UNOVA Announces Second Quarter 2003 Results

Business Wire, July 28, 2003

Business Editors

EVERETT, Wash.--(BUSINESS WIRE)--July 28, 2003

UNOVA, Inc. (NYSE:UNA):

-- ADS (Intermec) reports the fourth successive quarter of

double-digit percent product and service revenue increases on

a comparable-quarter basis and a related record quarterly

operating profit margin

-- IAS wins major flexible systems order from Hyundai Motor

Manufacturing Alabama

-- Net debt is reduced to another record low

UNOVA, Inc. (NYSE:UNA) (www.unova.com) today announced results for the second quarter of 2003.

"Our strong revenue and profit margin growth reflects the considerable operating leverage in our business model and Intermec's excellent market presence," said Larry D. Brady, CEO. "Our pursuit of an Asian alliance strategy at IAS has yielded its first tangible result with a large order for a flexible automotive production system."

For the second quarter of 2003, UNOVA reported a net loss of ($0.8) million, or ($0.01) per share, on revenues of $292.1 million. This compares to net earnings of $22.3 million, or $0.38 per diluted share, on revenues of $355.2 million for the second quarter of 2002.

During the second quarters of 2003 and 2002, the Company settled intellectual property (IP) disputes regarding its smart battery patents. In the second quarter 2003, IP settlements resulted in $7.2 million of revenues and $5.3 million in operating profit, a $28.2 million decrease in IP-related operating profit from the comparable prior-year period. Second quarter 2003 segment operating profit from product and service revenues increased $2.8 million from the prior-year comparable quarter.

Special charges of $0.9 million, related to the ongoing consolidation of two IAS divisions and the relocation of the Company's headquarters, affected pre-tax operating results for the second quarter of 2003.

UNOVA's net debt (defined as total debt less cash and cash equivalents) was reduced $15.4 million during the second quarter 2003 to $5.5 million primarily due to continued positive cash generation from operations and the IP settlements.

For the first six months of 2003, UNOVA reported a net loss of ($15.7) million, or ($0.27) per share, on revenues of $565.8 million. This compares to net earnings of $4.1 million, or $0.07 per diluted share, on revenues of $647.6 million in the same period during 2002.

Automated Data Systems (ADS)

In the second quarter of 2003, revenues at the Company's ADS segment, comprising Intermec Technologies, were $179.0 million. ADS revenues for the comparable second quarter of 2002 were $198.0 million. The ADS segment recorded a $21.5 million operating profit for the second quarter 2003 compared to an operating profit of $37.9 million for the second quarter of 2002.

For the first six months of 2003, ADS revenues were $341.9 million and operating profit was $30.5 million compared to $338.3 million and $37.2 million, respectively, for the comparable period in 2002.

ADS' second quarter 2003 product and service revenues of $171.8 million represent 12 percent growth from the second quarter 2002. Core 'Systems & Solutions' and Printer/Media product revenues both grew more than 11 percent on a comparable quarter basis while Service revenues grew 16 percent.

Revenue performance in international markets was particularly strong. Compared to the second quarter of 2002, sales in the EMEA region grew 40 percent and sales in Asia/Pacific, Latin America grew 50 percent, and North American revenues declined four percent. Favorable foreign currency exchange rates contributed approximately $9.0 million of the revenue increase from the comparable quarter of 2002.

Operating margin on ADS product and service revenues was 9.4 percent in the second quarter 2003, more than three times greater than the comparable prior-year quarter. The improvement resulted from a 1.8 point increase in product and service gross margins combined with a 4.7 point reduction in selling, general and administrative expense versus the second quarter of 2002.

During the quarter and less than two years since its introduction, Intermec's popular 700 Series handheld computer surpassed 100,000 cumulative units sold, representing the fastest sales growth of a handheld computer in the company's history. The 700 Series is the only rugged handheld computer certified to operate on seven wireless data networks in North America including Sprint, ATT Wireless, Verizon, T-Mobile, Bell Mobility, Telus and Rogers ATT.

Industrial Automation Systems

The Industrial Automation Systems (IAS) segment reported an operating loss of $(9.9) million on revenues of $113.1 million for the second quarter of 2003, compared to an operating loss of ($0.9) million on revenues of $157.2 million for the second quarter of 2002.

For the first six months of 2003, IAS revenues of $223.8 million resulted in a loss of ($20.3) million, compared to $309.3 million of revenue and a ($1.0) million operating loss in the first half of 2002.

In June, IAS's Asian alliance strategy directly resulted in an order to supply a complete engine machining and assembly system to Hyundai Motor Manufacturing Alabama, LLC. The new lines will produce up to 200,000 new 3.3 liter V-6 engines per year for Hyundai's next-generation designs of the popular Sonata sedan and the Santa Fe sport utility vehicle for North America.