Graham Corporation (AMEX: GHM) today reported net sales of $15.9
million for the second quarter of fiscal 2007 ended September 30,
2006, up $1.9 million, or 13%, from the second quarter of fiscal
2006. Net income for the second quarter was $563 thousand, or $0.14
per diluted share, compared with $1.4 million, or $0.36 per diluted
share, during the same quarter of the prior year. For the first
half, net sales increased 18%, or $4.7 million, to $30.5 million
compared with the first half of fiscal 2006. Net income declined
18% in the first half to $1.7 million, or $0.43 per diluted share,
from $2.1 million, or $0.56 per diluted share, in the first half of
the prior year. Net income for the current fiscal year was impacted
by higher cost of goods sold, discussed in greater detail below.
Worldwide demand for Graham�s products remains strong. Orders for
the quarter were up $9.3 million to $22.1 million, a 72% increase
over the prior year�s second fiscal quarter and a 10% sequential
increase over the first quarter of the current fiscal year. For the
first half, orders increased $8.9 million, a 27% improvement
compared with the first half of the prior year. Driving order
growth for the first half were orders from Asia, which were up $9.0
million compared with the same period last year. James R. Lines,
Graham�s President and COO, commented, �Although we have increased
our Batavia plant capacity, we remain at full capacity. We are
revising our fiscal 2007 revenue outlook downward from $75 to $80
million to $65 to $70 million due to customer delays in order
placements that would have been fabricated in Asia this year and
customer constraints limiting our ability to outsource refinery
projects in North America.� Profit Margins Gross margin for the
second quarter was 20.3%, down from gross margin of 33% in the
second quarter of fiscal 2006 and 28.2% in the first quarter of the
current fiscal year. In the second quarter, gross margin was
impacted by material cost increases and an approximate 4% negative
impact as a result of higher engineering costs incurred to address
higher order volume combined with some production inefficiencies. A
$329 thousand loss provision estimated on a job in process had
about a 2% negative impact on gross margin in the quarter. This
contract is expected to continue to negatively affect gross margin
by about 2% for the remainder of fiscal 2007. Mr. Lines commented,
�Operating performance in the second half will improve we believe
because the challenges faced in the second quarter in the areas of
plant capacity and North American outsourcing have been addressed.
We also intend to continue to leverage our pricing power. Although
we believe that our move into the Asian marketplace has exposed us
to tighter gross margin potential because of the economic climates
in these regions, we also believe that the long-term opportunities
and expanded customer base in this region more than balance out any
current impact on profitability.� Selling, general and
administrative costs for the second quarter were $2.4 million, or
15% of net sales, compared with $2.5 million in the same quarter of
the previous year. Operating margin for the second quarter was
5.2%, down 9.6 percentage points from the second quarter of fiscal
2006. Six-Month Review For the first six months, net sales were
$30.5 million compared with $25.8 million for the first six months
of fiscal 2006, an 18% increase. Gross profit margin for the first
six months was 24% compared with 31% in the previous year.
Operating margin declined to 8.2% for the first six months compared
with 12.3% from the prior year. Lower margins for the first half
are related to the effects of the second quarter. For the first
half net income was $1.7 million, or $0.43 per diluted share,
compared with $2.1 million, or $0.56 per diluted share, in the
prior year period. Balance Sheet and Cash Management Net cash used
by operating activities was $215 thousand for the second quarter
and $2.7 million for the first half, compared with net cash
provided by operating activities of $7.7 million for the first six
months of the prior year. Increases in trade accounts receivable
and unbilled revenue, due to higher sales for large projects and
the negotiated timing of certain progress payments, were the
primary reasons for the year-over-year difference. Additionally,
$2.0 million in cash was used to fund Graham�s defined benefit
pension plan. Capital expenditures for the quarter were $464
thousand and were $668 thousand for the first six months compared
with $480 thousand for the first six months of fiscal 2006. Capital
expenditures for fiscal 2007 are expected to be between $1.4 and
$1.8 million and will be used primarily for plant productivity and
information technology enhancements. Outlook Backlog was $45
million at September 30, 2006, compared with $30 million at the end
of the second quarter of the prior year and $38.6 million at the
end of the first quarter of the current year. Current backlog
consists of approximately 47% for refinery projects, 30% to the
petrochemical and chemical industry, 5% to the power generation
sector and 18% to other industrial or commercial applications.
Orders currently in backlog are expected to ship within twelve
months. Mr. Lines concluded, �We have not seen an indication of a
slowing in our end markets and believe that we are not yet half-way
through a longer industrial cycle than we have historically
experienced. We intend to continue to address organic expansion
requirements for our Batavia and China operations by incorporating
initiatives to improve productivity and add production capacity.�
Webcast and Conference Call Graham�s senior management team will
host a conference call and live webcast on October 23, 2006 at 4:15
p.m. EST. During the conference call and webcast, James R. Lines,
President and COO, and J. Ronald Hansen, Vice President Finance and
CFO, will review Graham�s financial and operating results as well
as its strategy and outlook. A question-and-answer session will
follow. Graham�s conference call and webcast can be accessed as
follows: The live webcast can be found at
http://www.graham-mfg.com. Participants should go to the website 10
-15 minutes prior to the scheduled conference in order to register
and download any necessary audio software. The conference call can
be accessed by calling 913-981-5523 approximately 5 -10 minutes
prior to the call. The conference call and webcast will be archived
and can be reviewed as follows: The archived webcast will be at
http://www.graham-mfg.com. A transcript will also be posted once
available. A replay can also be heard by calling 1-719-457-0820 and
entering Passcode 1317418. The telephonic replay will be available
from 7:15 p.m. EST the day of the teleconference through Monday,
October 30, 2006 at 11:59 p.m. EST. ABOUT GRAHAM CORPORATION With
world-renowned engineering expertise in vacuum and heat transfer
technology, Graham Corporation is a global designer, manufacturer
and supplier of ejectors, pumps, condensers, vacuum systems and
heat exchangers. Over the past 70 years, Graham has built a
reputation for top quality, reliable products and high-standards of
customer service. Sold either as components or complete system
solutions, the principle markets for Graham�s equipment are the
petrochemical, oil refining and electric power generation
industries, including cogeneration and geothermal plants. Graham
equipment can be found in diverse applications, such as metal
refining, pulp and paper processing, ship-building, water heating,
refrigeration, desalination, food processing, drugs, heating,
ventilating and air conditioning. Graham Corporation�s reach spans
the globe. Its equipment is installed in facilities from North and
South America to Europe, Asia, Africa and the Middle East. More
information regarding Graham can be found at its website:
www.graham-mfg.com Safe Harbor Statement This press release
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are subject to risks, uncertainties and assumptions and
are identified by words such as �expects,� �estimates,� �projects,�
�anticipates,� �believes,� �could,� and other similar words. All
statements addressing operating performance, events, or
developments that the Company expects or anticipates will occur in
the future, including but not limited to statements relating to the
Company�s anticipated revenues, profit margins, foreign sales
operations, its strategy to build its global sales representative
channel, the effectiveness of automation in expanding its
engineering capacity, its ability to improve cost competitiveness,
customer preferences and changes in market conditions in the
industries in which the Company operates are forward-looking
statements. Because they are forward-looking, they should be
evaluated in light of important risk factors and uncertainties.
These risk factors and uncertainties are more fully described in
Graham's Annual and Quarterly Reports filed with the Securities and
Exchange Commission. Should one or more of these risks or
uncertainties materialize, or should any of the Company�s
underlying assumptions prove incorrect, actual results may vary
materially from those currently anticipated. In addition, undue
reliance should not be placed on the Company�s forward-looking
statements. Except as required by law, the Company disclaims any
obligation to update or publicly announce any revisions to any of
the forward-looking statements contained in this press release.
Graham Corporation Second Quarter Fiscal 2007 Consolidated
Statements of Operations and Retained Earnings (Dollar amounts in
thousands, except share and per share data) (Unaudited) � Three
Months Ended Six Months Ended September 30, September 30, � 2006� �
2005� � 2006� � 2005� � � Net sales $ 15,903� $ 14,044� $ 30,511� $
25,793� Cost of products sold � 12,679� � 9,415� � 23,169� �
17,826� Gross profit � 3,224� � 4,629� � 7,342� � 7,967� Gross
profit margin 20.3% 33.0% 24.1% 30.9% Other expenses and income:
Selling, general and administrative 2,392� 2,547� 4,833� 4,800�
Operating income 832� 2,082� 2,509� 3,167� Operating profit margin
5.2% 14.8% 8.2% 12.3% Other income -� -� (148) -� Interest expense
� 2� � 4� � 6� � 9� Total other expenses and income � 2,394� �
2,551� � 4,691� � 4,809� Income before income taxes 830� 2,078�
2,651� 3,158� Provision for income taxes � 267� � 728� � 972� �
1,105� Net income 563� 1,350� 1,679� 2,053� � Retained earnings at
beginning of period 18,321� 14,699� 17,301� 14,082� Dividends �
(97) � (91) � (193) � (177) Retained earnings at end of period $
18,787� $ 15,958� $ 18,787� $ 15,958� � Per Share Data: Basic: Net
income $ .14� $ .38� $ .43� $ .58� � Diluted: Net income $ .14� $
.36� $ .43� $ .56� � Average common shares outstanding: Basic:
3,890,833� 3,584,795� 3,878,392� 3,525,995� Diluted: 3,945,358�
3,721,261� 3,937,069� 3,657,058� � Dividends declared per share $
.025� $ .025� $ .025� $ .025� Graham Corporation Second Quarter
Fiscal 2007 Consolidated Balance Sheets (Dollar amounts in
thousands, except share and per share data) � (Unaudited) September
30, March 31, 2006� 2006� Assets Current assets: Cash and cash
equivalents $ 437� $ 570� Investments 7,468� 10,418� Trade accounts
receivable, net of allowances ($29 and $28 at September 30, and
March 31, 2006, respectively) 7,479� 5,978� Unbilled revenue 7,669�
4,978� Inventories, net 4,687� 5,115� Domestic and foreign income
taxes receivable 257� 114� Deferred income tax asset 19� 19�
Prepaid expenses and other current assets � 338� � 203� Total
current assets 28,354� 27,395� Property, plant and equipment, net
8,190� 7,954� Deferred income tax asset 1,136� 2,107� Prepaid
pension asset 4,805� 3,076� Other assets � 20� � 24� Total assets $
42,505� $ 40,556� � Liabilities and Stockholders� Equity Current
liabilities: Current portion of long-term debt $ 39� $ 45� Accounts
payable 5,201� 4,135� Accrued compensation 2,709� 3,310� Accrued
expenses and other liabilities 1,634� 1,573� Customer deposits �
1,313� � 1,553� Total current liabilities 10,896� 10,616� �
Long-term debt 14� 30� Accrued compensation 297� 276� Other
long-term liabilities 117� 191� Accrued pension liability 244� 232�
Accrued postretirement benefits � 2,042� � 2,104� Total liabilities
� 13,610� � 13,449� � Stockholders� equity: Preferred stock, $1.00
par value - Authorized, 500,000 shares Common stock, $.10 par value
- Authorized, 6,000,000 shares Issued and outstanding, 3,862,190
and 3,832,390 shares at September 30 and March 31, 2006,
respectively 386� 383� Capital in excess of par value 9,800� 9,517�
Retained earnings 18,787� 17,301� Accumulated other comprehensive
income (loss) Cumulative foreign currency translation adjustment 2�
(1) Notes receivable from officers and directors � (80) � (93)
Total stockholders� equity � 28,895� � 27,107� Total liabilities
and stockholders� equity $ 42,505� $ 40,556� Graham Corporation and
Subsidiaries Second Quarter Fiscal 2007 Condensed Consolidated
Statements of Cash Flows (Dollar amounts in thousands) (Unaudited)
� Six Months Ended September 30, 2006� 2005� � Operating
activities: Net income $ 1,679� $ 2,053� Adjustments to reconcile
net income to net cash (used) provided by operating activities:
Depreciation and amortization 442� 394� Discount accretion on
investments (201) (75) Stock-based compensation expense 33� -� Gain
on disposal of property, plant and equipment (13) (3) Deferred
income taxes 972� 1,102� (Increase) decrease in operating assets:
Accounts receivable (1,502) 3,729� Unbilled revenue (2,691) (595)
Inventories 429� 645� Domestic and foreign income taxes
receivable/payable (143) (27) Prepaid expenses and other current
and non-current assets (138) (235) Prepaid pension asset (1,729) -�
Increase (decrease) in operating liabilities: Accounts payable
1,066� (1,014) Accrued compensation, accrued expenses and other
current and non-current liabilities (615) 168� Customer deposits
(240) 2,314� Long-term portion of accrued compensation, accrued
pension liability and accrued postretirement benefits � (30) �
(798) Total adjustments � (4,360) � 5,605� Net cash (used) provided
by operating activities � (2,681) � 7,658� � Investing activities:
Purchase of property, plant and equipment (668) (480) Proceeds from
sale of property, plant and equipment 15� 1� Purchase of
investments (10,850) (13,883) Redemption of investments at maturity
� 14,000� � 7,500� Net cash provided (used) by investing activities
� 2,497� � (6,862) � Financing activities: Decrease in short-term
debt, net -� (1,872) Proceeds from issuance of long-term debt
2,479� -� Principal repayments on long-term debt (2,505) (24)
Issuance of common stock 253� 1,240� Collection of notes receivable
from officers and directors 13� 50� Dividends paid � (193) � (171)
Net cash provided (used) by financing activities � 47� � (777)
Effect of exchange rate on cash � 4� � -� Net (decrease) increase
in cash and equivalents (133) 19� Cash and cash equivalents at
beginning of period � 570� � 724� Cash and cash equivalents at end
of period $ 437� $ 743� Graham Corporation Second Quarter Fiscal
2007 Additional Information � Order and Backlog Trend (Dollar
amounts in thousands) � � Q1 06 6/30/05 Q2 06 9/30/05 Q3 06 2/31/05
Q4 06 3/31/06 FY 06 3/31/06 Q1 07 6/30/06 Q2 07 9/30/06 Orders
$20,425� $12,833� $14,337� $18,630� $66,225� $20,032� $22,125�
Backlog $31,145� $30,002� $30,278� $33,083� $33,083� $38,642�
$45,000� Graham Corporation (AMEX: GHM) today reported net sales of
$15.9 million for the second quarter of fiscal 2007 ended September
30, 2006, up $1.9 million, or 13%, from the second quarter of
fiscal 2006. Net income for the second quarter was $563 thousand,
or $0.14 per diluted share, compared with $1.4 million, or $0.36
per diluted share, during the same quarter of the prior year. For
the first half, net sales increased 18%, or $4.7 million, to $30.5
million compared with the first half of fiscal 2006. Net income
declined 18% in the first half to $1.7 million, or $0.43 per
diluted share, from $2.1 million, or $0.56 per diluted share, in
the first half of the prior year. Net income for the current fiscal
year was impacted by higher cost of goods sold, discussed in
greater detail below. Worldwide demand for Graham's products
remains strong. Orders for the quarter were up $9.3 million to
$22.1 million, a 72% increase over the prior year's second fiscal
quarter and a 10% sequential increase over the first quarter of the
current fiscal year. For the first half, orders increased $8.9
million, a 27% improvement compared with the first half of the
prior year. Driving order growth for the first half were orders
from Asia, which were up $9.0 million compared with the same period
last year. James R. Lines, Graham's President and COO, commented,
"Although we have increased our Batavia plant capacity, we remain
at full capacity. We are revising our fiscal 2007 revenue outlook
downward from $75 to $80 million to $65 to $70 million due to
customer delays in order placements that would have been fabricated
in Asia this year and customer constraints limiting our ability to
outsource refinery projects in North America." Profit Margins Gross
margin for the second quarter was 20.3%, down from gross margin of
33% in the second quarter of fiscal 2006 and 28.2% in the first
quarter of the current fiscal year. In the second quarter, gross
margin was impacted by material cost increases and an approximate
4% negative impact as a result of higher engineering costs incurred
to address higher order volume combined with some production
inefficiencies. A $329 thousand loss provision estimated on a job
in process had about a 2% negative impact on gross margin in the
quarter. This contract is expected to continue to negatively affect
gross margin by about 2% for the remainder of fiscal 2007. Mr.
Lines commented, "Operating performance in the second half will
improve we believe because the challenges faced in the second
quarter in the areas of plant capacity and North American
outsourcing have been addressed. We also intend to continue to
leverage our pricing power. Although we believe that our move into
the Asian marketplace has exposed us to tighter gross margin
potential because of the economic climates in these regions, we
also believe that the long-term opportunities and expanded customer
base in this region more than balance out any current impact on
profitability." Selling, general and administrative costs for the
second quarter were $2.4 million, or 15% of net sales, compared
with $2.5 million in the same quarter of the previous year.
Operating margin for the second quarter was 5.2%, down 9.6
percentage points from the second quarter of fiscal 2006. Six-Month
Review For the first six months, net sales were $30.5 million
compared with $25.8 million for the first six months of fiscal
2006, an 18% increase. Gross profit margin for the first six months
was 24% compared with 31% in the previous year. Operating margin
declined to 8.2% for the first six months compared with 12.3% from
the prior year. Lower margins for the first half are related to the
effects of the second quarter. For the first half net income was
$1.7 million, or $0.43 per diluted share, compared with $2.1
million, or $0.56 per diluted share, in the prior year period.
Balance Sheet and Cash Management Net cash used by operating
activities was $215 thousand for the second quarter and $2.7
million for the first half, compared with net cash provided by
operating activities of $7.7 million for the first six months of
the prior year. Increases in trade accounts receivable and unbilled
revenue, due to higher sales for large projects and the negotiated
timing of certain progress payments, were the primary reasons for
the year-over-year difference. Additionally, $2.0 million in cash
was used to fund Graham's defined benefit pension plan. Capital
expenditures for the quarter were $464 thousand and were $668
thousand for the first six months compared with $480 thousand for
the first six months of fiscal 2006. Capital expenditures for
fiscal 2007 are expected to be between $1.4 and $1.8 million and
will be used primarily for plant productivity and information
technology enhancements. Outlook Backlog was $45 million at
September 30, 2006, compared with $30 million at the end of the
second quarter of the prior year and $38.6 million at the end of
the first quarter of the current year. Current backlog consists of
approximately 47% for refinery projects, 30% to the petrochemical
and chemical industry, 5% to the power generation sector and 18% to
other industrial or commercial applications. Orders currently in
backlog are expected to ship within twelve months. Mr. Lines
concluded, "We have not seen an indication of a slowing in our end
markets and believe that we are not yet half-way through a longer
industrial cycle than we have historically experienced. We intend
to continue to address organic expansion requirements for our
Batavia and China operations by incorporating initiatives to
improve productivity and add production capacity." Webcast and
Conference Call Graham's senior management team will host a
conference call and live webcast on October 23, 2006 at 4:15 p.m.
EST. During the conference call and webcast, James R. Lines,
President and COO, and J. Ronald Hansen, Vice President Finance and
CFO, will review Graham's financial and operating results as well
as its strategy and outlook. A question-and-answer session will
follow. Graham's conference call and webcast can be accessed as
follows: -- The live webcast can be found at
http://www.graham-mfg.com. Participants should go to the website 10
-15 minutes prior to the scheduled conference in order to register
and download any necessary audio software. -- The conference call
can be accessed by calling 913-981-5523 approximately 5 -10 minutes
prior to the call. The conference call and webcast will be archived
and can be reviewed as follows: -- The archived webcast will be at
http://www.graham-mfg.com. A transcript will also be posted once
available. -- A replay can also be heard by calling 1-719-457-0820
and entering Passcode 1317418. The telephonic replay will be
available from 7:15 p.m. EST the day of the teleconference through
Monday, October 30, 2006 at 11:59 p.m. EST. ABOUT GRAHAM
CORPORATION With world-renowned engineering expertise in vacuum and
heat transfer technology, Graham Corporation is a global designer,
manufacturer and supplier of ejectors, pumps, condensers, vacuum
systems and heat exchangers. Over the past 70 years, Graham has
built a reputation for top quality, reliable products and
high-standards of customer service. Sold either as components or
complete system solutions, the principle markets for Graham's
equipment are the petrochemical, oil refining and electric power
generation industries, including cogeneration and geothermal
plants. Graham equipment can be found in diverse applications, such
as metal refining, pulp and paper processing, ship-building, water
heating, refrigeration, desalination, food processing, drugs,
heating, ventilating and air conditioning. Graham Corporation's
reach spans the globe. Its equipment is installed in facilities
from North and South America to Europe, Asia, Africa and the Middle
East. More information regarding Graham can be found at its
website: www.graham-mfg.com Safe Harbor Statement This press
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are subject to risks, uncertainties and
assumptions and are identified by words such as "expects,"
"estimates," "projects," "anticipates," "believes," "could," and
other similar words. All statements addressing operating
performance, events, or developments that the Company expects or
anticipates will occur in the future, including but not limited to
statements relating to the Company's anticipated revenues, profit
margins, foreign sales operations, its strategy to build its global
sales representative channel, the effectiveness of automation in
expanding its engineering capacity, its ability to improve cost
competitiveness, customer preferences and changes in market
conditions in the industries in which the Company operates are
forward-looking statements. Because they are forward-looking, they
should be evaluated in light of important risk factors and
uncertainties. These risk factors and uncertainties are more fully
described in Graham's Annual and Quarterly Reports filed with the
Securities and Exchange Commission. Should one or more of these
risks or uncertainties materialize, or should any of the Company's
underlying assumptions prove incorrect, actual results may vary
materially from those currently anticipated. In addition, undue
reliance should not be placed on the Company's forward-looking
statements. Except as required by law, the Company disclaims any
obligation to update or publicly announce any revisions to any of
the forward-looking statements contained in this press release. -0-
*T Graham Corporation Second Quarter Fiscal 2007 Consolidated
Statements of Operations and Retained Earnings (Dollar amounts in
thousands, except share and per share data) (Unaudited) Three
Months Ended Six Months Ended September 30, September 30,
---------------------- ---------------------- 2006 2005 2006 2005
---------------------- ---------------------- Net
sales............... $ 15,903 $ 14,044 $ 30,511 $ 25,793 Cost of
products sold... 12,679 9,415 23,169 17,826 ----------------------
---------------------- Gross profit........... 3,224 4,629 7,342
7,967 ---------------------- ---------------------- Gross profit
margin 20.3% 33.0% 24.1% 30.9% Other expenses and income: Selling,
general and administrative........ 2,392 2,547 4,833 4,800
Operating income 832 2,082 2,509 3,167 Operating profit margin 5.2%
14.8% 8.2% 12.3% Other income........... - - (148) - Interest
expense....... 2 4 6 9 ----------------------
---------------------- Total other expenses and income..........
2,394 2,551 4,691 4,809 ----------------------
---------------------- Income before income taxes..................
830 2,078 2,651 3,158 Provision for income taxes..................
267 728 972 1,105 ---------------------- ---------------------- Net
income.............. 563 1,350 1,679 2,053 Retained earnings at
beginning of period.... 18,321 14,699 17,301 14,082
Dividends............... (97) (91) (193) (177)
---------------------- ---------------------- Retained earnings at
end of period.............. $ 18,787 $ 15,958 $ 18,787 $ 15,958
====================== ====================== Per Share Data:
Basic: Net income........... $ .14 $ .38 $ .43 $ .58
====================== ====================== Diluted: Net
income........... $ .14 $ .36 $ .43 $ .56 ======================
====================== Average common shares outstanding:
Basic:................. 3,890,833 3,584,795 3,878,392 3,525,995
Diluted:............... 3,945,358 3,721,261 3,937,069 3,657,058
Dividends declared per share.................. $ .025 $ .025 $ .025
$ .025 ====================== ====================== *T -0- *T
Graham Corporation Second Quarter Fiscal 2007 Consolidated Balance
Sheets (Dollar amounts in thousands, except share and per share
data) (Unaudited) September 30, March 31, -------------
------------ 2006 2006 ------------- ------------ Assets Current
assets: Cash and cash equivalents................. $ 437 $ 570
Investments............................... 7,468 10,418 Trade
accounts receivable, net of allowances ($29 and $28 at September
30, and March 31, 2006, respectively)........ 7,479 5,978 Unbilled
revenue.......................... 7,669 4,978 Inventories,
net.......................... 4,687 5,115 Domestic and foreign
income taxes receivable............................... 257 114
Deferred income tax asset................. 19 19 Prepaid expenses
and other current assets. 338 203 ------------- ------------ Total
current assets.................. 28,354 27,395 Property, plant and
equipment, net......... 8,190 7,954 Deferred income tax
asset.................. 1,136 2,107 Prepaid pension
asset...................... 4,805 3,076 Other
assets............................... 20 24 -------------
------------ Total assets.......................... $ 42,505
$40,556 ============= ============ Liabilities and Stockholders'
Equity Current liabilities: Current portion of long-term
debt......... $ 39 $ 45 Accounts payable..........................
5,201 4,135 Accrued compensation...................... 2,709 3,310
Accrued expenses and other liabilities.... 1,634 1,573 Customer
deposits......................... 1,313 1,553 -------------
------------ Total current liabilities............. 10,896 10,616
Long-term debt............................. 14 30 Accrued
compensation....................... 297 276 Other long-term
liabilities................ 117 191 Accrued pension
liability.................. 244 232 Accrued postretirement
benefits............ 2,042 2,104 ------------- ------------ Total
liabilities......................... 13,610 13,449 -------------
------------ Stockholders' equity: Preferred stock, $1.00 par value
- Authorized, 500,000 shares Common stock, $.10 par value -
Authorized, 6,000,000 shares Issued and outstanding, 3,862,190 and
3,832,390 shares at September 30 and March 31, 2006,
respectively........... 386 383 Capital in excess of par
value............ 9,800 9,517 Retained
earnings......................... 18,787 17,301 Accumulated other
comprehensive income (loss)...................................
Cumulative foreign currency translation
adjustment............................. 2 (1) Notes receivable from
officers and directors................................ (80) (93)
------------- ------------ Total stockholders'
equity................. 28,895 27,107 ------------- ------------
Total liabilities and stockholders'
equity............................... $ 42,505 $40,556
============= ============ *T -0- *T Graham Corporation and
Subsidiaries Second Quarter Fiscal 2007 Condensed Consolidated
Statements of Cash Flows (Dollar amounts in thousands) (Unaudited)
Six Months Ended September 30, -------------------- 2006 2005
--------- --------- Operating activities: Net
income...................................... $ 1,679 $ 2,053
--------- --------- Adjustments to reconcile net income to net cash
(used) provided by operating activities: Depreciation and
amortization................. 442 394 Discount accretion on
investments............. (201) (75) Stock-based compensation
expense.............. 33 - Gain on disposal of property, plant and
equipment.................................... (13) (3) Deferred
income taxes......................... 972 1,102 (Increase) decrease
in operating assets: Accounts receivable.........................
(1,502) 3,729 Unbilled revenue............................ (2,691)
(595) Inventories................................. 429 645 Domestic
and foreign income taxes
receivable/payable......................... (143) (27) Prepaid
expenses and other current and non- current
assets............................. (138) (235) Prepaid pension
asset....................... (1,729) - Increase (decrease) in
operating liabilities: Accounts payable............................
1,066 (1,014) Accrued compensation, accrued expenses and other
current and non-current liabilities.. (615) 168 Customer
deposits........................... (240) 2,314 Long-term portion
of accrued compensation, accrued pension liability and accrued
postretirement benefits.................... (30) (798) ---------
--------- Total adjustments.......................... (4,360) 5,605
--------- --------- Net cash (used) provided by operating
activities (2,681) 7,658 --------- --------- Investing activities:
Purchase of property, plant and equipment....... (668) (480)
Proceeds from sale of property, plant and
equipment...................................... 15 1 Purchase of
investments......................... (10,850) (13,883) Redemption
of investments at maturity........... 14,000 7,500 ---------
--------- Net cash provided (used) by investing activities 2,497
(6,862) --------- --------- Financing activities: Decrease in
short-term debt, net................ - (1,872) Proceeds from
issuance of long-term debt........ 2,479 - Principal repayments on
long-term debt.......... (2,505) (24) Issuance of common
stock........................ 253 1,240 Collection of notes
receivable from officers and
directors...................................... 13 50 Dividends
paid.................................. (193) (171) ---------
--------- Net cash provided (used) by financing activities 47 (777)
--------- --------- Effect of exchange rate on
cash.................. 4 - --------- --------- Net (decrease)
increase in cash and equivalents.. (133) 19 Cash and cash
equivalents at beginning of period. 570 724 --------- ---------
Cash and cash equivalents at end of period....... $ 437 $ 743
========= ========= *T -0- *T Graham Corporation Second Quarter
Fiscal 2007 Additional Information Order and Backlog Trend (Dollar
amounts in thousands) Q1 06 Q2 06 Q3 06 Q4 06 FY 06 Q1 07 Q2 07
6/30/05 9/30/05 2/31/05 3/31/06 3/31/06 6/30/06 9/30/06 -------
-------- -------- -------- -------- -------- -------- --------
Orders $20,425 $12,833 $14,337 $18,630 $66,225 $20,032 $22,125
------- -------- -------- -------- -------- -------- --------
-------- Backlog $31,145 $30,002 $30,278 $33,083 $33,083 $38,642
$45,000 ------- -------- -------- -------- -------- --------
-------- -------- *T
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