Carpenter Technology Reports Fourth Quarter & Full Year 2005 Results.WYOMISSING, Pa. -- Carpenter Technology Corporation Carpenter Technology Corporation (NYSE:CRS) is a leading manufacturer and distributor of specialty alloys, including stainless steel and titanium, and various engineered products made from metallic and ceramic materials. (NYSE NYSE See: New York Stock Exchange :CRS CRS Course CRS Certified Residential Specialist (real estate certification) CRS Central Reservation System CRS Can't Remember Stuff (polite form) CRS Cost Reduction Strategy CRS Consumer Relations Specialist ) today reported record sales and net income for the fourth quarter and fiscal year ended June June: see month. 30, 2005. The results reflected favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. market conditions and the benefits from the company's continued focus on lean and variation reduction. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the fourth fiscal quarter ended June 30, 2005 were $362.4 million, compared with $296.8 million for the same quarter a year ago. Net income in the recent fourth quarter was $47.8 million, or $1.86 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to net income of $17.7 million, or $0.73 per diluted share, a year ago. Carpenter's recent fourth quarter included a gain of $0.21 per diluted share from the sale of its Carpenter Special Products Corporation (CSPC CSPC Center for the Study of Popular Culture CSPC Center for Sex Positive Culture (Seattle, WA) CSPC CNOOC and Shell Petrochemical Company Limited CSPC Canadian Standard Product Code ) subsidiary. Also in the recent fourth quarter, net income was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by $.23 per diluted share, as a result of favorable tax adjustments. Free cash flow in the recent fourth quarter was $45.1 million, compared with free cash flow of $9.4 million in the quarter a year ago. Free cash flow in the recent fourth quarter included $15.4 million in net cash proceeds from the sale of CSPC. Also in the quarter, free cash flow was reduced by $25 million as a result of the company's voluntary contribution to a VEBA VEBA Voluntary Employees' Beneficiary Association trust that funds post-retirement medical expenses. Carpenter also made a $25 million voluntary contribution to the VEBA trust in last year's fourth quarter. At June 30, 2005, net debt was $63.5 million. Carpenter's net debt amount was $53.3 million lower than at the end of the previous quarter and $186.2 million lower than a year ago. Fiscal Year Results Net sales for fiscal 2005 were $1.3 billion, compared with $1.0 billion for the previous fiscal year. Net income for fiscal 2005 was $135.5 million, or $5.37 per diluted share, compared with net income of $36.0 million, or $1.49 per diluted share a year ago. For fiscal 2005, the company generated $133.8 million of free cash flow, compared to free cash flow of $88.4 million a year ago. Fourth Quarter - Operating Summary "Record results for the quarter and fiscal 2005 were driven by strong demand for our higher value materials, especially from the aerospace market, and our continued focus on lean and variation reduction," said Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. J. Torcolini, chairman, president and chief executive officer. "The operating improvements made during the past few years significantly enhanced the operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. in our business model and has positioned the company to create additional value for shareholders." Carpenter's sales increased 22 percent in the fourth quarter from a year ago, which reflected a better product mix, higher base selling prices and surcharges. Excluding surcharge An overcharge or additional cost. A surcharge is an added liability imposed on something that is already due, such as a tax on tax. It also refers to the penalty a court can impose on a fiduciary for breaching a duty. revenue, sales increased 17 percent from the fourth quarter a year ago. Sales increased in most major end-use markets during the fourth quarter versus the same quarter a year ago. Aerospace market sales increased 52 percent; medical market sales 43 percent; automotive market sales 19 percent; consumer market sales 12 percent; and industrial market sales 7 percent. Sales to the power generation market declined 1 percent. Geographically ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge , sales outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. increased 32 percent from a year ago and represented 29 percent of fourth quarter sales. In the recent fourth quarter, sales outside the United States benefited from strong demand for materials sold to the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. aerospace and medical markets, and growth in Asia. Carpenter's gross profit in the fourth quarter increased to $92.9 million, or 25.6 percent of sales, from $62.5 million, or 21.1 percent of sales, in the quarter a year ago. The gross profit improvement reflected a better product mix due to increased demand for higher value materials from key markets, notably aerospace and medical, higher base prices and the benefits from lean initiatives and variation reduction. Carpenter's fourth quarter operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased to $66.9 million, or 18.5 percent of sales, from $31.3 million, or 10.5 percent of sales, a year ago. Excluding the gain on the sale of CSPC, Carpenter's fourth quarter operating income reached a record level. The increase from a year ago reflects the improvement in gross profit and a continued focus on managing selling and administrative expenses. Outlook "We believe that market conditions will remain favorable in fiscal 2006, particularly for our specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. alloy alloy (ăl`oi, əloi`) [O. Fr.,=combine], substance with metallic properties that consists of a metal fused with one or more metals or nonmetals. , titanium titanium (tītā`nēəm, tĭ–) [from Titan], metallic chemical element; symbol Ti; at. no. 22; at. wt. 47.88; m.p. 1,675°C;; b.p. 3,260°C;; sp. gr. 4.54 at 20°C;; valence +2, +3, or +4. and ceramic This article is about ceramic materials. For the fine art, see Ceramic art. The word ceramic is derived from the Greek word κεραμικός (keramikos). materials sold into the aerospace market. These favorable conditions combined with our focus to reduce product complexity through the elimination of marginally mar·gin·al adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. profitable products and efforts in lean and variation reduction will continue to drive our performance in 2006," Torcolini said. "Although we are pleased with our recent accomplishments, we see opportunity for continued improvement in our operating results." Accordingly, the company expects that free cash flow will be in excess of $100 million in fiscal 2006. Segment Results - Fourth Quarter Specialty Metals Net sales for the quarter ended June 30, 2005 for the Specialty Metals segment, which includes the Specialty Alloys This is a list of alloys for which an article exists in Wikipedia (or is proposed but not yet written). They are grouped by base metal, in order of increasing atomic number. Within these headings they are in no particular order. Operations (SAO Sa´o n. 1. (Zool.) Any marine annelid of the genus Hyalinæcia, especially H. tubicola of Europe, which inhabits a transparent movable tube resembling a quill in color and texture. ), Dynamet, and Carpenter Powder powder, any mass of fine particles or dust prepared by various mechanical means, e.g., grinding of solid substances, or by chemical means, e.g., precipitation from solutions. In a special sense, the word is applied to powdered propellant explosives, e.g. Products (CPP cpp - C preprocessor. ) business units, were $329.7 million, compared to $268.3 million in the same quarter a year ago. SAO sales increased 19 percent from the same quarter a year ago. The increase was due primarily to a better product mix as a result of strong demand from the U.S. and European aerospace markets, pricing actions and surcharges. SAO volume decreased 16 percent from the quarter a year ago primarily reflecting the strategy to reduce the sale of marginally profitable products, and lower demand from the automotive and industrial markets. Dynamet's sales increased 69 percent in the fourth quarter versus a year ago, also as a result of strong demand from the aerospace markets, continued growth in the domestic and foreign medical markets, and higher base selling prices. The sales increase also reflected the impact of a significant rise in titanium costs. CPP's sales were 46 percent higher than a year ago due to higher selling prices, stronger demand from the industrial and automotive markets and a better product mix. Operating income for the Specialty Metals segment was $58.4 million, compared to $32.6 million a year ago. The increase in operating income reflected the effects of a better product mix, higher base prices and continued operational improvements. Engineered Products Segment Net sales for this segment, which includes sales of fabricated fab·ri·cate tr.v. fab·ri·cat·ed, fab·ri·cat·ing, fab·ri·cates 1. To make; create. 2. To construct by combining or assembling diverse, typically standardized parts: metal and ceramic components, were $33.4 million, compared to $29.0 million a year ago. Strong demand from most end use markets and higher base prices were the primary drivers of the sales increase. Operating income for the Engineered Products segment increased to $5.8 million from $3.8 million a year ago. Operating income benefited from higher sales, increased base selling prices and better operating efficiencies from lean and variation reduction. Segment Results - Fiscal Year Specialty Metals Fiscal 2005 net sales for the Specialty Metals segment were $1.2 billion, compared to $909.1 million for the previous fiscal year. SAO sales increased 28 percent from a year ago, due to an improved product mix, base pricing actions and surcharges. SAO volume was 4 percent lower than a year ago as strong demand for higher value materials was offset primarily by SAO's intentional in·ten·tion·al adj. 1. Done deliberately; intended: an intentional slight. See Synonyms at voluntary. 2. Having to do with intention. reduction in the sale of marginally profitable products and lower volumes to the industrial and automotive markets. For fiscal 2005, Dynamet's sales increased 61 percent from a year ago. The increase is due primarily to stronger demand from the aerospace and medical markets and increased prices. CPP's sales were 40 percent higher than a year ago as a result of strong demand from the industrial, automotive and aerospace markets and higher base selling prices. Fiscal 2005 operating income for the Specialty Metals segment was $183.9 million, compared to $71.5 million a year ago. The increase reflected higher base selling prices, a better product mix and continued operational improvements. Engineered Products Segment Net sales for this segment in fiscal 2005 were $129.1 million compared to $110.0 million for fiscal 2004. This group of companies benefited from strong demand across most major markets including automotive, aerospace, industrial and power generation and higher base selling prices. Operating income for the Engineered Products segment for fiscal 2005 was $22.2 million versus $14.4 million a year ago. The increase in operating income was largely associated with stronger demand, better pricing and a continued focus on lean and variation reduction. Net Pension Expense In the fourth quarter of 2005, Carpenter had pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta net pension expense of $0.6 million, which was offset by the favorable tax effects of Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. Part D and, therefore, did not have a measurable impact on earnings per share. This compares to pre-tax net pension expense of $3.6 million, or $0.09 per diluted share, for the same quarter a year ago. For fiscal 2005, the company's pre-tax net pension expense was $2.4 million. This amount was mostly offset by the favorable tax effects of Medicare Part D, which resulted in a net pension expense equivalent to $0.01 per diluted share. In fiscal 2004, Carpenter's pre-tax net pension expense was $16.1 million, or $0.42 per diluted share. The net pension amount is actuarially determined as of each June 30 and typically held constant throughout the fiscal year. In fiscal 2006, Carpenter expects that it will have a pre-tax net pension expense of $11.5 million, or the equivalent of $0.24 per diluted share. The increase in the net pension expense from fiscal 2005 primarily reflects a decrease in the discount rate to 5.00% from 6.25% as a result of a lower interest rate environment. The company's defined benefit pension plan remains well funded and, as in prior years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time company is not required to make a cash contribution to the plan. Other Items In the fourth quarter of fiscal 2005, selling and administrative expenses of $34.7 million were 9.6 percent of sales compared to $31.2 million, or 10.5 percent of sales, in the same quarter a year ago. The increase primarily reflects a $4.2 million increase of a reserve related to ongoing cleanup costs at a location that was closed in 1987. For fiscal 2005, selling and administrative expenses of $120.6 million were 9.2 percent of sales compared to $117.1 million, or 11.5 percent of sales, in fiscal 2004. Interest expense for the quarter decreased to $5.4 million from $5.6 million in the fourth quarter a year ago due to reduced debt levels, which was partially offset by higher interest rates. For fiscal 2005, interest expense was $23.0 million or $0.7 million lower than a year ago. In fiscal 2004, Carpenter incurred a loss on the early retirement of debt of $2.3 million, or $.06 per diluted share. Other income for the fourth quarter was $1.1 million as compared to $0.6 million in the fourth quarter a year ago. In the recent fourth quarter, increased interest income from invested cash was partially offset by foreign exchange losses. For fiscal 2005, other income of $8.8 million compared to other income of $7.6 million in fiscal 2004. In the recent fourth quarter, net income was favorably impacted by $0.23 per diluted share as a result of a $3.0 million benefit from a partial reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of state tax net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carry forward valuation allowances and a $2.8 million benefit due to an adjustment of the state effective deferred tax rate. Cash Flow and Liquidity Carpenter has maintained the ability to provide cash to meet its needs through cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , management of working capital and the flexibility to use outside sources of financing to supplement internally generated funds. Free cash flow in the recent fourth quarter was $45.1 million, compared with free cash flow of $9.4 million in the fourth quarter a year ago. Free cash flow in the recent fourth quarter included $15.4 million in net cash proceeds from the sale of CSPC. Also in the quarter, free cash flow was reduced by $25 million as a result of the company's decision to make a voluntary contribution to a VEBA trust that funds post-retirement medical expenses. Carpenter also made a $25 million voluntary contribution to the VEBA trust in last year's fourth quarter. For fiscal 2005, the company generated $133.8 million of free cash flow, compared to free cash flow of $88.4 million in fiscal 2004. Carpenter believes that its current financial resources, both from internal and external sources, will be more than adequate to meet its foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. needs. Conference Call Carpenter will host a conference call and webcast today, July July: see month. 25, at 10:00 a.m., Eastern Time, to discuss the results of operations for the fourth quarter and fiscal 2005. Please call 610-208-2800 for details of the conference call. Access to the call will also be made available at Carpenter's web site (www.cartech.com) and through CCBN CCBN Central Coast Bancorp CCBN Charles County Business Network (www.ccbn.com). A replay of the call will be made available at www.cartech.com or at www.ccbn.com. Carpenter produces and distributes specialty alloys, including stainless steels stainless steel: see steel. stainless steel Any of a family of alloy steels usually containing 10–30% chromium. The presence of chromium, together with low carbon content, gives remarkable resistance to corrosion and heat. , titanium alloys Titanium alloys are metallic materials which contain a mixture of titanium and other chemical elements. Such alloys have very high tensile strength and toughness (even at extreme temperatures), light weight, extraordinary corrosion resistance, and ability to withstand extreme and superalloys, and various engineered products. Information about Carpenter can be found on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.cartech.com. Except for historical information, all other information in this news release consists of forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected, anticipated or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. . The most significant of these uncertainties are described in Carpenter's filings with the Securities and Exchange Commission including its annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended June 30, 2004, its subsequent Forms 10-Q and the exhibits attached to those filings. They include but are not limited to: 1) the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of the specialty materials business and certain end-use markets, including aerospace, power generation, automotive, industrial and consumer, or other influences on Carpenter's business such as new competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. , the consolidation of customers and suppliers or the transfer of manufacturing capacity from the United States to foreign countries; 2) the ability of Carpenter to achieve cost savings, productivity improvements or process changes; 3) the ability to recoup recoup To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. increases in the cost of energy and raw materials or other factors; 4) domestic and foreign excess manufacturing capacity for certain metals; 5) fluctuations in currency exchange rates; 6) the degree of success of government trade actions; 7) the valuation of the assets and liabilities in Carpenter's pension trusts and the accounting for pension plans; 8) possible labor disputes or work stoppages; and 9) the potential that our customers may substitute alternate alternate /al·ter·nate/ (awl´ter-nit) 1. following in turns. 2. pertaining to every other one in a series. 3. occurring in place of another; acting as a substitute. materials or adopt different manufacturing practices that replace or limit the suitability of our products. Any of these factors could have an adverse and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. effect on Carpenter's results of operations. The forward-looking statements in this document are intended to be subject to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. protection provided by Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. Carpenter undertakes no obligation to update or revise any forward-looking statements.
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
Three Months Ended Year Ended
June 30 June 30
------------------ -------------------
2005 2004 2005 2004
--------- -------- --------- ---------
NET SALES $362.4 $296.8 $1,314.2 $1,016.7
Cost of sales 269.5 234.3 998.1 831.5
--------- -------- --------- ---------
Gross profit 92.9 62.5 316.1 185.2
Selling and administrative
expenses 34.7 31.2 120.6 117.1
Gain on sale of business (8.7) -- (8.7) --
--------- -------- --------- ---------
Operating income 66.9 31.3 204.2 68.1
Interest expense 5.4 5.6 23.0 23.7
Loss on early retirement of debt -- -- -- 2.3
Other income, net (1.1) (0.6) (8.8) (7.6)
--------- -------- --------- ---------
Income before income taxes 62.6 26.3 190.0 49.7
Income taxes 14.8 8.6 54.5 13.7
--------- -------- --------- ---------
NET INCOME $47.8 $17.7 $135.5 $36.0
========= ======== ========= =========
EARNINGS PER COMMON SHARE:
Basic $1.92 $0.75 $5.54 $1.51
========= ======== ========= =========
Diluted $1.86 $0.73 $5.37 $1.49
========= ======== ========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic 24.7 22.8 24.2 22.5
========= ======== ========= =========
Diluted 25.6 23.7 25.1 23.4
========= ======== ========= =========
Cash dividends per common share $0.125 $0.0825 $0.4075 $0.3300
========= ======== ========= =========
Certain reclassifications of prior year's amounts have been made to
conform with current year's presentation.
PRELIMINARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Year ended
June 30
--------------------
2005 2004
---------- ---------
OPERATIONS:
Net income $135.5 $36.0
Adjustments to reconcile net income to
net cash provided from operations:
Depreciation 46.8 49.2
Amortization 3.4 7.9
Deferred income taxes 7.7 6.5
Net pension expense 2.4 16.1
Net loss on asset disposals 1.2 0.1
Gain on sale of business (8.7) --
Changes in working capital and other:
Receivables (31.8) (40.5)
Net change in accounts receivable purchase
facility -- (10.0)
Inventories (49.8) (4.3)
Other current assets (9.2) (0.1)
Accounts payable 26.2 44.5
Accrued current liabilities 42.7 28.2
Income tax refund 3.4 0.6
Contribution to VEBA (25.0) (25.0)
Other, net (2.3) (15.1)
---------- ---------
Net cash provided from operations 142.5 94.1
---------- ---------
INVESTING ACTIVITIES:
Purchases of plant, equipment and software (13.8) (8.0)
Proceeds from disposals of plant and equipment 1.1 1.6
Proceeds from sale of business 15.4 --
Purchases of marketable securities (172.4) (70.0)
Sales of marketable securities 94.6 41.2
---------- ---------
Net cash used for investing activities (75.1) (35.2)
---------- ---------
FINANCING ACTIVITIES:
Net change in short-term debt (2.3) (15.7)
Payments on long-term debt (20.2) (20.2)
Checks not cleared -- (3.7)
Dividends paid (11.4) (9.3)
Proceeds from issuance of common stock 54.2 12.8
---------- ---------
Net cash provided from (used for) financing
activities 20.3 (36.1)
---------- ---------
Effect of exchange rate changes on cash and cash
equivalents (0.5) 0.3
---------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 87.2 23.1
Cash and cash equivalents at beginning of period 76.6 53.5
---------- ---------
Cash and cash equivalents at end of period $163.8 $76.6
========== =========
Certain reclassifications of prior year's amounts have been made
to conform with current year's presentation.
PRELIMINARY
CONSOLIDATED BALANCE SHEET
(in millions)
June 30 June 30
2005 2004
--------- ---------
ASSETS
Current Assets:
Cash and cash equivalents $163.8 $76.6
Marketable securities 106.6 28.8
Accounts receivable, net 193.4 165.2
Inventories 228.6 185.0
Deferred income taxes 7.4 --
Other current assets 31.8 36.2
--------- ---------
Total current assets 731.6 491.8
Property, plant and equipment, net 569.2 608.7
Prepaid pension cost 250.8 247.0
Goodwill 46.4 46.4
Trademarks and trade names, net 21.1 24.3
Other assets 34.3 38.0
--------- ---------
Total assets $1,653.4 $1,456.2
========= =========
LIABILITIES
Current liabilities:
Short-term debt $-- $2.2
Accounts payable 133.4 109.0
Accrued compensation 39.6 26.1
Accrued income taxes 18.4 10.3
Accrued liabilities 57.5 51.4
Deferred income taxes -- 10.9
Current portion of long-term debt 0.2 20.2
--------- ---------
Total current liabilities 249.1 230.1
Long-term debt, net of current portion 333.7 332.7
Accrued postretirement benefits 108.5 143.5
Deferred income taxes 192.5 175.6
Other liabilities 45.4 36.3
--------- ---------
Total liabilities 929.2 918.2
--------- ---------
STOCKHOLDERS' EQUITY
Convertible preferred stock 19.7 20.8
Common stock 129.7 120.7
Capital in excess of par value - common stock 278.1 215.1
Reinvested earnings 354.5 230.4
Common stock in treasury, at cost (35.8) (38.0)
Deferred compensation (9.2) (9.5)
Accumulated other comprehensive loss (12.8) (1.5)
--------- ---------
Total stockholders' equity 724.2 538.0
--------- ---------
Total liabilities and stockholders' equity $1,653.4 $1,456.2
========= =========
Certain reclassifications of prior year's amounts have been made to
conform with current year's presentation.
PRELIMINARY
SEGMENT FINANCIAL DATA
(in millions)
Three Months Ended Year Ended
June 30 June 30
------------------- -------------------
2005 2004 2005 2004
---------- -------- --------- ---------
Net sales:
Specialty Metals $329.7 $268.3 $1,188.3 $909.1
Engineered Products 33.4 29.0 129.1 110.0
Intersegment (0.7) (0.5) (3.2) (2.4)
---------- -------- --------- ---------
Consolidated net sales $362.4 $296.8 $1,314.2 $1,016.7
========== ======== ========= =========
Operating income:
Specialty Metals $58.4 $32.6 $183.9 $71.5
Engineered Products 5.8 3.8 22.2 14.4
Gain on sale of business 8.7 -- 8.7 --
Corporate costs (9.9) (6.3) (25.2) (20.9)
Pension earnings, interest &
deferrals 3.7 1.2 14.7 3.1
Intersegment 0.2 -- (0.1) --
---------- -------- --------- ---------
Consolidated operating
income $66.9 $31.3 $204.2 $68.1
========== ======== ========= =========
Carpenter is organized in the following business units: Specialty
Alloys Operations, Dynamet, Carpenter Powder Products and Engineered
Products. For segment reporting, the Specialty Alloys Operations,
Dynamet and Carpenter Powder Products operating segments have been
aggregated into one reportable segment, Specialty Metals, because of
the similarities in products, processes, customers, distribution
methods and economic characteristics.
The service cost component of net pension expense, which represents
the estimated cost of future pension liabilities earned associated
with active employees, is included in the operating results of the
business segments. The residual net pension expense, which is
comprised of the expected return on plan assets, interest costs on the
projected benefit obligations of the plans, and amortization of
actuarial gains and losses and prior service costs, is included under
the heading "Pension earnings, interest & deferrals."
Certain reclassifications of prior year's amounts have been made to
conform with current year's presentation.
PRELIMINARY
SELECTED FINANCIAL MEASURES
(in Millions, Except Per Share Data)
Three Months Ended Year Ended
June 30 June 30
------------------ ---------------
FREE CASH FLOW 2005 2004 2005 2004
--------- -------- ------- -------
Net cash provided from operations $37.7 $4.4 $142.5 $94.1
Net change in accounts receivable
purchase facility -- 10.0 -- 10.0
Purchases of plant, equipment and
software (5.0) (2.8) (13.8) (8.0)
Proceeds from disposals of plant and
equipment 0.5 0.2 1.1 1.6
Proceeds from sale of business 15.4 -- 15.4 --
Dividends paid (3.5) (2.4) (11.4) (9.3)
--------- -------- ------- -------
Free cash flow $45.1 $9.4 $133.8 $88.4
========= ======== ======= =======
Free cash flow is a measure of cash generated which management
evaluates for alternative uses.
March
June 30 31 June 30
NET DEBT 2005 2005 2004
-------- ------- -------
Short-term debt $--- $1.0 $2.2
Current portion of long-term debt 0.2 20.2 20.2
Long-term debt, net of current
portion 333.7 332.1 332.7
-------- ------- -------
Total debt 333.9 353.3 355.1
Cash (163.8) (148.2) (76.6)
Marketable securities (106.6) (88.3) (28.8)
-------- ------- -------
Net debt $63.5 $116.8 $249.7
======== ======= =======
Accumulated cash and marketable securities are expected to be used
for debt repayment when economically feasible until a targeted debt to
capital ratio is achieved.
Three Months Ended Year Ended
June 30 June 30
------------------ ---------------
NET PENSION EXPENSE 2005 2004 2005 2004
--------- -------- ------- -------
Pension plan (income) expense ($0.6) $2.2 ($2.4) $8.8
Other postretirement benefits
expense 1.2 1.4 4.8 7.3
--------- -------- ------- -------
Pre-tax net pension expense 0.6 3.6 2.4 16.1
Income tax benefit (0.5) (1.5) (2.2) (6.3)
--------- -------- ------- -------
Net pension expense $0.1 $2.1 $0.2 $9.8
========= ======== ======= =======
Net pension expense per share $0.00 $0.09 $0.01 $0.42
========= ======== ======= =======
Weighted average diluted common
shares 25.6 23.7 25.1 23.4
========= ======== ======= =======
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