ST. PAUL, Minn., Feb. 1 /PRNewswire/ -- Pentair, Inc. (NYSE: PNR) reported
today that sales from continuing businesses totaled $2.7 billion for the year
ended December 31, 2000, an increase of 30 percent from 1999. The company
said fourth quarter net income and diluted earnings per share (EPS), including
a non-recurring charge of $27 million for restructuring, were significantly
below year-earlier levels but in line with guidance issued last month.
Pre-restructuring charge net income for full year 2000, including $30 million
of non-recurring working capital write-offs in Tools, was $97.2 million, or
$1.99 per share, down from $2.55 per share in the previous year. Improvements
in working capital drove Pentair's free cash flow for 2000 to a record
$113 million compared to $86 million in 1999.
The impact of a slower economy on the sales of the company's Tools
businesses resulted in a seven percent decline in Pentair's revenues for the
quarter ended December 31, 2000, and an 81 percent drop in earnings from
continuing operations. Fourth quarter sales from continuing businesses
totaled $674.8 million, versus $722.1 million in the comparable 1999 period;
pre-restructuring charge operating earnings were $15.7 million versus
$84.7 million; and pre-restructuring charge net income was $(1.0) million, or
$(0.02) per share, versus $39.6 million or $.83 per share in 1999. In the
fourth quarter of 2000, the company recorded a $27 million restructuring
charge and established working capital reserves of $25 million to account for
weakened marketplace conditions.
Pentair sales and earnings for 2000 and 1999 have been restated in
accordance with new accounting standards to reclass both outbound freight
(from sales) and distribution expense (from SG&A) to Cost of Goods Sold, and
to reflect the discontinuation of the equipment segment. Sales and earnings
for 2000 were also restated in accordance with new SEC revenue recognition
guidelines.
"The fourth quarter economic slowdown certainly had a negative impact on
our sales, particularly in our Tools segment, but we had already begun
planning a major restructuring to revitalize the Tools business and restore
the entire company's long-term growth momentum," said Randall J. Hogan,
president and chief executive officer. "We have since implemented prompt and
effective actions to streamline the company and position it to compete more
successfully in a radically changed global economy. Today, we are cautiously
optimistic that Pentair's financial performance will improve steadily
throughout 2001 and beyond.
"Our restructuring will yield an estimated $20 million annual cost
savings, and the benefits will begin to be reflected in the first quarter of
2001," Hogan added. "Since the end of the third quarter, we have reduced the
company's payroll by 400 jobs. About 60 of the reductions came from the
consolidation of key support services within the three operating businesses.
An additional 340 jobs were cut within the Tools segment, where we also closed
production operations in the last two weeks of December and the first
two weeks of January. The Tools segment now has a substantially improved cost
and inventory position."
Pentair said the cutbacks included approximately 50 percent of the
corporate headquarters staff, which had been situated in two locations in the
Twin Cities. As a result of these job reductions, the company has vacated its
downtown Minneapolis executive offices. The company's headquarters now is
consolidated in St. Paul, Minnesota, where executive staff formerly had been
based and recently has been occupied by corporate services staff.
Hogan, who became CEO on January 1, 2001, said priorities for this year
include completing the turnaround of the company's Tools segment, completing
the disposition of the non-core equipment businesses, and expanding the water
and enclosure businesses.
Sales in the Tools segment totaled $1.1 billion in 2000, a 22 percent gain
over the previous year, principally due to the acquisition of DeVilbiss Air
Power Company by Pentair in September 1999. Operating income for the segment
was $29.1 million, down 73 percent from 1999.
Pentair's Enclosures segment recorded significant achievements in 2000, as
it continued its strong performance following its transformation to serve
datacom and telecom customers. All of the segment's businesses received major
contract awards from global customers. For example, Pentair Electronic
Packaging fourth quarter 2000 sales rose almost 70 percent over year ago
figures as it captured new programs with Motorola, Dell, and Marconi, among
others. The Enclosures segment is also adding aluminum enclosure capabilities
to its Minnesota facilities, increasing integration capacity at several
locations, and expanding its industrial enclosures plant in Mexico. Hoffman
Enclosures won the annual Control magazine Reader's Choice Awards for the
Enclosures Product category, in which 72 percent of readers chose Hoffman as
their preferred enclosure manufacturer.
Enclosure segment sales totaled $777.7 million in 2000, an 18 percent gain
over 1999 levels, while operating income totaled $94.6 million, a 50 percent
improvement over the previous year. In local currencies, sales increased
22 percent while operating income gained 53 percent. Return on sales for the
Enclosures segment was 12.2 percent for full year 2000, versus 9.6 percent in
1999.
The Water Technologies segment also performed well in 2000, continuing a
five-year annual growth rate of over 50 percent. The integration of the Essef
acquisition marked the second major successful integration in as many years.
The segment's pump business reported continued strong activity in its
municipal market, and pool and spa equipment sales exceeded expectations.
Pentair Water Treatment continued its expansion into China and India regions
and recorded sales and operating income gains of over 20 percent from its
international units.
The Water Technologies segment reported 2000 sales of $903.7 million, a
55 percent gain over 1999, partially due to the acquisition of Essef in August
1999. Operating income for the segment totaled $120.7 million, up 65 percent
from 1999. In local currencies, sales increased 57 percent while operating
income gained 69 percent. Return on sales for the segment was 13.4 percent
for 2000 versus 12.6 percent for 1999.
Hogan said discussions are under way with potential buyers of the
company's discontinued equipment businesses, and transactions are expected to
be concluded in the first half of 2001.
"Looking forward," Hogan said, "we are encouraged that January sales in
our Tools segment are up over the same period last year. While prevailing
economic conditions may slow the growth of our Water Technologies and Tools
segments somewhat, we expect to achieve first quarter 2001 earnings in the
range of $.40 to $.45 per share."
A Pentair conference call scheduled for 9:00 a.m. CST today will be
webcast live via http://www.pentair.com . The conference call, which can be
found on the site's "Financial Information" page, will be archived at the same
location.
Pentair is a St. Paul-based manufacturer whose core businesses compete in
Tools, Water Technologies, and enclosures markets. The company employs
13,000 people in more than 50 locations around the world.
Any statements made about the company's anticipated financial results are
forward-looking statements subject to risks and uncertainties such as
continued economic growth in North America, strong retail demand during the
Christmas selling season, pricing and other competitive pressures, Pentair's
ability to rapidly strengthen management in the affected businesses, and other
uncertainties as described in the company's Annual Report on Form 10K for the
year ended December 31, 2000. Actual results could differ materially from
anticipated results.
PENTAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Fourth Quarter Full Year
In thousands, except
per-share data 2000 1999 2000 1999
Net sales $674,777 $722,056 $2,748,013 $2,116,070
Cost of goods sold 523,187 523,859 2,051,515 1,529,419
Gross profit 151,590 198,197 696,498 586,651
Selling, general and
administrative 128,011 106,091 438,488 339,707
Research and
development 7,831 7,388 31,191 22,170
Restructuring charge 27,257 -- 24,789 23,048
Operating income
(loss) (11,509) 84,718 202,030 201,726
Net interest expense 18,619 20,100 74,899 43,582
Income (loss) from
continuing
operations before
income taxes (30,128) 64,618 127,131 158,144
Income taxes (11,661) 24,991 45,263 60,056
Income (loss) from
continuing
operations (18,467) 39,627 81,868 98,088
Income (loss) from
discontinued
operations, net of
tax (7,962) 3,348 (24,759) 5,221
Cumulative effect of
accounting change,
net of tax -- -- (1,222) --
Net income (loss) $(26,429) $42,975 $55,887 $103,309
Earnings per common share
Basic
Continuing
operations $(0.38) $0.83 $1.68 $2.24
Income (loss)
from discontinued
operations (0.16) 0.07 (0.51) 0.12
Cumulative effect
of accounting change -- -- (0.02) --
Basic earnings per
common share $(0.54) $0.90 $1.15 $2.36
Diluted
Continuing operations $(0.38) $0.83 $1.68 $2.21
Income (loss) from
discontinued
operations (0.16) 0.07 (0.51) 0.12
Cumulative effect
of accounting change -- -- (0.02) --
Diluted earnings
per common share $(0.54) $0.90 $1.15 $2.33
Pro forma amounts assuming the accounting change is applied retroactively
Net income (loss)
from continuing
operations $(18,467) $39,532 $81,868 $97,514
Net income (loss)
from discontinued
operations (7,962) 3,348 (24,759) 5,221
$(26,429) $42,880 $57,109 $102,735
Net income (loss) per common share
Basic
Continuing
operations $(0.38) $0.83 $1.68 $2.23
Income (loss)
from discontinued
operations (0.16) 0.07 (0.51) 0.12
$(0.54) $0.90 $1.17 $2.35
Diluted
Continuing
operations $(0.38) $0.83 $1.68 $2.20
Income (loss) from
discontinued
operations (0.16) 0.07 (0.51) 0.12
$(0.54) $0.90 $1.17 $2.32
The above financial statements reflect:
*a fourth quarter 2000 net restructuring charge related to the
reorganization of our Tools segment and corporate headquarters;
*discontinuing the operations of our Equipment segment in the fourth
quarter of 2000;
- the adoption of SAB 101, which resulted in a cumulative effect of
accounting change in 2000; and
- the adoption of EITF 00-10, which clarified the income statement
classification for shipping and handling fees and costs.
Certain prior year information has been reclassified to conform to the
current year presentation.
PENTAIR, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION BY REPORTABLE BUSINESS SEGMENT (UNAUDITED)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
In thousands 2000 2000 2000 2000 2000
Net Sales
Tools $231,610 $275,375 $280,203 $279,428 $1,066,616
Water 231,967 261,727 214,119 195,859 903,672
Enclosures 184,114 196,659 197,462 199,490 777,725
Other -- -- -- -- --
Consolidated $647,691 $733,761 $691,784 $674,777 $2,748,013
Operating Income (Loss) Before Restructuring Charge
Tools $22,005 $17,235 $10,772 $(20,865) $29,147
Water 30,749 41,448 28,512 20,023 120,732
Enclosures 23,149 24,542 24,786 22,166 94,643
Other (5,619) (3,788) (2,720) (5,576) (17,703)
Consolidated $70,284 $79,437 $61,350 $15,748 $226,819
Operating Income (Loss) Before Restructuring
Charge as a Percent of Net Sales
Tools 9.5% 6.3% 3.8% (7.5%) 2.7%
Water 13.3% 15.8% 13.3% 10.2% 13.4%
Enclosures 12.6% 12.5% 12.6% 11.1% 12.2%
Consolidated 10.9% 10.8% 8.9% 2.3% 8.3%
Restructuring Charge (Income) Expense
Tools $(1,171) $-- $-- $6,567 $5,396
Water -- -- -- -- --
Enclosures (1,297) -- -- (328) (1,625)
Other -- -- -- 21,018 21,018
Consolidated $(2,468) $-- $-- $27,257 $24,789
Operating Income (Loss) After Restructuring Charge
Tools $23,176 $17,235 $10,772 $(27,432) $23,751
Water 30,749 41,448 28,512 20,023 120,732
Enclosures 24,446 24,542 24,786 22,494 96,268
Other (5,619) (3,788) (2,720) (26,594) (38,721)
Consolidated $72,752 $79,437 $61,350 $(11,509) $202,030
PENTAIR, INC. AND SUBSIDIARIES
FINANCIAL INFORMATION BY REPORTABLE BUSINESS SEGMENT (UNAUDITED)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
In thousands 1999 1999 1999 1999 1999
Net Sales
Tools $154,831 $153,606 $214,747 $352,459 $875,643
Water 105,049 123,544 164,353 189,981 582,927
Enclosures 148,360 162,038 167,486 179,616 657,500
Other -- -- -- -- --
Consolidated $408,240 $439,188 $546,586 $722,056 $2,116,070
Operating Income (Loss) Before Restructuring Charge
Tools $18,815 $15,611 $24,702 $47,857 $106,985
Water 14,052 17,595 20,113 21,602 73,362
Enclosures 12,393 14,405 16,406 19,885 63,089
Other (4,661) (4,324) (5,051) (4,626) (18,662)
Consolidated $40,599 $43,287 $56,170 $84,718 $224,774
Operating Income (Loss) Before Restructuring Charge
as a Percent of Net Sales
Tools 12.2% 10.2% 11.5% 13.6% 12.2%
Water 13.4% 14.2% 12.2% 11.4% 12.6%
Enclosures 8.4% 8.9% 9.8% 11.1% 9.6%
Consolidated 9.9% 9.9% 10.3% 11.7% 10.6%
Restructuring Charge (Income) Expense
Tools $6,305 $-- $-- $-- $6,305
Water -- -- -- -- --
Enclosures 16,743 -- -- -- 16,743
Other -- -- -- -- --
Consolidated $23,048 $-- $-- $-- $23,048
Operating Income (Loss) After Restructuring Charge
Tools $12,510 $15,611 $24,702 $47,857 $100,680
Water 14,052 17,595 20,113 21,602 73,362
Enclosures (4,350) 14,405 16,406 19,885 46,346
Other (4,661) (4,324) (5,051) (4,626) (18,662)
Consolidated $17,551 $43,287 $56,170 $84,718 $201,726
PENTAIR, INC. AND SUBSIDIARIES
RECONCILIATION OF CONTINUING AND DISCONTINUED OPERATIONS (UNAUDITED)
In millions,
except per First Second Third Fourth
-share data Quarter Quarter Quarter Quarter Year
Net Sales (a)
1999 total $483.7 $521.0 $622.3 $807.5 $2,434.5
Equipment
discontinued
operations 75.5 81.8 75.7 85.4 318.4
1999
continuing
operations $408.2 $439.2 $546.6 $722.1 $2,116.1
2000 total $722.0 $803.3 $745.6 $732.4 $3,003.3
Equipment
discontinued
operations 74.3 69.5 53.8 57.7 255.3
2000
continuing
operations $647.7 $733.8 $691.8 $674.7 $2,748.0
% change
from
continuing
operations 59% 67% 27% (7%) 30%
Operating Income (Loss) (b)
1999 total $46.4 $51.6 $62.7 $91.6 $252.3
Equipment
discontinued
operations 5.8 8.3 6.5 6.9 27.5
1999
continuing
operations $40.6 $43.3 $56.2 $84.7 $224.8
2000 total $72.9 $78.6 $40.7 $2.9 $195.1
Equipment
discontinued
operations 2.6 (0.8) (20.7) (12.8) (31.7)
2000
continuing
operations
(c) $70.3 $79.4 $61.4 $15.7 $226.8
% change
from
continuing
operations 73% 83% 9% (81%) 1%
Diluted Earnings Per Share (d)
1999 continuing
operations $0.53 $0.55 $0.62 $0.83 $2.55
Restructuring
charge (0.34) -- -- -- (0.34)
1999 total
continuing
operations 0.19 0.55 0.62 0.83 2.21
Discontinued
operations 0.08 0.11 0.08 0.07 0.34
Restructuring
charge (0.22) -- -- -- (0.22)
1999 total
discontinued
operations (0.14) 0.11 0.08 0.07 0.12
1999 total
reported $0.05 $0.66 $0.70 $0.90 $2.33
2000
continuing
operations
(excluding
one-time
costs) $0.64 $0.85 $0.58 $0.31 $2.38
One-time
costs (e) -- (0.06) -- (0.33) (0.39)
2000
continuing
operations
before
restructuring
charge 0.64 0.79 0.58 (0.02) 1.99
Restructuring
charge 0.03 -- -- (0.36) (0.33)
2000 total
continuing
operations 0.67 0.79 0.58 (0.38) 1.66
Discontinued
operations
(including
one-time
costs) 0.01 (0.03) (0.30) (0.19) (0.51)
Restructuring
charge (0.03) -- -- 0.03 --
2000 total
discontinued
operations (0.02) (0.03) (0.30) (0.16) (0.51)
2000 total
reported $0.65 $0.76 $0.28 $(0.54) $1.15
% change from
continuing
operations
before
restructuring
and one-time
costs 21% 55% (6%) (63%) (7%)
(a) Adjusted for SAB 101, cumulative effect of accounting change, and
outbound freight reclassification.
(b)Adjusted for SAB 101 and cumulative effect of accounting change and
excludes restructuring charge.
(c)One-time charges included above.
(d)Amounts may not total the annual earnings per share because each
quarter and the year are calculated separately based on the basic and diluted weighted average common shares outstanding during that period.
(e)One-time costs relate to our Tools segment and consist of $5 million in accounts receivable reserves that were established in the second quarter of 2000 and $25 million for accounts receivable ($17 million)and inventory valuation reserves ($8 million) that were established in the fourth quarter of 2000.
CONTACT:
Mark Cain of Pentair, 651-639-5278
SOURCE Pentair, Inc.
CONTACT: Mark Cain of Pentair, 651-639-5278