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The eBearing News
October 20, 2000
Kaydon Reports Third Quarter 2000 Earnings,
Settlement, Realignments
copyright © 2000 eBearing Inc.
Kaydon Corporation (Ann Arbor, Michigan) reported third quarter 2000 sales of $81.3 million,
up from $73.7 in 1999. Net income from operations was $29.7 million in the quarter, compared
to $27.8 million in 1999.
Kaydon is a diversified manufacturing company which
manufactures bearings under the Kaydon brand in the United States and Cooper Roller
Bearings in the U.K.
Net income was much lower than operating income in 3Q2000, however, due to substantial
financial drain from ongoing litigation.
For 3Q2000, Kaydon made a $9.1 million provision for actual and estimated settlement
costs of litigation related to The Sikorsky Matter.
Background on The Sikorsky Matter
In May 1996, an accident and crash occurred involving a U.S. Navy Sikorsky CH-53E
helicopter. In 1998, Sikorsky Aircraft Corporation filed a lawsuit against Kaydon
seeking damages in the case. The U.S. government also began a parallel investigation via
a federal grand jury from the U.S. Attorney's Office in Bridgeport, Connecticut.
Sikorsky's litigation involves the product, while the grand jury investigation has
centered around inspection and product certification procedures at one of Kaydon's
manufacturing facilities.
During 3Q2000, Kaydon and Sikorsky reached a settlement without going to court, which
was expected to happen sometime during 2001 and could have litigated for a number of
years. The $9.1 million is the final charge against earnings which accounts for
this settlement.
Kaydon is also involved in ongoing negotiations toward a resolution of the U.S. Government
and grand jury investigation. The $9.1 million includes the estimated amount of a
settlement with the U.S. Government.
Including these $9.1 million in pre-tax charges, Kaydon earned $7.1 million
for 3Q2000.
Kaydon reported that sales of specialty bearings, particularly to the semiconductor and
railroad markets, continued strong from 1999 through 2000. The recent acquisition of
the Tridan Group added approximately USD $5 million in quarterly sales.
• the earlier Tridan acquisition article
The company reported a slowdown in sales of fluid power products and in the U.K. Cooper
Roller Bearings subsidiary due to continued soft demand for heavy construction equipment
and offshore oil equipment. The company is addressing the market conditions by
restructuring the Fluid Power Products division, closing one facility by folding its
operations into the remaining three facilities. The Cooper Roller Bearings subsidiary
has undergone management and staff realignments.
Cash flow for 3Q2000 was $10.2 million. So far during 2000, Kaydon spent $17.7
million on a common stock repurchase plan, and spent $9.8 million on capital
expenditures, net of credits and depreciation. Cash on hand at the end of 3Q2000 was
approximately $100 million vs. $89.7 million at the beginning of 1Q2000.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
trademarks of eBearing Inc.
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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