L-3 Communications Announces Fourth Quarter 2006 Results.- Net Sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight , Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and 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 Increase 16.7%, 11.3% and 10.5%, Respectively NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- L-3 Communications
L-3 Communications Holdings, Inc. (NYSE: LLL) is a company that supplies command, control, communications, intelligence, surveillance and reconnaissance (C3ISR) systems and (NYSE NYSE See: New York Stock Exchange : LLL LLL abbr. left lower lobe (of the lung) ) today announced results for the 2006 fourth quarter, with net sales of $3,385.2 million, including organic sales growth(1) of 8.9%, operating income of $340.8 million, diluted earnings per share of $1.37, net cash from operating activities of $339.1 million and free cash flow(2)of $286.1 million. "L-3 finished the year with strong operational performance, generating record sales, earnings, cash flows, orders and backlog in addition to strong organic sales in the fourth quarter, underscoring the contribution of L-3's executive team and employees," said Michael T. Strianese, President and Chief Executive Officer of L-3 Communications. "We look forward to another strong year for 2007. The company is well-positioned in its core business areas. We will continue to grow organically and generate significant cash flows that will be used to increase returns for our shareholders through share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. , dividends and continued acquisition growth." Diluted earnings per share (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. ) for the 2006 fourth quarter increased by $0.13, or 10.5%, to $1.37, compared to $1.24 for the 2005 fourth quarter. Effective January 1, 2006, the company adopted the provisions of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 123R, Share-Based Payment (SFAS 123R), which reduced the 2006 fourth quarter 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. EPS by $0.06, compared to the 2005 fourth quarter diluted EPS. Excluding the impact of SFAS 123R, diluted EPS would have grown by 15.3%. Net income for the 2006 fourth quarter increased by $22.2 million, or 14.7%, to $173.6 million, compared to net income of $151.4 million for the 2005 fourth quarter. For the 2006 fourth quarter, consolidated net sales increased by $485.0 million, or 16.7%, to $3,385.2 million, compared to consolidated net sales of $2,900.2 million for the 2005 fourth quarter. Consolidated organic sales growthwas 8.9%, or $258.3 million, driven primarily by strong demand for government services, aircraft modification A change in the physical characteristics of aircraft, accomplished either by a change in production specifications or by alteration of items already produced. , base support operations, secure networked communications products and several specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. products, partially offset by volume declines for airport security systems. The increase in consolidated net sales from acquired businesses was $226.7 million, or 7.8%. Consolidated operating income increased by $34.7 million, or 11.3%, to $340.8 million for the 2006 fourth quarter, compared to $306.1 million for the 2005 fourth quarter, and consolidated operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: declined by 0.5 percentage points to 10.1% for the 2006 fourth quarter, compared to 10.6% for the 2005 fourth quarter. Consolidated operating margin decreased by 0.3 percentage points due to SFAS 123R stock-based compensation expense. The remaining decline in operating margin was primarily related to new product development costs, contract sales mix sales mix See product mix. and severance costs for certain administrative consolidation activities. The changes in operating margin are further explained in the company's reportable segment results discussed below. Interest and other income was $5.8 million for the 2006 fourth quarter, compared to an expense of $0.9 million for the 2005 fourth quarter. The 2005 fourth quarter included a charge of $5.8 million to write-down the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of certain investments, which did not recur in the 2006 fourth quarter. Interest expense for the 2006 fourth quarter increased by $6.9 million, or 10.2%, to $74.5 million, compared to interest expense of $67.6 million for the 2005 fourth quarter. The increase is primarily due to higher interest rates on the company's variable interest rate senior term loan facility. The effective income tax rate for the 2006 fourth quarter decreased to 35.7% from 35.8% for the 2005 fourth quarter. Funded orders for the 2006 fourth quarter increased by $1,091.6 million, or 39.4%, to $3,864.6 million from $2,773.0 million for the 2005 fourth quarter. Funded backlog at December 31, 2006 increased by $1,742.1 million, or 24.9%, to $8,743.0 million from $7,000.9 million at December 31, 2005. Net cash from operating activities for the 2006 fourth quarter increased by $71.8 million, or 26.9%, to $339.1 million from $267.3 million for the 2005 fourth quarter. Free cash flow for the 2006 fourth quarter decreased by $0.9 million, or 0.3%, to $286.1 million from $287.0 million for the 2005 fourth quarter. FULL YEAR RESULTS For the year ended December 31, 2006, diluted EPS increased by $0.02, or 0.5%, to $4.22 per share, compared to $4.20 for the year ended December 31, 2005. Net income for the year ended December 31, 2006 increased by $17.6 million, or 3.5%, to $526.1 million, compared to $508.5 million for the year ended December 31, 2005. The year ended December 31, 2006 included a litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. charge of $129.0 million ($78.2 million after income taxes, or $0.63 per share) for an adverse jury verdict (the "Litigation Charge") and a charge of $39.2 million ($25.5 million after income taxes, or $0.20 per share) in connection with the company's voluntary review of its past stock option granting practices and the related accounting (the "Stock-Based Charge"). Each of these charges was recorded in the 2006 second quarter. These charges are more fully described in the company's latest Quarterly Report on Form 10-Q Form 10-Q See 10-Q. filed with the Securities and Exchange Commission. Excluding the Litigation and Stock-Based Charges, diluted EPS would have increased by $0.85, or 20.2%, to $5.05 for the year ended December 31, 2006, compared to $4.20 per share for the year ended December 31, 2005, and net income for the year ended December 31, 2006 would have increased by $121.3 million, or 23.9%, to $629.8 million from $508.5 million for the year ended December 31, 2005. SFAS 123R stock-based compensation expense reduced diluted EPS for the year ended December 31, 2006 by $0.24, compared to the year ended December 31, 2005. Excluding the impact of SFAS 123R and the Litigation and Stock-Based Charges, diluted EPS would have grown by 26.0%. For the year ended December 31, 2006, consolidated net sales increased by $3,032.2 million, or 32.1%, to $12,476.9 million from consolidated net sales of $9,444.7 million for the year ended December 31, 2005. Consolidated organic sales growth was 9.3%, or $875.1 million, driven primarily by strong demand for government services, ISR (Interrupt Service Routine) Software routine that is executed in response to an interrupt. systems, secure networked communications products, base support operations, aircraft modification, and several specialized products, partially offset by volume declines for aircraft support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services , secure terminal equipment and airport security systems. The increase in consolidated net sales from acquired businesses was $2,157.1 million, or 22.8%, including $1,477.5 million from the Titan acquired businesses. Consolidated operating income increased by $114.2 million, or 11.5%, to $1,110.9 million for the year ended December 31, 2006 from $996.7 million for the year ended December 31, 2005, and consolidated operating margin declined by 1.7 percentage points to 8.9% for the year ended December 31, 2006 from 10.6% for the year ended December 31, 2005. Excluding the Litigation Charge ($129.0 million) and Stock-Based Charge ($39.2 million), consolidated operating income would have increased by $282.4 million, or 28.3%, to $1,279.1 million for the year ended December 31, 2006 from $996.7 million for the year ended December 31, 2005, and consolidated operating margin would have declined by 0.3 percentage points to 10.3% for the year ended December 31, 2006 from 10.6% for the year ended December 31, 2005. Although consolidated operating margin declined, improved contract performance, higher sales volume and lower indirect costs Indirect costs are costs that are not directly accountable to a particular function or product; these are fixed costs. Indirect costs include taxes, administration, personnel and security costs. See also
Interest and other income was $20.2 million for the year ended December 31, 2006, compared to $5.5 million for the year ended December 31, 2005. The increase was primarily due to a charge of $8.7 million to write-down the carrying value of certain investments in the 2005 third quarter that did not recur in 2006 and $3.5 million of interest income from the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. settlement of a claim during the 2006 first quarter. Interest expense for the year ended December 31, 2006 increased by $91.9 million, or 45.0%, to $296.1 million, compared to interest expense of $204.2 million for the year ended December 31, 2005. This increase was primarily due to the full year effect in 2006 of the interest expense on debt incurred to finance the Titan acquisition in July 2005. The effective income tax rate for the year ended December 31, 2006 increased to 36.2% from 35.5% for the year ended December 31, 2005. Excluding the Litigation Charge and Stock-Based Charge, the effective income tax rate for the year ended December 31, 2006 would have been 36.6%. The increase in the effective income tax rate in 2006 was primarily due to the favorable disposition of certain tax contingencies in the 2005 third quarter (which did not recur in 2006), partially offset by higher income tax benefits in 2006 from foreign tax credits resulting from the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of certain foreign earnings. The recent retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a enactment to January 1, 2006 of the U.S. Federal income tax credit for research and experimentation activities reduced the tax rate for 2006 by 0.3 percentage points. Funded orders for the year ended December 31, 2006 increased by $3,288.1 million, or 31.7%, to $13,653.5 million from $10,365.4 million for the year ended December 31, 2005. Net cash from operating activities for the year ended December 31, 2006 increased by $227.5 million, or 26.9%, to $1,074.3 million from $846.8 million for the year ended December 31, 2005. Free cash flow for the year ended December 31, 2006 increased by $122.6 million, or 15.4%, to $920.1 million from free cash flow of $797.5 million for the year ended December 31, 2005. The company's cash and cash equivalents decreased by $45.7 million to $348.2 million at December 31, 2006 from $393.9 million at December 31, 2005. The decrease was primarily due to cash used for business acquisitions and to repay $100 million of senior term loans, partially offset by the company's free cash flow for the year ended December 31, 2006. Total debt of $4,535.0 million at December 31, 2006 decreased by $98.5 million from $4,633.5 million at December 31, 2005. The decrease in debt was primarily due to a repayment of $100 million of the company's senior term loans in December 2006. Available borrowings under the company's revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facilities after reduction for outstanding letters of credit were $923.2 million at December 31, 2006. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. increased by $696.8 million to $5,187.5 million at December 31, 2006, compared to $4,490.7 million at December 31, 2005, primarily resulting from the company's retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. for 2006, partially offset by approximately $110.0 million due to the adoption of SFAS 158, Employers' Accounting for Defined Benefit Plans Defined benefit plan A pension plan obliging the sponsor to make specified dollar payments to qualifying employees at retirement. The pension obligations are effectively the debt obligation of the plan sponsor. Related: Defined contribution plan and Other Retirement Plans (SFAS 158). Effective December 31, 2006, the company adopted SFAS 158, which requires that losses and prior service costs not yet included in net period benefit costs be recognized as a component of accumulated other comprehensive income In 1997 the Financial Accounting Standards Board issued a Statement on Financial Accounting Standards entitled “Comprehensive Income”. This statement required all income statement items to be reported either as a regular item in the income statement and or a special item as . REPORTABLE SEGMENTS During the 2006 fourth quarter, the company revised its four reportable segment presentations to conform with certain re-alignments in the company's management and organization structure implemented by the company's President and Chief Executive Officer. Consequently, the company made certain re-alignments to its reportable segments, reclassifying into the Government Services reportable segment the Technical and Management Services and Intelligence Solutions businesses, which were previously in the C3ISR C3ISR Command, Control, Communication, Intelligence, Surveillance and Reconnaissance reportable segment and reclassifying into the Specialized Products reportable segment the Electronics Systems business, which was previously in the Aircraft 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, and Maintenance reportable segment. Refer to the "Unaudited Supplemental Reportable Segment Data" tables attached to this press release, which present (1) the previous segment data presentation for the years ended December 31, 2006, 2005 and 2004, and the quarterly periods ended March 31, June 30, September 30 and December 31, 2006 and 2005, (2) the reclassifications for these periods to the respective reportable segments, and (3) the revised reportable segment data presentation for these periods. The following discussion compares the operating results for the 2006 fourth quarter and the year ended December 31, 2006 to the corresponding periods in 2005 for each of the company's reportable segments, which have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the revised reportable segment presentation. [TABLE OMITTED] C3ISR net sales for the 2006 fourth quarter increased by 11.5% compared to the 2005 fourth quarter. The increase in net sales from acquired businesses of $34.1 million was primarily due to TRL TRL In currencies, this is the abbreviation for the Turkish Lira. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. Electronics plc (TRL), which was acquired on July 12, 2006. Organic sales growth was $22.6 million, or 4.6%, driven primarily by higher volumes for transportable satellite communications terminals Terminus of a communications circuit at which data can be either entered or received; located with the originator or ultimate addressee. Also called CT. , and recent new business awards for airborne mission and ISR systems. C3ISR operating income for the 2006 fourth quarter increased by 12.3% compared to the 2005 fourth quarter. The increase in operating income was due to higher sales volume, while operating margin remained unchanged. Operating margin increased by 1.0 percentage points due to higher margins from acquired businesses, which were offset by a 0.4 percentage point reduction for SFAS 123R stock-based compensation expense and 0.6 percentage points primarily due to higher development costs for new secure communications products, which are expected to provide future growth sales. Orders for the C3ISR segment were $663.3 million during the 2006 fourth quarter. For the year ended December 31, 2006, C3ISR net sales increased by 12.4% compared to the year ended December 31, 2005. Organic sales growth was $156.0 million, or 8.7%, driven largely by trends similar to those for the 2006 fourth quarter, except that organic sales growth for 2006 was partially offset by lower sales of secure terminal equipment, a product with declining demand as it continues to approach full deployment in the marketplace. The increase in net sales from acquired businesses was $67.7 million. C3ISR operating income for the year ended December 31, 2006 decreased by 0.4% compared to the year ended December 31, 2005. The decrease in operating income was due to lower operating margins of 1.3 percentage points partially offset by higher sales volume. Operating margin declined by 1.3 percentage points, primarily due to higher development costs for new secure communications products and higher sales volume on contracts with greater material and subcontractor One who takes a portion of a contract from the principal contractor or from another subcontractor. When an individual or a company is involved in a large-scale project, a contractor is often hired to see that the work is done. content, which generally have lower margins, and by 0.4 percentage points for SFAS 123R stock-based compensation expense. These decreases were partially offset by an increase of 0.4 percentage points due to higher margins from acquired businesses. [TABLE OMITTED] Government Services net sales for the 2006 fourth quarter increased by 11.1% compared to the 2005 fourth quarter. Organic sales growth was $98.7 million, or 11.1%, and the increase in net sales from acquired businesses was $0.5 million. Organic sales growth was primarily due to increased sales volume for (1) intelligence support services because of recent competitive contract awards primarily to support the global war on terrorism Terrorist acts and the threat of Terrorism have occupied the various law enforcement agencies in the U.S. government for many years. The Anti-Terrorism and Effective Death Penalty Act of 1996, as amended by the usa patriot act , (2) training and leadership development services, primarily for the Iraq and Afghanistan governments' ministries of defense, (3) communication software support, systems engineering, and other technical services to support U.S. Army communications and surveillance activities, and (4) the company's linguist lin·guist n. 1. A person who speaks several languages fluently. 2. A specialist in linguistics. [Latin lingua, language; see contract with the U.S. Army's Intelligence and Security Command (INSCOM INSCOM United States Army Intelligence & Security Command ). The linguist contract generated sales of $155.9 million for the 2006 fourth quarter and in 2006 was the company's largest contract in terms of annual sales. As previously disclosed in December 2006, INSCOM did not select L-3's proposal for the Translation and Interpretation Management Services (TIMS TIMS Thermal Ionization Mass Spectrometry TIMS The Institute of Management Sciences TIMS Thermal Infrared Multispectral Scanner TIMS Transportation Information Management System TIMS The International Molinological Society TIMS Tuberculosis Information Management System ) contract to provide translators This is primarily a list of notable Western translators. Please feel free to add translators from other languages, cultures and areas of specialization. Large sublists have been split off to separate articles. and linguists A linguist in the academic sense is a person who studies linguistics. Ambiguously, the word is sometimes also used to refer to a polyglot (one who knows more than 2 languages), or a grammarian, but these two uses of the word are distinct. in support of the U.S. military operations This is a list of missions, operations, and projects. Missions in support of other missions are not listed independently. World War I ''See also List of military engagements of World War I
Government Services operating income for the 2006 fourth quarter decreased by 4.0% compared to the 2005 fourth quarter. The decrease in operating income was primarily due to lower operating margin of 1.3 percentage points. Operating margin decreased by 1.0 percentage points due to higher sales on the linguist contract and contracts with greater subcontractor content which generate lower margins, severance costs of $4.1 million incurred related to certain administrative consolidation activities, and costs and expenses for the introduction of security video products. SFAS 123R stock-based compensation expense decreased operating margin by 0.3 percentage points. Orders for the Government Services segment were $1,134.0 million during the 2006 fourth quarter. For the year ended December 31, 2006, Government Services net sales increased by 75.2% compared to the year ended December 31, 2005. The increase in net sales from acquired businesses was $1,306.8 million, primarily related to the Titan acquired businesses. Organic sales growth was $339.3 million, or 15.5%, driven primarily by trends similar to those for the 2006 fourth quarter. The linguist contract generated sales of $612.4 million for the year ended December 31, 2006. Government Services operating income for the year ended December 31, 2006 increased by 69.9% compared to the year ended December 31, 2005. The increase in operating income was due to higher sales volume, partially offset by lower operating margin of 0.3 percentage points. Operating margin increased by 0.2 percentage points due to improved contract performance and lower indirect costs, which were partially offset by the 2006 fourth quarter severance costs of $4.1 million, and costs and expenses for the introduction of security video products. Operating margin also decreased by 0.2 percentage points because of lower margins from the Titan acquired businesses and by 0.3 percentage points due to SFAS 123R stock-based compensation expense. [TABLE OMITTED] AM&M net sales for the 2006 fourth quarter increased by 12.3% compared to the 2005 fourth quarter. The increase in net sales from acquired businesses was $39.1 million and was primarily due to the acquisition of Crestview Aerospace Corporation (Crestview), which occurred on June 29, 2006. Organic sales growth was $29.8 million, or 5.3%, driven primarily by increased sales volume for base support operations related to continued support of U.S. military operations in Iraq and Afghanistan, and aircraft support services due to recent new business awards. AM&M operating income for the 2006 fourth quarter increased by 20.9% compared to the 2005 fourth quarter. The increase in operating income was due to higher sales volume and higher operating margins of 0.8 percentage points. Operating margin increased by 1.0 percentage points, primarily due to higher margins from acquired businesses, which were partially offset by a 0.2 percentage point reduction for SFAS 123R stock-based compensation expense. Orders for the AM&M segment were $783.8 million during the 2006 fourth quarter. For the year ended December 31, 2006, AM&M net sales increased by 6.0% compared to the year ended December 31, 2005. The increase in net sales from acquired businesses was $85.6 million primarily due to the acquisition of Crestview and TCS (Transportation Control System) A widely used integrated information system for railroad transportation developed by the Missouri Pacific Railroad Company in the late 1960s and early 1970s. It was later implemented by Union Pacific when the companies merged. Design and Management Services. Organic sales growth was $46.5 million, or 2.1%, driven by increased sales volume for base support operations and the completion of performance milestones on the Canadian Maritime Helicopter Program (MHP MHP Multimedia Home Platform (consumer electronics) MHP Milliyetci Hareket Partisi (Turkish: National People's Party) MHP Mobile Home Park (district) MHP Maximum Human Performance ) contract. These sales increases were partially offset by lower sales due to the competitive loss of two contracts, one to provide maintenance and support services for U.S. Navy fixed wing training aircraft, which was lost in the second quarter of 2006, and another to support U.S. Air Force utility aircraft, which was lost in the first quarter of 2005. AM&M operating income for the year ended December 31, 2006 increased by 5.8% compared to the year ended December 31, 2005. The increase in operating income was due to higher sales volume. Operating margin for 2006 was unchanged compared with 2005. Higher margins primarily from acquired businesses were offset by a 0.2 percentage point reduction for SFAS 123R stock-based compensation expense. [TABLE OMITTED] Specialized Products net sales for the 2006 fourth quarter increased by 27.2% compared to the 2005 fourth quarter. The increase in net sales from acquired businesses was $153.0 million. Sales from acquired businesses primarily include SAM Electronics GmbH (SAM), which was acquired on January 31, 2006. Organic sales growth was $107.2 million, or 11.2%, primarily due to higher sales volume for (1) Electro-Optic/Infrared (EO/IR EO/IR Electro-Optical/Infra-Red ) products due to increased demand and timing of scheduled deliveries, (2) simulation devices from recent contract awards, (3) combat vehicle propulsion Vehicle propulsion refers to the act of moving an artificial carrier of people or goods over a distance. The power plant used to drive the vehicles can vary widely. Originally, humans or animals would have provided the means of propulsion, later being supplemented by wind power (eg systems for U.S. military reset and replacement of equipment consumed in the U.S. military operations in Iraq, and (4) microwave products due to recent contract awards 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" equipment for the U.S. military and electron power components for commercial satellites. These increases were partially offset by volume declines for airport security products because of a reduction in the procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. of explosive detection systems Noun 1. explosive detection system - a rapid automatic system to detect plastic explosives in passengers' luggage using X-ray technology and computers; designed for use in airports EDS by the U.S. Transportation Security Administration and foreign government customers. Specialized Products operating income for the 2006 fourth quarter increased by 17.7% compared to the 2005 fourth quarter. The increase in operating income was primarily due to higher sales volume, partially offset by lower operating margin. Operating margin for the 2006 fourth quarter decreased by 0.9 percentage points compared to the 2005 fourth quarter. Operating margin declined by 0.9 percentage points because of lower margins from acquired businesses and 0.4 percentage points due to SFAS 123R stock-based compensation expense. These declines in operating margin were partially offset by an increase of 0.4 percentage points, primarily due to improved contract performance and lower indirect costs for several business areas, including EO/IR products and airport security products. Orders for the Specialized Products segment were $1,283.5 million during the 2006 fourth quarter. For the year ended December 31, 2006, Specialized Products net sales increased by 31.6% compared to the year ended December 31, 2005. The increase in net sales from acquired businesses was $697.0 million. Acquired businesses primarily include SAM, which was acquired on January 31, 2006, and certain divisions of Titan, Electron Dynamic Devices, Inc. and Combat 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 , all of which were acquired in 2005. Organic sales growth was $333.3 million, or 10.2%, primarily due to higher sales volume of (1) combat vehicle propulsion systems, (2) simulation devices, (3) EO/IR products, (4) acoustic undersea anti-submarine warfare “A/S” redirects here. For the Danish stock company form, see Aktieselskab. “A/S” redirects here. For the Norwegian stock company form, see aksjeselskap. products driven by sales of the company's next generation airborne dipping sonars, and (5) precision and navigation systems A GPS-based electronic system in a car or truck that provides a real time map of the vehicle's current location as well as step-by-step directions to a programmed destination. See GPS and vehicle tracking. primarily related to a new program awarded in 2006. These increases were partially offset by volume declines for airport security systems. Specialized Products operating income for the year ended December 31, 2006 increased by 36.1% compared to the year ended December 31, 2005. The increase in operating income was primarily due to higher sales volume and operating margins. Operating margin increased by 1.4 percentage points, primarily due to improved contract performance and lower indirect costs for airport security systems and EO/IR products, and 0.3 percentage points for the settlement of a claim against a third party for patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. in the 2006 third quarter and charges recorded in 2005 that did not recur in 2006. These increases in operating margin were partially offset by a decline of 0.9 percentage points because of lower margins from acquired businesses and by 0.4 percentage points due to SFAS 123R stock-based compensation expense. OUTLOOK "We believe that 2007 will be another strong year for L-3," said Mr. Strianese. "Our businesses are performing very well and we entered the new year with a record funded backlog. In addition, the current U.S. defense budget presents many opportunities for L-3's products and services. One of the high priority items for the Department of Defense is funding the U.S. military's continued effort to transform its forces and equipment to deal with the global war on terrorism, insurgencies and rogue nations Noun 1. rogue nation - a state that does not respect other states in its international actions renegade state, rogue state body politic, country, nation, res publica, commonwealth, state, land - a politically organized body of people under a single ." "There is also an increased requirement in Iraq and Afghanistan for a variety of high-level government services, including training, education and leadership and organizational development. In addition, there is a continuing need to reset and recapitalize re·cap·i·tal·ize tr.v. re·cap·i·tal·ized, re·cap·i·tal·iz·ing, re·cap·i·tal·iz·es To change the capital structure of (a corporation). re·cap the military equipment degraded de·grad·ed adj. 1. Reduced in rank, dignity, or esteem. 2. Having been corrupted or depraved. 3. Having been reduced in quality or value. by the harsh operating environments In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. in Iraq and Afghanistan. These are all areas where L-3 has significant capabilities." "There has been much debate about the size and scope of the supplemental spending bill to sustain the war effort in Iraq and Afghanistan," continued Mr. Strianese. "We believe there is recognition that the U.S. needs to provide an adequate level of funding support to ensure the stability of those countries, as well as the Middle East region, and to continue the fight against the expanding circle of terrorist cells." In homeland security Noun 1. Homeland Security - the federal department that administers all matters relating to homeland security Department of Homeland Security executive department - a federal department in the executive branch of the government of the United States , Mr. Strianese said that he believes there continues to be an opportunity for L-3's solutions. He noted that the U.S. Congressional leadership will likely increase the focus on securing the nation's infrastructure. The House of Representatives is increasing its focus on mandating cargo screening at airports and maritime ports, among other measures. There may be a greater emphasis on securing ports, maritime transportation and rail transit, in addition to upgrading existing airport checkpoints to detect a widening range of threats, which could benefit L-3, if it occurs. "As we approach L-3's tenth anniversary in April 2007, we will continue to build upon the strategy that has been so successful for us, with a focus on refinements aimed at improving our business model," said Mr. Strianese. "We will continue to focus on organic growth, earnings and cash flows by increasing our performance and by expanding our presence on key programs. We expect to improve the efficiency and performance of our current portfolio of businesses and combine select businesses to increase synergies. We also intend to fund promising technologies and solutions development in the high growth areas of the defense and homeland security budgets. L-3 will also continue to enhance customer relationships and partner with other companies to win larger programs." On the acquisition front, Mr. Strianese said there continues to be a number of potential acquisition candidates. "We will focus on businesses that are reasonably valued, provide important technology, add customers, or provide the potential for meaningful synergies with L-3's existing businesses. Our ultimate aim is to expand our offerings, our customer base and provide an attractive return for our shareholders." Mr. Strianese noted several business areas where the company is actively reviewing acquisition candidates. They include C3ISR, sensors, technical services for intelligence and logistics, ground and mobile antenna technologies, as well as aircraft modernization companies. "We will also continue our disciplined approach to capital allocation," continued Mr. Strianese. "We expect to return more cash to shareholders through the share repurchase plan share repurchase plan A corporation's plan for buying back a predetermined number of its own shares in the open market. Institution of a share repurchase plan derives from management's view that the company has limited outside investment opportunities and announced in December 2006 and by continuing to moderately increase our dividend, while maintaining our financial flexibility." Financial Outlook. Based on information known as of today, the company revised its financial guidance for the year ending December 31, 2007, as follows: [TABLE OMITTED] CONFERENCE CALL In conjunction with this release, L-3 Communications will host a conference call today, Wednesday, January 31, 2007, at 1:00 PM ET that will be simultaneously broadcast live over the Internet. Michael T. Strianese, President and Chief Executive Officer, Ralph D'Ambrosio, Vice President and Chief Financial Officer, and Cynthia Swain, 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. , will host the call.
1:00 PM ET
12:00 PM CT
11:00 AM MT
10:00 AM PT
Listeners may access the conference call live over the Internet at the
following web address:
http://www.videonewswire.com/event.asp?id=37295
Please allow fifteen minutes prior to the call to download and install any necessary audio software. The archived version of the call may be accessed at either this site or by dialing (800) 642-1687 (passcode: 5727251), beginning approximately two hours after the call ends, and will be available until the company's next quarterly earnings release. Headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , L-3 Communications is a leading provider of Intelligence, Surveillance and Reconnaissance Intelligence, Surveillance and Reconnaissance may refer to:
Homeland Security executive department - a federal department in the executive branch of the government of the United States , selected U.S. Government intelligence agencies and aerospace prime contractors. To learn more about L-3 Communications, please visit the company's web site at www.L-3com.com. SAFE HARBOR Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and OF 1995 Except for historical information contained herein, the matters set forth in this news release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Statements that are predictive in nature, that depend upon or refer to events or conditions or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," "could" and similar expressions are forward-looking statements. The forward-looking statements set forth above involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, including the risks and uncertainties discussed in the company's Safe Harbor Compliance Statement for Forward-looking Statements included in the company's recent filings, including Forms 10-K and 10-Q, with the Securities and Exchange Commission. The forward-looking statements speak only as of the date made, and the company undertakes no obligation to update these forward-looking statements. Notes: (1) Organic sales growth is defined as the increase or decrease in sales for the current period compared to the prior period, excluding sales in the current period from business acquisitions that have been included in L-3's actual results of operations for less than twelve months. (2) See discussion, definition and calculation of free cash flow on the financial tables attached to this press release. - Financial Tables Follow - [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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