ESCO TECHNOLOGIES
Exhibit 99.1
For more information contact: For media inquiries:
Patricia K. Moore David P. Garino
Director, Investor Relations (314) 982-0551
ESCO Technologies Inc.
(314) 213-7277
ESCO ANNOUNCES ACQUISITION OF HEXAGRAM, INC.
St. Louis, MO, February 2, 2006 - ESCO Technologies Inc. (NYSE: ESE) today
announced the acquisition of Hexagram, Inc. (Hexagram). The capital stock of
Hexagram was acquired for cash consideration of $67.5 million and a potential
working capital adjustment. The acquisition agreement also provides for
contingent consideration of up to $6.3 million during the five year period
following the acquisition if Hexagram exceeds certain sales targets.
Hexagram is a well established RF fixed network Automatic Meter Reading
(AMR) company headquartered in Cleveland, Ohio. Hexagram's fixed network
technology was first deployed in 1996, and currently provides AMR data from over
one million endpoints. Hexagram's system is in service at over seventy-five
utilities including installations at the water utility in the District of
Columbia and at Wisconsin Public Service where it provides gas reads and
operates alongside ESCO's Distribution Control Systems, Inc. (DCSI) electric AMR
system. In addition, Hexagram has a contract with Pacific Gas and Electric
Company (PG&E) covering 4.1 million gas meters with total anticipated revenues
over the five year full deployment period of approximately $225 million.
Hexagram's contract with PG&E, like DCSI's, is subject to a successful
demonstration phase, Public Utility Commission approval and PG&E's full-scale
deployment decision. Annual purchase order releases are anticipated on the PG&E
program.
Over the past three years Hexagram's annual revenue has been in the range
of $20 to $35 million. Excluding amortization of identifiable intangible assets,
the acquisition is not expected to have a material impact on earnings in fiscal
2006. Including amortization, the acquisition may be modestly dilutive to 2006
earnings.
Hexagram will continue to be led by the existing management team, and
Hexagram's founder, Larry Sears, will remain as a consultant to the company
focused on helping Hexagram and ESCO shape their long-
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term AMR technology roadmaps. Hexagram will operate as a stand-alone subsidiary
of ESCO and will collaborate with DCSI and Nexus Energy Software, Inc., ESCO's
other utility communications businesses, where there are opportunities to better
support its customers by working together.
In making the announcement, Vic Richey, Chairman and CEO, commented: "The
addition of Hexagram not only more than doubles our served market in AMR but
also allows us to offer a broader portfolio of products and technologies to
satisfy the AMR needs of any utility. I have great confidence in the team at
Hexagram and I am extremely excited about the opportunities created by this
combination."
Larry Sears, Hexagram's founder, stated: "By joining ESCO, Hexagram will
gain valuable additional resources. These will allow us to expand our marketing,
customer support, and product development activities, as well as maintain a
creative and innovative environment for our employees."
Statements in this press release regarding the Hexagram acquisition's
impact on fiscal 2006 earnings, the impact of the acquisition on the Company's
success in the AMR market, the total anticipated value and scope of the PG&E
contract and any other statements which are not strictly historical are
"forward-looking" statements within the meaning of the safe harbor provisions of
the Federal Securities Laws. Investors are cautioned that such statements are
only predictions, speak only as of the date of this release and the Company
undertakes no duty to update. The Company's actual results in the future may
differ materially from those projected in the forward-looking statements due to
risks and uncertainties that exist in the Company's operations and business
environment, including but not limited to: actions by the California Public
Utility Commission, PG&E's Board of Directors or PG&E's management impacting
PG&E's AMI projects, the content of purchase order releases by PG&E, Hexagram's
successful performance under the PG&E contract, technical difficulties,
competition, changes in customers demands, intellectual property rights,
termination for convenience of the PG&E contract, and the Company's successful
execution of internal operating plans.
ESCO, headquartered in St. Louis, is a leading supplier of engineered
filtration products to the process, health care and transportation markets
worldwide. In addition, the Company markets proprietary, special purpose
communications systems and is the industry leader in RF shielding and EMC test
products. Further information regarding ESCO and its subsidiaries is available
on the Company's web site, www.escotechnologies.com.
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