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REXNORD CORPORATION REPORTS IMPROVED FIRST-QUARTER RESULTS

 REXNORD CORPORATION REPORTS IMPROVED FIRST-QUARTER RESULTS
 MILWAUKEE, Oct. 27 /PRNewswire/ -- Rexnord Corporation (NYSE: REX), a Wisconsin-based manufacturing company, today reported a 22-percent increase in operating profit for the first fiscal quarter ended Sept. 30, 1992, compared to the same quarter of 1991.
 Net earnings before nonrecurring extraordinary expenses related to the company's recent recapitalization and preferred stock dividends, totaled $4.3 million, or $.26 per share as compared to net earnings before preferred stock dividends of $.1 million or $.02 per share last year.
 The recapitalization completed July 9, 1992, had the effect of significantly reducing the interest cost of the company, eliminating all preferred stock dividends and increasing the number of common shares outstanding. Accordingly, earnings and earnings-per-share data for the current quarter are not comparable to results reported under the previous capital structure. To achieve comparative numbers, pro forma results for 1991 and 1992 have been developed with adjustments for interest expense, preferred stock dividends and the number of common shares outstanding. On this pro forma basis, net earnings for the current quarter were $4.7 million, or $.26 per share which represented a 75-percent increase over last year's pro forma net earnings of $2.7 million, or $.15 per share.
 Sales for the September 1992 quarter were $126.6 million, an increase of 2.9 percent over the $123.0 million reported in the comparable quarter last year. Operating profit improved 22 percent to $18.5 million in 1992 vs. $15.1 million in 1991. The improvement in operating profit was a result of cost-reduction actions implemented during the last fiscal year, incremental sales volume and increased plant utilization.
 James R. Swenson, chairman, president and CEO, stated, "Earlier this year, our incoming order trends suggested that the recovery would have been further advanced at this point. On a year-over-year basis, our business has been increasing for the past 10 months, but the rate of increase leveled off over the summer consistent with general economic conditions. The cost-reduction actions initiated this last year have been important contributors to our first-quarter margin improvement as well as our longer term earning potential."
 Interest expense declined by 31 percent, or $4.6 million to a total of $10.3 million compared to $14.9 million last year. This reduction is due to lower debt levels outstanding and interest rate reduction effects of the recapitalization.
 The September 1992 quarter included the completion of a comprehensive recapitalization of the company. The recapitalization provided cash proceeds to the company of $388 million from the issuance of 9.2 million new shares of common stock with gross proceeds of $156.4 million, $172.5 million from the sale of new 10.75 percent Senior Notes due 2002, and a $59 million increase in borrowings under the senior bank credit agreement. The proceeds were used to retire all of the high-cost capital of the company including the entire issue of the $250 million, 13.625 percent Subordinated Notes and the preferred stock held by stockholders other than The Fairchild Corporation. The remaining preferred stock held by The Fairchild Corporation was converted into common stock.
 Swenson stated, "The recapitalization was important for the long- term success of Rexnord. The 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." In connection with the recapitalization, the company incurred certain extraordinary charges to earnings resulting from the premiums paid to retire the Subordinated Notes and the write-off of unamortized deferred loan costs. These charges amounted to $27.3 million ($1.61 per share), net of income tax benefits of $10.6 million.
 Swenson concluded, "Incoming orders for the September 1992 quarter totaled $129.3 million, 4.8 percent higher than last year's first- quarter total of $123.3 million. In the near term, we expect most of our domestic industrial businesses to continue to improve at a modest rate and our commercial aerospace business to remain at a level similar to that of a year ago. Although our foreign-based businesses are experiencing markets often softer than those in the U.S., our export business continues to grow and take market share abroad. In light of current global economic conditions, we remain cautiously positive about the near term while very optimistic and enthusiastic about the company's prospects as the recovery gains momentum."
 Rexnord is a leading worldwide manufacturer and supplier of power transmission components and related products. Rexnord employs approximately 4,900 persons at 18 domestic and eight international manufacturing locations and at other offices, service centers and warehouses throughout the world.
 REXNORD CORPORATION CONDENSED CONSOLIDATED FINANCIAL DATA
 (Unaudited) FOR THE QUARTER ENDED SEPT. 30, 1992
 (Dollars in thousands, except per-share data)
 INCOME STATEMENT DATA: Quarter Ended Sept. 30,
 Historical Pro Forma(a)
 1992 1991 1992 1991
 Net sales $126,618 $123,048 $126,618 $123,048
 Costs and expenses 106,048 105,823 106,048 105,823
 Goodwill amortization 2,107 2,107 2,107 2,107
 Operating profit 18,463 15,118 18,463 15,118
 Operating profit(pct) 14.6 12.3 14.6 12.3
 Interest expense, net 10,269 14,883 9,850 9,803
 Pretax profit 8,194 235 8,613 5,315
 Income tax provision 3,851 130 3,962 2,662
 Earnings before
 extraordinary item and
 preferred stock dividends $4,343 $105 $4,651 $2,653
 Dividends on preferred
 stock(b) (1,158) (5,427) --- ---
 Extraordinary item -
 recapitalization(c) (27,303) --- --- ---
 Net earnings (loss)
 after preferred
 stock dividends ($24,118) ($5,322) $4,651 $2,653
 Earnings Per Share:
 Earnings before
 extraordinary item and
 preferred stock dividends $0.26 $0.02 $0.26 $0.15
 Dividends on preferred
 stock(b) (0.07) (1.08) --- ---
 Extraordinary item -
 recapitalization(c) (1.61) --- --- ---
 Net earnings (loss) after
 preferred stock dividends ($1.42) ($1.06) $0.26 $0.15
 Other Data:
 Shares used in EPS
 calculation (000s) 16,968 5,010 18,107 17,289
 EBITDA $24,361 $20,719 $24,361 $20,719
 (a) -- Pro forma adjusts interest expense and preferred stock dividends as if the recapitalization occurred on July 1, 1992, for the September 1992 quarter, and on July 1, 1991, for the September 1991 quarter.
 (b) -- In connection with the recapitalization, all outstanding preferred stock was retired. The final dividend on the preferred stock amounted to $1,158 and was paid during the first quarter.
 (c) -- In connection with the recapitalization, extraordinary charges related to the premium paid to retire the Subordinated Notes and the write-off of unamortized loan costs were incurred. These nonrecurring charges amounted to $27.3 million ($1.61 per share), net of income tax benefits of $10.6 million.
 REXNORD CORPORATION
 CONDENSED CONSOLIDATED FINANCIAL DATA (Unaudited)
 FOR THE QUARTER ENDED SEPT. 30, 1992
 (Dollars in thousands, except per-share data)
 BALANCE SHEET DATA: Sept. 30, June 30, 1992
 1992 Pro forma(a) Historical
 Current assets $197,676 $194,661 $184,167
 Other noncurrent assets 23,081 19,627 24,843
 Goodwill 303,322 305,429 305,429
 Property, net 148,476 148,784 148,784
 Total Assets $672,555 $668,501 $663,223
 Current liabilities $95,531 $85,686 $98,464
 Long-term debt 382,366 387,047 404,573
 Long-term accrued liabilities 63,570 66,706 66,706
 Deferred income taxes 12,998 14,128 14,128
 Preferred stock issued
 by subsidiary --- --- 4,866
 Stockholders' equity 118,090 114,934 74,486
 $672,555 $668,501 $663,223
 (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.
 -0- 10/27/92
 /CONTACT: Tom Jansen of Rexnord Corporation, 414-643-2252/
 (REX) CO: Rexnord Corporation ST: Wisconsin IN: AUT SU: ERN


JG-SB -- DE032 -- 5688 10/27/92 18:02 EST
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Date:Oct 27, 1992
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