott -- with double- digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. sales growth and more than doubled earnings per share from continuing operations,&uot; said Glen W. Lindemann Lindemann is a surname, and may refer to:
ther·mal adj. 1. Of, relating to, using, producing, or caused by heat. 2. imaging camera for firefighters -- which contributed approximately $6 million of sales in its first year on the market. Finally, the Health &Safety group added approximately $7 million of sales from its Scott/Bacharach Instruments joint venture.&uot; Lindemann added, &uot;We also were pleased with the steady performance of our Aviation &Government Products Group, which maintained its sales level during 1999 despite the expected absence of the sizeable emergency escape breathing device (EEBD EEBD Emergency Escape Breathing Device ) orders that were included in 1998's results, as well as the softness in the large air-frame OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and sector of the aviation market.&uot; &uot;In addition to our superb financial performance, we took several important steps during 1999 to ensure our future growth,&uot; said Mark A. Kirk, senior vice president and chief financial officer. &uot;First, we completed our strategic evolution into a tightly focused, highly profitable growth operation with the previously announced sale of Interstate in·ter·state adj. Involving, existing between, or connecting two or more states. n. One of a system of highways extending between the major cities of the 48 contiguous United States. Noun 1. Electronics (IEC (International Electrotechnical Commission, Geneva, Switzerland, www.iec.ch) An organization that sets international electrical and electronics standards founded in 1906. It is made up of national committees from over 60 countries. IEC - International Electrotechnical Commission ). Second, we solidified so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. our balance sheet by -- among other things -- building a significant cash war chest through asset sales and strong operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , repurchasing stock and refinancing Refinancing An extension and/or increase in amount of existing debt. our debt. Finally, we added two complementary, highly accretive businesses to the Scott family through our strategic acquisition program. We clearly enter 2000 focused, strengthened and growing.&uot; For the year ended December December: see month. 31, 1999, Scott Technologies' sales increased approximately 14 percent to a record $201.5 million, compared with sales of $177.1 million in 1998. The company's income from continuing operations in 1999 climbed approximately 103 percent to a record $19.2 million, or $1.05 per share on a 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. basis, compared with last year's income from continuing operations of $9.5 million, or $0.52 per share on a diluted basis. The company reported net income of $50.3 million, or $2.74 per share on a diluted basis, for the year, compared with 1998's net loss of $8.6 million, or ($0.47) per share on a diluted basis. 1999's net income includes $31.2 million, or $1.70 per share on a diluted basis, of income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . This figure comprises such previously announced items as the gain of $17.3 million from the sale of IEC, the earn-out Earn-out Refers to an additional payment in a merger or acquisition that is not part of the original acquisition cost, which is based on the acquired company's future earnings relative to a level determined by the merger agreement. payment of $17.9 million from the 1997 sale of Snorkel snorkel, tube through which a submarine or diver can draw air while underwater. When in use, the top of the snorkel tube extends above the water surface into the air. , an adjustment of ($2.6) million to the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the company's real estate portfolio, $1.8 million of earnings from IEC, as well as a fourth quarter adjustment of ($3.2) million to the carrying value of the company's deferred divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). proceeds. Scott achieved record 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. of $37.6 million in 1999, an increase of approximately 33 percent over last year's operating income of $28.3 million. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for 1999 improved to 33.9 percent of sales, compared to last year's operating margin of 32.3 percent of sales. &uot;Our significantly improved operating margin is the result of our ongoing cost reduction and lean manufacturing Lean manufacturing is the production of goods using less of everything compared to mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. initiatives, coupled with increased sales volume,&uot; said Kirk. Included in the company's 1999 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. is $6.8 million of corporate general and administrative (G&) expenses, a decrease of 31 percent from last year's G& expenses of $9.9 million. Excluding these corporate expenses, the Scott Aviation division's operating profit for the year was $44.4 million, or 22.0 percent of sales, compared to last year's operating profit of $38.2 million, or 21.6 percent of sales. For the fourth quarter ended December 31, 1999, Scott Technologies' sales increased approximately 26 percent to a record $52.6 million, compared with sales of $41.7 million in 1998's fourth quarter. The company's income from continuing operations in the fourth quarter of 1999 climbed approximately 250 percent to a record $5.3 million, or $0.29 per share on a diluted basis, compared with last year's fourth quarter income from continuing operations of $1.5 million, or $0.08 per share on a diluted basis. The company reported net income of $2.1 million, or $0.12 per share on a diluted basis, for the fourth quarter of 1999, compared with 1998's fourth quarter net loss of $2.0 million, or ($0.11) per share on a diluted basis. Included in 1999's fourth quarter net income is an adjustment of approximately ($3.2) million to the carrying value of the company's deferred divestiture proceeds. Scott achieved record operating income of $9.3 million for the fourth quarter of 1999, an increase of approximately 72 percent over last year's fourth quarter operating profit of $5.4 million. Operating margin for the fourth quarter of 1999 improved to 34.8 percent of sales, compared to last year's fourth quarter operating margin of 31.2 percent of sales due to the same factors that had a positive influence on the full year's operating margin. Included in the company's fourth quarter operating profit is $1.4 million of corporate general and administrative (G&) expenses, a decrease of 52 percent from last year's fourth quarter G& expenses of $2.9 million. Excluding these corporate expenses, the Scott Aviation division's operating profit for the fourth quarter was $10.7 million, or 20.3 percent of sales, compared to last year's fourth quarter operating profit of $8.3 million, or 19.9 percent of sales. Bookings for 1999 were approximately $197 million, up from last year's bookings of approximately $185 million. This increase includes a record level of bookings within the company's Health &Safety Product Group. 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. at the end of the fourth quarter of 1999 was $57.1 million, down slightly from last year's backlog at the end of the fourth quarter of $61.2 million. &uot;Our strong bookings and backlog figures are additional evidence of the strong momentum we have built in 1999,&uot; said Kirk. &uot;Accordingly, we have increased our sales projection for 2000 from approximately $225 million to in excess of $230 million.&uot; Scott Technologies, Inc. is a leading designer and manufacturer of sophisticated, high-performance Adj. 1. high-performance - modified to give superior performance; "a high-performance car" superior - of high or superior quality or performance; "superior wisdom derived from experience"; "superior math students" respiratory respiratory /res·pi·ra·to·ry/ (res´pi-rah-tor?e) pertaining to respiration. res·pi·ra·to·ry adj. Of, relating to, used in, or affecting respiration. protection systems, gas detection instruments and other life saving products for aerospace, aviation, defense, firefighting 1. firefighting - What sysadmins have to do to correct sudden operational problems. An opposite of hacking. "Been hacking your new newsreader?" "No, a power glitch hosed the network and I spent the whole afternoon fighting fires." 2. , government, and industrial markets. Some statements contained in this news release are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and involve a number of risks and uncertainties. The company's actual experience may differ materially from that anticipated in such statements. Among those factors that could cause actual results to differ materially include but are not limited to the impact of competitive products and pricing; unexpected delays in product development; changes in business conditions and product mix; successfully consummating and integrating acquisitions; and other risks detailed in the company's Securities and Exchange Commission filings.
(tables attached)
Scott Technologies, Inc.
Consolidated Financial Results
(in thousands, except per share data)
Three Months Ended
December 31,
1999 1998
------- -------
Net Sales $52,597 $41,733
Cost of Sales 34,312 28,694
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Gross Profit on Sales 18,285 13,039
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% of Sales 34.8% 31.2%
Operating Expenses:
Selling, General and Administrative 7,891 7,020
Research and Development 1,097 629
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Total Operating Expenses 8,988 7,649
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Operating Income 9,297 5,390
------- -------
% of Sales 17.7% 12.9%
Other Expense (Income):
Refinancing Costs 94 131
Interest Expense 1,575 2,655
Interest Income (1,064) (503)
Other, Net 430 568
------- -------
Income Before Income Taxes 8,262 2,539
Income Tax 2,933 1,041
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Income from Continuing Operations 5,329 1,498
Discontinued Operations, net of tax:
Income (Loss) from Operations - 679
Gain (Loss) on Disposal (3,185) (4,200)
Extraordinary (Loss) on Extinguishment of Debt - -
------- -------
Net Income (Loss) $2,144 ($2,023)
------- -------
------- -------
Weighted Average Shares - Basic 17,851 17,984
Weighted Average Shares - Diluted 18,199 18,062
Per Share Data - Basic EPS:
---------------------------
Income from Continuing Operations $0.30 $0.08
Income (Loss) from Discontinued Operations (0.18) (0.19)
(Loss) on Early Extinguishment of Debt - -
------- -------
Net Income (Loss) $0.12 ($0.11)
------- -------
------- -------
Per Share Data - Assuming Dilution:
-----------------------------------
Income from Continuing Operations $0.29 $0.08
Income (Loss) from Discontinued Operations (0.17) (0.19)
(Loss) on Early Extinguishment of Debt - -
------- -------
Net Income (Loss) $0.12 ($0.11)
------- -------
------- -------
EBITDA from Continuing Operations $10,988 $5,544
------- -------
------- -------
Twelve Months Ended
December 31,
1999 1998
------- -------
Net Sales $201,541 $177,108
Cost of Sales 133,206 119,853
------- -------
Gross Profit on Sales 68,335 57,255
------- -------
% of Sales 33.9% 32.3%
Operating Expenses:
Selling, General and Administrative 27,199 25,813
Research and Development 3,571 3,113
------- -------
Total Operating Expenses 30,770 28,926
------- -------
Operating Income 37,565 28,329
------- -------
% of Sales 18.6% 16.0%
Other Expense (Income):
Refinancing Costs 375 652
Interest Expense 8,727 12,550
Interest Income (3,597) (3,396)
Other, Net 1,662 2,602
------- -------
Income Before Income Taxes 30,398 15,921
Income Tax 11,160 6,427
------- -------
Income from Continuing Operations 19,238 9,494
Discontinued Operations, net of tax:
Income (Loss) from Operations 1,761 (6,275)
Gain (Loss) on Disposal 29,440 (10,098)
Extraordinary (Loss) on Extinguishment of Debt (156) (1,689)
------- -------
Net Income (Loss) $50,283 ($8,568)
------- -------
------- -------
Weighted Average Shares - Basic 18,075 18,321
Weighted Average Shares - Diluted 18,357 18,390
Per Share Data - Basic EPS:
Income from Continuing Operations $1.06 $0.52
Income (Loss) from Discontinued Operations 1.73 (0.90)
(Loss) on Early Extinguishment of Debt (0.01) (0.09)
------- -------
Net Income (Loss) $2.78 ($0.47)
------- -------
------- -------
Per Share Data - Assuming Dilution:
Income from Continuing Operations $1.05 $0.52
Income (Loss) from Discontinued Operations 1.70 (0.90)
(Loss) on Early Extinguishment of Debt (0.01) (0.09)
------- -------
Net Income (Loss) $2.74 ($0.47)
------- -------
------- -------
EBITDA from Continuing Operations $42,981 $30,842
------- -------
------- -------
Scott Technologies, Inc.
Consolidated Balance Sheet
(in thousands)
December 31, December 31,
ASSETS 1999 1998
--------- ---------
CURRENT ASSETS
Cash and Cash Equivalents $67,924 $39,344
Trade Accounts Receivable, net 18,938 13,978
Inventories 33,193 26,360
Prepaid Expenses 2,311 939
Recoverable Income Taxes - 974
Current Deferred Tax Asset 14,060 28,000
Net Assets Related to Discontinued
Operations - 25,039
--------- ---------
Total Current Assets 136,426 134,634
--------- ---------
PROPERTY, PLANT AND EQUIPMENT
Land and Land Improvements 29,783 37,395
Buildings and Leasehold Improvements 12,718 14,696
Machinery and Equipment 26,492 18,682
--------- ---------
68,993 70,773
Accumulated Depreciation (18,828) (17,972)
--------- ---------
Net Property, Plant and Equipment 50,165 52,801
--------- ---------
OTHER ASSETS
Deferred Divestiture Proceeds and
Other, net 7,463 20,803
Prepaid Pension Costs 18,948 15,687
Intangible Assets 40,268 1,866
Cash Surrender Value of Insurance Policies 6,204 4,838
Prepaid Finance Costs 1,875 1,800
Deferred Tax Asset 13,215 26,936
Other 4,525 3,819
--------- ---------
Total Other Assets 92,498 75,749
--------- ---------
Total Assets $279,089 $263,184
--------- ---------
--------- ---------
December 31, December 31,
LIABILITIES 1999 1998
--------- ---------
CURRENT LIABILITIES
Accounts Payable $12,910 $15,661
Accrued Insurance Reserves 9,380 10,853
Accrued Compensation 4,315 3,964
Accrued Interest 1,133 2,435
Accrued Liabilities and Expenses 30,590 18,135
Current Maturities of Long-Term Debt 5,010 24,481
--------- ---------
Total Current Liabilities 63,338 75,529
--------- ---------
Long-Term Debt 69,990 75,550
Non-Current Insurance Reserves 17,300 26,172
Other Non-Current Liabilities 31,390 30,667
--------- ---------
Total Liabilities 182,018 207,918
--------- ---------
STOCKHOLDERS' EQUITY
Common Stock 1,905 1,886
Capital Surplus 114,502 112,409
Retained Earnings (Deficit) 3,708 (46,575)
Accumulated Other Comprehensive (Loss) (1,563) (3,229)
Treasury Stock (21,481) (9,225)
--------- ---------
Total Stockholders' Equity 97,071 55,266
--------- ---------
Total Liabilities and Stockholders'
Equity $279,089 $263,184
--------- ---------
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