Esterline Reports 2Q Results from Continuing Operations; Income $14.7 Million, or $.58 Per Share, on $211.6 Million Sales; Bookings, Revenues and Profits Continue to Strengthen; Order Intake Up 30%.BELLEVUE Bellevue (bĕl`vy  ).1 City (1990 pop. 30,982), Sarpy co., E Nebr., a suburb of Omaha, on the Missouri River; inc. 1855. , Wash. -- Esterline Corporation (NYSE NYSE See: New York Stock Exchange :ESL (1) An earlier family of client/server development tools for Windows and OS/2 from Ardent Software (formerly VMARK). It was originally developed by Easel Corporation, which was acquired by VMARK. ) (www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fiscal 2005 second quarter (ended April 29) income 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 of $14.7 million, or $.58 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 $211.6 million sales. Year-ago income from continuing operations was $9.0 million, or $.42 per diluted share, on sales of $146.5 million. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. W. Cremin Cremin is a municipality in the district Moudon in the canton of Vaud in Switzerland. , Esterline CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. said, "...the second quarter was strong across the board, and continued the trend from Q1. Our bookings, revenues, and profits continue to strengthen." Cremin said that order intake intake /in·take/ (in-tak´) the substances, or the quantities thereof, taken in and utilized by the body. intake, n the substance or quantities thereof taken in and used by the body. , for example, is ahead of last quarter by nearly 30%, and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. organic sales growth is nearly 17%. "With all things considered All Things Considered (ATC) is a news radio program in the United States, broadcast on the National Public Radio network. It was the first news program on the network, and is broadcast live worldwide through several outlets. ," he said, "we're we're Contraction of we are. we're we are raising the company's full-year earnings guidance range for continuing operations to $1.90 - $2.05 per share from the previous range of $1.70 - $1.80 per share." He said that the company's acquisition efforts are bearing fruit. "Leach International, which was acquired nine months ago, is now a solid contributor," Cremin said. "They were selected to supply the primary power distribution system on the Airbus A400M This article contains information about a scheduled or anticipated . It may contain preliminary or speculative information, and may not reflect the final version of the aircraft. , a major step forward for this operation." Similarly, he said the company's new embedded software Instructions that permanently reside in a ROM or flash memory chip. Embedded software may be immediately available to the CPU or, for faster execution, may be transferred to RAM first and then executed. operation has grown more than 50% in the last year. Other wins underscoring the success of past acquisition efforts include a contract to provide the majority of U.S. Air Force countermeasure coun·ter·meas·ure n. A measure or action taken to counter or offset another one. countermeasure Noun action taken to counteract some other action Noun 1. flares, and the Tier I win for the entire 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. suite on the Rolls Royce-led TP400 turboprop turboprop: see turbine. turboprop Hybrid engine that provides jet thrust and also drives a propeller. It is similar to the turbojet except that an added turbine, behind the combustion chamber, works through a shaft and speed-reducing gears to turn a engine that will power Europe's new military transport aircraft. In addition to Esterline's expanding defense work, conditions continue to improve in its commercial aerospace business. Strong aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. spare parts Spare parts, also referred to as Service Parts is a term used to indicate extra parts available and in proximity to the mechanical item, such as a automobile, boat, engine, for which they might be used. Spare parts are also called “spares. growth is being driven by gains in worldwide air traffic and increases in 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 build rates. Cremin reiterated that Esterline's success at winning Tier I contracts will lead to increased research, development and engineering costs in the short term, but noted that as a percent of total sales "...the increase will be modest and the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. potential return is high." R&D spending in the quarter rose to $9.9 million, or 4.7% of sales, compared with $6.0 million, or 4.1% of sales, for the second quarter of fiscal 2004. "And, as we reported last quarter," Cremin added, "we continue to see the potential for some slowing in the growth of our medical business; but the long-term strategy to expand our technologies into medical markets continues to be a sound one." Year-to-date income from continuing operations was $24.3 million, or $.97 per diluted share, on sales of $401.4 million. For the first six months of fiscal 2004, comparable earnings were $10.7 million, or $.50 per diluted share, on sales of $275.8 million. Including discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , net earnings in the second quarter of fiscal 2005 of $14.1 million, or $.55 per diluted share, compared with $9.9 million, or $.46 per diluted share, in the prior-year period. Year-to-date net earnings were $31.3 million, or $1.25 per diluted share, compared with $11.8 million, or $.55 per diluted share a year ago. Fiscal year 2005 income from discontinued operations principally reflect the sale of the company's Fluid Regulators subsidiary. That sale resulted in a gain of approximately $7.0 million, net of tax of $2.4 million, or $.28 per diluted share, in the first quarter of 2005. Fiscal 2004 income from discontinued operations principally reflect the earnings of Fluid Regulators and Esterline's discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: Automation segment. Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. at the end of the second quarter was up more than 50% to $489.6 million compared with $323.7 million at the end of the prior-year period, and $423.8 million at the end of fiscal 2004. 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 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 forward-looking statements are based on the current intent and expectations of the management of Esterline, are not guarantees of future performance or actions, and involve risks and uncertainties that are difficult to predict. Esterline's actual results and the timing and outcome of events may differ materially from those expressed in or implied by the forward-looking statements due to risks detailed in Esterline's public filings with the Securities and Exchange Commission.
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Statement of Operations
------------------------------------
In thousands, except per share amounts
Three months ended Six months ended
April 29, April 30, April 29, April 30,
2005 2004 2005 2004
------ ------ ------ ------
Segment Sales
Avionics & Controls $ 64,990 $ 52,292 $ 125,845 $ 98,608
Sensors & Systems 84,541 39,772 158,915 74,424
Advanced Materials 62,061 54,410 116,624 102,808
---------- --------- -------- ---------
Net Sales 211,592 146,474 401,384 275,840
Cost of Sales 143,054 97,890 274,746 188,664
---------- --------- -------- ---------
68,538 48,584 126,638 87,176
Expenses
Selling, general and
administrative 34,455 26,027 65,765 55,887
Research,
development and
engineering 9,866 6,015 19,113 11,438
---------- --------- -------- ---------
Total Expenses 44,321 32,042 84,878 67,325
---------- --------- -------- ---------
Operating Earnings
from Continuing
Operations 24,217 16,542 41,760 19,851
Other income 28 (19) 66 (575)
Interest income (1,025) (284) (1,560) (597)
Interest expense 4,097 4,163 8,779 8,455
---------- --------- -------- ---------
Other Expense, Net 3,100 3,860 7,285 7,283
---------- --------- -------- ---------
Income from Continuing
Operations
Before Income Taxes 21,117 12,682 34,475 12,568
Income Tax Expense 6,415 3,730 10,119 1,912
---------- --------- -------- ---------
Income from Continuing
Operations Before
Minority Interest 14,702 8,952 24,356 10,656
Minority Interest (35) -- (48) --
---------- --------- -------- ---------
Income from Continuing
Operations 14,667 8,952 24,308 10,656
Income (Loss) from
Discontinued
Operations,
Net of Tax (562) 960 6,965 1,134
---------- --------- -------- ---------
Net Earnings $ 14,105 $ 9,912 $ 31,273 $ 11,790
========== ========= ======== =========
Earnings (Loss) Per
Share -- Basic:
Continuing
operations $ .58 $ .42 $ .99 $ .50
Discontinued
operations (.02) .05 .28 .06
---------- --------- -------- ---------
Earnings Per Share --
Basic $ .56 $ .47 $ 1.27 $ .56
========== ========= ======== =========
Earnings (Loss) Per
Share -- Diluted:
Continuing
operations $ .58 $ .42 $ .97 $ .50
Discontinued
operations (.03) .04 .28 .05
---------- --------- -------- ---------
Earnings Per Share --
Diluted $ .55 $ .46 $ 1.25 $ .55
========== ========= ======== =========
Weighted Average
Number of Shares
Outstanding -- Basic 25,120 21,167 24,577 21,133
Weighted Average
Number of Shares
Outstanding --
Diluted 25,484 21,495 24,953 21,466
Consolidated Balance Sheet
--------------------------
In thousands April 29, April 30,
2005 2004
------ ------
Assets
Current Assets
Cash and cash equivalents $ 137,704 $111,435
Cash in escrow 7,537 1,007
Short-term investments 45,486 19,035
Accounts receivable, net 128,212 86,884
Inventories 132,097 83,598
Income tax refundable -- 4,079
Deferred income tax benefits 22,324 15,258
Prepaid expenses 8,733 9,117
Other current assets 288 --
---------- --------
Total Current Assets 482,381 330,413
Property, Plant and Equipment, Net 137,349 119,544
Other Non-Current Assets
Goodwill 246,032 190,784
Intangibles, net 166,593 114,973
Debt issuance costs, net 5,481 6,139
Deferred income tax benefits 9,986 --
Other assets 28,266 22,279
---------- --------
$1,076,088 $784,132
========== ========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 42,387 $ 22,251
Accrued liabilities 95,388 72,316
Credit facilities 2,567 2,952
Current maturities of long-term debt 30,901 451
Federal and foreign income taxes 7,213 506
---------- --------
Total Current Liabilities 178,456 98,476
Long-Term Liabilities
Long-term debt, net of current maturities 217,722 245,631
Deferred income taxes 45,280 25,178
Other liabilities 26,185 --
Minority Interest 2,427 --
Net Liabilities of Discontinued Operations -- 2,868
Shareholders' Equity 606,018 411,979
---------- --------
$1,076,088 $784,132
========== ========
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