EXHIBIT 99.1
FISCAL 2007 FIRST QUARTER EARNINGS ANNOUNCEMENT
FROM: | KENNAMETAL INC. | |||
P.O. Box 231 | ||||
Latrobe, PA 15650 | ||||
724-539-5000 | ||||
Investor Relations | ||||
Contact: Quynh McGuire | ||||
724-539-6559 | ||||
Media Relations | ||||
Contact: Joy Chandler | ||||
724-539-4618 | ||||
DATE: | October 25, 2006 | |||
FOR RELEASE: | Immediate |
KENNAMETAL ANNOUNCES RECORD FIRST QUARTER EPS,
SHARE REPURCHASE PROGRAM AND DIVIDEND INCREASE
SHARE REPURCHASE PROGRAM AND DIVIDEND INCREASE
- Reported earnings per diluted share (EPS) of $0.78; adjusted EPS of $0.82 | |||
- Adjusted ROIC improved 160 basis points | |||
- Repurchase program for 3.3 million shares and 11 percent dividend increase approved | |||
- Increased full-year guidance range to $4.30 — $4.50 EPS |
LATROBE, Pa., October 25, 2006 — Kennametal Inc. (NYSE: KMT) today reported record first quarter fiscal 2007 EPS of $0.78, including charges from special items of $0.04 per share. This represents an increase of 8 percent over prior year. First quarter adjusted EPS were $0.82 compared with prior year quarter EPS of $0.72, an increase of 14 percent.
Kennametal’s President and Chief Executive Officer Carlos Cardoso said, “The momentum we gained in fiscal 2006 is continuing in the first quarter of fiscal 2007. We saw improvements that collectively resulted in the 12th consecutive quarter of year-over-year earnings growth, coupled with strong cash flow from operations – an excellent performance by any measure.
We attribute this success to our ability to focus steadily on the execution of our strategy through adherence to the disciplined processes that comprise the Kennametal Value Business System. This strategy calls for us to leverage the continued strength of our core businesses, as well as to diversify our business mix, geographic presence and customer base. We believe that our proven strategic approach will deliver exceptional value to customers and shareowners as Kennametal transforms into an even more balanced enterprise with a solid foundation for future growth.”
Reconciliation of all non-GAAP financial measures are set forth in the attached tables.
Highlights of Fiscal 2007 First Quarter
• | First quarter sales of $543 million were in line with the same quarter last year. Sales grew 6 percent on an organic basis offset by the net impact of acquisitions and divestitures, primarily the divestiture of J&L Industrial Supply (J&L). J&L outside sales were $65 million in the September quarter last year. | |
• | Income from continuing operations was $29 million for the first quarter, compared with $28 million in the prior year quarter, an increase of 5 percent despite the J&L divestiture. J&L contributed $7 million in operating income in the September quarter last year. Income from continuing operations, excluding special items, was $31 million for the first quarter, an increase of 9 percent over the prior year quarter. The September 2007 quarter results benefited from lower securitization fees and higher interest income, as well as lower minority interest expense, reflecting the effective use of cash and consistent with the company’s previously communicated strategies. | |
• | Income from discontinued operations reflects divested results of the Metalworking Solutions & Services Group’s consumer-related products business, including industrial saw blades (CPG) and the Advanced Materials Solutions Group’s Kemmer Praezision electronics business (Electronics). | |
• | First quarter reported EPS were $0.78, including charges from special items of $0.04 per share, compared with prior year quarter reported EPS of $0.72, an increase of 8 percent. The September quarter also reflects a lower effective tax rate primarily due to the company’s pan-European business model strategy implemented last year. First quarter adjusted EPS were $0.82. A reconciliation follows: |
Earnings Per Diluted Share Reconciliation
First Quarter FY 2007 | First Quarter FY 2006 | |||||||||||
Reported EPS | $ | 0.78 | Reported EPS | $ | 0.72 | |||||||
Loss on divestiture of CPG and transaction-related charges | 0.01 | No special items | ||||||||||
Adjustment on J&L divestiture and transaction-related charges | 0.03 | |||||||||||
Adjusted EPS | $ | 0.82 | $ | 0.72 | ||||||||
• | Adjusted return on invested capital (ROIC) was up 160 basis points to 11.5 percent from 9.9 percent in the prior year. |
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• | Cash flow from operations for the current quarter was an outflow of $19 million, compared with an inflow of $21 million in the prior year. Income tax payments were $86 million for the current quarter, primarily due to tax payments related to the gain on the sale of J&L and cash repatriated last quarter under the American Jobs Creation Act, compared with a refund of $1 million in the prior year quarter. Adjusted free operating cash flow for the September quarter, excluding the effects of income tax payments and refunds, was $45 million versus $6 million in the prior year quarter. |
Business Segment Highlights of Fiscal 2007 First Quarter
Metalworking Solutions & Services Group (MSSG) continued to deliver top-line growth led by year-over-year expansion in the aerospace, distribution and energy markets. The North American market remained stable; Europe has begun to show a modest recovery and Asia Pacific and India delivered strong double-digit growth.
In the September quarter, MSSG sales were up 3 percent on an organic basis. North American sales increased 1 percent. Asia Pacific and India sales grew 12 percent and 15 percent, respectively. Europe sales increased 2 percent.
MSSG operating income was unchanged at $46 million and the operating margin of 13 percent was lower than the same period last year, primarily due to higher realized raw material costs in the current quarter, partially offset by ongoing cost containment and price realization, particularly in Europe and Asia Pacific.
Advanced Materials Solutions Group (AMSG) delivered significant top-line growth in the September quarter, driven by favorable market conditions and the effect of acquisitions. Strong growth in the energy and mining markets continued to contribute to AMSG’s results.
AMSG sales grew 11 percent on an organic basis. Energy product sales were up 35 percent, mining and construction product sales were higher by 8 percent and engineered product sales increased 2 percent.
AMSG operating income grew 15 percent over last year, while operating margin of 15 percent was lower than prior year due primarily to higher realized raw material costs in the current quarter and a less favorable business mix.
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Outlook
Worldwide market conditions support Kennametal’s expectations of continued top-line growth during the balance of fiscal year 2007. Based on global economic indicators, the company believes that the North American market will remain solid. The company also believes that the market will improve and grow modestly in Europe, and that it will continue to be strong in developing economies. While there remain some uncertainties and risks related to the macro-economic environment, fundamental drivers for global demand appear to be stable.
“Virtually every move we have made at Kennametal has been oriented toward implementing our strategy and advancing our transformation,” said Carlos Cardoso. “As we strive to achieve our fiscal 2007 goals, we will continue to maintain our commitment to our proven strategy, driving organic growth and leveraging a favorable global industry environment to maximize the growth opportunities ahead.”
Kennametal expects organic revenue growth in the 7 to 10 percent range for fiscal 2007, which would extend its track record of consistently outpacing worldwide industrial production rates by two to three times. The company anticipates the majority of its end markets will continue to operate at favorable levels throughout the year, with moderating growth rates for some sectors.
For the second quarter of fiscal 2007, ongoing expansion around the globe supports the company’s projection of 6 to 9 percent organic sales growth, on top of strong performance in the prior year quarter.
The company has increased reported EPS guidance for the year to a range of $4.30 to $4.50, due to benefits associated with its pan-European business model strategy, which will drive a better than originally forecasted tax rate for fiscal year 2007. This range represents an increase in spite of some dilution from recent divestitures of non-core businesses. This revised earnings outlook reflects management’s confidence in the ability to maintain the strength of Kennametal’s performance. This forecasted range includes costs related to ongoing operating expense initiatives that will result in increased long-term profitability. On a comparable basis, the fiscal 2007 guidance midpoint represents a 29 percent growth rate, a substantial increase over prior year adjusted EPS from continuing operations of $3.41.
The company expects second quarter 2007 EPS to be $0.70 to $0.75. As previously announced, second quarter 2007 guidance includes approximately $0.10 per share of costs related to manufacturing streamlining initiated during this quarter, which is expected to have a payback within this fiscal year.
Kennametal expects to achieve its goal of 12 percent EBIT margin, and ROIC is on track for the projected 11 to 12 percent range for fiscal year 2007.
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Kennametal anticipates reported cash flow from operations of approximately $190 million to $200 million for fiscal 2007. Included in this amount are income tax payments of $86 million, as mentioned above. Adjusted cash from operations is expected to be approximately $275 million to $285 million.
Based on anticipated capital expenditures of $90 million, the company expects to generate between $185 million to $195 million of adjusted free operating cash flow for fiscal 2007.
Share Repurchase Program and Dividend Increase
Kennametal announced today that its Board of Directors has authorized a repurchase program of up to 3.3 million shares of its outstanding common stock. The purchases would be made from time to time, on the open market or in private transactions, with consideration given to the market price of the stock, the nature of other investment opportunities, cash flows from operations and general economic conditions.
Kennametal also announced that its Board of Directors declared a quarterly cash dividend of $0.21 per share, which represents an increase of 11 percent, or $0.02 per share. The dividend is payable November 20, 2006 to shareowners of record as of the close of business on November 8, 2006.
Kennametal advises shareowners to note monthly order trends, for which the company makes a disclosure ten business days after the conclusion of each month. This information is available on the Investor Relations section of Kennametal’s corporate web site atwww.kennametal.com.
First quarter results for fiscal 2007 will be discussed in a live Internet broadcast at 10:00 a.m. Eastern time today. This event will be broadcast live on the company’s website,www.kennametal.com. Once on the homepage, click “Corporate,” and then “Investor Relations.” Also, the replay of this event will be available on the company’s website through November 8, 2006.
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This release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements that do not relate strictly to historical or current facts. You can identify forward-looking statements by the fact they use words such as “should,” “anticipate,” “estimate,” “approximate,” “expect,” “may,” “will,” “project,” “intend,” “plan,” “believe” and other words of similar meaning and expression in connection with any discussion of future operating or financial performance. These statements are likely to relate to, among other things, our strategy, goals, plans and projections regarding our financial position, results of operations, market position, and product development, all of which are based on current expectations that involve inherent risks and uncertainties, including factors that could delay, divert or change any of them in the next several years. It is not possible to predict or identify all factors; however, they may include the following: global and regional economic conditions; energy costs; risks associated with the availability and costs of raw materials; commodity prices; risks associated with integrating recent acquisitions, as well as any future acquisitions, and achieving the expected savings and synergies; risks relating to business divestitures; competition; demands on management resources; risks associated with international markets, such as currency exchange rates and social and political environments or instability; future terrorist attacks or acts of war; labor relations; demand for and market acceptance of new and existing products; and risks associated with the implementation of restructuring plans, cost-reduction initiatives and environmental remediation matters. We can give no assurance that any goal or plan set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. We undertake no obligation to release publicly any revisions to forward-looking statements as a result of future events or developments.
Kennametal Inc. (NYSE:KMT) is a leading global supplier of tooling, engineered components and advanced materials consumed in production processes. The company improves customers’ competitiveness by providing superior economic returns through the delivery of application knowledge and advanced technology to master the toughest of materials application demands. Companies producing everything from airframes to coal, from medical implants to oil wells and from turbochargers to motorcycle parts recognize Kennametal for extraordinary contributions to their value chains. Customers buy over $2.3 billion annually of Kennametal products and services – delivered by our approximately 13,500 talented employees in over 60 countries – with almost 50 percent of these revenues coming from outside the United States. Visit us atwww.kennametal.com [KMT-E]
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FINANCIAL HIGHLIGHTS
Consolidated Statements of Income (Unaudited):
Three Months Ended | ||||||||
September 30, | ||||||||
(in thousands, except per share amounts) | 2006 | 2005 a | ||||||
Sales | $ | 542,811 | $ | 545,766 | ||||
Cost of goods sold | 355,780 | 348,438 | ||||||
Gross profit | 187,031 | 197,328 | ||||||
Operating expense | 135,044 | 144,901 | ||||||
Loss on divestiture | 1,686 | — | ||||||
Amortization of intangibles | 1,940 | 1,351 | ||||||
Operating income | 48,361 | 51,076 | ||||||
Interest expense | 7,427 | 7,829 | ||||||
Other income, net | (3,006 | ) | (879 | ) | ||||
Income from continuing operations before income taxes and minority interest | 43,940 | 44,126 | ||||||
Provision for income taxes | 13,929 | 15,300 | ||||||
Minority interest expense | 557 | 748 | ||||||
Income from continuing operations | 29,454 | 28,078 | ||||||
Income from discontinued operations, net of income taxes | 907 | 19 | ||||||
Net income | $ | 30,361 | $ | 28,097 | ||||
Basic earnings per share — continuing operations | $ | 0.77 | $ | 0.74 | ||||
Basic earnings per share — discontinued operations | 0.02 | 0.00 | ||||||
Basic earnings per share | $ | 0.79 | $ | 0.74 | ||||
Diluted earnings per share — continuing operations | $ | 0.76 | $ | 0.72 | ||||
Diluted earnings per share — discontinued operations | 0.02 | 0.00 | ||||||
Diluted earnings per share | $ | 0.78 | $ | 0.72 | ||||
Dividends per share | $ | 0.19 | $ | 0.19 | ||||
Basic weighted average shares outstanding | 38,226 | 37,949 | ||||||
Diluted weighted average shares outstanding | 39,058 | 38,915 |
a | Amounts have been reclassified to reflect discontinued operations related to the divestitures of Electronics — AMSG and CPG — MSSG. |
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FINANCIAL HIGHLIGHTS (Continued)
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited):
September 30, | June 30, | |||||||
(in thousands) | 2006 | 2006 | ||||||
ASSETS | ||||||||
Cash and equivalents | $ | 118,224 | $ | 233,976 | ||||
Accounts receivable, net | 366,837 | 386,714 | ||||||
Inventories | 354,876 | 334,949 | ||||||
Current assets of discontinued operations held for sale | — | 24,280 | ||||||
Other current assets | 109,337 | 106,938 | ||||||
Total current assets | 949,274 | 1,086,857 | ||||||
Property, plant and equipment, net | 546,408 | 530,379 | ||||||
Goodwill and intangible assets, net | 674,834 | 618,423 | ||||||
Assets of discontinued operations held for sale | — | 11,285 | ||||||
Other assets | 189,362 | 188,328 | ||||||
Total | $ | 2,359,878 | $ | 2,435,272 | ||||
LIABILITIES | ||||||||
Current maturities of long-term debt and capital leases, including notes payable | $ | 2,106 | $ | 2,214 | ||||
Accounts payable | 113,120 | 124,907 | ||||||
Current liabilities of discontinued operations held for sale | — | 3,065 | ||||||
Other current liabilities | 242,427 | 332,013 | ||||||
Total current liabilities | 357,653 | 462,199 | ||||||
Long-term debt and capital leases | 407,486 | 409,508 | ||||||
Other liabilities | 259,963 | 253,574 | ||||||
Total liabilities | 1,025,102 | 1,125,281 | ||||||
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES | 15,177 | 14,626 | ||||||
SHAREOWNERS’ EQUITY | 1,319,599 | 1,295,365 | ||||||
Total | $ | 2,359,878 | $ | 2,435,272 | ||||
SEGMENT DATA (Unaudited):
Three Months Ended | ||||||||
September 30, | ||||||||
(in thousands) | 2006 | 2005a | ||||||
Outside Sales: | ||||||||
Metalworking Solutions and Services Group | $ | 357,084 | $ | 331,580 | ||||
Advanced Materials Solutions Group | 185,727 | 149,184 | ||||||
J&L Industrial Supply | — | 65,002 | ||||||
Total outside sales | $ | 542,811 | $ | 545,766 | ||||
Sales By Geographic Region: | ||||||||
United States | $ | 266,863 | $ | 290,069 | ||||
International | 275,948 | 255,697 | ||||||
Total sales by geographic region | $ | 542,811 | $ | 545,766 | ||||
Operating Income (Loss): | ||||||||
Metalworking Solutions and Services Group | $ | 45,666 | $ | 45,941 | ||||
Advanced Materials Solutions Group | 27,386 | 23,852 | ||||||
J&L Industrial Supply | — | 6,844 | ||||||
Corporate and eliminationsb | (24,691 | ) | (25,561 | ) | ||||
Total operating income | $ | 48,361 | $ | 51,076 | ||||
a | Amounts have been reclassified to reflect discontinued operations related to the divestiture of Electronics (AMSG) and CPG including industrial saw blades (MSSG). | |
b | Includes corporate functional shared services and intercompany eliminations. |
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FINANCIAL HIGHLIGHTS (Continued)
In addition to reported results under generally accepted accounting principles in the United States of America (GAAP), the following financial highlight tables also include, where appropriate, a reconciliation of gross profit, operating expense, operating income, income from continuing operations, net income and diluted earnings per share, in each case excluding special items, adjusted free operating cash flow, adjusted segment sales, and adjusted return on invested capital (which are non-GAAP financial measures), to the most directly comparable GAAP measures. Management believes that the investor should have available the same information that management uses to assess operating performance, determine compensation, and assess the capital structure of the Company. These non-GAAP measures should not be considered in isolation or as a substitute for the most comparable GAAP measures. Investors are cautioned that non-GAAP financial measures utilized by the Company may not be comparable to non-GAAP financial measures used by other companies.
RECONCILIATION TO GAAP — THREE MONTHS ENDED SEPTEMBER 30, 2006 (Unaudited)
Income from | ||||||||||||||||||||||||
Gross | Operating | Operating | Continuing | Net | Diluted | |||||||||||||||||||
(in thousands, except per share amounts) | Profit | Expense | Income | Operations | Income | EPS | ||||||||||||||||||
2006 Reported Results | $ | 187,031 | $ | 135,044 | $ | 48,361 | $ | 29,454 | $ | 30,361 | $ | 0.78 | ||||||||||||
Loss on divestiture of CPG and transaction-related charges | — | — | — | — | 368 | 0.01 | ||||||||||||||||||
Adjustment on J&L divestiture and transaction-related charges | — | (333 | ) | 2,019 | 1,252 | 1,252 | 0.03 | |||||||||||||||||
2006 Results, excl. special items | $ | 187,031 | $ | 134,711 | $ | 50,380 | $ | 30,706 | $ | 31,981 | $ | 0.82 | ||||||||||||
For the three months ended September 30, 2005, there were no special items.
RECONCILIATION TO GAAP — YEAR ENDED JUNE 30, 2006 (Unaudited)
�� | ||||||||
Diluted EPS | ||||||||
Income from | from | |||||||
Continuing | Continuing | |||||||
(in thousands, except per share amounts) | Operations | Operations | ||||||
2006 Reported Results | $ | 272,251 | $ | 6.88 | ||||
Gain on divestiture of J&L recorded at corporate level | (1,091 | ) | (0.03 | ) | ||||
J&L transaction-related charges recorded at corporate level | 3,956 | 0.10 | ||||||
Tax impact of cash repatriation under AJCA | 11,176 | 0.28 | ||||||
Loss on sale of Presto | 9,457 | 0.24 | ||||||
Favorable resolution of tax contingencies | (10,873 | ) | (0.27 | ) | ||||
Divestiture impact of J&L(1) | (149,971 | ) | (3.79 | ) | ||||
2006 Adjusted Results | $ | 134,905 | $ | 3.41 | ||||
(1) | Excludes the impact of commercial relationships entered into in connection with the divestiture transaction. |
RECONCILIATION OF ADJUSTED FREE OPERATING CASH FLOW INFORMATION (Unaudited):
Three Months Ended | ||||||||
September 30, | ||||||||
(in thousands) | 2006 | 2005 | ||||||
Net cash flow (used for) provided by operating activities | $ | (18,800 | ) | $ | 20,526 | |||
Purchases of property, plant and equipment | (22,661 | ) | (14,875 | ) | ||||
Proceeds from disposals of property, plant and equipment | 483 | 835 | ||||||
Free operating cash flow | (40,978 | ) | 6,486 | |||||
Income taxes paid (refunded) | 86,236 | (572 | ) | |||||
Adjusted free operating cash flow | $ | 45,258 | $ | 5,914 | ||||
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FINANCIAL HIGHLIGHTS (Continued)
MSSG SEGMENT (Unaudited)
Three Months Ended | ||||||||
September 30, | ||||||||
(in thousands) | 2006 | 2005 | ||||||
Sales, as reported | $ | 357,084 | $ | 331,580 | ||||
Foreign currency exchange | (7,372 | ) | — | |||||
Divestiture-related adjustments | — | 8,408 | ||||||
Adjusted sales | $ | 349,712 | $ | 339,988 | ||||
AMSG SEGMENT (Unaudited)
Three Months Ended | ||||||||
September 30, | ||||||||
(in thousands) | 2006 | 2005 | ||||||
Sales, as reported | $ | 185,727 | $ | 149,184 | ||||
Foreign currency exchange | (1,880 | ) | — | |||||
Acquisition-related adjustments | (14,375 | ) | 3,612 | |||||
Adjusted sales | $ | 169,472 | $ | 152,796 | ||||
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RETURN ON INVESTED CAPITAL (Unaudited):
September 30, 2006 (in thousands, except percents)
9/30/2006 | 6/30/2006 | 3/31/2006 | 12/31/2005 | 9/30/2005 | Average | |||||||||||||||||||
Invested Capital | ||||||||||||||||||||||||
Debt | $ | 409,592 | $ | 411,722 | $ | 365,906 | $ | 410,045 | $ | 415,250 | $ | 402,503 | ||||||||||||
Accounts receivable securitized | — | — | 106,106 | 100,295 | 100,445 | 61,369 | ||||||||||||||||||
Minority interest | 15,177 | 14,626 | 18,054 | 16,918 | 18,117 | 16,578 | ||||||||||||||||||
Shareowners’ equity | 1,319,599 | 1,295,365 | 1,115,110 | 1,045,974 | 1,009,394 | 1,157,089 | ||||||||||||||||||
Total | $ | 1,744,368 | $ | 1,721,713 | $ | 1,605,176 | $ | 1,573,232 | $ | 1,543,206 | $ | 1,637,539 | ||||||||||||
Quarter Ended | ||||||||||||||||||||
9/30/2006 | 6/30/2006 | 3/31/2006 | 12/31/2005 | Total | ||||||||||||||||
Interest Expense | ||||||||||||||||||||
Interest expense | $ | 7,427 | $ | 7,478 | $ | 7,728 | $ | 7,984 | $ | 30,617 | ||||||||||
Securitization fees | 22 | 1,288 | 1,241 | 1,170 | 3,721 | |||||||||||||||
Total interest expense | $ | 7,449 | $ | 8,766 | $ | 8,969 | $ | 9,154 | $ | 34,338 | ||||||||||
Income tax benefit | 9,134 | |||||||||||||||||||
Total interest expense, net of tax | $ | 25,204 | ||||||||||||||||||
9/30/2006 | 6/30/2006 | 3/31/2006 | 12/31/2005 | Total | ||||||||||||||||
Total Income | ||||||||||||||||||||
Net Income, as reported | $ | 30,361 | $ | 164,196 | $ | 32,903 | $ | 31,087 | $ | 258,547 | ||||||||||
Gain on divestiture of J&L | 1,045 | (132,001 | ) | — | — | (130,956 | ) | |||||||||||||
J&L transaction-related charges | 207 | 2,796 | 1,160 | — | 4,163 | |||||||||||||||
Loss on divestiture of Electronics | — | 15,366 | — | — | 15,366 | |||||||||||||||
Tax impact of cash repatriation under AJCA | — | 11,176 | — | — | 11,176 | |||||||||||||||
Loss on divestiture of CPG, goodwill impairment and transaction-related charges | 368 | (2,192 | ) | 5,030 | — | 3,206 | ||||||||||||||
Loss on divestiture of Presto | — | 1,410 | 8,047 | — | 9,457 | |||||||||||||||
Favorable resolution of tax contingencies | — | (10,873 | ) | — | — | (10,873 | ) | |||||||||||||
Minority interest expense | 557 | 525 | 782 | 511 | 2,375 | |||||||||||||||
Total Income, excluding special items | $ | 32,538 | $ | 50,403 | $ | 47,922 | $ | 31,598 | $ | 162,461 | ||||||||||
Total interest expense, net of tax | 25,204 | |||||||||||||||||||
$ | 187,665 | |||||||||||||||||||
Average invested capital | $ | 1,637,539 | ||||||||||||||||||
Adjusted Return on Invested Capital | 11.5 | % | ||||||||||||||||||
Return on invested capital calculated utilizing net income, as reported is as follows: | ||||||||||||||||||||
Net income, as reported | $ | 258,547 | ||||||||||||||||||
Total interest expense, net of tax | 25,204 | |||||||||||||||||||
$ | 283,751 | |||||||||||||||||||
Average invested capital | $ | 1,637,539 | ||||||||||||||||||
Return on Invested Capital | 17.3 | % | ||||||||||||||||||
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FINANCIAL HIGHLIGHTS (Continued)
RETURN ON INVESTED CAPITAL (Unaudited):
September 30, 2005 (in thousands, except percents)
9/30/2005 | 6/30/2005 | 3/31/2005 | 12/31/2004 | 9/30/2004 | Average | |||||||||||||||||||
Invested Capital | ||||||||||||||||||||||||
Debt | $ | 415,250 | $ | 437,374 | $ | 485,168 | $ | 405,156 | $ | 435,435 | $ | 435,667 | ||||||||||||
Accounts receivable securitized | 100,445 | 109,786 | 120,749 | 115,253 | 115,309 | 112,308 | ||||||||||||||||||
Minority interest | 18,117 | 17,460 | 19,664 | 19,249 | 17,377 | 18,373 | ||||||||||||||||||
Shareowners’ equity | 1,009,394 | 972,862 | 1,021,186 | 1,003,507 | 924,432 | 986,276 | ||||||||||||||||||
Total | $ | 1,543,206 | $ | 1,537,482 | $ | 1,646,767 | $ | 1,543,165 | $ | 1,492,553 | $ | 1,552,635 | ||||||||||||
Quarter Ended | ||||||||||||||||||||
9/30/2005 | 6/30/2005 | 3/31/2005 | 12/31/2004 | Total | ||||||||||||||||
Interest Expense | ||||||||||||||||||||
Interest expense | $ | 7,829 | $ | 7,897 | $ | 6,803 | $ | 6,121 | $ | 28,650 | ||||||||||
Securitization fees | 1,065 | 981 | 868 | 757 | 3,671 | |||||||||||||||
Total interest expense | $ | 8,894 | $ | 8,878 | $ | 7,671 | $ | 6,878 | $ | 32,321 | ||||||||||
Income tax benefit | 11,086 | |||||||||||||||||||
Total interest expense, net of tax | $ | 21,235 |
9/30/2005 | 6/30/2005 | 3/31/2005 | 12/31/2004 | Total | ||||||||||||||||
Total Income | ||||||||||||||||||||
Net income, as reported | $ | 28,097 | $ | 37,740 | $ | 30,650 | $ | 28,181 | $ | 124,668 | ||||||||||
Goodwill impairment charge | — | — | 3,306 | — | 3,306 | |||||||||||||||
Loss on assets held for sale | — | — | 1,086 | — | 1,086 | |||||||||||||||
Minority interest expense | 748 | 238 | 1,449 | 928 | 3,363 | |||||||||||||||
Total income, excluding special items | $ | 28,845 | $ | 37,978 | $ | 36,491 | $ | 29,109 | $ | 132,423 | ||||||||||
Total interest expense, net of tax | 21,235 | |||||||||||||||||||
$ | 153,658 | |||||||||||||||||||
Average invested capital | $ | 1,552,635 | ||||||||||||||||||
Adjusted Return on Invested Capital | 9.9 | % | ||||||||||||||||||
Return on invested capital calculated utilizing net income, as reported is as follows: | ||||||||||||||||||||
Net income, as reported | $ | 124,668 | ||||||||||||||||||
Total interest expense, net of tax | 21,235 | |||||||||||||||||||
$ | 145,903 | |||||||||||||||||||
Average invested capital | $ | 1,552,635 | ||||||||||||||||||
Return on Invested Capital | 9.4 | % | ||||||||||||||||||
-end-
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