Kaydon Corporation Reports Fourth Quarter and Full Year 2005 Results.ANN ARBOR Ann Arbor, city (1990 pop. 109,592), seat of Washtenaw co., S Mich., on the Huron River; inc. 1851. It is a research and educational center, with a large number of government and industrial research and development firms, many in high-technology fields such as , Mich. -- Kaydon Corporation (NYSE NYSE See: New York Stock Exchange :KDN KDN Korea Electric Power Data Network Co, Ltd KDN Kenya Data Networks Limited (Nairobi, Kenya) ) today announced financial results for the fourth quarter and full year ended December December: see month. 31, 2005. Fourth quarter sales of continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the were up 24.1 percent, after tax income from continuing operations increased 53.5 percent and 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 from continuing operations were up 48.4 percent, to $.46, versus the comparable period last year. On a full-year basis, sales of continuing operations were up 19.5 percent, after tax income from continuing operations increased 28.0 percent and diluted earnings per share from continuing operations were up 24.6 percent, to $1.52, versus 2004. Highlights - Continuing Operations - Full Year 2005 Highlights compared with Full Year 2004 --Sales, including recent acquisitions, increased 19.5 percent, to $354.6 million, on strengthened demand across most key product lines. --After tax income increased 28.0 percent to $46.5 million. --Diluted earnings per share increased 24.6 percent to $1.52. --Order entry increased 25.5 percent to $398.3 million. --Ending backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. increased 47.8 percent to $150.2 million. --Cash and cash equivalents increased to $320.8 million. --EBITDA, a non-GAAP measure, increased 14.8 percent to $86.7 million, equal to 24.4 percent of sales, and covered interest expense by more than 9.0 times. Brian The name Brian (sometimes spelled Bryan) comes from an Irish backround. It is of Celtic origin and its meaning may be "hill" or "strong, noble, and high"[1]. P. Campbell Campbell, city, United States Campbell, city (1990 pop. 36,048), Santa Clara co., W Calif., in the fertile Santa Clara valley; founded 1885, inc. 1952. , Kaydon's President and Chief Executive Officer commented, "We are pleased with our fourth quarter and full year results, both of which improved nicely over 2004's comparable periods. Our strong order intake intake /in·take/ (in-tak´) the substances, or the quantities thereof, taken in and utilized by the body. intake, n the substance or quantities thereof taken in and used by the body. during the year and the resultant This article is about the resultant of polynomials. For the result of adding two or more vectors, see Parallelogram rule. For the technique in organ building, see Resultant (organ). In mathematics, the resultant of two monic polynomials year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. backlog, reflect the strength in our key markets during the year. Our performance also reflects the success of our efforts to drive growth through new product development and application engineering, our continued success in providing performance critical products to meet demanding customer needs, and our operational excellence initiatives." Additional Data on Fourth Quarter and Full Year 2005 Results Sales of continuing operations during the fourth quarter of 2005 equaled $89.7 million compared to $72.2 million during the fourth quarter of 2004, a 24.1 percent increase. Increased sales across most of the Company's product lines, including 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. bearings, split roller bearings roller bearing One of the two types of rolling, or antifriction, bearings, the other being the ball bearing. Like a ball bearing, a roller bearing has two grooved tracks, but the balls are replaced by rollers. The rollers may be cylinders or shortened cones. , sealing products, and metal forming Metal forming Manufacturing processes by which parts or components are fabricated from metal stock. In the specific technical sense, metal forming involves changing the shape of a piece of metal. equipment were only partially offset by decreases totaling $1.1 million related to lower sales of certain filtration filtration: see sewerage; water supply. Filtration The separation of solid particles from a fluidsolids suspension of which they are a part by passage of most of the fluid through a septum or membrane that retains most of the solids products, specialty metal 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 specialty ball products. Sales of continuing operations for the full year 2005 were $354.6 million, an increase of 19.5 percent compared to $296.7 million during 2004. Gross profit from continuing operations equaled $37.2 million or 41.5 percent of sales during the fourth quarter of 2005 as compared to $29.9 million or 41.4 percent of sales during the fourth quarter of 2004. Although higher material costs continued to have an impact on gross margins during the fourth quarter of 2005, they were substantially offset by selling price increases initiated during the third quarter of 2005. Affected by operating inefficiencies during the first half of the year related to new programs for military and wind power applications and by higher material costs that were not offset by selling price increases, gross profit from continuing operations equaled $139.0 million or 39.2 percent of sales during the full year 2005 as compared to $121.2 million or 40.8 percent of sales during the full year 2004. Selling, general, and administrative ("SG&A") expenses of continuing operations equaled $17.6 million during the fourth quarter of 2005, as compared to $14.2 million during the fourth quarter of 2004. Both amounts represented 19.7 percent of sales. During the fourth quarter, costs associated with Sarbanes-Oxley compliance declined $1.1 million when compared to 2004. At the same time, we experienced increased SG&A costs related to higher sales volumes and increased amortization primarily associated with recent acquisitions. SG&A expenses of continuing operations equaled $68.9 million, or 19.4 percent of sales, during the full year 2005 as compared to $58.8 million, or 19.8 percent of sales, during full year 2004. 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. from continuing operations during the fourth quarter of 2005 was $19.5 million, or 21.8 percent of sales, compared to $15.7 million, or 21.7 percent of sales in 2004, an increase of 24.5 percent. Operating income from continuing operations during full year 2005 was $70.2 million, compared to $62.4 million in 2004. Interest income increased to $3.0 million during the fourth quarter of 2005, compared with $1.4 million during the fourth quarter of 2004. Interest income increased to $8.7 million during full year 2005, compared with $4.0 million during 2004. The effective tax rate for continuing operations for the fourth quarter of 2005 was 28.7 percent, reflecting $1.1 million of reductions to the tax provision resulting from several tax audit settlements during the quarter related to deductions previously not recognized for financial reporting purposes. The fourth quarter 2005 effective tax rate also reflects the elimination of a valuation allowance attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the expected utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of foreign net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. that were previously not expected to be realized, additional deductions available under the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Jobs Creation Act of 2004, and an increase in the U.S. federal tax benefit of the Extraterritorial ex·tra·ter·ri·to·ri·al adj. 1. Located outside territorial boundaries: fishing in extraterritorial waters. 2. Income Exclusion exclusion /ex·clu·sion/ (eks-kloo´zhun) 1. a shutting out or elimination. 2. surgical isolation of a part, as of a segment of intestine, without removal from the body. . The effective tax rate during the fourth quarter of 2004 was 36.0 percent. For the full year 2005, the effective tax rate for continuing operations was 32.9 percent compared to 36.0 percent in 2004. The Company expects the effective tax rate for 2006 to be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 36.0 percent. Income from continuing operations for the fourth quarter of 2005 was $14.4 million or $.46 per share on a 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. basis, based on 34.7 million common shares outstanding. During the fourth quarter of 2004 Kaydon generated income from continuing operations of $9.4 million or $.31 per share on a diluted basis, based on 34.8 million common shares outstanding. Income from continuing operations for the full year 2005 was $46.5 million or $1.52 per share on a diluted basis, based on 34.7 million common shares outstanding, and full year 2004 income from continuing operations was $36.3 million or $1.22 per share on a diluted basis, based on 34.8 million common shares outstanding. Income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. for the full year 2005 equaled $27.4 million, including the after tax gain of $25.4 million on the sale of the Power and Data Transmission Products Group. Diluted earnings per share from discontinued operations for the full year 2005 were $.79, based on 34.7 million common shares outstanding. Income from discontinued operations for 2004 equaled $2.0 million, and diluted earnings per share from discontinued operations were $.06, based on 34.8 million common shares outstanding. Including discontinued operations, net income for the full year 2005 was $73.9 million, equal to diluted earnings per share of $2.30. Net income for 2004 was $38.4 million, or $1.27 per share on a diluted basis. Reflecting increased orders for many of our specialty products from various key markets, order entry for continuing operations during the fourth quarter of 2005 equaled $112.7 million, making it the strongest quarter of the year, and bringing total order entry for 2005 to $398.3 million, a 25.5 percent increase over 2004. Backlog equaled $150.2 million at December 31, 2005, a 47.8 percent increase compared to a backlog for continuing operations of $101.6 million at December 31, 2004. Affected by a $16.6 million tax payment related to the gain on sale of discounted operations, net cash flow from operating activities of continuing operations during the fourth quarter 2005 equaled $10.1 million, compared to fourth quarter 2004 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 of $14.8 million. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. provided by net income and working capital items increased to $26.7 million before the effect of the tax payment. Also during the fourth quarter 2005, the Company paid common stock dividends of $3.4 million and invested $5.7 million in net capital expenditures. Net cash flow from operating activities for full year 2005 totaled $41.2 million, after giving effect to the $16.6 million tax payment related to the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). , compared to $48.2 million during 2004. During 2005, the Company invested $42.7 million for an acquisition, repurchased a total of 207,771 shares of Company common stock for $6.1 million, paid common stock dividends of $13.5 million, and invested $12.6 million in net capital expenditures. Depreciation and amortization of continuing operations equaled $4.2 million during the fourth quarter of 2005, compared to $3.3 million during the comparable period last year, due principally to the increased amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. associated with recent acquisitions. Depreciation and amortization of continuing operations for 2005 equaled $16.5 million, compared to $13.1 million in 2004. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become from continuing operations, or earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure. Segment Discussion During the fourth quarter of 2005 sales of the Friction and Motion Control Products segment equaled $51.0 million, a 22.9 percent increase over the fourth quarter of 2004. This segment continues to benefit from increased demand for specialty bearings utilized in defense, heavy equipment, wind power, and various industrial markets. Operating income during this year's fourth quarter equaled $14.6 million, a 36.4 percent increase compared to the $10.7 million generated in the fourth quarter of 2004. Although fourth quarter 2005 operating income continued to be affected by higher, but moderating, material costs and subcontracting expenses, these higher costs were substantially offset by selling price and capacity increases initiated during the third quarter. During 2005, sales of the Friction and Motion Control Products segment increased $31.2 million, to $195.0 million, or 19.0 percent when compared with 2004. Operating income increased $8.6 million or 20.9 percent, to $49.5 million. Sales for the fourth quarter 2005 of the Velocity Control Products segment were $11.0 million compared to sales of $12.3 million for the fourth quarter 2004. Due in part to lower Sarbanes-Oxley compliance costs at certain foreign locations, fourth quarter operating income increased $0.6 million, to $1.8 million. Aided by the small product line acquisition completed in September September: see month. 2004, full year 2005 sales of this segment increased 5.5 percent, to $53.8 million, compared with 2004. Operating income increased to $12.2 million compared to $11.8 million in 2004. Fourth quarter sales of the Sealing Products segment increased $3.1 million, or 45.0 percent, to $10.0 million as the segment benefited from increased demand from all its key markets. As was previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , fourth quarter 2004 sales were affected by a work stoppage stoppage - /sto'p*j/ Extreme lossage that renders something (usually something vital) completely unusable. "The recent system stoppage was caused by a fried transformer." at the Baltimore, Maryland "Baltimore" redirects here. For the surrounding county, see Baltimore County, Maryland. For other uses, see Baltimore (disambiguation). Baltimore is an independent city located in the state of Maryland in the United States. facility. Operating income of $2.1 million increased $1.9 million when compared with the fourth quarter of 2004, despite increased material and energy costs. Primarily as a result of increased sales of new industrial seal seal, in zoology seal, carnivorous aquatic mammal with front and hind feet modified as flippers, or fin-feet. The name seal is sometimes applied broadly to any of the fin-footed mammals, or pinnipeds, including the walrus, the eared seals (sea lion and fur products and industrial seal maintenance services, full year 2005 sales of this segment increased 10.3 percent, to $38.5 million, when compared with 2004. Operating income for full year 2005 increased 2.5 percent to $5.9 million compared with operating income last year of $5.8 million. Full year 2004 included the $0.6 million favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. effect of certain reserve adjustments. Sales of the Company's remaining businesses equaled $17.6 million during the fourth quarter of 2005, an increase from fourth quarter 2004 of $6.1 million. Sales from a recent acquisition and increased sales of specialty metal forming equipment were partially offset by a decrease in sales of specialty metal alloys and liquid filtration products. Operating income for these businesses, affected by unfavorable sales mix sales mix See product mix. and costs associated with the consolidation of the manufacturing facilities of the liquid filtration products business, totaled $1.3 million in the fourth quarter of 2005 compared to $1.2 million in the fourth quarter of 2004. For full year 2005, sales of these businesses, including a recent acquisition, increased 43.1 percent, to $67.2 million, compared with 2004. Operating income increased to $4.6 million, compared with $2.2 million in 2004, which included a $1.9 million goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. loss. As previously disclosed, on July July: see month. 26, 2005 Kaydon Corporation sold its Power and Data Transmission Products Group. Up to the date of disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of , 2005 sales of the Group equaled $22.1 million and operating income was $3.0 million. For full year 2004, sales of the Group equaled $37.1 million and operating income was $3.1 million. The Group's operating income is reported as a component of income from discontinued operations. The Power and Data Transmission Products Group has been eliminated as a reportable segment. About Kaydon Kaydon Corporation is a leading designer and manufacturer of custom-engineered, performance-critical products, supplying a broad and diverse group of industrial, aerospace, medical and electronic equipment, and aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. customers. Conference call information: At 10:30 a.m. Eastern time today, Kaydon will host a fourth quarter and full year 2005 earnings conference call. The conference call can be accessed telephonically in a listen-only mode by dialing 1-800-500-0311 and providing the following passcode number: 852369. Participants are asked to dial in 10 minutes prior to the scheduled start time of the call. Alternatively, interested parties are invited to listen to the conference call 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: https://cis.premconf.com/sc/scw.dll/usr?cid=vlllrswnsddvswzdw or by logging on to the Kaydon Corporation website at: http://www.kaydon.com and accessing the conference call at the "4Q and Full Year 2005 Earnings Conference Call" icon. To accommodate those that are unable to listen at the scheduled start time, a replay of the conference call will be available telephonically beginning at 1:30 p.m. Eastern time today through Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , March 3, 2006 at 5:00 p.m. Eastern time. The replay is accessible by dialing 1-888-203-1112 and providing the following passcode number: 1465272. Additionally, interested parties can access an archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. of the conference call on the Kaydon Corporation website at http://www.kaydon.com . This press release contains 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 Securities Exchange Act of 1934 regarding the Company's plans, expectations, estimates and beliefs. Forward-looking statements are typically identified by words such as "believes," "anticipates," "estimates," "expects," "intends," "will," "may," "potential," "projects," "approximately" and other similar expressions, including statements regarding pending 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. , general economic conditions, competitive dynamics and the adequacy of capital resources. These forward-looking statements may include, among other things, projections of the Company's financial performance, anticipated growth, characterization A rather long and fancy word for analyzing a system or process and measuring its "characteristics." For example, a Web characterization would yield the number of current sites on the Web, types of sites, annual growth, etc. of and the Company's ability to control contingent liabilities Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. , and anticipated trends in the Company's businesses. These statements are only predictions, based on the Company's current expectation about future events. Although the Company believes the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, performance or achievements or that predictions or current expectations will be accurate. These forward-looking statements involve risks and uncertainties that could cause the Company's actual results, performance or achievements to differ materially from those expressed 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. by the forward-looking statements. In addition, the Company or persons acting on its behalf may from time to time publish or communicate other items that could also be construed to be forward-looking statements. Statements of this sort are or will be based on the Company's estimates, assumptions, and projections and are subject to risks and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. Kaydon does not undertake any responsibility to update its forward-looking statements or risk factors to reflect future events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . Certain non-GAAP performance measures are presented in this press release. These measures should be viewed as supplemental data, rather than as substitutes or alternatives to the most comparable GAAP performance measures.
KAYDON CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
----------------------------------------- ------------- -------------
Fourth Quarter Ended Full Year Ended
------------------------- ---------------------------
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
------------ ------------ ------------- -------------
Net sales $89,653,000 $72,221,000 $354,558,000 $296,731,000
Cost of sales 52,477,000 42,339,000 215,528,000 175,573,000
------------ ------------ ------------- -------------
Gross profit 37,176,000 29,882,000 139,030,000 121,158,000
Selling,
general, and
administrative
expenses 17,643,000 14,197,000 68,854,000 58,764,000
------------ ------------ ------------- -------------
Operating
income from
continuing
operations 19,533,000 15,685,000 70,176,000 62,394,000
Interest income 3,045,000 1,379,000 8,747,000 3,987,000
Interest
expense (2,376,000) (2,399,000) (9,579,000) (9,589,000)
------------ ------------ ------------- -------------
Income from
continuing
operations
before income
taxes 20,202,000 14,665,000 69,344,000 56,792,000
Provision for
income taxes 5,794,000 5,280,000 22,814,000 20,446,000
------------ ------------ ------------- -------------
Income from
continuing
operations 14,408,000 9,385,000 46,530,000 36,346,000
Income from
discontinued
operations
(including in
2005 the gain
on disposal
of
$40,969,000) - 973,000 43,943,000 3,143,000
Provision for
income taxes - 350,000 16,584,000 1,131,000
------------ ------------ ------------- -------------
Income from
discontinued
operations - 623,000 27,359,000 2,012,000
------------ ------------ ------------- -------------
Net income $14,408,000 $10,008,000 $73,889,000 $38,358,000
============ ============ ============= =============
Weighted
average common
shares
outstanding
Basic 27,772,000 27,846,000 27,800,000 27,872,000
Diluted 34,676,000 34,776,000 34,706,000 34,789,000
Earnings per
share -
continuing
operations
Basic $0.52 $0.34 $1.67 $1.30
============ ============ ============= =============
Diluted $0.46 $0.31 $1.52 $1.22
============ ============ ============= =============
Earnings per
share -
discontinued
operations
Basic $0.00 $0.02 $0.98 $0.07
============ ============ ============= =============
Diluted $0.00 $0.02 $0.79 $0.06
============ ============ ============= =============
Earnings per
share
Basic $0.52 $0.36 $2.66 $1.38
============ ============ ============= =============
Diluted $0.46 $0.33 $2.30 $1.27
============ ============ ============= =============
Dividends
declared per
share $0.12 $0.12 $0.48 $0.48
============ ============ ============= =============
KAYDON CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
----------------------------------------------------------------------
December 31, December 31,
2005 2004
------------- -------------
Assets:
Cash and cash equivalents $320,804,000 $278,586,000
Accounts receivable, net 50,869,000 41,641,000
Inventories, net 51,783,000 49,303,000
Assets of discontinued operations - 14,245,000
Other current assets 14,671,000 9,252,000
------------- -------------
Total current assets 438,127,000 393,027,000
Plant and equipment, net 79,603,000 76,039,000
Goodwill, net 117,168,000 100,260,000
Other intangible assets, net 24,288,000 9,053,000
Assets of discontinued operations - 23,251,000
Other assets 11,401,000 17,494,000
------------- -------------
Total assets $670,587,000 $619,124,000
============= =============
Liabilities and Shareholders' Equity:
Accounts payable $18,192,000 $15,626,000
Liabilities of discontinued operations - 3,632,000
Accrued expenses 26,552,000 24,438,000
------------- -------------
Total current liabilities 44,744,000 43,696,000
Long-term debt 200,000,000 200,066,000
Liabilities of discontinued operations - 139,000
Long-term liabilities 66,167,000 66,542,000
------------- -------------
Total long-term liabilities 266,167,000 266,747,000
Shareholders' equity 359,676,000 308,681,000
------------- -------------
Total liabilities and shareholders'
equity $670,587,000 $619,124,000
============= =============
KAYDON CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
----------------------------------------- ---------------------------
Fourth Quarter Ended Full Year Ended
--------------------------- ---------------------------
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
------------- ------------- ------------- -------------
Cash flows from
operating
activities:
Net income $14,408,000 $10,008,000 $73,889,000 $38,358,000
Adjustments to
reconcile net
income to
net cash from
operating
activities:
Income from
discontinued
operations,
net of tax - (623,000) (27,359,000) (2,012,000)
Depreciation
and
amortization 4,218,000 3,321,000 16,513,000 13,119,000
Deferred
financing
fees 387,000 393,000 1,560,000 1,574,000
Net change in
receivables,
inventories
and trade
payables 6,366,000 736,000 (7,046,000) (8,762,000)
Net change in
other assets
and
liabilities (15,275,000) 954,000 (16,333,000) 5,884,000
------------- ------------- ------------- -------------
Net cash from
operating
activities 10,104,000 14,789,000 41,224,000 48,161,000
Cash flows from
investing
activities:
Additions to
property,
plant and
equipment,
net (5,717,000) (4,511,000) (12,560,000) (11,141,000)
Proceeds from
the sale of
discontinued
operations (987,000) - 71,413,000 -
Acquisitions
of businesses,
net of cash
acquired - 100,000 (42,668,000) (3,864,000)
------------- ------------- ------------- -------------
Net cash from
(used in)
investing
activities (6,704,000) (4,411,000) 16,185,000 (15,005,000)
Cash flows from
financing
activities:
Cash dividends
paid (3,379,000) (3,389,000) (13,528,000) (13,541,000)
Payments on
debt (16,000) (15,000) (62,000) (90,000)
Debt issuance
costs (940,000) - (940,000) -
Proceeds from
exercise of
stock options - 73,000 1,000,000 115,000
Purchase of
treasury
stock - (299,000) (6,102,000) (2,117,000)
------------- ------------- ------------- -------------
Net cash used
in financing
activities (4,335,000) (3,630,000) (19,632,000) (15,633,000)
Effect of
exchange rate
changes on
cash and cash
equivalents 68,000 434,000 612,000 644,000
Cash from
discontinued
operations - 2,056,000 3,829,000 4,663,000
------------- ------------- ------------- -------------
Net increase
(decrease) in
cash and cash
equivalents (867,000) 9,238,000 42,218,000 22,830,000
Cash and cash
equivalents -
Beginning of
period 321,671,000 269,348,000 278,586,000 255,756,000
------------- ------------- ------------- -------------
Cash and cash
equivalents -
End of period $320,804,000 $278,586,000 $320,804,000 $278,586,000
============= ============= ============= =============
Reportable Segment Information
(Amounts in thousands)
Fourth Quarter Ended Full Year Ended
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
---------------------------------------------------
Net sales
Friction and Motion
Control Products
External customers $50,925 $41,397 $194,566 $163,491
Intersegment 40 82 428 332
----------- ----------- ----------- -----------
50,965 41,479 194,994 163,823
Velocity Control
Products
External customers 11,012 12,278 53,839 51,011
Intersegment - - (1) -
----------- ----------- ----------- -----------
11,012 12,278 53,838 51,011
Sealing Products
External customers 10,069 6,937 38,632 35,035
Intersegment (33) (14) (88) (79)
----------- ----------- ----------- -----------
10,036 6,923 38,544 34,956
Other
External customers 17,647 11,546 67,219 46,957
Intersegment (7) (5) (37) (16)
----------- ----------- ----------- -----------
17,640 11,541 67,182 46,941
Power and Data
Transmission Products
External customers - 10,607 22,399 37,317
Intersegment - (63) (302) (237)
----------- ----------- ----------- -----------
- 10,544 22,097 37,080
Total segment
net sales $89,653 $82,765 $376,655 $333,811
Net sales of
discontinued
operations - (10,544) (22,097) (37,080)
----------- ----------- ----------- -----------
Total
consolidated
net sales $89,653 $72,221 $354,558 $296,731
============ ============ ============ ============
Fourth Quarter Ended Full Year Ended
December 31, December 31, December 31, December 31,
Operating income 2005 2004 2005 2004
---------------------------------------------------
Friction and Motion
Control Products $14,620 $10,719 $49,502 $40,951
Velocity Control
Products 1,790 1,215 12,162 11,786
Sealing Products 2,120 194 5,944 5,797
Other 1,314 1,166 4,616 2,196
Power and Data
Transmission
Products - 973 2,974 3,143
----------- ----------- ----------- -----------
Total segment
operating
income 19,844 14,267 75,198 63,873
State income tax
provision included
in segment
operating income 612 299 1,862 1,141
Items not allocated
to segment
operating income (923) 2,092 (3,910) 523
Interest expense (2,376) (2,399) (9,579) (9,589)
Interest income 3,045 1,379 8,747 3,987
Operating income of
discontinued
operations - (973) (2,974) (3,143)
----------- ----------- ----------- -----------
Income from
continuing
operations
before income
taxes $20,202 $14,665 $69,344 $56,792
============ ============ ============ ============
Kaydon Corporation
Reconciliation of Non-GAAP Measures
(Amounts in Thousands)
Free cash flow (non-GAAP)
from continuing
operations Fourth Quarter Ended Full Year Ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net cash from
operating
activities
(GAAP) $10,104 $14,789 $41,224 $48,161
Capital
expenditures (5,717) (4,511) (12,560) (11,141)
------------ ------------ ------------ ------------
Free cash flow
(non-GAAP) $4,387 $10,278 $28,664 $37,020
============ ============ ============ ============
Kaydon's management believes free cash flow, a non-GAAP measure, is an
important indicator of the Company's ability to generate excess cash
above levels required for capital investment to support future growth.
However, it should be viewed as supplemental data, rather than as a
substitute or alternative to the GAAP performance measure.
Earnings before interest,
taxes, depreciation and
amortization-EBITDA (non-
GAAP) from
continuing
operations Fourth Quarter Ended Full Year Ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Income from
continuing
operations
(GAAP) $14,408 $9,385 $46,530 $36,346
Net interest
(income)/expense (669) 1,020 832 5,602
Income tax
expense 5,794 5,280 22,814 20,446
Depreciation and
amortization 4,218 3,321 16,513 13,119
------------ ------------ ------------ ------------
Earnings before
interest, taxes,
depreciation
and amortization-
EBITDA (non-
GAAP) $23,751 $19,006 $86,689 $75,513
============ ============ ============ ============
Kaydon's management believes EBITDA, or earnings before interest,
taxes, depreciation and amortization, a non-GAAP measure, is a gauge
of financial strength from continuing operations before financing
costs, investment income, taxes on income and non-cash charges. In
addition, EBITDA is widely used by financial analysts and investors,
and is utilized in measuring compliance with financial covenants in
the Company's credit agreement. Accordingly, EBITDA is a determinant
of the Company's capacity to incur additional senior capital to
enhance future profit growth and cash flow growth. However, it should
be viewed as supplemental data, rather than as a substitute or
alternative to the GAAP performance measure.
Kaydon Corporation
RESTATED QUARTERLY DATA FOR CONTINUING OPERATIONS
(in thousands except per share figures)
Earnings
Per Share
Net Operating Net ----------------
Quarter Sales Income Earnings Basic Diluted
-------- --------- --------- -------- ------ -------
2005
First $84,562 $15,122 $9,204 $0.33 $0.31
Second 94,473 18,104 11,273 0.41 0.37
Third 85,870 17,417 11,645 0.42 0.38
Fourth 89,653 19,533 14,408 0.52 0.46
--------- --------- -------- ------ -------
Total 2005 $354,558 $70,176 $46,530 $1.67 $1.52
========= ========= ======== ====== =======
Earnings
Per Share
Net Operating Net ----------------
Sales Income Earnings Basic Diluted
--------- --------- -------- ------ -------
2004
First $74,665 $15,471 $8,843 $0.32 $0.30
Second 76,831 16,768 9,726 0.35 0.32
Third 73,014 14,470 8,392 0.30 0.28
Fourth 72,221 15,685 9,385 0.34 0.31
--------- --------- -------- ------ -------
Total 2004 $296,731 $62,394 $36,346 $1.30 $1.22
========= ========= ======== ====== =======
Kaydon Corporation
RESTATED QUARTERLY DATA FOR DISCONTINUED OPERATIONS
OF THE POWER AND DATA TRANSMISSION PRODUCTS GROUP
(unaudited) (in thousands except per share figures)
Earnings
Per Share
Net Operating Net ----------------
Quarter Sales Income Earnings Basic Diluted
-------- --------- --------- -------- ------ -------
2005
First $9,920 $1,015 $675 $0.02 $0.02
Second 9,936 1,722 1,145 0.04 0.03
Third (1) 2,241 237 25,539 (2) 0.92 (2) 0.74 (2)
Fourth - - - - -
--------- --------- -------- ------ -------
Total 2005 $22,097 $2,974 $27,359 (2)$0.98 (2) $0.79 (2)
========= ========= ======== ====== =======
Earnings
Per Share
Net Operating Net ----------------
Sales Income Earnings Basic Diluted
--------- --------- -------- ------ -------
2004
First $8,658 $92 $59 $0.00 $0.00
Second 7,555 341 218 0.01 0.01
Third 10,323 1,737 1,112 0.04 0.03
Fourth 10,544 973 623 0.02 0.02
--------- --------- -------- ------ -------
Total 2004 $37,080 $3,143 $2,012 $0.07 $0.06
========= ========= ======== ====== =======
(1) Through date of disposition, July 26, 2005.
(2) Includes the gain on sale of $25.4 million after tax, or $0.91
basic earnings per share and $0.73 diluted earnings per share.
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