Harmon Announces First Quarter Results

BLUE SPRINGS, Mo. (Monday, May 1, 1995) -- Harmon Industries, Inc., a leading supplier of signal and train control products to railroads and transit systems throughout North America and the world, today announced results for the first quarter ended March 31, 1995.

Sales in the first quarter were $29.4 million, an increase of 14 percent from $25.9 million in the first quarter of 1994. Net earnings were $706,000 for the period ended March 31, compared with $1.5 million a year ago. Earnings per share were $0.10 in the first quarter of 1995, compared with $0.23 in the first quarter of 1994.

The principal reason for lower first quarter earnings was the acquisition of the Transportation Division of Servo Corporation of America in the fourth quarter of 1994. As a result of this acquisition, Harmon incurred planned, one-time costs which resulted in higher operating and manufacturing costs for the first quarter. Manufacturing operations ceased at Servo's Transportation Division's Long Island, NY facility on April 30, and are being moved and integrated with operations at Harmon's existing facilities in Riverside, California. This integration will result in lower manufacturing and administrative costs, allowing Harmon to more fully realize the financial benefits from this acquisition beginning in the third quarter of 1995. Servo is expected to achieve nearly $10 million in sales in 1995.

Harmon made several gains in the first quarter. Orders in the first quarter increased 26 percent from 1994. The March 31 backlog was at an all-time record $51.4 million. Moreover, almost all of this backlog is expected to ship in 1995. International sales continue to grow, comprising nearly ten percent of total orders for the quarter.

Harmon was also recently selected to provide the latest Incremental Train Control System (ITCS) technology for a high-speed train control test installation between Detroit and Chicago under a grant from the Federal Railroad Administration (FRA) . This selection will showcase Harmon's technology and positions the company as a leader in this application for future high-speed rail lines.

"First quarter earnings were weaker than last year primarily due to the expenses incident to the Servo acquisition," said Björn Olsson, president and chief executive officer. "However, given the record backlog, order stream and the quotation activity to date, the rest of the year looks strong. We expect to achieve new record levels for sales and earnings for the year."

Harmon Industries, Inc., is traded on the Nasdaq Stock Market under the symbol "HRMN." For further information, please contact Charles M. Foudree, executive vice president - finance and chief financial officer, Harmon Industries, Inc., 1300 Jefferson Court, Blue Springs, MO 64015. The telephone number is (816) 229-3345.

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