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IMO INDUSTRIES ANNOUNCES RESTRUCTURING PROGRAM TO REDUCE DEBT; REPORTS THIRD QUARTER 1992 RESULTS

 IMO INDUSTRIES ANNOUNCES RESTRUCTURING PROGRAM TO REDUCE DEBT;
 REPORTS THIRD QUARTER 1992 RESULTS
 LAWRENCEVILLE, N.J., Oct. 29 /PRNewswire/ -- Imo Industries Inc. (NYSE: IMD) today reported its results for the third quarter ended September 30, 1992, and outlined a restructuring plan, approved by its Board of Directors, to strengthen the Company's balance sheet and tighten its business focus through the divestiture of operations representing 15 to 20 percent of the Company's assets, a part of which reduces its involvement in the aerospace sector.
 The Company has retained Morgan Stanley & Co. for counsel and assistance in this restructuring program.
 The Company intends to apply proceeds from the asset sales principally to reduce debt by at least $125 million and to fund additional development efforts in Imo's core businesses. The Company incurred $70.3 million of pre-tax charges in the third quarter which were not normal operating charges, $51.9 million of which are reflected as unusual charges in the third quarter results. These include provisions for estimated costs associated with pending litigation and certain warranty and claim settlements as well as costs related to certain aspects of the Company's Electro-Optical business. At the same time, the Board approved certain changes in Imo's post-retirement medical benefits and the accounting for post-retirement benefits other than pensions by adopting the provisions of FASB Statement No. 106. The FASB 106 charge, which does not have an impact on cash, will be retroactively applied to the first quarter of 1992, and will result in a restatement of the Company's results for that quarter to recognize a cumulative after-tax charge of $27.6 million.
 As a result of these unusual items, operating losses due principally to production interruptions at the Company's Electro-Optical unit, delays in shipments of turbomachinery equipment, and continued softness in other areas, Imo had a net loss for the third quarter of $57.5 million, or $3.41 per share, compared with net income of $2.2 million, or $0.13 per share, in the same period a year ago.
 Net sales for the quarter were $203.4 million, versus $244.5 million for the same period in the prior year.
 Including the effect of the adoption of FASB 106, Imo had a net loss of $82.9 million, or $4.92 per share, in the first nine months of 1992, compared with net income of $8.5 million, or $0.51 per share, in the first three quarters of 1991. Net sales for the first nine months were $678 million, compared with $759 million in the same period in 1991.
 Bookings for the third quarter of 1992 amounted to $209 million, an increase of 7 percent from $195 million a year ago.
 Backlog at the end of the third quarter was $573 million, compared with $570 million at the same time a year ago.
 THE RESTRUCTURING PLAN
 "The restructuring program we are undertaking will sharpen our focus on our core businesses, such as pumps, controls, turbomachinery and power transmission, and significantly reduce our involvement in the aerospace sector, with the major remaining portion of our defense- related business being primarily in Electro-Optical and Navy pumps." said Robert R. Womack, Vice Chairman and Chief Executive Officer.
 "We expect that the divestiture program will be completed over the next 12 to 18 months. Letters of intent have already been signed relating to the sale of certain under-utilized real estate holdings. We have met with Bankers Trust, the lead bank for a syndicate providing Imo's $100 million revolving line of credit, and have requested waivers to certain existing loan covenants to enable Imo to proceed with implementation of the plan.
 "Applying the proceeds of these sales to reduce debt will significantly strengthen our balance sheet. These actions, added to the effect of our overall reduction in employment since January 1, 1991 of approximately 1,800 people, or almost 20 percent, will significantly lower our cost of doing business as the benefits of the program are realized and as the economy improves. We will continue to monitor business and employment levels and make further adjustments as conditions warrant."
 The operations which Imo is planning to divest include units of its aerospace businesses, units of its instruments and transducer businesses, subunits of certain other businesses, and real estate not currently being fully utilized.
 DIVIDEND ACTION
 Consistent with the Company's objective of improving its capital structure, the Board also suspended the Company's dividend beginning with the fourth quarter of 1992. The Board will review the dividend policy on a quarterly basis.
 GROUP OPERATING RESULTS
 "In addition to the unusual items incurred by the Company and specific production problems in our Electro-Optical and turbomachinery businesses, results in each of our operating groups reflect the continued sluggish economy," Womack noted. "Looking ahead to the fourth quarter, we expect shipments of our turbomachinery equipment to rebound sharply as production bottlenecks are relieved."
 Instruments Group sales in the third quarter were down 21 percent, with a 35 percent decline in Electro-Optical revenue. Unusual items totalling $29 million and an operating loss of $15 million at the Electro-Optical operations reflect costs associated with production interruptions resulting from increased levels of production testing and voluntary retesting of certain product previously shipped. In addition, the adjustments and losses reflect damage to inventory occurring in the process of implementing product design changes, excess production costs incurred during facilities consolidation and costs associated with revised estimates to complete on current contracts. After completing thorough testing and retesting procedures, Imo is confident that products delivered by its Electro-Optical operations meet the quality standards specified by customers and that the company is fully capable of meeting all obligations under current and prospective government programs.
 The remainder of the Group had generally mixed results with the exception of continued strong performance by the Gems division, led by its freon recapturing and leak detection products.
 Mechanical Controls Group revenue grew slightly in the third quarter, aided in part by the addition of aftermarket product lines acquired last year. The controls business continues to be affected by the declines in off-the-road, agricultural and construction markets, and a slowdown in the automotive market in Europe. Pleasure marine markets in the US and Europe remain flat. Operating income in the quarter declined primarily as the result of margin pressure and asset valuation adjustments.
 Power Transmission Group revenue declined 6 percent in the third quarter, compared with a year ago, primarily due to continued weakness in aerospace related businesses. The ongoing decline in Navy business for the pump operations is being effectively replaced by commercial business, especially in the oil and gas processing areas and the pulp and paper market. Group operating income was affected primarily by inventory adjustments.
 Power Products and Services Group third-period sales declined sharply from year-ago levels. An operating loss was recorded due to major turbomachinery unit shipment delays and the establishment of provisions for costs associated with pending litigation and certain warranty and claim settlements. Aftermarket maintenance and repair activity was essentially flat with year-ago levels. The turbomachinery units delayed in the third quarter are expected to be shipped by year end.
 Imo, with 1991 sales of $1 billion, supplies analytical instrument, electronic and mechanical controls, engineered power products and their support services to industrial and defense customers worldwide.
 IMO INDUSTRIES INC. AND SUBSIDIARIES
 Condensed Consolidated Statements of Income
 (Unaudited; amounts in thousands, except per-share data)
 Three months ended Sept. 30 1992 1991
 Net Sales $203,414 $244,491
 Gross Profit 30,271 61,371
 Unusual Items (A) (51,942) ---
 Segment Operating Income (Loss) (A) (70,523) 19,435
 Income (Loss) Before Income Taxes,
 Minority Interest and Cumulative
 Effect of Change in Accounting
 Principle (A) (86,290) 3,417
 Income Taxes (27,995) 1,298
 Minority Interest (841) (80)
 Income (Loss) Before Cumulative Effect
 of Change in Accounting Principle (57,454) 2,199
 Cumulative Effect of Change in
 Accounting Principle --- ---
 Net Income (Loss) ($57,454) $2,199
 Earnings (Loss) Per Share : (A)
 Before Cumulative Effect of Change
 in Accounting Principle $(3.41) $0.13
 Net Income (Loss) $(3.41) $0.13
 Average Shares Outstanding 16,867 16,867
 Bookings:
 Instruments and Controls $113,720 $110,697
 Power Systems 95,022 84,334
 Total Bookings $208,742 $195,031
 See notes below.
 Nine months ended Sept. 30 1992 1991
 Net Sales $678,074 $759,467
 Gross Profit 153,850 196,231
 Unusual Items (A) (51,942) ---
 Segment Operating Income (Loss) (A) (35,535) 62,205
 Income (Loss) Before Income Taxes,
 Minority Interest and Cumulative
 Effect of Change in Accounting
 Principle (A) (81,272) 15,808
 Income Taxes (26,088) 6,007
 Minority Interest 149 1,304
 Income (Loss) Before Cumulative Effect
 of Change in Accounting Principle (55,333) 8,497
 Cumulative Effect of Change in
 Accounting Principle (B) (27,590) ---
 Net Income (Loss) ($82,923) $8,497
 Earnings (Loss) Per Share : (A)
 Before Cumulative Effect of Change
 in Accounting Principle $(3.28) $0.51
 Net Income (Loss) $(4.92) $0.51
 Average Shares Outstanding 16,867 16,795
 Bookings:
 Instruments and Controls $426,726 $457,112
 Power Systems 285,327 269,548
 Total Bookings $712,053 $726,660
 Backlog 572,945 570,086
 See notes below.
 IMO INDUSTRIES INC. AND SUBSIDIARIES
 Segment Information
 (Unaudited; dollars in thousands)
 Three months ended Sept. 30 1992 1991
 Net Sales:
 Instruments and Controls:
 Instruments $74,248 $93,671
 Mechanical Controls 53,498 52,562
 Total 127,746 146,233
 Power Systems:
 Power Transmission 47,671 50,622
 Power Products and Services 27,997 47,636
 Total 75,668 98,258
 Total Net Sales 203,414 244,491
 Segment Operating Income (Loss):
 Instruments and Controls:
 Instruments (C) (45,150) 4,142
 Mechanical Controls 704 4,300
 Total (44,446) 8,442
 Power Systems:
 Power Transmission 2,147 4,687
 Power Products and Services (D) (28,224) 6,306
 Total (26,077) 10,993
 Total Segment Operating Income (Loss)(A) (70,523) 19,435
 Equity in Income of
 Unconsolidated Companies 1,370 1,164
 Net Interest Expense (14,763) (14,801)
 Corporate Expense (2,374) (2,381)
 Income (Loss) Before Income Taxes,
 Minority Interest and Cumulative
 Effect of Change in Accounting
 Principle (A) ($86,290) $3,417
 See notes below.
 Nine months ended Sept. 30 1992 1991
 Net Sales:
 Instruments and Controls:
 Instruments $247,104 $286,274
 Mechanical Controls 181,585 179,524
 Total 428,689 465,798
 Power Systems:
 Power Transmission 146,784 154,202
 Power Products and Services 102,601 139,467
 Total 249,385 293,669
 Total Net Sales 678,074 759,467
 Segment Operating Income (Loss):
 Instruments and Controls:
 Instruments (C) (34,840) 12,957
 Mechanical Controls 10,984 13,688
 Total (23,856) 26,645
 Power Systems:
 Power Transmission 10,226 15,334
 Power Products and Services (D) (21,905) 20,226
 Total (11,679) 35,560
 Total Segment Operating Income (Loss)(A) (35,535) 62,205
 Equity in Income of
 Unconsolidated Companies 5,057 3,478
 Net Interest Expense (43,791) (43,944)
 Corporate Expense (7,003) (5,931)
 Income (Loss) Before Income Taxes,
 Minority Interest and Cumulative
 Effect of Change in Accounting
 Principle (A) ($81,272) $15,808
 See attached notes.
 IMO INDUSTRIES INC. AND SUBSIDIARIES
 Notes
 (A) The third quarter of 1992 includes unusual items totalling ?$51.9 million ($2.09 per share after tax). These charges include provisions for the settlement of several litigation claims, warranties and associated legal costs of $27 million; costs associated with operational disruptions and restructuring at the Electro-Optical operations, including revised estimates to complete on current contracts, of $22 million; and other costs related to the write-down of assets, principally inventories, to net realizable value of $2.9 million.
 (B) The nine months ended Sept. 30, 1992, includes a charge related to the adoption of Financial Accounting Standards Board Statement No. 106 "Employer's Accounting for Postretirement Benefits Other Than Pensions." This charge has been reported as a cumulative effect of a change in accounting principle and has been adopted and retroactively applied as of Jan. 1, 1992.
 (C) The third quarter of 1992 includes unusual items totalling $29.3 million relating to the following: provisions for settlements of litigation claims, warranties and associated legal costs of $5 million; costs associated with operational disruptions and restructuring at the Electro-Optical operations, including revised estimates to complete on current contracts, of $22 million; and a write-down of assets, principally inventories, to net realizable value of $2.3 million.
 (D) The third quarter of 1992 includes unusual items totalling $22.1 million related principally to provisions for the settlement of several litigation claims, warranties and associated legal costs.
 /delval/
 -0- 10/29/92
 /CONTACT: Paul B. Lazovick, director of investor relations for Imo Industries, 609-896-7615/ CO: Imo Industries Inc. ST: New Jersey IN: SU: ERN


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