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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 25049
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (Date of earliest event reported): October 15, 1999.
MotivePower Industries, Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania 0-23802 82-0461010
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(State or other jurisdiction (Commission file (IRS Employer
of incorporation) number) Identification Number)
Two Gateway Center, Pittsburgh, PA 15222
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (412) 201-1101
Not applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
The Registrant hereby incorporates by reference the information
contained in Exhibit 99.1 hereto in response to this Item 5.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) -- (b) Not applicable.
(c) Exhibits.
99.1 Text of press release dated October 15, 1999, issued by
MotivePower Industries, Inc., regarding 1999 third quarter
earnings.
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SIGNATURE
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, hereunto duly authorized.
MOTIVEPOWER INDUSTRIES, INC.
Date: October 15, 1999 By: /s/ David L. Bonvenuto
--------------------------------
David L. Bonvenuto
Vice President, Controller and
Principal Accounting Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ ----------------------
<S> <C>
99.1 Text of press release dated October 15, 1999, issued by
MotivePower Industries, Inc., regarding 1999 third quarter
earnings.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
[PRESS RELEASE AND MOTIVEPOWER LETTERHEAD]
CONTACT: TIM WESLEY AT (412) 201-2830
MOTIVEPOWER INDUSTRIES REPORTS E.P.S. OF 19 CENTS FOR
THIRD QUARTER;
BACKLOG STRONG FOR YEAR 2000
PITTSBURGH, October 15, 1999 - MotivePower Industries,
Inc. (NYSE: MPO) today reported earnings per diluted
share of 19 cents for the third quarter, and a strong
backlog of work for the year 2000.
For the third quarter ended Sept. 30, 1999, the
company had net income of $5.3 million on net sales of $88.4
million, compared to net income of $7.7 million, or 28 cents
per diluted share, on net sales of $87.4 million in the prior-year
quarter. Excluding non-recurring and non-operating items from both
quarters, the company had earnings per diluted share of 20 cents
in the 1999 third quarter and 27 cents in the 1998 third quarter.
The company attributed its lower results in the 1999 third
quarter to significantly lower sales and operating income in the
Locomotive Group, primarily due to the delayed timing of certain
contracts, and the shift of some business in other freight and
industrial market segments from the third to the fourth quarter.
In addition, the company said it was negatively impacted by the
effects of planning its pending merger with Westinghouse Air Brake
Company (NYSE: WAB).
"We are obviously disappointed by our financial
results for the 1999 third quarter," said John C. (Jack) Pope,
MotivePower Industries' chairman. "We are, however, optimistic
about our prospects going forward, with the backlog of business in
the Locomotive Group strengthening. As a result, we are comfortable
with Wall Street's consensus earnings estimate of 32 cents for the
fourth quarter for MotivePower Industries on a stand-alone basis."
For the nine months ended Sept. 30, 1999, the company had net
income of $22.4 million, or 80 cents per diluted share, on net
sales of $294.3 million. For the same period, the company had
normalized operating income of $42 million, 17 percent higher than
the normalized operating income from the prior-year period.
1999 THIRD QUARTER HIGHLIGHTS
Net sales increased slightly, with higher results in
the Components Group offsetting lower results in the
Locomotive Group.
The company's gross margin was 23.1 percent,
compared to 24.4 percent in the prior-year quarter,
excluding non-recurring and non-operating expenses. The
lower gross margin was due to product mix and lower sales
in the Locomotive Group, which, in turn, impacted sales
in the Components Group.
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[PRESS RELEASE AND MOTIVEPOWER LETTERHEAD}
Selling, general and administrative expenses
increased 8 percent, as lower general and incentive-
related expenses were more than offset by expenses from
three companies acquired since the year-ago quarter.
Interest expense increased as the company incurred
debt to fund the three acquisitions. At Sept. 30, 1999,
debt, net of cash and equivalents, was $115.9 million (36
percent of total capital), compared to $43.2 million, or
21 percent of total capital, a year ago.
The company had a foreign exchange loss of $205,000,
compared to a gain of $1.2 million in the year-ago
quarter. The loss resulted from the company's net peso
liability position in its Mexican operations and the
strengthening of the peso during the quarter.
During the quarter, the company had operating cash
flow (operating income plus depreciation and
amortization) of $14.9 million, compared to a normalized
$15.3 million in the prior-year quarter. Capital
expenditures in the current-year quarter were $1.5
million, compared to $5.9 million in the prior-year
quarter, as the company completed its three-year, $60
million investment program this year. Depreciation and
amortization was $4.1 million in the current-year
quarter, compared to $2.8 million in the prior-year
quarter.
SEGMENT HIGHLIGHTS
For the quarter, the Components Group had a 39
percent net sales increase, primarily due to sales from
acquisitions. Excluding these sales, the group's net
sales increased 5 percent. The group's operating income
increased 74 percent, but was flat excluding
non-recurring and non-operating items, and acquisitions
from the year-ago quarter.
For the quarter, the Locomotive Group had a 36
percent net sales decrease and a 57 percent decrease in
operating income. These results reflected the contract
delays in the U.S. and product mix in Mexico.
"We are very disappointed with the performance of
our Locomotive Group this year," said Michael A. Wolf,
MotivePower Industries' president and chief executive
officer. "The business has been soft this year primarily
due to order delays, and cutbacks in budgeting for new
locomotive purchases and overhauls by Class I railroads.
To date this year, the group's revenues are off 25
percent from a year ago, which also impacts our
Components Group because of the `pull-through' nature of
our business. As a result, we have taken further actions
to lower overhead costs, including a work force reduction
of 8 percent. In addition, we are bolstering our sales
efforts for aftermarket components sales, as well as for
the transit/commuter market in the U.S. and for growing
international markets. Given these actions, good market
fundamentals and our strong backlog for the next 12
months, we expect the Locomotive Group's performance to
improve significantly."
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[PRESS RELEASE AND MOTIVEPOWER LETTERHEAD}
BACKLOG
At Sept. 30, 1999, the company's multi-year backlog
was $853 million, compared to $741 million a year ago. The
company's backlog for the year 2000 was $161 million,
compared to $86 million a year ago for 1999.
During the quarter, the Locomotive Group added the
following to its backlog: A five-year, $175 million contract
to maintain locomotives and passenger cars for the Massachusetts
Bay Transportation Authority; a 14-year, $16 million
contract to maintain new locomotives for Transportacion
Ferroviaria Mexicana in Mexico; and a $5 million contract
to overhaul locomotives for Transtar.
MERGER AGREEMENT WITH WESTINGHOUSE AIR BRAKE
During the quarter, the company signed a revised
merger agreement with Westinghouse Air Brake after the
original transaction was delayed in mid-August. Under the
revised agreement, shareholders of MotivePower Industries
will receive .66 shares of Westinghouse Air Brake stock
in exchange for each share of MotivePower Industries. The
merger, which will create the premier supplier of
products and services for the railroad industry, is
expected to be completed by year-end, subject to
shareholder approvals. The companies have set a record
date of Oct. 20, 1999 and a meeting date of Nov. 19,
1999.
This press release contains forward-looking
statements, such as the company's statement that it is
comfortable with Wall Street's consensus earnings
estimates of 32 cents for the fourth quarter. The
company's actual results could differ materially from the
results suggested in any forward-looking statement.
Factors that could cause or contribute to these material
differences include, but are not limited to, the
following: a slowdown in the U.S. or Mexican economy; a
decrease in NAFTA rail traffic; continued consolidation
by U.S. and Canadian railroads; the company's ability to
implement productivity improvement plans; the company's
ability to successfully complete its information
technology project, including "Year 2000" compliance. The
company assumes no obligation to update these
forward-looking statements or advise of changes in the
assumptions on which they were based.
MotivePower Industries (www.motivepower.com) is a
leader in the manufacturing of products for rail and
other power-related industries. Through its subsidiaries,
the company manufactures and distributes engineered
locomotive components; provides locomotive and freight
car fleet maintenance; overhauls locomotives, freight
cars and diesel engines; manufactures new,
environmentally friendly, switcher, commuter and
mid-range locomotives up to 4,000 horsepower; and
manufactures components for power, marine and industrial
markets.
####
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<TABLE>
<CAPTION>
Motivepower Industries Three Months Ended Three Months Ended
Consolidated Statements of Income September 30, % of September 30, % of
(In thousands except per share data) 1999 Net sales 1998 Net sales
- ------------------------------------ ----------------- --------- ------------------ ---------
<S> <C> <C> <C> <C>
Net sales $ 88,410 100.0% $ 87,406 100.0%
Cost of sales (68,024) (76.9%) (68,324) (78.2%)
----------------- --------- ------------------ ---------
Gross profit 20,386 23.1% 19,082 21.8%
Selling, general and
administrative expenses (9,644) (10.9%) (8,898) (10.2%)
----------------- --------- ------------------ ---------
Operating income 10,742 12.2% 10,184 11.6%
Investment income 239 0.3% 360 0.4%
Interest expense (2,525) (2.9%) (1,212) (1.4%)
Other income - 0.0% 677 0.8%
Foreign exchange (loss) gain (205) (0.3%) 1,242 1.4%
----------------- --------- ------------------ ---------
Income before income taxes 8,251 9.3% 11,251 12.8%
Income tax expense (2,959) (3.3%) (3,539) (4.0%)
----------------- --------- ------------------ ---------
Net income $ 5,292 6.0% $ 7,712 8.8%
================= ========= ================== =========
Earnings per common share - basic:
Net income $ 0.20 $ 0.29
================== ==================
Adjusted weighted average
common shares outstanding 27,135 26,775
================== ==================
Earnings per common share assuming dilution:
Net income $ 0.19 $ 0.28
================== ==================
Adjusted weighted average
common shares outstanding 28,004 27,912
================== ==================
Debt, net of cash and equivalents $ 115,954 $ 43,228
================== ==================
Stockholders' equity $ 202,501 $ 167,435
================== ==================
Operating Group Results
Components Group % Change
Net sales 60,469 39.1% 43,456
Operating income 7,592 74.4% 4,353 a
Operating margin 12.6% 10.0%
Locomotive Group
Net sales 27,942 (36.4%) 43,950
Operating income 3,681 (56.6%) 8,475
Operating margin 13.2% 19.3%
</TABLE>
a-- Includes $2.3 million of facility
relocation expenses.
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<TABLE>
<CAPTION>
Motivepower Industries Nine months ended Nine months ended
Consolidated Statements of Income September 30, % of September 30, % of
(In thousands except per share data) 1999 Net sales 1998 Net sales
- ------------------------------------ ----------------- --------- ------------------ ---------
<S> <C> <C> <C> <C>
Net sales $ 294,347 100.0% $ 258,720 100.0%
Cost of sales (218,752) (74.3%) (196,946) (76.1%)
----------------- --------- ------------------ ---------
Gross profit 75,595 25.7% 61,774 23.9%
Selling, general and
administrative expenses (33,880) (11.5%) (29,395) (11.4%)
----------------- --------- ------------------ ---------
Operating income 41,715 14.2% 32,379 12.5%
Investment income 853 0.3% 918 0.4%
Interest expense (7,136) (2.4%) (3,739) (1.5%)
Other income 183 0.0% 2,622 1.0%
Foreign exchange (loss) gain (774) (0.3%) 2,071 0.8%
----------------- --------- ------------------ ---------
Income before income taxes 34,841 11.8% 34,251 13.2%
Income tax expense (12,465) (4.2%) (11,549) (4.4%)
----------------- --------- ------------------ ---------
Income before extraordinary item 22,376 7.6% 22,702 8.8%
Extraordinary loss on extinguishment of
debt net of income tax benefit of $265 -- 0.0% (472) (0.2%)
----------------- --------- ------------------ ---------
Net income $ 22,376 7.6% $ 22,230 8.6%
================= ========= ================== =========
Earnings per common share - basic:
Income before extraordinary item $ 0.83 $ 0.85
Extraordinary item -- (0.02)
----------------- ------------------
Net income $ 0.83 $ 0.83
================= ==================
Adjusted weighted average
common shares outstanding 27,058 26,745
================= ==================
Earnings per common share assuming dilution:
Income before extraordinary item $ 0.80 $ 0.81
Extraordinary item -- (0.02)
----------------- ------------------
Net income $ 0.80 $ 0.79
================= ==================
Adjusted weighted average
common shares outstanding 28,046 27,899
================= ==================
Debt, net of cash and equivalents $ 115,954 $ 43,228
================= ==================
Stockholders' equity $ 202,501 $ 167,435
================= ==================
Operating Group Results
Components Group % Change
Net sales 201,500 48.8% 135,440
Operating income 31,418 68.9% 18,602 b
Operating margin 15.6% 13.7%
Locomotive Group
Net sales 92,847 (24.7%) 123,280
Operating income 15,335 (31.6%) 22,430 c
Operating margin 16.5% 18.2%
</TABLE>
b-- Includes $4.6 million of facility relocation expenses.
c-- Includes $1.2 million restructuring reserve reversal.
