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News Release

Carpenter Technology Reports Fiscal Fourth Quarter and Full Year Results

  • Fourth quarter sales from continuing operations up 4% from prior year to $556.3 million and up 12%, net of surcharges, to $391.3 million
  • Fourth quarter net income from continuing operations of $46.9 million or $1.01 per share which includes a special reserve for litigation matters of $0.08 per share
  • Record full year EPS from continuing operations of $4.31 per share
  • Record full year sales from continuing operations of $1.953 billion
  • Full year free cash flow of $112 million excluding acquisition and divestitures
  • Net income of $1.15 per share for fourth quarter and $5.89 per share for fiscal year which includes income from divested businesses

    WYOMISSING, Pa.--(BUSINESS WIRE)--July 31, 2008--Carpenter Technology Corporation (NYSE:CRS) today reported net income from continuing operations of $46.9 million or $1.01 per diluted share for the fiscal fourth quarter ended June 30, 2008, which includes a special increase in reserves for litigation matters of $0.08 per diluted share. This compares with net income from continuing operations a year earlier of $58.9 million or $1.12 per diluted share.

    Financial highlights for the fourth quarter and full fiscal year include:

    (millions, except EPS & pounds          4Q     4Q
     shipped)                               2008   2007  FY 2008  FY 2007
    -------------------------------------- ====== ====== ======== ========
    Net Sales                              $556.3 $533.2 $1,953.5 $1,839.0
    -------------------------------------- ------ ------ -------- --------
    Net Sales excluding surcharge (a)      $391.3 $349.5 $1,369.0 $1,316.7
    -------------------------------------- ------ ------ -------- --------
    Income from continuing operations       $46.9  $58.9   $209.9   $215.2
    -------------------------------------- ------ ------ -------- --------
    Net income                              $53.4  $61.3   $287.1   $227.2
    -------------------------------------- ------ ------ -------- --------
    Diluted EPS from continuing operations  $1.01  $1.12    $4.31    $4.09
    -------------------------------------- ------ ------ -------- --------
    Diluted EPS                             $1.15  $1.17    $5.89    $4.32
    -------------------------------------- ------ ------ -------- --------
    Free cash flow excluding sale and
     acquisition of businesses (a)          $61.7 $101.1   $111.8   $202.3
    -------------------------------------- ------ ------ -------- --------
    Pounds sold (000)                      65,028 56,382  223,460  229,072
    -------------------------------------- ------ ------ -------- --------
    
    (a) non-GAAP financial measure that is explained in the attached
     tables
    

    "We finished the year with good growth momentum due to strong demand in the global energy and aerospace markets, and improving demand in our industrial and consumer businesses. Our international sales also continued to grow at a double-digit rate year on year, and now account for 34% of total annual sales," said Anne Stevens, chairman, president and chief executive officer. "We were pleased to achieve record full year EPS results for the fourth consecutive year. We continue to drive operational excellence initiatives to improve our results, and expect to complete the expansion of our premium melt facilities by the turn of the calendar year, which will provide needed additional capacity."

    Fourth Quarter Results

    Net sales from continuing operations for the fourth quarter were $556.3 million, or 4 percent higher than a year ago. Excluding surcharge revenue, net sales from continuing operations were $391.3 million, 12 percent higher than last year.

    Pounds sold in the fourth quarter were 15 percent above the quarter a year ago. Volumes shipped by our Premium Alloys Operations segment increased 30 percent, due to continued strong demand from energy and aerospace. Pounds sold by our Advanced Metals Operations segment increased 10 percent reflecting improvement in the industrial and consumer markets.

    Although volumes grew, gross profit in the fourth quarter declined to $117.3 million, from $120.8 million a year earlier. The results reflect LIFO accounting effects related to changes in inventory levels and year to-year raw material costs, other impacts from the year-to-year difference in raw material costs, significant equipment upgrade activity, and general inflationary pressures.

    Gross margin was 21.1 percent in the fourth quarter, compared to 22.7 percent in the 2007 fourth quarter. Adjusted for the dilutive impact of the surcharge revenue, the year-to-year difference in the lag effect in our surcharge mechanism, and the LIFO inventory effects, fourth quarter gross margin on a comparable basis would have been an estimated 30.0 percent compared with an estimated 32.5 percent in the 2007 fourth quarter.

    Operating income for the fourth quarter was $72.7 million, down 17 percent compared with $87.4 million in the fourth quarter of 2007. The decline in operating income reflected lower gross profit, and an $11.2 million increase in SG&A expenses, primarily from the special litigation reserve, investments associated with driving our strategic initiatives, and other year-end items.

    Adjusted for the lag effect, surcharge revenue, other inventory effects and the special litigation reserve, fourth quarter operating margin would have been an estimated 18.6 percent versus an estimated 22.9 percent in the same quarter a year earlier.

    Other income in the fourth quarter was $1.9 million, compared with other income of $6.6 million in the 2007 fourth quarter. The decrease of $4.7 million or $0.07 per share primarily reflected lower interest income from invested cash.

    The income tax provision for fourth quarter continuing operations totaled $23.2 million or 33.1 percent of pre-tax income, compared with an income tax provision of $29.5 million or 33.4 percent in last year's fourth quarter.

    Income from continuing operations was $46.9 million or $1.01 per diluted share, which includes a special reserve for litigation matters of $0.08 per share. This compared with 2007 fourth quarter income from continuing operations of $58.9 million or $1.12 per diluted share.

    Aerospace market sales were $208.3 million, an increase of 10 percent compared with a year earlier. Excluding surcharge revenue, aerospace sales grew 12 percent over the fourth quarter of 2007. Aerospace results picked up in the second half of the fiscal year, consistent with the strong aircraft build schedule. There was relatively little change in demand seen from announced delays in the deliveries of the 787 and A380 airliners or the reductions in the U.S. domestic fleet.

    Energy market sales increased to $76.2 million, 18 percent growth compared with the fourth quarter 2007. Excluding surcharge revenue, energy market sales increased 29 percent. Power generation sales showed significant gains due to strong demand for our materials for industrial gas turbines going to Europe, the Middle East and Asia Pacific. Oil and gas exploration remains strong as the number of directional drilling rigs increases around the world.

    Industrial market sales were $121.6 million, up 4 percent from the fourth quarter a year earlier. Excluding surcharge, industrial sales rose 17 percent. Sales improved for weld wire and stainless grades supporting U.S. infrastructure projects, while there were offsets from lower demand in the semiconductor and valves and fittings segments.

    Medical market sales were $39.4 million, an increase of 11 percent compared with the 2007 fourth quarter. Excluding surcharge revenue, medical sales grew 10 percent. The medical supply chain appears to have worked through its adjustment period from the last several quarters and is returning to more normal purchasing patterns.

    Consumer market sales were $51.9 million, an 11 percent decrease compared with a year earlier. Excluding surcharge revenue, sales improved 6 percent. The results reflect good growth in electronics and sports, partially offset by weakness in the housing and construction markets.

    Automotive market sales were $58.9 million, a decline of 14 percent from the same period a year ago. Excluding surcharge revenue, sales were down 6 percent. Our business continues to be impacted by the current weakness in the domestic auto market.

    Sales outside the United States were $177.7 million for the fourth quarter, a 13 percent increase from the same quarter a year earlier. Sales improved in all major markets.

    Fiscal Year 2008 Results

    Net sales from continuing operations for the year were $1.953 billion, or 6 percent higher than a year ago. Excluding surcharge revenue, sales from continuing operations were $1.369 billion, 4 percent higher than a year ago.

    Pounds shipped in FY2008 were 2 percent lower than last year. Pounds shipped by our Premium Alloys Operations segment increased 21 percent year on year, while our Advanced Metals Operations segment declined 7 percent.

    Gross profit in FY2008 was $457.2 million, compared with $427.5 million a year earlier.

    Operating income for FY 2008 was $309.1 million, up 2 percent compared with $304.4 million in 2007. Operating margin excluding surcharge was 22.6 percent in FY2008, compared to 23.1 percent in 2007.

    Other income in FY 2008 was $24.2 million, compared with other income of $30.3 million in 2007.

    The income tax provision for FY2008 continuing operations totaled $102.9 million or 32.9 percent of pre-tax income, compared with an income tax provision of $96.8 million or 31.0 percent last year.

    For the year, income from continuing operations was $209.9 million or $4.31 per diluted share, compared with 2007 income from continuing operations of $215.2 million or $4.09 per diluted share.

    Market data for fiscal 2008 is shown below.

                                                                % change
                                          FY2008                  from
                                          Revenues  % change      FY2007
                                            (in        from       w/o
    Market                                millions)   FY2007    surcharges
    ------------------------------------ ---------- ---------- -----------
    Aerospace                                $753.3        9%          2%
    ------------------------------------ ---------- ---------- -----------
    Energy                                   $241.2       41%         52%
    ------------------------------------ ---------- ---------- -----------
    Medical                                  $133.6        7%     Flat
    ------------------------------------ ---------- ---------- -----------
    Industrial                               $419.5       (1%)        (3%)
    ------------------------------------ ---------- ---------- -----------
    Automotive                               $221.0       (6%)        (6%)
    ------------------------------------ ---------- ---------- -----------
    Consumer                                 $184.9       (7%)        (3%)
    ------------------------------------ ---------- ---------- -----------
    International                            $655.5       22%        n/a
    ------------------------------------ ---------- ---------- -----------
    

    Other Financial Items

    Free cash flow for the fourth quarter excluding the acquisition and divestitures was $61.7 million, and $111.8 million for the year. Full year capital expenditures totaled $118.9 million, primarily reflecting Carpenter's ongoing expansion of its premium melt capacity. Total FY2007 capital expenditures were $47.1 million.

    FY 2009 Outlook

    "In the 2009 fiscal year, we expect continuing strong growth driven largely by the favorable industry dynamics in our key aerospace and energy markets," said Stevens. "Our first half will be subject to capacity constraints on our premium melt products that should be relieved when the new melting facility and other equipment upgrades come on line around the beginning of the 2009 calendar year. We are well situated to respond to the challenges that the current economic conditions are presenting, and anticipate greater demand for our high performance materials as we pursue aggressive goals for new product development. We will also continue our focused efforts on operational excellence that are transforming a 120-year old business.

    "We expect another year of record earnings and strong free cash flow," continued Stevens, "although several factors will lead our second half comparisons to be stronger than the first half. Of note, we have had significant planned outages including an upgrade to our major rolling mill and an extended maintenance outage on our cleaning facilities that will carry into the first quarter."

    Pension Effects

    During FY2008, the Company had net pension income associated with its pension and other post retirement benefit plans of $0.5 million. Based on the value of the plans' assets and projected costs of the plans as of June 30, 2008, the Company will experience a non-cash net pension expense during fiscal 2009 of $20.1 million, which equates to a year-to-year difference in reported earnings of roughly $0.28 per share. The plans are well funded as of June 30, 2008, and the Company has had no required cash contributions to the plans since 1986.

    Discontinued Operations

    On June 30, 2008, Carpenter completed the sale of its metal shapes business, Rathbone Precision Metal, to Calvi Holdings, S.r.l., for $17.5 million in cash. Carpenter recorded a pre-tax gain in the quarter of $8.1 million, or $0.09 per share on an after-tax basis.

    Results for the metal shapes business were reported as discontinued operations for the fourth quarter. Income from discontinued operations of $6.5 million compares with income of $2.4 million for the fourth quarter 2007. Details for the quarter and year, which includes the sale of our ceramics businesses in March, 2008, are as follows:

                                               Q4-    Q4-
    (millions)                                 2008   2007  FY2008  FY2007
    ----------------------------------------- ====== ====== ======= ======
    Income from discontinued operations        $0.4   $4.7   $13.2  $19.0
    ----------------------------------------- ------ ------ ------- ------
    Gain on sale, net of expenses              $8.1     --  $109.6     --
    ----------------------------------------- ------ ------ ------- ------
    Income tax expense                        ($2.0) ($2.3) ($45.6) ($7.0)
    ----------------------------------------- ------ ------ ------- ------
    Income from discontinued operations        $6.5   $2.4   $77.2  $12.0
    ----------------------------------------- ------ ------ ------- ------
    

    Share Repurchase Program

    Carpenter repurchased 3.1 million shares of its common stock during the fourth quarter for a total of $174 million, or an average price of $56.43 per share, under the $250 million share repurchase plan that was authorized by the Board of Directors on December 21, 2007. As of June 30, 2008, aggregate repurchases under this program and the previously completed $250 million share repurchase program totaled 7.6 million shares with an aggregate cost of $454 million, or an average price of $59.69/share. As of June 30, 2008, there were 45,295,770 shares of common stock outstanding.

    Sales Excluding Surcharge

    This press release includes discussions of net sales as adjusted to exclude the impact of raw material surcharges, which represents a financial measure that has not been determined in accordance with U.S. generally accepted accounting principles ("GAAP"). The Company provides this additional financial measure because management believes removing the impact of raw material surcharges from net sales provides a more consistent basis for comparing results of operations from period to period.

    Conference Call

    Carpenter will host a conference call and webcast today, July 31st, at 10:00 a.m., ET, to discuss financial results and operations for the fiscal fourth quarter and full year. Please call 610-208-2800 for details of the conference call. Access to the call will also be made available at Carpenter's web site (www.cartech.com) and through CCBN (www.ccbn.com). A replay of the call will be made available at www.cartech.com or at www.ccbn.com.

    About Carpenter Technology

    Carpenter produces and distributes specialty alloys, including stainless steels, titanium alloys, and superalloys, and various engineered products. Information about Carpenter can be found on the Internet at www.cartech.com.

    Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected, anticipated or implied. The most significant of these uncertainties are described in Carpenter's filings with the Securities and Exchange Commission including its annual report on Form 10-K for the year ended June 30, 2007, its subsequent Forms 10-Q and the exhibits attached to those filings. They include but are not limited to: 1) the cyclical nature of the specialty materials business and certain end-use markets, including aerospace, industrial, automotive, consumer, medical, and energy, or other influences on Carpenter's business such as new competitors, the consolidation of customers, and suppliers or the transfer of manufacturing capacity from the United States to foreign countries; 2) the ability of Carpenter to achieve cost savings, productivity improvements or process changes; 3) the ability to recoup increases in the cost of energy and raw materials or other factors; 4) domestic and foreign excess manufacturing capacity for certain metals; 5) fluctuations in currency exchange rates; 6) the degree of success of government trade actions; 7) the valuation of the assets and liabilities in Carpenter's pension trusts and the accounting for pension plans; 8) possible labor disputes or work stoppages; 9) the potential that our customers may substitute alternate materials or adopt different manufacturing practices that replace or limit the suitability of our products; 10) the ability to successfully acquire and integrate acquisitions; and 11) the ability of Carpenter to implement and manage material capital expansion projects in a timely and efficient manner. Any of these factors could have an adverse and/or fluctuating effect on Carpenter's results of operations. The forward-looking statements in this document are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Carpenter undertakes no obligation to update or revise any forward-looking statements.

    
                       CONSOLIDATED STATEMENT OF INCOME
                     (in millions, except per share data)
    
    
                                   Three Months Ended      Year Ended
                                         June 30             June 30
                                   ------------------- -------------------
    
                                     2008      2007      2008      2007
                                   --------- --------- --------- ---------
    
    NET SALES                        $556.3    $533.2  $1,953.5  $1,839.0
    
    Cost of sales                     439.0     412.4   1,496.3   1,411.5
                                   --------- --------- --------- ---------
    Gross profit                      117.3     120.8     457.2     427.5
    
    Selling, general and
     administrative expenses           44.6      33.4     148.1     123.1
                                   --------- --------- --------- ---------
    Operating income                   72.7      87.4     309.1     304.4
    
    Interest expense                    4.5       5.6      20.5      22.7
    Other income, net                  (1.9)     (6.6)    (24.2)    (30.3)
                                   --------- --------- --------- ---------
    
    Income before income taxes         70.1      88.4     312.8     312.0
    Income taxes                       23.2      29.5     102.9      96.8
                                   --------- --------- --------- ---------
    INCOME FROM CONTINUING
     OPERATIONS                        46.9      58.9     209.9     215.2
    
    INCOME FROM DISCONTINUED
     OPERATIONS                         6.5       2.4      77.2      12.0
    
                                   --------- --------- --------- ---------
    NET INCOME                        $53.4     $61.3    $287.1    $227.2
                                   ========= ========= ========= =========
    
    
    
    EARNINGS PER COMMON SHARE -
     BASIC:
       Income from continuing
        operations                    $1.02     $1.12     $4.33     $4.16
       Income from discontinued
        operations                    $0.14     $0.05     $1.59     $0.24
                                   --------- --------- --------- ---------
       NET INCOME PER SHARE -
        BASIC                         $1.16     $1.17     $5.92     $4.40
                                   ========= ========= ========= =========
    
    EARNINGS PER COMMON SHARE -
     DILUTED:
       Income from continuing
        operations                    $1.01     $1.12     $4.31     $4.09
       Income from discontinued
        operations                    $0.14     $0.05     $1.58     $0.23
                                   --------- --------- --------- ---------
       NET INCOME PER SHARE -
        DILUTED                       $1.15     $1.17     $5.89     $4.32
                                   ========= ========= ========= =========
    
    
    WEIGHTED AVERAGE COMMON
      SHARES OUTSTANDING:
    Basic                              46.1      52.3      48.5      51.5
                                   ========= ========= ========= =========
    Diluted                            46.4      52.5      48.7      52.5
                                   ========= ========= ========= =========
    
    Cash dividends per common
     share                            $0.18     $0.15     $0.63   $0.4875
                                   ========= ========= ========= =========
    
    
    
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                (in millions)
    
                                                             Year Ended
                                                               June 30
                                                           ---------------
    
                                                            2008    2007
                                                           ------- -------
    
    OPERATING ACTIVITIES:
      Net income                                           $287.1  $227.2
      Adjustments to reconcile net income to net cash
       provided from operations:
        Depreciation                                         46.8    47.1
        Amortization                                          2.4     1.6
        Deferred income taxes                                 2.1     5.7
        Net pension (income) expense                         (0.1)    4.9
        Net (gain) loss on asset disposals                   (0.9)    1.3
        Gain on sale of businesses                         (109.6)     --
      Changes in working capital and other:
        Receivables                                           6.3   (63.9)
        Inventories                                          17.4    (8.1)
        Other current assets                                 (8.3)   (4.5)
        Accounts payable                                    (56.1)   77.8
        Accrued current liabilities                          19.8   (14.6)
        Other, net                                           11.6     0.6
                                                           ------- -------
    Net cash provided from operating activities             218.5   275.1
                                                           ------- -------
    
    INVESTING ACTIVITIES:
      Purchases of plant, equipment and software           (118.9)  (47.1)
      Proceeds from disposals of plant and equipment          1.5      --
      Acquisition of business                                (6.6)     --
      Net proceeds from sale of businesses                  149.5      --
      Purchases of marketable securities                   (366.2) (680.3)
      Sales of marketable securities                        722.2   449.4
                                                           ------- -------
    Net cash provided from (used for) investing activities  381.5  (278.0)
                                                           ------- -------
    
    FINANCING ACTIVITIES:
      Payments on long-term debt                            (33.2)   (0.2)
      Payments to acquire treasury stock                   (425.2)  (28.9)
      Dividends paid                                        (30.6)  (25.7)
      Tax benefits on share-based compensation                1.0     7.7
      Proceeds from common stock options exercised            0.7     4.2
                                                           ------- -------
    Net cash used for financing activities                 (487.3)  (42.9)
                                                           ------- -------
    
    Effect of exchange rate changes on cash and cash
     equivalents                                            (10.2)   (6.2)
                                                           ------- -------
    
    INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS        102.5   (52.0)
    Cash and cash equivalents at beginning of period        300.8   352.8
                                                           ------- -------
    Cash and cash equivalents at end of period             $403.3  $300.8
                                                           ======= =======
    
    
    
                          CONSOLIDATED BALANCE SHEET
                                (in millions)
    
                                                        June 30   June 30
                                                         2008      2007
                                                       --------- ---------
    
    ASSETS
    Current assets:
      Cash and cash equivalents                          $403.3    $300.8
      Marketable securities                                 5.3     372.7
      Accounts receivable, net                            285.1     303.2
      Inventories                                         209.0     235.0
      Deferred income taxes                                16.4      13.3
      Other current assets                                 44.2      30.7
                                                       --------- ---------
        Total current assets                              963.3   1,255.7
    
    Property, plant and equipment, net                    583.8     537.4
    Prepaid pension cost                                   51.5     132.4
    Goodwill                                               35.2      46.4
    Other intangibles                                      19.8      19.2
    Other assets                                           55.2      34.6
                                                       --------- ---------
    Total assets                                       $1,708.8  $2,025.7
                                                       ========= =========
    
    LIABILITIES
    Current liabilities:
      Accounts payable                                   $158.4    $215.9
      Accrued liabilities                                 135.6     117.1
      Current portion of long-term debt                    23.0      33.2
                                                       --------- ---------
        Total current liabilities                         317.0     366.2
    
    Long-term debt, net of current portion                276.7     299.5
    Accrued postretirement benefits                        90.9      90.9
    Deferred income taxes                                  98.4     143.5
    Other liabilities                                      77.2      57.9
                                                       --------- ---------
    Total liabilities                                     860.2     958.0
                                                       --------- ---------
    
    STOCKHOLDERS' EQUITY
      Common stock                                        273.0     272.8
      Capital in excess of par value - common stock       197.5     191.6
      Reinvested earnings                               1,006.0     751.3
      Common stock in treasury, at cost                  (484.0)    (65.7)
      Accumulated other comprehensive loss               (143.9)    (82.3)
                                                       --------- ---------
        Total stockholders' equity                        848.6   1,067.7
                                                       --------- ---------
    
    Total liabilities and stockholders' equity         $1,708.8  $2,025.7
                                                       ========= =========
    
    
    
                            SEGMENT FINANCIAL DATA
                                (in millions)
    
    
                                    Three Months Ended     Year Ended
                                         June 30             June 30
                                    ------------------ -------------------
    
                                      2008      2007     2008      2007
                                    --------- -------- --------- ---------
    
    Net sales:
      Advanced Metals Operations      $393.1   $385.0  $1,390.7  $1,365.2
      Premium Alloys Operations        167.0    148.8     575.7     475.7
      Intersegment                      (3.8)    (0.6)    (12.9)     (1.9)
                                    --------- -------- --------- ---------
    
      Consolidated net sales          $556.3   $533.2  $1,953.5  $1,839.0
                                    ========= ======== ========= =========
    
    Operating income:
      Advanced Metals Operations       $50.4    $55.3    $188.7    $202.9
      Premium Alloys Operations         34.3     36.6     144.7     120.1
      Corporate costs                  (17.2)    (7.9)    (46.3)    (33.2)
      Pension earnings, interest &
       deferrals                         4.9      3.6      21.7      14.5
      Intersegment                       0.3     (0.2)      0.3       0.1
                                    --------- -------- --------- ---------
    
       Consolidated operating
        income                         $72.7    $87.4    $309.1    $304.4
                                    ========= ======== ========= =========
    
    
    Beginning with the first quarter of fiscal 2008, Carpenter realigned
     its reportable business segments to focus more effectively on our
     customers, end-use markets, and operational excellence goals. As a
     result, we now have two reportable business segments: Advanced Metals
     Operations and Premium Alloys Operations.
    
    The Advanced Metals Operations (AMO) segment includes the
     manufacturing and distribution of high temperature and high strength
     metal alloys, stainless steels and titanium in the form of small bars
     and rods, wire, narrow strip and powder. AMO sales are spread across
     many of our end-use markets including aerospace, industrial,
     consumer, automotive, and medical.
    
    The Premium Alloys Operations (PAO) segment includes the manufacturing
     and distribution of high temperature and high strength metal alloys
     and stainless steels in the form of ingots, billets, large bars and
     hollows and primarily services the aerospace and energy markets.
    
    The service cost component of net pension expense, which represents
     the estimated cost of future pension liabilities earned associated
     with active employees, is included in the operating results of the
     business segments. The residual net pension expense, which is
     comprised of the expected return on plan assets, interest costs on
     the projected benefit obligations of the plans, and amortization of
     actuarial gains and losses and prior service costs, is included under
     the heading "Pension earnings, interest & deferrals."
    
    
    
                         SELECTED FINANCIAL MEASURES
                                (in millions)
    
    
                                   Three Months Ended      Year Ended
                                         June 30             June 30
                                   ------------------- -------------------
    FREE CASH FLOW                   2008      2007      2008      2007
                                   --------- --------- --------- ---------
    
    Net cash provided from
     operations                       $75.0    $128.4    $218.5    $275.1
    Purchases of plant, equipment
     and software                     (46.2)    (19.3)   (118.9)    (47.1)
    Acquisition of business              --        --      (6.6)       --
    Proceeds from disposals of
     plant and
    equipment                           0.1      (0.2)      1.5        --
    Net proceeds from sale of
     businesses                         6.5        --     149.5        --
    Dividends paid                     (8.5)     (7.8)    (30.6)    (25.7)
                                   --------- --------- --------- ---------
    Free cash flow                    $26.9    $101.1    $213.4    $202.3
                                   ========= ========= ========= =========
    
    
    
                                   Three Months Ended      Year Ended
                                         June 30             June 30
                                   ------------------- -------------------
    FREE CASH FLOW EXCLUDING
     IMPACTS OF SALE AND
     ACQUISITION OF BUSINESSES       2008      2007      2008      2007
                                   --------- --------- --------- ---------
    
    Net cash provided from
     operations                       $75.0    $128.4    $218.5    $275.1
    Increased payment of income
     tax liability associated with
     gain on sale of business          41.3        --      41.3        --
    Purchases of plant, equipment
     and software                     (46.2)    (19.3)   (118.9)    (47.1)
    Proceeds from disposals of
     plant and
    equipment                           0.1      (0.2)      1.5        --
    Dividends paid                     (8.5)     (7.8)    (30.6)    (25.7)
                                   --------- --------- --------- ---------
    Free cash flow                    $61.7    $101.1    $111.8    $202.3
                                   ========= ========= ========= =========
    
    
    Free cash flow is a measure of cash generated which management
     evaluates for alternative uses.
    
    
    
                            SUPPLEMENTAL SCHEDULES
                                (in millions)
    
    
                                   Three Months Ended      Year Ended
                                         June 30             June 30
                                   ------------------- -------------------
    NET SALES BY MAJOR PRODUCT
     LINE                            2008      2007      2008      2007
                                   --------- --------- --------- ---------
    
    Product Line Excluding
     Surcharge:
      Stainless steel                $133.9    $124.7    $459.7    $476.7
      Special alloys                  182.1     158.8     647.1     573.5
      Titanium products                51.3      45.9     180.6     188.2
      Tool and other steel             18.4      14.4      61.4      54.9
      Other materials                   5.6       5.7      20.2      23.4
                                   --------- --------- --------- ---------
    
    Consolidated net sales
     excluding surcharge             $391.3    $349.5  $1,369.0  $1,316.7
    
    Surcharge revenue                 165.0     183.7     584.5     522.3
                                   --------- --------- --------- ---------
    
    Consolidated net sales           $556.3    $533.2  $1,953.5  $1,839.0
                                   ========= ========= ========= =========
    

    CONTACT: Carpenter Technology Corporation
    Investor and Media Inquiries:
    David A. Christiansen
    610-208-3065
    dchristiansen@cartech.com

    SOURCE: Carpenter Technology Corporation


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