Twin Disc, Inc. Announces Fiscal 2012 Fourth-Quarter And Full-Year Financial Results

Twin Disc, Inc. (NASDAQ: TWIN), today reported financial results for the fiscal 2012 fourth quarter and year ended June 30, 2012.

Sales for the fiscal 2012 fourth quarter declined modestly to $96,109,000, from $97,367,000 for the same period last year. For fiscal 2012, sales were a record $355,870,000, compared to $310,393,000 for fiscal 2011. The anticipated decline in fiscal 2012 fourth quarter sales was due to the softening demand for oil and gas products. Shipments to the aftermarket and industrial products markets, land- and marine-based military, airport rescue and fire fighting (ARFF), and commercial marine markets were good, while the yacht market continued to be challenging.

Gross margin for the fiscal 2012 fourth quarter declined to 29.4 percent, compared to 37.1 percent in the fiscal 2011 fourth quarter and 34.6 percent in the fiscal 2012 third quarter. The year-over-year and sequential decline in the fiscal 2012 fourth-quarter gross margin was the result of a change in the mix of sales, primarily due to the impact of lower oil and gas transmission sales, and the unfavorable absorption impact due to the significant inventory reduction experienced in the fourth fiscal quarter. For fiscal 2012, gross margin was 34.2 percent, compared to 34.7 percent for fiscal 2011.

For the fiscal 2012 fourth quarter, marketing, engineering and administrative (ME&A) expenses, as a percentage of sales, were 20.1 percent, compared to 23.1 percent for the fiscal 2011 fourth quarter. ME&A expenses decreased $3,158,000 versus the fiscal 2011 fourth quarter. The table below summarizes significant changes in certain ME&A expenses for the quarter:

Three Months Ended

(In thousands)

June 30, 2012

June 30, 2011

Increase/ (Decrease)
Stock-Based Compensation $ (380) $ 2,860 $ (3,240)
Severance 354 - 354
Domestic Pension Expense 30 244 (214)
Incentive/Bonus Expense 1,888 1,717   171
$ (2,929)
Foreign Exchange Translation, Net   (585)
$ (3,514)
All Other, Net   356
$ (3,158)

The net remaining increase in ME&A expenses for the quarter primarily relates to increased research and development activities, wage inflation and additional headcount.

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