AMHERST, NY, June 18, 1996 -- Mark IV Industries, Inc. (NYSE: IV) today reported record sales and earnings for its first fiscal quarter ended May 31, 1996. Net income rose 16 percent in the quarter, to $28.5 million from $24.6 million last year, while fully-diluted earnings per share increased 15 percent, to 45 cents from 39 cents. Weighted average shares outstanding, on a frilly-diluted basis, rose slightly in the period, to 63.5 million from 63.4 million last year.
Sales in the quarter increased 19 percent, to $616.9 million from $518.5 million, while operating income (income before interest expense and taxes) increased 17 percent, to $64.6 million from $55.3 million last year. All share-related amounts are frilly-diluted and have been adjusted for the five percent stock dividend issued on April 26, 1996.
Included in this year's first quarter are the results of operations of FitzSimons Manufacturing Company and Imperial Eastman, acquired in December 1995 and March 1996, respectively. On a combined basis, these businesses added approximately $47 million to sales in this year's first quarter.
Commenting on the quarter's performance, Sal H. Alfiero, chairman and chief executive officer of Mark IV, said, "The first period of fiscal 1997, marking our 65th consecutive quarter of year-over-year earnings growth, provides us with a pretty good start to fiscal 1997. We expect this to be a very eventful year -- several dispositions are in progress; our cycle time reduction (CTR) programs are being implemented; and we have a clear plan to reduce working capital and total asset investment, thereby improving returns.
"During the first quarter of fiscal 1997, overall automotive revenue (OEM and aftermarket, both foreign and domestic), was up 17 percent in the period, as compared with last year's first quarter. This year's period includes the results of FitzSimons Manufacturing Company. Year-over-year, automotive revenue, excluding FitzSimons, increased ten percent.
"Foreign automotive OEM sales continued to lead revenue gains. However, domestic markets also improved despite the General Motors strike early in the quarter, which cost us about one cent per share in earnings. We also saw some strengthening in the traditional domestic aftermarket business, offset somewhat by pricing pressures on the filter side of the business.
"In our industrial business, first quarter revenue increased 21 percent, year-over-year. This year's first quarter includes the Imperial Eastman acquisition. Excluding the results of Imperial Eastman, sales still grew by ten percent in the period, reflecting improved domestic economic conditions and some favorable product pricing. On the minus side, wet weather conditions in the spring negatively impacted first quarter revenue, and cost us an additional one cent per share in quarterly earnings. Throughout our transportation units, increased order rates, continuing record backlogs, and increased shipment levels have more than offset some softening in our professional audio markets.
"As mentioned in our annual report, we are taking a careful look at long-term assets acquired over the years -- goodwill, plant, equipment, etc. -- in accordance with the newly-effective SFAS 121 accounting standard. We expect to be writing down some goodwill and fixed asset values due to changing conditions in markets and technologies since the acquisition and valuation dates of certain assets. In some cases, those valuation dates are more than a decade old. We will NOT, of course, be making upward adjustments of comparable assets which were correspondingly undervalued at their acquisition dates. These charges will occur later on in fiscal 1997, in conjunction with the refocusing of our factories resulting from our CTR programs, and the recent realignment of the company into two core businesses -- Mark IV Automotive and Mark IV Industrial -- based on our primary markets.
"Any charge taken related to these long-lived assets will be non-cash. Any cash portion of a charge for realignment will more than likely be substantially offset by gains from the disposition of assets in the process of being sold. We will view such cash charges as we view any other investment opportunity -- with an eye toward a return to our investors over a short period of time. In these situations, we look for paybacks in the two to four year time frame." Mark IV Industries, Inc., headquartered in the Buffalo suburb of Amherst, New York, employs more than 18,000 people worldwide, manufacturing power and fluid transfer systems and components for global industrial and automotive markets.
|Operating income *||$ 64,600||$ 55,300|
|Interest expense||$ 17,800||$ 15,000|
|Operating income, net of interest expense||$ 46,800||$ 40,300|
|Net income||$ 28,500||$ 24,600|
|Earnings per share:|
|Weighted average number of shares outstanding:|
|* Represents income before interest expense and taxes.|