Watts Water Technologies Reports Fourth Quarter 2004 Results.NORTH ANDOVER North Andover (ăn`dōvər), town (1990 pop. 22,792), Essex co., NE Mass., on the Merrimack River, in a dairy and farm area; settled c.1644, set off from Andover and inc. 1855. , Mass. -- Watts Watts, residential section of south central Los Angeles. Named after C. H. Watts, a Pasadena realtor, the section became part of Los Angeles in 1926. Artist Simon Rodia's celebrated Watts Towers are there. Water Technologies, Inc. (NYSE NYSE See: New York Stock Exchange : WTS See Windows Terminal Server. ) today announced results for the fourth quarter ended December December: see month. 31, 2004, reflecting an increase in sales of 18% over the fourth quarter ended December 31, 2003. Sales were $221,406,000, an increase of $34,260,000, or 18%, compared to the fourth quarter of 2003. Net income was $8,161,000, a decrease of $1,580,000, or 16%, compared to the fourth quarter of 2003. Net income for the fourth quarters of 2004 and 2003 included losses 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. of $1,688,000 and $43,000, respectively. Income from 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 for the fourth quarter of 2004 was $9,849,000, or $0.30 per share, an increase of $65,000, or 1%, compared to income from continuing operations for the fourth quarter of 2003 of $9,784,000, or $0.34 per share. Income from continuing operations for the fourth quarter of 2004 and 2003 includes costs incurred for our manufacturing restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan of $408,000, or $0.01 per share, and $444,000, or $0.02 per share, respectively. The year ended December 31, 2004 reflected increases in sales and net income of 17% and 40%, respectively, over the year ended December 31, 2003. Sales were $824,558,000, an increase of $122,699,000, or 17%, compared to the year ended December 31, 2003. Net income for the year ended December 31, 2004, was $46,820,000, an increase of $13,458,000, or 40%, compared to the year ended December 31, 2003. Net income for the years ended December 31, 2004 and December 31, 2003 included losses from discontinued operations of $1,918,000 and $3,057,000, respectively. Income from continuing operations for the year ended December 31, 2004 was $48,738,000, or $1.49 per share, an increase of $12,319,000, or 34%, compared to income from continuing operations for the year ended December 31, 2003 of $36,419,000, or $1.32 per share. Income from continuing operations for the years ended December 31, 2004 and 2003 included net costs incurred for our manufacturing restructuring plan of $1,825,000, or $0.06 per share, and $1,084,000, or $0.04 per share, respectively. Earnings per share for the fourth quarter and the full year of 2004 reflect an increase of 15% and 18%, respectively, in outstanding shares resulting from the Company's public offering of Class A Common Stock in December 2003. During the fourth quarter of 2004, the Company identified and corrected errors related to certain accrued expenses Accrued Expense An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection. . The after tax adjustments necessary to correct these errors amounted to $2,289,000, or $0.07 per share. The portions of these adjustments that related to the year ended December 31, 2004 and the fourth quarter of 2004 were $1,520,000, or $0.05 per share and $411,000, or $0.01 per share, respectively. The impact of the amount that related to prior periods was not material to any of the financial statements of prior periods, thus the amount related to prior periods was also recorded in the fourth quarter of 2004. The Company estimates that it will record an additional after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charge of approximately $900,000, or $0.03 per share, for the nine months ended October October: see month. 2, 2005. The following table illustrates the effects of the adjustments on earnings per share from continuing operations and reconciles the unadjusted earnings per share to earnings per share under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting :
Fourth Quarter Ended Year Ended
December 31, 2004 December 31, 2004
------------------------------------------
As Reported $0.30 $1.49
Adjustments
Relating to 2004 $0.01 $0.05
Relating to earlier
periods $0.06 $0.02
Unadjusted $0.37 $1.56
In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Section 404 of the Sarbanes-Oxley Act See SOX. of 2002, management is in the process of performing its annual assessment of the effectiveness of the Company's internal control over financial reporting. In the course of performing its assessment, management has identified certain significant deficiencies, including a significant deficiency that led to the above described accounting error. Management has not yet completed its assessment and has not yet determined whether these deficiencies, individually or in the aggregate, constitute a material weakness. Patrick S. O'Keefe O'Keeffe, and Keeffe, are the anglicised versions of the Irish Ó Caoimh, from caomh, meaning "kind" or "gentle". The original Caomh from whom the family descend lived in the early eleventh century, and was a descendant of Art, King of Munster from 742 to 762. , Chief Executive Officer, commented, "Excluding the impact of the accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. adjustments, we are pleased with the results from all three of our geographic segments, North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and China. Our overall increase in sales was achieved by
internal growth, the contribution from acquired companies, and the
change in foreign exchange rates. In comparing sales from the fourth
quarter of 2003 to the fourth quarter of 2004, our internal growth rate
was 10% and contributed $18,791,000, the acquisitions of Orion Orion, in Greek mythologyOrion (ōrī`ən), in Greek mythology, Boeotian hunter. When Oenopion delayed giving his daughter Merope to him, Orion, when drunk, violated her. Enterprises, Inc, TEAM Precision Pipework, Ltd, and Flowmatic Systems, Inc. contributed $9,903,000, or 5%, and the change in foreign exchange rates contributed $5,566,000, or 3%, due primarily to the strengthening of the euro versus the U.S. dollar." "Our North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. segment sales for the fourth quarter of 2004 increased 20% to $144,972,000 compared to $120,400,000 for the fourth quarter of 2003. This increase in North American sales was due to internal sales growth of $16,623,000, or 14%, the inclusion of $7,221,0000 in sales from Orion Enterprises, Inc., acquired on May 21, 2004, and Flowmatic Systems, Inc., acquired on January January: see month. 5, 2004 and $728,000 due to favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign exchange rates associated with the strengthening of the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents versus the U.S. dollar." "Internal sales growth in the North American wholesale market increased 11% over the fourth quarter of 2003. This increase was led by increased sales of backflow backflow /back·flow/ (-flo) reflux or regurgitation (1). pyelovenous backflow drainage from the renal pelvis into the venous system occurring under certain conditions of back pressure. prevention units, as well as strength in our plumbing plumbing, piping systems inside buildings for water supply and sewage. The Romans had a highly developed plumbing system; water was brought to Rome by aqueducts and distributed to homes in lead pipes—hence the name plumbing from the Latin word plumbum and under-floor radiant heating radiant heating: see heating. radiant heating Heating system in which heat is transmitted by radiation from a heated surface. Radiant heating systems usually employ either electric-resistance wiring or hot-water heating pipes, which may embedded in product lines. Our internal sales growth in the North American home improvement retail market increased 21% for the fourth quarter of 2004 over the fourth quarter of 2003." "We derived 32% of our total sales for the fourth quarter of 2004 from Europe. European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. sales increased $8,329,000, or 14%, compared to the fourth quarter of 2003. This increase is comprised of $4,838,000 due to favorable foreign exchange rates associated with the strengthening of the euro versus the U.S. dollar, the inclusion of $2,682,000 in sales from TEAM Precision Pipework, Ltd., acquired on April 16, 2004 and internal sales growth of $809,000. This organic growth is predominately due to market share gains in the wholesale market partially offset by a soft quarter in the O.E.M. markets." "We are pleased with the positive operating trends in our Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. subsidiaries. The plants continue to increase capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. and gain manufacturing efficiencies. These increased manufacturing efficiencies allowed our Chinese operations to generate a profit for the third consecutive quarter. The full year operations of China were also profitable. In addition, we believe we will be able to sustain the profitability of our Chinese operations and, as a result, in the fourth quarter of 2004 we valued a 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 which provided a tax benefit of approximately $322,000, or $0.01 per share." "In the fourth quarter of 2004 we recorded pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of approximately $569,000 in cost of sales and $95,000 in restructuring for costs associated with our manufacturing restructuring program. Additionally, in this quarter we incurred and recorded pre-tax charges of approximately $2,973,000 for costs to comply with the requirements of Section 404 of the Sarbanes-Oxley Act." "We are particularly pleased with the Company's continued strong cash generation. Since the spin off of our industrial and oil and gas businesses in October 1999, we have continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. generated strong levels of cash from operations. We generated $40,210,000 of net cash provided by continuing operations for the year ended December 31, 2004. We had a particularly strong fourth quarter of 2004 generating $42,139,0000 of cash from continuing operations due to improved management of working capital. This strong performance in the fourth quarter resulted in $12,283,000 of free cash flow for the year ended December 31, 2004. (Please refer to Table 1 at the end of this press release for a reconciliation of free cash flow to net cash provided by continuing operations.) The impact of this free cash flow and our financing activities in 2003, net of investments in acquired companies, results in a net debt to capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. ratio of 16% at December 31, 2004. (Please refer to Table 2 at the end of this press release for a reconciliation of net debt to capitalization.) We are pleased that we have maintained a conservative capital structure while achieving the growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. which we have realized over the past several years. We maintain a $300,000,000 Revolving Line of Credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. of which $218,445,000 was unused and available at December 31, 2004." Loss from discontinued operations for the fourth quarter of 2004 was $1,688,000, or $0.05 per share, compared to loss from discontinued operations for the fourth quarter of 2003 of $43,000, or $0.00 per share. Loss from discontinued operations for the fourth quarter of 2004 includes an after tax charge of $783,000 or $0.02 per share, for the planned divesture Di`ves´ture n. 1. Divestiture. of Jameco International, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control and after tax charges of $905,000 attributable to legal fees associated with the James Jones James Jones is the name of:
When a person begins a civil lawsuit, the person enters into a process called litigation. . In the fourth quarter of 2004, the Company recorded an 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. charge to write down the investment in its minority owned subsidiary, Jameco International, LLC., to an estimated fair value. Prior periods reflect Jameco International, LLC as discontinued operations. On January 5, 2004, the Company acquired substantially all of the assets of Flowmatic Systems, Inc. located in Dunnellon, Florida Dunnellon is a city in Marion County, Florida, United States. The population was 1,898 at the 2000 census. As of 2004, the population recorded by the U.S. Census Bureau is 1,951. , for approximately $16,800,000 in cash. Flowmatic designs and distributes high quality reverse osmosis reverse osmosis n. The movement of a solvent in the opposite direction from osmosis in such a manner that the solvent moves from a solution of greater concentration through a membrane to a solution of lesser concentration. components and 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 equipment. Flowmatics product lines include stainless steel 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. and plastic housings, filter cartridges
On April 16, 2004, the Company acquired 90% of the outstanding stock of TEAM Precision Pipework, Ltd., located in Ammanford Coordinates: Ammanford (Welsh: Rhydaman) is the fourth largest town in the county of Carmarthenshire, Wales with a population 5,299 according to the 2001 census. , West Wales West Wales is the western area of Wales bordered by South Wales to the east. The area is loosely-defined, but is generally considered to include Pembrokeshire, Carmarthenshire, southern areas of Ceredigion, and sometimes the city of Swansea, . , United Kingdom for approximately $17,200,000 subject to final adjustments, if any, as stipulated in the purchase and sale agreement. TEAM custom designs and manufactures manipulated pipe and hose tubing assemblies, which are utilized in the heating ventilation ventilation, process of supplying fresh air to an enclosed space and removing from it air contaminated by odors, gases, or smoke. Proper ventilation requires also that there be a movement or circulation of the air within the space and that the temperature and and air conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. markets. TEAM is a supplier to major original equipment manufacturers of air conditioning systems and several of the major European automotive air conditioning manufacturers. On May 21, 2004, the Company acquired 100% of the stock of McCoy Enterprises, Inc., which we subsequently renamed Orion Enterprises, Inc. located in Kansas City, Kansas Kansas City, Kansas (KCK) is the third largest city in the U.S. state of Kansas and the county seat of Wyandotte County (WyCo); it is part of the "Unified Government"[2] which also includes the cities of Bonner Springs and Edwardsville. , for approximately $27,900,000 in cash. Orion distributes its products under the brand names of Orion, FloSafe and Laboratory Enterprises. Orion's product lines include a complete line of acid resistant waste disposal products, double containment containment Strategic U.S. foreign policy of the late 1940s and early 1950s intended to check the expansionist designs of the Soviet Union through economic, military, diplomatic, and political means. It was conceived by George Kennan soon after World War II. piping systems, as well as, a line of high purity Purity: see Pearl, The. Purity See also Modesty. almond symbol of the Virgin Mary’s innocence. [O.T.: Numbers 17: 1–11; Art: Hall, 14] crystal its transparency symbolizes pureness. pipes, fittings and faucets. On January 4, 2005, the Company acquired Sea Tech, Inc. located in Wilmington, North Carolina For other places with the same name, see Wilmington (disambiguation). Wilmington is a city in New Hanover County, North Carolina, United States. The population was estimated at 100,000 as of 2006;[1] in an asset purchase transaction for approximately $10,000,000 in cash. Sea Tech, which was established in 1995, provides cost effective solutions for fluidic flu·id·ic adj. 1. Of, relating to, or characteristic of a fluid. 2. Relating to or controlled by fluidics. connection needs. Sea Tech offers a wide range of standard and custom quick connect fittings, valves and manifolds This is a list of particular manifolds, by Wikipedia page. See also list of geometric topology topics. For categorical listings see and its subcategories. Generic families of manifolds
On January 5, 2005, the Company acquired HF Scientific, Inc. located in Fort Myers, Florida Fort Myers is the county seatGR6 and commercial center of Lee County, Florida. The population was 48,208 at the 2000 census. According to the 2006 U.S. Census Bureau's Estimates, the city had a population of 60,531. , in a stock purchase transaction for approximately $7,800,000 in cash. HF Scientific manufactures and distributes a line of instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. equipment, test kits and chemical reagents used for monitoring water quality in a variety of applications. Watts Water Technologies, Inc. will hold a live webcast of its conference call to discuss fourth quarter results for 2004 on February 24, 2005, at 10:00 a.m. Eastern Time. This press release and the live webcast can be accessed by visiting the Investors section of the Company's website at www.wattswater.com. Following the webcast, an archived version of the call will be available at the same address until 2006. Watts Water Technologies, Inc. is a world leader in the manufacture of innovative products to control the efficiency, safety, and quality of water within residential, commercial, and institutional applications. Its expertise in a wide variety of water technologies enables it to be a comprehensive supplier to the water industry. To supplement our unaudited consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge presented on a generally accepted accounting principles (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) basis, we sometimes use non-GAAP measures of net income, net income per share, income from continuing operations or income from continuing operations per share, net cash provided by continuing operations and, with respect to the effect of the adjustments made to correct the above described errors, earnings per share from continuing operations that we believe are appropriate to enhance an overall understanding of our historical financial performance and future prospects. The non-GAAP results, which are adjusted to exclude certain pre-tax charges, costs, expenses, gains and losses from the comparable GAAP measures, are an indication of our baseline The horizontal line to which the bottoms of lowercase characters (without descenders) are aligned. See typeface. baseline - released version performance before gains, losses or other charges that are considered by management to be outside of our core operating results. These non-GAAP results are among the primary indicators management uses as a basis for evaluating our financial performance as well as for forecasting future periods. For these reasons, management believes these non-GAAP measures can be useful to investors, potential investors and others. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income, income per share or other measures prepared in accordance with GAAP. This Press Release includes statements that are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These 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. reflect Watts Water Technologies' current views about future results of operations and other forward-looking information. In some cases you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will" and "would" or similar words. You should not rely on forward-looking statements because Watts' actual results may differ materially from those indicated by these forward-looking statements as a result of a number of important factors. These factors include, but are not limited to, the following: shortages in and pricing of raw materials and supplies including price increases by suppliers of raw materials and the Company's ability to pass these costs on to customers, loss of market share through competition, introduction of competing products by other companies, pressure on prices from competitors, suppliers, and/or customers, diversion A turning aside or altering of the natural course or route of a thing. The term is chiefly applied to the unauthorized change or alteration of a water course to the prejudice of a lower riparian, or to the unauthorized use of funds. of management's attention and costs associated with efforts to comply with Section 404 of the Sarbanes-Oxley Act of 2002, failure to meet the new requirements under Section 404 of the Sarbanes-Oxley Act of 2002, identification and disclosure of material weaknesses in our internal controls over financial reporting, failure to expand our markets through acquisitions, failure or delay in developing new products, lack of acceptance of new products, failure to manufacture products that meet required performance and safety standards Safety standards are standards designed to ensure the safety of products, activities or processes, etc. They may be advisory or compulsory and are normally laid down by an advisory or regulatory body that may be either voluntary or statutory. , foreign exchange rate fluctuations, cyclicality of industries, such as plumbing and heating wholesalers and home improvement retailers, in which the Company markets certain of its products, economic factors, such as the levels of housing starts and remodeling remodeling /re·mod·el·ing/ (re-mod´el-ing) reorganization or renovation of an old structure. bone remodeling , impacting the markets where the Company's products are sold, manufactured, or marketed, environmental compliance costs, product liability risks, the results and timing of the Company's manufacturing restructuring plan, changes in the status of current litigation, including the James Jones case, and other risks and uncertainties discussed under the heading "Certain Factors Affecting Future Results" in the Watts Water Technologies, Inc. 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 December 31, 2003 filed with the Securities Exchange Commission and other reports Watts files from time to time with the Securities and Exchange Commission. Watts does not intend to, and undertakes no duty to, update the information contained in this Press Release.
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share information)
(Unaudited)
Fourth Quarter Years Ended
Ended
December December December December
31, 31, 31, 31,
2004 2003 2004 2003
-------- -------- -------- --------
STATEMENTS OF INCOME
--------------------
Net sales $221,406 $187,146 $824,558 $701,859
Income from continuing
operations $ 9,849 $ 9,784 $ 48,738 $ 36,419
Loss from discontinued
operations (1,688) (43) (1,918) (3,057)
-------- -------- -------- --------
Net income $ 8,161 $ 9,741 $ 46,820 $ 33,362
======== ======== ======== ========
DILUTED EARNINGS PER SHARE
--------------------------
Weighted Average Number of
Common Shares & Equivalents 32,901 28,524 32,719 27,692
Earnings per Share:
Continuing operations $ 0.30 $ 0.34 $ 1.49 $ 1.32
Discontinued operations (0.05) (0.00) (0.06) (0.11)
-------- -------- -------- --------
Net income $ 0.25 $ 0.34 $ 1.43 $ 1.21
======== ======== ======== ========
Cash dividends per share $ 0.07 $ 0.07 $ 0.28 $ 0.25
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share information)
(Unaudited)
December December
31, 31,
ASSETS 2004 2003
--------- ---------
CURRENT ASSETS:
Cash and cash equivalents $ 92,513 $ 149,001
Trade accounts receivable, less allowance for
doubtful accounts of
$7,551 at Decmber 31, 2004 and $7,772 at
December 31, 2003 150,073 135,170
Inventories, net:
Raw materials 53,942 41,998
Work in process 28,020 21,870
Finished goods 121,082 90,253
--------- ---------
Total Inventories 203,044 154,121
Prepaid expenses and other assets 14,359 10,355
Deferred income taxes 27,463 23,889
Assets of discontinued operations 10,227 10,358
--------- ---------
Total Current Assets 497,679 482,894
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 321,655 284,087
Accumulated depreciation (170,966) (138,521)
--------- ---------
Property, plant and equipment, net 150,689 145,566
--------- ---------
OTHER ASSETS:
Goodwill 226,178 184,901
Other 49,702 27,557
--------- ---------
TOTAL ASSETS $ 924,248 $ 840,918
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 73,606 $ 73,607
Accrued expenses and other liabilities 64,604 54,843
Accrued compensation and benefits 29,679 18,466
Current portion of long-term debt 4,981 11,689
Liabilities of discontinued operations 24,303 16,031
--------- ---------
Total Current Liabilities 197,173 174,636
--------- ---------
LONG-TERM DEBT, NET OF CURRENT PORTION 180,562 179,061
DEFERRED INCOME TAXES 19,578 15,978
OTHER NONCURRENT LIABILITIES 26,632 25,085
MINORITY INTEREST 7,515 9,767
STOCKHOLDERS' EQUITY:
Preferred Stock, $.10 par value; 5,000,000
shares authorized; no shares issued
or outstanding - -
Class A Common Stock, $.10 par value;
80,000,000 shares authorized;
1 vote per share; issued and outstanding:
25,049,338 shares at
December 31, 2004 and 24,459,121 shares at
December 31, 2003 2,505 2,446
Class B Common Stock, $.10 par value;
25,000,000 shares authorized;
10 votes per share; issued and
outstanding: 7,343,880 shares at
December 31, 2004 and 7,605,224 shares at
December 31, 2003 734 761
Additional paid-in capital 139,434 132,983
Deferred compensation (648) -
Retained earnings 324,145 286,396
Accumulated other comprehensive income 26,618 13,805
--------- ---------
Total Stockholders' Equity 492,788 436,391
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 924,248 $ 840,918
========= =========
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share information)
(Unaudited)
Fourth Quarter Years Ended
Ended
------------------ ------------------
December December December December
31, 31, 31, 31,
2004 2003 2004 2003
-------- -------- -------- --------
Net sales $221,406 $187,146 $824,558 $701,859
Cost of goods sold 145,752 120,983 533,997 461,994
-------- -------- -------- --------
GROSS PROFIT 75,654 66,163 290,561 239,865
Selling, general &
administrative expenses 60,058 46,077 207,590 169,438
Restructuring 95 312 95 426
-------- -------- -------- --------
OPERATING INCOME 15,501 19,774 82,876 70,001
-------- -------- -------- --------
Other (income) expense:
Interest income (343) (299) (1,135) (1,043)
Interest expense 2,634 3,545 10,564 12,108
Minority interest 308 (106) 1,203 (554)
Other 67 877 (428) 748
-------- -------- -------- --------
2,666 4,017 10,204 11,259
-------- -------- -------- --------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 12,835 15,757 72,672 58,742
Provision for income taxes 2,986 5,973 23,934 22,323
-------- -------- -------- --------
INCOME FROM CONTINUING
OPERATIONS 9,849 9,784 48,738 36,419
Loss from discontinued
operations, net of taxes (1,688) (43) (1,918) (3,057)
-------- -------- -------- --------
NET INCOME $ 8,161 $ 9,741 $ 46,820 $ 33,362
======== ======== ======== ========
BASIC EPS
Income (loss) per share:
Continuing operations $ 0.30 $ 0.35 $ 1.51 $ 1.33
Discontinued operations (0.05) (0.00) (0.06) (0.11)
-------- -------- -------- --------
NET INCOME $ 0.25 $ 0.35 $ 1.45 $ 1.22
======== ======== ======== ========
Weighted average number of
shares 32,369 28,184 32,276 27,455
======== ======== ======== ========
DILUTED EPS
Income (loss) per share:
Continuing operations $ 0.30 $ 0.34 $ 1.49 $ 1.32
Discontinued operations (0.05) (0.00) (0.06) (0.11)
-------- -------- -------- --------
NET INCOME $ 0.25 $ 0.34 $ 1.43 $ 1.21
======== ======== ======== ========
Weighted average number of
shares 32,901 28,524 32,719 27,692
======== ======== ======== ========
Dividends per share $ 0.07 $ 0.07 $ 0.28 $ 0.25
======== ======== ======== ========
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
Net Sales
Fourth Quarter Years Ended
Ended
----------------- -----------------
December December December December
31, 31, 31, 31,
2004 2003 2004 2003
-------- -------- -------- --------
North America 144,972 120,400 545,139 472,518
Europe 69,834 61,505 253,234 210,614
China 6,600 5,241 26,185 18,727
-------- -------- -------- --------
Total 221,406 187,146 824,558 701,859
======== ======== ======== ========
Operating Income
Fourth Quarter Years Ended
Ended
----------------- -----------------
December December December December
31, 31, 31, 31,
2004 2003 2004 2003
-------- -------- -------- --------
North America 13,755 17,391 68,558 64,375
Europe 8,137 6,969 31,597 22,592
China 581 (980) 1,857 (3,834)
Corporate (6,972) (3,606) (19,136) (13,132)
-------- -------- -------- --------
Total 15,501 19,774 82,876 70,001
======== ======== ======== ========
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
TABLE 1
RECONCILIATION OF NET CASH PROVIDED BY CONTINUING OPERATIONS TO FREE
CASH FLOW
(Thousands)
(Unaudited)
Years Ended
December December
31, 31,
2004 2003
-------- --------
Net cash provided by continuing operations $ 40,210 $ 51,068
Less: additions to property, plant, and equipment (20,999) (20,030)
Plus: proceeds from the sale of property, plant,
and equipment 2,143 1,765
Less: dividends (9,071) (6,859)
-------- --------
Free cash flow $ 12,283 $ 25,944
======== ========
TABLE 2
RECONCILIATION OF NET DEBT TO CAPITALIZATION
(Thousands)
(Unaudited)
December December
31, 31,
2004 2003
-------- ---------
Current portion of long-term debt $ 4,981 $ 11,689
Plus: Long-term debt, net of current portion 180,562 179,061
Less: Cash and cash equivalents (92,513) (149,001)
-------- ---------
Net debt $ 93,030 $ 41,749
======== =========
Net debt $ 93,030 $ 41,749
Plus: Total stockholders' equity 492,788 436,391
Plus: Minority interest 7,515 9,767
-------- ---------
Capitalization $593,333 $ 487,907
======== =========
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