Exhibit 99.1
CONDENSED CONSOLIDATED STATEMENT OF INCOME
AS REPORTED | AS ADJUSTED (1) | ||||||||||||||||||||||||||||||||||||||||||
(Thousands of U.S. dollars, except share data)(Unaudited) | Q1 2006 | Q2 2006 | Q3 2006 | Q4 2006 | Year 2006 | Q1 2006 | Q2 2006 | Q3 2006 | Q4 2006 | Year 2006 | |||||||||||||||||||||||||||||||||
Net sales | $ | 1,254,308 | $ | 1,302,174 | $ | 1,185,962 | $ | 1,230,921 | $ | 4,973,365 | $ | 1,254,308 | $ | 1,302,174 | $ | 1,185,962 | $ | 1,230,921 | $ | 4,973,365 | |||||||||||||||||||||||
Cost of products sold | 981,459 | 1,003,380 | 950,146 | 1,014,060 | 3,949,045 | 981,459 | 1,003,380 | 950,146 | 1,014,060 | 3,949,045 | |||||||||||||||||||||||||||||||||
Manufacturing rationalization/Reorganization expenses — cost of products sold | 3,036 | 4,945 | 3,419 | 7,076 | 18,476 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Gross Profit | $ | 269,813 | $ | 293,849 | $ | 232,397 | $ | 209,785 | $ | 1,005,844 | $ | 272,849 | $ | 298,794 | $ | 235,816 | $ | 216,861 | $ | 1,024,320 | |||||||||||||||||||||||
Selling, administrative & general expenses (SG&A) | 170,375 | 171,193 | 159,635 | 170,222 | 671,425 | 170,375 | 171,193 | 159,635 | 170,222 | 671,425 | |||||||||||||||||||||||||||||||||
Manufacturing rationalization/reorganization expenses — SG&A | 377 | 1,316 | 1,044 | 3,180 | 5,917 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Loss on divestitures | — | 9,971 | — | 54,300 | 64,271 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Impairment and restructuring | 1,040 | 7,469 | 2,682 | 33,690 | 44,881 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Operating Income | $ | 98,021 | $ | 103,900 | $ | 69,036 | $ | (51,607 | ) | $ | 219,350 | $ | 102,474 | $ | 127,601 | $ | 76,181 | $ | 46,639 | $ | 352,895 | ||||||||||||||||||||||
Other expense | (4,851 | ) | (4,843 | ) | (1,825 | ) | (3,465 | ) | (14,984 | ) | (4,851 | ) | (4,843 | ) | (1,825 | ) | (3,465 | ) | (14,984 | ) | |||||||||||||||||||||||
Special items — other (expense) income | (308 | ) | 2,662 | 76 | 92,220 | 94,650 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Earnings Before Interest and Taxes (EBIT) (2) | $ | 92,862 | $ | 101,719 | $ | 67,287 | $ | 37,148 | $ | 299,016 | $ | 97,623 | $ | 122,758 | $ | 74,356 | $ | 43,174 | $ | 337,911 | |||||||||||||||||||||||
Interest expense, net | (11,602 | ) | (11,697 | ) | (10,850 | ) | (10,633 | ) | (44,782 | ) | (11,602 | ) | (11,697 | ) | (10,850 | ) | (10,633 | ) | (44,782 | ) | |||||||||||||||||||||||
Income From Continuing Operations Before Income Taxes | $ | 81,260 | $ | 90,022 | $ | 56,437 | $ | 26,515 | $ | 254,234 | $ | 86,021 | $ | 111,061 | $ | 63,506 | $ | 32,541 | $ | 293,129 | |||||||||||||||||||||||
Provision for income taxes | 24,166 | 25,134 | 17,749 | 10,746 | 77,795 | 27,851 | 36,070 | 17,134 | 11,280 | 92,335 | |||||||||||||||||||||||||||||||||
Income From Continuing Operations | $ | 57,094 | $ | 64,888 | $ | 38,688 | $ | 15,769 | $ | 176,439 | $ | 58,170 | $ | 74,991 | $ | 46,372 | $ | 21,261 | $ | 200,794 | |||||||||||||||||||||||
Income from discontinued operations net of income taxes, special items (3) | — | — | — | 12,849 | 12,849 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Income from discontinued operations net of income taxes, other (3) | 8,846 | 9,803 | 7,859 | 6,731 | 33,239 | 8,846 | 9,803 | 7,859 | 6,731 | 33,239 | |||||||||||||||||||||||||||||||||
Net Income | $ | 65,940 | $ | 74,691 | $ | 46,547 | $ | 35,349 | $ | 222,527 | $ | 67,016 | $ | 84,794 | $ | 54,231 | $ | 27,992 | $ | 234,033 | |||||||||||||||||||||||
Earnings Per Share —Continuing Operations | $ | 0.61 | $ | 0.70 | $ | 0.41 | $ | 0.17 | $ | 1.89 | $ | 0.63 | $ | 0.80 | $ | 0.50 | $ | 0.23 | $ | 2.15 | |||||||||||||||||||||||
Earnings Per Share —Discontinued Operations — Other | 0.10 | 0.10 | 0.09 | 0.21 | 0.49 | 0.09 | 0.11 | 0.08 | 0.07 | 0.36 | |||||||||||||||||||||||||||||||||
Earnings Per Share | $ | 0.71 | $ | 0.80 | $ | 0.50 | $ | 0.38 | $ | 2.38 | $ | 0.72 | $ | 0.91 | $ | 0.58 | $ | 0.30 | $ | 2.51 | |||||||||||||||||||||||
Diluted Earnings Per Share —Continuing Operations | $ | 0.61 | $ | 0.69 | $ | 0.41 | $ | 0.17 | $ | 1.87 | $ | 0.62 | $ | 0.80 | $ | 0.49 | $ | 0.23 | $ | 2.13 | |||||||||||||||||||||||
Diluted Earnings Per Share —Discontinued Operations — Other | 0.09 | 0.10 | 0.08 | 0.20 | 0.49 | 0.09 | 0.10 | 0.08 | 0.07 | 0.35 | |||||||||||||||||||||||||||||||||
Diluted Earnings Per Share | $ | 0.70 | $ | 0.79 | $ | 0.49 | $ | 0.37 | $ | 2.36 | $ | 0.71 | $ | 0.90 | $ | 0.57 | $ | 0.30 | $ | 2.48 | |||||||||||||||||||||||
Average Shares Outstanding | 92,942,082 | 93,261,154 | 93,500,491 | 93,605,048 | 93,325,729 | 92,942,082 | 93,261,154 | 93,500,491 | 93,605,048 | 93,325,729 | |||||||||||||||||||||||||||||||||
Average Shares Outstanding-assuming dilution | 94,010,483 | 94,313,670 | 94,376,937 | 94,483,631 | 94,294,716 | 94,010,483 | 94,313,670 | 94,376,937 | 94,483,631 | 94,294,716 | |||||||||||||||||||||||||||||||||
BUSINESS SEGMENTS
(Thousands of U.S. dollars) (Unaudited) | Q1 2006 | Q2 2006 | Q3 2006 | Q4 2006 | Year 2006 | ||||||||||||||||||
Industrial Group | |||||||||||||||||||||||
Net sales to external customers | $ | 503,444 | $ | 528,605 | $ | 501,347 | $ | 539,099 | $ | 2,072,495 | |||||||||||||
Intersegment sales | 435 | 462 | 469 | 632 | 1,998 | ||||||||||||||||||
Total net sales | $ | 503,879 | $ | 529,067 | $ | 501,816 | $ | 539,731 | $ | 2,074,493 | |||||||||||||
Adjusted earnings before interest and taxes (EBIT) * (2) | $ | 45,885 | $ | 63,492 | $ | 48,180 | $ | 43,777 | $ | 201,334 | |||||||||||||
Adjusted EBIT Margin (2) | 9.1 | % | 12.0 | % | 9.6 | % | 8.1 | % | 9.7 | % | |||||||||||||
Automotive Group | |||||||||||||||||||||||
Net sales to external customers | $ | 420,984 | $ | 426,714 | $ | 363,585 | $ | 361,751 | $ | 1,573,034 | |||||||||||||
Adjusted (loss) earnings before interest and taxes (EBIT) * (2) | $ | (3,141 | ) | $ | (1,960 | ) | $ | (26,276 | ) | $ | (42,319 | ) | $ | (73,696 | ) | ||||||||
Adjusted EBIT (Loss) Margin (2) | -0.7 | % | -0.5 | % | -7.2 | % | -11.7 | % | -4.7 | % | |||||||||||||
Steel Group | |||||||||||||||||||||||
Net sales to external customers | $ | 329,880 | $ | 346,855 | $ | 321,030 | $ | 330,071 | $ | 1,327,836 | |||||||||||||
Intersegment sales | 45,530 | 36,441 | 34,584 | 27,869 | 144,424 | ||||||||||||||||||
Total net sales | $ | 375,410 | $ | 383,296 | $ | 355,614 | $ | 357,940 | $ | 1,472,260 | |||||||||||||
Adjusted earnings before interest and taxes (EBIT) * (2) | $ | 56,983 | $ | 59,749 | $ | 50,436 | $ | 39,523 | $ | 206,691 | |||||||||||||
Adjusted EBIT Margin (2) | 15.2 | % | 15.6 | % | 14.2 | % | 11.0 | % | 14.0 | % |
* | Industrial Group, Automotive Group and Steel Group EBIT do not equal Consolidated EBIT due to intersegment adjustments which are eliminated upon consolidation. | |
(1) | “Adjusted” statements exclude the impact of impairment and restructuring, manufacturing rationalization/reorganization and special charges and credits for all periods shown. | |
(2) | EBIT is defined as operating income plus other income (expense). EBIT Margin is EBIT as a percentage of net sales. EBIT and EBIT margin on a segment basis exclude certain special items set forth above. EBIT and EBIT Margin are important financial measures used in the management of the business, including decisions concerning the allocation of resources and assessment of performance. Management believes that reporting EBIT and EBIT Margin best reflect the performance of the company’s business segments and EBIT disclosures are responsive to investors. | |
(3) | Discontinued Operations reflects the December 8, 2006 sale of Timken Latrobe Steel. Steel Group Net sales and Adjusted EBIT have been changed to exclude Timken Latrobe Steel for all periods. Income From Discontinued Operations Net of Income Taxes, Special Items includes the gain on sale. |
Reconciliation of GAAP net income and EPS — diluted.
This reconciliation is provided as additional relevant information about the company’s performance. Management believes adjusted net income and adjusted earnings per share are more representative of the company’s performance and therefore useful to investors. Management also believes that it is appropriate to compare GAAP net income to adjusted net income in light of special items related to impairment and restructuring and manufacturing rationalization/reorganization costs, Continued Dumping and Subsidy Offset Act (CDSOA) receipts, and gain/loss on the sale of non-strategic assets.
Q1 2006 | Q2 2006 | Q3 2006 | Q4 2006 | Year 2006 | ||||||||||||||||||||||||||||||||||||
(Thousands of U.S. dollars, except share data) (Unaudited) | $ | EPS (2) | $ | EPS (2) | $ | EPS (2) | $ | EPS (2) | $ | EPS (2) | ||||||||||||||||||||||||||||||
Net income | $ | 65,940 | $ | 0.70 | $ | 74,691 | $ | 0.79 | $ | 46,547 | $ | 0.49 | $ | 35,349 | $ | 0.37 | $ | 222,527 | $ | 2.36 | ||||||||||||||||||||
Pre-tax special items: | ||||||||||||||||||||||||||||||||||||||||
Manufacturing rationalization/reorganization expenses — cost of products sold | 3,036 | 0.03 | 4,945 | 0.05 | 3,419 | 0.04 | 7,076 | 0.07 | 18,476 | 0.20 | ||||||||||||||||||||||||||||||
Manufacturing rationalization/reorganization expenses — SG&A | 377 | — | 1,316 | 0.01 | 1,044 | 0.01 | 3,180 | 0.03 | 5,917 | 0.06 | ||||||||||||||||||||||||||||||
Loss on Divestiture | — | — | 9,971 | 0.11 | — | — | 54,300 | 0.57 | 64,271 | 0.68 | ||||||||||||||||||||||||||||||
Impairment and restructuring | 1,040 | 0.01 | 7,469 | 0.08 | 2,682 | 0.03 | 33,690 | 0.36 | 44,881 | 0.48 | ||||||||||||||||||||||||||||||
Special items — other expense (income): | 308 | — | (2,662 | ) | (0.03 | ) | (76 | ) | — | (92,220 | ) | (0.98 | ) | (94,650 | ) | (1.00 | ) | |||||||||||||||||||||||
Provision for income taxes | (3,685 | ) | (0.04 | ) | (10,936 | ) | (0.12 | ) | 615 | 0.01 | (534 | ) | (0.01 | ) | (14,540 | ) | (0.15 | ) | ||||||||||||||||||||||
Income From Discontinued Operations | ||||||||||||||||||||||||||||||||||||||||
Net of Income Taxes, Special Items (1) | — | — | — | — | — | — | (12,849 | ) | (0.14 | ) | (12,849 | ) | (0.14 | ) | ||||||||||||||||||||||||||
Adjusted net income | $ | 67,016 | $ | 0.71 | $ | 84,794 | $ | 0.90 | $ | 54,231 | $ | 0.57 | $ | 27,992 | $ | 0.30 | $ | 234,033 | $ | 2.48 | ||||||||||||||||||||
(1) | Discontinued Operations relates to the sale of Latrobe Specialty Steel Unit in November of 2006. | |
(2) | EPS amounts will not sum due to rounding differences. |
Reconciliation of GAAP income from continuing operations and EPS — diluted.
This reconciliation is provided as additional relevant information about the company’s performance. Management believes adjusted income from continuing operations and adjusted earnings per share are more representative of the company’s performance and therefore useful to investors. Management also believes that it is appropriate to compare GAAP income from continuing operations to adjusted income from continuing operations in light of special items related to impairment and restructuring and manufacturing rationalization/reorganization costs, Continued Dumping and Subsidy Offset Act (CDSOA) receipts, and gain/loss on the sale of non-strategic assets.
Q1 2006 | Q2 2006 | Q3 2006 | Q4 2006 | Year 2006 | ||||||||||||||||||||||||||||||||||||
(Thousands of U.S. dollars, except share data) (Unaudited) | $ | EPS (2) | $ | EPS (2) | $ | EPS (2) | $ | EPS (2) | $ | EPS (2) | ||||||||||||||||||||||||||||||
Income from continuing operations | $ | 57,094 | $ | 0.61 | $ | 64,888 | $ | 0.69 | $ | 38,688 | $ | 0.41 | $ | 15,769 | $ | 0.17 | $ | 176,439 | $ | 1.87 | ||||||||||||||||||||
Pre-tax special items: | ||||||||||||||||||||||||||||||||||||||||
Manufacturing rationalization/reorganization expenses — cost of products sold | 3,036 | 0.03 | 4,945 | 0.05 | 3,419 | 0.04 | 7,076 | 0.07 | 18,476 | 0.20 | ||||||||||||||||||||||||||||||
Manufacturing rationalization/reorganization expenses — SG&A | 377 | — | 1,316 | 0.01 | 1,044 | 0.01 | 3,180 | 0.03 | 5,917 | 0.06 | ||||||||||||||||||||||||||||||
Loss on Divestiture | — | — | 9,971 | 0.11 | — | — | 54,300 | 0.57 | 64,271 | 0.68 | ||||||||||||||||||||||||||||||
Impairment and restructuring | 1,040 | 0.01 | 7,469 | 0.08 | 2,682 | 0.03 | 33,690 | 0.36 | 44,881 | 0.48 | ||||||||||||||||||||||||||||||
Special items — other expense (income): | 308 | — | (2,662 | ) | (0.03 | ) | (76 | ) | — | (92,220 | ) | (0.98 | ) | (94,650 | ) | (1.00 | ) | |||||||||||||||||||||||
Provision for income taxes | (3,685 | ) | (0.04 | ) | (10,936 | ) | (0.12 | ) | 615 | 0.01 | (534 | ) | (0.01 | ) | (14,540 | ) | (0.15 | ) | ||||||||||||||||||||||
Adjusted income from continuing operations | $ | 58,170 | $ | 0.62 | $ | 74,991 | $ | 0.80 | $ | 46,372 | $ | 0.49 | $ | 21,261 | $ | 0.23 | $ | 200,794 | $ | 2.13 | ||||||||||||||||||||
(2) | EPS amounts will not sum due to rounding differences. |