<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUERS
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of July, 1998
Elsag Bailey Process Automation N.V.
------------------------------------
(Translation of registrant's name into English)
Schiphol Boulevard 157, 1118 BG Luchthaven Schiphol,
The Netherlands
---------------
(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F].
Form 20-F [X] Form 40-F
[Indicate by check mark whether the registrant by furnishing
information contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.]
Yes [ ] No [X]
[If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g-2(b)] Not Applicable.
Exhibit Index: Page 4
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Elsag Bailey Process Automation N.V., a Netherlands corporation (the
"Company"), hereby furnishes the following document pursuant to Rule 13a-16 or
15d-16 of the Securities Exchange Act of 1934:
1. A press release of the Company dated July 29, 1998, announcing the
Company's second quarter 1998 results.
The following paragraphs or portions thereof of the above filed press
release shall be deemed to be incorporated by reference in the
Company's Prospectus dated June 28, 1996, included in its
Registration Statement No. 333-4770 and to be a part thereof from the
date hereof:
the first through eighth (1st-8th) paragraph; and the
thirteenth (13th) paragraph; and the first sentence of
the fifteenth (15th) paragraph.
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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.
ELSAG BAILEY PROCESS AUTOMATION N.V.
By: /s/Vincenzo Cannatelli
--------------------------
Name: Vincenzo Cannatelli
Title: Managing Director and
Chief Executive Officer
Date: July 29, 1998
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EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
- ------- -------------
Exhibit 1 - A press release of the Company dated July 29,
1998, announcing the Company's second quarter
1998 results. 5
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[GRAPHIC OMITTED] Elsag Bailey Process Automation N.V.
- -------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
Contact: Christopher M. Farage, Ph.D.
Director, Investor Relations
(440) 585-8675
ELSAG BAILEY PROCESS AUTOMATION N.V. REPORTS
SECOND QUARTER 1998 RESULTS
Amsterdam, the Netherlands (July 29, 1998) - Elsag Bailey Process Automation
N.V. (NYSE:EBY) today announced financial results for the second quarter
ending June 25, 1998.
OPERATING RESULTS
Net income recorded by Elsag Bailey in the second quarter, applicable to
common shareholders, was $18.5 million, or $0.48 per share. These figures are
before a tax benefit associated with first quarter restructuring and
extraordinary charges, and assume conversion of the preferred shares. This
compares to $14.2 million or $0.37 per share in the second quarter 1997,
before restructuring charges and assuming conversion of the preferred shares.
Earnings per share recorded this quarter includes approximately $0.14 of
capital gain after tax from the recent sale of the Company's Chlorine
Disinfection Business.
Bookings were $420 million this quarter, which is the second highest level of
bookings recorded in the Company's history. This compares to bookings of $385
million one year ago. Revenues were $384 million this quarter, compared to
revenues of $402 million in the second quarter of 1997. Currency translation
decreased bookings and revenues this quarter by approximately 3 percent.
Adjusting for the effects of currency translation and the sale of non-core
businesses, in a year-on-year comparison, bookings for the quarter were up $52
million, or 14 percent.
The Company continues to reduce selling, general, and administrative (SG&A)
expenses. SG&A expenses this quarter were $82.2 million, or 21.4 percent of
revenues, compared to $95.2 million, or 23.7 percent of revenues, before
restructuring charges taken in the second quarter of 1997. On the same basis,
gross margin was 33.6 percent of revenues this quarter, compared to 35.9
percent recorded for the second quarter of 1997. Operating margin, before
amortization, was 8.2 percent, up from 7.9 percent one year ago. Earnings
before interest, taxes, depreciation, and amortization (EBITDA), including the
gain related to asset sales, were $49.6 million, as compared to $42.8 million
before restructuring charges in the same quarter one year ago. Net debt was
$591 million as of June 25, substantially lower than the $668 million net debt
recorded a year earlier, and down from $612 million at the end of the first
quarter.
Elsag Bailey Process Automation N.V.
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SIX-MONTH SUMMARY
For the six months ending June 25, 1998, Elsag Bailey's net income applicable
to common shareholders, before restructuring charges, was $20.3 million,
compared to $15.6 million in the first six months of 1997. Earnings per share,
before non-recurring charges and assuming conversion of the preferred shares,
were $0.53, compared to $0.41 in the same period last year.
Restructuring charges taken during 1998, all in the first quarter, were $10.3
million before tax, and $6.9 million after tax. After the restructuring
charges and dividends on preferred shares, net income applicable to common
shareholders, was $5.6 million, or $0.19 per share, calculated on 29,201,981
shares. This compares to a net loss of $9.2 million, or $0.32 per share, on
the same basis last year.
Bookings were $783 million in the first six months of 1998, compared to $751
million in the same period last year. Revenues were $704 million, compared to
$748 million last year. Currency translation negatively impacted bookings and
revenues in the first six months of 1998 by approximately 4 percent. Adjusting
for the effects of currency translation and the sale of non-core businesses,
in a year-on-year comparison, bookings for the first six months were up $72
million, or 10 percent.
Operating income, before amortization and restructuring charges, was $44.1
million, compared to $44.7 million in 1997.
Mr. Vincenzo Cannatelli, Managing Director and Chief Executive Officer,
commented on the Company's second quarter performance, stating, "We are quite
pleased with our second quarter results, and with the positive business trends
we have seen in these past few quarters. These lead us to believe that the
actions we took to restructure the Company in 1996 and 1997 were appropriate
to restore the competitiveness and profitability of our business. In addition,
our continued investment in research and development, and the many new
releases of our high-technology products, has positioned Elsag Bailey as one
of the few technology leaders in the process automation field.
"The growth of bookings this quarter, especially in the month of June, is
particularly significant. This growth comes despite the announcement that we
have launched a process to sell the Company, and amidst a significant slowdown
in the Asian markets, and a competitive global market overall. The substantial
earnings improvement over the past few quarters seems to confirm the merits of
our actions to achieve a more efficient cost structure for our company. This
structure should permit a significant benefit in earnings from even relatively
small revenue increases. The Company's selling, general and administrative
expenses as a percentage of revenues continue to come down, giving us comfort
that we are on track for continuous improvement in our profitability," said
Mr. Cannatelli.
Mr. Cannatelli continued, "In addition to our solid results this quarter, we
have again been successful in reducing debt levels. This reduction came as a
result of further improvements in cash management, together with the proceeds
this quarter related to the sale of our Chlorine Disinfection Business.
Achieving this lower debt position is especially gratifying as it has come
with the increase in business, and despite the severance expenditures for
planned employment reductions during the quarter.
"Based on the overall improvements experienced in the past few months," Mr.
Cannatelli concluded, "we remain positive as to the outlook for the second
half of the year."
Elsag Bailey Process Automation N.V.
Page 6 of 9
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Significant news which the Company announced this quarter included the sale of
Elsag Bailey's Chlorine Disinfection Business. This business had 1997 revenues
of $15 million, based on operations in Warminster, Pennsylvania, and Milan,
Italy. As part of the agreement, Elsag Bailey received preferred vendor status
from the purchaser, who will obtain and resell various Elsag Bailey process
instrumentation products including flow, level, pressure, and temperature
measurement devices.
Other news this quarter included an announcement that the Company is
experiencing a significant upswing in business from its operations in Latin
America, and from the energy transmission and distribution sectors of the
electric utility market. Major orders and business trends in both of these
areas demonstrate that they represent exciting and continuing growth
opportunities for Elsag Bailey.
In a major decision this quarter, on June 4, 1998 the Supervisory Board of
Elsag Bailey Process Automation N.V. launched a process to seek offers for the
purchase of all outstanding common shares of the Company. This decision was
seen as the best method to immediately maximize value for all shareholders.
Commenting on the sale process to date, Mr. Cannatelli stated, "We have been
very pleased with the extent and level of interest shown so far by many
parties. These parties span a range of strategic and financial interests and
geographic regions. Our Board and a core management team are focused on
effectively pursuing the sale process."
One of the world's leading process automation companies, Elsag Bailey Process
Automation N.V., incorporated in the Netherlands, has grown revenues to more
than $1.5 billion by aggressively expanding its global markets and
technologies. The Company employs some 11,000 employees in over 30 countries.
Elsag Bailey's computer and electrical products--control systems,
instrumentation products, and analytical devices--keep its customers on the
cutting edge of productivity. Elsag Bailey's global customers are among the
leading names in the process industries including electric utilities, oil and
gas, chemicals and pharmaceuticals, pulp and paper, water and wastewater,
metals and ceramics, and other industrial companies.
For copies of additional press releases or quarterly reports, call Elsag
Bailey's Fax-on-Demand service at 1-888-329-2311, or visit the Company's web
site at www.ebpa.com. Requests for information can also be made via e-mail at
[email protected].
This document contains forward-looking statements subject to the safe harbor
created by the Securities Litigation Reform Act of 1995. These include,
without limitation, the statements related to Elsag Bailey's sale process,
outlook for the second half of the year, the earnings impact of small revenue
increases, being on track continuous improvement in profitability, expected
costs, SG&A expenses, operating performance, earnings, results and liquidity
needs, anticipated conditions in its markets, including investments by
customers in the Company's product area; the effect of foreign currency
fluctuations relative to the U.S. dollar, technological advances, the ability
of the Company to successfully and in a timely fashion complete its
integration plans and major projects, the ability of the Company to generate
cash, secure adequate financing, reduce debt and grow, improve profitability
and shareholder value, and any other statements concerning matters that are
not historical facts. Actual results and performance could differ materially
from those expressed in or implied by these forward-looking statements as a
result of a number of known and unknown risks. These and other risks and
uncertainties affecting Elsag Bailey are discussed in greater detail in Elsag
Bailey's Form 20-F filed with the United States Securities and Exchange
Commission for the year ended December 1997.
***
Elsag Bailey Process Automation N.V.
Page 7 of 9
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Elsag Bailey Process Automation N.V.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
For the quarter ended For the six months ended
June 25, 1998 June 25, 1997 June 25, 1998 June 25, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 383,908 $ 402,293 $ 704,352 $ 748,019
Cost of sales 254,779 264,516 469,942 493,092
--------- --------- --------- ---------
Gross profit 129,129 137,777 234,410 254,927
Selling, general and administrative expenses 82,092 100,166 165,454 189,694
Research, development and engineering expenses 15,542 19,901 31,285 39,129
Amortization of intangibles 7,207 9,923 14,002 19,209
--------- --------- --------- ---------
Operating income 24,288 7,787 23,669 6,895
Interest expense 9,663 8,814 17,571 17,485
Other income (9,943) (1,621) (13,516) (8,033)
--------- --------- --------- ---------
Income (loss) before income taxes, minority interest 24,568 594 19,614 (2,557)
and extraordinary item
Income tax expense (benefit) 3,671 (372) 4,119 (435)
Minority interest in net income (loss) of subsidiaries 163 (329) (38) (661)
Minority interest - dividends on preferred securities 3,999 3,999 7,774 7,774
--------- --------- --------- ---------
Income (loss) before extraordinary item 16,735 (2,704) 7,759 (9,235)
Extraordinary item - write-off deferred financing costs 1,167 -- (2,167) --
--------- --------- --------- ---------
Net income (loss) $ 17,902 $ (2,704) $ 5,592 $ (9,235)
========= ========= ========= =========
Net income (loss) per share:
Basic $ 0.61 $ (0.09) $ 0.19 $ (0.32)
========= ========= ========= =========
Diluted (1) $ 0.57 $ (0.09) $ 0.19 $ (0.32)
========= ========= ========= =========
Assuming conversion of the preferred shares (1) $ 0.57 $ 0.03 $ 0.35 $ (0.04)
========= ========= ========= =========
Weighted average number of shares outstanding:
Basic 29,201,981 29,201,981 29,201,981 29,201,981
========== ========== ========== ==========
Diluted (1) 38,415,000 29,201,981 29,419,000 29,201,981
========== ========== ========== ==========
Assuming conversion of the preferred shares (1) 38,140,000 38,140,000 38,140,000 38,140,000
========== ========== ========== ==========
The way in which the income statement is impacted by non-recurring charges is outlined below. These charges are associated with
restructuring, both in 1998 and 1997.
<CAPTION>
Non-recurring charges
For the quarter ended For the six months ended
June 25, 1998 June 25, 1997 June 25, 1998 June 25, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Cost of sales $ --- $ 6,778 $ 4,344 $ 7,961
Selling, general and administrative expenses --- 5,015 2,284 7,997
Research, development and engineering expenses --- 2,361 56 2,660
Other expenses --- --- 306 ---
--------- --------- --------- ---------
Loss before income taxes, minority interest and
extraordinary item --- 14,154 6,990 18,618
Income tax (benefit) (2,264) (1,299) (2,264) (1,559)
--------- --------- --------- ---------
Net loss/(income) related to non-recurring charges $ (2,264) $ 12,855 $ 4,726 $ 17,059
========= ========= ========= =========
</TABLE>
The above expenses are for severance expenses and the restructuring of
Hartmann & Braun.
(1) Preferred shares are anti-dilutive in all periods except for the three
months ended June 25, 1998.
Elsag Bailey Process Automation N.V.
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Elsag Bailey Process Automation N.V.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Amounts in thousands)
<TABLE>
<CAPTION>
June 25, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Cash and cash equivalents $ 19,439 $ 15,179
Accounts receivable 295,469 326,630
Costs in excess of billings on uncompleted contracts 182,821 147,571
Inventory 266,494 263,069
Other current assets 99,207 89,519
Other assets 1,090,612 1,096,185
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Total assets $1,954,042 $1,938,153
========== ==========
Notes payable $ 14,750 $ 58,628
Current maturities of long-term debt 576,943 39,107
Billings in excess of costs on uncompleted contracts 53,605 56,996
Other current liabilities 476,677 463,375
Long-term debt 19,050 520,968
Other liabilities 311,435 303,818
Minority equity 8,507 9,208
Minority equity - company obligated preferred securities of grantor trust 282,894 279,067
Total shareholders' equity 210,181 206,986
---------- ----------
Total liabilities and shareholders' equity $1,954,042 $1,938,153
========== ==========
</TABLE>
Elsag Bailey Process Automation N.V.
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