F O R M 1 0 - Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
( ) 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 1-6948
SPX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 38-1016240
(State of Incorporation) (I.R.S. Employer Identification No.)
700 Terrace Point Drive, Muskegon, Michigan 49443
(Address of Principal Executive Office)
Registrant's Telephone Number including Area Code (616) 724-5000
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
Common shares outstanding July 29, 1994 -- 13,969,606
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
SPX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(000s omitted)
(Unaudited)
June 30 December 31
1994 1993
<S> <C> <C>
ASSETS
Current Assets:
Cash and temporary cash investments $ 16,872 $ 117,843
Receivables 153,447 123,081
Lease finance receivables - current 33,004 33,834
Inventories 164,536 159,223
Deferred income tax asset and refunds 54,489 54,489
Prepaid expenses and other current assets 21,307 29,726
Total Current Assets $443,655 $ 518,196
Investments 14,976 13,446
Property, plant and equipment (at cost) 384,203 367,832
Less: Accumulated depreciation (182,784) (169,687)
$201,419 $ 198,145
Lease finance receivables - long term 48,948 51,013
Costs in excess of net assets of businesses
acquired 202,365 204,149
Other assets 46,371 39,452
$957,734 $1,024,401
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable and current maturities of
long-term debt $ 5,608 $ 93,975
Accounts payable 69,495 62,968
Accrued liabilities 153,391 229,998
Income taxes payable 3,841 11,864
Total Current Liabilities $232,335 $ 398,805
Long-term liabilities 123,985 123,235
Deferred income taxes 19,238 20,787
Long-term debt 427,596 336,187
Shareholders' equity:
Common stock $155,872 $ 155,558
Paid in capital 58,229 58,923
Retained earnings 27,733 20,282
$241,834 $ 234,766
Less: Common stock held in treasury 50,000 50,000
Unearned compensation - ESOP 34,154 35,900
Minority interest 1,530 1,080
Cumulative translation adjustments 1,544 2,399
Total Shareholders' Equity $154,606 $ 145,387
$957,734 $1,024,401
</TABLE>
<PAGE>
<TABLE>
SPX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands of dollars except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
<S> <C> <C> <C> <C>
REVENUES $289,054 $212,548 $566,505 $391,712
COSTS & EXPENSES
Cost of products sold 214,720 141,700 422,077 263,476
Selling, general &
administrative expenses 52,660 55,899 106,820 106,661
Other expense, net 858 2,277 1,464 3,796
SPT equity losses (earnings) - (317) - 248
OPERATING INCOME $ 20,816 $ 12,989 $ 36,144 $ 17,531
Interest expense, net 9,516 4,272 19,744 8,179
INCOME BEFORE INCOME TAXES $ 11,300 $ 8,717 $ 16,400 $ 9,352
PROVISION FOR INCOME TAXES 4,400 3,289 6,400 3,567
INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING METHODS $ 6,900 $ 5,428 $ 10,000 $ 5,785
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING METHODS, NET
OF INCOME TAXES - - - (31,800)
NET INCOME (LOSS) $ 6,900 $ 5,428 $ 10,000 $(26,015)
NET INCOME (LOSS) PER SHARE:
Before cumulative effect of change
in accounting methods $ .54 $ .43 $ .78 $ .46
Cumulative effect of change in
accounting methods - - - (2.53)
Net income (loss) $ .54 $ .43 $ .78 $ (2.07)
Dividends per share $ .10 $ .10 $ .20 $ .20
Weighted average number of
common shares outstanding 12,759,000 12,587,000 12,740,000 12,572,000
</TABLE>
<PAGE>
<TABLE>
SPX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(000s omitted)
(Unaudited)
Six Months Ended
June 30
1994 1993
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) from operating activities $ 10,000 $ (26,015)
Adjustments to reconcile net income (loss) to net
cash from operating activities -
Cumulative effect of change in accounting methods - 31,800
Depreciation and amortization 19,838 12,972
Increase (decrease) in deferred income taxes (1,549) 3,781
Increase in accounts receivable (30,366) (19,322)
(Increase) decrease in inventories (5,313) 11,280
Decrease in prepaid and other current assets 8,419 4,368
Increase (decrease) in accounts payable 6,527 (5,398)
Increase (decrease) in accrued liabilities (8,450) 13,738
Decrease in income taxes payable (8,023) (6,840)
(Increase) decrease in lease finance receivables 2,895 (5,274)
Increase in long-term liabilities 724 498
Other, net (3,481) (4,088)
Net cash provided by (used by) operating activities $ (8,779) $ 11,500
Cash flows used by investing activities:
Capital expenditures $(20,466) $ (7,023)
Advance to SP Europe - (8,919)
Payments for purchase of Allen Testproducts and
Allen Group Leasing - (101,957)
Net cash used by investing activities $(20,466) $(117,899)
Cash flows provided by financing activities:
Net borrowings under debt agreements $ 3,042 $ 119,712
Payment of debt restructuring costs (33,219) -
Payment for interest in SPT (39,000) -
Dividends paid (2,549) (2,541)
Net cash provided by (used by) financing activities $(71,726) $ 117,171
Net increase (decrease) in cash and temporary
cash investments (100,971) 10,772
Cash and temporary cash investments, beg. of period 117,843 9,729
Cash and temporary cash investments, end of period $ 16,872 $ 20,501
</TABLE>
<PAGE>
SPX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1994 (Unaudited)
1. The interim financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results of the
interim periods presented. All adjustments are of a normal recurring
nature. Amounts in the 1993 consolidated financial statements have been
restated to reflect the company's previous 49% share of Sealed Power
Technologies Limited Partnership ("SPT") income or loss and the effect of
amortizing the difference between its investment balance and its share of
SPT's initial partnership capital deficit and to reflect new accounting for
the company's ESOP.
2. Information regarding the company's segments was as follows:
<TABLE>
Three months Six months
ended June 30, ended June 30,
1994 1993 1994 1993
(in thousands)
<S> <C> <C> <C> <C>
Revenues:
Specialty Service Tools.......... $ 146.9 $ 132.8 $ 286.6 $ 244.2
SPX Credit Corporation........... 3.3 1.8 6.6 2.3
Original Equipment Components.... 138.9 6.5 273.3 12.6
Businesses sold in 1993.......... - 71.4 - 132.6
Total........................... $ 289.1 $ 212.5 $ 566.5 $ 391.7
Operating income (loss):
Specialty Service Tools.......... $ 9.5 $ 5.6 $ 15.8 $ 9.8
SPX Credit Corporation........... 1.7 1.2 3.9 1.3
Original Equipment Components.... 14.2 .7 25.9 .2
Businesses sold in 1993.......... - 9.4 - 14.0
General corporate expenses....... (4.6) (3.9) (9.5) (7.8)
Total........................... $ 20.8 $ 13.0 $ 36.1 $ 17.5
Capital expenditures:
Specialty Service Tools.......... $ 1.4 $ 1.4 $ 4.2 $ 2.6
SPX Credit Corporation........... - - - -
Original Equipment Components.... 8.6 - 14.6 .1
Businesses sold in 1993.......... - 1.6 - 4.2
General corporate................ .2 .1 1.7 .1
Total........................... $ 10.2 $ 3.1 $ 20.5 $ 7.0
Depreciation and amortization:
Specialty Service Tools.......... $ 3.7 $ 3.7 $ 7.7 $ 7.3
SPX Credit Corporation........... - - - -
Original Equipment Components.... 5.8 .4 11.5 .9
Businesses sold in 1993.......... - 2.3 - 4.5
General corporate................ .4 .2 .5 .3
Total........................... $ 9.9 $ 6.6 $ 19.7 $ 13.0
</TABLE>
<TABLE>
June 30, December 31,
1994 1993
(in thousands)
<S> <C> <C>
Identifiable assets:
Specialty Service Tools.......... $ 419.7 $ 383.3
SPX Credit Corporation........... 83.6 85.2
Original Equipment Components.... 366.1 343.8
General corporate................ 88.3 212.1
Total........................... $ 957.7 $1,024.4
</TABLE>
3. In May of 1994, the company completed its $260 million offering of senior
subordinated notes. The eight year notes bear interest of 11 3/4% and are
redeemable after four years. Concurrently, the company's revolving credit
was reduced from $250 million to $225 million of maximum availability. The
proceeds from the sale of the senior subordinated notes was used to retire
SPT's $100 million of 14.5% senior subordinated debentures, the Term Bank
Loan and the Revolving Credit Loans with the excess, approximately $44
million, used to pay down on the company's revolving credit facility and to
pay related debt restructuring costs.
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
The accompanying 1993 second quarter and six months ending June 30, 1993
consolidated statements of income include the results of the Sealed Power
Replacement division which was sold October 22, 1993, the results of the Truth
division which was sold November 5, 1993, the company's 49% share of the
earnings or losses of Sealed Power Technologies Limited Partnership ("SPT")
accounted for on the equity basis, the losses of Sealed Power Technologies Lim-
ited Partnership Europe ("SP Europe"), and the acquisition and results of Allen
Testproducts and Allen Group Leasing beginning with their acquisition on June
10, 1993. The 1994 consolidated statements of income reflect SPT and SP Europe
in their entirety.
For purposes of comparison, certain selected unaudited pro forma 1993
information is presented in the following discussion to enhance understanding.
The pro forma 1993 information reflects the acquisition of Allen Testproducts
and Allen Group Leasing and the related restructuring, the divestiture of the
Sealed Power Replacement and Truth divisions, the acquisition of 51% of SPT, and
the consolidation of SP Europe as if they had occurred as of January 1, 1993.
Second Quarter 1994 vs. Second Quarter 1993
Revenues
The following were revenues by business segment:
<TABLE>
Three months ended June 30,
Historical Pro Forma
1994 1993 1993
(dollars in millions)
<S> <C> <C> <C>
Specialty Service Tools....... $ 146.9 $ 132.8 $ 143.5
SPX Credit Corporation........ 3.3 1.8 4.9
Original Equipment Components. 138.9 6.5 120.4
Businesses sold in 1993....... - 71.4 -
Total....................... $ 289.1 $ 212.5 $ 268.8
</TABLE>
Total revenues for the second quarter of 1994 were up significantly over
the historical second quarter of 1993 due to the inclusion of SPT and SP Europe
revenues in 1994 (SPT and SP Europe were consolidated as of December 31, 1993).
Also effecting second quarter 1994 revenues was the inclusion of the revenues of
Allen Testproducts and Allen Group Leasing (now called SPX Credit Corporation),
whereas in 1993, the revenues of Allen Testproducts and Allen Group Leasing were
not included until the June 10, 1993 acquisition. Offsetting these increases in
revenues was the loss of revenues of the Sealed Power Replacement and Truth
divisions ("Businesses sold in 1993), which were sold in the fourth quarter of
1993.
Second quarter 1994 revenues of Specialty Service Tools increased 2.4% over
pro forma second quarter 1993 revenues. This increase was attributable to
continued improvement in sales of aftermarket specialty service tools and
strength in sales of dealer equipment and warranty tools, hand-held diagnostic
testers, and high-pressure hydraulic specialty service tools. Sales of refrig-
erant recovery and recycling systems and engine diagnostic equipment were down
slightly from 1993 which moderated the overall increase in revenues. Pro forma
1993 second quarter revenues reflect $10.7 million of Allen Testproducts rev-
enues that are not included in the historical revenues as it was acquired June
10, 1993.
Second quarter 1994 revenues of SPX Credit Corporation were down $1.6
million from pro forma second quarter 1993. The second quarter of 1993 included
approximately $1.0 million of revenue on the sale of a $5.0 portfolio of leases
to a third party. The second quarter 1994 revenue level was reflective of
levels of the last half of 1993, which include the combination of Allen Group
Leasing with existing leasing activities.
Second quarter 1994 revenues of Original Equipment Components increased
15.4% over pro forma second quarter 1993. This significant increase was the
result of increased light vehicle production. The segment's aftermarket rev-
enues also increased. Pro forma 1993 revenues reflect the revenues of SPT and
SP Europe which were consolidated as of December 31, 1993.
Gross Profit
In the second quarter of 1994, gross profit was $74.3 million, or 25.7% of
revenues. In the second quarter of 1993, gross profit was $70.8 million, or
33.3% of revenues. Due to the significant acquisition and divestiture activity
of 1993, these figures are not comparable. Pro forma second quarter 1993 gross
profit was $71.2 million, or 26.5% of revenues with the revenue mix influencing
the comparable quarter comparisons.
Selling, General and Administrative Expense ("SG&A")
SG&A was $52.7 million, or 18.2% of revenues, in the second quarter of 1994
compared to $55.9 million, or 26.3% of revenues, in the second quarter of 1993.
Due to the significant acquisition and divestiture activity in 1993, the figures
are not comparable. Pro forma second quarter 1993 SG&A would have been $57.3
million, or 21.3% of revenues with strong revenue levels in 1994 contributing to
the favorable quarterly comparisons.
Operating Income
The following was operating income by business segment:
<TABLE>
Three months ended June 30,
Historical Pro Forma
1994 1993 1993
(dollars in millions)
<S> <C> <C> <C>
Specialty Service Tools....... $ 9.5 $ 5.6 $ 7.6
SPX Credit Corporation........ 1.7 1.2 3.0
Original Equipment Components. 14.2 .7 7.1
Businesses sold in 1993....... - 9.4 -
General corporate expenses.... (4.6) (3.9) (4.5)
Total....................... $ 20.8 $ 13.0 $ 13.2
</TABLE>
Total operating income for the second quarter of 1994 was up significantly
over the historical second quarter of 1993 due to the inclusion of SPT in 1994
(SPT and SP Europe were consolidated as of December 31, 1993). Also effecting
second quarter 1994 operating income was the inclusion of the operating results
of Allen Testproducts and Allen Group Leasing (now called SPX Credit Corpora-
tion), whereas in 1993, operating results were not included until the June 10,
1993 acquisition. Offsetting these increases in operating income was the loss
of operating income of the Sealed Power Replacement and Truth divisions, which
were sold in the fourth quarter of 1993.
Second quarter 1994 operating income of Specialty Service Tools increased
25% over pro forma second quarter 1993 operating income. The increase was
attributable to strong specialty tool programs. Pro forma second quarter 1993
operating income reflects the June 10, 1993 acquisition of Allen Testproducts
and related cost reductions through the combination with the Bear Automotive
division as if they had occurred at the beginning of 1993.
Operating income of SPX Credit Corporation for the second quarter was down
$1.3 million from pro forma second quarter 1993, primarily resulting from a $.7
million gain recorded in 1993 from the sale of a $5 million lease portfolio.
Second quarter 1994 operating income of Original Equipment Components
increased 100% over pro forma second quarter 1993 operating income. The increase
was attributable to continued increases in customer demand. Pro forma second
quarter 1993 operating income includes the operating results of SPT and SP
Europe which were consolidated as of December 31, 1993.
Interest Expense, net
Second quarter 1994 interest expense, net was $9.5 million compared to $4.3
million in the second quarter of 1993. The increase was attributable to higher
debt levels associated with the purchase of SPT and Allen Testproducts which
were partially offset by proceeds from the divestitures of the Sealed Power
Replacement and Truth divisions.
Provision for Income Taxes
The second quarter 1994 effective income tax rate was approximately 39%
which reflects the company's current estimated rate for the year.
First Six Months of 1994 vs. First Six Months of 1993
Revenues
The following were revenues by business segment:
<TABLE>
Six months ended June 30,
Historical Pro Forma
1994 1993 1993
(dollars in millions)
<S> <C> <C> <C>
Specialty Service Tools....... $ 286.6 $ 244.2 $ 269.9
SPX Credit Corporation........ 6.6 2.3 9.1
Original Equipment Components. 273.3 12.6 240.0
Businesses sold in 1993....... - 132.6 -
Total....................... $ 566.5 $ 391.7 $ 519.0
</TABLE>
Total revenues for the first six months of 1994 were up significantly over
historical first six months of 1993 due to the inclusion of SPT and SP Europe
revenues in 1994 (SPT and SP Europe were consolidated as of December 31, 1993).
Also effecting first six months 1994 revenues was the inclusion of the revenues
of Allen Testproducts and Allen Group Leasing (now called SPX Credit Corpora-
tion), whereas in 1993, the revenues of Allen Testproducts and Allen Group
Leasing were not included until the June 10, 1993 acquisition. Offsetting these
increases in revenues was the loss of revenues of the Sealed Power Replacement
and Truth divisions ("Businesses sold in 1993), which were sold in the fourth
quarter of 1993.
First six months of 1994 revenues of Specialty Service Tools increased 6.2%
over pro forma first six months of 1993 revenues. This increase was attribu-
table to continued improvement in sales of aftermarket specialty service tools
and strength in sales of dealer equipment and warranty tools, hand-held diagnos-
tic testers, and high-pressure hydraulic specialty service tools. Sales of
engine diagnostic equipment were down slightly from 1993, which moderated the
overall increase in revenues. Pro forma first six months of 1993 revenues re-
flect $25.7 million of Allen Testproducts revenues that are not included in the
historical revenues, as that business was not acquired until June 10, 1993.
First six months of 1994 revenues of SPX Credit Corporation were down $2.5
million from pro forma first six months of 1993. The second quarter of 1993
included approximately $1.0 million of revenue on the sale of a $5.0 portfolio
of leases to a third party. The first six months of 1994 revenue level was
reflective of levels of the last half of 1993, which include the combination of
Allen Group Leasing with existing leasing activities.
First six months of 1994 revenues of Original Equipment Components increased
13.9% over pro forma first six months of 1993. This significant increase was
attributable to strong increases in all product line sales to OEMs as production
of new vehicles was up from 1993. The segment's aftermarket revenues also
increased. Pro forma 1993 revenues reflect the revenues of SPT and SP Europe
which were consolidated as of December 31, 1993.
Gross Profit
In the first six months of 1994, gross profit was $144.4 million, or 25.5%
of revenues. In the first six months of 1993, gross profit was $128.2 million,
or 32.7% of revenues. Due to the significant acquisition and divestiture
activity of 1993, these figures are not comparable. Pro forma first six months
of 1993 gross profit was $135.7 million, or 26.1% of revenues with revenue mix
influencing the comparable six month comparisons.
Selling, General and Administrative Expense ("SG&A")
SG&A was $106.8 million, or 18.9% of revenues, in the first six months of
1994 compared to $106.7 million, or 27.2% of revenues, in the first six months
of 1993. Due to the significant acquisition and divestiture activity in 1993,
the figures are not comparable. Pro forma first six months of 1993 SG&A would
have been $111.8 million, or 21.5% of revenues with strong revenue levels in
1994 contributing to the favorable six month comparisons.
Operating Income
The following was operating income by business segment:
<TABLE>
Six months ended June 30,
Historical Pro Forma
1994 1993 1993
(dollars in millions)
<S> <C> <C> <C>
Specialty Service Tools....... $ 15.8 $ 9.8 $ 14.2
SPX Credit Corporation........ 3.9 1.3 5.5
Original Equipment Components. 25.9 .2 12.2
Businesses sold in 1993....... - 14.0 -
General corporate expenses.... (9.5) (7.8) (9.0)
Total....................... $ 36.1 $ 17.5 $ 22.9
</TABLE>
Total operating income for the first six months of 1994 was up significant-
ly over historical first six months of 1993 due to the inclusion of SPT in 1994
(SPT and SP Europe were consolidated as of December 31, 1993). Also effecting
the first six months of 1994 operating income was the inclusion of the operating
results of Allen Testproducts and Allen Group Leasing (now called SPX Credit
Corporation), whereas in 1993, operating results were not included until the
June 10, 1993 acquisition. Offsetting these increases in operating income was
the loss of operating income of the Sealed Power Replacement and Truth
divisions, which were sold in the fourth quarter of 1993.
First six months of 1994 operating income of Specialty Service Tools
increased 11.3% over pro forma first six months of 1993 operating income. The
increase was attributable to strong specialty tool programs. Pro forma first
six months of 1993 operating income reflects the June 10, 1993 acquisition of
Allen Testproducts and related cost reductions through the combination with the
Bear Automotive division as if they had occurred at the beginning of 1993.
Operating income of SPX Credit Corporation for the first six months was
down $1.6 million from pro forma first six months of 1993, primarily resulting
from a $.7 million gain recorded in 1993 from the sale of a $5 million lease
portfolio.
First six months of 1994 operating income of Original Equipment Components
increased 112% over pro forma first six months of 1993 operating income. The
increase was attributable to continued increases in customer demand. Pro forma
first six months of 1993 operating income reflect the operating results of SPT
and SP Europe which were actually consolidated as of December 31, 1993.
Interest Expense, net
First six months of 1994 interest expense, net was $19.7 million compared
to $8.2 million in the first six months of 1993. The increase was attributable
to higher debt levels associated with the purchase of SPT and Allen Testproducts
which were partially offset by proceeds from the divestitures of the Sealed
Power Replacement and Truth divisions.
Provision for Income Taxes
The first six months of 1994 effective income tax rate was approximately 39%
which reflects the company's current estimated rate for the year.
Cumulative Effect of Change in Accounting Methods, net of Tax
In the first quarter of 1993, the company adopted new accounting for its
Employee Stock Ownership Plan and adopted SFAS No. 106 - "Employers' Accounting
for Postretirement Benefits Other Than Pensions" for its then existing 49% share
of SPT, resulting in a $31.8 million aftertax charge.
Liquidity and Financial Condition
As a result of the company's acquisition activity in 1993, the company is
more leveraged than in the past. This financial leverage requires the company
to focus on cash flows to meet higher interest costs and to maintain dividends.
Management believes that operations and the credit arrangements established in
the first six months of 1994 will be sufficient to supply the future funding
needed by the company.
Cash Flow
<TABLE>
Six months ended June 30,
1994 1993
(in millions)
<S> <C> <C>
Cash flow from:
Operating activities...... $ (8.8) $ 11.5
Investing activities...... (20.5) (117.9)
Financing activities...... (71.7) 117.2
Net Cash Flow............ $ (101.0) $ 10.8
</TABLE>
Cash flow from operating activities was a $8.8 million outflow in the first
six months of 1994 compared to a $11.5 million inflow in the first six months of
1993. Second quarter working capital tends to increase significantly as higher
revenue levels are experienced during the second quarter when compared to
revenues levels of the fourth quarter. This was particularly the case with
accounts receivable levels which were $30.4 million higher at June 30, 1994
compared to December 31, 1993. Also effecting first six months 1994 cash flow
from operating activities was an approximately $8 million payment to finalize
the dispute with the Internal Revenue Service regarding the company's tax
deferred treatment of the 1989 transaction in which several operating units were
contributed to SPT and to finalize certain other tax matters related to the 1989
tax year. The first six months of 1994 cash flow from operating activities also
included the reduction of accrued liabilities, much of which was continued
utilization of the Automotive Diagnostic's restructuring reserve. During the
first six months of 1994, approximately $9.5 million of this reserve was
utilized leaving a June 30, 1994 balance of approximately $5 million, which is
principally required for remaining work force reductions and facility closing
costs.
Cash flow from investing activities in 1994 consists of capital expendi-
tures. In addition to capital expenditures, 1993 cash flow from investing
activities included $8.9 million of advances to SP Europe which was not consoli-
dated until December 31, 1993 and $102 million for the June 10, 1993 purchase of
Allen Testproducts and Allen Group Leasing from the Allen Group.
First six months of 1993 cash flow from financing activities consisted
primarily of debt borrowings to finance the purchase of Allen Testproducts and
Allen Group Leasing. The first six months of 1994 cash flow from financing
activities reflects the $39 million payment to Riken Corporation to acquire the
additional 49% of SPT, payment of approximately $33.2 million of debt restruc-
turing costs related to the new revolving credit agreement and the $260 million
of senior subordinated notes.
As of June 30, 1994, the company had substantially completed the expendi-
tures to acquire the additional 51% of SPT and refinance its debt structure.
Capitalization
<TABLE>
June 30, December 31,
1994 1993
(in millions)
<S> <C> <C>
Notes payable and current maturities
of long-term debt.................. $ 5.6 $ 94.0
Long-term debt...................... 427.6 336.2
Total debt........................ $ 433.2 $ 430.2
Shareholders' equity................ 154.6 145.4
Total capitalization................ $ 587.8 $ 575.6
Total debt to capitalization ratio.. 73.7 74.7%
</TABLE>
As of June 30, 1994, the company had completed its Refinancing Plan. In
May, $260 million of 11 3/4% senior subordinated notes, due June 1, 2002 and
redeemable after four years, were issued. In the first quarter, a $250 million
revolving credit facility was obtained. This revolving credit facility's maxi-
mum credit availability was reduced to $225 million concurrent with the issuance
of the notes. Proceeds from these new credit facilities and existing cash bal-
ances were used to extinguish most debt instruments existing at December 31,
1993 and to pay certain debt restructuring costs.
At June 30, 1994, the following summarizes the debt outstanding (in mil-
lions):
<TABLE>
<S> <C>
Senior subordinated notes $ 260.0
Revolving credit facility 149.0
Industrial revenues bonds 15.2
Other 9.0
Total debt $ 433.2
</TABLE>
At June 30, 1994, the maximum availability on the revolving credit facility
would have been $76 million. Management believes that the additional avail-
ability is sufficient to meet operational cash requirements, working capital
requirements and capital expenditures for 1994 and thereafter.
The revolving credit agreement contains covenants which cover leverage,
interest expense coverage, fixed charge coverage, dividends, capital expendi-
tures, investments and transactions with affiliates. At June 30, 1994, the
company was in compliance with all covenants. The following summarizes the June
30, 1994 status versus the more restrictive covenants: (a) maintain a leverage
ratio, as defined, of 78% or less, the company's leverage ratio was 75%, (b)
maintain an interest expense coverage ratio, as defined, of 2.0 to 1.0 or
greater, the company's interest expense coverage ratio was 2.84 to 1.0, and (c)
maintain a fixed charge coverage ratio, as defined, of 1.75 to 1.0 or greater,
the company's fixed charge coverage ratio was 1.98 to 1.0.
Capital Expenditures
Capital expenditures for the first six months of 1994 were $20.5 million
compared to $7 million in 1993. Full year 1994 estimated capital expenditures
will likely exceed $40 million and the first six months reflect that pace. 1993
capital expenditures did not include SPT.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(2) None.
(4) None.
(11) None.
(15) None.
(18) None.
(19) None.
(20) None.
(23) None.
(24) None.
(25) None.
(28) None.
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Regis-
trant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
SPX CORPORATION
(Registrant)
Date: August 12, 1994 By s/s Dale A. Johnson
Dale A. Johnson
Chairman and
Chief Executive Officer
Date: August 12, 1994 By s/s R. Budd Werner
R. Budd Werner
Vice President, Finance and
Chief Financial Officer
