Printer Friendly

IMO INDUSTRIES REPORTS THIRD QUARTER 1993 RESULTS

 LAWRENCEVILLE, N.J., Oct. 25 /PRNewswire/ -- Imo Industries Inc. (NYSE-IMD) today reported a net loss for the third quarter ended Sept. 30, 1993, of $13.1 million, or $.78 per share.
 This compares with a net loss of $57.5 million, or $3.41 per share, in the third quarter of 1992. $10.9 million of the 1993 third quarter loss was due to Imo providing a 100 percent valuation reserve against tax benefits generated by 1993 losses. The company continues to believe, however, that these tax benefits will eventually be realized. $9.7 million of the valuation reserve applies to tax benefits recorded in the first half of 1993, and $1.2 million applies to the third-quarter loss. There was a loss before taxes of $3.1 million in the third quarter of 1993, compared with a loss before taxes of $86.3 million in 1992's third quarter.
 Profitable operating results were reported by three of the company's four groups in the third quarter; the Instruments Group had a loss due to technical problems and delays in moving certain laser programs into production. One of these programs has already moved into production and the other is expected to do so shortly.
 Segment operating income amounted to $12.2 million in the third quarter of 1993, compared with a loss of $70.5 million in the same period of 1992. Excluding unusual items, segment operating income improved $24.8 million in the third quarter of 1993 over the third quarter of 1992, primarily in the Instruments Group.
 Sales for the third quarter of 1993 were $202.1 million, about flat with sales of $203.4 million for the same period a year ago. Worldwide sales in local currencies, before considering unfavorable foreign exchange rate effects, increased by 6 percent.
 New orders booked during the third quarter amounted to $191 million, 8 percent less than in the third quarter of 1992. Backlog at the end of the quarter was $468 million, compared with $478 million at the start of the period adjusted for the effect of asset sales.
 For the first nine months of 1993, sales of $614.1 million were $64.0 million, or 9.4 percent, below the same period last year. Segment operating income, eliminating unusual items, was $34.9 million for the nine months of 1993, $18.5 million above the same period in 1992. There was a net loss of $25.0 million, or $1.48 per share, for the nine months of 1993. This compares with a net loss of $82.9 million, or $4.92 per share, for the same period in 1992. $18.1 million of the 1993 loss was an extraordinary charge incurred in connection with Imo's refinancing.
 Imo reduced its debt by $57.7 million, or 12.1 percent, in the third quarter of 1993. The funds were generated primarily by sale of the company's aerospace divisions, in line with its previously announced programs of asset divestiture and debt reduction. The next phase of debt reduction is due by March 31, 1994, in the amount of approximately $35 million.
 Imo's new CEO, Donald K. Farrar, said, "I am encouraged by the progress Imo has made in many areas during the past year. We will continue to move forward with our asset divestiture and debt reduction programs. We are also reviewing possible shifts in organizational and operating structures as part of our ongoing pursuit of further cost- reduction opportunities.
 "The company's earlier expectation of reporting an operating profit for the full year is not achievable in light of results to date. However, I am confident that Imo will return to profitability in 1994."
 Instruments Group sales were up in the third quarter over year-ago levels, as gains at Electro-Optical, which benefited from the recovery of night vision equipment shipments to a more normal level, more than offset an overall decline in the rest of the Group. Technical problems and delays in moving two laser programs into production resulted in a loss at the Electro-Optical operations and for the Group as a whole.
 The remainder of the Group had mixed results, although, in total, operating income improved on lower sales. The Group's loss in the third quarter was significantly reduced from a year ago, primarily at Electro- Optical.
 Mechanical Controls Group reported revenue was down 14 percent in the quarter compared with the third quarter last year, due primarily to adverse changes in the lira-to-dollar exchange rate. Sales also declined at the aerospace divisions, which were divested at the end of this year's third quarter. Group income in this year's third quarter was up sharply from last year's reported results, which included unfavorable asset valuation adjustments, and current operating margins were ahead of last year's.
 Power Transmission Group sales were down 11 percent in the third quarter compared with a year ago, mainly due to the sale of Heim Bearings division earlier this year. Pump sales also declined as general economic conditions and Navy business remain soft, although pump operating margins moved up slightly. Gear operating margins improved on modestly higher sales. Group operating income comparisons were favorable both before and after inventory adjustments made in last year's third quarter.
 Power Products and Services Group third-period sales were up sharply from year-ago levels as the result of higher turbomachinery unit completions and parts and repair revenue. This comparison reflects in part that turbomachinery revenue last year was weakest in the first and third quarters. Aftermarket maintenance and repair activity declined from last year's level. Operating income was positive in this year's third quarter; the Group had an operating loss in last year's period even before the establishment of special provisions.
 Imo, with 1992 sales of $928 million, supplies analytical and optical instruments, 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, 1993 1992
 Net Sales $202,060 $203,414
 Gross Profit 48,294 30,271
 Unusual Items (A) 6,000 (51,942)
 Segment Operating Income (A) 12,243 (70,523)
 Income (Loss) Before Income Taxes,
 Minority Interest, Extraordinary
 Item and Cumulative Effect of
 Accounting Change (A) (3,098) (86,290)
 Income Taxes (B) 2,851 (27,995)
 Minority Interest 288 (841)
 Income (Loss) Before Extraordinary
 Item and Accounting Change (6,237) (57,454)
 Extraordinary Item (C) (6,876) ---
 Cumulative Effect of Change
 in Accounting Principle --- ---
 Net Income (Loss) ($13,113) ($57,454)
 Earnings (Loss) Per Share:
 Before Extraordinary Item
 and Accounting Change ($0.37) ($3.41)
 Net Income (Loss) ($0.78) ($3.41)
 Average Shares Outstanding 16,881 16,867
 Bookings:
 Instruments and Controls $116,182 $113,720
 Power Systems 75,170 95,022
 Total Bookings $191,352 $208,742
 Nine Months Ended Sept. 30, 1993 1992
 Net Sales $614,089 $678,074
 Gross Profit 163,223 153,850
 Unusual Items (A) 6,000 (51,942)
 Segment Operating Income (A) 40,876 (35,535)
 Income (Loss) Before Income Taxes,
 Minority Interest, Extraordinary
 Item and Cumulative Effect of
 Accounting Change (A) (6,437) (81,272)
 Income Taxes (B) --- (26,088)
 Minority Interest 476 149
 Income (Loss) Before Extraordinary
 Item and Accounting Change (6,913) (55,333)
 Extraordinary Item (C) (18,095) ---
 Cumulative Effect of Change
 in Accounting Principle (D) --- (27,590)
 Net Income (Loss) ($25,008) ($82,923)
 Earnings (Loss) Per Share:
 Before Extraordinary Item
 and Accounting Change ($0.41) ($3.28)
 Net Income (Loss) ($1.48) ($4.92)
 Average Shares Outstanding 16,881 16,867
 Bookings:
 Instruments and Controls $395,683 $426,726
 Power Systems 229,033 285,327
 Total Bookings $624,716 $712,053
 Backlog $468,089 $572,945
 Segment Information (Unaudited)
 (Dollars in thousands)
 Three months Ended Sept. 30, 1993 1992
 Net Sales:
 Instruments and Controls:
 Instruments $76,770 $74,248
 Mechanical Controls 45,780 53,498
 122,550 127,746
 Power Systems:
 Power Transmission 42,306 47,671
 Power Products and Services 37,204 27,997
 79,510 75,668
 Total Net Sales 202,060 203,414
 Segment Operating Income:
 Instruments and Controls:
 Instruments (E) (4,067) (45,150)
 Mechanical Controls 3,372 704
 (695) (44,446)
 Power Systems:
 Power Transmission 4,852 2,147
 Power Products and Services (F) 8,086 (28,224)
 12,938 (26,077)
 Total Segment Operating Income (A) 12,243 (70,523)
 Equity in Income of
 Unconsolidated Companies 957 1,370
 Net Interest Expense (14,637) (14,763)
 Corporate Expense (1,661) (2,374)
 Income (Loss) Before Income Taxes,
 Minority Interest, Extraordinary
 Item and Cumulative Effect of
 Accounting Change (A) ($3,098) ($86,290)
 Nine Months Ended Sept. 30, 1993 1992
 Net Sales:
 Instruments and Controls:
 Instruments $217,575 $247,104
 Mechanical Controls 153,008 181,585
 370,583 428,689
 Power Systems:
 Power Transmission 134,662 146,784
 Power Products and Services 108,844 102,601
 243,506 249,385
 Total Net Sales 614,089 678,074
 Segment Operating Income:
 Instruments and Controls:
 Instruments (E) (1,678) (34,840)
 Mechanical Controls 12,769 10,984
 11,091 (23,856)
 Power Systems:
 Power Transmission 14,542 10,226
 Power Products and Services (F) 15,243 (21,905)
 29,785 (11,679)
 Total Segment Operating Income (A) 40,876 (35,535)
 Equity in Income of
 Unconsolidated Companies 1,600 5,057
 Net Interest Expense (43,578) (43,791)
 Corporate Expense (5,335) (7,003)
 Income (Loss) Before Income Taxes,
 Minority Interest, Extraordinary
 Item and Cumulative Effect of
 Accounting Change (A) ($6,437) ($81,272)
 Notes:
 (A) The three and nine month periods ended Sept. 30, 1993, include unusual income of $6 million ($3.7 million or $.22 per share after tax) as a result of a change in estimate related to legal costs associated with pending litigation.
 The three and nine month periods ended Sept. 30, 1992, include unusual charges totalling $51.9 million ($35.3 million or $2.09 per share after tax). These charges include provisions for the estimated costs associated with pending litigation and certain warranty and claim settlements 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 of $2.9 million related to the write-down of assets, principally inventories, to net realizable value.
 (B) The three and nine months ended Sept. 30, 1993 include a valuation allowance of approximately $4 million provided against previously recorded tax benefits. This includes a valuation allowance for tax benefits of $2.8 million which had been recorded through the first half, as the company expected to earn an overall profit for the year.
 (C) The nine months ended Sept. 30, 1993, include an extraordinary charge of $18.1 million ($1.07 per share) representing fees and charges related to the restructuring of the company's senior credit facilities. The extraordinary charge of $6.9 million ($.41 per share) reflected in the three months ended Sept. 30, 1993, represents a valuation allowance provided against the related tax benefit recorded in the second quarter of 1993.
 (D) The nine months ended Sept. 30, 1992, include 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 was adopted and retroactively applied as of Jan. 1, 1992.
 (E) The three and nine month periods ended Sept. 30, 1992, include unusual charges totalling $29.3 million relating to the following: provisions for the estimated costs associated with pending litigation and certain warranty and claim settlements 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 $2.3 million write-down of assets, principally inventories, to net realizable value.
 (F) The three and nine month periods ended Sept. 30, 1993, include unusual income of $6 million as a result of a change in estimate related to legal costs associated with pending litigation.
 The three and nine month periods ended Sept. 30, 1992, include unusual charges totalling $22.1 million related principally to provisions for the estimated costs associated with pending litigation and certain warranty and claim settlements.
 /delval/
 -0- 10/25/93
 /CONTACT: Paul B. Lazovick, director of Investor Relations for Imo Industries, 609-896-7615/
 (IMD)


CO: Imo Industries Inc. ST: New Jersey IN: SU: ERN

JM -- PH032 -- 6492 10/25/93 16:13 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Oct 25, 1993
Words:2081
Previous Article:UNITED AND LUFTHANSA FILE FOR APPROVAL OF MARKETING ALLIANCE
Next Article:BETZ LABORATORIES, INC. REPORTS THIRD QUARTER SALES AND EARNINGS
Topics:

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters