MacDermid, Incorporated a worldwide manufacturer of
proprietary specialty chemical products and materials for the
electronics, metal finishing and graphic arts industries (NYSE: MRD)
today reported third quarter sales of $193.3 million, a 19.6% increase
over the same period in 2004. The company's acquisition of Autotype in
June of 2005 contributed $22.3 million to sales in the third quarter.
Sales without Autotype increased $9.4 million, or 5.8% over last year.
Sales for the nine months ended September 30th were $541.8 million, or
10.9% above the same period in 2004. Autotype contributed $27.2
million to sales year to date. Year to date sales without Autotype
would have increased $26.0 million or 5.3% over the prior year to
date.
Diluted earnings per share for the quarter of $0.42 were $0.03 more than the $0.39 per share from continuing operations in 2004. Earnings in the quarter were negatively impacted by acquisition and restructuring charges amounting to $0.04. Accordingly earnings before these charges would have been $0.46 per share, an increase of 17.9% over the third quarter last year.
Diluted earnings per share for the nine-month period were $1.19 or $0.05 less than the same period last year. This was offset by the negative impacts of acquisition and restructuring charges of $0.05 per share and by the impact of the litigation settlement in the second quarter amounting to $0.06 per share.
Owner Earnings, a measure of free cash flow (defined below and shown in BOLD in the attached Condensed Consolidated Summary of Cash Flows), were $ 1.8 million for the quarter ended September 30 2005. Owner earnings were negatively impacted by the payment of the litigation settlement of $5.0 million that was accrued that was accrued as of the end of the second quarter and by the semi-annual payment of interest on our bonds amounting to $ 13.8 million.
Advanced Surface Finishing (ASF) segment
Sales in our ASF segment for the quarter increased by $14.9 million or 15.5% compared with the same quarter last year, of which $10.7 million is attributable to Autotype. Sales excluding Autotype increased $4.2 million, or 4.3%. Sales for the nine months ended September 30th increased $27.5 million, or 9.6% compared to the same nine-month period last year, of which $13.0 million was attributable to Autotype. Sales excluding Autotype increased $14.6 million or 5.1%.
Gross profit for the quarter is down by 3.9 percentage points primarily due to the affect of the lower inherent gross profit margin of Autotype (2.2%), and increased raw material costs and higher overhead costs in percentage terms due in part to lower volumes in Europe and North America. The seasonal summer effect in Europe was particularly pronounced this year.
Operating profit for the quarter was $16.9 million or 4.0% ahead of last year, Asia and Offshore Solutions increased and the Americas and Europe are down from last year. The decrease in the operating profit percentage from 16.9% to 15.2% is entirely attributable to the lower operating margins as a percentage of sales at Autotype. For the nine-month period operating profit was $47.8 million or 2.2% ahead of last year, but down 1.1% as a percent of sales for the same reasons as for the quarter.
Printing Solutions Segment
The Printing Solutions business increased sales by $16.8 million, or 25.7% for the quarter, of which $11.5 million was attributable to Autotype. Sales excluding Autotype were up $5.3 million or 8.1%. Sales for the nine months increased by $25.7 million, or 12.7%, of which $14.3 million is attributable to Autotype. Sales year to date excluding Autotype increased $11.4 million, or 5.6%. Colorspan had another excellent quarter. MPS Europe was affected by the summer slow down and continued poor underlying performance. As a result a restructuring was announced during the quarter.
The gross profit % is down 4.0 percentage points for the quarter and by 3.0 percentage points year to date. The decline is due in part to the inclusion of Autotype with its inherently lower gross profit percentage.
Operating profit of $7.2 million is down 23.9% in the quarter as compared to last year due to restructuring charges in France of $ 0.7 million, increased selling, technical and R&D costs. Year to date operating profits were $24.4 million, or 24.7% less than last year due to $2.5 million in litigation settlement expenses from the second quarter, restructuring charges in France and increased selling, technical and R & D expenses. MPS France is consolidating its' manufacturing operations to improve profitability by moving one of three factories it operates in Europe.
Autotype
Autotype began reorganizing its operations to realize synergies brought about by the acquisition by announcing the closing of its' US plant, which will be merged into an existing MacDermid plant. Management continues to further plan for cost reducing synergies.
Dan Leever Chairman and CEO said, "Overall the quarter was satisfactory. MPS North America stabilized this quarter and we are hopeful we will grow from this base. In Europe, the summer effect, which always reduces our August revenues, was more pronounced than normal. We did not see the bounce back in September that we usually do. The challenges in the US automotive industry are not helping ASF North America, but the Asia demand is still robust. We believe our momentum in ASF is building.
Offshore Solutions and Colorspan continued their excellent performance.
MacDermid Autotype is off to a poor start. Revenues and profits are already significantly behind our plan. However, we remain confident this business will provide the returns and growth opportunities we envisioned. We understand the business much better than we did before we acquired it, and are much more confident we have cost and synergy levers far beyond the planned levels. We will exercise the appropriate balance between short-term earnings and longer-term growth.
Owner Earnings were below our expectations although the underlying working capital remains in control. Acquisition activity remains high. It is the company's intent to grow through acquisition in a responsible manner. Although there can be no assurance we will be successful in finding acquisition candidates that meet our criteria, we are optimistic."
Note:
Owner Earnings is calculated as Net Cash flows provided by operating activities (GAAP definition) less net capital expenditures. EBITDA comprises Earnings before Interest, Taxation, Depreciation and Amortization. This press release and additional financial information together with our reconciliation of GAAP to Non-GAAP numbers are available on our website.
Website: http://www.macdermid.com
MacDermid, Incorporated
NYSE - MRD
CUSIP 554273 10 2
October 31, 2005
This report and other Corporation reports and statements describe many of the positive factors affecting the Corporation's future business prospects. Investors should also be aware of factors that could have a negative impact on those prospects. These include political, economic or other conditions such as currency exchange rates, inflation rates, recessionary or expansive trends, taxes and regulations and laws affecting the business; competitive products, advertising, promotional and pricing activity; the degree of acceptance of new product introductions in the marketplace; technical difficulties which may arise with new product introductions; and the difficulty of forecasting sales at certain times in certain markets. -0- MacDermid, Incorporated Condensed Consolidated Summary of Earnings (Unaudited) $ in thousands, except share and per share amounts Three Months Ended Nine Months Ended ----------------------- ----------------------- Sept 30th Sept 30th Sept 30th Sept 30th 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Proprietary sales $182,445 $150,969 $511,903 $458,121 Other sales 10,815 10,616 29,885 30,529 ----------- ----------- ----------- ----------- Total net sales $193,260 $161,585 $541,788 $488,650 ----------- ----------- ----------- ----------- Gross margin 83,282 76,375 240,961 231,975 GM % 43.1% 47.3% 44.5% 47.5% Selling, technical and administrative 51,387 45,254 147,581 136,841 Research and development 6,684 5,375 19,725 15,928 Restructuring/ Acquisition 1,077 0 1,462 0 ----------- ----------- ----------- ----------- Operating profit 24,134 25,746 72,193 79,206 Other income (expense), net 799 92 207 531 Interest (expense), net (7,101) (7,287) (21,170) (22,542) ----------- ----------- ----------- ----------- Earnings before income taxes 17,832 18,551 51,230 57,195 Income tax (expense) (4,915) (6,508) (14,600) (18,874) ----------- ----------- ----------- ----------- Net earnings $12,917 $12,043 $36,630 $38,321 =========== =========== =========== =========== ----------- ----------- ----------- ----------- Diluted earnings per share $0.42 $0.39 $1.19 $1.24 =========== =========== =========== =========== Diluted average common shares outstanding 30,956,963 30,907,677 30,865,440 30,988,259 =========== =========== =========== =========== -0- MacDermid, Incorporated Sales and Margins by Region $ in thousands Three Months Ended Nine Months Ended ------------------- ------------------- Sept 30th Sept 30th Sept 30th Sept 30th 2005 2004 2005 2004 --------- --------- --------- --------- Americas Total net sales $76,194 $65,801 $215,599 $200,418 Operating profit $10,398 $10,219 $26,812 $33,909 OP % 13.6% 15.5% 12.4% 16.9% Europe Total net sales $65,836 $56,877 $191,077 $177,445 Operating profit $3,235 $7,047 $19,455 $22,076 OP % 4.9% 12.4% 10.2% 12.4% Asia Total net sales $51,230 $38,907 $135,112 $110,787 Operating profit $10,501 $8,480 $25,926 $23,221 OP % 20.5% 21.8% 19.2% 21.0% Consolidated Total Total net sales $193,260 $161,585 $541,788 $488,650 Operating profit $24,134 $25,746 $72,193 $79,206 OP % 12.5% 15.9% 13.3% 16.2% MacDermid, Incorporated Sales and Margins by Group $ in thousands Three Months Ended Nine Months Ended ------------------- ------------------- Sept 30th Sept 30th Sept 30th Sept 30th 2005 2004 2005 2004 --------- --------- --------- --------- Advanced Surface Finishing Total net sales $111,003 $96,136 $313,476 $286,000 Operating profit $16,925 $16,276 $47,764 $46,742 OP % 15.2% 16.9% 15.2% 16.3% Printing Solutions Total net sales $82,257 $65,449 $228,312 $202,650 Operating profit $7,209 $9,470 $24,429 $32,464 OP % 8.8% 14.5% 10.7% 16.0% Consolidated Total Total net sales $193,260 $161,585 $541,788 $488,650 Operating profit $24,134 $25,746 $72,193 $79,206 OP % 12.5% 15.9% 13.3% 16.2% -0- MacDermid, Incorporated Condensed Consolidated Balance Sheets $ in thousands Sept 30th Dec. 31st 2005 2004 ----------- --------- (Unaudited) Cash and cash equivalents $60,307 $137,829 Accounts receivable, net 156,817 142,455 Inventories, net 96,655 80,445 Other current assets 31,274 28,486 ----------- --------- Current Assets 345,053 389,215 Property, plant & equipment, net 122,538 110,463 Goodwill 245,630 194,287 Intangibles 32,299 28,434 Other Assets 47,749 51,320 ----------- --------- Total assets $793,269 $773,719 =========== ========= Payables and accruals $126,022 $128,359 Short-term debt 3,554 753 ----------- --------- Current Liabilities 129,576 129,112 Long-term debt 301,288 301,077 Other long-term liabilities 37,369 39,499 ----------- --------- Total Liabilities 468,233 469,688 Shareholders' equity 325,036 304,031 ----------- --------- Total liabilities & shareholders' equity $793,269 $773,719 =========== ========= ---------------------------------------------------------------------- Debt to total capital 48% 50% ---------------------------------------------------------------------- -0- MacDermid, Incorporated Condensed Consolidated Summary of Cash Flows (Unaudited) $ in thousands Three Months Ended Nine Months Ended ----------------- ------------------ Sept Sept Sept Sept 30th 30th 30th 30th 2005 2004 2005 2004 -------- -------- --------- -------- Net earnings $12,917 $12,043 $36,630 $38,321 Depreciation 4,592 3,897 12,209 12,011 Amortization 1,008 708 2,796 2,159 Provision for bad debt 842 1,517 1,580 3,024 Stock compensation expense 1,177 1,351 5,227 4,383 Deferred Taxes (1,620) (1,559) (995) (1,431) Restructuring Charges 1,077 - 1,463 - Working capital changes (15,669) 5,021 (27,718) (1,359) -------- -------- --------- -------- Cash from operations 4,324 22,978 31,192 57,108 Capital spending, net (2,517) (768) (9,565) (3,212) -------- -------- --------- -------- Owner earnings** 1,807 22,210 21,627 53,896 Acquisition of business (3,883) - (93,153) Dividends paid (1,827) (1,211) (4,858) (2,423) Increase/(decrease) in debt (7,877) (261) 2,780 (1,001) Treasury shares - - 33 31 Other 1,973 396 (3,951) 256 -------- -------- --------- -------- Increase/(decrease) in cash $(9,807) $21,134 $(77,522) $50,759 ======== ======== ========= ======== ---------------------------------------------------------------------- **Note: Pro forma owner earnings adjusted for semi-annual bond interest payments would have been as follows: $6,900 $(6,900) $6,900 $6,900 $8,707 $15,310 $28,527 $60,796 ======== ======== ========= ======== -0- MacDermid, Inc. Regulation G: GAAP to Non-GAAP Reconciliation ---------------------------------------------------------------------- Gross Profit Before Special Charges (a) (b) ---------------------------------------------------------------------- (In thousands) Three Months Ended Dec-03 Mar-04 Jun-04 Sep-04 -------- -------- -------- --------- -------- -------- -------- --------- Net Sales as reported $162,106 $162,012 $165,053 $161,585 -------- -------- -------- --------- Gross Profit as reported $74,363 $77,526 $78,074 $76,375 Add: Special Charges - - - - -------- -------- -------- --------- Gross Profit Before Special Charges $74,363 $77,526 $78,074 $76,375 -------- -------- -------- --------- GP % Before Special Charges 45.9% 47.9% 47.3% 47.3% ---------------------------------------------------------------------- ---------------------------------------------------------------------- Operating Profit Before Amortization and Special Charges (a) (b) ---------------------------------------------------------------------- (In thousands) Three Months Ended Dec-03 Mar-04 Jun-04 Sep-04 -------- -------- -------- --------- Net Sales per above $162,106 $162,012 $165,053 $161,585 -------- -------- -------- --------- Earnings Before Interest and Taxes $27,689 $26,551 $27,348 $25,838 Add: Other (Income) Expense (1,142) 258 (697) (92) Add: Special Charges - - - - -------- -------- -------- --------- Operating Profit Before Special Charges $26,547 $26,809 $26,651 $25,746 ======== ======== ======== ========= % OP Before Special Charges to Net Sales 16.4% 16.5% 16.1% 15.9% ---------------------------------------------------------------------- MacDermid, Inc. Regulation G: GAAP to Non-GAAP Reconciliation ---------------------------------------------------------------------- Gross Profit Before Special Charges (a) (b) ---------------------------------------------------------------------- (In thousands) Dec-04 Mar-05 Jun-05 Sep-05 -------- -------- -------- --------- -------- -------- -------- --------- Net Sales as reported $172,135 $170,247 $178,281 $193,260 -------- -------- -------- --------- Gross Profit as reported $81,266 $77,653 $80,026 $83,282 Add: Special Charges - - 117 418 -------- -------- -------- --------- Gross Profit Before Special Charges $81,266 $77,653 $80,143 $83,700 -------- -------- -------- --------- GP % Before Special Charges 47.2% 45.6% 45.0% 43.3% ---------------------------------------------------------------------- ---------------------------------------------------------------------- Operating Profit Before Amortization and Special Charges (a) (b) ---------------------------------------------------------------------- (In thousands) Dec-04 Mar-05 Jun-05 Sep-05 -------- -------- -------- --------- Net Sales per above $172,135 $170,247 $178,281 $193,260 -------- -------- -------- --------- Earnings Before Interest and Taxes $27,615 $24,481 $22,988 $24,536 Add: Other (Income) Expense (1,411) (30) 622 (799) Add: Special Charges - - 503 1,495 -------- -------- -------- --------- Operating Profit Before Special Charges $26,204 $24,451 $24,113 $25,232 ======== ======== ======== ========= % OP Before Special Charges to Net Sales 15.2% 14.4% 13.5% 13.1% ---------------------------------------------------------------------- -------------------------------------------------------------------- Gross Profit Before Special Charges (a) (b) ------------------------------------------- Year Year (In thousands) Ended Ended Dec-03 Dec-04 -------- --------- -------- --------- Net Sales as reported $619,886 $660,785 -------- --------- Gross Profit as reported $290,615 $313,241 Add: Special Charges - - -------- --------- Gross Profit Before Special Charges $290,615 $313,241 -------- --------- GP % Before Special Charges 46.9% 47.4% -------------------------------------------------------------------- -------------------------------------------------------------------- Operating Profit Before Amortization and Special Charges (a) (b) ---------------- Year Year (In thousands) Ended Ended Dec-03 Dec-04 -------- --------- Net Sales per above $619,886 $660,785 -------- --------- Earnings Before Interest and Taxes $103,464 $107,352 Add: Other (Income) Expense (4,314) (1,942) Add: Special Charges - - -------- --------- Operating Profit Before Special Charges $99,150 $105,410 ======== ========= % OP Before Special Charges to Net Sales 16.0% 16.0% -------------------------------------------------------------------- (a) as a result of the Company's sale of Eurocir in Q4 2003, all applicable historical figures have been modified to exclude the results now reflected as Discontinued Operations. (b) "Gross Profit Before Special Charges" and "Operating Profit Special Charges" are not intended to represent Net Earnings as defined by Generally Accepted Accounting Principles. These measurements should not be used as an alternative to Net Earnings as an indicator of operating performance and may not be comparable to similarly titled measures used by other entities. Management believes that these measurements portray a meaningful measure of past operating performance and believes these measurements play an important factor toward the growth of shareholder value over time. -0- MacDermid, Inc. Regulation G: GAAP to Non-GAAP Reconciliation ---------------------------------------------------------------------- EPS from Continuing Operations Before Special Charges & Stock Compensation (a) (b) ------------------------------------------------------------- (In thousands, except share and per share amounts) Three Months Ended Dec-03 Mar-04 Jun-04 Sep-04 -------------------------------------------- Net Income (Loss) as reported $19,289 $12,893 $13,385 $12,043 Deduct: Income (Loss) from Discontinued Ops, net of income taxes 5,632 - - - -------------------------------------------- Income (Loss) from Continuing Operations 13,657 12,893 13,385 12,043 Change in accounting method - - - - SFAS 150 gain on stock call option - - - - Cost of sales impact of acquisition inventory adj - - - - Write-off of In process R&D - - - - Restructuring & Other Charges -------------------------------------------- Total Special Charges (Income) - - - - After Tax Effect of Special Charges (Income) - - - - -------------------------------------------- Net Income from Continuing Operations Before Tax Effected Special Charges $13,657 $12,893 $13,385 $12,043 ============================================ Stock Compensation Expense 1,119 1,560 1,472 1,351 After Tax Effect Stock Compensation Expense 761 1,061 1,001 905 -------------------------------------------- Net Income from Continuing Operations Before Tax Effected Special Charges & Stock Compensation $14,418 $13,954 $14,386 $12,948 ============================================ Earnings Per Share from Continuing Operations Before Tax Effected Special Charges $0.45 $0.42 $0.43 $0.39 ============================================ Earnings Per Share from Continuing Operations Before Tax Effected Special Charges and Stock Compensation $0.47 $0.45 $0.46 $0.42 ============================================ Diluted Average Common Shares Outstanding 30,501,615 31,041,763 31,014,374 30,988,259 ---------------------------------------------------------------------- ---------------------------------------------------------------------- EBITDA from Continuing Operations Before Special Charges (a) (b) ---------------------------------------------------------------- (In thousands) Three Months Ended Dec-03 Mar-04 Jun-04 Sep-04 -------------------------------------------- Earnings Before Interest and Taxes $27,689 $26,551 $27,348 $25,838 SFAS 150 gain on stock call option - - - - Cost of sales impact of acquisition inventory adj - - - - Write-off of In Process R&D - - - - Restructuring & Other Charges -------------------------------------------- Total Special Charges - - - - Amortization 889 734 717 708 Depreciation 3,976 4,125 3,989 3,897 EBITDA from Continuing Operations Before Special Charges $32,554 $31,410 $32,054 $30,443 ============================================ ---------------------------------------------------------------------- ---------------------------------------------------------------------- Owners Earnings (b) ------------------- (In thousands) Three Months Ended Dec-03 Mar-04 Jun-04 Sep-04 -------------------------------------------- Net cash flow provided by operating activities $29,158 $5,977 $28,153 $22,978 Capital expenditures, net 5,213 782 1,662 768 -------------------------------------------- Owner Earnings $23,945 $5,195 $26,491 $22,210 ============================================ Adjustment for Bond Interest assumed to be paid quarterly ---------------------- Owner Earnings $23,945 $5,195 $26,491 $22,210 Assumed if Bond Interest was paid quarterly (6,900) 6,900 (6,900) 6,900 -------------------------------------------- Adjusted Owner Earnings $17,045 $12,095 $19,591 $29,110 --------------------------============================================ ---------------------------------------------------------------------- EPS from Continuing Operations Before Special Charges & Stock Compensation (a) (b) -------------------------------------------------------------- (In thousands, except share and per share amounts) Three Months Ended Dec-04 Mar-05 Jun-05 Sep-05 -------------------------------------------- Net Income (Loss) as reported $14,903 $11,785 $11,928 $12,633 Deduct: Income (Loss) from Discontinued Ops, net of income taxes - - - -------------------------------------------- Income (Loss) from Continuing Operations 14,903 11,785 11,928 12,633 Change in accounting method - - SFAS 150 gain on stock call option - - Cost of sales impact of acquisition inventory adj - 117 418 Write-off of In process R&D - - 386 Restructuring & Other Charges 1,077 -------------------------------------------- Total Special Charges (Income) - - 503 1,495 After Tax Effect of Special Charges (Income) - - 357 1,069 -------------------------------------------- Net Income from Continuing Operations Before Tax Effected Special Charges $14,903 $11,785 $12,285 $13,702 ============================================ Stock Compensation Expense 2,112 2,177 1,873 1,177 After Tax Effect Stock Compensation Expense 1,415 1,361 1,330 842 -------------------------------------------- Net Income from Continuing Operations Before Tax Effected Special Charges & Stock Compensation $16,318 $13,146 $13,615 $14,544 ============================================ Earnings Per Share from Continuing Operations Before Tax Effected Special Charges $0.48 $0.38 $0.40 $0.44 ============================================ Earnings Per Share from Continuing Operations Before Tax Effected Special Charges and Stock Compensation $0.53 $0.43 $0.44 $0.47 ============================================ Diluted Average Common Shares Outstanding 30,794,808 30,809,620 30,787,829 30,865,440 ---------------------------------------------------------------------- ---------------------------------------------------------------------- EBITDA from Continuing Operations Before Special Charges (a) (b) ---------------------------------------------------------------- (In thousands) Three Months Ended Dec-04 Mar-05 Jun-05 Sep-05 -------------------------------------------- Earnings Before Interest and Taxes $27,615 $24,481 $22,988 $24,536 SFAS 150 gain on stock call option - - - Cost of sales impact of acquisition inventory adj - - 117 418 Write-off of In Process R&D - - 386 Restructuring & Other Charges 1,077 -------------------------------------------- Total Special Charges - - 503 1,495 Amortization 850 891 897 1,008 Depreciation 4,137 3,846 3,771 4,592 EBITDA from Continuing Operations Before Special-------------------------------------------- Charges $32,602 $29,218 $28,159 $31,631 ============================================ ---------------------------------------------------------------------- ---------------------------------------------------------------------- Owners Earnings (b) ------------------- (In thousands) Three Months Ended Dec-04 Mar-05 Jun-05 Sep-05 -------------------------------------------- Net cash flow provided by operating activities $28,169 $2,023 $24,845 $3,927 Capital expenditures, net 5,322 2,990 4,058 2,120 -------------------------------------------- Owner Earnings $22,847 ($967) $20,787 $1,807 ============================================ Adjustment for Bond Interest assumed to be paid quarterly ---------------------- Owner Earnings $22,847 ($967) $20,787 $1,807 Assumed if Bond Interest was paid quarterly (6,900) 6,900 (6,900) 6,900 -------------------------------------------- Adjusted Owner Earnings $15,947 $5,933 $13,887 $8,707 --------------------------============================================ --------------------------------------------------------------------- EPS from Continuing Operations Before Special Charges & Stock Compensation (a) (b) ----------------------------------------------------- (In thousands, except share and per share amounts) Year Year Ended Ended Dec-03 Dec-04 ---------------------- Net Income (Loss) as reported $56,426 $53,224 Deduct: Income (Loss) from Discontinued Ops, net of income taxes 5,592 - ---------------------- Income (Loss) from Continuing Operations 50,834 53,224 Change in accounting method (1,014) - SFAS 150 gain on stock call option (2,214) - Cost of sales impact of acquisition inventory adj - - Write-off of In process R&D - - Restructuring & Other Charges ---------------------- Total Special Charges (Income) (3,228) - After Tax Effect of Special Charges (Income) (2,520) - ---------------------- Net Income from Continuing Operations Before Tax Effected Special Charges $48,314 $53,224 ====================== Stock Compensation Expense 4,219 6,495 After Tax Effect Stock Compensation Expense 2,869 4,382 ---------------------- Net Income from Continuing Operations Before Tax Effected Special Charges & Stock Compensation $51,183 $57,606 ====================== Earnings Per Share from Continuing Operations Before Tax Effected Special Charges $1.55 $1.72 ====================== Earnings Per Share from Continuing Operations Before Tax Effected Special Charges and Stock Compensation $1.63 $1.86 ====================== Diluted Average Common Shares Outstanding 31,430,398 30,961,108 --------------------------------------------------------------------- --------------------------------------------------------------------- EBITDA from Continuing Operations Before Special Charges (a) (b) ---------------------------------------------------------------- (In thousands) Year Year Ended Ended Dec-03 Dec-04 ---------------------- Earnings Before Interest and Taxes $103,464 $107,352 SFAS 150 gain on stock call option (2,214) - Cost of sales impact of acquisition inventory adj - - Write-off of In Process R&D - - Restructuring & Other Charges ---------------------- Total Special Charges (2,214) - Amortization 3,301 3,009 Depreciation 15,793 16,148 EBITDA from Continuing Operations Before ---------------------- Special Charges $120,344 $126,509 ====================== ---------------------------------------------------------------------- ---------------------------------------------------------------------- Owners Earnings (b) -------------------- (In thousands) Year Year Ended Ended Dec-03 Dec-04 ---------------------- Net cash flow provided by operating activities $91,417 $85,277 Capital expenditures, net 10,704 8,534 ---------------------- Owner Earnings $80,713 $76,743 ====================== Adjustment for Bond Interest assumed to be paid quarterly ------------------------------------------ Owner Earnings $80,713 $76,743 Assumed if Bond Interest was paid quarterly - - ---------------------- Adjusted Owner Earnings $80,713 $76,743 -----------------------------------------------====================== (a) as a result of the Company's sale of Eurocir in Q4 2003, all applicable historical figures have been modified to exclude the results now reflected as Discontinued Operations. (b) "EPS from Continuing Operations Before Special Charges and Stock Compensation", "EBITDA from Continuing Operations Before Special Charges" and "Owners Earnings" are not intended to represent Net Earnings (loss) or Net Cash Flow From Operating Activities as defined by Generally Accepted Accounting Principles. These measurements should not be used as an alternative to Net Earnings or Net Cash Flow From Operating Activities as an indicator of operating performance and may not be comparable to similarly titled measures used by other entities. Management believes that these measurements portray a meaningful measure of past operating performance and believes these measurements play an important factor toward the growth of shareholder value over time.
Diluted earnings per share for the quarter of $0.42 were $0.03 more than the $0.39 per share from continuing operations in 2004. Earnings in the quarter were negatively impacted by acquisition and restructuring charges amounting to $0.04. Accordingly earnings before these charges would have been $0.46 per share, an increase of 17.9% over the third quarter last year.
Diluted earnings per share for the nine-month period were $1.19 or $0.05 less than the same period last year. This was offset by the negative impacts of acquisition and restructuring charges of $0.05 per share and by the impact of the litigation settlement in the second quarter amounting to $0.06 per share.
Owner Earnings, a measure of free cash flow (defined below and shown in BOLD in the attached Condensed Consolidated Summary of Cash Flows), were $ 1.8 million for the quarter ended September 30 2005. Owner earnings were negatively impacted by the payment of the litigation settlement of $5.0 million that was accrued that was accrued as of the end of the second quarter and by the semi-annual payment of interest on our bonds amounting to $ 13.8 million.
Advanced Surface Finishing (ASF) segment
Sales in our ASF segment for the quarter increased by $14.9 million or 15.5% compared with the same quarter last year, of which $10.7 million is attributable to Autotype. Sales excluding Autotype increased $4.2 million, or 4.3%. Sales for the nine months ended September 30th increased $27.5 million, or 9.6% compared to the same nine-month period last year, of which $13.0 million was attributable to Autotype. Sales excluding Autotype increased $14.6 million or 5.1%.
Gross profit for the quarter is down by 3.9 percentage points primarily due to the affect of the lower inherent gross profit margin of Autotype (2.2%), and increased raw material costs and higher overhead costs in percentage terms due in part to lower volumes in Europe and North America. The seasonal summer effect in Europe was particularly pronounced this year.
Operating profit for the quarter was $16.9 million or 4.0% ahead of last year, Asia and Offshore Solutions increased and the Americas and Europe are down from last year. The decrease in the operating profit percentage from 16.9% to 15.2% is entirely attributable to the lower operating margins as a percentage of sales at Autotype. For the nine-month period operating profit was $47.8 million or 2.2% ahead of last year, but down 1.1% as a percent of sales for the same reasons as for the quarter.
Printing Solutions Segment
The Printing Solutions business increased sales by $16.8 million, or 25.7% for the quarter, of which $11.5 million was attributable to Autotype. Sales excluding Autotype were up $5.3 million or 8.1%. Sales for the nine months increased by $25.7 million, or 12.7%, of which $14.3 million is attributable to Autotype. Sales year to date excluding Autotype increased $11.4 million, or 5.6%. Colorspan had another excellent quarter. MPS Europe was affected by the summer slow down and continued poor underlying performance. As a result a restructuring was announced during the quarter.
The gross profit % is down 4.0 percentage points for the quarter and by 3.0 percentage points year to date. The decline is due in part to the inclusion of Autotype with its inherently lower gross profit percentage.
Operating profit of $7.2 million is down 23.9% in the quarter as compared to last year due to restructuring charges in France of $ 0.7 million, increased selling, technical and R&D costs. Year to date operating profits were $24.4 million, or 24.7% less than last year due to $2.5 million in litigation settlement expenses from the second quarter, restructuring charges in France and increased selling, technical and R & D expenses. MPS France is consolidating its' manufacturing operations to improve profitability by moving one of three factories it operates in Europe.
Autotype
Autotype began reorganizing its operations to realize synergies brought about by the acquisition by announcing the closing of its' US plant, which will be merged into an existing MacDermid plant. Management continues to further plan for cost reducing synergies.
Dan Leever Chairman and CEO said, "Overall the quarter was satisfactory. MPS North America stabilized this quarter and we are hopeful we will grow from this base. In Europe, the summer effect, which always reduces our August revenues, was more pronounced than normal. We did not see the bounce back in September that we usually do. The challenges in the US automotive industry are not helping ASF North America, but the Asia demand is still robust. We believe our momentum in ASF is building.
Offshore Solutions and Colorspan continued their excellent performance.
MacDermid Autotype is off to a poor start. Revenues and profits are already significantly behind our plan. However, we remain confident this business will provide the returns and growth opportunities we envisioned. We understand the business much better than we did before we acquired it, and are much more confident we have cost and synergy levers far beyond the planned levels. We will exercise the appropriate balance between short-term earnings and longer-term growth.
Owner Earnings were below our expectations although the underlying working capital remains in control. Acquisition activity remains high. It is the company's intent to grow through acquisition in a responsible manner. Although there can be no assurance we will be successful in finding acquisition candidates that meet our criteria, we are optimistic."
Note:
Owner Earnings is calculated as Net Cash flows provided by operating activities (GAAP definition) less net capital expenditures. EBITDA comprises Earnings before Interest, Taxation, Depreciation and Amortization. This press release and additional financial information together with our reconciliation of GAAP to Non-GAAP numbers are available on our website.
Website: http://www.macdermid.com
MacDermid, Incorporated
NYSE - MRD
CUSIP 554273 10 2
October 31, 2005
This report and other Corporation reports and statements describe many of the positive factors affecting the Corporation's future business prospects. Investors should also be aware of factors that could have a negative impact on those prospects. These include political, economic or other conditions such as currency exchange rates, inflation rates, recessionary or expansive trends, taxes and regulations and laws affecting the business; competitive products, advertising, promotional and pricing activity; the degree of acceptance of new product introductions in the marketplace; technical difficulties which may arise with new product introductions; and the difficulty of forecasting sales at certain times in certain markets. -0- MacDermid, Incorporated Condensed Consolidated Summary of Earnings (Unaudited) $ in thousands, except share and per share amounts Three Months Ended Nine Months Ended ----------------------- ----------------------- Sept 30th Sept 30th Sept 30th Sept 30th 2005 2004 2005 2004 ----------- ----------- ----------- ----------- Proprietary sales $182,445 $150,969 $511,903 $458,121 Other sales 10,815 10,616 29,885 30,529 ----------- ----------- ----------- ----------- Total net sales $193,260 $161,585 $541,788 $488,650 ----------- ----------- ----------- ----------- Gross margin 83,282 76,375 240,961 231,975 GM % 43.1% 47.3% 44.5% 47.5% Selling, technical and administrative 51,387 45,254 147,581 136,841 Research and development 6,684 5,375 19,725 15,928 Restructuring/ Acquisition 1,077 0 1,462 0 ----------- ----------- ----------- ----------- Operating profit 24,134 25,746 72,193 79,206 Other income (expense), net 799 92 207 531 Interest (expense), net (7,101) (7,287) (21,170) (22,542) ----------- ----------- ----------- ----------- Earnings before income taxes 17,832 18,551 51,230 57,195 Income tax (expense) (4,915) (6,508) (14,600) (18,874) ----------- ----------- ----------- ----------- Net earnings $12,917 $12,043 $36,630 $38,321 =========== =========== =========== =========== ----------- ----------- ----------- ----------- Diluted earnings per share $0.42 $0.39 $1.19 $1.24 =========== =========== =========== =========== Diluted average common shares outstanding 30,956,963 30,907,677 30,865,440 30,988,259 =========== =========== =========== =========== -0- MacDermid, Incorporated Sales and Margins by Region $ in thousands Three Months Ended Nine Months Ended ------------------- ------------------- Sept 30th Sept 30th Sept 30th Sept 30th 2005 2004 2005 2004 --------- --------- --------- --------- Americas Total net sales $76,194 $65,801 $215,599 $200,418 Operating profit $10,398 $10,219 $26,812 $33,909 OP % 13.6% 15.5% 12.4% 16.9% Europe Total net sales $65,836 $56,877 $191,077 $177,445 Operating profit $3,235 $7,047 $19,455 $22,076 OP % 4.9% 12.4% 10.2% 12.4% Asia Total net sales $51,230 $38,907 $135,112 $110,787 Operating profit $10,501 $8,480 $25,926 $23,221 OP % 20.5% 21.8% 19.2% 21.0% Consolidated Total Total net sales $193,260 $161,585 $541,788 $488,650 Operating profit $24,134 $25,746 $72,193 $79,206 OP % 12.5% 15.9% 13.3% 16.2% MacDermid, Incorporated Sales and Margins by Group $ in thousands Three Months Ended Nine Months Ended ------------------- ------------------- Sept 30th Sept 30th Sept 30th Sept 30th 2005 2004 2005 2004 --------- --------- --------- --------- Advanced Surface Finishing Total net sales $111,003 $96,136 $313,476 $286,000 Operating profit $16,925 $16,276 $47,764 $46,742 OP % 15.2% 16.9% 15.2% 16.3% Printing Solutions Total net sales $82,257 $65,449 $228,312 $202,650 Operating profit $7,209 $9,470 $24,429 $32,464 OP % 8.8% 14.5% 10.7% 16.0% Consolidated Total Total net sales $193,260 $161,585 $541,788 $488,650 Operating profit $24,134 $25,746 $72,193 $79,206 OP % 12.5% 15.9% 13.3% 16.2% -0- MacDermid, Incorporated Condensed Consolidated Balance Sheets $ in thousands Sept 30th Dec. 31st 2005 2004 ----------- --------- (Unaudited) Cash and cash equivalents $60,307 $137,829 Accounts receivable, net 156,817 142,455 Inventories, net 96,655 80,445 Other current assets 31,274 28,486 ----------- --------- Current Assets 345,053 389,215 Property, plant & equipment, net 122,538 110,463 Goodwill 245,630 194,287 Intangibles 32,299 28,434 Other Assets 47,749 51,320 ----------- --------- Total assets $793,269 $773,719 =========== ========= Payables and accruals $126,022 $128,359 Short-term debt 3,554 753 ----------- --------- Current Liabilities 129,576 129,112 Long-term debt 301,288 301,077 Other long-term liabilities 37,369 39,499 ----------- --------- Total Liabilities 468,233 469,688 Shareholders' equity 325,036 304,031 ----------- --------- Total liabilities & shareholders' equity $793,269 $773,719 =========== ========= ---------------------------------------------------------------------- Debt to total capital 48% 50% ---------------------------------------------------------------------- -0- MacDermid, Incorporated Condensed Consolidated Summary of Cash Flows (Unaudited) $ in thousands Three Months Ended Nine Months Ended ----------------- ------------------ Sept Sept Sept Sept 30th 30th 30th 30th 2005 2004 2005 2004 -------- -------- --------- -------- Net earnings $12,917 $12,043 $36,630 $38,321 Depreciation 4,592 3,897 12,209 12,011 Amortization 1,008 708 2,796 2,159 Provision for bad debt 842 1,517 1,580 3,024 Stock compensation expense 1,177 1,351 5,227 4,383 Deferred Taxes (1,620) (1,559) (995) (1,431) Restructuring Charges 1,077 - 1,463 - Working capital changes (15,669) 5,021 (27,718) (1,359) -------- -------- --------- -------- Cash from operations 4,324 22,978 31,192 57,108 Capital spending, net (2,517) (768) (9,565) (3,212) -------- -------- --------- -------- Owner earnings** 1,807 22,210 21,627 53,896 Acquisition of business (3,883) - (93,153) Dividends paid (1,827) (1,211) (4,858) (2,423) Increase/(decrease) in debt (7,877) (261) 2,780 (1,001) Treasury shares - - 33 31 Other 1,973 396 (3,951) 256 -------- -------- --------- -------- Increase/(decrease) in cash $(9,807) $21,134 $(77,522) $50,759 ======== ======== ========= ======== ---------------------------------------------------------------------- **Note: Pro forma owner earnings adjusted for semi-annual bond interest payments would have been as follows: $6,900 $(6,900) $6,900 $6,900 $8,707 $15,310 $28,527 $60,796 ======== ======== ========= ======== -0- MacDermid, Inc. Regulation G: GAAP to Non-GAAP Reconciliation ---------------------------------------------------------------------- Gross Profit Before Special Charges (a) (b) ---------------------------------------------------------------------- (In thousands) Three Months Ended Dec-03 Mar-04 Jun-04 Sep-04 -------- -------- -------- --------- -------- -------- -------- --------- Net Sales as reported $162,106 $162,012 $165,053 $161,585 -------- -------- -------- --------- Gross Profit as reported $74,363 $77,526 $78,074 $76,375 Add: Special Charges - - - - -------- -------- -------- --------- Gross Profit Before Special Charges $74,363 $77,526 $78,074 $76,375 -------- -------- -------- --------- GP % Before Special Charges 45.9% 47.9% 47.3% 47.3% ---------------------------------------------------------------------- ---------------------------------------------------------------------- Operating Profit Before Amortization and Special Charges (a) (b) ---------------------------------------------------------------------- (In thousands) Three Months Ended Dec-03 Mar-04 Jun-04 Sep-04 -------- -------- -------- --------- Net Sales per above $162,106 $162,012 $165,053 $161,585 -------- -------- -------- --------- Earnings Before Interest and Taxes $27,689 $26,551 $27,348 $25,838 Add: Other (Income) Expense (1,142) 258 (697) (92) Add: Special Charges - - - - -------- -------- -------- --------- Operating Profit Before Special Charges $26,547 $26,809 $26,651 $25,746 ======== ======== ======== ========= % OP Before Special Charges to Net Sales 16.4% 16.5% 16.1% 15.9% ---------------------------------------------------------------------- MacDermid, Inc. Regulation G: GAAP to Non-GAAP Reconciliation ---------------------------------------------------------------------- Gross Profit Before Special Charges (a) (b) ---------------------------------------------------------------------- (In thousands) Dec-04 Mar-05 Jun-05 Sep-05 -------- -------- -------- --------- -------- -------- -------- --------- Net Sales as reported $172,135 $170,247 $178,281 $193,260 -------- -------- -------- --------- Gross Profit as reported $81,266 $77,653 $80,026 $83,282 Add: Special Charges - - 117 418 -------- -------- -------- --------- Gross Profit Before Special Charges $81,266 $77,653 $80,143 $83,700 -------- -------- -------- --------- GP % Before Special Charges 47.2% 45.6% 45.0% 43.3% ---------------------------------------------------------------------- ---------------------------------------------------------------------- Operating Profit Before Amortization and Special Charges (a) (b) ---------------------------------------------------------------------- (In thousands) Dec-04 Mar-05 Jun-05 Sep-05 -------- -------- -------- --------- Net Sales per above $172,135 $170,247 $178,281 $193,260 -------- -------- -------- --------- Earnings Before Interest and Taxes $27,615 $24,481 $22,988 $24,536 Add: Other (Income) Expense (1,411) (30) 622 (799) Add: Special Charges - - 503 1,495 -------- -------- -------- --------- Operating Profit Before Special Charges $26,204 $24,451 $24,113 $25,232 ======== ======== ======== ========= % OP Before Special Charges to Net Sales 15.2% 14.4% 13.5% 13.1% ---------------------------------------------------------------------- -------------------------------------------------------------------- Gross Profit Before Special Charges (a) (b) ------------------------------------------- Year Year (In thousands) Ended Ended Dec-03 Dec-04 -------- --------- -------- --------- Net Sales as reported $619,886 $660,785 -------- --------- Gross Profit as reported $290,615 $313,241 Add: Special Charges - - -------- --------- Gross Profit Before Special Charges $290,615 $313,241 -------- --------- GP % Before Special Charges 46.9% 47.4% -------------------------------------------------------------------- -------------------------------------------------------------------- Operating Profit Before Amortization and Special Charges (a) (b) ---------------- Year Year (In thousands) Ended Ended Dec-03 Dec-04 -------- --------- Net Sales per above $619,886 $660,785 -------- --------- Earnings Before Interest and Taxes $103,464 $107,352 Add: Other (Income) Expense (4,314) (1,942) Add: Special Charges - - -------- --------- Operating Profit Before Special Charges $99,150 $105,410 ======== ========= % OP Before Special Charges to Net Sales 16.0% 16.0% -------------------------------------------------------------------- (a) as a result of the Company's sale of Eurocir in Q4 2003, all applicable historical figures have been modified to exclude the results now reflected as Discontinued Operations. (b) "Gross Profit Before Special Charges" and "Operating Profit Special Charges" are not intended to represent Net Earnings as defined by Generally Accepted Accounting Principles. These measurements should not be used as an alternative to Net Earnings as an indicator of operating performance and may not be comparable to similarly titled measures used by other entities. Management believes that these measurements portray a meaningful measure of past operating performance and believes these measurements play an important factor toward the growth of shareholder value over time. -0- MacDermid, Inc. Regulation G: GAAP to Non-GAAP Reconciliation ---------------------------------------------------------------------- EPS from Continuing Operations Before Special Charges & Stock Compensation (a) (b) ------------------------------------------------------------- (In thousands, except share and per share amounts) Three Months Ended Dec-03 Mar-04 Jun-04 Sep-04 -------------------------------------------- Net Income (Loss) as reported $19,289 $12,893 $13,385 $12,043 Deduct: Income (Loss) from Discontinued Ops, net of income taxes 5,632 - - - -------------------------------------------- Income (Loss) from Continuing Operations 13,657 12,893 13,385 12,043 Change in accounting method - - - - SFAS 150 gain on stock call option - - - - Cost of sales impact of acquisition inventory adj - - - - Write-off of In process R&D - - - - Restructuring & Other Charges -------------------------------------------- Total Special Charges (Income) - - - - After Tax Effect of Special Charges (Income) - - - - -------------------------------------------- Net Income from Continuing Operations Before Tax Effected Special Charges $13,657 $12,893 $13,385 $12,043 ============================================ Stock Compensation Expense 1,119 1,560 1,472 1,351 After Tax Effect Stock Compensation Expense 761 1,061 1,001 905 -------------------------------------------- Net Income from Continuing Operations Before Tax Effected Special Charges & Stock Compensation $14,418 $13,954 $14,386 $12,948 ============================================ Earnings Per Share from Continuing Operations Before Tax Effected Special Charges $0.45 $0.42 $0.43 $0.39 ============================================ Earnings Per Share from Continuing Operations Before Tax Effected Special Charges and Stock Compensation $0.47 $0.45 $0.46 $0.42 ============================================ Diluted Average Common Shares Outstanding 30,501,615 31,041,763 31,014,374 30,988,259 ---------------------------------------------------------------------- ---------------------------------------------------------------------- EBITDA from Continuing Operations Before Special Charges (a) (b) ---------------------------------------------------------------- (In thousands) Three Months Ended Dec-03 Mar-04 Jun-04 Sep-04 -------------------------------------------- Earnings Before Interest and Taxes $27,689 $26,551 $27,348 $25,838 SFAS 150 gain on stock call option - - - - Cost of sales impact of acquisition inventory adj - - - - Write-off of In Process R&D - - - - Restructuring & Other Charges -------------------------------------------- Total Special Charges - - - - Amortization 889 734 717 708 Depreciation 3,976 4,125 3,989 3,897 EBITDA from Continuing Operations Before Special Charges $32,554 $31,410 $32,054 $30,443 ============================================ ---------------------------------------------------------------------- ---------------------------------------------------------------------- Owners Earnings (b) ------------------- (In thousands) Three Months Ended Dec-03 Mar-04 Jun-04 Sep-04 -------------------------------------------- Net cash flow provided by operating activities $29,158 $5,977 $28,153 $22,978 Capital expenditures, net 5,213 782 1,662 768 -------------------------------------------- Owner Earnings $23,945 $5,195 $26,491 $22,210 ============================================ Adjustment for Bond Interest assumed to be paid quarterly ---------------------- Owner Earnings $23,945 $5,195 $26,491 $22,210 Assumed if Bond Interest was paid quarterly (6,900) 6,900 (6,900) 6,900 -------------------------------------------- Adjusted Owner Earnings $17,045 $12,095 $19,591 $29,110 --------------------------============================================ ---------------------------------------------------------------------- EPS from Continuing Operations Before Special Charges & Stock Compensation (a) (b) -------------------------------------------------------------- (In thousands, except share and per share amounts) Three Months Ended Dec-04 Mar-05 Jun-05 Sep-05 -------------------------------------------- Net Income (Loss) as reported $14,903 $11,785 $11,928 $12,633 Deduct: Income (Loss) from Discontinued Ops, net of income taxes - - - -------------------------------------------- Income (Loss) from Continuing Operations 14,903 11,785 11,928 12,633 Change in accounting method - - SFAS 150 gain on stock call option - - Cost of sales impact of acquisition inventory adj - 117 418 Write-off of In process R&D - - 386 Restructuring & Other Charges 1,077 -------------------------------------------- Total Special Charges (Income) - - 503 1,495 After Tax Effect of Special Charges (Income) - - 357 1,069 -------------------------------------------- Net Income from Continuing Operations Before Tax Effected Special Charges $14,903 $11,785 $12,285 $13,702 ============================================ Stock Compensation Expense 2,112 2,177 1,873 1,177 After Tax Effect Stock Compensation Expense 1,415 1,361 1,330 842 -------------------------------------------- Net Income from Continuing Operations Before Tax Effected Special Charges & Stock Compensation $16,318 $13,146 $13,615 $14,544 ============================================ Earnings Per Share from Continuing Operations Before Tax Effected Special Charges $0.48 $0.38 $0.40 $0.44 ============================================ Earnings Per Share from Continuing Operations Before Tax Effected Special Charges and Stock Compensation $0.53 $0.43 $0.44 $0.47 ============================================ Diluted Average Common Shares Outstanding 30,794,808 30,809,620 30,787,829 30,865,440 ---------------------------------------------------------------------- ---------------------------------------------------------------------- EBITDA from Continuing Operations Before Special Charges (a) (b) ---------------------------------------------------------------- (In thousands) Three Months Ended Dec-04 Mar-05 Jun-05 Sep-05 -------------------------------------------- Earnings Before Interest and Taxes $27,615 $24,481 $22,988 $24,536 SFAS 150 gain on stock call option - - - Cost of sales impact of acquisition inventory adj - - 117 418 Write-off of In Process R&D - - 386 Restructuring & Other Charges 1,077 -------------------------------------------- Total Special Charges - - 503 1,495 Amortization 850 891 897 1,008 Depreciation 4,137 3,846 3,771 4,592 EBITDA from Continuing Operations Before Special-------------------------------------------- Charges $32,602 $29,218 $28,159 $31,631 ============================================ ---------------------------------------------------------------------- ---------------------------------------------------------------------- Owners Earnings (b) ------------------- (In thousands) Three Months Ended Dec-04 Mar-05 Jun-05 Sep-05 -------------------------------------------- Net cash flow provided by operating activities $28,169 $2,023 $24,845 $3,927 Capital expenditures, net 5,322 2,990 4,058 2,120 -------------------------------------------- Owner Earnings $22,847 ($967) $20,787 $1,807 ============================================ Adjustment for Bond Interest assumed to be paid quarterly ---------------------- Owner Earnings $22,847 ($967) $20,787 $1,807 Assumed if Bond Interest was paid quarterly (6,900) 6,900 (6,900) 6,900 -------------------------------------------- Adjusted Owner Earnings $15,947 $5,933 $13,887 $8,707 --------------------------============================================ --------------------------------------------------------------------- EPS from Continuing Operations Before Special Charges & Stock Compensation (a) (b) ----------------------------------------------------- (In thousands, except share and per share amounts) Year Year Ended Ended Dec-03 Dec-04 ---------------------- Net Income (Loss) as reported $56,426 $53,224 Deduct: Income (Loss) from Discontinued Ops, net of income taxes 5,592 - ---------------------- Income (Loss) from Continuing Operations 50,834 53,224 Change in accounting method (1,014) - SFAS 150 gain on stock call option (2,214) - Cost of sales impact of acquisition inventory adj - - Write-off of In process R&D - - Restructuring & Other Charges ---------------------- Total Special Charges (Income) (3,228) - After Tax Effect of Special Charges (Income) (2,520) - ---------------------- Net Income from Continuing Operations Before Tax Effected Special Charges $48,314 $53,224 ====================== Stock Compensation Expense 4,219 6,495 After Tax Effect Stock Compensation Expense 2,869 4,382 ---------------------- Net Income from Continuing Operations Before Tax Effected Special Charges & Stock Compensation $51,183 $57,606 ====================== Earnings Per Share from Continuing Operations Before Tax Effected Special Charges $1.55 $1.72 ====================== Earnings Per Share from Continuing Operations Before Tax Effected Special Charges and Stock Compensation $1.63 $1.86 ====================== Diluted Average Common Shares Outstanding 31,430,398 30,961,108 --------------------------------------------------------------------- --------------------------------------------------------------------- EBITDA from Continuing Operations Before Special Charges (a) (b) ---------------------------------------------------------------- (In thousands) Year Year Ended Ended Dec-03 Dec-04 ---------------------- Earnings Before Interest and Taxes $103,464 $107,352 SFAS 150 gain on stock call option (2,214) - Cost of sales impact of acquisition inventory adj - - Write-off of In Process R&D - - Restructuring & Other Charges ---------------------- Total Special Charges (2,214) - Amortization 3,301 3,009 Depreciation 15,793 16,148 EBITDA from Continuing Operations Before ---------------------- Special Charges $120,344 $126,509 ====================== ---------------------------------------------------------------------- ---------------------------------------------------------------------- Owners Earnings (b) -------------------- (In thousands) Year Year Ended Ended Dec-03 Dec-04 ---------------------- Net cash flow provided by operating activities $91,417 $85,277 Capital expenditures, net 10,704 8,534 ---------------------- Owner Earnings $80,713 $76,743 ====================== Adjustment for Bond Interest assumed to be paid quarterly ------------------------------------------ Owner Earnings $80,713 $76,743 Assumed if Bond Interest was paid quarterly - - ---------------------- Adjusted Owner Earnings $80,713 $76,743 -----------------------------------------------====================== (a) as a result of the Company's sale of Eurocir in Q4 2003, all applicable historical figures have been modified to exclude the results now reflected as Discontinued Operations. (b) "EPS from Continuing Operations Before Special Charges and Stock Compensation", "EBITDA from Continuing Operations Before Special Charges" and "Owners Earnings" are not intended to represent Net Earnings (loss) or Net Cash Flow From Operating Activities as defined by Generally Accepted Accounting Principles. These measurements should not be used as an alternative to Net Earnings or Net Cash Flow From Operating Activities as an indicator of operating performance and may not be comparable to similarly titled measures used by other entities. Management believes that these measurements portray a meaningful measure of past operating performance and believes these measurements play an important factor toward the growth of shareholder value over time.
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