Kaydon Corporation Reports Third Quarter 2012 Results

ANN ARBOR, Mich.--()--Kaydon Corporation (NYSE:KDN) today announced its results for the third fiscal quarter ended September 29, 2012.

Consolidated Results

Sales in the third quarter of 2012 were $123.8 million, compared to sales of $121.6 million in the third quarter of 2011. On a constant currency basis, revenues increased four percent in the third quarter of 2012.

The third quarter 2012 loss per share was $.99 compared to diluted earnings per share of $.45 in the third quarter of 2011. Adjusted earnings per share, as defined below, was $.44 in the third quarter of 2012, compared to $.50 in the third quarter of 2011. Adjusted results include charges related to the comprehensive restructuring of Kaydon’s wind energy bearings business, which was announced earlier this month.

Adjusted EBITDA, was $27.2 million, during the third quarter of 2012, compared to $29.8 million, during the third quarter of 2011. Adjusted gross margins were 34.9 percent during the third quarter of 2012, compared to 35.9 percent during the third quarter of 2011. Margins were impacted by inefficiencies associated with the ramp down of the two facilities affected by the restructuring.

This press release includes certain non-GAAP measures, including Adjusted net income, Adjusted earnings per share, EBITDA, Adjusted EBITDA and free cash flow. Readers should refer to the attached Reconciliation of Non-GAAP Measures exhibit for the reconciliations of the applicable GAAP measures to the non-GAAP measures presented.

Adjustments to GAAP results include certain items management considers in evaluating operating performance in each period. During the third quarter of 2012, such adjustments included the $46.0 million pre-tax charge associated with the recently announced restructuring of the company’s wind energy bearings business and the related impairment charge, $4.0 million of largely non-cash costs related to the recently completed wind customer arbitration, $0.4 million of due diligence and acquisition related purchase accounting costs and $1.3 million of non-cash amortization of previously incurred net actuarial losses related to postretirement benefit plans. During the third quarter, the Company offered certain former non-retiree employees with vested pension benefits the option of receiving a lump sum payment or an immediate annuity in settlement of all future pension obligations. This offer, described below, would further de-risk the Company’s pension obligations with no cash impact on operations.

Management Commentary

James O’Leary, Chairman and Chief Executive Officer commented, “The restructuring announced earlier this month proactively addressed conditions in the wind and military markets by right-sizing manufacturing capacity and lowering fixed operating costs to provide maximum operating leverage and opportunity for margin expansion going forward. While wind will continue to be an important product offering, reducing capacity was the appropriate action to take at this time. Since 2006, we have built a leadership position in a global market that recognizes both our brand and our technology. The capabilities developed to service the ever increasing demands of the wind market will also serve us well in other markets, including heavy equipment and mining.

“The rapid growth and subsequent contraction in the renewable energy market consumed considerable Company resources during the most recent supercharged wind energy cycle. With this restructuring announced and well under way, we have rebalanced and reprioritized our efforts going forward. We remain focused on achieving profitable growth, particularly in underserved international markets, and providing consistent returns to shareholders. With much of the revenue generated by our wind assets in 2012 already replaced by our last two acquisitions of Velocity Control businesses, the product focus within our Friction Control segment will center on accelerated growth of Kaydon’s traditional highly engineered bearings, internationally and in our traditional distribution channels.

“While this restructuring addresses certain sector specific concerns associated with our wind and military businesses, we still see uncertainty and softness around the world. Europe continues to be impacted by its own macroeconomic issues while growth in Asia has become increasingly challenging in recent months. That said, non-wind incoming orders during the quarter were healthy as many of our traditional markets, including military, heavy equipment and medical, experienced gains. With a non-wind book to bill of 102 percent, we saw the third consecutive quarter of non-wind orders exceeding shipments. While we wait for a more balanced and sustained improvement in business conditions, a reprioritized focus on our powerful industrial brands, and the enhanced operating leverage we expect to experience, should serve us well.”

Segment Results and Review

Friction Control Products sales in the third quarter of 2012 were $66.7 million, compared to $69.9 million in the 2011 third quarter. Excluding the restructuring and arbitration adjustments previously detailed, third quarter 2012 Friction Control Products operating income totaled $9.5 million compared to $12.3 million in the prior third quarter. Results were impacted by lower wind revenues of $16.0 million, as compared to $19.2 million in the third quarter of 2011. Excluding wind, Friction Control Products’ sales were flat compared to the prior year. Operating income was negatively affected by inefficiencies and lower cost absorption associated with the ramp down of wind operations and the reduction of inventory.

Velocity Control Products sales in the third quarter of 2012 were $29.9 million, compared to $24.4 million in the third quarter of 2011. Operating income for this segment totaled $6.6 million, compared to $6.1 million in the prior third quarter. This segment benefited from both the Fabreeka acquisition and improved sales in Asia, which offset weakness in Europe.

Other Industrial Products sales in the third quarter of 2012 were $27.3 million, compared to $27.4 million in the 2011 third quarter. Operating income equaled $2.7 million in the third quarter of 2012, compared to operating income of $2.9 million in the third quarter of 2011.

Order Activity

Orders were $105.7 million in the third quarter of 2012, compared to $130.4 million in the third quarter of 2011. Non-wind orders were $109.7 million in the third quarter of 2012 compared to $92.2 million in the prior third quarter, reflecting strength in military and the contribution of Fabreeka’s operations.

Backlog at September 29, 2012 was $151.3 million compared to $169.5 million at June 30, 2012, and $205.1 million at October 1, 2011. Excluding wind orders, backlog at September 29, 2012 was $141.3 million compared to $139.5 million at June 30, 2012, and $135.6 million at October 1, 2011.

Financial Position and Free Cash Flow

Free cash flow was $20.4 million in the third quarter of 2012, compared to $10.5 million in the third quarter of 2011, primarily driven by a $14 million current quarter reduction in working capital.

As of September 29, 2012, the Company had cash and cash equivalents totaling $52.0 million, up $13 million from the second quarter. Kaydon had borrowings outstanding in the principal amount of $50.0 million under the revolving credit facility and $146.3 million under the term loan facility as of September 29, 2012.

During the third quarter, the Company offered certain former non-retiree employees with vested pension benefits the option of receiving a lump sum payment or an immediate annuity in settlement of all future pension obligations. This de-risking of our pension obligations will reduce future pension liabilities proportionately. Depending on the level of acceptance, the Company may incur a fourth quarter 2012 non-cash settlement after-tax charge of between $0.0 and $4.1 million resulting from the acceleration of associated unrecognized actuarial losses currently being amortized. There will be no current impact on the Company’s cash flow as the distributions will be funded using the assets of the pension plan.

About Kaydon

Kaydon Corporation is a leading designer and manufacturer of custom engineered, performance-critical products, supplying a broad and diverse group of industrial, military, alternative energy, aerospace, medical and semiconductor equipment, and aftermarket customers.

Conference call information: At 11:00 a.m. Eastern time today, Kaydon will host a third quarter 2012 earnings conference call. The conference call can be accessed telephonically in a listen-only mode by dialing 1-888-417-8516 and providing the following passcode number: 800500. 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 at:

http://w.on24.com/r.htm?e=526480&s=1&k=601DDE8317B1817CE4593E2000E0CBC3

or by logging on to the Kaydon Corporation website at: http://www.kaydon.com and accessing the conference call at the “Third Quarter 2012 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 2:00 p.m. Eastern time today through Thursday, November 1, 2012 at 2:00 p.m. Eastern time. The replay is accessible by dialing 1-888-203-1112 and providing the following passcode number: 3033430.

Additionally, interested parties can access an archive of the conference call on the Kaydon Corporation website at http://www.kaydon.com.

This press release contains forward-looking statements 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,” “should,” “could,” “potential,” “projects,” “approximately,” and other similar expressions, including statements regarding 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 of and the Company’s ability to control contingent liabilities, and anticipated trends in the Company’s businesses. These statements are only predictions, based on the Company’s current expectations 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 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 except to the extent required by applicable law.

Certain non-GAAP 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 measures.

KAYDON CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
         
 
Three Months Ended Nine Months Ended
 
September 29, October 1, September 29, October 1,
  2012     2011     2012     2011  
Net sales $ 123,849 $ 121,637 $ 364,688 $ 352,007
 
Cost of sales   87,361     78,795     245,599     226,359  
 
Gross profit 36,488 42,842 119,089 125,648
 
Selling, general and administrative expenses 25,026 22,498 72,822 67,358
 
Impairment charge   42,953     0     42,953     0  
 
Operating income (loss) (31,491 ) 20,344 3,314 58,290
 
Interest expense (955 ) (98 ) (2,138 ) (293 )
 
Interest income   59     88     238     377  
 
Income (loss) before taxes (32,387 ) 20,334 1,414 58,374
 
Provision for income taxes   (1,084 )   5,830     8,902     17,722  
 
Net income (loss) $ (31,303 ) $ 14,504   $ (7,488 ) $ 40,652  
 
 
Earnings per share:
Basic   ($0.99 ) $ 0.45     ($0.24 ) $ 1.25  
Diluted   ($0.99 ) $ 0.45     ($0.24 ) $ 1.25  
 
 
Dividends declared per share $ 0.20   $ 0.20   $ 11.10   $ 0.58  
 
 
Weighted average common shares outstanding:
Basic   31,756     31,931     31,748     32,229  
Diluted   31,756     31,950     31,748     32,254  
     
KAYDON CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
 
September 29, December 31,
  2012   2011
Assets:
Cash and cash equivalents $ 52,009 $ 225,214
Accounts receivable, net 93,391 78,441
Inventories, net 108,096 110,206
Other current assets   17,040   16,701
 
Total current assets 270,536 430,562
 
Property, plant and equipment, net 120,408 168,946
 
Assets held for sale 6,531 -
Goodwill, net 190,143 157,087
Other intangible assets, net 49,794 31,140
Other assets   2,736   3,962
 
Total assets $ 640,148 $ 791,697
 
 
Liabilities and Shareholders' Equity:
 
Accounts payable $ 21,945 $ 19,699
Accrued expenses 21,942 29,766
Current portion long-term debt   9,375   -
Total current liabilities 53,262 49,465
 
Long-term debt 186,875 -
Other long-term liabilities   69,881   57,594
Total long-term liabilities 256,756 57,594
 
Shareholders' equity   330,130   684,638
 
Total liabilities and shareholders' equity $ 640,148 $ 791,697
 
KAYDON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
         
Three Months Ended Nine Months Ended
 
September 29, October 1, September 29, October 1,
  2012     2011     2012     2011  
Cash Flows from Operating Activities:
Net income (loss) $ (31,303 ) $ 14,504 $ (7,488 ) $ 40,652
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation 5,154 5,128 15,329 15,095
Amortization of intangible assets 1,007 816 2,585 2,274
Amortization of stock awards 572 1,102 2,367 3,125
Stock option compensation expense 190 317 1,525 995
Excess tax benefits from stock-based compensation 19 (37 ) (654 ) (95 )
Non-cash postretirement benefits curtailment gain - - - (142 )
Non-cash impairment charge 42,953 - 42,953 -
Deferred financing fees 123 97 593 291
Contributions to qualified pension plans (5,790 ) (840 ) (7,959 ) (1,952 )
Net change in receivables, inventories and trade payables 13,698 (8,824 ) (2,622 ) (25,466 )
Net change in other assets and liabilities   (1,416 )   2,198     2,524     497  
 
Net cash from operating activities 25,207 14,461 49,153 35,274
 
Cash Flows from Investing Activities:
Capital expenditures (4,854 ) (4,134 ) (12,976 ) (11,865 )
Dispositions of property, plant and equipment 51 133 2,012 210
Acquisition of business, net of cash acquired   -     (563 )   (51,567 )   (39,610 )
 
Net cash used in investing activities (4,803 ) (4,564 ) (62,531 ) (51,265 )
 
Cash Flows from Financing Activities:
Proceeds from long-term borrowings - - 200,000 -
Repayments of long-term borrowings (1,875 ) - (3,749 ) -
Debt issuance costs - - (1,357 ) -
Cash dividends paid (6,405 ) (6,143 ) (355,297 ) (18,652 )
Purchase of treasury stock - (6,569 ) (1,199 ) (34,719 )
Excess tax benefits from stock-based compensation (19 ) 37 654 95
Proceeds from exercise of stock options   22       -     134       39  
 
Net cash used in financing activities (8,277 ) (12,675 ) (160,814 ) (53,237 )
 
 
Effect of exchange rate changes on cash and
cash equivalents   1,143     (1,401 )   987     1,668  
 
Net increase (decrease) in cash and cash equivalents 13,270 (4,179 ) (173,205 ) (67,560 )
 
Cash and cash equivalents - Beginning of period   38,739     223,267     225,214     286,648  
 
Cash and cash equivalents - End of period $ 52,009   $ 219,088   $ 52,009   $ 219,088  
 
KAYDON CORPORATION
REPORTABLE SEGMENT INFORMATION
(In thousands)
       
Three Months Ended Nine Months Ended
 
September 29, October 1, September 29, October 1,
Net sales   2012     2011     2012     2011  
 
Friction Control Products $ 66,709 $ 69,885 $ 204,037 $ 196,530
Velocity Control Products 29,865 24,373 78,652 69,330
Other Industrial Products   27,275     27,379     81,999     86,147  
 
Total consolidated net sales $ 123,849   $ 121,637   $ 364,688   $ 352,007  
 
 
Three Months Ended Nine Months Ended
 
September 29, October 1, September 29, October 1,
Operating income (loss)   2012     2011     2012     2011  
 
Friction Control Products (1) $ (40,534 ) $ 11,080 $ (18,541 ) $ 32,480
Velocity Control Products 6,631 6,050 18,181 17,760
Other Industrial Products   2,687     2,937     7,616     9,869  
Total segment operating income (loss) (31,216 ) 20,067 7,256 60,109
Items not allocated to segment operating income (275 ) 277 (3,942 ) (1,819 )
Interest expense (955 ) (98 ) (2,138 ) (293 )
Interest income   59     88     238     377  
 
Income (loss) before taxes $ (32,387 ) $ 20,334   $ 1,414   $ 58,374  
 
The Company has two reporting segments: Friction Control Products and Velocity Control Products. The Company’s remaining operating segments are combined and disclosed as "Other Industrial Products."
 
 
(1) The Friction Control Products operating loss included $46.0 million of impairment, severance and other charges associated with the wind restructuring program in the third quarter of 2012 and first nine months of 2012 and a net charge of $4.0 million associated with the conclusion of a customer arbitration.
 
Kaydon Corporation
Reconciliation of Non-GAAP Measures
(In thousands)
           
 
Three Months Ended Nine Months Ended LTM
 
September 29, October 1, September 29, October 1, September 29, October 1,

Free cash flow, as defined (non-GAAP)

  2012     2011     2012     2011     2012     2011  
Net cash from operating activities (GAAP) $ 25,207 $ 14,461 $ 49,153 $ 35,274 $ 68,765 $ 62,749
Capital expenditures, net of dispositions   (4,803 )   (4,001 )   (10,964 )   (11,655 )   (14,017 )   (15,738 )
Free cash flow, as defined (non-GAAP) $ 20,404   $ 10,460   $ 38,189   $ 23,619   $ 54,748   $ 47,011  
 
Kaydon's management believes free cash flow, as defined above and 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 comparable GAAP measure.
 
Three Months Ended Nine Months Ended LTM
 
September 29, October 1, September 29, October 1, September 29, October 1,
  2012     2011     2012     2011     2012     2011  

Adjusted EBITDA, as defined (non-GAAP)

Net income (loss) (GAAP) $ (31,303 ) $ 14,504 $ (7,488 ) $ 40,652 1,192 $ 51,966
Net interest (income)/expense 896 10 1,900 (84 ) 1,881 (157 )
Provision for income taxes (1,084 ) 5,830 8,902 17,722 12,187 23,586
Depreciation and amortization of intangible assets 6,161 5,944 17,914 17,369 23,840 23,521
Stock-based compensation expense (1)   762     1,419     3,892     4,120     5,288     5,480  
EBITDA, as defined (non-GAAP) (24,568 ) 27,707 25,120 79,779 44,388 104,396
 
Arbitration costs 3,989 505 4,132 1,040 9,309 1,636
Impairment and restructuring related costs (2) 46,076 757 46,294 2,493 46,574 3,105
Due diligence and purchase accounting costs 402 173 1,953 1,573 2,151 2,600
Recapitalization costs - - 267 - 267 -
Curtailment gains - - - (142 ) (133 ) (527 )
Amortization of net actuarial loss   1,263     703     3,516     2,098     4,218     2,692  
Adjusted EBITDA, as defined (non-GAAP) $ 27,162   $ 29,845   $ 81,282   $ 86,841   $ 106,774   $ 113,902  
 
(1) Includes non-cash stock amortization expense and non-cash stock option expense.
(2) Includes wind restructuring related impairments and other costs including fixed asset impairments of $43.0 million, inventory impairment of $1.1 million, accounts receivable reserves of $1.3 million, severance costs of $0.4 million, and asset retirement obligations of $0.2 million for the three months and nine months ended September 29, 2012.
 
Kaydon's management believes EBITDA, as defined above and Adjusted EBITDA, as defined, both non-GAAP measures, are determinants of the Company's capacity to incur additional senior capital to enhance future profit growth and cash flow growth. 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. Also, EBITDA is a metric used to determine payments under the Company's annual incentive compensation program for senior managers. However, EBITDA, as defined, and Adjusted EBITDA, as defined should be viewed as supplemental data, rather than as substitutes or alternatives to the comparable GAAP measure.
 
Three Months Ended
 
September 29, October 1,
  2012     2011  

Friction Control Products Operating income, as adjusted (Non-GAAP)

 
Friction Control Products Operating income (loss) (GAAP) $ (40,534 ) $ 11,080
Arbitration costs 3,989 505
Impairment and restructuring related costs (2)   46,049     757  
Friction Control Products Operating income, as adjusted (non-GAAP) $ 9,504   $ 12,342  
 
(2) Includes wind restructuring related impairments and other costs including fixed asset impairments of $43.0 million, inventory impairment of $1.1 million, accounts receivable reserves of $1.3 million, severance costs of $0.4 million, and other of $0.2 million for the three months and nine months ended September 29, 2012.
 
Kaydon's management believes the non-GAAP measures of operating income, as adjusted, provides investors with additional information to assess the financial performance of the Company's Friction Control Products reporting segment. However, this measure should be viewed as supplemental data, rather than as a substitute or alternative to the comparable GAAP measures.
 
 

Constant Currency Basis

 
Kaydon's management believes that the non-GAAP measure constant currency basis, which presents revenue growth excluding the effect of changes in foreign currency exchange rates, provides investors with additional information to assess the financial performance of the Company from one period to another. The constant currency basis is calculated retranslating current period revenues at the exchange rates of the prior period to identify the effect of changes in foreign currency exchange rates on revenue. However, this measure should be viewed as supplemental data, rather than as a substitute or alternative to the comparable GAAP measures.
 
Kaydon Corporation
Reconciliation of Non-GAAP Measures (continued)
(In thousands, except per share data)
               
Three months ended September 29, 2012
 
Non-operating items, as defined by the Company
Wind Due Diligence/
restructuring Restructuring/ Purchase
and impairment Severance Accounting Recapitalization Curtailment Amortization of Adjusted
GAAP charge Arbitration Costs Costs Costs Costs Gains Actuarial Loss (Non-GAAP)
 
Net Sales $ 123,849 $ - $ - $ - $ - $ - $ - $ - $ 123,849
 
Gross profit 36,488 1,335 4,394 - 237 - - 831 43,285
 
Gross margin 29.5 % 1.1 % 3.5 % 0.0 % 0.2 % 0.0 % 0.0 % 0.7 % 34.9 %
 
S, G & A expenses 25,026 1,761 (405 ) 27 165 - - 432 23,046
 
Impairment charge   42,953     42,953     -     -     -     -     -     -     0  
 
Operating income (loss) (31,491 ) 46,049 3,989 27 402 - - 1,263 20,239
 
Interest, net   (896 )   -     -     -     -     -     -     -     (896 )
 
Income (loss) before taxes (32,387 ) 46,049 3,989 27 402 - - 1,263 19,343
 
Tax provision *   (1,084 )   4,339     1,456     7     107     -     -     337     5,162  
 
Net income (loss) $ (31,303 ) $ 41,710   $ 2,533   $ 20   $ 295   $ -   $ -   $ 926   $ 14,181  
 
Diluted EPS $ (0.99 ) $ 1.31 $ 0.08 $ - $ 0.01 $ - $ - $ 0.03 $ 0.44
 
Three months ended October 1, 2011
 
Non-operating items, as defined by the Company
Wind Due Diligence/
restructuring Restructuring/ Purchase
and impairment Severance Accounting Recapitalization Curtailment Amortization of Adjusted
GAAP charge Arbitration Costs Costs Costs Costs Gains Actuarial Loss (Non-GAAP)

 

Net Sales $ 121,637 $ - $ - $ - $ - $ - $ - $ - $ 121,637
 
Gross profit 42,842 - - 310 - - - 550 43,702
 
Gross margin 35.2 % 0.0 % 0.0 % 0.3 % 0.0 % 0.0 % 0.0 % 0.5 % 35.9 %
 
S, G & A 22,498 - 505 447 173 - - 153 21,220
 
Impairment charge   0     -     -     -     -     -     -     -     0  
 
Operating income 20,344 - 505 757 173 - - 703 22,482
 
Interest, net   (10 )   -     -     -     -     -     -     -     (10 )
 
Income before taxes 20,334 - 505 757 173 - - 703 22,472
 
Tax provision *   5,830     -     145     217     50     -     -     202     6,444  
 
Net income $ 14,504   $ -   $ 360   $ 540   $ 123   $ -   $ -   $ 501   $ 16,028  
 
Diluted EPS $ 0.45 $ - $ 0.01 $ 0.02 $ 0.00 $ - $ - $ 0.02 $ 0.50
 
Kaydon's management believes that certain non-GAAP measures of Adjusted operating income, Adjusted interest, net, Adjusted net income, and Adjusted earnings per share - diluted, provide investors with additional information to assess the Company's financial performance. However, these measures should be viewed as supplemental data, rather than substitutes or alternatives to the comparable GAAP measures.
 
 
* Taxed at effective tax rate for each quarter, except for wind restructuring and impairment charge and arbitration costs.
                 
Kaydon Corporation
Reconciliation of Non-GAAP Measures (continued)
(In thousands, except per share data)
 
Nine months ended September 29, 2012
 
Non-operating items, as defined by the Company
Wind Due Diligence/
restructuring Restructuring/ Purchase
and impairment Severance Accounting Recapitalization Curtailment Amortization of Adjusted
GAAP charge Arbitration Costs Costs Costs Costs Gains Actuarial Loss (Non-GAAP)
 
Net Sales $ 364,688 $ - $ - $ - $ - $ - $ - $ - $ 364,688
 
Gross profit 119,089 1,335 4,394 - 355 - - 2,494 127,667
 
Gross margin 32.7 % 0.4 % 1.2 % 0.0 % 0.1 % 0.0 % 0.0 % 0.7 % 35.0 %
 
S, G & A expenses 72,822 1,761 (262 ) 245 1,598 1,058 - 1,022 67,400
 
Impairment charge   42,953     42,953     -     -     -     -     -     -     0  
 
Operating income 3,314 46,049 4,132 245 1,953 1,058 - 3,516 60,267
 
Interest, net   (1,900 )   -     -     -     -     247     -     -     (1,653 )
 
Income before taxes 1,414 46,049 4,132 245 1,953 1,305 - 3,516 58,614
 
Tax provision *   8,902     4,339     1,497     71     574     378     -     1,003     16,764  
 
Net income $ (7,488 ) $ 41,710   $ 2,635   $ 174   $ 1,379   $ 927   $ -   $ 2,513   $ 41,850  
 
Diluted EPS ($0.24 ) $ 1.31 $ 0.08 $ 0.01 $ 0.04 $ 0.03 $ - $ 0.08 $ 1.31
 
Nine months ended October 1, 2011
 
Non-operating items, as defined by the Company
Wind Due Diligence/

 

restructuring Restructuring/ Purchase

 

and impairment Severance Accounting Recapitalization Curtailment Amortization of

Adjusted

GAAP charge Arbitration Costs Costs Costs Costs Gains Actuarial Loss

(Non-GAAP)

 

Net Sales $ 352,007 $ - $ - $ - $ - $ - $ - $ - $ 352,007
 
Gross profit 125,648 - - 1,787 252 - - 1,655 129,342
 
Gross margin 35.7 % 0.0 % 0.0 % 0.5 % 0.1 % 0.0 % 0.0 % 0.5 % 36.7 %
 
S, G & A 67,358 - 1,040 706 1,321 - (142 ) 443 63,990
 
Wind impairment   0     -     -     -     -     -     -     -     0  
 
Operating income 58,290 - 1,040 2,493 1,573 - (142 ) 2,098 65,352
 
Interest, net   84     -     -     -     -     -     -     -     84  
 
Income before taxes 58,374 - 1,040 2,493 1,573 - (142 ) 2,098 65,436
 
Tax provision *   17,722     -     314     763     486     -     (44 )   639     19,880  
 
Net income $ 40,652   $ -   $ 726   $ 1,730   $ 1,087   $ -   $ (98 ) $ 1,459   $ 45,556  
 
Diluted EPS $ 1.25 $ 0.00 $ 0.02 $ 0.05 $ 0.03 $ 0.00 ($0.00 ) $ 0.04 $ 1.40
 
Kaydon's management believes that certain non-GAAP measures of Adjusted operating income, Adjusted interest, net, Adjusted net income, and Adjusted earnings per share - diluted, provide investors with additional information to assess the Company's financial performance. However, these measures should be viewed as supplemental data, rather than substitutes or alternatives to the comparable GAAP measures.
 
 
* Taxed at effective tax rate for each quarter, except for wind restructuring and impairment charge and arbitration costs.

Contacts

Kaydon Corporation
Timothy J. Heasley
Senior Vice President & Chief Financial Officer
(734) 680-2018
READ IT ON THE WEB
http://www.kaydon.com

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Contacts

Kaydon Corporation
Timothy J. Heasley
Senior Vice President & Chief Financial Officer
(734) 680-2018
READ IT ON THE WEB
http://www.kaydon.com