DeCrane Aircraft Holdings Signs Definitive Agreement to Acquire Avtech Corp.EL SEGUNDO El Segundo (ĕl sēgŭn`dō), industrial city (1990 pop. 15,223), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1917. Its products include navigation and computer systems, aircraft parts, office machines, telephone apparatus, and , Calif.--(BUSINESS WIRE)--June 4, 1998-- Acquisition Highlights: -- Adds about $40 million in new revenue -- Margin improvement opportunities -- Expected to be accretive to 1998 EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. -- Substantially increases sales to Boeing -- Increases DeCrane's participation in the high-end corporate and commuter jet markets with Embraer, Saab, de Havilland de Ha·vil·land , Olivia Born 1916. British-born American actress who portrayed Melanie in Gone With the Wind (1939) and won an Academy Award for To Each His Own (1946) and The Heiress (1949). and Canadair, among others DeCrane Aircraft Holdings Inc. (Nasdaq:DAHX), a leading manufacturer of 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. components and an avionics systems integrator An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. for the commercial and high-end corporate aircraft industry, Thursday announced, in furtherance fur·ther·ance n. The act of furthering, advancing, or helping forward: "Pakistan does not aspire to any . . . role in furtherance of the strategies of other powers" Ismail Patel. of its acquisition and internal growth strategy, the signing of a definitive agreement to acquire Avtech Corp., a Seattle provider of electronic systems for the aerospace industry, for approximately $83 million. DeCrane Chairman and Chief Executive Officer R. Jack DeCrane said he expects the acquisition to be accretive to 1998 earnings. DeCrane believes Avtech's business fundamentals business fundamentals The general background within which an economy operates including earnings, sales, wage rates, taxes, and inflation. Improving business fundamentals are generally viewed as bullish for stocks, although stock prices at any given point strongly complement the company's current business mix and will greatly extend DeCrane's product and service franchise in the areas of cockpit audio and communications, lighting, and power and control. DeCrane further noted that the company's competitive standing in the original equipment market, retrofit ret·ro·fit v. ret·ro·fit·ted or ret·ro·fit, ret·ro·fit·ting, ret·ro·fits v.tr. 1. To provide (a jet, automobile, computer, or factory, for example) with parts, devices, or equipment not in market and the aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. will be strengthened, as these are the same market segments historically focused on by Avtech. More precisely, DeCrane noted there is a potential for significant synergies in engineering and technologies used by Avtech and other DeCrane subsidiaries in providing components and systems integration services. Importantly, Avtech will expand the company's presence in the high-growth, high-end corporate jet market and the expanding regional jet and commuter market. Transaction Terms The acquisition will be structured as an all-cash transaction. Funding for the transaction is to be provided from internal cash flow and borrowings under the company's recently amended credit facility under which the permitted maximum borrowings were increased by $30 million to $105 million in May. Other terms of the transaction were undisclosed. Following completion of review pursuant to a Hart-Scott-Rodino filing by the company, the transaction is expected to close within 30 days. Fits DeCrane's Key Acquisition Criteria Stated DeCrane: "In addition to a strong track record of increasing revenues, margins and profits, we found Avtech attractive because it met several of our fundamental acquisition criteria. They are a market leader in several of the product niches they serve and there are considerable strategic benefits to us in terms of deepening deep·en tr. & intr.v. deep·ened, deep·en·ing, deep·ens To make or become deep or deeper. Noun 1. deepening - a process of becoming deeper and more profound certain existing customer relationships, such as with Boeing, Bombardier, Cessna, Rockwell Collins Rockwell Collins, Inc. (NYSE: COL) is a large United States-based international company headquartered in Cedar Rapids, Iowa, primarily providing aviation and information technology systems, solutions, and services to governmental agencies and aircraft manufacturers. and Honeywell, along with adding new customers." Added DeCrane, "We have also identified synergies in several operational areas, in engineering and in our sales and marketing activities, which over time, will result in further gains in our margins on a combined basis." Continued DeCrane, "I want to highlight as well, Avtech's demonstrated innovation in new product development and the sophistication so·phis·ti·cate v. so·phis·ti·cat·ed, so·phis·ti·cat·ing, so·phis·ti·cates v.tr. 1. To cause to become less natural, especially to make less naive and more worldly. 2. with which they manage the product development, production and distribution cycle. A focus on providing solutions to complex design requirements, superior engineering capabilities and strong internal control systems are the competitive advantages which have enabled Avtech to distinguish itself from its competitors and establish a leading market position." "All of these traits, similar to those already in place at DeCrane, are key characteristics which we believe will enable us to continue successfully executing our long-term growth strategy," concluded DeCrane. Long-Established Market Leader, Aviation Product Innovator, Strong Customer Base Avtech, founded in 1963, is a privately held corporation Noun 1. privately held corporation - a corporation owned by a few people; shares have no public market close corporation, closed corporation, private corporation well known as a leader in the design, development and manufacture of electronic systems for the aerospace industry. Serving more than 450 customers in 49 countries, Avtech products are supplied to commercial, business, regional and commuter aircraft manufacturers and the leading avionics manufacturers. Avtech is an innovator in the aviation field, with noteworthy achievements including the introduction of several new technologies to aircraft -- namely, the Digitally Controlled Audio Systems for the corporate market, commuter market and Boeing; Electronic Ballasts; the Airborne Fax Machine; and the Active Harmonic harmonic. 1 Physical term describing the vibration in segments of a sound-producing body (see sound). A string vibrates simultaneously in its whole length and in segments of halves, thirds, fourths, etc. Filter. Avtech is the primary cockpit audio supplier to Boeing, and its audio and communications products can also be found on aircraft manufactured by Canadair, de Havilland, Embraer, Fairchild Dornier, Cessna, CASA Ca´sa n. 1. A house or mansion. I saw that Enriquez had made no attempt to modernize the old casa, and that even the garden was left in its lawless native luxuriance. - Bret Harte. and Saab, among others. Key products consist of audio control panels, audio management units, passenger address systems and a host of communications-related hardware items used in the installation process. In the power and control area, Avtech product offerings include power supplies for Honeywell, De-Ice Controllers for the air transport and regional markets and an innovative active voltage filter for the large transport market. Avtech's lighting products consist of cabin and cockpit lighting ballasts (both magnetic and patented electronic versions) and fixtures. Strategy of Maximizing DeCrane's Financial Performance Avtech's performance track record has been strong, as denoted by its 25 percent compound annual growth rate in revenues during the past four years to approximately $40 million in estimated revenues for the current fiscal year. Avtech also generates strong cash flow and has a solid history of operating profitably. DeCrane pointed out that with the inclusion of Avtech's results, he expects DeCrane to show material improvements in its gross, operating and net profit margins by the close of 1998 and into early 1999. Operational synergies between the two operations are expected to be realized mostly in engineering and in sales and marketing, along with some economies of scale in certain aspects of key production processes. DeCrane believes the acquisition of Avtech will be immediately accretive to earnings per share. Avtech will operate as a separate subsidiary, keeping intact its talented management team led by three general managers, Gene Zipp, Jeff Smith and John Gibson John Gibson is a common name, shared by:
DeCrane Aircraft Holdings is a leading manufacturer of avionics components and a provider of avionics systems integration services in certain niche markets A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. of the commercial aircraft and high-end corporate jet industries. The company's products and services typically are utilized to provide an interface between an aircraft and its avionic a·vi·on·ics n. 1. (used with a sing. verb) The science and technology of electronics and the development of electronic devices as applied to aeronautics and astronautics: systems. For more information about DeCrane Aircraft Holdings via facsimile, call 800/PRO-INFO and dial client code "DAHX." -0- Except for historical information contained herein, this document 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 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. These statements involve known and unknown risks and uncertainties that may cause the company's actual results or outcomes to be materially different from those anticipated and discussed herein. Further, the company operates in an industry sector where securities values may be volatile and may be influenced by regulatory and other factors beyond the company's control. Important factors that the company believes might cause such differences are discussed in the cautionary statements accompanying the forward-looking statements in the company's reports filed with the Securities and Exchange Commission. In assessing forward-looking statements contained herein, readers are urged to read carefully all cautionary statements contained in those filings with the Securities and Exchange Commission.
CONTACT: DeCrane Aircraft Holdings Inc., El Segundo
Robert A. Rankin, 310/725-9123
or
Financial Relations Board, Los Angeles
310/442-0599
Karen Taylor, general information)
Moira Conlon (investor/analyst contact)
Michaelle Burstin (media contact)
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion