Western Atlas Reports Third Quarter Results; New industrial company, UNOVA, to be spun off by the end of October.BEVERLY HILLS Beverly Hills, city (1990 pop. 31,971), Los Angeles co., S Calif., completely surrounded by the city of Los Angeles; inc. 1914. The largely residential city is home to many motion-picture and television personalities. , Calif.--(BUSINESS WIRE)--Oct. 21, 1997--Western Atlas Atlas, in Greek mythology Atlas (ăt`ləs), in Greek mythology, a Titan; son of Iapetus and Clymene and the brother of Prometheus. Inc. (NYSE NYSE See: New York Stock Exchange :WAI WAI Web Accessibility Initiative (W3C) WAI Where Am I? WAI Wales Arts International (UK) WAI Women in Aviation, International WAI Warm Air Intake WAI Web Application Interface ) today announced preliminary 1997 third quarter and nine-month results for its oilfield services activities, and for the industrial operations that soon will be spun off as UNOVA, Inc., a new publicly traded industrial technologies company. Combined sales and service revenues, including the operations to be spun off, amounted to $782.0 million and $2,312.8 million, respectively, for the 1997 third quarter and nine months, compared to $672.6 million and $1,848.5 million in the same periods a year ago. Net earnings were $41.4 million, or $0.75 per share, for the third quarter, with a net loss of $97.8 million, or $1.77 per share, for the nine months of this year. The nine-month loss was primarily due to a non-cash, non-tax deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). charge of $203.3 million related to the value of in-process research and development activities resulting from acquisitions in the Industrial Automation segment made earlier in 1997. On a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis, earnings from the Oilfield Services segment, which represents "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 ," were $30.1 million, or $0.55 per share in the third quarter of 1997, while earnings from the Industrial Automation segment, which is being reported as "discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. " due to the UNOVA spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. , were $11.3 million, or $0.20 per share. On a Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) basis, which includes all other corporate unallocated expenses assigned to continuing operations, earnings from the Oilfield Services segment were $27.3 million, or $0.49 per share in the third quarter of 1997, while earnings from the Industrial Automation segment were $14.1 million, or $0.26 per share. Oilfield Services (Western Atlas Western Atlas was formed in 1987 through the merger of Western Geophysical (owned by Litton Industries) and Dresser Atlas. The resulting company was a joint venture of Litton and Dresser Industries until it was spun off as a publicly traded company in 1994. Inc.) The Company's Oilfield Services segment achieved another quarter of revenue and earnings growth. Revenues increased 16 percent from $362.6 to $420.2 million, and 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. was up 21 percent over the third quarter of last year from $51.3 million to $62.1 million. Both the seismic and well-logging operations participated in this earnings and revenue growth. The underlying positive trends in oilfield services remained unchanged and Western Atlas responded to the increasing global demand for seismic and well-logging services by adding capacity in all its businesses. Major onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. and offshore crews continued to conduct both proprietary and non-exclusive seismic surveys in promising areas around the world. Driven by strong customer demand, the Company's multi-year, deepwater "Ultra Survey" has grown by 30 percent to cover 1,300 blocks in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east . This project is now in its second year with data being acquired by two high-capacity streamer vessels. The Company's three newly upgraded high-capacity vessels proved their superior productivity after performing six- and eight-streamer exploration surveys with very wide streamer separations. Two of the three vessels were operating in North Sea waters and successfully demonstrated the advanced capabilities of these new acquisition systems and innovative streamer technology, despite poor weather conditions. During the third quarter, Western Atlas again proved its leadership in ocean-bottom cable (OBC OBC Other Backward Classes OBC Ontario Building Code OBC On Board Computer OBC Organization for Bat Conservation OBC Outline Business Case (UK government procurement) OBC Oriental Bank of Commerce (India) ) and four-component (4-C) technology by performing several high-resolution 4-C surveys over existing reservoirs in the North Sea and the Gulf of Mexico. Its innovative multi-purpose OBC vessels are the first in the industry to be equipped with multi-component OBC acquisition systems, which are greatly improving the understanding of subsurface sub·sur·face adj. Of, relating to, or situated in an area beneath a surface, especially the surface of the earth or of a body of water. Adj. 1. geology. The Company's Logging Services division has teamed with three oil companies in Norway to standardize stan·dard·ize v. 1. To cause to conform to a standard. 2. To evaluate by comparing with a standard. the Norwegian geological wireline data bank, opening opportunities for high-end analysis and interpretation services. In the Middle East, geoscience ge·o·sci·ence n. Any one of the sciences, such as geology or geochemistry, that deals with the earth. ge activity further increased with contracts to perform major reservoir and multi-level sedimentology sedimentology Scientific discipline concerned with the physical and chemical properties of sedimentary rocks and the processes involved in their formation, including transportation, deposition, and lithification of sediments. studies, supporting the Company's geoscience center concept. High demand in the Gulf of Mexico once again set the pace for growth 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. . The Canadian operations continued their strong performance, based in part on the 1997 second quarter acquisition of Sungroup Energy Services Company. The recent introduction of new logging technologies such as HDIL, RCOR RCOR Royal College of Radiologists (UK; also seen as RCR) RCOR Responsible Conduct of Research and STAR I have successfully proven their capabilities by generating a number of long-term contracts in various geographic regions of the world, supporting the continuing growth outlook for this business. In a technical milestone during the quarter, the Logging Services division successfully performed simultaneous logging and perforating operations. Measuring well pressures while perforating is a combination that allows for the identification of additional reservoir characteristics. Shortly after the quarter ended, Western Atlas completed the acquisition of GeoSignal, Inc., a seismic data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a company, and Seismic Resources, Inc. (SRI), a provider of non-exclusive seismic surveys. Both companies will operate as divisions of Western Atlas Inc. and will continue to be based in Houston. GeoSignal has developed some of the industry's leading processing methods for hydrocarbon hydrocarbon (hī'drōkär`bən), any organic compound composed solely of the elements hydrogen and carbon. The hydrocarbons differ both in the total number of carbon and hydrogen atoms in their molecules and in the proportion of hydrogen exploration in attractive areas that are difficult to image. SRI specializes in non-exclusive surveys in the Mississippi Delta This article is about the geographic region of the U.S. state of Mississippi. For other uses, see Mississippi Delta (disambiguation). The Mississippi Delta is the distinct northwest section of the state of Mississippi that lies between the Mississippi and Yazoo Region. The Company's Western Geophysical Western Geophysical was a company founded in California in 1933 by Henry Salvatori for the purpose of using reflection seismology to explore for petroleum. The company prospered and was sold by Salvatori to Litton Industries in the 1960s. division plans to expand the application of GeoSignal's and SRI's technology through its worldwide organization. Industrial Automation (UNOVA, Inc.) The Company's Industrial Automation segment also continued its growth. Revenues in this segment were up 17 percent from $310.0 million a year ago to $361.8 million in the third quarter of this year, driven by the newly acquired automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. data collection businesses, while operating profits increased from $26.3 million in the 1996 third quarter to $30.2 million in the same three-month period of 1997. Although the Company's manufacturing systems activities reported lower revenues for the third quarter, revenues for the 1997 nine months were up 32 percent over last year. Quarterly operating profit margins Operating profit margin The ratio of operating profit to net sales. improved as a number of major customer projects neared completion and bookings in the third quarter were the strongest so far in 1997, further strengthening the outlook for the second half of 1998. During the third quarter, Western Atlas acquired the stamping, engineering and prototyping division of Modern Prototype Company, a subsidiary of CDI CDI compact disc interactive: a system for storing a mix of software, data, audio, and compressed video for interactive use under processor control Corporation. Following the spin-off, this operation will be integrated into UNOVA's Industrial Automation segment. After the quarter ended, a letter of intent was signed to acquire Goldcrown Machinery, Inc., a designer and manufacturer of precision centerless grinding Centerless grinding is a method of material removal through grinding, similar to centered grinding except for the absence of the spindle. It has high through-put, i.e. large number of parts can be manufactured in a short time. systems. Goldcrown will add technological capabilities and improve the Company's position in the grinding grinding, process by which surface material is removed from an object, usually metal, by the abrasive action of a rotating wheel or a moving belt that contains abrasive grains. market. In the growing automated data systems business, the quarterly results were impacted by the integration costs of the recently acquired companies and by the 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). of the combined operations For the department of the British War Office during World War II, see . In the military, combined operations are operations conducted by forces of two or more allied nations acting together for the accomplishment of a single mission. See also
A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: should begin to show improvement in 1998. New contracts included selection of the Company's PEN-KEY mobile computer system by the Washington Post to help automate To turn a set of manual steps into an operation that goes by itself. See automation. its independent distribution organization, and the supply of hand-held radio frequency terminals to the Department of Defense under a subcontract sub·con·tract n. A contract that assigns some of the obligations of a prior contract to another party. intr. & tr.v. sub·con·tract·ed, sub·con·tract·ing, sub·con·tracts to Raytheon. Spin-off Transaction On October 14, 1997, Western Atlas announced that distribution of the shares of UNOVA, Inc. to the Company's holders of common stock will take place on October 31, 1997. Each shareholder of record on October 24, 1997, will receive an equivalent amount of shares of UNOVA, Inc. common stock. The transaction is expected to be tax-free to the Company and its shareholders. UNOVA, which will be listed on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol "UNA Una personification of honesty; leads lamb and rides white ass. [Br. Lit.: Faerie Queene] See : Honesty ," is expected to begin "when issued" trading on October 22, 1997. CONTACT: Western Atlas Inc., Beverly Hills Dirk Koerber, 310/888-2575 Rex Gwinn, 713/972-4980
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WESTERN ATLAS INC.
Results of Operations
Pro Forma Presentation (Preliminary)
Three and Nine Months Ended September 30, 1997 and 1996
(thousands of dollars, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
Sales and Service
Revenues $ 420,214 $ 362,571 $ 1,218,665 $ 1,034,047
========= ========= =========== ===========
Operating Profit 62,085 51,291 155,562 128,158
Interest, Net (b) (11,855) (7,717) (31,482) (23,282)
---------- --------- -------- --------
Earnings from
Continuing Operations
before Spin-off
Related Costs and
Taxes on Income 50,230 43,574 124,080 104,876
Taxes on Income (20,092) (17,444) (49,632) (41,950)
--------- --------- --------- ---------
Pro Forma Earnings
from Continuing
Operations (a) 30,138 26,130 74,448 62,926
Earnings (Loss) from
Discontinued Operations
and Unallocated
Expenses (a) 11,287 10,380 (172,199) 26,121
------- ------ --------- ------
Net Earnings (Loss) $ 41,425 $ 36,510 $ (97,751) $ 89,047
======== ======== =========== ========
Net Earnings (Loss)
per Share:
Pro Forma Continuing
Operations $ 0.55 $ 0.48 $ 1.35 $ 1.16
Discontinued
Operations and
Unallocated
Expenses 0.20 0.19 (3.12) 0.48
======= ====== ====== =====
Total Earnings (Loss)
per Share $ 0.75 $ 0.67 $ (1.77) $ 1.64
======== ======== =========== ========
Shares Used in
Computing Net
Earnings (Loss)
per Share 55,325,109 54,469,212 55,216,885 54,374,577
(a) Basis of Presentation: The 1997 nine month results of discontinued operations include a $203.3 million non-tax-deductible write-off of in-process research and development activities resulting from the Norand and UBI UBI Universidade da Beira Interior (Portugal) UBI Unrelated Business Income UBI Unified Business Identifier UBI United Bank of India UBI UKW-Sprechfunkzeugnis für den Binnenschifffahrtsfunk acquisitions. To facilitate the analysis of the Company's financial results, spin-off and unallocated corporate costs have been included in discontinued operations in the accompanying pro forma results of operations and cash flows. This treatment differs from that required under Generally Accepted Accounting Principles (GAAP), which require such costs to be included in continuing operations. Included in discontinued operations for the nine months ended September 30, 1997 are spin-off related costs of $5.0 million net of tax. Also included in the three and nine months ended September 30, 1997 are net of tax unallocated corporate expense amounts of $2.8 million and $9.4 million, respectively. The comparable 1996 figures are $4.0 million for the three month and $11.8 million for the nine month ended periods. Earnings per share on a GAAP basis from continuing operations were $0.49 and $0.41 for the three months, and $1.09 and $0.94 for the nine months ended September 30, 1997 and 1996, respectively. Earnings (loss) per share on a GAAP basis from discontinued operations were $0.26 and $0.26 for the three months, and $(2.86) and $0.70 for the nine months ended September 30, 1997 and 1996, respectively. (b) Total cash, debt and related net interest expense have been allocated based on the capital needs of the operations.
WESTERN ATLAS INC.
CONSOLIDATED BALANCE SHEETS (Preliminary)
(thousands of dollars)
September 30, December 31,
1997 1996
------------- ------------
Assets
Current Assets
Cash and cash equivalents $16,195 $16,296
Accounts receivable, net 382,084 360,935
Inventories 40,074 42,706
Deferred tax assets 42,997 43,049
Net assets of UNOVA to be
distributed to Western Atlas
shareholders 619,538 574,508
Due from UNOVA 230,000 121,890
Other current assets 55,678 35,158
------- -------
Total Current Assets 1,386,566 1,194,542
--------- ---------
Property, Plant and Equipment, Net 862,778 692,252
Goodwill and Other Intangibles, Net 321,730 299,494
Geophysical Data and Other Assets 247,118 225,836
-------- --------
Total Assets $2,818,192 $2,412,124
========== ==========
Liabilities and Shareholders' Investment
Current Liabilities
Accounts payable $214,818 $262,620
Payrolls and related expenses 89,685 97,147
Notes payable and current portion of
long-term obligations 326,531 55,912
-------- --------
Total Current Liabilities 631,034 415,679
-------- --------
Long-term Obligations 733,040 465,924
-------- --------
Deferred Taxes and Other Long-term
Liabilities 34,016 27,583
------- --------
Shareholders' Investment
Common stock 54,051 53,706
Additional paid-in capital 1,164,570 1,146,066
Retained earnings 193,707 291,458
Cumulative currency
translation adjustment 8,795 12,482
Less: 17,718 and 13,552 treasury
shares at cost at September 30, 1997,
and December 31, 1996, respectively (1,021) (774)
-------- -------
Total Shareholders' Investment 1,420,102 1,502,938
--------- ---------
Total Liabilities and Shareholders'
Investment $2,818,192 $2,412,124
========== ==========
WESTERN ATLAS INC.
PRO FORMA STATEMENT OF CASH FLOWS (Preliminary)
Nine Months Ended September 30, 1997
(thousands of dollars)
Cash and Cash Equivalents
at Beginning of Period $16,296
--------
Cash Flows from Operating
Activities:
Continuing Operations
Pro forma earnings 74,448
Adjustments to reconcile
pro forma earnings to net cash
provided by operating activities:
Depreciation and amortization 158,560
Changes in working capital and
other operating activities (83,473)
---------
Total from Continuing Operations 149,535
Net Operating Activities of
Discontinued Operations (12,431)
---------
Net Cash Provided by Operating
Activities 137,104
---------
Cash Flows from Investing
Activities:
Capital expenditures (315,544)
Acquisition of businesses,
net of cash acquired (45,345)
Other investing activities (15,770)
---------
Total from Continuing Operations (376,659)
Net Investing Activities of
Discontinued Operations (405,705)
---------
Net Cash Used in Investing
Activities (782,364)
---------
Cash Flows from Financing
Activities:
Proceeds from borrowings 598,979
Receivable from UNOVA (120,426)
Repayment of long-term
obligations (49,801)
Other financing activities 19,187
--------
Total from Continuing Operations 447,939
Net Financing Activities of
Discontinued Operations 197,220
--------
Net Cash Provided by Financing
Activities 645,159
-------
Resulting in Decrease in Cash
and Cash Equivalents (101)
-------
Cash and Cash Equivalents at
End of Period $16,195
========
CONTACT: Western Atlas Inc., Beverly Hills Dirk Koerber, 310/888-2575 Rex Gwinn, 713/972-4980 |
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