DRS Technologies Reports Record Second Quarter and Six-Month Results; Quarter's Revenues, Operating Income and Net Earnings up 59%, 62% and 53%, Respectively.PARSIPPANY, N.J. -- Record New Orders Increase 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. to an All-Time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal High; Company Raises FY2005 Guidance 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 six-month period ended September September: see month. 30, 2004. Fiscal 2005 second quarter results included significant gains 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. , net earnings and earnings per share. A second quarter record in new orders for products and services increased funded backlog at the end of the period to an all-time high. "DRS reported excellent results for the second quarter and completed the first half of fiscal 2005 in an exceptional position," said Mark S. Newman, chairman, president and chief executive officer of DRS Technologies. "Higher sales and profitability were achieved during both periods. Free cash flow and bookings for both periods were very strong, and we ended the quarter with a new high in funded backlog." Fiscal 2005 Second Quarter Results Fiscal 2005 second quarter revenues were $328.0 million, a 59 percent increase over revenues of $206.2 million for last year's second quarter. Record revenues for the three-month period primarily were attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to strong organic growth and the addition of sales from the company's acquisition of Integrated Defense Technologies, Inc. (IDT IDT Integrated Device Technology, Inc. (Santa Clara, CA, USA) IDT I Don't Think IDT Identity Theft IDT Interrupt Descriptor Table IDT Integrated DNA Technologies IDT Inactive Duty Training IDT Instructional Design & Technology ) completed during the third quarter of fiscal 2004. Organic revenue growth accounted for approximately 9.4 percent of the increase in the quarter. Operating income of $34.5 million was 62 percent higher than the $21.2 million reported for the same quarter of fiscal 2004. Record operating income for the second quarter of fiscal 2005 was attributable to the higher overall sales volume and the solid performance of the company's operating segments. Operating income as a percentage of sales was 10.5 percent, compared with 10.3 percent for the same three-month period in the prior fiscal 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 second quarter of fiscal 2005 were 53 percent higher than a year ago at $14.4 million, or $0.52 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, compared with last year's second quarter net earnings of $9.4 million, or $0.41 per diluted share. Second quarter net earnings per share were 27 percent higher than a year ago, despite the 21 percent increase in weighted average diluted shares outstanding for the period of 27.8 million, compared with 23.0 million shares a year earlier. The issuance of shares in connection with company's acquisition of IDT in the third quarter of fiscal 2004 was the principal factor for the increase in the number of shares outstanding. Free cash flow (net cash provided by operating activities less capital expenditures) for the second quarter of fiscal 2005 was strong at $19.4 million, slightly higher than last year. New Contract Awards and Backlog DRS secured a second quarter record of $344.3 million in new orders for products and services for the three-month period, reflecting a 56 percent increase over bookings for the comparable prior-year period. For the first half of fiscal 2005, the company was awarded $699.6 million in new contracts, 69 percent higher than the same six-month period in the previous year. Funded backlog at September 30, 2004 climbed to $1.29 billion, 43 percent above $899.7 million in funded backlog at the end of the second quarter of fiscal 2004 and 6 percent higher than the $1.22 billion in backlog recorded at March 31, 2004, the company's previous fiscal year end. During the second quarter of fiscal 2005, the company's C4I C4I Command, Control, Communications, Computers, & Intelligence (US DoD) C4I Command Control Communications Computer and Intelligence segment booked $186.7 million in new contracts, including: --$49 million for battlefield digitization dig·i·tize tr.v. dig·i·tized, dig·i·tiz·ing, dig·i·tiz·es To put (data, for example) into digital form. dig systems, the largest associated with a recently awarded, multi-year, indefinite INDEFINITE. That which is undefined; uncertain. INDEFINITE, NUMBER. A number which may be increased or diminished at pleasure. 2. When a corporation is composed of an indefinite number of persons, any number of them consisting of a majority of those delivery/indefinite quantity (IDIQ IDIQ Indefinite Delivery, Indefinite Quantity (contracting/procurement) ) contract to produce rugged Applique Computer Systems for the U.S. Army's Force XXI Battle Command, Brigade brigade Military unit commanded by a brigadier general or a colonel and composed of two or more subordinate units, such as regiments or battalions. Two or more brigades make up a division. and Below (FBCB FBCB Force XXI Battle Command Brigade (US Army) FBCB Fixed Bed Circulating Bioreactor 2) program supporting Blue Force Tracking requirements; --$38 million to provide data collection and processing equipment, including receivers, tuners, signal processing See DSP. systems and recorders supporting U.S. intelligence operations The variety of intelligence and counterintelligence tasks that are carried out by various intelligence organizations and activities within the intelligence process. Intelligence operations include planning and direction, collection, processing and exploitation, analysis and production, ; --$36 million to provide engineering and manufacturing services for combat display systems associated with the U.S. Navy's AN/UYQ-70 Advanced Display Systems program supporting ships, submarines and aircraft; --$28 million to provide primarily ship control, power generation, distribution and propulsion systems Noun 1. propulsion system - a system that provides a propelling or driving force system - instrumentality that combines interrelated interacting artifacts designed to work as a coherent entity; "he bought a new stereo system"; "the system consists of a motor and a , as well as nuclear products supporting U.S. Navy ships, carriers and submarines; and --$11 million for data link, ship telephone products and other secure and non- non- word element [L.]not . non- pref. Not: noninvasive. secure 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. . New contracts for DRS's Surveillance & Reconnaissance  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. segment were $157.6 million for the second quarter and included: --$40 million for ground-based thermal imaging systems, the largest to provide Improved Bradley Acquisition Subsystems (IBAS), which provide important enhancements to the M2A M2A Message to Anywhere (mobile messaging framework) 3 Bradley Fighting Vehicles, including the incorporation of Second Generation Forward Looking Infrared
A forward looking infrared (FLIR) is the North American English term for a camera that takes pictures using the infrared portion of the electromagnetic spectrum. (FLIR FLIR Forward-Looking Infrared (Radar) FLIR Forward Looking Infrared Radiometer FLIR Forward Looking Infrared Radar FLIR Forward Looking Infra Red ) technology; --$21 million to produce 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. thermal imaging systems and FLIR sensors
--$19 million for weapons control systems and production services, the largest contract associated with providing launch control electronics for the U.S. Navy's MK 41 Vertical Launching System For the Brazilian Space Agency launcher, see . A Vertical Launching System (VLS) is a type of missile-firing system used aboard the submarines and surface vessels of several navies around the world. on board Arleigh Burke Arleigh Albert Burke (October 19, 1901–January 1, 1996) was an admiral of the United States Navy who distinguished himself during World War II and the Korean War, and who served as Chief of Naval Operations during the Eisenhower administration. class guided-missile destroyers and ships of allied navies; --$16 million for test and energy management systems, the two largest awards associated with providing embedded Inserted into. See embedded system. test equipment on board the U.S. Army's M1A1 Abrams Abrams may refer to:
(2) Error messages in a programmer's source code that refer to statements or syntax that the compiler or assembler and energy management systems supporting Abrams and Bradley tanks; --$14 million for air combat training, range support and test systems, the largest award from the U.S. Air Force on the Enhanced Range Applications Program (EnRAP EnRAP Enhanced Range Application Program ) to provide next-generation test and evaluation range data systems to tri- tri- word element [Gr.], three. tri- pref. 1. Three: tricuspid. 2. Containing three atoms, molecules, or groups: triacetic acid. service test ranges for the comprehensive testing of advanced combat systems on fighter aircraft fighter aircraft Aircraft designed primarily to secure control of essential airspace by destroying enemy aircraft in combat. Designed for high speed and maneuverability, they are armed with weapons capable of striking other aircraft in flight. and attack helicopters A helicopter specifically designed to employ various weapons to attack and destroy enemy targets. ; --$12 million for electronic warfare Noun 1. electronic warfare - military action involving the use of electromagnetic energy to determine or exploit or reduce or prevent hostile use of the electromagnetic spectrum EW military action, action - a military engagement; "he saw action in Korea" and network systems, the most significant contract related to Station-Keeping Equipment (SKE SKE Steinkohleeinheit (German: hard coal unit) SKE station-keeping equipment (US DoD) SKE Skills, Knowledge and Experience (human resources) SKE Session-Key Exchange ) 2000, which provides aircraft with the ability to fly in close formation; --$11 million for weapons systems and advanced electro-optical technology programs, related to remote sensing Deriving digital models of an area on the earth. Using special cameras from airplanes or satellites, either the sun's reflections or the earth's temperature is turned into digital maps of the area. , infrared countermeasures This article is about missile counter measures. For IRCMonitor, see Wikipedia:IRCMonitor. Infrared countermeasures (IRCM) are devices designed to protect aircraft from infrared homing ("heat seeking") missiles by confusing the missiles' infrared and sensor arrays A sensor array is a set of several sensors that an information gathering device uses to gather information (usually directional in nature) that cannot be gathered from a single source for a central processing unit. for future advanced military and space surveillance applications; and --$8 million for weapons and 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. products utilizing uncooled 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. technology, the largest supporting the competitively awarded, multi-year U.S. Army Driver Vision Enhancers (DVEs) II program to provide drivers of a wide range of frontline combat Frontline Combat was a bi-monthly war comic edited by Harvey Kurtzman for the Bill Gaines' line of EC Comics. The first issue was cover-dated July/August, 1951. Over a three-year span, the title ran for 15 issues, ending with the January, 1954 issue due to a drop in sales after and tactical wheeled vehicles Noun 1. wheeled vehicle - a vehicle that moves on wheels and usually has a container for transporting things or people; "the oldest known wheeled vehicles were found in Sumer and Syria and date from around 3500 BC" axle - a shaft on which a wheel rotates with the ability to see clearly under adverse conditions using infrared technology. The latest award will place DVEs on the Army's 4th Stryker Brigade Combat Team The brigade combat team (BCT) is the basic deployable unit of maneuver in the US Army. A brigade combat team consists of one combat arms branched maneuver brigade, and its attached support and fire units. . Balance Sheet Highlights At September 30, 2004, the company had $71.9 million in cash and cash equivalents, reflecting strong second quarter cash flow, which enabled the company to prepay pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. $10.0 million of its term loan debt during
the quarter and $20.0 million during the first half of the fiscal year.
Total debt on September 30, 2004 was $550.1 million, compared with
$571.6 million at the end of fiscal 2004, which reflected utilization utilization,n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of the company's credit facility, as well as its $350 million of 6.875 percent senior subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes due 2013. DRS used the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the offering of the notes last fiscal year, together with a portion of its available cash and initial borrowings under an amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. and restated credit facility, to fund the acquisition of IDT during the third quarter of fiscal 2004, to repay certain of the company's and IDT's outstanding indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , and to pay related fees and expenses. Segment Results DRS's C4I Group reported substantial increases in revenues, operating income, bookings and backlog for the second quarter of fiscal 2005. Sales of $178.1 million were up 44 percent from $123.7 million a year ago. Operating income of $18.1 million was a 48 percent improvement over the $12.2 million for the same prior-year period and reflected a 10.2 percent operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , compared with 9.8 percent for last year's second quarter. The increases were due primarily to the addition of sales and profitability from operations associated with the company's acquisition of IDT in the third quarter of fiscal 2004 and to higher organic growth led by shipments relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the U.S. Navy's AN/UYQ-70 Advanced Display Systems program, international ship sensor systems and tactical computers for the United Kingdom's Bowman program. Bookings during the period of $186.7 million contributed to a record funded backlog of approximately $647.1 million at September 30, 2004, 13 percent above backlog at the same time a year ago. Second quarter results for DRS's Surveillance & Reconnaissance Group also reflected significant increases in key financial metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. over the prior-year period. Revenues of $149.9 million were up 82 percent from $82.5 million for same quarter in the previous year. Operating income of $16.4 million was 80 percent higher than the $9.0 million reported for the comparable three-month period a year earlier and reflected a strong operating margin of 11.0 percent, the same as last year. The increases in sales and profitability were due primarily to the addition of operations associated with the company's acquisition of IDT in the third quarter of last fiscal year and to higher organic growth led by shipments associated with the U.S. Army's Mast Mounted Sight program and a number of other programs supported by the company's thermal sensor A device that detects temperature. Thermal sensors are found in many laptops and desktop PCs in order to sound an alarm when a certain temperature has been exceeded. assemblies product lines for air and ground surveillance. Strong new orders of $157.6 million during the quarter contributed to a second quarter record funded backlog of $641.5 million at September 30, 2004, 95 percent higher than the same time last year. Fiscal 2005 Six-Month Results For the first six months of fiscal 2005, DRS posted record revenues of $628.8 million, 68 percent above revenues of $373.4 million for the same period last year. Higher revenues for the first half were primarily attributable to the addition of sales from the IDT acquisition operations and organic growth primarily associated with the company's Naval display workstations, ship sensor systems, data link and other communications systems, Naval electric drive and other power systems, U.S. and international army tactical computer systems, airborne, ground-based and maritime thermal imaging systems, and infrared assemblies product lines. Organic revenue growth accounted for approximately 18.4 percent of the increase in the six-month period. Operating income was a first-half record at $64.3 million, a 71 percent increase above the $37.6 million reported for the same period a year earlier. Six-month operating income as a percentage of sales was 10.2 percent, compared with 10.1 percent a year ago. Record operating income during the first half of fiscal 2005 was primarily the result of added profitability from the IDT acquisition operations, higher sales overall and improved operating margins on international contract manufacturing services, and airborne, ground-based and maritime thermal sighting and weapon systems. The company posted record EBITDA of $85.2 million for the first six months of the fiscal year, 79 percent higher than the $47.6 million reported for the first half of last year. Record net earnings for the first six months of fiscal 2005 were up 56 percent to $26.2 million, or $0.95 per diluted share, on 27.6 million weighted average diluted shares outstanding. Net earnings for the six-month period a year earlier were $16.7 million, or $0.73 per diluted share, on 23.0 million weighted average diluted shares outstanding. The 20 percent increase in diluted shares outstanding for the first six months of fiscal 2005 was principally due to shares issued in connection with company's acquisition of IDT in the third quarter of fiscal 2004. Free cash flow for the first half of fiscal 2005 was approximately $36.7 million, more than double the $15.2 million for the same period last year. "DRS reported very strong financial results for the six-month period, and we expect to continue our solid performance in the second half to turn in another record fiscal year," said Mr. Newman. Outlook The company raised its previously issued fiscal 2005 guidance, and now anticipates revenues between $1.27 billion and $1.30 billion, an increase of approximately 30 percent above fiscal 2004 sales. Approximately 10 percent of the revenue growth is expected to be organic, and DRS continues to anticipate an operating margin of 10.5 percent or greater. The company also raised its earnings guidance for the fiscal year ending March 31, 2005, now anticipating $2.02 to $2.05 in diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of , based on weighted average diluted shares outstanding of approximately 28.0 million, compared with 24.8 million shares in fiscal 2004. The company continues to target free cash flow conversion of at least one times net earnings and thus expects to generate free cash flow in excess of $50 million for fiscal 2005. "Having completed the first half with solid operating performance in both segments, including strong free cash flow and a record backlog at the end of the period, DRS expects, over the long term, to benefit from the long-tail effects of sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz a·ble·ness n. multi-year
contracts competitively awarded year to date," Mr. Newman added.
"We remain confident in our business model and our ability to
successfully execute on programs to achieve our goals for the fiscal
year. Our core concentration in areas that industry forecasts predict
will continue to be well funded in the defense budget over the next
several years reinforces the integrity of our growth strategies."DRS Technologies, headquartered in Parsippany, New Jersey, provides leading edge products and services to defense, government intelligence and commercial customers. Focused on defense technology, DRS develops and manufactures a broad range of mission critical systems. The company employs 5,800 people worldwide. 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. : This press release contains 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. , within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on management's beliefs and assumptions, current expectations, estimates and projections. Such statements, including statements relating to the Company's expectations for future financial performance, are not considered historical facts and are considered forward-looking statements under the federal securities laws. These statements may contain words such as "believes," "anticipates," "plans," "expects," "intends," "estimates" or similar expressions. These statements are not guarantees of the Company's future performance and are subject to risks, uncertainties and other important factors that could cause our actual performance or achievements to differ materially from those expressed or implied by these forward-looking statements 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. Given these uncertainties, you should not rely on forward-looking statements. The Company undertakes no obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise. Note to Investors: DRS Technologies will host a conference call, which will be simultaneously broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . Mark S. Newman, chairman, president and chief executive officer, Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a A. Schneider Schnei·der , Vreni Born 1964. Swiss alpine skier. She won the overall World Cup in 1989, 1994, and 1995, was a four-time world champion, and earned five Olympic medals. , executive vice president and chief financial officer, and Patricia M. Williamson Wil·liam·son , Mount A peak, 4,382.9 m (14,370 ft) high, in the Sierra Nevada of east-central California. , vice president, corporate communications Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise. and investor relations Investor relations The process by which the corporation communicates with its investors. , will host the call, which is scheduled for today, Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , November November: see month. 5, 2004 at 9:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . Listeners can access the call live and archived by visiting DRS's web site at http://www.shareholder.com/drs or by visiting Thomson 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.streetevents.com or individual investor center at http://www.fulldisclosure.com. Please allow 15 minutes prior to the call to visit one of 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,
--------------------
2004(1) 2003
-------- --------
Revenues $ 328.0 $ 206.2
Operating Income $ 34.5 $ 21.2
Interest and Related Expenses $ 9.0 $ 4.1
Earnings before Income Taxes $ 25.0 $ 16.9
Income Tax Expense $ 10.6 $ 7.4
Net Earnings $ 14.4 $ 9.4
Net Earnings per Share of Common Stock:
Basic $ .53 $ .42
Diluted $ .52 $ .41
Weighted Average Number of Shares of
Common Stock Outstanding:
Basic 27.1 22.5
Diluted 27.8 23.0
Six Months Ended
September 30,
--------------------
2004(1) 2003
-------- --------
Revenues $ 628.8 $ 373.4
Operating Income $ 64.3 $ 37.6
Interest and Related Expenses $ 18.0 $ 7.2
Earnings before Income Taxes $ 45.5 $ 29.9
Income Tax Expense $ 19.3 $ 13.2
Net Earnings $ 26.2 $ 16.7
Net Earnings per Share of Common Stock:
Basic $ .97 $ .75
Diluted $ .95 $ .73
Weighted Average Number of Shares of
Common Stock Outstanding:
Basic 27.0 22.5
Diluted 27.6 23.0
1 Fiscal 2005 second quarter and six-month results include the
operations of the Company's DRS Broadcast Technology, DRS Weather
Systems, Inc., DRS Signal Solutions, Inc., DRS Signal Solutions
(West), DRS Training & Control Systems, Inc., DRS EW & Network
Systems, Inc., DRS EW & Network Systems (Canada) and DRS Test &
Energy Management, Inc. units, as a result of the acquisition of
Integrated Defense Technologies, Inc. in the third quarter of
fiscal 2004 (November 4, 2003).
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL DATA (UNAUDITED)
($ Millions)
Three Months Ended
September 30,
--------------------
2004(1) 2003
-------- --------
Reconciliation of Non-GAAP Financial Data:
Net Earnings $ 14.4 $ 9.4
Income Taxes 10.6 7.4
Interest Income (0.2) (0.2)
Interest and Related Expenses 9.0 4.1
Amortization and Depreciation 11.4 5.7
-------- --------
EBITDA(2) $ 45.2 $ 26.4
Income Taxes (10.6) (7.4)
Interest Income 0.2 0.2
Interest and Related Expenses (9.0) (4.1)
Deferred Income Taxes (0.9) (0.1)
Changes in Assets and Liabilities,
Net of Effects from Business
Combinations (0.8) 8.4
Other, Net 1.6 0.7
-------- --------
Net Cash Provided by
Operating Activities $ 25.7 $ 24.1
Capital Expenditures (6.3) (4.9)
-------- --------
Free Cash Flow(3) $ 19.4 $ 19.2
Six Months Ended
September 30,
--------------------
2004(1) 2003
-------- --------
Reconciliation of Non-GAAP Financial Data:
Net Earnings $ 26.2 $ 16.7
Income Taxes 19.3 13.2
Interest Income (0.3) (0.5)
Interest and Related Expenses 18.0 7.2
Amortization and Depreciation 22.0 11.0
-------- --------
EBITDA(2) $ 85.2 $ 47.6
Income Taxes (19.3) (13.2)
Interest Income 0.3 0.5
Interest and Related Expenses (18.0) (7.2)
Deferred Income Taxes (0.4) 0.1
Changes in Assets and Liabilities,
Net of Effects from Business
Combinations (0.7) (5.6)
Other, Net 3.5 2.1
-------- --------
Net Cash Provided by
Operating Activities $ 50.6 $ 24.3
Capital Expenditures (13.9) (9.1)
-------- --------
Free Cash Flow(3) $ 36.7 $ 15.2
1 Fiscal 2005 second quarter and six-month results include the
operations of the Company's DRS Broadcast Technology, DRS Weather
Systems, Inc., DRS Signal Solutions, Inc., DRS Signal Solutions
(West), DRS Training & Control Systems, Inc., DRS EW & Network
Systems, Inc., DRS EW & Network Systems (Canada) and DRS Test &
Energy Management, Inc. units, as a result of the acquisition of
Integrated Defense Technologies, Inc. in the third quarter of
fiscal 2004 (November 4, 2003).
2 The Company defines EBITDA as net earnings before net interest
and related expenses (primarily amortization of debt issuance
costs), income taxes, depreciation and amortization. The Company
believes that the most directly comparable GAAP financial measure
to EBITDA is net cash provided by operating activities. The
preceding tables present the components of EBITDA and a
reconciliation of EBITDA to net cash provided by operating
activities. EBITDA is presented as additional information because
we believe it to be a useful indicator of an entity's debt
capacity and its ability to service its debt. EBITDA is not a
substitute for operating income, net earnings or net cash flows
provided by operating activities, as determined in accordance with
generally accepted accounting principles. EBITDA is not a complete
net cash flow measure because EBITDA is a measure of liquidity
that does not include reductions for cash payments for an entity's
obligation to service its debt, fund its working capital and
capital expenditures and pay its income taxes. Rather, EBITDA is
one potential indicator of an entity's ability to fund these cash
requirements. EBITDA also is not a complete measure of an entity's
profitability because it does not include costs and expenses for
depreciation and amortization, interest and related expenses, and
income taxes. EBITDA, as we define it, may differ from similarly
named measures used by other entities and, consequently, could be
misleading unless all entities calculate and define EBITDA in the
same manner.
3 The Company discloses free cash flow because the Company
believes that it is a measurement of cash flow generated that is
available for investing and financing activities. Free cash flow
is defined as net cash provided by operating activities less
capital expenditures. Free cash flow represents cash generated
after paying for interest on borrowings, income taxes, capital
expenditures and changes in working capital, but before repaying
outstanding debt and investing cash to acquire businesses and make
other strategic investments. Thus, key assumptions underlying free
cash flow are that the Company will be able to refinance its
existing debt when it matures with new debt, and that the Company
will be able to finance any new acquisitions it makes by raising
new debt or equity capital. Free cash flow, as we define it, may
differ from similarly named measures used by other entities and,
consequently, could be misleading unless all entities calculate
and define free cash flow in the same manner.
Three Months Ended Six Months Ended
September 30, September 30,
------------------ ------------------
2004 2003 2004 2003
-------- -------- -------- --------
Organic Growth Calculation:
Total Revenues $ 328.0 $ 206.2 $ 628.8 $ 373.4
Less Revenues from
Acquisitions
Owned Less Than One
Year (102.4) - (186.8) -
-------- -------- -------- --------
Organic Revenues $ 225.6 $ 206.2 $ 442.0 $ 373.4
Organic Revenue
Growth(1) 9.4% 18.4%
1 Certain investors consider organic revenue growth to be an
important metric in assessing a company's reported sales from
period to period. We define organic revenues as revenues recorded
by DRS's subsidiaries once they are owned by the Company for at
least twelve months and exclude revenues of divested subsidiaries
for all periods. Organic growth, as we define it, may differ from
similarly named measures used by other entities and, consequently,
could be misleading, unless all entities calculate and define
organic growth in the same manner.
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
SECOND QUARTER SEGMENT RESULTS (UNAUDITED)
($ Millions)
Three Months Ended
September 30,
--------------------
2004 2003(3)
-------- --------
Revenues
C4I Group(1) $ 178.1 $ 123.7
Surveillance & Reconnaissance Group(2) 149.9 82.5
----------------------------------------------------------------------
Consolidated $ 328.0 $ 206.2
----------------------------------------------------------------------
Operating Income
C4I Group(1) $ 18.1 $ 12.2
Surveillance & Reconnaissance Group(2) 16.4 9.0
----------------------------------------------------------------------
Consolidated $ 34.5 $ 21.2
----------------------------------------------------------------------
Operating Margin
C4I Group(1) 10.2% 9.8%
Surveillance & Reconnaissance Group(2) 11.0% 11.0%
Consolidated 10.5% 10.3%
----------------------------------------------------------------------
Bookings
C4I Group(1) $ 186.7 $ 138.3
Surveillance & Reconnaissance Group(2) 157.6 82.2
----------------------------------------------------------------------
Consolidated $ 344.3 $ 220.5
----------------------------------------------------------------------
Backlog
C4I Group(1) $ 647.1 $ 570.6
Surveillance & Reconnaissance Group(2) 641.5 329.1
----------------------------------------------------------------------
Consolidated $1,288.6 $ 899.7
----------------------------------------------------------------------
1 Fiscal 2005 second quarter results include the operations of the
Company's DRS Broadcast Technology, DRS Weather Systems, Inc., DRS
Signal Solutions, Inc. and DRS Signal Solutions (West) units, as a
result of the acquisition of Integrated Defense Technologies, Inc.
in the third quarter of fiscal 2004 (November 4, 2003).
2 Fiscal 2005 second quarter results include the operations of the
Company's DRS Training & Control Systems, Inc., DRS EW & Network
Systems, Inc., DRS EW & Network Systems (Canada) and DRS Test &
Energy Management, Inc. units, as a result of the acquisition of
Integrated Defense Technologies, Inc. in the third quarter of
fiscal 2004 (November 4, 2003).
3 Fiscal 2004 second quarter results were restated to conform to
the Company's current operating structure.
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
SIX-MONTH SEGMENT RESULTS (UNAUDITED)
($ Millions)
Six Months Ended
September 30,
--------------------
2004 2003(3)
-------- --------
Revenues
C4I Group(1) $ 346.3 $ 219.6
Surveillance & Reconnaissance Group(2) 282.5 153.9
----------------------------------------------------------------------
Consolidated $ 628.8 $ 373.4
----------------------------------------------------------------------
Operating Income
C4I Group(1) $ 34.3 $ 22.3
Surveillance & Reconnaissance Group(2) 30.0 15.3
----------------------------------------------------------------------
Consolidated $ 64.3 $ 37.6
----------------------------------------------------------------------
Operating Margin
C4I Group(1) 9.9% 10.2%
Surveillance & Reconnaissance Group(2) 10.6% 10.0%
Consolidated 10.2% 10.1%
----------------------------------------------------------------------
Bookings
C4I Group(1) $ 347.4 $ 252.8
Surveillance & Reconnaissance Group(2) 352.2 161.1
----------------------------------------------------------------------
Consolidated $ 699.6 $ 413.9
----------------------------------------------------------------------
Backlog
C4I Group(1) $ 647.1 $ 570.6
Surveillance & Reconnaissance Group(2) 641.5 329.1
----------------------------------------------------------------------
Consolidated $1,288.6 $ 899.7
----------------------------------------------------------------------
1 Fiscal 2005 six-month results include the operations of the
Company's DRS Broadcast Technology, DRS Weather Systems, Inc., DRS
Signal Solutions, Inc. and DRS Signal Solutions (West) units, as a
result of the acquisition of Integrated Defense Technologies, Inc.
in the third quarter of fiscal 2004 (November 4, 2003).
2 Fiscal 2005 six-month results include the operations of the
Company's DRS Training & Control Systems, Inc., DRS EW & Network
Systems, Inc., DRS EW & Network Systems (Canada) and DRS Test &
Energy Management, Inc. units, as a result of the acquisition of
Integrated Defense Technologies, Inc. in the third quarter of
fiscal 2004 (November 4, 2003).
3 Fiscal 2004 six-month results were restated to conform to the
Company's current operating structure.
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET DATA (UNAUDITED)
($ Thousands)
September 30, March 31,
2004 2004
-------- --------
Assets
Cash and Cash Equivalents $ 71,908 $ 56,790
Other Current Assets 413,600 445,417
----------------------------------------------------------------------
Total Current Assets 485,508 502,207
----------------------------------------------------------------------
Property, Plant and Equipment, Net 147,101 149,542
Goodwill, Intangibles and Other Assets 935,206 943,639
----------------------------------------------------------------------
Total Assets $ 1,567,815 $1,595,388
----------------------------------------------------------------------
Liabilities and Stockholders' Equity
Short-Term Debt $ - $ 45
Current Installments of Long-Term Debt 5,753 5,894
Accounts Payable and Other Current
Liabilities 346,315 381,815
----------------------------------------------------------------------
Total Current Liabilities 352,068 387,754
----------------------------------------------------------------------
Long-Term Debt, Excluding Current
Installments 544,331 565,654
Other Liabilities 44,513 46,355
Stockholders' Equity 626,903 595,625
----------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 1,567,815 $1,595,388
----------------------------------------------------------------------
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