DRS Technologies Reports Record Second Quarter Results; Revenues, Operating Income and Net Earnings Advance 39%, 56% and 71%, Respectively; Backlog At a New High.Business Editors PARSIPPANY, N.J.--(BUSINESS WIRE)--Nov. 6, 2002 DRS Technologies DRS Technologies, Inc. (commonly known as DRS; formerly known as Diagnostic/Retrieval Systems, Inc.) is a supplier of defense electronic products and systems to the United States Air Force, Army, Coast Guard, Marine Corps, Navy, aerospace and defense prime , Inc. (NYSE NYSE See: New York Stock Exchange :DRS DRS Drives (street suffix) DRS Dispute Resolution Service DRS Doctorandus DRS Department of Rehabilitative Services DRS Direct Registration System (securities) DRS Department of Rehabilitation Services ) today reported record financial results for the second quarter and first six months of fiscal 2003. Results for both periods included significant increases in revenues, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and net earnings. Funded backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. at the end of the period was at the highest level in the company's history. For the second quarter ended September September: see month. 30, 2002, revenues were $161.2 million, a 39 percent increase over revenues of $116.2 million for the same period last year. Fiscal 2003 second quarter operating income of $16.7 million was 56 percent higher than the $10.7 million reported for the same three-month period in fiscal 2002. Operating income as a percentage of sales was 10.4 percent, versus 9.2 percent for the previous year. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Net earnings for the three-month period were 71 percent higher than a year ago at $7.7 million, or $0.44 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, on 17.6 million diluted shares outstanding. Last year, second quarter net earnings were $4.5 million, or $0.34 per diluted share, on 13.2 million diluted shares outstanding. The 33 percent increase in diluted shares outstanding for the second quarter of fiscal 2003 was principally due to the equity offering completed by the company in the third quarter of fiscal 2002, which placed approximately 3.8 million additional shares in the marketplace. "DRS completed the second quarter of fiscal 2003 with excellent results, achieving new records for the period in revenues, operating income, earnings, bookings and backlog," said Mark S. Newman, chairman, president and chief executive officer of DRS Technologies. "Performance in our electronic systems and electro-optical systems segments was enhanced by the contributions of acquired operations and our ability to successfully integrate them. Higher sales and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: in our Flight Safety and Communications Group also contributed to strong results." Record revenues for the second quarter were primarily attributable to the addition of sales from acquired operations, including the Navy Controls Division of Eaton Corporation This article is about an industrial manufacturer. For other meanings see Eaton. Eaton Corporation (NYSE: ETN) is a diversified industrial manufacturer with 2006 sales of $12.4 billion, putting it at 198 on the Fortune 500 for 2007. (NYSE: ETN ETN Eaton Corporation (stock symbol) ETN Exchange Traded Note (investing) ETN European Travel Network ETN Electronic Tandem Network ETN Educational Telephone Network ) on July July: see month. 15, 2002 and The Boeing (language) BOEING - An early system on the IBM 1130. [Listed in CACM 2(5):16, May 1959]. Company's (NYSE: BA) Sensors
Second quarter record operating income was due to higher sales volume overall, and strong program performance in the company's electro-optical systems and flight safety and communications segments, partially offset by lower profitability in the electronic systems segment. Mr. Newman continued, "During this fiscal year, we have remained active in implementing our ongoing acquisition program. On July 15th, we completed the acquisition of the Navy Controls Division of Eaton Corporation (NYSE: ETN), located in Milwaukee, Wisconsin For other places with the same name, see Milwaukee (disambiguation). Milwaukee is the largest city within the state of Wisconsin and 25th largest (by population) in the United States. and Danbury, Connecticut “Danbury” redirects here. For other uses, see Danbury (disambiguation). Danbury is a city in Fairfield County, Connecticut, United States. It has an estimated population as of July 1, 2005 of 78,736. . With a focus on ship power conversion, distribution and control systems, motor products, networking and ship automation, this new unit is strategically significant to DRS's long-term goals Long-term goals Financial goals expected to be accomplished in five years or longer. for growth as a leading U.S. Navy electronic systems supplier. Renamed DRS Power & Control Technologies, this unit has a major installed base of equipment in the fleet and is expected to benefit from the Navy's backfit back·fit tr.v. back·fit·ted or back·fit, back·fit·ting, back·fits To retrofit. , transformational conversion and modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, initiatives, as well as from new ship installation. It has captured key positions on next generation programs, including the Virginia class submarine The Virginia class (or SSN-774 class) of attack submarines are the first U.S. subs to be designed for a broad spectrum of open-ocean and littoral missions around the world. and the CVN (Card Verification Number) See CSC. (X) future aircraft carrier, and has played a significant role in promoting electric drive propulsion Propulsion The process of causing a body to move by exerting a force against it. Propulsion is based on the reaction principle, stated qualitatively in Newton's third law, that for every action there is an equal and opposite reaction. for the Navy's next new ship design, the DD(X). "On October October: see month. 15th, we were pleased to report that we had acquired Nytech Integrated Infrared An invisible band of radiation at the lower end of the visible light spectrum. With wavelengths from 750 nm to 1 mm, infrared starts at the end of the microwave spectrum and ends at the beginning of visible light. Systems, located in Irvine, California Irvine is an incorporated city in Orange County, California, United States. It is a planned city, mainly developed by the Irvine Company since the 1960s. Formally incorporated on December 28 1971, the 69.7 square mile (180.5 km²) city has a population of 202,079 (as of 2007). . Renamed DRS Nytech Imaging Systems, this new operating unit operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon enhances DRS's reputation as a premier supplier of leading edge, lightweight, thermal imaging systems and supports our objectives to expand in the growing uncooled infrared technology market. Providing a critical technology base that strengthens our competitive position in uncooled sensor A device that measures or detects a real-world condition, such as motion, heat or light and converts the condition into an analog or digital representation. An optical sensor detects the intensity or brightness of light, or the intensity of red, green and blue for color systems. programs, Nytech strongly complements our core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
"In addition, we signed a definitive merger agreement on October 23rd to acquire Paravant Par´a`vant` adv. 1. 1. In front; publicly. 2. Beforehand; first. and subsequently commenced a tender offer to purchase all of the company's outstanding shares. Headquartered in Morristown, New Jersey Morristown is a town in Morris County, New Jersey, United States. As of the United States 2000 Census, the town population was 18,544. Its estimated population in 2004 was 18,842. It is the county seat of Morris CountyGR6. , the acquisition of Paravant is highly compatible with our goals to strengthen our core rugged systems business base, as well as increase our presence in Air Force and intelligence agency programs. A leading manufacturer of computers, controllers and communications interfaces serving military Command, Control, Communications, Computer, Intelligence and Surveillance (C4ISR C4ISR Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance C4ISR Command, Control, Communications, Computer, Intelligence, Surveillance and Reconnaissance C4ISR Command Control Communications Computers Intelligence Surveillance and Reconnaissance ) initiatives, Paravant is expected to provide opportunities for growth in technology areas extremely familiar to us." The tender offer is subject to customary regulatory approvals and other closing conditions. It is scheduled to expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. at 12:00 midnight, New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. time, on Friday, November 22. Mr. Newman added, "These acquisitions are closely aligned with our strategic objectives for growth in targeted business areas that are associated with our core competencies." DRS secured new orders for products and services valued at approximately $130.6 million in the second quarter and $269.8 million in contract awards during the first half of fiscal 2003. Backlog of approximately $651.6 million at September 30, 2002 was the highest in the company's history - 14 percent above the $569.2 million in backlog at the end of last year's second quarter and 9 percent above backlog of $595.3 million at March 31, 2002, the company's fiscal 2002 year end. Backlog reflected the addition of DRS Power & Control Technologies, as a result of the acquisition of Eaton's Navy Controls Division completed by the company in the second quarter. New contract awards during the second quarter included: -- $28.7 million in new awards for second generation infrared ground vehicle, maritime and aircraft sighting, targeting and weapons systems supporting the U.S. Army and U.S. Navy; -- $24.2 million in power distribution, motor control and propulsion systems for U.S. Navy surface ships and submarines, and industrial applications; -- $16.3 million in new contracts from Lockheed Martin (NYSE: LMT) to manufacture combat display systems associated with the U.S. Navy's AN/UYQ-70 Advanced Display Systems program in support of ships, aircraft and submarines; -- $13.1 million in new awards for electronic manufacturing services for defense, commercial and space-based applications; -- $11.0 million in new awards for high-speed digital imaging systems, avionics and mission recording systems for U.S. and international military, scientific and industrial applications; -- $9.3 million in surface ship communications systems and data link products for domestic and international military operations; -- $9.2 million in orders for rugged computers and peripheral equipment for U.S. Army, intelligence and international military programs; and -- $5.6 million for infrared sensors and electro-optical technology development supporting remote surveillance, soldier systems and electronic countermeasures. At September 30, 2002, the company had $40.2 million in cash and cash equivalents, reflecting utilization of cash for the acquisition of Eaton's Navy Controls Division. Total debt on September 30, 2002 was $139.5 million, compared with $162.5 million at September 30, 2001, reflecting utilization of the company's credit facility for acquisitions. Net debt was $98.4 million, compared with $157.1 million at the end of the second quarter last year. Free cash flow (cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses less capital expenditures) for the second quarter was $18.4 million. The company's Electronic Systems Group posted increases in revenues, operating income, bookings and backlog for the second quarter. Sales of $69.0 million were up 30 percent from a year ago, due to the purchase of Eaton's Navy Controls Division, while operating income was $4.3 million, slightly lower than the same prior-year period. The group's operating margin was lower at 6.2 percent, due primarily to losses associated with the company's DRS Rugged Systems (Europe) and DRS Advanced Programs operating units. Bookings of $69.2 million, as well as the addition of $85.5 million in acquisition-related backlog contributed to record funded backlog of approximately $232.6 million at September 30, 2002, 42 percent higher than the same time last year. DRS's Electro-Optical Systems Group achieved second quarter record revenues, operating income and backlog. Sales were $67.5 million, 67 percent above the same prior-year period. Higher sales were due to the addition of acquisition-related revenues from the purchase of Boeing's Sensors and Electronic Systems business at the end of last year's second quarter, as well as increased volume in ground sighting and weapon targeting systems. Operating income was 92 percent higher at $10.3 million, reflecting a 15.2 percent operating margin, compared with 13.2 percent last year. New orders valued at $34.4 million contributed to funded backlog of $285.2 million for this segment at September 30, 2002, up slightly from the same time a year ago. The company's Flight Safety and Communications Group posted improvements in revenues, operating income, operating margin and backlog. Sales were $24.2 million, 18 percent higher than the year-ago period, due to increased shipments in surface ship communications systems In telecommunication, a communications system is a collection of individual communications networks, transmission systems, relay stations, tributary stations, and data terminal equipment (DTE) usually capable of interconnection and interoperation to form an integrated whole. and airborne airborne /air·borne/ (ar´born) suspended in, transported by, or spread by air. airborne, adj carried through the air. In health care settings, viruses or bacteria may become airborne, e.g. mission recording systems, as well as higher volume in electronic manufacturing services. Operating income of $2.7 million for the second quarter increased the group's operating margin to 11.3 percent, versus operating income of $1.5 million and an operating margin of 7.3 percent for the comparable period last year. The increase was due to solid performance on international mobile surveillance, ship communications and deployable recorder system programs, as well as space-related manufacturing services. New orders for products and services valued at $26.0 million increased backlog to a record $131.0 million at the end of the second quarter, 8 percent higher than backlog at the same time a year ago. For the first six months of fiscal 2003, DRS posted record revenues of $292.4 million, 33 percent above revenues of $219.5 million for the same period last year. Higher sales for the six-month period were primarily attributable to the addition of revenues from the acquisitions previously mentioned, combined with increased shipments in the company's electro-optical and flight safety and communications segments. Operating income was a first-half record at $29.4 million, a 44 percent increase above the $20.4 million reported for the same period a year earlier. Six-month operating income as a percentage of sales was 10.1 percent, versus 9.3 percent for the comparable period a year ago. Record operating income during the first half of fiscal 2003 was primarily the result of the overall increase in sales and strong program performance in the company's electro-optical systems and flight safety and communications segments. For the first six months of the fiscal year, the company posted record EBITDA of $35.9 million, 40 percent higher than the $25.7 million reported for the first half of the prior year. Six-month EBITDA as a percentage of sales was 13.0 percent, compared with 11.7 percent for the same period last year. Record net earnings for the six-month period of fiscal 2003 were up 56 percent to $13.1 million, or $0.74 per diluted share, on 17.6 million diluted shares outstanding. Net earnings for the six-month period a year earlier were $8.4 million, or $0.64 per diluted share, on 13.1 million diluted shares outstanding. The 34 percent increase in diluted shares outstanding for the second quarter of fiscal 2003 was principally due to the equity offering completed by the company in December 2001. Free cash flow for the first half of fiscal 2003 was approximately $15.3 million. "During the first six months of fiscal 2003, we made important progress toward our goals for growth, targeting discriminately dis·crim·i·nate v. dis·crim·i·nat·ed, dis·crim·i·nat·ing, dis·crim·i·nates v.intr. 1. a. selected acquisitions that are grounded in leading edge technologies supporting current and future defense initiatives," Mr. Newman said. "We believe these businesses possess a high degree of potential for greater expansion in areas that are recognized as vital for maintaining a superior military capability well into the future. With an increased defense budget and a highly competitive market position in core technology areas consistently funded, we have confidence that we can play an increasingly greater role in the key interests of the defense community. The company remains on track to achieve planned objectives for the second half of the fiscal year." DRS Technologies provides leading edge products and services to government and commercial customers worldwide. Focused on defense electronics, the company develops and manufactures a broad range of mission critical systems and components in the areas of communications, combat systems, rugged computers A rugged (or ruggedized) computer is a computer specifically designed to reliably operate in harsh usage environments and conditions, such as strong vibrations, extreme temperatures and wet or dusty conditions. , electro-optics, power conversion, data storage, digital imaging, flight safety and space. For more information about DRS Technologies, please visit the company's web site at www.drs.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: Except for historical information contained herein, the matters set forth in this news release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . The forward-looking statements set forth above involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, and include, without limitation, demand and competition for the Company's products and other risks or uncertainties detailed in the Company's Securities and Exchange Commission filings. Note to investors: DRS Technologies will host a conference call, which will be simultaneously broadcast live over the internet. Mark S. Newman, chairman, president and chief executive officer, Richard A. Schneider, executive vice president, chief financial officer and treasurer, and Patricia M. Williamson, vice president, corporate communications/ investor relations Investor relations The process by which the corporation communicates with its investors. , will host the call, which is scheduled for today, Wednesday, November 6, 2002 at 4:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. . Listeners can access the call live and archived at DRS's web site on page http://www.drs.com/investorinfo/index.cfm or at CCBN's institutional investor Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. site at http://www.street events.com or individual investor center at http://www.companyboardroom.com. Please allow 15 minutes prior to the call to visit these sites and download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software.
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(Millions Except Earnings per Share)
Three Months Ended September 30,
2002(1) 2001
Revenues $ 161.2 $ 116.2
Operating Income $ 16.7 $ 10.7
Interest and Related Expenses $ 2.5 $ 1.8
Earnings before Income Taxes $ 14.2 $ 8.5
Net Earnings $ 7.7 $ 4.5
Net Earnings per Share of Common Stock:
Basic $ .45 $ .37
Diluted $ .44 $ .34
Weighted Average Number of Shares of
Common Stock Outstanding:
Basic 16.9 12.1
Diluted 17.6 13.2
Six Months Ended September 30,
2002(1,2) 2001
Revenues $ 292.4 $ 219.5
Operating Income $ 29.4 $ 20.4
Interest and Related Expenses $ 4.8 $ 4.0
Earnings before Income Taxes $ 24.3 $ 15.8
Net Earnings $ 13.1 $ 8.4
Net Earnings per Share of Common Stock:
Basic $ .78 $ .69
Diluted $ .74 $ .64
Weighted Average Number of Shares of
Common Stock Outstanding:
Basic 16.9 12.1
Diluted 17.6 13.1
1 Fiscal 2003 second quarter and six-month results include the
operations of DRS Sensors & Targeting Systems, Inc., as a
result of the acquisition of the Sensors and Electronic
Systems business of The Boeing Company, on September 28, 2001,
DRS Unmanned Technologies, Inc., as a result of the
acquisition of the U.S.-based Unmanned Aerial Vehicle business
of Meggitt Defense Systems - Texas, Inc., a unit of Meggitt
Defense Systems, plc., on April 11, 2002, and DRS Power &
Control Technologies, Inc., as a result of the acquisition of
the Navy Controls Division of Eaton Corporation, on July 15,
2002.
2 Fiscal 2003 six-month results reflect the operations of the
Company's DRS Ahead Technology unit through the date of sale
on May 27, 2002.
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA (UNAUDITED)
($ Millions)
Three Months Ended Six Months Ended
September 30, September 30,
2002(1) 2001 2002(1) 2001
EBITDA $ 20.9 $ 13.4 $ 35.9 $ 25.7
Depreciation and
Amortization $ 4.4 $ 3.1 $ 7.6 $ 6.0
Capital Expenditures $ 5.2 $ 4.0 $ 9.3 $ 7.5
Bookings $ 130.6 $105.2 $ 269.8 $ 244.9
September 30, March 31,
2002(1) 2002
Backlog(2,3) $ 651.6 $ 595.3
Cash and Cash Equivalents $ 40.2 $ 117.8
Total Debt $ 139.5 $ 139.7
Stockholders' Equity $ 273.9 $ 257.2
1 Fiscal 2003 second quarter and six-month results include the
operations of DRS Sensors & Targeting Systems, Inc., as a
result of the acquisition of the Sensors and Electronic
Systems business of The Boeing Company, on September 28, 2001,
DRS Unmanned Technologies, Inc., as a result of the
acquisition of the U.S.-based Unmanned Aerial Vehicle business
of Meggitt Defense Systems - Texas, Inc., a unit of Meggitt
plc., on April 11, 2002, and DRS Power & Control Technologies,
Inc., as a result of the acquisition of the Navy Controls
Division of Eaton Corporation on July 15, 2002.
2 Backlog at September 30, 2002 includes approximately $2.9
million from DRS Unmanned Technologies, Inc., as a result of
the acquisition of the U.S.-based Unmanned Aerial Vehicle
business of Meggitt Defense Systems - Texas, Inc., a unit of
Meggitt plc., on April 11, 2002, and approximately $85.5
million from DRS Power & Control Technologies, Inc., as a
result of the acquisition of the Navy Controls Division of
Eaton Corporation on July 15, 2002.
3 Backlog at March 31, 2002 includes approximately $0.8 million
from DRS Ahead Technology, which was sold on May 27, 2002.
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