Cash provided by continuing operations was $92 million in the first quarter, compared to cash used in continuing operations of $14 million a year ago. The increase in cash provided by continuing operations during the first quarter was primarily due to the collection of accounts receivable and a reduction in the year over year inventory build. These benefits were partially offset by a reduction in advance payments resulting from a decline in new original equipment order activity.
Capital expenditures were $55 million in the first quarter of fiscal 2013, compared to $49 million in the prior year first quarter. The expenditures resulted from the investments in manufacturing capacity in emerging markets and aftermarket service infrastructure.
After struggling through much of 2012, global economic activity reached its highest level of the year in the fourth quarter. While U.S. fiscal policy was an overhang on the fourth quarter, many other indicators provided encouraging signs for the U.S. economy as 2013 began, including improving labor statistics, strengthening industrial production and recovering residential and non-residential construction. While Eurozone economic troubles continue, data suggests that the fourth quarter of 2012 could be a bottoming for the region. However, it is unlikely that the Eurozone will escape recessionary territory during the first half of 2013.The Chinese economy is reporting that year over year growth is now improving in numerous key measures, and this has positive implications for global growth. China GDP rebounded with 8 percent growth during the fourth quarter. Activity in China’s manufacturing sector increased to an 18-month high in December, while electricity consumption increased at 13 percent for the month, the highest in 11 months. Trade data from January has also been encouraging. Chinese imports increased 29 percent in January following 6 percent growth in December, and Chinese exports rose 25 percent during January.