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Net income for the quarter decreased by $4.2 million (11.6%) to $32.7 million, or $1.16 per fully diluted share, compared to $36.9 million, or $1.34 per fully diluted share, in the third quarter of 2006. The $1.16 per fully diluted share includes the effect of certain after tax expenses totaling approximately $6.2 million. Gross profit margins increased to 39.6% of net sales in the third quarter of 2007 from 38.0% in the previous year’s quarter.
Sales for the nine months ended September 30, 2007, reached a record $565.4 million, up from $484.2 million in the same period last year. Net income for the first nine months of 2007 increased to a record $109.0 million, or $3.93 per fully diluted share, on 27.8 million shares, from $90.7 million, or $3.31 per fully diluted share, on 27.4 million shares, for the nine month period in 2006.
New bookings for the third quarter of 2007 were $163.6 million, compared to $138.3 million for the same period last year. For the first nine months of 2007, new bookings were $395.3 million, compared to $416.5 million for the comparable period last year. Total backlog as of September 30, 2007, was $173.1 million, compared to total backlog at September 30, 2006, of $209.1 million.
“The third quarter 2007 was very exciting for Ceradyne and we believe laid the groundwork for future growth in 2008 and beyond,” said Joel P. Moskowitz, president and chief executive officer. “We completed the acquisitions of Minco, Inc. and EaglePicher Boron, LLC as previously announced. Although early in the integration process for both acquisitions, we continue to be very enthused regarding their growth prospects.
“Minco provides Ceradyne its starting powders of high-purity fused silica for our production of crucibles used in the manufacture of photovoltaic solar cells. Due to our projected strong growth of the solar cell crucible business, particularly in China, Ceradyne has committed approximately $5.0 million to expand Minco’s manufacturing capacity for fused silica powder from 5.0 million pounds per year to 30.0 million pounds per year by 2009.
“Our new Ceradyne Boron Products subsidiary (formerly EaglePicher Boron, LLC) produces the 10B boron isotope for peaceful electricity generating nuclear reactor uses and the 11B boron isotope for use in ion implantation in the fabrication of semiconductors. Although we continue to believe that nuclear uses of the 10B isotope will be a growth area and complement our Ceradyne Canada operation, we have recently become aware of additional new uses of the 11B isotope in semiconductor applications. We are currently evaluating semiconductor opportunities.
“We have recently promoted Ceradyne’s chief technology officer, Dr. Thomas Juengling, to the position of president, ESK Ceramics, in Kempten, Germany. Dr. Juengling has 10 years of combined experience with ESK and Ceradyne, and will be focused on ESK’s continued expansion of its BORONEIGE® cosmetic ceramic powder business and ESK’s industrial ceramic operations. He will also continue to lead Ceradyne’s efforts to develop its ceramic components for use in the primary smelting of aluminum.
“In the 40 years since I participated in the founding of Ceradyne, the company has never been involved with a program as exciting and with the financial potential as large as our involvement with the BULL™ combat vehicle. Together with our team partners Oshkosh Truck Co. and Ideal Innovations, Inc., we have developed an EFP (explosively formed penetrator) resistant vehicle, which we submitted on September 28, 2007, in response to a government request for proposal. The military is currently evaluating the two vehicles we submitted along with our proposal, as well as several competitive proposals.
“We anticipate a response from the government in late 2007 or first quarter 2008. If there is a positive response, we anticipate a modest order with deliveries in early 2008. As the process continues, more substantive production orders could be issued with deliveries in the second half of 2008. Ceradyne’s manufacturing of the BULL combat vehicle is anticipated to be performed in Michigan.”
Regarding guidance, Moskowitz added, “On February 26, 2007, Ceradyne increased its guidance for 2007 to a sales range of $720 million to $740 million with an earnings range of $5.20 to $5.40 per fully diluted share. We continue to believe, based on our 2007 nine month results and our internal projections for the fourth quarter, that we will meet our full year 2007 guidance with sales at the upper range of the guidance and earnings at the lower range.”
Additional information, including an archive of a recent teleconference regarding these results, is available at www.ceradyne.com.