<PAGE> 1
EXHIBIT 99
Brian P. Campbell For Immediate Release
President and Chief Executive Officer
(734) 747-7025 ext. 129
KAYDON CORPORATION REPORTS THIRD QUARTER EARNINGS
AND ANNOUNCES SETTLEMENT CHARGE
Ann Arbor, Michigan, October 20, 2000
Kaydon Corporation (NYSE:KDN) reported net earnings for the third quarter
ended September 30, 2000, of $7.1 million or $.24 per share on a diluted basis,
including the after tax effect ($5.7 million or $.19 per share on a diluted
basis) of a pre-tax $9.1 million provision for actual and estimated settlement
costs associated with various previously disclosed litigation matters. This
compares to net earnings in the third quarter of 1999 of $13.0 million or $.41
cents per share on a diluted basis. Sales during the third quarter of 2000 were
$81.3 million, as compared to $73.7 million in 1999's third quarter. Sales of
specialty bearings products, particularly to the semiconductor equipment market,
industrial rings, sold to the railroad market, and specialty ball products
continue to be strong in 2000 compared to 1999. Third quarter 2000 sales were
also positively impacted by recent acquisitions which added approximately $5
million to quarterly revenue compared to 1999. Sales of fluid power products and
operations of the Company's UK-based Cooper Roller Bearings operation remain
weak and compare negatively to last year's performance, and are not expected to
recover until the markets these products serve, particularly the heavy
construction equipment and offshore oil equipment markets, rebound.
Sales for the first three quarters ended September 30, 2000 increased to
$252.3 million compared to $247.4 million during the first three quarters of
1999. Net income for the first three quarters of 2000 equaled $26.0 million or
$.86 per share on a diluted basis, including the after tax effect ($13.7 million
or $.45 per share on a diluted basis) of the $21.7 million of special
litigation-related charges taken during the second and third quarters. Net
earnings for the first three quarters of 1999 equaled $45.1 million or $1.41 per
share on a diluted basis.
Cash flow performance remains strong. Cash flow from operations during
this year's third quarter equaled $10.2 million, bringing operating cash flow
for the first three quarters of 2000 to a total of $46.7 million. Cash flow from
operations for the comparable period of 1999 was $52.2 million. During the first
three quarters of 2000, Kaydon repurchased 769,472 shares of its
<PAGE> 2
common stock for $17.7 million, paid $10.1 million of common stock dividends and
spent $9.8 million on net capital expenditures. Cash and cash equivalents at the
end of the quarter equaled $100.0 million compared to $89.7 million at the
beginning of the year.
Brian P. Campbell, Kaydon's President and Chief Executive Officer,
commented on the operating results, "As previously disclosed, certain key
markets, particularly those served by our Fluid Power Products division and our
Cooper Roller Bearings subsidiary in the United Kingdom remain depressed and
continue to negatively impact our operating performance. We are continuing to
make changes at these operations to react to current market conditions and to
prepare for when these markets begin to recover. The changes include the
previously announced restructuring of the Fluid Power Products division, which
includes the closing of one of the division's four facilities with its
operations integrated into the other three divisional locations, as well as
continued management and staff realignments at the Cooper UK facility. These
changes will leave these operations leaner and more focused, with greater
operating efficiencies."
Kaydon Corporation also announced that during the third quarter it
recorded a pre-tax $9.1 million charge in connection with claims related to the
previously disclosed May 1996 accident involving a CH-53E helicopter, which
Sikorsky Aircraft Corporation was manufacturing for the U.S. Navy (the "Sikorsky
Matter"). The Sikorsky Matter involves a private civil lawsuit and a U.S.
government investigation. Sikorsky Aircraft Corporation filed a lawsuit against
the Company in 1998 claiming damages that Sikorsky allegedly incurred following
the accident. In addition, the U.S. Attorney's Office in Bridgeport, Connecticut
has been conducting a grand jury and civil investigation of inspection and
product certification procedures at one of Kaydon's manufacturing facilities.
During the third quarter, Kaydon reached a settlement with Sikorsky
Aircraft Corporation, and has been engaged in negotiations toward a resolution
of the U.S. government investigation. The additional charge recorded during the
third quarter reflects the amount of the settlement with Sikorsky Aircraft
Corporation and the estimated amount of a potential settlement with the U.S.
government, less amounts the Company had previously reserved to litigate these
matters.
In commenting on the Sikorsky Matter, Mr. Campbell said, "The genesis of
this litigation dates back to 1996 and has been a time consuming and expensive
process. Company management has pursued a global settlement, even though it
believes Kaydon Corporation has meritorious defenses against claims relating to
alleged quality problems or deficiencies in its products, because management
believes resolving this protracted and costly litigation is in the best interest
of Kaydon. Absent any movement toward a resolution of this matter, Kaydon
Corporation would be faced with a multi-year litigation process."
Further information relating to the Sikorsky Matter is contained in Note
10 to Kaydon's 1999 financial statements, which are included in its Form 10-K,
filed with the Securities and Exchange Commission.
<PAGE> 3
Kaydon Corporation is a leading designer and manufacturer of
custom-engineered products, supplying a broad and diverse group of industrial,
aerospace, medical and electronic equipment, and aftermarket customers.
# # # # #
Certain information in this press release is forward looking, such as the
Company's expectations regarding future financial performance and
litigation/settlement expenses. The Company may not update these expectations to
reflect subsequent events. Such forward-looking information involves risks and
uncertainties that could significantly affect expected results. These risks and
uncertainties include, but are not limited to, uncertainties relating to
economic conditions, market acceptance of new or enhanced versions of the
Company's products, the pricing of raw materials, changes in the competitive
environments in which the Company's businesses operate, and the outcome of
pending and future litigation and governmental proceedings. Readers are
cautioned to consider these factors when relying on such forward-looking
information.
