Carpenter Technology Reports Record Quarterly 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 ): --Record net income of $60.8 million - up 72% from a year ago --Record revenues of $426.0 million - up 25% from a year ago --Aerospace market sales increased 80% to a record high --Record international sales accounted for 33% of total sales Carpenter Technology Corporation (NYSE:CRS) today reported record quarterly sales and net income. Results were led by strong demand for aerospace materials and by the Company's continued focus on cost through 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 third quarter ended March 31, 2006 were $426.0 million, compared with $342.1 million for the same quarter a year ago. Net income in the third quarter was $60.8 million, or $2.32 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 $35.3 million, or $1.38 per diluted share, a year ago. Free cash flow in the third quarter was $53.3 million, compared with $46.1 million in the quarter a year ago. Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Results Net sales for the first nine months of the current fiscal year were $1.1 billion, compared with $951.8 million for the same period a year ago. Net income for the first nine months of the current fiscal year was $143.8 million, or $5.51 per diluted share, compared with net income of $87.6 million, or $3.48 per diluted share, for the same period a year ago. Free cash flow for the first nine months of fiscal 2006 was $95.8 million, compared to free cash flow of $88.7 million for the same period a year ago. Third Quarter - Operating Summary "Record quarterly results were achieved primarily due to robust demand from the aerospace market 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. and 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. materials, and our ongoing focus on operational excellence," 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. "Our growth in the aerospace and other key markets reflects our strategy to develop and produce materials that are valued for their performance characteristics. "For the quarter, aerospace sales reached a record level and accounted for 43 percent of total sales. Sales of our higher value materials also benefited from favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. market conditions in the medical and power generation markets. "I am pleased that a continuous refinement of our business operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. has proven effective in enabling us to generate returns above our cost of capital. We will continue to improve upon our operating model so that we can build shareholder value through all phases of a business cycle." For the third quarter, Carpenter's sales increased 25 percent compared to a year ago. Sales in the most recent quarter benefited from increased sales of higher value materials, especially to the aerospace, medical and power generation markets, and higher base selling prices. Adjusted for surcharges, sales increased 26 percent from the third quarter a year ago. Sales increased in several key end-use markets during the third quarter versus the same quarter a year ago. Aerospace market sales increased 80 percent, which reflected strong demand for 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. and ceramics ceramics (sərăm`ĭks), materials made of nonmetallic minerals that have been permanently hardened by firing at a high temperature, or objects made of such materials. used in the manufacture of jet engines, and titanium used in the manufacture of structural components. Demand for aerospace materials was particularly strong due to the number and models of aircraft being built. The new, wide-body aircraft typically require a greater use of lighter-weight materials such as titanium. Medical market sales increased 40 percent primarily as a result of a richer product mix, growth in international markets, and increased selling prices. Sales to the power generation market increased 10 percent. Adjusted for sales of a divested business, sales to this market increased 30 percent in the third quarter compared to the same quarter a year ago. The increase reflected solid demand as a result of industrial gas turbine turbine, rotary engine that uses a continuous stream of fluid (gas or liquid) to turn a shaft that can drive machinery. A water, or hydraulic, turbine is used to drive electric generators in hydroelectric power stations. new build and maintenance activity. Sales to the consumer market were up 6 percent compared to a year ago. An increase in sales to the electronics, sporting goods Noun 1. sporting goods - sports equipment sold as a commodity commodity, trade good, good - articles of commerce sports equipment - equipment needed to participate in a particular sport and housing markets was tempered by the 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 sales 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. Sales to the automotive and truck markets decreased 7 percent. An increase in sales of higher value materials for the heavy duty truck market was more than offset by lower sales of materials used in engine components and in general applications. Industrial market sales decreased 10 percent as higher sales to the energy market were offset by reduced sales of materials to capital equipment manufacturers. 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 48 percent from a year ago and represented 33 percent of third quarter sales. International sales reflected strong demand for higher value materials, particularly in the aerospace and power generation markets. Carpenter's third quarter gross profit increased 46 percent to $124.1 million, or 29.1 percent of sales, from $85.2 million, or 24.9 percent of sales, in the same quarter a year ago. The 420 basis point increase in the gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. reflected a richer product mix, driven primarily by demand for higher value materials from the aerospace, power generation and medical markets, reduced sales of marginally profitable products, and higher base selling prices. Margins also benefited from the ongoing lean and variation reduction initiatives. Carpenter's third 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 63 percent to $92.3 million, or 21.7 percent of sales, from $56.6 million, or 16.5 percent of sales, a year ago. The increase resulted from improved gross margins and diligent dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d management of selling and administrative expenses. Outlook "Our operating performance through the balance of this fiscal year should benefit from the momentum in the aerospace market, as well as from the strength in other key markets," Torcolini said. "We are focused on leveraging these opportunities through our continuous efforts in lean and variation reduction in order to further enhance margins. "In the past quarter, J. Michael Fitzpatrick Michael Fitzpatrick may refer to:
Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. shareholder value." Despite volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in order patterns characteristic of a tight supply chain, Carpenter expects that its current fourth quarter operating performance will show year-over-year improvement. Also, Carpenter continues to estimate that its free cash flow will exceed $150 million for fiscal 2006. The estimate was confirmed despite increased working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. caused by a higher value mix and by additions to inventory needed to support higher sales. Segment Results - Third Quarter Specialty Metals Net sales for the quarter ended March 31, 2006 for the Specialty Metals segment, which includes Specialty Alloys 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 $400.3 million, compared to $311.1 million in the same quarter a year ago. SAO sales increased 28 percent from the same quarter a year ago. The increase was due primarily to increased demand for higher value materials from the aerospace, power generation and consumer markets, and higher base prices. SAO volume was flat with the same quarter a year ago. Increased volumes across several key end-use markets were offset by lower shipments to the automotive and industrial markets and the reduction in the sale of marginally profitable products. Dynamet's sales increased 65 percent in the third quarter versus a year ago. Robust demand from the aerospace market for materials used in structural fasteners fasteners In construction, connectors between structural members. Bolted connections are used when it is necessary to fasten two elements tightly together, especially to resist shear and bending, as in column and beam connections. , continued growth in the domestic and international medical markets, and higher base selling prices were principally responsible for the sales growth. The sales increase also reflected significantly higher titanium costs. CPP's sales were 8 percent lower than a year ago. Increased sales to the industrial market were more than offset by reduced sales to the automotive market and the reduction in the sale of marginally profitable products. Operating income for the Specialty Metals segment was $93.1 million, compared to $52.6 million a year ago. The increase in operating income reflected increased sales of higher value materials, higher base prices and a continued focus on 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 This article is about ceramic materials. For the fine art, see Ceramic art. The word ceramic is derived from the Greek word κεραμικός (keramikos). components, were $26.3 million, compared to $31.9 million a year ago. Last year's third quarter included $6.2 million in sales from a business that was divested in the fourth quarter of fiscal 2005. Higher sales to the automotive, aerospace and consumer markets were the primary contributors to the increased sales. In the third quarter, operating income for the Engineered Products segment was $4.3 million compared to $5.6 million in the third quarter of 2005. The decrease is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to lower operating income in the ceramics business and the absence of operating income from the divested business. Segment Results - Year-to-Date Specialty Metals Net sales for the first nine months of fiscal 2006 for the Specialty Metals segment were $1.0 billion, compared to $858.6 million for the same period a year ago. SAO sales increased 19 percent from the same period a year ago due to solid demand for higher value materials from the aerospace, power generation and medical markets, and pricing actions. SAO volume decreased 12 percent from the same period a year ago due to the intentional reduction in the sale of marginally profitable products and lower shipments primarily to the industrial, consumer and automotive markets. Dynamet's sales increased 61 percent during the first nine months of fiscal 2006 compared to the same period a year ago. Robust demand from the aerospace market, continued growth in the domestic and international medical markets, and higher base selling prices were principally responsible for sales growth. CPP's sales were 13 percent higher than a year ago due to higher selling prices, stronger demand from the industrial market, and a better product mix. Operating income for the Specialty Metals segment was $217.4 million for the first nine months of fiscal 2006 as compared to $125.5 million for the same period a year ago. The increase in operating income reflected increased sales of higher value materials, higher base prices, and continued operational improvements. Engineered Products Segment Net sales for the Engineered Products segment through the first nine months of fiscal 2006 were $76.6 million as compared to $95.6 million for the same period a year ago. Sales in the first nine months of fiscal 2005 included $23.1 million from the business that was subsequently divested. This group of companies experienced increased sales to the automotive, aerospace, and power generation markets, and higher base selling prices. Operating income for the Engineered Products segment was $13.7 million compared to $16.4 million during the first nine months of fiscal 2005. The decrease is primarily attributable to operating income from the divested business included in the first nine months of fiscal 2005. Net Pension Expense In the third quarter of 2006, 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 $2.7 million. This was partially 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, which resulted in net pension expense of $0.06 per diluted share. This compares to pre-tax net pension expense of $0.6 million, or less than $0.01 per diluted share, for the same quarter a year ago. The increase in the net pension expense in the third quarter of fiscal 2006 primarily reflects a decrease in the discount rate from 6.25% to 5.00%. The net pension amount is actuarially determined as of each June June: see month. 30 and typically held constant throughout the fiscal year. 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 third quarter of fiscal 2006, selling and administrative expenses were $31.8 million, or 7.5 percent of sales, compared to $28.6 million, or 8.4 percent of sales, in the same quarter a year ago. For the first nine months of fiscal 2006, selling and administrative expenses were $89.7 million, or 8.0 percent of sales, compared to $85.9 million, or 9.0 percent of sales, for the first nine months of fiscal 2005. Interest expense for the quarter of $5.9 million was unchanged from the third quarter a year ago. For the first nine months of fiscal 2006, interest expense was $17.8 million compared to $17.6 million in the same period a year ago. Other income in the quarter was $4.0 million compared to $2.4 million in last year's third quarter. The increase in other income is primarily due to increased interest income from higher balances of invested cash. For fiscal 2006 year to date, other income rose to $15.8 million from $7.7 million for the comparable year ago period. The increase in other income is due primarily to increases in interest income from higher balances of invested cash and foreign exchange gains. Carpenter's income tax provision in the recent third quarter was $29.6 million, or 32.7 percent of pre-tax income, versus $17.8 million, or 33.5 percent, in the same quarter a year ago. For the first nine months of fiscal 2006, Carpenter's income tax provision was $74.0 million, or 34.0 percent of pre-tax income, versus $39.8 million, or 31.2 percent, for the same period a year ago. For the first nine months of fiscal 2005, Carpenter's income tax provision benefited from a $4.5 million favorable settlement of an outstanding tax matter. 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 third quarter was $53.3 million, compared with free cash flow of $46.1 million in the third quarter a year ago. Through the first nine months of fiscal 2006, free cash flow was $95.8 million, compared to $88.7 million for the same period a year ago. 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, April 24, at 10:00 AM, Eastern Time, to discuss the results of operations for the third quarter of fiscal 2006. 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, 2005, its subsequent Form 10-Q Form 10-Q See 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, industrial, automotive, consumer, medical and power generation, 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 Nine Months Ended
March 31 March 31
--------------- ------------------
2006 2005 2006 2005
------- ------- --------- --------
NET SALES $426.0 $342.1 $1,117.7 $951.8
Cost of sales 301.9 256.9 808.2 728.6
------- ------- --------- --------
Gross profit 124.1 85.2 309.5 223.2
Selling and administrative expenses 31.8 28.6 89.7 85.9
------- ------- --------- --------
Operating income 92.3 56.6 219.8 137.3
Interest expense 5.9 5.9 17.8 17.6
Other income, net (4.0) (2.4) (15.8) (7.7)
------- ------- --------- --------
Income before income taxes 90.4 53.1 217.8 127.4
Income taxes 29.6 17.8 74.0 39.8
------- ------- --------- --------
NET INCOME $60.8 $35.3 $143.8 $87.6
======= ======= ========= ========
EARNINGS PER COMMON SHARE:
Basic $2.39 $1.43 $5.67 $3.60
======= ======= ========= ========
Diluted $2.32 $1.38 $5.51 $3.48
======= ======= ========= ========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic 25.3 24.4 25.2 24.0
======= ======= ========= ========
Diluted 26.1 25.4 25.9 25.0
======= ======= ========= ========
Cash dividends per common share $0.15 $0.10 $0.45 $0.2825
======= ======= ========= ========
PRELIMINARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Nine Months Ended
March 31
-------------------
2006 2005
--------- ---------
OPERATIONS:
Net income $143.8 $87.6
Adjustments to reconcile net income to
net cash provided from operations:
Depreciation 34.1 35.0
Amortization 1.4 2.8
Deferred income taxes (3.0) 17.7
Net pension expense 8.1 1.8
Net loss on asset disposals 0.3 0.3
Changes in working capital and other:
Receivables (40.2) (30.3)
Inventories (34.0) (38.7)
Other current assets 7.2 (4.0)
Accounts payable 7.8 15.3
Accrued current liabilities 4.3 21.5
Other, net (8.2) (4.2)
--------- ---------
Net cash provided from operations 121.6 104.8
--------- ---------
INVESTING ACTIVITIES:
Purchases of plant, equipment and software (13.7) (8.8)
Proceeds from disposals of plant and equipment 0.3 0.6
Purchases of marketable securities (271.1) (138.8)
Sales of marketable securities 312.7 69.1
--------- ---------
Net cash provided from (used for) investing
activities 28.2 (77.9)
--------- ---------
FINANCING ACTIVITIES:
Net change in short-term debt -- (1.3)
Payments on long-term debt (0.2) --
Dividends paid (12.4) (7.9)
Proceeds from issuance of common stock 12.4 46.1
--------- ---------
Net cash (used for) provided from financing
activities (0.2) 36.9
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents 1.1 (2.3)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 150.7 61.5
Cash and cash equivalents at beginning of period 163.8 76.6
--------- ---------
Cash and cash equivalents at end of period $314.5 $138.1
========= =========
Certain reclassifications of prior year's amounts have been made to
conform with current year's presentation.
PRELIMINARY
CONSOLIDATED BALANCE SHEET
(in millions)
March 31 June 30
2006 2005
----------- ----------
ASSETS
Current assets:
Cash and cash equivalents $314.5 $163.8
Marketable securities 65.0 106.6
Accounts receivable, net 232.7 193.4
Inventories 262.1 228.6
Deferred income taxes 8.5 7.4
Other current assets 22.6 31.8
----------- ----------
Total current assets 905.4 731.6
Property, plant and equipment, net 548.0 569.2
Prepaid pension cost 248.0 250.8
Goodwill 46.4 46.4
Trademarks and trade names, net 20.4 21.1
Other assets 33.5 34.3
----------- ----------
Total assets $1,801.7 $1,653.4
=========== ==========
LIABILITIES
Current liabilities:
Accounts payable $141.0 $133.4
Accrued liabilities 119.9 115.5
Current portion of long-term debt 0.2 0.2
----------- ----------
Total current liabilities 261.1 249.1
Long-term debt, net of current portion 333.2 333.7
Accrued postretirement benefits 102.9 108.5
Deferred income taxes 189.3 192.5
Other liabilities 46.1 45.4
----------- ----------
Total liabilities 932.6 929.2
----------- ----------
STOCKHOLDERS' EQUITY
Convertible preferred stock 18.3 19.7
Common stock 132.1 129.7
Capital in excess of par value - common stock 290.2 278.1
Reinvested earnings 485.9 354.5
Common stock in treasury, at cost (36.0) (35.8)
Deferred compensation (5.7) (9.2)
Accumulated other comprehensive loss (15.7) (12.8)
----------- ----------
Total stockholders' equity 869.1 724.2
----------- ----------
Total liabilities and stockholders' equity $1,801.7 $1,653.4
=========== ==========
PRELIMINARY
SEGMENT FINANCIAL DATA
(in millions)
Three Months
Ended Nine Months Ended
March 31 March 31
--------------- -----------------
2006 2005 2006 2005
------- ------- --------- -------
Net sales:
Specialty Metals $400.3 $311.1 $1,042.5 $858.6
Engineered Products 26.3 31.9 76.6 95.6
Intersegment (0.6) (0.9) (1.4) (2.4)
------- ------- --------- -------
Consolidated net sales $426.0 $342.1 $1,117.7 $951.8
======= ======= ========= =======
Operating income:
Specialty Metals $93.1 $52.6 $217.4 $125.5
Engineered Products 4.3 5.6 13.7 16.4
Corporate costs (7.2) (5.3) (18.7) (15.3)
Pension earnings, interest &
deferrals 2.6 3.7 7.8 11.1
Intersegment (0.5) --- (0.4) (0.4)
------- ------- --------- -------
Consolidated operating income $92.3 $56.6 $219.8 $137.3
======= ======= ========= =======
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."
PRELIMINARY
SELECTED FINANCIAL MEASURES
(in millions, except per share data)
Three Months Nine Months
Ended Ended
March 31 March 31
------------- ---------------
FREE CASH FLOW 2006 2005 2006 2005
------ ------ ------- -------
Net cash provided from operations $60.7 $52.4 $121.6 $104.8
Purchases of plant, equipment and
software (3.5) (4.0) (13.7) (8.8)
Proceeds from disposals of plant and
equipment 0.3 0.4 0.3 0.6
Dividends paid (4.2) (2.7) (12.4) (7.9)
------ ------ ------- -------
Free cash flow $53.3 $46.1 $95.8 $88.7
====== ====== ======= =======
Free cash flow is a measure of cash generated which management
evaluates for alternative uses.
Three Months Nine Months
Ended Ended
March 31 March 31
------------- ---------------
NET PENSION EXPENSE 2006 2005 2006 2005
------ ------ ------- -------
Pension plan expense (income) $1.5 ($0.6) $4.5 ($1.8)
Other postretirement benefits expense 1.2 1.2 3.6 3.6
------ ------ ------- -------
Pre-tax net pension expense 2.7 0.6 8.1 1.8
Income tax benefit (1.3) (0.5) (3.8) (1.6)
------ ------ ------- -------
Net pension expense $1.4 $0.1 $4.3 $0.2
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Net pension expense per share $0.06 $0.00 $0.17 $0.01
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Weighted average diluted common shares 26.1 25.4 25.9 25.0
====== ====== ======= =======
Grouping these retirement benefits together, and discussing
changes in this volatile net expense is helpful in analyzing the
operational performance of the company.
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