October 20, 1997: Third Quarter Financial Results
United Dominion Industries Ltd. reported third-quarter net income of $26.7 million from continuing operations, or
60 cents a common share, compared with $15.7 million, or 35 cents a share, from continuing operations in the third
quarter last year, an increase of 70 percent. Net income in 1996 amounted to $24.3 million (54 cents a share) which
included $8.5 million (19 cents) from discontinued operations. Sales for the third quarter totaled $441 million
compared with $358 million for the same period last year. Recently acquired Core Industries accounted for $52
million of sales.
Per share results in the latest quarter were calculated on 44.3 million shares outstanding, approximately 900,000
shares fewer than the corresponding quarter last year due to the company's share buyback program.
Earnings benefited from the $8 million pre-tax termination fee that the company collected after its failed bid for Imo
Industries. This gain was substantially offset by one-time charges related to the company's ongoing margin
improvement program and other one-time adjustments. The company also benefited from a lower effective tax rate
of 33 percent, compared with a rate of 40 percent in last year's third quarter. Last year's results were negatively
impacted by the $3 million charge associated with the company's unsuccessful bid for Commercial Intertech Corp.
The company's backlog stood at $332 million at the end of September versus $241 million for the same period in
1996 with Core Industries accounting for $52 million of the increase.
For the nine months ended September 30, income from continuing operations amounted to $58.1 million ($1.30 a
share), compared with $43.6 million (98 cents a share) for the corresponding period in 1996. Net income in 1997
amounted to $111.2 million ($2.48 a share) compared with $57.5 million ($1.30 a share) in 1996 after factoring in
the results of discontinued operations.
"The third quarter was an eventful time in the history of the company with the acquisition of Core Industries and
several other product-line additions and joint ventures following the divestiture of Varco-Pruden," said William R.
Holland, chairman and chief executive officer. "These actions continue to reshape United Dominion into a higher
margin, less cyclical company, providing shareholders with more stable earnings and continued growth through our
industrial manufacturing businesses.
"Third quarter earnings reflect record results from our Compaction business and solid performances from Ceco,
Serco, and Marley Electric Heating. However, we experienced disappointing results from several businesses
including Flair, Marley Cooling Tower, Marley Pump and Waukesha Cherry-Burrell. The decline in earnings from
these businesses more than offset the additional earnings derived from acquisitions. We have taken actions to
resolve these issues and enhance performance going forward."
The company also announced several organizational appointments. Effective January 1, 1998, Jan Ver Hagen,
currently president and chief operating officer, is appointed vice chairman of the company; Glenn A. Eisenberg,
currently senior vice president and chief financial officer to executive vice president and chief financial officer;
Timothy J. Verhagen, currently vice president - human resources to senior vice president - human resources; and
Lothar Wahl, president of the company's Compaction Segment is also appointed senior vice president of United
Dominion. In addition, Richard A Bearse, senior vice president - Planning & Development, and I. B. (Buddy)
Prude, senior vice president, have announced that they will retire at year end.
"With the recent appointment of David Zimmer, former CEO of Core Industries, to executive vice president -
Operations, we have been able to strengthen our operations management team. Jan Ver Hagen will continue to focus
on the company's margin improvement program and assist me in expanded development activities," Mr. Holland
said.
United Dominion is a diversified manufacturer of engineered products employing 11,000 people at 68 locations in
16 countries. Following is a tabulation of the company's latest results and financial statements:
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Consolidated Statements of Income (In Thousands of U.S. Dollars)
Quarters Ended Nine Months Ended
Sept. 30, Sept. 30,
1997 1996 1997 1996
(Restated) (Restated)
Sales $ 441,337 $ 357,616 $ 1,160,072 $ 1,043,993
Costs and expenses
Cost of sales 316,409 248,172 825,828 738,224
Selling, general and administrative
expenses 88,855 75,650 237,944 214,826
Total costs
and expenses 405,264 323,822 1,063,772 953,050
Operating income 36,073 33,794 96,300 90,943
Other income
(expense) 7,700 (3,000) 7,700 (3,000)
Interest - net (4,079) (4,557) (12,350) (15,238)
Income from continuing operations before income
taxes 39,694 26,237 91,650 72,705
Income tax
provision 13,021 10,506 33,544 29,151
Income from continuing
operations 26,673 15,731 58,106 43,554
Income from discontinued operations Earnings, net
of tax --- 8,524 3,088 13,944
Gain on sale, net
of tax --- -- 50,000 ---
--- 8,524 53,088 13,944
Net income $ 26,673 $ 24,255 $111,194 $ 57,498
Earnings per common share
Continuing
operations $ 0.60 $ 0.35 $ 1.30 $ 0.98
Discontinued
operations 0.00 0.19 1.18 0.32
Net earnings $ 0.60 $ 0.54 $ 2.48 $ 1.30
Average common shares outstanding
(thousands) 44,340 45,234 44,811 44,271
Consolidated Statements of Financial Position (In Thousands of U.S.
Dollars)
Sept. 30, Dec. 31,
1997 1996
Current assets
Cash and short-term investments $ 96,638 $ 166,269
Accounts and notes receivable 257,629 282,477
Inventories 320,969 272,170
Net assets of business
to be divested 42,277 ---
Other current assets 38,069 33,875
Total current assets 755,582 754,791
Fixed assets 272,724 285,091
Goodwill and other intangibles 678,778 466,488
Other assets 105,526 111,895
$ 1,812,610 $ 1,618,265
Current liabilities
Notes payable to banks $ 49,940 $ 45,461
Current portion of long-term debt 17,072 13,687
Accounts payable 128,350 144,507
Income taxes payable 72,494 12,072
Accrued liabilities 188,510 158,605
Customer advances 16,677 18,025
Total current liabilities 473,043 392,357
Long-term debt 335,376 288,561
Other liabilities 132,105 116,056
940,524 796,974
Shareholders' equity
Common shares 570,669 616,538
Contributed surplus 1,712 1,409
Retained earnings 331,277 229,472
903,658 847,419
Equity adjustment from foreign
currency translation (31,572) (26,128)
Total shareholders' equity 872,086 821,291
$ 1,812,610 $ 1,618,265
Consolidated Statements of Cash Flows (In Thousands of U.S. Dollars)
Nine Months Ended Sept. 30,
1997 1996
(Restated)
Cash provided from (used by) operating activities
Continuing operations Income from continuing
operations $ 58,106 $ 43,554
Add (deduct) items not affecting cash
Depreciation 24,653 22,247
Amortization 11,727 10,031
Deferred income taxes 6,306 14,377
Other 234 (1,448)
Net increase in working capital
other than cash (8,882) (29,546)
Asset securitization (5,800) 1,600
86,344 60,815
Cash provided from (used by)
discontinued operations (6,440) 26,712
79,904 87,527
Cash provided from (used by) investing activities
Additions to fixed assets (32,993) (27,427)
Acquisition of businesses (326,795) (39,424)
Net proceeds from disposal
of assets 216,724 1,000
Proceeds from other assets 7,808 2,071
Other (2,698) (7,496)
(137,954) (71,276)
Cash provided from (used by) financing activities
Net addition to (repayment of)
borrowings 41,896 (85,538)
Issuance of common stock 1,453 112,943
Repurchase of common stock (45,551) --
Dividends (9,389) (6,792)
Other -- 2,500
(11,591) 23,113
Increase (decrease) in cash during the period
(69,641) 39,364
Cash at beginning of period 166,269 107,174
Cash at end of period $ 96,628 $ 146,538
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TEL: (704) 347-6838 United Dominion Industries Ltd.
Nancy Spurlock, Media TEL: (704) 347-6529 United Dominion Industries Ltd.
Michael Morgan, Analysts |
