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Ceradyne Inc. Reports Record Third-Quarter and Nine-Month Results

30 October 2000

Ceradyne Inc. Reports Record Third-Quarter and Nine-Month Results

    COSTA MESA, Calif.--Oct. 30, 2000--Ceradyne Inc. today reported record earnings for the third quarter and record sales and earnings for the nine months ended Sept. 30, 2000.
    Third-quarter sales grew 47 percent to $11.5 million from $7.8 million in the third quarter of 1999. Net income increased 184 percent to $1.4 million, or 17 cents per diluted and basic share, from $496,000, or 6 cents per diluted and basic share, in the year-ago period.
    Sales for the nine-month period increased 60 percent to $34.3 million, compared with $21.4 million in 1999. Net income increased almost fourfold to $3.9 million, or 47 cents per share diluted and 48 cents per share basic, compared with $945,000, or 12 cents per share diluted and basic, in the prior year period.
    New bookings for the third quarter were $11.8 million compared with $11.0 million in the year-earlier quarter. For the nine months ended Sept. 30, 2000, new bookings were $34.6 million compared with $30.4 million for the same period in 1999.
    Looking beyond the strong results for the period, Joel P. Moskowitz, Ceradyne's president and chief executive officer, commented: "Several events occurred during the third quarter which, on a going-forward basis, support a positive outlook for the coming fiscal year:
    First, as announced earlier this month, we received $2.3 million in government research grants in the fields of ceramic armor for military vehicles and a ceramic composite for high-power microwave communications.
    Secondly, the company received requests for proposals or became aware of several very large potential contracts for military ceramic armor systems and components for diesel engines. These potential orders are competitive and there is no assurance that Ceradyne will be the successful bidder, although we believe that Ceradyne has a strong position in these markets. The awards are expected to be made no later than early 2001.
    Thirdly, Ceradyne began expanding its facilities at its Thermo Materials operation in Scottdale, Ga., and its Advanced Ceramic Operations in Costa Mesa, Calif. The expansions include both plant and equipment and will allow Ceradyne to meet expected production volumes in ceramic armor and special ceramics for photovoltaic energy devices and other industrial applications. We have committed a minimum of $2 million to these projects, which we expect to complete by the second quarter of 2001."
    Moskowitz continued: "The company's current cash and equivalents position of $4.2 million, up from $1.4 million at year-end 1999, coupled with positive cash flow from operations, is expected to provide the primary financing sources for the above expansions and other corporate activities."
    
    Below is a summary of unaudited comparative results. Amounts in thousands except per share data.


                            Three Months Ended     Nine Months Ended
                                  Sept. 30,            Sept. 30,
                               2000      1999       2000        1999

NET SALES                   $ 11,493   $ 7,810   $ 34,340    $ 21,446
COST OF PRODUCT SALES          8,263     6,034     25,061      16,803
   Gross profit                3,230     1,776      9,279       4,643
 
OPERATING EXPENSES:
   Research and development      330       113        949         429
   Selling                       444       395      1,197       1,075
   General and administrative  1,142       866      3,371       2,531
                               1,916     1,374      5,517       4,035

   Income from operations      1,314       402      3,762         608

OTHER (INCOME) EXPENSE:
   Other (income)               (132)     (110)      (247)       (279)
   Interest expense                8         6         26           6 
                                (124)     (104)      (221)       (273)
   Income before provision
    (benefit) for income 
    taxes                      1,438       506      3,983         881
PROVISION (BENEFIT) FOR
 INCOME TAXES                     29        10         80         (64)

NET INCOME                  $  1,409   $   496   $  3,903    $    945

Earnings per share, basic   $   0.17   $  0.06   $   0.48    $   0.12
Earnings per share, diluted $   0.17   $  0.06   $   0.47    $   0.12

Avg. shares outstanding        8,469     8,227      8,376       8,163

Condensed Consolidated Balance Sheet (in thousands):

                                   Sept. 30, 2000      Dec. 31, 1999
                                      Unaudited           Audited

Cash and Cash Equivalents              $  4,238          $  1,407
Other Current Assets                     18,705            16,877
Net Property, Plant and Equipment        11,236            11,002
Other Assets                              3,462             3,607
         Total Assets                  $ 37,641          $ 32,893

Current Liabilities                       3,496             3,128
Long Term Debt                              283               358
Deferred Revenue                             67               270
Stockholders' Equity                     33,795            29,137

Total Liabilities and
 Stockholders' Equity                  $ 37,641          $ 32,893