DRS Technologies Reports Record Third Quarter and Nine-Month Results; Quarter's Revenues, Operating Income and Net Earnings up 23%, 41% and 51%, Respectively.PARSIPPANY, N.J. -- 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.: --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 a New High --Company Raises FY2005 Guidance DRS Technologies, 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 third quarter and nine months ended December December: see month. 31, 2004. Fiscal 2005 third 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 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 . A quarterly record in new orders for products and services increased funded backlog at the end of the period to a new high. "DRS reported an outstanding third quarter," said Mark S. Newman, chairman, president and chief executive officer of DRS Technologies. "Higher sales and profitability were achieved for the three- and nine-month periods, and free cash flow was exceptionally strong. We set a quarterly record in new orders, driving funded backlog at the end of the period to the highest level ever achieved by the company." Fiscal 2005 Third Quarter Results DRS's results for the reported periods of fiscal 2005 and 2004 reflect discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the company's decision to sell its DRS Broadcast Technology and DRS Weather Systems units. Fiscal 2005 third quarter revenues from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the were $338.2 million, a 23 percent increase over revenues from continuing operations of $274.4 million for last year's third quarter. The increase was primarily attributable to strong organic growth in the company's power and tactical systems businesses and to the benefit of a full quarter 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 on November November: see month. 4, 2003. Organic revenue growth accounted for approximately 14.3 percent of the increase in the quarter. Operating income of $39.2 million was 41 percent higher than the $27.9 million reported for the same quarter of fiscal 2004. The increase was attributable to the higher overall sales volume and the strong performance of both of the company's operating segments. Operating income as a percentage of sales was 11.6 percent, compared with 10.2 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.
Earnings from continuing operations for the third quarter of fiscal 2005 were 50 percent higher than a year ago at $16.8 million, or $0.60 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 weighted average diluted shares outstanding of 28.0 million. Third quarter net earnings were $17.5 million, or $0.62 per diluted share. Last year's earnings from continuing operations for the same quarter were $11.2 million, or $0.44 per diluted share, on 25.7 million weighted average diluted shares outstanding. The 9 percent increase in diluted shares outstanding for the fiscal 2005 third quarter was principally due to the issuance of shares in connection with company's acquisition of IDT in the third quarter of fiscal 2004. Net cash provided by operating activities of continuing operations for the third quarter of fiscal 2005 increased to $34.0 million from $12.7 million for the comparable quarter the year before. Free cash flow (net cash provided by operating activities less capital expenditures) was strong at $26.8 million, significantly higher than free cash flow of $6.1 million for the same quarter a year ago. New Contract Awards and Backlog DRS secured $359.8 million in new orders for products and services from continuing operations for the three-month period, slightly higher than the comparable prior-year period. For the first nine months of fiscal 2005, the company was awarded a record $1.04 billion in new contracts, 35 percent higher than the same nine-month period in the previous year. Funded backlog from continuing operations at December 31, 2004 climbed to $1.31 billion, 4 percent above $1.26 billion in funded backlog from continuing operations at the same time last year and 10 percent higher than the $1.20 billion in backlog recorded at March 31, 2004, the company's previous fiscal year end. During the third 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 $185.1 million in new contracts, including: --$82 million to provide Naval nuclear products, 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 supporting U.S. Navy ships, carriers and submarines; --$38 million to provide electronic manufacturing services, primarily associated with the U.S. Navy's AN/UYQ-70 Advanced Display Systems program supporting ships, submarines and aircraft; --$32 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, ; --$16 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 order associated with a 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) ) U.S. Army contract awarded in the first quarter to produce rugged Applique Computer Systems for the 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; and --$12 million for data link, ship telephone products and other secure and non-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 $174.7 million for the third quarter and included: --$50 million for ground-based thermal imaging systems, the largest orders to produce Improved Bradley Acquisition Subsystems (IBAS), which provide important enhancements to the M2A M2A Message to Anywhere (mobile messaging framework) 3 Bradley Fighting Vehicles, and the Long Range Advanced Scout Surveillance System (LRAS LRAS Long Run Aggregate Supply (economics) LRAS Long Range Advanced Scout Surveillance System LRAS Logistics Requirements Allocation Sheets LRAS Long Range Aggregate Supply 3), both of which incorporate 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; --$37 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
--$21 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" , network systems and avionics avionics (ā'vēŏn`ĭks), electronic instruments used in air or space flight; also the design and production of such instruments. Early planes had few instruments, but as aviation and aircraft became more complex, so did instrumentation. , the most significant contracts relating to the U.S. Air Force Unmanned Threat Emitter One side of a bipolar transistor. See collector. (UMTE UMTE Unmanned Threat Emitter ) Training System and 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 ) for cargo aircraft A cargo aircraft is an airplane designed and used for the carriage of goods, rather than passengers. This role demands a number of features that makes a cargo aircraft instantly identifiable; a "fat" looking fuselage, a high-wing to allow the cargo area to sit near the ground, a , which provides the ability to fly in close formation; --$14 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, including the 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 vehicles See: military designed vehicle. with the ability to see clearly using infrared technology and the Thermal Weapon Sights program, which places increased lethality le·thal adj. 1. Capable of causing death. 2. Of, relating to, or causing death. See Synonyms at fatal. 3. Extremely harmful; devastating: accusations lethal to the candidate's image. in the hands of individual war fighters, increasing their survivability sur·viv·a·ble adj. 1. Capable of surviving: survivable organisms in a hostile environment. 2. That can be survived: a survivable, but very serious, illness. on the battlefield; --$13 million for test and energy management systems, the largest contracts associated with supporting the M1A1 Abrams Integrated Management Abrams Integrated Management (AIM) is a program wherein older M1 Abrams tanks are refurbished and restored to 'zero hours' status to ease maintenance requirements. The tanks are shipped to the General Dynamics Land Systems plant and stripped to bare hulls and turrets (even the (AIM) overhaul program to sustain the Abrams Abrams may refer to:
Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. plan and with supporting base station test facilities; --$12 million for air combat training, range support and test systems, the largest awards to provide next-generation test and evaluation range data systems to tri-service and international test ranges to support 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. ; and --$9 million for weapons systems and advanced electro-optical technology programs, related to 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 , 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. 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 advanced military and space surveillance applications. Balance Sheet Highlights During the quarter, the company completed an offering of $200 million aggregate principal amount of 6.875 percent senior subordinated notes due 2013. The notes were priced at 105 percent of the principal amount and were issued as additional debt securities under the company's $350 million indenture An agreement declaring the benefits and obligations of two or more parties, often applicable in the context of Bankruptcy and bond trading. The term indenture primarily describes secured contracts and has several applications in U.S. law. dated October October: see month. 30, 2003. After its obligation to offer the lenders under its senior credit facility their pro rata [Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share. In a Bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. share of 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). of the offering, DRS intends to use the remaining net proceeds to replenish re·plen·ish v. re·plen·ished, re·plen·ish·ing, re·plen·ish·es v.tr. 1. To fill or make complete again; add a new stock or supply to: replenish the larder. 2. cash balances, following a $42.5 million cash payment for an acquisition on December 14, 2004, and for working capital and general corporate purposes, which may include future acquisitions. At December 31, 2004, the company had $258.2 million in cash and cash equivalents, reflecting strong third quarter cash flow and net proceeds from its $200 million debt offering. The company prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. $5.0
million of its term loan debt during the quarter and $25.0 million
during the first nine months of the fiscal year. Early in the fourth
quarter, DRS prepaid an additional $10.0 million.
Total debt on December 31, 2004 was $751.2 million, compared with $571.4 million at the end of fiscal 2004, which reflected utilization of the company's credit facility and its $550 million of senior subordinated notes. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. increased to $649.9 million, up 9 percent from $595.6 million at the same time a year earlier. Segment Results DRS's C4I Group reported substantial increases in revenues, operating income and bookings for the third quarter of fiscal 2005. Sales of $189.0 million were up 18 percent from $160.6 million a year ago. Operating income of $23.1 million was a 41 percent improvement over the $16.4 million for the same prior-year period and reflected a 12.2 percent operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , compared with 10.2 percent for last year's third quarter. The increases were due primarily to the benefit of a full quarter 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 the U.S. Naval power, display, intelligence and Army tactical computer systems product lines. Bookings from continuing operations during the three-month period of $185.1 million contributed to a funded backlog of approximately $622.8 million at December 31, 2004. Third quarter results for DRS's Surveillance & Reconnaissance Group 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 $149.2 million were up 31 percent from $113.8 million for same quarter in the previous year. Operating income of $16.1 million was 40 percent higher than the $11.5 million reported for the comparable three-month period a year earlier and reflected a 10.8 percent operating margin, compared with 10.1 percent for last year's third quarter. The increases in sales and profitability were due primarily to the benefit of a full quarter of operating results from the IDT acquisition, completed in November of last fiscal year, and to higher organic growth led by shipments associated with the U.S. Army's Mast Mounted Sight program and several ground vehicle sighting and targeting system programs. Strong new orders from continuing operations of $174.7 million during the quarter contributed to a third quarter record funded backlog of $688.3 million at December 31, 2004. Fiscal 2005 Nine-Month Results For the first nine months of fiscal 2005, DRS posted record revenues of $947.4 million, 46 percent above revenues of $647.8 million for the same period last year. Higher revenues for the nine-month period were primarily attributable to the addition of sales from the IDT acquisition operations and organic growth associated with the company's Naval electric drive and other power systems, receivers, tuners and other intelligence 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 16.7 percent of the increase in the nine-month period. Operating income was a nine-month record at $101.6 million, a 55 percent increase above the $65.5 million reported for the same period a year earlier. Nine-month operating income as a percentage of sales was 10.7 percent, compared with 10.1 percent a year ago. Record operating income during the first nine months of fiscal 2005 was primarily the result of a full nine months of profitability contributed by the IDT acquisition operations, higher sales overall and improved operating margins on certain power, intelligence and tactical computer systems programs, as well as airborne, ground-based and maritime thermal sighting systems programs. The company posted record EBITDA from continuing operations of $130.0 million for the first nine months of the fiscal year, 56 percent higher than the $83.3 million reported for the same nine months last year. Earnings from continuing operations for the fiscal 2005 nine-month period were up 49 percent to $41.8 million, or $1.51 per diluted share, on weighted average diluted shares outstanding of 27.7 million. Net earnings were $43.6 million, or $1.57 per diluted share. For the same nine-month period last year, earnings from continuing operations were $28.0 million, or $1.17 per diluted share, on 23.9 weighted average diluted shares outstanding. The 16 percent increase in diluted shares outstanding for the first nine months of fiscal 2005 was principally due to the issuance of shares in connection with the company's acquisition of IDT in the third quarter of fiscal 2004. Net cash provided by operating activities of continuing operations for the first nine months of fiscal 2005 increased to $81.3 million from $37.0 million for the comparable period a year earlier. Free cash flow from continuing operations for the first three quarters of fiscal 2005 was approximately $60.6 million, 185 percent above the $21.3 million reported for the same period last year. "The excellent results achieved for the nine-month period clearly point to the strength of the company's business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets and support our expectations for a record fiscal 2005," said Mr. Newman. Acquisition On December 14, 2004, DRS announced that it had acquired certain assets and liabilities of Night Vision Equipment Company (NVEC NVEC Night Vision Equipment Company, Inc. NVEC Nespelem Valley Electric Cooperative ), a privately-held producer of small, high-quality night vision products and thermal imaging soldier systems headquartered in Allentown Allentown, city (1990 pop. 105,090), seat of Lehigh co., E Pa., on the Lehigh River; inc. as a borough 1811, as a city 1867. The largest city in the agricultural and industrial Lehigh Valley, it is a commercial, financial, and government center. , Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York . The company used existing cash on hand to finance the $42.5 million purchase price. Additional future consideration is payable upon the achievement of certain revenue targets. The company said NVEC is expected to generate approximately $45 to $50 million in annual revenues and approximately $0.08 to $0.10 in diluted earnings per share in its first twelve months of operation under DRS ownership. For DRS's current fiscal year ending March 31, 2005, the business is expected to be accretive to earnings and contribute approximately $15 million to DRS's sales. Mr. Newman commented, "NVEC enhances DRS's position as a market leader in uncooled infrared (IR) sensor systems and supports our increased participation in homeland defense efforts at the federal, state and local levels. It has strong original equipment manufacturer (OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and ) relationships and an extensive catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. of products and accessories." The addition of NVEC to DRS's Surveillance & Reconnaissance Group expands the company's electro-optical product offerings and provides strong sales distribution channels for broadly marketing the company's existing uncooled thermal imaging systems and other lightweight, portable military equipment. Outlook The company adjusted its previously issued fiscal 2005 guidance to reflect its acquisition of NVEC and its decision to sell two of its operating units 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 . For fiscal 2005, DRS now anticipates revenues from continuing operations to be between $1.28 billion and $1.30 billion, approximately 30 percent above fiscal 2004 sales from continuing operations. An estimated 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. Despite the prospective disposition of two operations, the company raised its previous earnings guidance for the fiscal year ending March 31, 2005 and now expects $2.07 to $2.10 in diluted earnings per share from continuing operations, based on weighted average diluted shares outstanding of approximately 28.0 million. Including discontinued operations, the company anticipates $2.15 to $2.19 in diluted earnings per share. The company's guidance does not include the effect of a gain, if any, that may be recorded upon the sale of two of its operations. The company continues to target free cash flow conversion of at least one times net earnings. DRS increased its expectations to generate free cash flow and now anticipates it to exceed $65 million for fiscal 2005. "DRS remains on track to achieve planned objectives in the fourth quarter and to complete fiscal 2005 with record results," Mr. Newman added. "The company moved into the final quarter of the fiscal year with a record backlog that includes a solid portfolio of some sustaining, large, multi-year defense contracts. With diversified diversified (di·verˑ·s technologies, products and services that transcend specific platform applications, DRS is precisely aligned with the military's objectives for end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. , modular system solutions. We are well positioned over the long term to continue our support of the military's transformation and recapitalization efforts for an integrated, networked, highly mobile future force and to continue our support of the current force as a leading supplier to military backfit back·fit tr.v. back·fit·ted or back·fit, back·fit·ting, back·fits To retrofit. 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, programs." 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, as 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 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 A. Schneider, executive vice president and chief financial officer, and Patricia M. Williamson, 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, Wednesday, February 9, 2005 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 December 31,
2004(1) 2003(1)
---------- ----------
Revenues $ 338.2 $ 274.4
Operating Income $ 39.2 $ 27.9
Interest and Related Expenses $ 9.4 $ 7.5
Earnings before Income Taxes $ 29.3 $ 19.7
Income Tax Expense $ 12.5 $ 8.5
Earnings from Continuing Operations $ 16.8 $ 11.2
Earnings from Discontinued
Operations $ .6 $ .4
Net Earnings $ 17.5 $ 11.6
Basic Earnings per Share of Common
Stock:
Earnings from Continuing
Operations $ .62 $ .45
Earnings from Discontinued
Operations $ .02 $ .02
Net Earnings $ .64 $ .46
Diluted Earnings per Share of
Common Stock:
Earnings from Continuing
Operations $ .60 $ .44
Earnings from Discontinued
Operations $ .02 $ .02
Net Earnings $ .62 $ .45
Weighted Average Number of Shares
of Common Stock Outstanding:
Basic 27.1 25.3
Diluted 28.0 25.7
Nine Months Ended December 31,
2004(1) 2003(1)
---------- ----------
Revenues $ 947.4 $ 647.8
Operating Income $ 101.6 $ 65.5
Interest and Related Expenses $ 27.4 $ 14.7
Earnings before Income Taxes $ 72.9 $ 49.6
Income Tax Expense $ 31.1 $ 21.6
Earnings from Continuing Operations $ 41.8 $ 28.0
Earnings from Discontinued
Operations $ 1.8 $ .4
Net Earnings $ 43.6 $ 28.4
Basic Earnings per Share of Common
Stock:
Earnings from Continuing
Operations $ 1.55 $ 1.19
Earnings from Discontinued
Operations $ .06 $ .02
Net Earnings $ 1.61 $ 1.21
Diluted Earnings per Share of
Common Stock:
Earnings from Continuing
Operations $ 1.51 $ 1.17
Earnings from Discontinued
Operations $ .07 $ .02
Net Earnings $ 1.57 $ 1.19
Weighted Average Number of Shares of
Common Stock Outstanding:
Basic 27.0 23.4
Diluted 27.7 23.9
(1) Fiscal 2005 and 2004 third quarter and nine-month results present
discontinued operations, due to the Company's decision to sell its
DRS Broadcast Technology and DRS Weather Systems units.
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL DATA (UNAUDITED)
($ Millions)
Three Months Ended December 31,
-------------------------------
2004(1) 2003(1)
---------- ----------
Reconciliation of Non-GAAP Financial
Data:
Net Earnings $ 17.5 $ 11.6
Earnings from Discontinued
Operations (0.6) (0.4)
Income Taxes 12.5 8.5
Interest Income (0.4) (0.1)
Interest and Related Expenses 9.4 7.5
Amortization and Depreciation 9.7 8.7
---------- ----------
EBITDA2 $ 48.1 $ 35.8
Income Taxes (12.5) (8.5)
Interest Income 0.4 0.1
Interest and Related Expenses (9.4) (7.5)
Deferred Income Taxes 1.8 0.1
Changes in Assets and Liabilities,
Net of Effects from Business
Combinations 2.2 (9.6)
Other, Net 3.4 2.3
---------- ----------
Net Cash Provided by Operating
Activities $ 34.0 $ 12.7
Capital Expenditures (7.2) (6.6)
---------- ----------
Free Cash Flow(3) $ 26.8 $ 6.1
Nine Months Ended December 31,
-------------------------------
2004(1) 2003(1)
---------- ----------
Reconciliation of Non-GAAP Financial
Data:
Net Earnings $ 43.6 $ 28.4
Earnings from Discontinued
Operations (1.8) (0.4)
Income Taxes 31.1 21.6
Interest Income (0.7) (0.6)
Interest and Related Expenses 27.4 14.7
Amortization and Depreciation 30.4 19.6
---------- ----------
EBITDA2 $130.0 $ 83.3
Income Taxes (31.1) (21.6)
Interest Income 0.7 0.6
Interest and Related Expenses (27.4) (14.7)
Deferred Income Taxes (0.4) 0.2
Changes in Assets and Liabilities,
Net of Effects from Business
Combinations 2.0 (15.8)
Other, Net 7.5 5.0
---------- ----------
Net Cash Provided by Operating
Activities of Continuing
Operations $ 81.3 $ 37.0
Capital Expenditures (20.7) (15.7)
---------- ----------
Free Cash Flow(3) $ 60.6 $ 21.3
(1) Fiscal 2005 and 2004 third quarter and nine-month results present
discontinued operations, due to the Company's decision to sell its
DRS Broadcast Technology and DRS Weather Systems units.
(2) The Company defines EBITDA as net earnings from continuing
operations 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 of continuing operations. The preceding
tables present the components of EBITDA and a reconciliation of
EBITDA to net cash provided by operating activities of continuing
operations. 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 of continuing operations, 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, business acquisitions and capital
expenditures, pay its income taxes and fund its discontinued
operations. 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, income taxes and the
results of operations of discontinued operations. 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 of continuing
operations 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, make other strategic investments and fund discontinued
operations. 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 Nine Months Ended
December 31, December 31,
------------- --------------
2004(1) 2003(1) 2004(1) 2003(1)
--------- --------- ------- --------
Organic Growth Calculation:
Total Revenues $338.2 $274.4 $947.4 $647.8
Less Revenues from
Acquisitions Owned Less
Than One Year (24.5) - (191.7) -
--------- --------- ------- --------
Organic Revenues $313.7 $274.4 $755.7 $647.8
Organic Revenue Growth(2) 14.3% 16.7%
(1) Fiscal 2005 and 2004 third quarter and nine-month revenues reflect
continuing operations and exclude discontinued operations, due to
the Company's decision to sell its DRS Broadcast Technology and
DRS Weather Systems units.
(2) Certain investors consider organic revenue growth to be an
important metric in assessing a company's reported revenues from
period to period. We define organic revenues as revenues recorded
by DRS's subsidiaries once they are owned by the Company for at
least twelve months and exclude revenues of divested and
discontinued subsidiaries for all periods. Organic growth, as we
define it, may differ from similarly named measures used by other
entities and, consequently, could be misleading, unless all
entities calculate and define organic growth in the same manner.
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
THIRD QUARTER SEGMENT RESULTS (UNAUDITED)
($ Millions)
Three Months Ended December 31,
--------------------------------
2004 2003(2)
------- ---------
Revenues
C4I Group(1) $ 189.0 $ 160.6
Surveillance & Reconnaissance
Group 149.2 113.8
----------------------------------------------------------------------
Consolidated $ 338.2 $ 274.4
----------------------------------------------------------------------
Operating Income
C4I Group(1) $ 23.1 $ 16.4
Surveillance & Reconnaissance
Group 16.1 11.5
----------------------------------------------------------------------
Consolidated $ 39.2 $ 27.9
----------------------------------------------------------------------
Operating Margin
C4I Group(1) 12.2% 10.2%
Surveillance & Reconnaissance
Group 10.8% 10.1%
----------------------------------------------------------------------
Consolidated 11.6% 10.2%
----------------------------------------------------------------------
Bookings
C4I Group(1) $ 185.1 $ 174.9
Surveillance & Reconnaissance
Group 174.7 178.5
----------------------------------------------------------------------
Consolidated $ 359.8 $ 353.4
----------------------------------------------------------------------
Backlog
C4I Group(1) $ 622.8 $ 654.9
Surveillance & Reconnaissance
Group 688.3 603.3
----------------------------------------------------------------------
Consolidated $1,311.1 $1,258.2
----------------------------------------------------------------------
(1) Fiscal 2005 and 2004 third quarter results reflect continuing
operations and exclude discontinued operations, due to the
Company's decision to sell its DRS Broadcast Technology and DRS
Weather Systems units.
(2) Fiscal 2004 third quarter results were restated to conform to the
Company's current operating structure.
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
NINE-MONTH SEGMENT RESULTS (UNAUDITED)
($ Millions)
Nine Months Ended December 31,
--------------------------------
2004 2003(2)
-------- ----------
Revenues
C4I Group(1) $ 515.7 $ 380.1
Surveillance & Reconnaissance
Group 431.7 267.7
----------------------------------------------------------------------
Consolidated $ 947.4 $ 647.8
----------------------------------------------------------------------
Operating Income
C4I Group(1) $ 55.7 $ 38.7
Surveillance & Reconnaissance
Group 45.9 26.8
----------------------------------------------------------------------
Consolidated $ 101.6 $ 65.5
----------------------------------------------------------------------
Operating Margin
C4I Group(1) 10.8% 10.2%
Surveillance & Reconnaissance
Group 10.6% 10.0%
----------------------------------------------------------------------
Consolidated 10.7% 10.1%
----------------------------------------------------------------------
Bookings
C4I Group(1) $ 512.0 $ 427.8
Surveillance & Reconnaissance
Group 526.8 339.5
----------------------------------------------------------------------
Consolidated $1,038.8 $ 767.3
----------------------------------------------------------------------
Backlog
C4I Group(1) $ 622.8 $ 654.9
Surveillance & Reconnaissance
Group 688.3 603.3
----------------------------------------------------------------------
Consolidated $1,311.1 $1,258.2
----------------------------------------------------------------------
(1) Fiscal 2005 and 2004 nine-month results reflect continuing
operations and exclude discontinued operations, due to the
Company's decision to sell its DRS Broadcast Technology and DRS
Weather Systems units.
(2) Fiscal 2004 nine-month results were restated to conform to the
Company's current operating structure.
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET DATA (UNAUDITED)
($ Thousands)
December 31, March 31,
2004(1) 2004(1)
--------- --------
Assets
Cash and Cash Equivalents $ 258,169 $ 56,790
Other Current Assets 453,996 428,577
Assets of Discontinued Operations 38,864 40,614
----------------------------------------------------------------------
Total Current Assets 751,029 525,981
----------------------------------------------------------------------
Property, Plant and Equipment, Net 139,661 142,378
Goodwill, Intangibles and Other
Assets 951,757 926,593
----------------------------------------------------------------------
Total Assets $1,842,447 $1,594,952
----------------------------------------------------------------------
Liabilities and Stockholders'
Equity
Short-Term Debt $ - $ 45
Current Installments of Long-Term
Debt 2,683 5,864
Accounts Payable and Other Current
Liabilities 383,682 368,652
Liabilities of Discontinued
Operations 11,263 12,757
Total Current Liabilities 397,628 387,318
Long-Term Debt, Excluding Current
Installments 748,551 565,530
Other Liabilities 46,340 46,480
Stockholders' Equity 649,928 595,624
Total Liabilities and Stockholders'
Equity $1,842,447 $1,594,952
(1) Data presented reflect continuing operations and exclude
discontinued operations, due to the Company's decision to sell its
DRS Broadcast Technology and DRS Weather Systems units.
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