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REXNORD CORPORATION REPORTS 1992 RESULTS

 REXNORD CORPORATION REPORTS 1992 RESULTS
 MILWAUKEE, Aug. 20 /PRNewswire/ -- Rexnord Corporation (NYSE: REX),


a Wisconsin-based manufacturing company, today reported improved sales orders for the fourth fiscal quarter ended June 30, 1992, and recession- influenced lower overall results for the fiscal year 1992.
 Incoming orders for the three months ended June 30, 1992, totaled $132.8 million compared to $121.6 million in the quarter ended June 30, 1991. The 9.2-percent increase reflected strengths in conveying products which serve the food and beverage markets and improvement in the company's core products of roller chain, engineered steel chain and industrial bearings. Orders for aerospace bearings and seals declined, reflecting the lower demand in the commercial aerospace market. Net sales of $135.5 million for this quarter were essentially flat with the $136.0 million sales rate last year, based on similar changes in the markets served.
 For the fiscal year ended June 30, 1992, net sales were $514.8 million compared to 1991 sales of $552.0 million. The decline was attributable to general recessionary conditions in the economy throughout the year, including most markets served by Rexnord. Operating profit totaled $68.2 million vs. the record profit of $96.9 million earned in 1991. The lower results stemmed from reduced sales, a 1992 restructuring charge of $3.0 million, and the absence of certain one-time gains included in fourth-quarter 1991 results. The restructuring charge, reported in the third quarter of 1992, reflected severance costs for early retirement and personnel-reduction programs and plant consolidation costs.
 James R. Swenson, president and chief executive officer, stated: "With the weaker markets, it was essential to reduce all areas of cost; we are very pleased with the actions taken by our managers this past year. Down-sizing is a difficult process, but it is necessary to relate personnel levels and costs to the business activity; these 1992 actions should result in improved profitability in 1993 and future years. Even with this restructuring charge and the influence of lower sales, our operating profit percentages were 13.3 percent of sales in 1992 and 17.6 percent in 1991, which we believe are at the higher end of our industry."
 Swenson then added: "We continue to aggressively manage our working capital, and despite the effect of the recession and recapitalization costs, we still reduced total indebtedness by over $18 million this year."
 Net income for 1992 of $3.1 million compared to $13.7 million in 1991, with the decline reflecting the lower sales and operating profit and an increase in the effective tax rate due to the effect of non- deductible goodwill amortization.
 Net income and net income per common share on a historical basis reflect the capital structure that existed in 1991 and 1992, when Rexnord had substantial debt service cost on 13-5/8 percent Subordinated Notes and preferred stock dividends which approximated 15 percent after- tax. On July 9, 1992, Rexnord completed a major recapitalization project generating cash proceeds of $388 million from the issuance of $156.4 million of common stock and $172.5 million of new 10-3/4 percent Senior Notes due 2002, and a $59 million increase in borrowings under the existing Credit Agreement. The proceeds were used to retire all of the $250 million Subordinated Notes and the preferred stock held by stockholders other than The Fairchild Corporation. The remaining preferred stock held by Fairchild was converted to common stock. Declared Swenson: "These new funds provide permanent and long-term capital, improve our balance sheet and liquidity, reduce fixed charges, and will serve as the base for growth of our product lines through development, expansion and acquisition. With our listing on the New York Stock Exchange, it is a time for a new beginning for Rexnord and we are all very excited about our opportunities."
 Because of this change in capital and funded debt in the early 1993 fiscal year, computations based on historical results do not provide a realistic base for comparing future net income and earnings per share. Accordingly, pro forma results have been developed reflecting the changes in interest rates and amount of debt, the elimination of preferred stock dividends and using the new number of common shares outstanding. On this pro forma basis, net income for fiscal 1992 totaled $15.0 million, or $0.91 per share, compared to 1991 amounts of $29.6 million and $1.80 per share, respectively.
 Commenting on present business conditions, Swenson indicated: "The recession continues to linger for many industrial businesses. We expect that the recovery will continue to gain strength and we are excited about the positive impact on Rexnord as this occurs."
 Swenson also referred to the 100-year centennial anniversary of the Rexnord power transmission components business. He stated: "Since 1892, the business has grown on a deliberate and planned basis to over one half billion dollars in sales, and now, with this new capital structure, we are poised to continue this growth during the second 100 years."
 Rexnord is a leading worldwide manufacturer and supplier of power transmission components and related products. Rexnord employs approximately 5,000 persons at 18 domestic and 10 international manufacturing locations and at other offices, service centers and warehouses throughout the world.
 REXNORD CORPORATION
 CONDENSED STATEMENTS OF INCOME
 (Unaudited; dollars in thousands, except per-share data)
 Historical Financial Quarters Ended Years Ended
 Data: June 30, June 30,
 1991 1992 1991 1992
 Net sales $136,028 $135,533 $551,970 $514,809
 Cost of sales(a) 86,882 88,030 357,767 339,524
 SG&A expense(b) 17,099 24,745 92,281 98,107
 Other misc. (income)
 expense (3,193) (727) (3,432) (2,545)
 Goodwill amortization 2,107 2,107 8,429 8,429
 Restructuring charge --- --- --- 3,060
 Operating profit 33,133 21,378 96,925 68,234
 Interest expense, net 14,759 13,863 64,075 56,793
 Pretax profit 18,374 7,515 32,850 11,441
 Income tax provision 11,142 5,348 19,103 8,348
 Net income before
 preferred dividends $7,232 $2,167 $13,747 $3,093
 Dividends on preferred
 stock 4,905 5,794 18,882 22,114
 Net income applicable
 to common stockholders $2,327 ($3,627) ($5,135) ($19,021)
 Average shares
 outstanding (000s) 5,010 5,010 5,010 5,010
 Earnings per share $0.44 ($0.72) ($1.02) ($3.80)
 Pro Forma Financial
 Data:(c)
 Net sales $136,028 $135,533 $551,970 $514,809
 Operating profit 33,133 21,378 96,925 68,234
 Interest expense, net 10,389 9,493 39,275 38,193
 Pretax profit 22,744 11,885 57,650 30,041
 Net income $11,697 $5,932 $29,647 $14,993
 Average shares
 outstanding (000s) 16,427 16,427 16,427 16,427
 Earnings per share $0.71 $0.36 $1.80 $0.91
 (a) The fourth fiscal quarter of 1991 includes income of $1.5 million related to the liquidation of LIFO inventories.
 (b) Expenses in the fourth fiscal quarter of 1991 were favorably impacted by an actuarial gain on retiree medical costs of $2.1 million, favorable settlement of litigation claims of $3.1 million and other credits of $1.5 million.
 (c) The company completed a major recapitalization on July 9, 1992. The pro forma financial data is presented to give effect to the recapitalization as if it had occurred on July 1, 1990, the beginning of fiscal year 1991 and includes redemption of $250 million 13.625 percent Senior Subordinated Notes, issuance of $172.5 million 10.75 percent Senior Notes, increase of $59 million in the senior bank facility, and redemption and exchange of all issues of preferred stock. The pro forma adjustments are based upon available information and certain assumptions that the company believes are reasonable. For pro forma purposes, the interest rate on the senior bank facility is assumed to be 6 percent; the average rate on the senior bank facility is currently 5.8 percent. Pro forma common shares outstanding of 16,427,000 represent the number of shares of common stock that would have been issued had the recapitalization occurred on July 1, 1990.
 REXNORD CORPORATION
 CONDENSED BALANCE SHEET
 (Unaudited; dollars in thousands)
 June 30, 1991 June 30, 1992 June 30, 1992
 Pro Forma(a)
 Assets
 Current assets $181,660 $181,064 $191,558
 Deferred loan costs 17,168 17,263 12,047
 Other noncurrent assets 8,105 7,581 7,581
 Goodwill 313,858 305,429 305,429
 Property, net 149,285 148,784 148,784
 Total assets $670,076 $660,121 $665,399
 Liabilities and stockholders'
 equity
 Current liabilities $86,762 $85,843 $73,065
 Current maturities of
 L-T debt 28,625 10,019 10,019
 Total current
 liabilities 115,387 95,862 83,084
 Long-term debt 400,388 404,573 387,015
 Long-term accrued
 liabilities 80,537 66,706 66,706
 Deferred income taxes 2,809 13,628 13,628
 Preferred stock issued
 by subsidiary --- 4,866 ---
 Stockholders' equity 70,955 74,486 114,966
 $670,076 $660,121 $665,399
 (a) 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. Pro forma common shares outstanding at June 30, 1992, were approximately 18,104,000.
 -0- 8/20/92
 /CONTACT: T.J. Jansen of Rexnord Corporation, 414-643-2252/
 (REX) CO: Rexnord Corporation ST: Wisconsin IN: AUT SU: ERN


SB-ML -- DE009 -- 1624 08/20/92 10:15 EDT
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Date:Aug 20, 1992
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