TRINOVA REPORTS FIRST-QUARTER RESULTS
MAUMEE, Ohio, April 21 /PRNewswire/ --- TRINOVA (NYSE: TNV) today announced income before cumulative effect of change in accounting principle (FAS 106) of $5.6 million, or 20 cents per share, in the 1993 first quarter, compared with $450,000, or 2 cents per share, in the 1992 first quarter. Sales were $429.2 million in the 1993 first quarter, compared with $422.6 million a year earlier. "Our results for the quarter show our continued progress in improving our manufacturing efficiency and reducing costs at a time when most of our markets continue to be soft," said Darryl F. Allen, TRINOVA chairman, president and chief executive officer. "1993 first-quarter operating income and margin increased substantially for each of our three business segments -- industrial, automotive, and aerospace & defense -- compared with the 1992 first quarter. In industrial, operating income also improved over the 1992 fourth quarter, in spite of Europe's continued weakness. In automotive, the strength of our European air conditioning and power steering businessl?ed strong operating results. In aerospace & defense, operating income and margin improved over the 1992 first quarter even though sales were at their lowest level for a quarter since 1988. "Selling and general administrative and engineering, research and development expenses were reduced $5 million from a year ago. We fully expect that our efforts to reduce costs, coupled with a modest recovery in some of our markets, will lead to continuing improvement in 1993." TRINOVA adopted FAS 106 in the 1993 first quarter, which resulted in a net loss for the quarter, after cumulative effect of change in accounting principle, of $64.6 million, or $2.28 per share. Quarterly Results (dollars in millions, except per share data) 1Q93 1Q92 4Q92 3Q92 2Q92 Sales $429.2 $422.6 $431.6 $402.2 $439.0 Operating income 18.5 8.7 19.3 12.3 18.6 Operating margin (pct) 4.3 2.1 4.5 3.1 4.2 Income before cumulative effect of change in accounting principle 5.6 .5 6.1 1.7 6.2 Cumulative effect of change in accounting for postretirement benefits (70.2) -- -- -- -- Net income (loss) (64.6) .5 6.1 1.7 6.2 Income per share before cumulative effect of change in accounting principle .20 .02 .21 .06 .22 Cumulative effect of change in accounting for postretirement benefits (2.48) -- -- -- -- Net income (loss) per share (2.28) .02 .21 .06 .22 Segment Analysis Industrial Quarterly Results (dollars in millions) 1Q93 1Q92 4Q92 3Q92 2Q92 Sales $221.8 $220.8 $228.0 $218.8 $235.2 Operating income 4.4 .9 2.6 6.5 6.8 Operating margin (percent) 2.0 .4 1.1 3.0 2.9 Order intake 239.2 253.4 225.3 214.4 234.7 Order backlog 153.4 179.2 152.2 167.8 180.8 "1993 first-quarter industrial operating income increased $3.5 million on sales that were flat," Allen said. "Sales and orders increased for the U.S. industrial markets compared with the first quarter of 1992, while both European sales and orders declined from a year ago. In Europe, our cost-reduction initiatives are helping mitigate the effects of lower volumes. Total industrial orders were down from the 1992 first quarter, although March orders increased from a year ago. Orders in Asia and Brazil also improved over a year ago." Automotive Quarterly Results (dollars in millions) 1Q93 1Q92 4Q92 3Q92 2Q92 Sales $117.6 $103.3 $110.1 $92.6 $109.3 Operating income 11.8 7.5 11.4 3.7 9.6 Operating margin (percent) 10.1 7.3 10.4 4.0 8.8 "Our automotive business continued strong, driven by air conditioning and power steering business in Europe," Allen said. "The increase in sales in Europe is especially impressive considering that car sales in Europe for the first quarter were down nearly 20 percent from a year earlier. Our automotive sales in the U.S. were up over a year ago as a result of the consolidation in the 1993 first quarter of a joint venture which was previously accounted for by the equity method." Aerospace & Defense Quarterly Results (dollars in millions) 1Q93 1Q92 4Q92 3Q92 2Q92 Sales $89.8 $98.5 $93.5 $90.9 $94.5 Operating income 7.0 5.2 10.2 7.0 7.4 Operating margin (percent) 7.8 5.2 10.9 7.7 7.8 Order intake 74.4 82.9 88.9 76.9 78.8 Order backlog 295.8 361.9 321.6 331.7 346.6 "1993 first-quarter aerospace & defense operating income increased by $1.8 million over 1991 on a $9 million decline in sales. Reducing our costs and consolidating operations have given us a degree of flexibility that maintained our profitability in the 1993 first quarter, even though our aerospace & defense markets continued to decline," Allen said. "Order intake declined after showing an increase in the 1992 fourth quarter. Implementing initiatives that will improve our aerospace & defense business in a declining worldwide market will continue to be a high priority."
Other Effects on First-Quarter Income
Utilizing time-based manufacturing principles and providing customers with just-in-time delivery to meet customer requirements are ways TRINOVA is working to improve its profitability. Reducing working capital, particularly inventories, is crucial to this process. Inventory was reduced an additional $15.3 million during the 1993 first quarter, and since the beginning of 1990 has now been reduced by $150 million. Additional reductions are expected in the future. Liquidation of LIFO inventory quantities reduced cost of products sold by $1.9 million in the 1993 first quarter, which increased income before cumulative effect of change in accounting principle by $1.2 million, or 4 cents per share. Liquidation of LIFO inventory quantities in the 1992 first quarter reduced cost of products sold by $700,000, which increased net income by $450,000, or 2 cents per share. The 1993 first-quarter incremental increase from a year ago in postretirement benefit cost (as a result of adopting FAS 106 in the 1993 first quarter) decreased income before cumulative effect of change in accounting principle by $900,000, or 3 cents per share.
FAS 106 Adopted in 1993 First Quarter
TRINOVA adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" (FAS 106) in the 1993 first quarter. FAS 106 specifies that the expected cost of providing postretirement benefits other than pensions (principally health care) must be accrued during the employees' active service period. Previously, the cost of providing these benefits was recognized as the claims were incurred. TRINOVA elected to recognize the benefit costs related to service up to the date of adoption (transition obligation) in the 1993 first quarter as a cumulative effect of change in accounting principle. This resulted in a non-cash charge to income of $113.2 million pretax, $70.2 million after tax, or $2.48 per share. Changes were made to TRINOVA's health care plans which reduced the estimated pretax transition obligation by $46 million and annual expense by approximately $10 million, compared with what they would have been had the plan changes not been made. First-quarter 1993 postretirement benefit cost amounted to $3.1 million, compared with $1.6 million in the 1992 first quarter. The adoption of FAS 106 will have no effect on cash flow because TRINOVA will continue its practice of paying the cost of postretirement benefits when incurred. The estimated cost for 1993 is $12.2 million and compares to a cost in 1992 of $5 million. Statement of Financial Position TRINOVA Corporation (Dollars in thousands, except per share data) March 31 December 31 1993 1992 Assets Current assets Cash $ 21,472 $ 26,269 Receivables 217,519 202,850 Inventories: In-process and finished products 201,762 217,865 Raw materials and manufacturing supplies 46,077 50,163 247,839 268,028 Other current assets 49,845 49,588 Total current assets 536,675 546,735 Plants and properties 834,048 826,756 Less accumulated depreciation 424,811 421,213 409,237 405,543 Other assets 81,359 65,111 Total assets $1,027,271 $1,017,389 Liabilities and shareholders' equity Current liabilities Notes payable $ 115,660 $ 109,549 Accounts payable 89,164 82,624 Income taxes 3,502 25,484 Other current liabilities 139,732 141,907 Current maturities of long-term debt 8,515 8,582 Total current liabilities 356,573 368,146 Long-term debt 248,374 239,061 Deferred credits and other liabilities 138,133 20,846 Deferred income taxes 8,667 36,476 Shareholders' equity Common stock - par value $5 a share Authorized - 100,000,000 shares Outstanding - 28,258,231 and 28,237,646 shares, respectively (after deducting 5,951,665 and 5,972,270 shares, respectively, in treasury) 141,291 141,188 Additional paid-in capital 550 470 Retained earnings 148,206 217,604 Currency translation adjustments (14,523) (6,402) Total shareholders' equity 275,524 352,860 Total liabilities and shareholders' equity $1,027,271 $1,017,389 Condensed Statement of Operations TRINOVA Corporation (In thousands, except per share data) Three Months Ended March 31 1993 1992 Net sales $ 429,169 $ 422,644 Cost of products sold 330,938 329,235 Manufacturing income 98,231 93,409 Selling and general administrative expenses 64,672 68,499 Engineering, research and development expenses 15,053 16,195 Operating Income 18,506 8,715 Interest expense (6,730) (6,435) Other-net (2,442) (1,530) Income before income taxes and cumulative effect of change in accounting principle 9,334 750 Income taxes 3,700 300 Income before cumulative effect of change in accounting principle 5,634 450 Cumulative effect of change in accounting for postretirement benefits other than pensions, net of income tax benefit (70,229) - Net income (loss) $ (64,595) $ 450 Income (loss) per share Income before cumulative effect of change in accounting principle .20 .02 Cumulative effect of change in accounting for postretirement benefits other than pensions (2.48) - Net income (loss) per share $ (2.28) $ .02 Cash dividends per common share $ .17 $ .17 Average shares outstanding 28,296 28,253 Notes: Income (loss) per share has been computed on the average number of shares outstanding, including common stock equivalents. The assumed conversion of TRINOVA's 6 percent convertible debentures was not included in average shares outstanding for the three months ended March 31, 1993 and 1992 because the effect of the inclusion would have been anti-dilutive. In the first quarter, TRINOVA adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions." The transition obligation amounting to $113.2 million pretax, $70.2 million after tax, or $2.48 per share, was recognized in the 1993 first quarter as the effect of a change in accounting principle. First-quarter 1993 postretirement benefit cost amounted to $3.1 million, compared with $1.6 million in the 1992 first quarter. Condensed Statement of Cash Flows TRINOVA Corporation (In thousands) Three Months Ended March 31 1993 1992 Cash Flows from operating activities Net Income (loss) $ (64,595) $ 450 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in accounting principle, net of deferred income tax benefit 70,229 - Depreciation 15,295 15,383 Changes in working capital elements, other than debt (7,611) 33,037 Restructuring payments (4,829) (5,840) Other 3,263 1,243 Net cash provided by operating activities 11,752 44,273 Cash flows from investing activities Capital expenditures (13,120) (11,335) Other (676) 47 Net cash used by investing activities (13,796) (11,288) Cash flows from financing activities Net increase (decrease) in short- and long-term debt 3,481 (22,751) Cash dividends (4,803) (4,798) Other 183 53 Net cash used by financing activities (1,139) (27,496) Effect of exchange rate changes on cash (1,614) (1,753) Increase (decrease) in cash (4,797) 3,736 Cash at beginning of period 26,269 26,597 Cash at end of period $ 21,472 $ 30,333 TRINOVA is a world leader in the manufacture and distribution of engineered components and systems for industry. Its components and systems are sold through its operating companies, Aeroquip and Vickers, to the industrial, aerospace and defense, and automotive markets. -0- 4/21/93 /CONTACT: Warren N. Bimblick of TRINOVA Corporation, 419-867-2290/ (TNV)
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|Date:||Apr 21, 1993|
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