Actuant Announces Impact of New Contingent Convertible Debt Accounting Rule.MILWAUKEE Milwaukee (mĭlwŏk`ē), city (1990 pop. 628,088), seat of Milwaukee co., SE Wis., at the point where the Milwaukee, Menominee, and Kinnickinnic rivers enter Lake Michigan; inc. 1846. -- Actuant Corporation (NYSE NYSE See: New York Stock Exchange :ATU (ADSL Transceiver Unit) A device that provides ADSL modulation of the telephone line. The device at the telco side is the ATU-C (Central), which is a line card plugged into the DSLAM. ) announced that it will adopt the provisions of the Emerging Issues Task Force Issue 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings per Share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of " ("EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation 04-08") in its quarter ending February February: see month. 28, 2005. Actuant's 2% Contingent Convertible Debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. (the "2% Co-Cos") are convertible at the option of the holder into shares of Actuant Class A Common Stock once the common stock trades above $47.89 for a specified period of time (a market price trigger). This new accounting rule requires companies with contingently convertible debt instruments to include the dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of the contingently convertible debt in diluted earnings per share calculations regardless of whether the market price trigger has been met. This new accounting rule is also required to be applied retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin . Actuant issued the 2% Co-Cos in November November: see month. 2003, and will therefore be restating its diluted earnings per share for each quarter in fiscal 2004, as well as the first quarter of fiscal 2005. The impact of adopting the new accounting rule is a reduction in diluted earnings per share, but not net earnings. The quarterly restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of diluted earnings per share for fiscal 2004 and 2005 is reported on the attachment to this press release. In calculating diluted earnings per share under the new rules, Actuant is required to add back the net of tax charges for interest expense and debt issuance cost amortization related to the 2% Co-Cos to net income (restated numerator numerator the upper part of a fraction. numerator relationship see additive genetic relationship. numerator Epidemiology The upper part of a fraction ) and increase the weighted average outstanding shares for the shares issuable under the 2% Co-Cos (restated denominator denominator the bottom line of a fraction; the base population on which population rates such as birth and death rates are calculated. denominator ). The adoption of EITF 04-08 also impacts the diluted earnings per share guidance the Company provided on December December: see month. 16, 2004. The adoption of the new accounting rule will reduce the Company's prior diluted earnings per share guidance for the fiscal year ended August 31, 2004 by approximately $0.25 per share, and its guidance for the quarter ended February 28, 2005 by approximately $0.05 per share. Updated guidance for the twelve months ended August 31, 2005, including the impact of the Key Components and Hedley Purvis acquisitions, will be provided on the Company's second quarter earnings conference call on March 17, 2005. Actuant, headquartered in Milwaukee, Wisconsin For other places with the same name, see Milwaukee (disambiguation). Milwaukee is the largest city within the state of Wisconsin and 25th largest (by population) in the United States. , is a diversified diversified (di·verˑ·s industrial company with operations in over 25 countries. The Actuant businesses are market leaders in highly engineered position and motion control systems and branded hydraulic and electrical tools and supplies. Products are offered under established brand names such as Acme (company, jargon) ACME - /ak'mee/ 1. A Company that Makes Everything. The canonical imaginary business. Possibly also derived from the word "acme" meaning "highest point". 2. A program for MS-DOS. Electric, B.W. Elliott, Dresco, Enerpac, Gardner Bender Gardner Bender is a manufacturer of professional electrician's tools and supplies. External links
For further information on Actuant and its business units, visit the Company's website at www.actuant.com.
ACTUANT CORPORATION
Impact of EITF 04-08 on Diluted Earnings Per Share
(In thousands, except per share amounts)
FISCAL
FISCAL 2004 2005
-------------------------------------------- --------
Q1 Q2 Q3 Q4 TOTAL Q1
-------- -------- -------- -------- -------- --------
(1) (1)
Restated diluted
earnings per
share:
Numerator:
Earnings from
continuing
operations $ 293 $ 8,758 $ 7,466 $ 7,373 $23,890 $17,506
Interest expense
on 2% Convertible
Notes, net of
income taxes - 491 491 491 1,583 491
Amortization of
debt issuance
costs on 2%
Convertible
Notes, net of
income taxes - 120 120 120 386 120
-------- -------- -------- -------- -------- --------
Earnings from
continuing
operations
based on the
if-converted
method 293 9,369 8,077 7,984 25,859 18,117
Discontinued
operations, net
of income taxes - - - 10,933 10,933 -
-------- -------- -------- -------- -------- --------
Net earnings
based on the
if-converted
method $ 293 $ 9,369 $ 8,077 $18,917 $36,792 $18,117
======== ======== ======== ======== ======== ========
Denominator:
Weighted average
common shares
outstanding for
basic earnings
per share $23,539 $23,601 $23,703 $23,757 $23,660 $23,877
Net effect of
dilutive stock
options based on
the treasury
stock method
using average
market price 1,188 1,311 811 758 1,017 727
Net effect of 2%
Convertible
Notes based on
the if-converted
method - 3,758 3,758 3,758 3,028 3,758
-------- -------- -------- -------- -------- --------
Weighted average
common and
equivalent
shares
outstanding for
diluted earnings
per share $24,727 $28,670 $28,272 $28,273 $27,705 $28,362
======== ======== ======== ======== ======== ========
Diluted earnings
per share as
reported:
Earnings from
continuing
operations $0.01 $0.35 $0.30 $0.30 $0.97 $0.71
Discontinued
operations, net
of income taxes - - - 0.45 0.44 -
-------- -------- -------- -------- -------- --------
Total $0.01 $0.35 $0.30 $0.75 $1.41 $0.71
EITF impact on
diluted EPS from
continuing
operations $ - $(0.02) $(0.01) $(0.02) $(0.04) $(0.07)
EITF impact on
diluted EPS from
discontinued
operations - - - (0.06) (0.05) -
Restated diluted
earnings per
share:
Earnings from
continuing
operations $0.01 $0.33 $0.29 $0.28 $0.93 $0.64
Discontinued
operations, net
of income taxes - - - 0.39 0.39 -
-------- -------- -------- -------- -------- --------
Total $0.01 $0.33 $0.29 $0.67 $1.32 $0.64
======== ======== ======== ======== ======== ========
Diluted Earnings
Per Share
Excluding
Discontinued
Operations and
Special Items
(2)
Diluted earnings
per share from
continuing
operations as
reported
(GAAP Measure) $0.01 $0.35 $0.30 $0.30 $0.97 $0.71
Debt
extinguishment
costs, net of
income taxes 0.40 0.06 0.28 0.29 1.02 -
-------- -------- -------- -------- -------- --------
Diluted earnings
per share
excluding
discontinued
operations and
special items
before
application of
EITF 04-08 $0.41 $0.41 $0.58 $0.59 $1.99 $0.71
Impact of
adoption of EITF
04-08 - (0.03) (0.05) (0.06) (0.15) (0.07)
-------- -------- -------- -------- -------- --------
Diluted earnings
per share
excluding
discontinued
operations and
special items
(Non-GAAP
Measure) $0.41 $0.38 $0.53 $0.53 $1.84 $0.64
======== ======== ======== ======== ======== ========
(1) The potential conversion of 2% Convertible Notes has been excluded
from the diluted earnings per share calculation for the first
quarter of fiscal 2004 because the effect is anti-dilutive. Such
amounts are dilutive when considering the full year impact of the
adoption of EITF 04-08.
(2) Diluted earnings per share excluding discontinued operations and
special items represent diluted earnings per share per the
Consolidated Statement of Earnings net of charges or credits for
items that are not representative of the normal recurring
operations of the current portfolio of Actuant companies. These
items include results from discontinued operations and expenses
recorded to extinguish debt entered into at the time of the
spin-off. These measures should not be considered as an
alternative to diluted earnings per share as an indicator of the
company's operating performance. However, this presentation is
important to investors for understanding the operating results of
the current portfolio of Actuant companies.
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