ST. PAUL, Minn., Jul 23, 2002 /PRNewswire-FirstCall via COMTEX/ -- Pentair
(NYSE: PNR) today announced that its recent growth and cost productivity actions
generated second quarter 2002 earnings per share (EPS) of $0.86, a 15 percent
gain over EPS of $0.75 -- without goodwill amortization -- in the same period
last year.
Pentair's second quarter net sales totaled $708.1 million, up three percent over
sales of $689.4 million in the prior year. Operating income totaled $74.6
million, seven percent greater than the $69.6 million of operating income
reported in the second quarter of 2001. Free cash flow in the first half of 2002
totaled $87.2 million -- representing a $33.8 million gain over the same period
last year, a 135 percent conversion of first-half net income, and cash EPS of
$1.75.
"Our second quarter 2002 performance demonstrates that our supply management,
lean enterprise, and cash flow initiatives are generating concrete results, and
that growth-oriented actions are contributing to our improved performance," said
Randall J. Hogan, Pentair chairman and CEO. "Our Tools and Enclosures groups
realized strong margin gains compared to the first quarter of this year, and
sales in both our Tools and Water Technologies groups increased by double-digit
percentages."
In the Tools Group, record second quarter 2002 sales of $303.8 million were 11
percent higher than in the same period last year, while operating income of
$30.8 million improved 50 percent on the same comparison. Second quarter
operating income margins were 10.2 percent, representing an increase of 270
basis points over the second quarter 2001. Sell-through in all channels improved
over prior-year levels, with particularly strong activity in pressure washer and
woodworking equipment lines.
In the Water Technologies Group, second quarter sales of $265.5 million -- an 11
percent gain over the same period last year -- was due to record high seasonal
activity in the pool and spa equipment business, robust sales in retail and
municipal markets, and strong international sales. Second quarter 2002 operating
income of $43.7 million gained eight percent over the same period last year,
driven principally by volume increases. Margins in the second quarter were 16.5
percent, down slightly from the prior year due to less favorable product mix.
In the Enclosures segment, sales of $138.8 million and operating income of $7.0
million in the second quarter of 2002 were down significantly against year-ago
levels due to continued slow capital spending and weak global technology
markets. Enclosures Group sales have been essentially flat during the last three
quarters, but margins improved sequentially by 90 basis points in the first
quarter of 2002 and gained another 170 basis points in the second quarter of
2002.
"There's uncertainty about the economy and its impact on business in the current
environment," Hogan said. "Despite these circumstances, our Tools business has
regained double-digit margins and moved from defense to offense; margins in the
Water Technologies business are strong, and our core pump and water treatment
markets are improving; and, cost productivity actions in our Enclosures business
are taking hold while industrial markets appear to be stabilizing.
"Looking forward, assuming our markets continue their current pace of recovery,
that we continue to build share in our water markets, and that Enclosures' sales
are flat to up slightly in the second half, we expect to remain on track with
2002 EPS expectations of between $2.80 and $2.90," Hogan added.
In a separate filing today to the SEC, Pentair filed an amended first quarter
2002 10-Q to conform its financial statements to EITF #01-9. This EITF
reclassifies certain selling expenses from SG&A as a reduction in net sales.
This reclassification does not change operating or net income for the quarter or
any prior accounting period. Conforming adjustments for prior periods are
included in the tables following this news release.
A Pentair conference call scheduled for 9:00 a.m. CDT 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 11,500 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. Forward- looking
statements included herein are made as of the date hereof and the company
undertakes no obligation to update publicly such statements to reflect
subsequent events or circumstances. Actual results could differ materially from
anticipated results.
Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
Three months ended Six months ended
June 29 June 30 June 29 June 30
In thousands, except
per-share data 2002 2001 2002 2001
Net sales (b) $708,116 $689,427 $1,311,179 $1,353,596
Cost of goods sold 532,136 531,294 998,188 1,038,690
Gross profit 175,980 158,133 312,991 314,906
% of net sales 24.9% 22.9% 23.9% 23.3%
Selling, general and
administrative (a)(b) 92,367 90,534 175,287 186,712
% of net sales 13.0% 13.1% 13.4% 13.8%
Research and development 9,021 7,250 17,385 14,989
% of net sales 1.3% 1.1% 1.3% 1.1%
Operating income 74,592 60,349 120,319 113,205
% of net sales 10.5% 8.8% 9.2% 8.4%
Net interest expense 10,476 16,241 24,206 33,957
% of net sales 1.5% 2.4% 1.8% 2.5%
Other expense,
write-off of
investment --- --- --- 2,500
% of net sales n/a n/a n/a 0.2%
Income before income
taxes 64,116 44,108 96,113 76,748
% of net sales 9.1% 6.4% 7.3% 5.7%
Provision for income
taxes 21,140 15,552 31,699 27,629
Effective tax rate 33.0% 35.3% 33.0% 36.0%
Net income $42,976 $28,556 $64,414 $49,119
% of net sales 6.1% 4.1% 4.9% 3.6%
Earnings per common
share
Basic $0.87 $0.58 $1.31 $1.00
Diluted $0.86 $0.58 $1.29 $1.00
Weighted average
common shares
outstanding
Basic 49,228 49,032 49,201 49,019
Diluted 50,039 49,274 49,812 49,200
Cash dividends
declared per common
share $0.18 $0.17 $0.36 $0.34
Goodwill amortization
disclosure
Reported net income $42,976 $28,556 $64,414 $49,119
Add back goodwill
amortization,
net of tax --- 8,200 --- 16,200
Adjusted net income $42,976 $36,756 $64,414 $65,319
Reported earnings per
share - basic $0.87 $0.58 $1.31 $1.00
Goodwill amortization --- 0.17 --- 0.33
Adjusted net earnings
per share - basic $0.87 $0.75 $1.31 $1.33
Reported earnings per
share - diluted $0.86 $0.58 $1.29 $1.00
Goodwill amortization --- 0.17 --- 0.33
Adjusted net earnings
per share - diluted $0.86 $0.75 $1.29 $1.33
(a) During the first quarter of 2002, we adopted SFAS 142, which requires that
goodwill no longer be amortized. Selling, general and administrative (SG&A)
expense for the three and six month periods of 2001 includes $9,238 and $18,252
of goodwill amortization, respectively ($8,200 and $16,200 net of tax, or $0.17
and $0.33 per diluted share, respectively). SG&A expense for the three and six
month periods of 2001 excluding the impact of goodwill amortization was $81,296
and $168,460, or 11.8% and 12.4% of sales, respectively.
(b) We adopted Emerging Issues Task Force (EITF) Issue No. 01-9, Accounting for
Consideration Given by a Vendor to a Customer or a Reseller of the Vendor's
Products. This new guidance was effective for Pentair beginning January 1, 2002.
EITF 01-9 requires that certain payments to our customers for cooperative
advertising and certain sales incentive offers that were historically classified
in selling, general and administrative expense be reclassified and shown as a
reduction in net sales. EITF 01-9 also requires the reclassification of
previously reported results of operations for periods prior to the adoption to
conform to the current presentation.
Pentair, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
June 29 December 31 June 30
In thousands 2002 2001 2001
Assets
Current assets
Cash and cash equivalents $29,289 $39,844 $27,689
Accounts and notes receivable,
net 450,701 398,579 475,813
Inventories 305,663 300,923 345,097
Other current assets 88,276 90,932 96,330
Net assets of discontinued
operations 2,399 5,325 109,060
Total current assets 876,328 835,603 1,053,989
Property, plant and equipment,
net 314,655 329,500 341,037
Goodwill, net 1,098,952 1,088,206 1,114,115
Other assets 110,894 118,889 91,275
Total assets $2,400,829 $2,372,198 $2,600,416
Liabilities and Shareholders' Equity
Current liabilities
Short-term borrowings $--- $--- $98,828
Current maturities of
long-term debt 6,089 8,729 4,463
Accounts and notes payable 206,159 179,149 230,286
Accrued expenses and other
current liabilities 250,235 240,555 244,731
Total current liabilities 462,483 428,433 578,308
Long-term debt 638,554 714,977 780,888
Other noncurrent liabilities 221,655 213,786 199,343
Total liabilities 1,322,692 1,357,196 1,558,539
Shareholders' equity 1,078,137 1,015,002 1,041,877
Total liabilities and
shareholders' equity $2,400,829 $2,372,198 $2,600,416
Days sales in accounts
receivable (13 month
moving average) 63 65 68
Days inventory on hand
(13 month moving average) 68 75 79
Days in accounts payable
(13 month moving average) 57 59 60
Debt/total capital 37.4% 41.6% 45.9%
Pentair, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six months ended
June 29 June 30
In thousands 2002 2001
Operating activities
Net income $64,414 $49,119
Depreciation 30,376 32,830
Amortization of intangibles and unearned
compensation 1,728 20,565
Deferred income taxes 3,485 264
Other expense, write-off of investment --- 2,500
Changes in assets and liabilities, net of
effects of business acquisitions
Accounts and notes receivable (43,527) (16,233)
Inventories (1,620) 42,752
Prepaid expenses and other current assets (5,092) (7,464)
Accounts payable 25,472 (15,222)
Employee compensation and benefits 1,099 (16,333)
Accrued product claims and warranties 1,894 (564)
Income taxes 8,496 7,000
Other current liabilities 8,077 (6,017)
Pension and post-retirement benefits 3,508 2,765
Other assets and liabilities 1,222 (5,050)
Net cash provided by continuing operations 99,532 90,912
Net cash provided by (used for) discontinued
operations 2,927 (12,387)
Net cash provided by operating activities 102,459 78,525
Investing activities
Capital expenditures (15,275) (25,131)
Proceeds from sale of businesses 1,547 ---
Acquisitions, net of cash acquired --- (1,937)
Equity investments (4,169) (16,698)
Other (165) ---
Net cash used for investing activities (18,062) (43,766)
Financing activities
Net short-term borrowings (repayments) --- (8,586)
Proceeds from long-term debt 89 2,413
Repayment of long-term debt (81,123) (21,683)
Proceeds from exercise of stock options 2,107 1,648
Dividends paid (17,713) (16,665)
Net cash used for financing activities (96,640) (42,873)
Effect of exchange rate changes on cash 1,688 859
Change in cash and cash equivalents (10,555) (7,255)
Cash and cash equivalents, beginning of period 39,844 34,944
Cash and cash equivalents, end of period $29,289 $27,689
Free cash flow
Net cash provided by operating activities $102,459 $78,525
Less capital expenditures (15,275) (25,131)
Free cash flow $87,184 $53,394
Weighted average common shares
outstanding - diluted 49,812 49,200
Free cash flow per share $1.75 $1.09
Pentair, Inc. and Subsidiaries
Supplemental Condensed Consolidated Statements of Income (Unaudited)
First Qtr Second Qtr Third Qtr Fourth Qtr Year
In thousands,
except per-
share data 2001 2001 2001 2001 2001
Net sales (a) $664,169 $689,427 $636,175 $584,309 $2,574,080
Cost of goods
sold 507,396 531,294 487,033 442,222 1,967,945
Gross profit 156,773 158,133 149,142 142,087 606,135
% of net
sales 23.6% 22.9% 23.4% 24.3% 23.5%
Selling, general
and
administrative (a) 96,178 90,534 90,153 100,233 377,098
% of net sales 14.5% 13.1% 14.2% 17.2% 14.6%
Research and
development 7,739 7,250 7,805 8,377 31,171
% of net sales 1.2% 1.1% 1.2% 1.4% 1.2%
Restructuring charge --- --- --- 40,105 40,105
% of net sales n/a n/a n/a 6.9% 1.6%
Operating income
(loss) 52,856 60,349 51,184 (6,628) 157,761
% of net sales 8.0% 8.8% 8.0% (1.1%) 6.1%
Net interest
expense 17,716 16,241 14,409 13,122 61,488
% of net sales 2.7% 2.4% 2.3% 2.2% 2.4%
Other expense,
write-off of
investment 2,500 --- --- 485 2,985
% of net sales 0.4% n/a n/a 0.1% 0.1%
Income (loss)
from continuing
operations before
income taxes 32,640 44,108 36,775 (20,235) 93,288
% of net sales 4.9% 6.4% 5.8% (3.5%) 3.6%
Provision for
income taxes 12,077 15,552 12,104 (3,961) 35,772
Effective tax rate 37.0% 35.3% 32.9% 19.6% 38.3%
Income (loss) from
continuing
operations 20,563 28,556 24,671 (16,274) 57,516
% of net sales 3.1% 4.1% 3.9% (2.8%) 2.2%
Loss on disposal
of discontinued
operations, net
of tax --- --- --- (24,647) (24,647)
Net income (loss) $20,563 $28,556 $24,671 $(40,921) $32,869
Earnings per common share
Basic
Continuing
operations $0.42 $0.58 $0.50 $(0.33) $1.17
Discontinued
operations --- --- --- (0.50) (0.50)
Basic earnings
per common share $0.42 $0.58 $0.50 $(0.83) $0.67
Diluted
Continuing
operations $0.42 $0.58 $0.50 $(0.33) $1.17
Discontinued
operations --- --- --- (0.50) (0.50)
Diluted earnings
per common share $0.42 $0.58 $0.50 $(0.83) $0.67
Weighted average
common shares
outstanding
Basic 49,006 49,032 49,082 49,070 49,047
Diluted 49,127 49,274 49,410 49,376 49,297
Cash dividends
declared per
common share $0.17 $0.17 $0.18 $0.18 $0.70
Goodwill
amortization
disclosure
(continuing
operations)
Reported net
income $20,563 $28,556 $24,671 $(16,274) $57,516
Add back goodwill
amortization,
net of tax 8,000 8,200 7,953 7,890 32,043
Adjusted net
income $28,563 $36,756 $32,624 $(8,384) $89,559
Reported earnings
per share - basic $0.42 $0.58 $0.50 $(0.33) $1.17
Goodwill
amortization 0.16 0.17 0.16 0.16 0.65
Adjusted net
earnings per
share - basic $0.58 $0.75 $0.66 $(0.17) $1.82
Reported earnings
per share -
diluted $0.42 $0.58 $0.50 $(0.33) $1.17
Goodwill
amortization 0.16 0.17 0.16 0.16 0.65
Adjusted net
earnings per
share - diluted $0.58 $0.75 $0.66 $(0.17) $1.82
(a) Adjusted to give effect to the adoption of EITF 01-9.
Pentair, Inc. and Subsidiaries Supplemental Financial Information by Reportable
Business Segment (Unaudited)
First Qtr Second Qtr Six Months
In thousands 2002 2002 2002
Net sales to external
customers (a)
Tools $252,092 $303,771 $555,863
Water 211,411 265,531 476,942
Enclosures 139,560 138,814 278,374
Consolidated $603,063 $708,116 $1,311,179
Operating income (loss) as
reported
Tools $16,686 $30,837 $47,523
Water 29,747 43,708 73,455
Enclosures 4,608 6,995 11,603
Other (5,314) (6,948) (12,262)
Consolidated $45,727 $74,592 $120,319
Restructuring charge
Tools $--- $--- $---
Water --- --- ---
Enclosures --- --- ---
Other --- --- ---
Consolidated (b) $--- $--- $---
Goodwill amortization
Tools $--- $--- $---
Water --- --- ---
Enclosures --- --- ---
Total goodwill amortization --- --- ---
Amortization of unearned
compensation 864 864 1,728
Total amortization $864 $864 $1,728
Operating income (loss)
excluding restructuring charge
and goodwill amortization
Tools $16,686 $30,837 $47,523
Water 29,747 43,708 73,455
Enclosures 4,608 6,995 11,603
Other (5,314) (6,948) (12,262)
Consolidated $45,727 $74,592 $120,319
Operating income before
restructuring charge and
goodwill amortization as a
percent of net sales
Tools 6.6% 10.2% 8.5%
Water 14.1% 16.5% 15.4%
Enclosures 3.3% 5.0% 4.2%
Consolidated 7.6% 10.5% 9.2%
(a) Adjusted to give effect to the adoption of EITF 01-9.
(b) $955 thousand of the fourth quarter 2001 restructuring charge is
included in cost of goods sold on the consolidated income statements
for the write-down of inventory on certain product lines that were
discontinued as a result of plant closures.
Pentair, Inc. and Subsidiaries Supplemental Financial Information by Reportable
Business Segment (Unaudited)
First Qtr Second Qtr Six Months
In thousands 2001 2001 2001
Net sales to external
customers (a)
Tools $234,404 $274,419 $508,823
Water 219,626 239,854 459,480
Enclosures 210,139 175,154 385,293
Consolidated $664,169 $689,427 $1,353,596
Operating income (loss)
as reported
Tools $7,863 $18,218 $26,081
Water 28,193 35,650 63,843
Enclosures 21,237 9,834 31,071
Other (4,437) (3,353) (7,790)
Consolidated $52,856 $60,349 $113,205
Restructuring charge
Tools $--- $--- $---
Water --- --- ---
Enclosures --- --- ---
Other --- --- ---
Consolidated (b) $--- $--- $---
Goodwill amortization
Tools $2,319 $2,319 $4,638
Water 4,549 4,859 9,408
Enclosures 2,146 2,060 4,206
Total goodwill amortization 9,014 9,238 18,252
Amortization of unearned
compensation 870 1,443 2,313
Total amortization $9,884 $10,681 $20,565
Operating income (loss)
excluding restructuring charge
and goodwill amortization
Tools $10,182 $20,537 $30,719
Water 32,742 40,509 73,251
Enclosures 23,383 11,894 35,277
Other (4,437) (3,353) (7,790)
Consolidated $61,870 $69,587 $131,457
Operating income before
restructuring charge and
goodwill amortization as a
percent of net sales
Tools 4.3% 7.5% 6.0%
Water 14.9% 16.9% 15.9%
Enclosures 11.1% 6.8% 9.2%
Consolidated 9.3% 10.1% 9.7%
(a) Adjusted to give effect to the adoption of EITF 01-9.
(b) $955 thousand of the fourth quarter 2001 restructuring charge is
included in cost of goods sold on the consolidated income statements
for the write-down of inventory on certain product lines that were
discontinued as a result of plant closures.
Pentair, Inc. and Subsidiaries Supplemental Financial Information by Reportable
Business Segment (Unaudited)
Third Qtr Fourth Qtr Year
In thousands 2001 2001 2001
Net sales to external
customers (a)
Tools $241,487 $251,335 $1,001,645
Water 230,370 192,765 882,615
Enclosures 164,317 140,210 689,820
Consolidated $636,174 $584,310 $2,574,080
Operating income (loss)
as reported
Tools $17,524 $19,627 $63,232
Water 28,427 17,522 109,792
Enclosures 8,740 (37,954) 1,857
Other (3,507) (5,823) (17,120)
Consolidated $51,184 $(6,628) $157,761
Restructuring charge
Tools $--- $--- $---
Water --- --- ---
Enclosures --- 39,382 39,382
Other --- 1,678 1,678
Consolidated (b) $--- $41,060 $41,060
Goodwill amortization
Tools $2,318 $2,318 $9,274
Water 4,575 4,577 18,560
Enclosures 2,066 2,001 8,273
Total goodwill amortization 8,959 8,896 36,107
Amortization of unearned
compensation 1,442 1,813 5,568
Total amortization $10,401 $10,709 $41,675
Operating income (loss)
excluding restructuring charge
and goodwill amortization
Tools $19,842 $21,945 $72,506
Water 33,002 22,099 128,352
Enclosures 10,806 3,429 49,512
Other (3,507) (4,145) (15,442)
Consolidated $60,143 $43,328 $234,928
Operating income before
restructuring charge and
goodwill amortization as a
percent of net sales
Tools 8.2% 8.7% 7.2%
Water 14.3% 11.5% 14.5%
Enclosures 6.6% 2.4% 7.2%
Consolidated 9.5% 7.4% 9.1%
(a) Adjusted to give effect to the adoption of EITF 01-9.
(b) $955 thousand of the fourth quarter 2001 restructuring charge is
included in cost of goods sold on the consolidated income statements
for the write-down of inventory on certain product lines that were
discontinued as a result of plant closures.
Pentair, Inc. and Subsidiaries
Additional Supplemental Financial Information (Unaudited)
In thousands 2000 1999 1998 1997 1996
Net sales to
external
customers (a)
Tools $1,029,658 $850,327 $644,226 $559,907 $467,464
Water 898,247 579,236 438,810 304,647 216,769
Enclosures 777,725 657,500 586,829 600,491 566,919
Other --- --- --- 128,136 133,360
Consolidated $2,705,630 $2,087,063 $1,669,865 $1,593,181 $1,384,512
Goodwill
amortization
Tools $9,285 $3,282 $287 $214 $306
Water 18,074 12,714 7,793 7,363 4,920
Enclosures 9,097 8,413 5,832 5,576 5,667
Other --- --- --- 418 502
Total goodwill
amortization 36,456 24,409 13,912 13,571 11,395
Amortization of
unearned
compensation 2,675 1,578 1,571 1,669 1,400
Total
amortization $39,131 $25,987 $15,483 $15,240 $12,795
SG&A
expense (a) $396,105 $310,700 $261,302 $241,062 $216,775
(a) Adjusted to give effect to the adoption of EITF 01-9.
For more information, contact: Mark Cain for Pentair, Inc., +1-651-639-5278.
SOURCE Pentair, Inc.
CONTACT: Mark Cain for Pentair, Inc., +1-651-639-5278