Twin Disc reports earning growth

RACINE, Wis. – Marine transmission manufacturer Twin Disc, Inc. (NYSE: TDI), saw sales for the second quarter ended December 31 decrease modestly; however, net earnings improved year-over-year for the fourth consecutive quarter, the company reported in a statement today.

The first-half financial results for fiscal 2004 continue to exhibit an improving trend in both sales and earnings growth compared with the same period last year, according to Twin Disc.

For the fiscal second-quarter of 2004, net sales were off less than 1 percent to $42,371,000 from $42,794,000 for the same period one year ago. Net sales were positively impacted by net favorable currency exchange rates.

The company reported net income of $508,000 or $0.18 per diluted share, compared with last year’s net loss of $3,087,000, or $1.10 per diluted share. Earnings in the 2004 second-quarter improved because of a significantly higher gross margin due to the implementation of cost reduction programs, a restructuring program undertaken last year, a better product mix, and the absence of manufacturing inefficiencies, according to Twin Disc.

For the 2004 fiscal first half, sales were up modestly to $80,337,000 compared with last year’s $79,315,000. Included in the first half of the current fiscal year are net favorable currency exchange rate benefits of approximately $5.0 million when compared to the first half of last year.

Net income for the 2004 first-six months was $679,000 or $0.24 per diluted share compared with last year’s net loss of $1.72 per share.

Twin Disc sells interest in Palmer Johnson Distributors

The company also reported the sale of its 25 percent minority interest in Palmer Johnson Distributors, LLC (PJD) to the majority holder, PJD, Inc. for $3,900,000 cash, which approximated the net book value of the investment.

Palmer Johnson Distributors began in business in 1977 with experience in yacht building and the marine distribution business, but has expanded since into the steel, forestry, mining, and construction industries.

The results of this transaction will be reflected in the company’s third quarter financial results. For the six months ended December 31, 2003 and the fiscal year ended June 30, 2003, the company recognized pre-tax earnings of $240,000 and $414,000, respectively, from its investment in PJD. In addition, the company received cash distributions of $195,000 and $303,000 for the first half of fiscal year 2004 and all of fiscal year 2003, respectively.

Commenting on the PJD sale, Batten said, “Under a 10-year operating agreement entered into in connection with our investment in PJD, which would have expired in May 2004, we have mutually agreed to the sale of our minority interest. The cash received from this sale will allow Twin Disc to continue its efforts to strengthen its balance sheet and will provide additional flexibility as we evaluate future strategic initiatives.”

Twin Disc, Inc., designs, manufactures and internationally distributes heavy-duty off-highway power transmission equipment for the construction, industrial, government, marine, agricultural, and energy and natural resources markets.

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