UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
__________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8782
GLEASON CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 16-1224655
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 University Avenue, Rochester, New York 14692
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 473-1000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( ).
The number of shares outstanding of the registrant's Common
stock, par value $1 per share, at June 30, 1999 was 9,586,198
shares.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
(Dollars in thousands)
JUNE 30 DECEMBER 31
1999 1998
<S> <C> <C>
Assets
Current assets
Cash and equivalents $ 9,943 $ 13,229
Trade accounts receivable 82,069 89,095
Inventories 65,834 58,614
Other current assets 15,948 16,094
Total current assets 173,794 177,032
Property, plant and equipment, at cost 262,336 265,790
Less accumulated depreciation 139,060 133,468
123,276 132,322
Goodwill 18,237 16,682
Other assets 14,614 14,433
Total assets $329,921 $340,469
Liabilities and Stockholders' Equity
Current liabilities
Short-term borrowings $ 8,800 $ 1,853
Current portion of long-term debt 243 8
Trade accounts payable 29,591 33,421
Income taxes 5,618 6,790
Other current liabilities 57,000 62,485
Total current liabilities 101,252 104,557
Long-term debt 27,108 28,906
Pension plans and other retiree benefits 64,525 66,163
Other liabilities 13,300 12,872
Total liabilities 206,185 212,498
Stockholders' equity
Common stock 11,594 11,594
Additional paid-in capital 11,913 12,443
Retained earnings 136,071 131,323
Accumulated other comprehensive income (8,060) (5,688)
151,518 149,672
Less treasury stock, at cost 27,782 21,701
Total stockholders' equity 123,736 127,971
Total liabilities and stockholders' equity $329,921 $340,469
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(Dollars in thousands, except
per share amounts)
THREE MONTHS ENDED
JUNE 30
1999 1998
<S> <C> <C>
Net sales $ 81,096 $108,171
Costs and expenses
Cost of products sold 55,638 75,766
Selling, general and
administrative expenses 19,157 17,920
Research and development expenses 2,202 2,692
Restructuring costs 1,200 --
Loss on settlement of pension plan -- 2,031
Interest expense -- net 196 275
Other (income) -- net (23) (82)
Income before income taxes 2,726 9,569
Provision for income taxes 1,346 4,010
Net income $ 1,380 $ 5,559
Earnings per common share:
Basic $ .14 $ .53
Diluted $ .14 $ .51
Weighted average number of common shares outstanding:
Basic 9,579,345 10,501,250
Diluted 9,838,637 10,922,179
Cash dividends declared per common share $ .0625 $ .0625
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
(Dollars in thousands, except
per share amounts)
SIX MONTHS ENDED
JUNE 30
1999 1998
<S> <C> <C>
Net sales $166,812 $203,568
Costs and expenses
Cost of products sold 115,311 141,740
Selling, general and
administrative expenses 35,729 34,530
Research and development expenses 4,774 4,906
Restructuring costs 1,200 --
Loss on settlement of pension plan -- 2,031
Interest expense -- net 354 642
Other (income) -- net (969) (71)
Income before income taxes 10,413 19,790
Provision for income taxes 4,443 8,021
Net income $ 5,970 $ 11,769
Earnings per common share:
Basic $ .61 $ 1.12
Diluted $ .60 $ 1.08
Weighted average number of common shares outstanding:
Basic 9,738,623 10,483,704
Diluted 9,992,178 10,896,833
Cash dividends declared per common share $ .125 $ .125
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
GLEASON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
(Dollars in thousands)
SIX MONTHS ENDED
JUNE 30
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,970 $ 11,769
Adjustments to reconcile net income
to net cash provided by operating activities:
Restructuring costs 1,200 --
Loss on settlement of pension plan -- 2,031
Depreciation and amortization 11,607 10,659
(Gain) on disposals of property, plant
and equipment (1,048) (5)
Provision for deferred income taxes 1,181 617
Changes in operating assets and liabilities:
Decrease in accounts receivable 7,305 7,622
(Increase) in inventories (6,545) (1,668)
Decrease in other current assets 180 263
(Decrease) in trade accounts payable (4,549) (578)
(Decrease) in all other current operating
liabilities (9,824) (9,197)
Other, net 1,501 1,449
Net cash provided by operating activities 6,978 22,962
Cash flows from investing activities:
Capital expenditures (9,403) (10,608)
Acquisition of business, net of cash acquired 365 --
Proceeds from asset disposals 4,765 144
Proceeds from collection of notes receivable -- 18
Net cash (used in) investing activities (4,273) (10,446)
Cash flows from financing activities:
Proceeds from (repayments of) short-term borrowings 2,068 (291)
Net (repayments) under term loan and
revolving credit agreements (773) (2,021)
Net proceeds from (repayment of) long-term debt 1,241 (1,561)
Purchase of treasury stock (7,213) (5)
Net stock issues 602 701
Dividends paid (1,222) (1,311)
Net cash (used in) financing activities (5,297) (4,488)
Effect of exchange rate changes on cash
and equivalents (694) (18)
Increase (decrease) in cash and equivalents (3,286) 8,010
Cash and equivalents, beginning 13,229 12,478
Cash and equivalents, ending $ 9,943 $ 20,488
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
1. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
necessary to present fairly (a) the results of operations
for the three- and six-month periods ended June 30, 1999 and
1998, (b) the financial position at June 30, 1999 and
December 31, 1998, and (c) the cash flows for the six-month
periods ended June 30, 1999 and 1998, of Gleason Corporation
and subsidiaries.
2. The results of operations for the six-month period ended
June 30, 1999 are not necessarily indicative of the results
to be expected for the full year.
3. All significant intercompany transactions are eliminated in
consolidation.
4. The components of inventories were as follows:
(In thousands) 6/30/99 12/31/98
Raw materials and
purchased parts $ 11,020 $ 12,626
Work in process 38,747 33,508
Finished goods 16,067 12,480
$ 65,834 $ 58,614
5. Net cash payments for income taxes were $3,684,000 and
$12,882,000 for the six months ended June 30, 1999 and 1998,
respectively. Interest payments were $568,000 and
$1,147,000 for the six months ended June 30, 1999 and 1998,
respectively.
6. Comprehensive income includes all changes in equity during a
period except those resulting from transactions with owners of
the Company. The components of the Company's comprehensive
income for the three- and six-month periods ended June 30, 1999
and 1998 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
(In thousands) 1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net income $ 1,380 $ 5,559 $ 5,970 $11,769
Foreign currency translation
adjustments (1,101) (82) (2,412) 7
Minimum pension liability
adjustments 12 -- 40 --
Comprehensive income $ 291 $ 5,477 $ 3,598 $11,776
</TABLE>
<PAGE>
The components of accumulated other comprehensive income
shown on the balance sheet were as follows:
(In thousands) 6/30/99 12/31/98
Cumulative foreign currency
translation adjustments $ (5,847) $(3,435)
Minimum pension liability adjustments (2,213) (2,253)
Accumulated other comprehensive income $ (8,060) $(5,688)
7. The Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosure about Segments of an
Enterprise and Related Information" (FAS No. 131), at
December 31, 1998. The Company's operations are treated as
one operating segment. The principal activity within this
operating segment is the design, manufacture and sale of
machinery and equipment for the production of gears. As a
result, the financial information disclosed herein
represents all of the financial information related to the
Company's principal operating segment.
8. The Company has not yet adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (FAS No. 133), which
provides new guidelines for accounting for derivative
instruments. FAS No. 133 requires companies to recognize
all derivatives on the balance sheet at fair value. Gains
or losses resulting from changes in the values of the
derivatives would be accounted for depending on the use of
the derivative and whether it qualifies for hedge
accounting. The Company is currently analyzing what impact
the new guidelines will have on the Company. This Statement
is effective for fiscal years beginning after June 15, 2000.
<PAGE>
GLEASON CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis
of Results of Operations and Financial Condition
The following are management's comments relating to significant
changes in the results of operations for the three- and six-month
periods ended June 30, 1999 and 1998 and in the Company's
financial condition during the six months ended June 30, 1999.
Results of Operations
All references to earnings per share reflect diluted earnings per
share.
Net income for the second quarter ended June 30, 1999 was $1.4
million, or $.14 per share, compared to $5.6 million, or $.51 per
share, for the 1998 second quarter. Net income for the six
months ended June 30, 1999 was $6.0 million, or $.60 per share,
compared to $11.8 million, or $1.08 per share, for the 1998 first
half. Net income for the second quarter of 1999 included charges
of $1.2 million (pre-tax and after-tax) for restructuring costs
and $.9 million ($.6 million after-tax) associated with other
cost reduction programs. These combined charges reduced earnings
by $.18 per share. Net income for the second quarter of 1998
included a non-cash charge of $2.0 million ($1.2 million after-
tax), or $.11 per share, resulting from the settlement of a
pension plan.
Net orders levels for the 1999 second quarter totaled $88.0
million, compared to $85.7 million in the 1998 second quarter.
Order levels for the 1999 six-month period were $171.4 million,
6% lower than the 1998 six-month period of $181.5 million.
Order levels in the second quarter were negatively
impacted by foreign exchange translation effects from the
revaluation of backlog by $2.3 million. The Company expects
order levels in the second half of 1999 to be slightly higher
than the first half of the year.
Consolidated backlog was $144.5 million at June 30, 1999 compared
to $132.5 million at December 31, 1998 and $155.6 million at June
30,1998. The Company assumed a backlog of $7.4 million with its
purchase of 80% of OGA Corporation, the Company's sales and
service representative in Japan and Taiwan, in the first quarter
of 1999, making it wholly-owned by the Company.
Net sales were $81.1 million and $166.8 million for the 1999
three- and six-month periods compared to $108.2 million and
$203.6 million in the respective prior year periods. Sales of
machine products decreased 37% and 26%, respectively, in the
three- and six-month periods of 1999 compared to the prior year,
primarily due to lower shipments of cylindrical gear production
machines to U.S. customers and shipment delays from the Company's
Italian plants. Sales of cylindrical machine products to
customers in the United States accounted for 14% of total machine
sales in the 1999 first half compared to 28% in the prior year
first half. Similar to other producers of metalworking
machinery, Gleason has experienced a significant decline in
<PAGE>
demand from the U.S. market over the past year. Combined sales
of tooling and aftermarket products for first half of 1999 were
slightly lower than in the 1998 first half.
Cost of products sold as a percentage of sales were 68.6% and
69.1% for the three- and six-month periods ended June 30, 1999
compared to 70.0% and 69.6% for the comparable 1998 periods.
Margins are heavily impacted by the mix of products sold.
Machines, in general, carry higher cost of sales percentages than
tooling and other products. The improvement in margins for both
the quarter and first half is due mainly to a lower percentage of
machines, particularly cylindrical gear production machines, and
a higher percentage of tooling and other products in the sales
mix.
Selling, general and administrative expenses were $19.2 million,
or 23.6% of sales, for the second quarter of 1999 compared to
$17.9 million, or 16.6% of sales, in the 1998 second quarter.
For the first half of 1999 these expenses totaled $35.7 million,
or 21.4% of sales, compared to $34.5 million, or 17.0% of sales,
for the prior year period. In the second quarter of 1999 the
Company recorded $.9 million ($.6 million after-tax) of costs
related to staff reduction actions. Excluding this charge,
spending as a percentage of sales was 22.5% and 20.9% of sales
for the second quarter and first half of 1999, respectively.
Spending as a percentage of sales increased in 1999 due to lower
sales volumes to cover the Company's fixed selling costs. With
the ownership of OGA Corporation, the Company has experienced an
increase in fixed selling costs and a decrease in variable
commission costs. In prior years, sales to customers in Japan
and Taiwan would have resulted in a variable commission expense.
Other factors contributing to the higher level of spending are
the Company's global systems implementation project, costs
associated with the Company's promotion activities for the
European Machine and Tooling trade show (EMO) in May 1999, and
the higher level of legal expenses incurred for the prosecution
and enforcement of intellectual property rights.
Research and development spending was $2.2 million and $4.8
million in the second quarter and first half of 1999,
respectively, compared to $2.7 million and $4.9 million in the
respective prior year periods. Development spending in the 1999
first half included new product development programs for bevel
and cylindrical machine products which were demonstrated at the
EMO trade show in May 1999. The Company expects that
development spending will be slightly lower for the 1999 full
year compared to 1998.
Other income in the first half of 1999 was $.9 million higher
than the prior year. The 1999 amount included a combined net
gain on the sale of certain assets, including real estate, in the
first quarter of $.8 million. The after-tax effect on income of
this net gain was $.5 million, or $.05 per share.
<PAGE>
The Company accrued $1.2 million of restructuring costs (pre-tax
and after-tax), or $.12 per share, in the second quarter of 1999
for costs associated with the closure of its two Italian
manufacturing plants located in Bologna and Porretta Terme.
These plants, which manufacture cylindrical gear machinery, have
combined employment of approximately 150 persons and were
acquired as part of the Company's Pfauter acquisition in 1997.
The Company plans to disengage from these operations by the end
of 1999. It is expected that doing so will result in a decrease
in fixed operating costs and an improvement in operating margins
beginning next year.
The Company's provision for income taxes as a percentage of
income before taxes was 49.4% for the 1999 second quarter and
42.7% for the first half, compared to 41.9% and 40.5% for the
respective 1998 periods. The Company did not recognize a tax
benefit on the $1.2 million of restructuring costs accrued in the
second quarter. Excluding this $1.2 million charge, the
effective tax rates for 1999 would be 34.3% and 38.3% for the
second quarter and first half, respectively. The levels of
income generated in different taxing jurisdictions impact the
Company's consolidated effective tax rate. The effective tax
rate for the 1999 periods, excluding the restructuring charge,
decreased due to a lower percentage of income from Germany and
Italy, which have higher statutory tax rates compared to other
jurisdictions in which the Company has operations.
<PAGE>
Liquidity and Capital Resources
Cash and cash equivalents decreased $3.3 million in the first six
months of 1999 to $9.9 million. Borrowings under the Company's
revolving credit facilities decreased to $26.2 million at June
30, 1999 from $28.7 million at December 31, 1998. Available
unused short and long-term credit lines with banks, including the
revolving credit facilities, totaled $84.7 million at June 30,
1999. Dividend payments to stockholders totaled $1.2 million in
the first half of 1999.
Operating activities in the first six months provided cash of
$7.0 million versus $23.0 million in the comparable 1998 period.
Operating cash flows were lower in the 1999 first half due to
lower operating earnings before depreciation and amortization and
increases in working capital. Working capital levels were higher
in the 1999 first half due to increases in inventories and
decreases in trade accounts payable. Inventory levels were higher
primarily due to delays in machine shipments from the Company's
European operations in the second quarter 1999.
Investing activities used $4.3 million of cash in the 1999 first
half and $10.4 million of cash in the comparable prior year
period. Capital expenditures totaled $9.4 million in the six
months of 1999 compared to $10.6 million in the 1998 period.
Capital expenditures for the 1999 full year are expected to
approximate depreciation expense with spending planned for
equipment to upgrade existing production facilities and
investments in information technology, including costs for
hardware, software and consulting services to support the
implementation of the Company's global enterprise resource
planning (ERP) system. The Company paid cash of $3.4 million to
acquire the remaining 80% of OGA Corporation in the first quarter
of 1999 and $3.7 million of cash was included as part of this
acquisition. Other investing activities in 1999 included the
receipt of $4.8 million related to the sale of certain assets,
including real estate.
In the first six months of 1999 the Company used $7.2 million to
repurchase 432,700 shares of Common Stock. In October 1998, the
Company's Board of Directors authorized the repurchase of up to
10% of the Company's outstanding shares, of which 317,134 shares
remained available for purchase as of June 30, 1999.
Management believes that the Company's cash balances, borrowing
capacity under its lines of credit and anticipated funds from
operations will be sufficient to meet its near-term operating and
investing activities and that it will be able to obtain
additional long-term financing if such financing is required.
<PAGE>
Year 2000 Readiness Disclosure
State of Readiness
Since 1997, the Company has undertaken a Year 2000 Program to
ensure that the Company's business critical computer systems will
be able to function without significant disruption because of the
use in the Year 2000 of computer date systems which were designed
using only two digits to identify the year in the date field and
without considering the effect of a change in the century
designation. The Company's Program addresses major information
technology and non-information technology (embedded chips) areas
including: business computer systems (such as financial,
manufacturing and sales and marketing systems); manufacturing,
warehousing and servicing equipment (such as manufacturing
execution systems and shop floor controls); technical
infrastructure (such as workstations, mainframes, servers and
operating systems); end-user computing (personal computers); the
readiness of suppliers, agents and service providers; facilities;
research and development test facilities; and the Company's
products. The Program includes the following phases: inventory /
identification; impact analysis / risk evaluation; remediation;
testing; and implementation.
The Company is in the process of remediating and testing those of
its major business information systems which are believed to be
non-compliant. Other major equipment, processes and systems have
also been evaluated. Those systems, equipment and processes
which have been identified as non-compliant are being upgraded,
modified or replaced so that they will properly process dates
beyond December 31, 1999. All mission critical systems have been
remediated and tested with two exceptions. One exception is the
inventory control and warehousing system at one of the Company
sites where remediation is complete and testing is expected to be
completed by the end of the third quarter. The other exception
is a new release of software for certain order administration and
materials management activities at a different Company site to be
implemented in the third quarter.
The Company has contacted its significant suppliers and other
third parties with whom the Company has relationships in order to
determine whether their operations and the products and services
they provide are Year 2000 compliant. The Company has received
responses from all of its major suppliers relative to their
progress with Year 2000 readiness efforts. Follow-up and
monitoring activities of the Company's major suppliers is
continuing as required. While the actions of these entities are
largely outside the Company's control, where practical, the
Company will attempt to mitigate its risks with respect to the
failure of these parties to be Year 2000 ready. However, such
<PAGE>
failures remain a possibility and could have an adverse impact on
the Company's results of operations or financial condition. The
Company will continue to evaluate the nature of these risks, but
is unable to determine the probability that any such risk will
occur, or if it does, what the nature, length or other effect, if
any, it may have on the Company.
The Company has evaluated the products it has sold and is
currently selling, to determine if any potential Year 2000 issues
exist. The Company believes, based on its own testing and/or
information received from its suppliers, that all of the products
it currently sells are compliant and that products formerly sold
are either compliant or can be made compliant at a minimal cost.
Cost:
The Company estimates that the cumulative costs of its Year 2000
Program will be approximately $1.0 million, of which
approximately $.7 million was incurred through June 30, 1999.
These costs, which are primarily for modifying and upgrading
software programs, are being funded from internally-generated
funds, are being expensed as incurred and are not expected to be
material to the Company's financial condition. The Company does
not separately track its internal costs, principally payroll and
related expenses of certain information systems personnel, for
the Year 2000 Program.
Risks:
The Company believes that the activities it is undertaking in
connection with its Year 2000 Program should satisfactorily
reduce the risk of or resolve Year 2000 issues. However, as is
true for most companies, the Year 2000 issue creates a risk for
the Company. If date information is not correctly recognized or
processed for years after 1999, there could be an adverse impact
on the Company's operations and financial results. Thus, if
necessary modifications and upgrades to the Company's systems and
equipment are not operationally effective on a timely basis, the
Year 2000 issue could have a material impact on the operations
and financial results of the Company. Likewise, if a
significant number of suppliers or key vendors of the Company are
not Year 2000 compliant, the ability of the Company to obtain
necessary materials or to manufacture, deliver or sell the
Company's products could be impaired. Disruption of the
Company's or its suppliers and vendors' information technology
systems and embedded chips, as well as the cost of avoiding such
disruption, could have a material adverse effect upon the
Company's financial condition and results of operations.
The Company is uncertain as to its most reasonably likely worst
case Year 2000 scenario. However, customers not satisfied with
the Company's timetable for its Year 2000 Program or the
Company's efforts to remediate any failure to be Year 2000
compliant may choose to delay or cancel orders for the Company's
products, which could have a material adverse effect on the
<PAGE>
Company's business, financial condition or results of operations.
To date, there has been no indication that any customer has
chosen to delay or cancel orders due to Year 2000 concerns.
Contingency Plans:
The Company believes its Year 2000 Program is designed to
safeguard the interests of the Company and its customers. The
Company believes that this Program will minimize the risk of a
Year 2000 issue serious enough to cause significant operational
problems. However, a failure to timely identify all Year 2000
dependencies in the Company's systems, equipment or processes, or
those of its suppliers or other third parties, or a delay or
failure to remediate any Year 2000 defects, could have material
adverse consequences. The Company is in the process of
considering contingency plans for continuing operations in the
event such problems arise, but there can be no assurance that any
such contingency plans will successfully address all
contingencies that may arise.
Euro Conversion
The Company sells products and has operations in several European
countries which have begun conversion in 1999 to the new common
currency (the Euro) used by members of the European Union. The
Company does not anticipate any significant risk to its
operations as a result of the conversion.
Market Risk Disclosures
The Company is exposed to market risk arising from its global
operating and financing activities. The Company manufactures its
products in the United States, Germany, the United Kingdom,
Italy, Switzerland and India and sells its products to customers
in over 35 countries. The Company's results of operations could
be significantly impacted by such factors as changes in foreign
currency exchange rates or weak economic conditions in foreign
markets. In an attempt to mitigate the short-term effect of
currency fluctuations, the Company enters into forward exchange
contracts to hedge specific foreign currency transactions entered
into in the ordinary course of business. Gains and losses on
such forward contracts offset the gains and losses on the
transactions being hedged.
The Company is exposed to interest rate risk related to its
outstanding debt. The Company utilizes both U.S. dollar
denominated and foreign currency denominated borrowings under its
revolving credit facility and various short-term credit lines to
fund its working capital needs. The revolving credit facility
provides for the Company to borrow on a spread over LIBOR as
determined by certain financial ratios which are adjusted on a
quarterly basis. The Company does not currently invest in
derivative instruments such as interest rate swaps or options to
hedge its exposure to interest rate fluctuations.
The Company does not use derivative financial instruments for
speculative or trading purposes. There has been no material change in
the Company's market risk exposure in the second quarter of 1999.
<PAGE>
Forward Looking Statements
This report and other documents or oral statements which have
been and will be prepared or made in the future contain or may
contain forward-looking statements by or on behalf of the
Company. Forward-looking statements are subject to a number of
factors that could cause actual results to differ materially from
those expected. Risk factors associated with future order
levels include, but are not limited to, less favorable economic
conditions in the markets the Company serves, currency
fluctuations, the success of new product introductions and
competitors actions which may effect the Company's ability to
obtain orders. Factors which may affect future benefits from
restructuring and cost savings activities include, but are not
limited to, the risk of not realizing fully the anticipated cost
reductions, unplanned delays in completing such activities and
the ability to implement changes in a manner that does not unduly
disrupt business operations or demand for the Company's products.
Risk factors associated with the Company's Year 2000 Program
include, but are not limited to, unforeseen Year 2000 issues
affecting the Company's systems, infrastructure, embedded
technologies and products, including issues arising from any
inaccuracy in the inventory, assessment, remediation or testing
done by the Company, and the failure of third parties with whom
the Company has relationships to effectively address their Year
2000 issues.
Risk factors associated with the adoption of the Euro currency
include, but are not limited to, delays, or unforeseen
difficulties in transitioning the Company's business information
systems to be made Euro compliant. Such delays or difficulties
could result in the Company incurring significant costs or may
impact the Company's ability to obtain and process customer
orders.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 : Financial Data Schedule - Six Months
Ended June 30, 1999
(b) Reports on Form 8-K
(1) The Company's Form 8-K reporting under Item 5 with respect
to the adoption of a Stockholders Rights Plan was filed
on May 12, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
GLEASON CORPORATION
Registrant
DATE: August 13, 1999 John J. Perrotti
John J. Perrotti
Vice President - Finance and Treasurer
(Chief Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000743239
<NAME> GLEASON CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 9943
<SECURITIES> 0
<RECEIVABLES> 82069
<ALLOWANCES> 0
<INVENTORY> 65834
<CURRENT-ASSETS> 15948
<PP&E> 262336
<DEPRECIATION> 139060
<TOTAL-ASSETS> 329921
<CURRENT-LIABILITIES> 101252
<BONDS> 0
0
0
<COMMON> 11594
<OTHER-SE> 112142
<TOTAL-LIABILITY-AND-EQUITY> 329921
<SALES> 166812
<TOTAL-REVENUES> 166812
<CGS> 115311
<TOTAL-COSTS> 115311
<OTHER-EXPENSES> 40734
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 354
<INCOME-PRETAX> 10413
<INCOME-TAX> 4443
<INCOME-CONTINUING> 5970
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5970
<EPS-BASIC> .61
<EPS-DILUTED> .60
</TABLE>
