UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
of the Securities Exchange Act of 1934
Date of
report (Date of earliest event reported): March 8, 2007
Park-Ohio Holdings Corp.
(Exact name of registrant as specified in its charter)
Ohio (State or other jurisdiction of incorporation or organization) |
000-03134 (Commission File No.) |
34-1867219 (I.R.S. Employer Identification Number) |
23000 Euclid Avenue
Cleveland, Ohio 44117
(Address of principal executive offices)
Cleveland, Ohio 44117
(Address of principal executive offices)
(216) 692-7200
(Registrants telephone number, including area code)
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On
March 8, 2007, the Company issued a press release announcing its
2006 year-end results. The
press release is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit | ||
Number | Description | |
99.1
|
Park-Ohio Holdings Corp. Press Release, dated March 8, 2007. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Park-Ohio Holdings Corp. (Registrant) |
||||
Date:
March 8, 2007
|
By: /s/ Richard P. Elliott | |||
Richard P. Elliott | ||||
Vice President and Chief Financial Officer |
Exhibit Index
Exhibit | ||
Number | Description | |
99.1
|
Park-Ohio Holdings Corp. Press Release, dated March 8, 2007. |
Exhibit
99.1
FOR IMMEDIATE RELEASE
|
CONTACT: | EDWARD F. CRAWFORD PARK-OHIO HOLDINGS CORP. (216) 692-7200 |
Park-Ohio Continues to Expand in 2006
CLEVELAND, OHIO, March 8, 2007 Park-Ohio Holdings Corp. (NASDAQ:PKOH) today announced
results for its fourth quarter and year ended December 31, 2006.
FULL YEAR RESULTS
Park-Ohio reported net income of $24.2 million or $2.11 per share dilutive for 2006, compared
to net income of $30.8 million or $2.70 per share dilutive for 2005. Net income in 2006 and 2005
increased by the reversal of $5.0 million and $7.3 million, respectively, of the Companys deferred
tax asset valuation allowance, while federal income taxes were not expensed in 2005. Park-Ohio
reported record net income,
fully-taxed(A)
of $19.2 million or $1.68 per share dilutive
for 2006, a 4% increase on 2005 net income, fully-taxed(A) of $18.5 million or $1.62 per
share dilutive (refer to Table 1 below). Park-Ohio reported net sales of $1,056.2 million for
2006, a 13% increase on sales of $932.9 million in 2005.
FOURTH QUARTER RESULTS
Park-Ohio reported net income of $10.8 million or $.94 per share dilutive for fourth quarter
2006, compared to net income of $12.0 million or $1.05 per share dilutive for the same quarter of
2005. Net income in 2006 and 2005 increased by the reversal of $5.0 million and $7.3 million,
respectively, of the Companys deferred tax asset valuation allowance, while federal income taxes
were not expensed in 2005. Park-Ohio reported net sales of $270.4 million for fourth quarter 2006,
a 12% increase on sales of $241.0 million for the same quarter of 2005.
Edward
F. Crawford, Chairman and Chief Executive Officer, stated, We
are pleased with the Companys record operating profit in 2006.
We expect the first quarter of 2007 to be sluggish because of reduced
activity in the domestic auto and heavy-duty truck markets. Despite
that slow start, our Company is well positioned with its diversity
and global presence to generate approximately 10% sales growth and
25% earnings growth this year, producing EBIT of $72 to
$78 million and diluted earnings per share of $2.10 to $2.35 in
2007.
Table 1: Recent History of EPS, EBIT and Revenue
Year ended December 31, | ||||||||||||||||
2004 | 2005 | 2006 | 2007 | |||||||||||||
(Guidance) | ||||||||||||||||
Dilutive EPS, GAAP, as reported |
$ | 1.27 | $ | 2.70 | $ | 2.11 | $2.10to$2.35 | |||||||||
Dilutive EPS, fully-taxed |
$ | 1.10 | $ | 1.62 | $ | 1.68 | $2.10to$2.35 | |||||||||
Operating Income (EBIT) [$ in millions] |
$ | 49.0 | $ | 53.5 | $ | 58.7 | $ | 72 to $78 | ||||||||
Revenue |
$ | 809 | $ | 933 | $ | 1.06 | $ | 1.1 to $1.2 | ||||||||
(million) | (million) | (billion) | (billion) |
(Note A) Reconciliation to GAAP:
Year ended | ||||||||||||
(In Millions, except EPS) | December 31, | |||||||||||
2006 | 2005 | 2004 | ||||||||||
Net Income, GAAP, as reported: |
$ | 24.2 | $ | 30.8 | $ | 14.2 | ||||||
Less: Reversal of Tax Valuation Allowance(1) |
(5.0 | ) | (7.3 | ) | ||||||||
Plus:
Addl Income Tax to 30% Rate before Reversal(2) |
| (5.0 | ) | (1.9 | ) | |||||||
Net Income, fully-taxed |
$ | 19.2 | $ | 18.5 | $ | 12.3 | ||||||
Number of Dilutive Shares |
11.46 | 11.41 | 11.19 | |||||||||
Dilutive EPS, fully-taxed |
$ | 1.68 | $ | 1.62 | $ | 1.10 | ||||||
The Company presents fully-taxed net income and EPS reflecting equalized tax rates to
facilitate comparison between periods.
(1) | Net Income in fourth quarter 2006 and 2005 increased by the reversal $5.0 and $7.3 million, respectively, of the Companys deferred tax asset valuation allowance, substantially eliminating this allowance. Based on strong recent and projected earnings, the Company has determined that it is more likely than not that this deferred tax asset will be realized. The tax valuation allowance reversal resulted in an increase to net income for the fourth quarter of each year. |
(2) | In 2006, following the reversal of a portion of its deferred tax valuation allowance, the Company began recording a quarterly provision for federal income taxes. For 2006, the Companys effective income tax rate was 30% excluding the tax valuation allowance reversal, compared to 11% and 19% for 2005 and 2004, respectively. Park-Ohios net operating loss carry-forward precluded the payment of cash federal income taxes in 2006 and should substantially reduce cash payments in 2007. |
A conference call reviewing Park-Ohios fourth quarter results will be broadcast live over the
Internet on Friday, March 9, commencing at 10:00 am Eastern Time. Simply log on to
http://www.pkoh.com.
Park-Ohio is a leading provider of supply chain logistics services, and a manufacturer of
highly engineered products. Headquartered in Cleveland, Ohio, the Company operates 24
manufacturing sites and 55 supply chain logistics facilities.
This news release contains forward-looking statements, including statements regarding future
performance of the Company that are subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, estimated or projected.
Among the key factors that could cause actual results to differ materially from expectations
are: the cyclical nature of the vehicular industry; timing of cost reductions; labor availability
and stability; changes in economic and industry conditions; adverse impacts to the Company, its
suppliers and customers from acts of terrorism or hostilities; the financial condition of the
Companys customers and suppliers, including the impact of any bankruptcies; the Companys ability
to successfully integrate the operations of acquired companies; the uncertainties of
environmental, litigation or corporate contingencies; and changes in regulatory requirements.
These and other risks and assumptions are described in the Companys reports that are available
from the United States Securities and Exchange Commission. The Company assumes no obligation to
update the information in this release.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands, Except per Share Data)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands, Except per Share Data)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Net sales |
$ | 270,405 | $ | 240,975 | $ | 1,056,246 | $ | 932,900 | ||||||||
Cost of products sold |
233,056 | 210,740 | 908,095 | 796,283 | ||||||||||||
Gross profit |
37,349 | 30,235 | 148,151 | 136,617 | ||||||||||||
Selling, general and administrative expenses |
23,925 | 17,237 | 90,296 | 82,133 | ||||||||||||
Restructuring and impairment charges (credits) |
(809 | ) | 943 | (809 | ) | 943 | ||||||||||
Operating income |
14,233 | 12,055 | 58,664 | 53,541 | ||||||||||||
Interest expense |
8,097 | 6,682 | 31,267 | 27,056 | ||||||||||||
Income before income taxes |
6,136 | 5,373 | 27,397 | 26,485 | ||||||||||||
Income taxes (benefit) |
(4,649 | ) | (6,583 | ) | 3,218 | (4,323 | ) | |||||||||
Net income |
$ | 10,785 | $ | 11,956 | $ | 24,179 | $ | 30,808 | ||||||||
Amounts per common share: |
||||||||||||||||
Basic |
$ | 0.98 | $ | 1.09 | $ | 2.20 | $ | 2.82 | ||||||||
Diluted |
$ | 0.94 | $ | 1.05 | $ | 2.11 | $ | 2.70 | ||||||||
Common shares used in the computation: |
||||||||||||||||
Basic |
11,029 | 10,943 | 10,997 | 10,908 | ||||||||||||
Diluted |
11,491 | 11,422 | 11,461 | 11,409 | ||||||||||||
Other financial data: |
||||||||||||||||
EBITDA, as defined |
$ | 20,701 | $ | 18,395 | $ | 80,057 | $ | 73,344 | ||||||||
Note AIn 2006, the Company began recording a quarterly provision for federal
income taxes, resulting in a total effective income tax rate of
approximately 30
percent. The Companys significant net operating loss carryforwards precluded
the cash payment of federal income taxes in 2006. In the fourth quarter of 2006
and 2005 the Company reversed its deferred tax asset valuation allowance of $5.0
million and $7.3 million, respectively.
Note BEBITDA, as defined, reflects earnings before interest, income taxes, and
excludes depreciation, amortization, certain non-cash charges and
corporate-level expenses as defined in the Companys Revolving Credit Agreement.
EBITDA is not a measure of performance under generally accepted accounting
principles (GAAP) and should not be considered in isolation or as a substitute
for net income, cash flows from operating, investing and financing activities
and other income or cash flow statement data prepared in accordance with GAAP or
as a measure of profitability or liquidity. The Company presents EBITDA because
management believes that EBITDA is useful to investors as an indication of the
Companys satisfaction of its Debt Service Ratio covenant in its revolving
credit agreement and because EBITDA is a measure used under the Companys
revolving credit facility to determine whether the Company may incur additional
debt under such facility. EBITDA as defined herein may not be comparable to
other similarly titled measures of other companies. The following table
reconciles net income to EBITDA, as defined:
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Net income |
$ | 10,785 | $ | 11,956 | $ | 24,179 | $ | 30,808 | ||||||||
Add back: |
||||||||||||||||
Income taxes (benefit) |
(4,649 | ) | (6,583 | ) | 3,218 | (4,323 | ) | |||||||||
Interest expense |
8,097 | 6,682 | 31,267 | 27,056 | ||||||||||||
Depreciation and amortization |
5,940 | 4,418 | 20,037 | 17,262 | ||||||||||||
Restructuring and other unusual charges (credits) |
(9 | ) | 1,776 | (9 | ) | 1,776 | ||||||||||
Miscellaneous |
537 | 146 | 1,365 | 765 | ||||||||||||
EBITDA, as defined |
$ | 20,701 | $ | 18,395 | $ | 80,057 | $ | 73,344 | ||||||||
Note COn October 18, 2006, the Company acquired 100 percent of the outstanding
stock of NABS for $21.0 million in cash, NABS is an an international supply
chain manager of production components providing services to high technology
companies in the computer, electronics and consumer products industries.The
acquisition was funded with borrowings under the Companys bank revolving credit
agreement.
CONSOLIDATED CONDENSED BALANCE SHEETS
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
(Unaudited) | (Audited) | |||||||
(In Thousands) | ||||||||
ASSETS |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 21,637 | $ | 18,696 | ||||
Accounts receivable, net |
181,893 | 153,502 | ||||||
Inventories |
223,936 | 190,553 | ||||||
Deferred tax assets |
34,142 | 8,627 | ||||||
Other current assets |
24,218 | 21,651 | ||||||
Total Current Assets |
485,826 | 393,029 | ||||||
Property, Plant and Equipment |
251,565 | 244,367 | ||||||
Less accumulated depreciation |
146,980 | 130,557 | ||||||
Total Property Plant and Equipment |
104,585 | 113,810 | ||||||
Other Assets |
||||||||
Goodwill |
98,180 | 82,703 | ||||||
Net assets held for sale |
6,959 | 1,992 | ||||||
Other |
88,592 | 71,320 | ||||||
Total Other Assets |
193,731 | 156,015 | ||||||
Total Assets |
$ | 784,142 | $ | 662,854 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current Liabilities |
||||||||
Trade accounts payable |
$ | 132,864 | $ | 115,401 | ||||
Accrued expenses |
78,655 | 65,416 | ||||||
Current portion of long-term liabilities |
5,873 | 4,161 | ||||||
Total Current Liabilities |
217,392 | 184,978 | ||||||
Long-Term Liabilities, less current portion |
||||||||
8.375% Senior Subordinated Notes due 2014 |
210,000 | 210,000 | ||||||
Revolving credit maturing on December 31, 2010 |
156,700 | 128,300 | ||||||
Other long-term debt |
4,790 | 6,705 | ||||||
Deferred tax liability |
32,089 | 3,176 | ||||||
Other postretirement benefits and other long-term liabilities |
24,434 | 26,174 | ||||||
Total Long-Term Liabilities |
428,013 | 374,355 | ||||||
Shareholders Equity |
138,737 | 103,521 | ||||||
Total Liabilities and Shareholders Equity |
$ | 784,142 | $ | 662,854 | ||||
BUSINESS SEGMENT INFORMATION (UNAUDITED)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands)
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
(In Thousands)
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
NET SALES |
||||||||||||||||
ILS |
$ | 148,598 | $ | 138,412 | $ | 598,228 | $ | 532,624 | ||||||||
Aluminum Products |
33,750 | 36,253 | 154,639 | 159,053 | ||||||||||||
Manufactured Products |
88,057 | 66,310 | 303,379 | 241,223 | ||||||||||||
$ | 270,405 | $ | 240,975 | $ | 1,056,246 | $ | 932,900 | |||||||||
INCOME BEFORE INCOME TAXES |
||||||||||||||||
ILS |
$ | 8,934 | $ | 10,139 | $ | 38,383 | $ | 34,814 | ||||||||
Aluminum Products |
(397 | ) | 1,683 | 3,921 | 9,103 | |||||||||||
Manufactured Products |
9,049 | 2,873 | 28,991 | 20,630 | ||||||||||||
17,586 | 14,695 | 71,295 | 64,547 | |||||||||||||
Corporate and Other Costs |
(3,352 | ) | (2,640 | ) | (12,631 | ) | (11,006 | ) | ||||||||
Interest Expense |
(8,097 | ) | (6,682 | ) | (31,267 | ) | (27,056 | ) | ||||||||
$ | 6,137 | $ | 5,373 | $ | 27,397 | $ | 26,485 | |||||||||