##### 



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
FOURTH QUARTER AND FULL YEAR 2005 RESULTS
   Highlights
 Continuing Operations  Full Year 2005 Highlights compared with Full Year 2004
 
    
    Sales, including recent acquisitions, increased 19.5 percent, to $354.6 million, on
strengthened demand across most key product lines.
    
    After tax income increased 28.0 percent to $46.5 million.
    
    Diluted earnings per share increased 24.6 percent to $1.52.
    
    Order entry increased 25.5 percent to $398.3 million.
    
    Ending backlog increased 47.8 percent to $150.2 million.
    
    Cash and cash equivalents increased to $320.8 million.
    
    EBITDA, a non-GAAP measure, increased 14.8 percent to $86.7 million, equal to 24.4
percent of sales, and covered interest expense by more than 9.0 times.




---



##### 



Additional Data on Fourth Quarter and Full Year 2005 Results
      2




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##### 



3




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##### 



Reconciliation of Non-GAAP Measures
 Segment Discussion
    4




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##### 



About Kaydon
    https://cis.premconf.com/sc/scw.dll/usr?cid=vlllrswnsddvswzdw http://www.kaydon.com
 5




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##### 



http://www.kaydon.com
     6




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##### 



Fourth Quarter Ended
    
    
    Full Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Net sales
    
    $
    89,653,000
    
    
    $
    72,221,000
    
    
    $
    354,558,000
    
    
    $
    296,731,000Cost of sales
    
    
    52,477,000
    
    
    
    42,339,000
    
    
    
    215,528,000
    
    
    
    175,573,000Gross profit
    
    
    37,176,000
    
    
    
    29,882,000
    
    
    
    139,030,000
    
    
    
    121,158,000Selling, general, and administrative expenses
    
    
    17,643,000
    
    
    
    14,197,000
    
    
    
    68,854,000
    
    
    
    58,764,000Operating income from continuing operations
    
    
    19,533,000
    
    
    
    15,685,000
    
    
    
    70,176,000
    
    
    
    62,394,000Interest income
    
    
    3,045,000
    
    
    
    1,379,000
    
    
    
    8,747,000
    
    
    
    3,987,000Interest expense
    
    
    (2,376,000
    )
    
    
    (2,399,000
    )
    
    
    (9,579,000
    )
    
    
    (9,589,000
    )Income from continuing operations before income taxes
    
    
    20,202,000
    
    
    
    14,665,000
    
    
    
    69,344,000
    
    
    
    56,792,000Provision for income taxes
    
    
    5,794,000
    
    
    
    5,280,000
    
    
    
    22,814,000
    
    
    
    20,446,000Income from continuing operations
    
    
    14,408,000
    
    
    
    9,385,000
    
    
    
    46,530,000
    
    
    
    36,346,000Income from discontinued operations
(including in 2005 the gain on disposal of $40,969,000)
    
    
    
    
    
    
    973,000
    
    
    
    43,943,000
    
    
    
    3,143,000Provision for income taxes
    
    
    
    
    
    
    350,000
    
    
    
    16,584,000
    
    
    
    1,131,000Income from discontinued operations
    
    
    
    
    
    
    623,000
    
    
    
    27,359,000
    
    
    
    2,012,000Net income
    
    $
    14,408,000
    
    
    $
    10,008,000
    
    
    $
    73,889,000
    
    
    $
    38,358,000Weighted average common
shares outstandingBasic
    
    
    27,772,000
    
    
    
    27,846,000
    
    
    
    27,800,000
    
    
    
    27,872,000Diluted
    
    
    34,676,000
    
    
    
    34,776,000
    
    
    
    34,706,000
    
    
    
    34,789,000Earnings per share  continuing operationsBasic
    
    
    $0.52
    
    
    
    $0.34
    
    
    
    $1.67
    
    
    
    $1.30Diluted
    
    
    $0.46
    
    
    
    $0.31
    
    
    
    $1.52
    
    
    
    $1.22Earnings per share  discontinued operationsBasic
    
    
    $0.00
    
    
    
    $0.02
    
    
    
    $0.98
    
    
    
    $0.07Diluted
    
    
    $0.00
    
    
    
    $0.02
    
    
    
    $0.79
    
    
    
    $0.06Earnings per shareBasic
    
    
    $0.52
    
    
    
    $0.36
    
    
    
    $2.66
    
    
    
    $1.38Diluted
    
    
    $0.46
    
    
    
    $0.33
    
    
    
    $2.30
    
    
    
    $1.27Dividends declared per share
    
    
    $0.12
    
    
    
    $0.12
    
    
    
    $0.48
    
    
    
    $0.48




---



##### 



December 31,
    
    
    December 31,2005
    
    
    2004Assets:Cash and cash equivalents
    
    $
    320,804,000
    
    
    $
    278,586,000Accounts receivable, net
    
    
    50,869,000
    
    
    
    41,641,000Inventories, net
    
    
    51,783,000
    
    
    
    49,303,000Assets of discontinued operations
    
    
    
    
    
    
    14,245,000Other current assets
    
    
    14,671,000
    
    
    
    9,252,000Total current assets
    
    
    438,127,000
    
    
    
    393,027,000Plant and equipment, net
    
    
    79,603,000
    
    
    
    76,039,000Goodwill, net
    
    
    117,168,000
    
    
    
    100,260,000Other intangible assets, net
    
    
    24,288,000
    
    
    
    9,053,000Assets of discontinued operations
    
    
    
    
    
    
    23,251,000Other assets
    
    
    11,401,000
    
    
    
    17,494,000Total assets
    
    $
    670,587,000
    
    
    $
    619,124,000Liabilities and Shareholders Equity:Accounts payable
    
    $
    18,192,000
    
    
    $
    15,626,000Liabilities of discontinued operations
    
    
    
    
    
    
    3,632,000Accrued expenses
    
    
    26,552,000
    
    
    
    24,438,000Total current liabilities
    
    
    44,744,000
    
    
    
    43,696,000Long-term debt
    
    
    200,000,000
    
    
    
    200,066,000Liabilities of discontinued operations
    
    
    
    
    
    
    139,000Long-term liabilities
    
    
    66,167,000
    
    
    
    66,542,000Total long-term liabilities
    
    
    266,167,000
    
    
    
    266,747,000Shareholders equity
    
    
    359,676,000
    
    
    
    308,681,000Total liabilities and shareholders
equity
    
    $
    670,587,000
    
    
    $
    619,124,000




---



##### 



Fourth Quarter Ended
    
    
    Full Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    14,408,000
    
    
    $
    10,008,000
    
    
    $
    73,889,000
    
    
    $
    38,358,000Adjustments to reconcile net income to
net cash from operating activities:Income from discontinued operations, net of tax
    
    
    
    
    
    
    (623,000
    )
    
    
    (27,359,000
    )
    
    
    (2,012,000
    )Depreciation and amortization
    
    
    4,218,000
    
    
    
    3,321,000
    
    
    
    16,513,000
    
    
    
    13,119,000Deferred financing fees
    
    
    387,000
    
    
    
    393,000
    
    
    
    1,560,000
    
    
    
    1,574,000Net change in receivables, inventories
and trade payables
    
    
    6,366,000
    
    
    
    736,000
    
    
    
    (7,046,000
    )
    
    
    (8,762,000
    )Net change in other assets and liabilities
    
    
    (15,275,000
    )
    
    
    954,000
    
    
    
    (16,333,000
    )
    
    
    5,884,000Net cash from operating activities
    
    
    10,104,000
    
    
    
    14,789,000
    
    
    
    41,224,000
    
    
    
    48,161,000Cash flows from investing activities:Additions to property, plant and equipment, net
    
    
    (5,717,000
    )
    
    
    (4,511,000
    )
    
    
    (12,560,000
    )
    
    
    (11,141,000
    )Proceeds from the sale of discontinued operations
    
    
    (987,000
    )
    
    
    
    
    
    
    71,413,000
    
    
    
    Acquisitions of businesses, net of cash acquired
    
    
    
    
    
    
    100,000
    
    
    
    (42,668,000
    )
    
    
    (3,864,000
    )Net cash from (used in) investing activities
    
    
    (6,704,000
    )
    
    
    (4,411,000
    )
    
    
    16,185,000
    
    
    
    (15,005,000
    )Cash flows from financing activities:Cash dividends paid
    
    
    (3,379,000
    )
    
    
    (3,389,000
    )
    
    
    (13,528,000
    )
    
    
    (13,541,000
    )Payments on debt
    
    
    (16,000
    )
    
    
    (15,000
    )
    
    
    (62,000
    )
    
    
    (90,000
    )Debt issuance costs
    
    
    (940,000
    )
    
    
    
    
    
    
    (940,000
    )
    
    
    Proceeds from exercise of stock options
    
    
    
    
    
    
    73,000
    
    
    
    1,000,000
    
    
    
    115,000Purchase of treasury stock
    
    
    
    
    
    
    (299,000
    )
    
    
    (6,102,000
    )
    
    
    (2,117,000
    )Net cash used in financing activities
    
    
    (4,335,000
    )
    
    
    (3,630,000
    )
    
    
    (19,632,000
    )
    
    
    (15,633,000
    )Effect of exchange rate changes on cash and
cash equivalents
    
    
    68,000
    
    
    
    434,000
    
    
    
    612,000
    
    
    
    644,000Cash from discontinued operations
    
    
    
    
    
    
    2,056,000
    
    
    
    3,829,000
    
    
    
    4,663,000Net increase (decrease) in cash and cash equivalents
    
    
    (867,000
    )
    
    
    9,238,000
    
    
    
    42,218,000
    
    
    
    22,830,000Cash and cash equivalents  Beginning of period
    
    
    321,671,000
    
    
    
    269,348,000
    
    
    
    278,586,000
    
    
    
    255,756,000Cash and cash equivalents  End of period
    
    $
    320,804,000
    
    
    $
    278,586,000
    
    
    $
    320,804,000
    
    
    $
    278,586,000




---



##### 



Reportable Segment Information
 Fourth Quarter Ended
    
    
    Full Year EndedDecember 31, 2005
    
    
    December 31, 2004
    
    
    December 31, 2005
    
    
    December 31, 2004Net salesFriction and Motion Control ProductsExternal customers
    
    $
    50,925
    
    
    $
    41,397
    
    
    $
    194,566
    
    
    $
    163,491Intersegment
    
    
    40
    
    
    
    82
    
    
    
    428
    
    
    
    33250,965
    
    
    
    41,479
    
    
    
    194,994
    
    
    
    163,823Velocity Control ProductsExternal customers
    
    
    11,012
    
    
    
    12,278
    
    
    
    53,839
    
    
    
    51,011Intersegment
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    11,012
    
    
    
    12,278
    
    
    
    53,838
    
    
    
    51,011Sealing ProductsExternal customers
    
    
    10,069
    
    
    
    6,937
    
    
    
    38,632
    
    
    
    35,035Intersegment
    
    
    (33
    )
    
    
    (14
    )
    
    
    (88
    )
    
    
    (79
    )10,036
    
    
    
    6,923
    
    
    
    38,544
    
    
    
    34,956OtherExternal customers
    
    
    17,647
    
    
    
    11,546
    
    
    
    67,219
    
    
    
    46,957Intersegment
    
    
    (7
    )
    
    
    (5
    )
    
    
    (37
    )
    
    
    (16
    )17,640
    
    
    
    11,541
    
    
    
    67,182
    
    
    
    46,941Power and Data Transmission ProductsExternal customers
    
    
    
    
    
    
    10,607
    
    
    
    22,399
    
    
    
    37,317Intersegment
    
    
    
    
    
    
    (63
    )
    
    
    (302
    )
    
    
    (237
    )
    
    
    
    10,544
    
    
    
    22,097
    
    
    
    37,080Total segment net sales
    
    $
    89,653
    
    
    $
    82,765
    
    
    $
    376,655
    
    
    $
    333,811Net sales of discontinued operations
    
    
    
    
    
    
    (10,544
    )
    
    
    (22,097
    )
    
    
    (37,080
    )Total consolidated net sales
    
    $
    89,653
    
    
    $
    72,221
    
    
    $
    354,558
    
    
    $
    296,731
 Fourth Quarter Ended
    
    
    Full Year EndedOperating income
    
    December 31, 2005
    
    
    December 31, 2004
    
    
    December 31, 2005
    
    
    December 31, 2004Friction and Motion Control Products
    
    $
    14,620
    
    
    $
    10,719
    
    
    $
    49,502
    
    
    $
    40,951Velocity Control Products
    
    
    1,790
    
    
    
    1,215
    
    
    
    12,162
    
    
    
    11,786Sealing Products
    
    
    2,120
    
    
    
    194
    
    
    
    5,944
    
    
    
    5,797Other
    
    
    1,314
    
    
    
    1,166
    
    
    
    4,616
    
    
    
    2,196Power and Data Transmission Products
    
    
    
    
    
    
    973
    
    
    
    2,974
    
    
    
    3,143Total segment operating income
    
    
    19,844
    
    
    
    14,267
    
    
    
    75,198
    
    
    
    63,873State income tax provision included in
segment operating income
    
    
    612
    
    
    
    299
    
    
    
    1,862
    
    
    
    1,141Items not allocated to segment operating income
    
    
    (923
    )
    
    
    2,092
    
    
    
    (3,910
    )
    
    
    523Interest expense
    
    
    (2,376
    )
    
    
    (2,399
    )
    
    
    (9,579
    )
    
    
    (9,589
    )Interest income
    
    
    3,045
    
    
    
    1,379
    
    
    
    8,747
    
    
    
    3,987Operating income of discontinued operations
    
    
    
    
    
    
    (973
    )
    
    
    (2,974
    )
    
    
    (3,143
    )Income from continuing operations
before income taxes
    
    $
    20,202
    
    
    $
    14,665
    
    
    $
    69,344
    
    
    $
    56,792




---



##### 



Kaydon Corporation
Reconciliation of Non-GAAP Measures
(Amounts in Thousands)
 Fourth Quarter Ended
    
    
    Full Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Free cash flow (non-GAAP)
from continuing operationsNet cash from operating activities (GAAP)
    
    $
    10,104
    
    
    $
    14,789
    
    
    $
    41,224
    
    
    $
    48,161Capital expenditures
    
    
    (5,717
    )
    
    
    (4,511
    )
    
    
    (12,560
    )
    
    
    (11,141
    )Free cash flow (non-GAAP)
    
    $
    4,387
    
    
    $
    10,278
    
    
    $
    28,664
    
    
    $
    37,020
  Fourth Quarter Ended
    
    
    Full Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Earnings before interest, taxes, depreciation
and amortization- EBITDA (non-GAAP)
from continuing operationsIncome from continuing operations (GAAP)
    
    $
    14,408
    
    
    $
    9,385
    
    
    $
    46,530
    
    
    $
    36,346Net interest (income)/expense
    
    
    (669
    )
    
    
    1,020
    
    
    
    832
    
    
    
    5,602Income tax expense
    
    
    5,794
    
    
    
    5,280
    
    
    
    22,814
    
    
    
    20,446Depreciation and amortization
    
    
    4,218
    
    
    
    3,321
    
    
    
    16,513
    
    
    
    13,119Earnings before interest, taxes, depreciation
and amortization- EBITDA (non-GAAP)
    
    $
    23,751
    
    
    $
    19,006
    
    
    $
    86,689
    
    
    $
    75,513




---



##### 



Kaydon Corporation
RESTATED QUARTERLY DATA FOR CONTINUING OPERATIONS
(in thousands except per share figures)
 EarningsNet
    
    
    Operating
    
    
    Net
    
    
    Per ShareQuarter
    
    
    
    
    
    Sales
    
    
    Income
    
    
    Earnings
    
    
    Basic
    
    
    Diluted2005First
    
    
    
    
    
    $
    84,562
    
    
    $
    15,122
    
    
    $
    9,204
    
    
    $
    0.33
    
    
    $
    0.31Second
    
    
    
    
    
    
    94,473
    
    
    
    18,104
    
    
    
    11,273
    
    
    
    0.41
    
    
    
    0.37Third
    
    
    
    
    
    
    85,870
    
    
    
    17,417
    
    
    
    11,645
    
    
    
    0.42
    
    
    
    0.38Fourth
    
    
    
    
    
    
    89,653
    
    
    
    19,533
    
    
    
    14,408
    
    
    
    0.52
    
    
    
    0.46Total 2005
    
    
    
    
    
    $
    354,558
    
    
    $
    70,176
    
    
    $
    46,530
    
    
    $
    1.67
    
    
    $
    1.52
 EarningsNet
    
    
    Operating
    
    
    Net
    
    
    Per ShareSales
    
    
    Income
    
    
    Earnings
    
    
    Basic
    
    
    Diluted2004First
    
    
    
    
    
    $
    74,665
    
    
    $
    15,471
    
    
    $
    8,843
    
    
    $
    0.32
    
    
    $
    0.30Second
    
    
    
    
    
    
    76,831
    
    
    
    16,768
    
    
    
    9,726
    
    
    
    0.35
    
    
    
    0.32Third
    
    
    
    
    
    
    73,014
    
    
    
    14,470
    
    
    
    8,392
    
    
    
    0.30
    
    
    
    0.28Fourth
    
    
    
    
    
    
    72,221
    
    
    
    15,685
    
    
    
    9,385
    
    
    
    0.34
    
    
    
    0.31Total 2004
    
    
    
    
    
    $
    296,731
    
    
    $
    62,394
    
    
    $
    36,346
    
    
    $
    1.30
    
    
    $
    1.22
 Kaydon Corporation
RESTATED QUARTERLY DATA FOR DISCONTINUED OPERATIONS
OF THE POWER AND DATA TRANSMISSION PRODUCTS GROUP
(unaudited) (in thousands except per share figures)
 EarningsNet
    
    
    Operating
    
    
    Net
    
    
    Per ShareQuarter
    
    
    
    
    
    Sales
    
    
    Income
    
    
    Earnings
    
    
    Basic
    
    
    Diluted2005First
    
    
    
    
    
    $
    9,920
    
    
    $
    1,015
    
    
    $
    675
    
    
    $
    0.02
    
    
    $
    0.02Second
    
    
    
    
    
    
    9,936
    
    
    
    1,722
    
    
    
    1,145
    
    
    
    0.04
    
    
    
    0.03Third(1)
    
    
    
    
    
    
    2,241
    
    
    
    237
    
    
    
    25,539
    (2)
    
    
    0.92
    (2)
    
    
    0.74
    (2)Fourth
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total 2005
    
    
    
    
    
    $
    22,097
    
    
    $
    2,974
    
    
    $
    27,359
    (2)
    
    $
    0.98
    (2)
    
    $
    0.79
    (2)
 EarningsNet
    
    
    Operating
    
    
    Net
    
    
    Per ShareSales
    
    
    Income
    
    
    Earnings
    
    
    Basic
    
    
    Diluted2004First
    
    
    
    
    
    $
    8,658
    
    
    $
    92
    
    
    $
    59
    
    
    $
    0.00
    
    
    $
    0.00Second
    
    
    
    
    
    
    7,555
    
    
    
    341
    
    
    
    218
    
    
    
    0.01
    
    
    
    0.01Third
    
    
    
    
    
    
    10,323
    
    
    
    1,737
    
    
    
    1,112
    
    
    
    0.04
    
    
    
    0.03Fourth
    
    
    
    
    
    
    10,544
    
    
    
    973
    
    
    
    623
    
    
    
    0.02
    
    
    
    0.02Total 2004
    
    
    
    
    
    $
    37,080
    
    
    $
    3,143
    
    
    $
    2,012
    
    
    $
    0.07
    
    
    $
    0.06
 
 (1)
    
    Through date of disposition, July 26, 2005.(2)
    
    Includes the gain on sale of $25.4 million after tax, or $0.91 basic earnings
per share and $0.73 diluted earnings per share.