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News From:
    
    For Immediate Release
 
 Kaydon Corporation
    
    Global Engineered Solutions
 Contact:
    
    Brian P. Campbell
    
    READ IT ON THE WEBPresident and Chief Executive Officer
    
    http://www.kaydon.com(734) 747-7025 ext. 129
 KAYDON CORPORATION REPORTS 67.7 PERCENT
GROWTH IN DILUTED EARNINGS PER SHARE FOR 2006 FIRST
QUARTER; SALES INCREASED 20.0 PERCENT AND OPERATING INCOME
GREW 56.2 PERCENT; OPERATING MARGINS OF 23.3 PERCENT IMPROVED 540 BASIS POINTS IN THE QUARTER
   Highlights  Continuing Operations  First Quarter 2006
 
    
    The Company achieved record first quarter sales of $101.5 million, versus $84.6
million during last years first quarter.
    
    Operating income equaled $23.6 million, or 23.3 percent of sales, compared to $15.1
million, or 17.9 percent of sales, last year.
    
    After tax income equaled $16.6 million, or 16.3 percent of sales, compared to $9.2
million, or 10.9 percent of sales, last year.
    
    Diluted earnings per share were $.52, versus $.31 last year.
    
    Order entry during the quarter equaled $95.9 million, resulting in a quarter-end
backlog of $144.6 million versus $127.0 million last year.
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
    
    EBITDA, a non-GAAP measure, was $28.0 million, equal to 27.6 percent of sales, and
covered interest expense by 11.6 times. EBITDA for the last twelve months ended April
1, 2006 totaled $95.7 million, equal to 25.8 percent of sales, and covered interest
expense by 10.0 times.
    
    Cash and cash equivalents equaled $327.6 million at the end of the first quarter.
   Additional Data on First Quarter 2006 Results
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Reconciliation of Non-GAAP Measures
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Reconciliation of Non-GAAP Measures
 Segment Discussion
      About Kaydon
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https://cis.premconf.com/sc/scw.dll/usr?cid=vlllrsscwzsvdnmll http://www.kaydon.com
  http://www.kaydon.com
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First Quarter EndedApril 1,
    
    
    April 2,2006
    
    
    2005Net sales
    
    $
    101,505,000
    
    
    $
    84,562,000Cost of sales
    
    
    59,962,000
    
    
    
    51,167,000Gross profit
    
    
    41,543,000
    
    
    
    33,395,000Selling, general, and administrative expenses
    
    
    17,915,000
    
    
    
    18,273,000Operating income from continuing operations
    
    
    23,628,000
    
    
    
    15,122,000Interest income
    
    
    3,396,000
    
    
    
    1,527,000Interest expense
    
    
    (2,411,000
    )
    
    
    (2,418,000
    )Income from continuing operations before income taxes
    
    
    24,613,000
    
    
    
    14,231,000Provision for income taxes
    
    
    8,024,000
    
    
    
    5,027,000Income from continuing operations
    
    
    16,589,000
    
    
    
    9,204,000Income from discontinued operations before income taxes
    
    
    
    
    
    
    1,015,000Provision for income taxes
    
    
    
    
    
    
    340,000Income from discontinued operations
    
    
    
    
    
    
    675,000Net income
    
    $
    16,589,000
    
    
    $
    9,879,000Weighted
average common shares outstandingBasic
    
    
    27,843,000
    
    
    
    27,885,000Diluted
    
    
    34,761,000
    
    
    
    34,818,000Earnings per share  continuing operationsBasic
    
    
    $0.60
    
    
    
    $0.33Diluted
    
    
    $0.52
    
    
    
    $0.31Earnings per share  discontinued operationsBasic
    
    
    
    
    
    
    $0.02Diluted
    
    
    
    
    
    
    $0.02Earnings per shareBasic
    
    
    $0.60
    
    
    
    $0.35Diluted
    
    
    $0.52
    
    
    
    $0.33Dividends declared per share
    
    
    $0.12
    
    
    
    $0.12




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April 1,
    
    
    December 31,2006
    
    
    2005Assets:Cash and cash equivalents
    
    $
    327,582,000
    
    
    $
    320,804,000Accounts receivable, net
    
    
    61,064,000
    
    
    
    50,869,000Inventories, net
    
    
    53,081,000
    
    
    
    51,783,000Other current assets
    
    
    11,464,000
    
    
    
    14,671,000Total current assets
    
    
    453,191,000
    
    
    
    438,127,000Plant and equipment, net
    
    
    80,892,000
    
    
    
    79,603,000Goodwill, net
    
    
    117,282,000
    
    
    
    117,168,000Other intangible assets, net
    
    
    23,533,000
    
    
    
    24,288,000Other assets
    
    
    10,049,000
    
    
    
    11,401,000Total assets
    
    $
    684,947,000
    
    
    $
    670,587,000Liabilities and Shareholders Equity:Accounts payable
    
    $
    16,255,000
    
    
    $
    18,192,000Accrued expenses
    
    
    29,187,000
    
    
    
    26,552,000Total current liabilities
    
    
    45,442,000
    
    
    
    44,744,000Long-term debt
    
    
    200,000,000
    
    
    
    200,000,000Long-term liabilities
    
    
    66,300,000
    
    
    
    66,167,000Total long-term liabilities
    
    
    266,300,000
    
    
    
    266,167,000Shareholders equity
    
    
    373,205,000
    
    
    
    359,676,000Total liabilities and shareholders
equity
    
    $
    684,947,000
    
    
    $
    670,587,000




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First Quarter EndedApril 1,
    
    
    April 2,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    16,589,000
    
    
    $
    9,879,000Adjustments to reconcile net income to
net cash from operating activities:Income from discontinued operations, net of tax
    
    
    
    
    
    
    (675,000
    )Depreciation
    
    
    2,866,000
    
    
    
    2,691,000Amortization of intangible assets
    
    
    769,000
    
    
    
    602,000Amortization of stock awards
    
    
    787,000
    
    
    
    658,000Stock option compensation expense
    
    
    136,000
    
    
    
    Excess tax benefit from stock-based compensation
    
    
    (462,000
    )
    
    
    Deferred financing fees
    
    
    387,000
    
    
    
    393,000Net change in receivables, inventories
and trade payables
    
    
    (13,274,000
    )
    
    
    (11,601,000
    )Net change in other assets and liabilities
    
    
    7,254,000
    
    
    
    3,616,000Net cash from operating activities
    
    
    15,052,000
    
    
    
    5,563,000Cash flows from investing activities:Additions to property, plant and equipment, net
    
    
    (4,106,000
    )
    
    
    (2,343,000
    )Acquisitions of businesses, net of cash acquired
    
    
    
    
    
    
    (42,664,000
    )Net cash used in investing activities
    
    
    (4,106,000
    )
    
    
    (45,007,000
    )Cash flows from financing activities:Cash dividends paid
    
    
    (3,378,000
    )
    
    
    (3,384,000
    )Payments on debt
    
    
    (16,000
    )
    
    
    (15,000
    )Excess tax benefit from stock-based compensation
    
    
    462,000
    
    
    
    Proceeds from exercise of stock options
    
    
    802,000
    
    
    
    494,000Purchase of treasury stock
    
    
    (2,327,000
    )
    
    
    (3,600,000
    )Net cash used in financing activities
    
    
    (4,457,000
    )
    
    
    (6,505,000
    )Effect of exchange rate changes on cash and
cash equivalents
    
    
    289,000
    
    
    
    333,000Cash from discontinued operations
    
    
    
    
    
    
    1,514,000Net increase (decrease) in cash and cash equivalents
    
    
    6,778,000
    
    
    
    (44,102,000
    )Cash and cash equivalents  Beginning of period
    
    
    320,804,000
    
    
    
    278,586,000Cash and cash equivalents  End of period
    
    $
    327,582,000
    
    
    $
    234,484,000




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Reportable Segment Information
 First Quarter EndedApril 1, 2006
    
    
    April 2, 2005Net salesFriction and Motion Control ProductsExternal customers
    
    $
    57,062
    
    
    $
    44,670Intersegment  continuing operations
    
    
    31
    
    
    
    26Intersegment  discontinued operations
    
    
    
    
    
    
    10457,093
    
    
    
    44,800Velocity Control ProductsExternal customers
    
    
    14,518
    
    
    
    14,738Sealing ProductsExternal customers
    
    
    10,835
    
    
    
    8,690Intersegment  continuing operations
    
    
    (23
    )
    
    
    (19
    )10,812
    
    
    
    8,671OtherExternal customers
    
    
    19,090
    
    
    
    16,360Intersegment  continuing operations
    
    
    (8
    )
    
    
    (7
    )19,082
    
    
    
    16,353Total consolidated net sales
    
    $
    101,505
    
    
    $
    84,562
 First Quarter EndedApril 1, 2006
    
    
    April 2, 2005Operating incomeFriction and Motion Control Products
    
    $
    15,919
    
    
    $
    10,609Velocity Control Products
    
    
    3,692
    
    
    
    3,441Sealing Products
    
    
    1,000
    
    
    
    1,191Other
    
    
    1,919
    
    
    
    1,038Total segment operating income
    
    
    22,530
    
    
    
    16,279State income tax provision included in
segment operating income
    
    
    711
    
    
    
    495Items not allocated to segment operating income
    
    
    387
    
    
    
    (1,652
    )Interest income
    
    
    3,396
    
    
    
    1,527Interest expense
    
    
    (2,411
    )
    
    
    (2,418
    )Income from continuing operations
before income taxes
    
    $
    24,613
    
    
    $
    14,231




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Kaydon Corporation
Reconciliation of Non-GAAP Measures
(Amounts in Thousands)
 Free cash flow (non-GAAP)  from continuing operations
 First Quarter Ended
    
    
    LTMApril 1,
    
    
    April 2,
    
    
    April 1,2006
    
    
    2005
    
    
    2006Net cash from operating activities
(GAAP)
    
    $
    15,052
    
    
    $
    5,563
    
    
    $
    50,713Capital expenditures
    
    
    (4,106
    )
    
    
    (2,343
    )
    
    
    (14,323
    )Free cash flow (non-GAAP)
    
    $
    10,946
    
    
    $
    3,220
    
    
    $
    36,390
  Earnings before interest, taxes, depreciation  and amortization- EBITDA (non-GAAP)  from continuing operations
 First Quarter Ended
    
    
    LTMApril 1,
    
    
    April 2,
    
    
    April 1,2006
    
    
    2005
    
    
    2006Income from continuing operations (GAAP)
    
    $
    16,589
    
    
    $
    9,204
    
    
    $
    53,915Net interest (income)/expense
    
    
    (985
    )
    
    
    891
    
    
    
    (1,044
    )Income tax expense
    
    
    8,024
    
    
    
    5,027
    
    
    
    25,811Depreciation and amortization
    
    
    4,422
    
    
    
    3,951
    
    
    
    16,984Earnings before interest, taxes, depreciation
and amortization- EBITDA (non-GAAP)
    
    $
    28,050
    
    
    $
    19,073
    
    
    $
    95,666