| Attached files | ||||||
| File | Filename | |||||
|---|---|---|---|---|---|---|
| 8-K - CERADYNE, INC. FORM 8-K 10-27-09 - CERADYNE INC | form8-k.htm | |||||
|
Jerrold
J. Pellizzon
|
Phil
Bourdillon/Gene Heller
|
|
|
Chief
Financial Officer
|
Silverman
Heller Associates
|
|
|
(714)
549-0421
|
(310)
208-2550
|
|
CERADYNE,
INC. REPORTS THIRD QUARTER,
NINE-MONTH
|
|
2009
FINANCIAL RESULTS
|
Costa
Mesa, Calif.–October 27, 2009–Ceradyne, Inc. (Nasdaq: CRDN) reported financial
results for the third quarter and nine months ended September 30,
2009.
Sales for
the third quarter 2009 were $108.0 million, compared with
$167.7 million in third
quarter 2008. Net income for the three months ended September 30, 2009 was
$4.9 million, or $0.19 per fully diluted share. The net income for the third
quarter 2009 included a pre-tax charge for losses on auction rate securities of
$1.8 million that reduced earnings per share by approximately
$0.07.
The
Company is adjusting its guidance for the full fiscal year 2009 from $.70 per
fully diluted share to approximately $.60 per fully diluted share and from sales
of $420 to $440 million to sales of $410 to $415 million. The forward looking
estimated fully diluted earnings per share guidance does not include the impact
of the total restructuring and impairment pre-tax charges for all of 2009, which
are estimated to be approximately $0.55 per fully diluted share.
Gross
profit margin was 26.5% of net sales in the third quarter 2009 compared to 39.7%
in the same period in 2008. The provision for income taxes was 22.4% in third
quarter 2009, compared to a provision for income taxes of 36.1% in the same
period in 2008.
Sales for
the nine months ended September 30, 2009 were $303.0 million, compared with
$541.3 million in the same period last year. Net loss for the nine months ended
September 30, 2009 was $5.6 million, or $0.22 per
fully diluted share. The loss included charges for restructuring and impairment
that had a negative impact by reducing fully diluted earnings per share by
approximately $0.51 for the nine months ended September 30, 2009. The charges
for restructuring and impairment totaled $17.3 million during the nine months
ended September 30, 2009 which included a pre-tax $11.9 million restructuring
charge for the closure of its plant in Bazet, France and other severance
expenses, a non-cash pre-tax impairment charge of $3.8 million to write down the
value of goodwill of its Ceradyne Canada reporting unit to reflect the current
industry and economic environment and accelerated depreciation of $1.6 million
resulting from a revision of the estimated useful lives of certain
assets.
Gross
profit margin was 24.8% of net sales in the nine months ended September 30, 2009
compared to 39.5% in the same period in 2008. The provision for income taxes was
9.7% in the nine months ended September 30, 2009, compared to a provision for
income taxes of 36.2% in the same period in 2008.
New
orders for the three months ended September 30, 2009 were $100.5 million,
compared to $119.4 million for the same period last year. For the nine months
ended September 30, 2009, new orders were $330.6 million, compared to $476.6
million for the comparable period last year.
Total
backlog as of September 30, 2009 was $156.3 million, compared to total backlog
at September 30, 2008 of $174.9 million.
Joel P.
Moskowitz, Ceradyne president and chief executive officer, commented: “Our
target of a balanced advanced technical ceramic company with sales approximately
equally divided between defense and non-defense markets has been achieved in
2009 with defense sales of about 52% of the Company’s total. As we look forward
to 2010, again we see significant opportunities in the non-defense sector,
particularly in solar energy, aluminum smelting, oil and gas drilling, and
certain novel, entirely new applications of our materials used in the
manufacturing of glass and automobile-related components.
“Although
lightweight ceramic body armor programs declined significantly in 2009, we
believe that in 2010 body armor along with other defense programs will reach a
sustainable level. Future defense opportunities include a new lighter weight
generation of body armor, body armor for our Allies, vehicle armor components
for U.S. as well as European vehicle manufacturers, and potential new business
for our recently acquired military helmet operation. We are also more actively
evaluating non-defense opportunities in China.
“Recent
examples of our progress towards 2010 product and market objectives
include:
|
·
|
A
recently completed successful oil and gas drilling event in which
Ceradyne’s proprietary ceramic bearing allowed the drilling of a
directional hole through a difficult Texas formation without removing the
drill and changing the bearing. We believe this bearing is the beginning
of a series of proprietary ceramic bearing products for oil and gas
drilling.
|
|
·
|
Our
ESK Ceramics subsidiary received its first order for its newly developed
oil/particle separator designed for removing hard erosive particles from
the oil in offshore applications, particularly in the North Sea. This
initial component is expected to be put into use early in
2010.
|
|
·
|
Ceradyne
together with its Fortune 500 customer have developed several new products
used in the fabrication of a new glass
system.
|
|
·
|
Our
long-time research efforts in the field of aluminum smelting are beginning
to show promise. Recent orders in North America and interest expressed in
China for our cathode product are
encouraging.
|
|
·
|
The
U.S. Marines have requested that our Ceradyne/Diaphorm division further
develop the ECH (Enhanced Combat Helmet) design based on our original
submission. Although we expect this will delay final evaluation by several
months, we continue to expect a decision by early
2010.
|
Because
of the uncertainty concerning some of our programs, we are establishing a wide
range for our initial guidance for 2010 as follows:
|
·
|
Sales
range from $380 million to $430
million
|
|
·
|
Earnings
range from $0.60 to $1.05 per fully diluted
share
|
This
assumes an annual tax rate of 31% with fully diluted average shares of 25.8
million.”
Ceradyne
will host a conference call today at 8:00 a.m. PDT (11:00 a.m. EDT) to discuss
its third quarter 2009 results. To participate in the teleconference, please
call toll free 877-717-3046 (or 706-634-6364 for international callers)
approximately 10 minutes prior to the above start time and provide Conference ID
35999659. Investors or other interested parties may listen to the teleconference
live via the Internet at www.ceradyne.com or
www.earnings.com.
These web sites will also host an archive of the teleconference. A telephonic
playback will be available beginning at 11:00 a.m. PDT today through 11:00 a.m.
PDT on October 29, 2009. The playback can be accessed by calling 800-642-1687
(or 706-645-9291 for international callers) and providing Conference ID
35999659.
Ceradyne develops, manufactures and markets advanced technical ceramic products and components for defense, industrial, automotive/diesel and commercial applications. Additional information can be found at the Company’s web site: www.ceradyne.com.
Except
for the historical information contained herein, this press release contains
forward-looking statements regarding future events and the future performance of
Ceradyne that involve risks and uncertainties that could cause actual results to
differ materially from those projected. Words such as "anticipates," "believes,"
"plans," "expects," "intends," "future," and similar expressions are intended to
identify forward-looking statements. These risks and uncertainties are described
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2008, and its quarterly Reports on Form 10-Q, as filed with the U.S.
Securities and Exchange Commission. Readers are cautioned not to place undue
reliance on the forward-looking statements, which speak only as of the date
thereof.
-more-
CERADYNE,
INC.
CONSOLIDATED
STATEMENTS OF INCOME
(Amounts
in thousands, except per share data)
|
Three Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||||
|
NET
SALES
|
$ | 107,954 | $ | 167,746 | $ | 302,993 | $ | 541,258 | ||||||||
|
COST
OF GOODS SOLD
|
79,329 | 101,082 | 227,717 | 327,504 | ||||||||||||
|
Gross
profit
|
28,625 | 66,664 | 75,276 | 213,754 | ||||||||||||
|
OPERATING
EXPENSES
|
||||||||||||||||
|
Selling
|
6,758 | 8,443 | 20,643 | 24,966 | ||||||||||||
|
General
and administrative
|
10,779 | 11,703 | 30,976 | 35,208 | ||||||||||||
|
Acquisition
related charge
|
(795 | ) | 9,783 | (795 | ) | 9,783 | ||||||||||
|
Research
and development
|
2,862 | 4,527 | 9,512 | 10,979 | ||||||||||||
|
Restructuring
- plant closure and severance
|
88 | - | 11,931 | - | ||||||||||||
|
Goodwill
impairment
|
- | - | 3,832 | - | ||||||||||||
| 19,692 | 34,456 | 76,099 | 80,936 | |||||||||||||
|
INCOME
(LOSS) FROM OPERATIONS
|
8,933 | 32,208 | (823 | ) | 132,818 | |||||||||||
|
OTHER
INCOME (EXPENSE):
|
||||||||||||||||
|
Interest
income
|
901 | 1,772 | 2,424 | 6,273 | ||||||||||||
|
Interest
expense
|
(1,520 | ) | (1,977 | ) | (5,469 | ) | (5,891 | ) | ||||||||
|
Gain
on early extinguishment of debt
|
96 | - | 1,881 | - | ||||||||||||
|
Loss
on auction rate securities
|
(1,849 | ) | (2,958 | ) | (3,480 | ) | (3,545 | ) | ||||||||
|
Miscellaneous
|
(197 | ) | 382 | (694 | ) | 1,702 | ||||||||||
| (2,569 | ) | (2,781 | ) | (5,338 | ) | (1,461 | ) | |||||||||
|
INCOME
(LOSS) BEFORE PROVISION FOR INCOME TAXES
|
6,364 | 29,427 | (6,161 | ) | 131,357 | |||||||||||
|
PROVISION
(BENEFIT) FOR INCOME TAXES
|
1,428 | 10,609 | (595 | ) | 47,546 | |||||||||||
|
NET
INCOME (LOSS)
|
$ | 4,936 | $ | 18,818 | $ | (5,566 | ) | $ | 83,811 | |||||||
|
BASIC
INCOME (LOSS) PER SHARE
|
$ | 0.19 | $ | 0.72 | $ | (0.22 | ) | $ | 3.15 | |||||||
|
DILUTED
INCOME (LOSS) PER SHARE
|
$ | 0.19 | $ | 0.71 | $ | (0.22 | ) | $ | 3.12 | |||||||
|
WEIGHTED
AVERAGE SHARES OUTSTANDING:
|
||||||||||||||||
|
BASIC
|
25,681 | 26,272 | 25,737 | 26,568 | ||||||||||||
|
DILUTED
|
25,798 | 26,563 | 25,737 | 26,888 | ||||||||||||
CERADYNE,
INC.
CONSOLIDATED
BALANCE SHEETS
(Amounts
in thousands, except share data)
|
September
30, 2009
|
December
31, 2008
|
|||||||
|
(Unaudited)
|
||||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$ | 143,718 | $ | 215,282 | ||||
|
Restricted
cash
|
3,130 | 2,702 | ||||||
|
Short-term
investments
|
78,739 | 6,140 | ||||||
|
Accounts
receivable, net of allowances for doubtful accounts of
$840
|
||||||||
|
and
$686 at September 30, 2009 and December 31, 2008, respectively
|
65,618 | 64,631 | ||||||
|
Other
receivables
|
4,094 | 5,316 | ||||||
|
Inventories,
net
|
98,751 | 101,017 | ||||||
|
Production
tooling, net
|
13,620 | 14,563 | ||||||
|
Prepaid
expenses and other
|
24,100 | 24,170 | ||||||
|
Deferred
tax asset
|
15,290 | 11,967 | ||||||
|
TOTAL
CURRENT ASSETS
|
447,060 | 445,788 | ||||||
|
PROPERTY,
PLANT AND EQUIPMENT, net
|
247,363 | 251,928 | ||||||
|
LONG
TERM INVESTMENTS
|
24,978 | 24,434 | ||||||
|
INTANGIBLE
ASSETS, net
|
90,380 | 84,384 | ||||||
|
GOODWILL
|
44,096 | 45,324 | ||||||
|
OTHER
ASSETS
|
2,512 | 2,669 | ||||||
|
TOTAL
ASSETS
|
$ | 856,389 | $ | 854,527 | ||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts
payable
|
$ | 30,577 | $ | 22,954 | ||||
|
Accrued
expenses
|
23,400 | 21,999 | ||||||
|
Income
taxes payable
|
2,142 | - | ||||||
|
TOTAL
CURRENT LIABILITIES
|
56,119 | 44,953 | ||||||
|
LONG-TERM
DEBT
|
81,338 | 102,631 | ||||||
|
EMPLOYEE
BENEFITS
|
21,071 | 19,088 | ||||||
|
OTHER
LONG TERM LIABILITY
|
46,406 | 41,816 | ||||||
|
DEFERRED
TAX LIABILITY
|
6,967 | 7,045 | ||||||
|
TOTAL
LIABILITIES
|
211,901 | 215,533 | ||||||
|
COMMITMENTS
AND CONTINGENCIES (Note 15)
|
||||||||
|
SHAREHOLDERS’
EQUITY
|
||||||||
|
Common
stock, $0.01 par value, 100,000,000 authorized, 25,680,354 and 25,830,374
shares issued and outstanding
at September 30, 2009 and December 31, 2008, respectively
|
257 | 259 | ||||||
|
Additional
paid-in capital
|
163,089 | 163,291 | ||||||
|
Retained
earnings
|
456,175 | 461,741 | ||||||
|
Accumulated
other comprehensive income
|
24,967 | 13,703 | ||||||
|
TOTAL
SHAREHOLDERS’ EQUITY
|
644,488 | 638,994 | ||||||
|
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 856,389 | $ | 854,527 | ||||
CERADYNE,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Amounts in
thousands)
|
Nine
Months Ended
September
30,
|
||||||||
|
2009
|
2008
|
|||||||
|
(Unaudited)
|
||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net
(loss) income
|
$ | (5,566 | ) | $ | 83,811 | |||
|
ADJUSTMENTS
TO RECONCILE NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING
ACTIVITIES:
|
||||||||
|
Depreciation
and amortization
|
28,649 | 30,122 | ||||||
|
Non
cash interest expense on convertible debt
|
2,817 | 2,887 | ||||||
|
Gain
on early extinguishment of debt
|
(1,880 | ) | - | |||||
|
Payments
of accreted interest on repurchased convertible debt
|
(2,956 | ) | - | |||||
|
Deferred
income taxes
|
(3,047 | ) | (656 | ) | ||||
|
Stock
compensation
|
2,906 | 2,233 | ||||||
|
Loss
on marketable securities
|
3,480 | 3,545 | ||||||
|
Goodwill
impairment
|
3,832 | - | ||||||
|
Loss
on equipment disposal
|
425 | 125 | ||||||
|
Change
in operating assets and liabilities (net of effect of businesses
acquired):
|
||||||||
|
Accounts
receivable, net
|
94 | 22,680 | ||||||
|
Other
receivables
|
1,352 | (3,597 | ) | |||||
|
Inventories,
net
|
5,387 | (5,079 | ) | |||||
|
Production
tooling, net
|
995 | 2,597 | ||||||
|
Prepaid
expenses and other assets
|
476 | (18,129 | ) | |||||
|
Accounts
payable and accrued expenses
|
8,985 | (5,456 | ) | |||||
|
Income
taxes payable
|
1,900 | 549 | ||||||
|
Other
long term liability
|
(510 | ) | 10,350 | |||||
|
Employee
benefits
|
1,071 | 1,014 | ||||||
|
NET
CASH PROVIDED BY OPERATING ACTIVITES
|
48,410 | 126,996 | ||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Purchases
of property, plant and equipment
|
(13,588 | ) | (35,938 | ) | ||||
|
Changes
in restricted cash
|
(428 | ) | (39 | ) | ||||
|
Purchases
of marketable securities
|
(136,173 | ) | - | |||||
|
Proceeds
from sales and maturities of marketable securities
|
64,051 | 21,700 | ||||||
|
Cash
paid for acquisitions
|
(9,655 | ) | (26,855 | ) | ||||
|
Proceeds
from sale of equipment
|
72 | 24 | ||||||
|
NET
CASH USED IN INVESTING ACTIVITIES
|
(95,721 | ) | (41,108 | ) | ||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Proceeds
from issuance of stock due to exercise of options
|
14 | 302 | ||||||
|
Excess
tax benefit due to exercise of stock options
|
24 | 287 | ||||||
|
Shares
repurchased
|
(5,099 | ) | (34,919 | ) | ||||
|
Reduction
on long term debt
|
(20,239 | ) | - | |||||
|
NET
CASH USED IN FINANCING ACTIVITIES
|
(25,300 | ) | (34,330 | ) | ||||
|
EFFECT
OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
|
1,047 | (2,175 | ) | |||||
|
(DECREASE)
INCREASE IN CASH AND CASH EQUIVALENTS
|
(71,564 | ) | 49,383 | |||||
|
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
215,282 | 155,103 | ||||||
|
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$ | 143,718 | $ | 204,486 | ||||
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW ACTIVITIES:
|
||||||||
|
Interest
paid
|
$ | 1,555 | $ | 1,744 | ||||
|
Income
taxes paid
|
$ | 692 | $ | 62,692 | ||||
##
