SEQUA CORP /DE/ - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q

(Mark one)
[X]	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended	March 31, 2005

	OR
[ ]	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from__________ to__________


Commission File Number 1-804
SEQUA CORPORATION

(Exact name of registrant as specified in its charter)

Delaware			13-1885030

(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification Number)

200 Park Avenue New York, New York			10166

(Address of principal executive offices)			(Zip code)

(212) 986-5500

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes	X		No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.)

Yes	X		No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class		Outstanding at April 30, 2005


Class A Common Stock, no par value	7,221,508
Class B Common Stock, no par value	3,321,772

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Sequa Corporation and Subsidiaries
Consolidated Statement of Operations
(Amounts in thousands, except per share)
(Unaudited)

		For the Three Months Ended March 31,

			2005			2004 *

Sales		$	475,022		$	431,023


Costs and expenses
	Cost of sales		383,520			355,322
	Selling, general and administrative		61,089			57,680

			444,609			413,002


Operating income			30,413			18,021

Other income (expense)
	Interest expense		(18,104	)		(18,066	)
	Interest income		1,318			759
	Equity in income of unconsolidated joint ventures		2,512			1,267
	Other, net		(715	)		(1,688	)


Income from continuing operations
	before income taxes		15,424			293

Income tax provision			(4,800	)		(100	)


Income from continuing operations			10,624			193

Income from discontinued operations,
	net of income taxes		-			1,060


Net income			10,624			1,253

Preferred dividends			(516	)		(516	)

Net income available to common stock		$	10,108		$	737




Basic earnings per share
	Income (loss) from continuing operations	$	0.96		$	(0.03	)
	Income from discontinued operations		-			0.10

	Net income	$	0.96		$	0.07




Diluted earnings per share
	Income (loss) from continuing operations	$	0.95		$	(0.03	)
	Income from discontinued operations		-			0.10

	Net income	$	0.95		$	0.07




Dividends declared per share
Preferred		$	1.25		$	1.25

The accompanying notes are an integral part of the financial statements.

*See Notes 1 and 9 to the consolidated financial statements.

Sequa Corporation and Subsidiaries
Consolidated Balance Sheet
(Amounts in thousands)

ASSETS


		(Unaudited)
		March 31,		December 31,
		2005		2004

Current assets
	Cash and cash equivalents	$	147,851	$	204,842
	Trade receivables (less allowances of $10,764 and $10,192 as of March 31, 2005 and December 31, 2004, respectively)		331,530		319,819
	Unbilled receivables		44,193		39,060
	Inventories		466,352		428,533
	Assets of discontinued operations		3,708		222
	Deferred income taxes		43,403		43,370
	Other current assets		27,020		26,882

	Total current assets		1,064,057		1,062,728


Investments
	Investments and other receivables		103,506		120,588
	Assets of discontinued operations		64,986		69,844

			168,492		190,432


Property, plant and equipment, net			433,593		431,337


Other assets
	Goodwill		147,356		147,943
	Deferred income taxes		23,876		23,225
	Deferred charges and other assets		105,077		107,088

			276,309		278,256


Total assets		$	1,942,451	$	1,962,753





The accompanying notes are an integral part of the financial statements.

Sequa Corporation and Subsidiaries
Consolidated Balance Sheet
(Amounts in thousands, except share data)

LIABILITIES AND SHAREHOLDERS' EQUITY

		(Unaudited)
		March 31,		December 31,
		2005		2004

Current liabilities
	Current maturities of long-term debt	$	12	$	520
	Accounts payable		190,415		186,858
	Taxes on income		22,994		22,016
	Accrued expenses		153,647		176,983

	Total current liabilities		367,068		386,377


Noncurrent liabilities
	Long-term debt		798,067		798,105
	Liabilities of discontinued operations		1,652		1,665
	Other noncurrent liabilities		104,482		105,545

			904,201		905,315

Shareholders' equity
	Preferred stock--$1 par value, 1,825,000 shares authorized, 797,000 shares of $5 cumulative convertible stock issued at March 31, 2005 and December 31, 2004 (involuntary liquidation value--$17,181 at March 31, 2005)		797		797
	Class A common stock--no par value, 50,000,000 shares authorized, 7,433,000 shares issued at March 31, 2005 and 7,410,000 shares issued at December 31, 2004		7,433		7,410
	Class B common stock--no par value, 10,000,000 shares authorized, 3,719,000 shares issued at March 31, 2005 and 3,727,000 shares issued at December 31, 2004		3,719		3,727
	Capital in excess of par value		295,021		294,092
	Retained earnings		410,678		400,571
	Accumulated other comprehensive income		31,390		41,994

			749,038		748,591
	Less: cost of treasury stock		77,856		77,530

	Total shareholders' equity		671,182		671,061


Total liabilities and shareholders' equity		$	1,942,451	$	1,962,753





The accompanying notes are an integral part of the financial statements.

Sequa Corporation and Subsidiaries
Consolidated Statement of Cash Flows
(Amounts in thousands)
(Unaudited)
			For the Three Months Ended March 31,

			2005				2004*

Cash flows from operating activities:
	Income from continuing operations before income taxes		$	15,424		$		293

	Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
		Depreciation and amortization		19,448				19,669
		Provision for losses on business transferred, under contractual arrangements		887				-
		Provision for losses on receivables		696				686
		Equity in income of unconsolidated joint ventures		(2,512	)			(1,267	)
		Other items not providing cash		879				794

	Changes in operating assets and liabilities:
		Receivables		(21,387	)			(23,143	)
		Proceeds from accounts receivable sold		17,000				-
		Accounts receivables settled		(17,000	)			-
		Inventories		(42,835	)			(17,361	)
		Other current assets		640				3,005
		Accounts payable and accrued expenses		(15,768	)			(8,218	)
		Other noncurrent liabilities		(1,166	)			2,983


	Net cash used for continuing operations before income taxes			(45,694	)			(22,559	)
	Net cash provided by discontinued operations before income taxes			1,477				5,481
	Income taxes paid, net			(4,419	)			(3,612	)

	Net cash used for operating activities			(48,636	)			(20,690	)


Cash flows from investing activities:
	Business purchased			(7,700	)			(1,824	)
	Purchases of property, plant and equipment			(16,706	)			(12,480	)
	Sales of property, plant and equipment			938				56
	Other investing activities			18,455				9

		Net cash used for investing activities		(5,013	)			(14,239	)


Cash flows from financing activities:
	Proceeds from debt			317				212
	Payments of debt			(857	)			(1,495	)
	Payments of preferred dividends			(516	)			(516	)
	Other financing activities			337				(847	)

		Net cash used for financing activities		(719	)			(2,646	)


Effect of exchange rate changes on cash and cash equivalents				(2,623	)			342

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