Exhibit 99.1
Esterline Reports Third Quarter Earnings of $8.4 Million on $140.5
Million Sales; EPS of $0.40 Includes $0.09 Gain from Currency Hedging
Associated with Recent Acquisition
BELLEVUE, Wash.--(BUSINESS WIRE)--Sept. 4, 2003--Esterline
Technologies (NYSE:ESL) (www.esterline.com), a leading specialty
manufacturer serving aerospace/defense markets, today reported third
quarter (ended August 1) performance in line with earlier forecasts.
Income from continuing operations was $8.4 million, or $.40 per
diluted share, including a foreign currency gain of approximately $2.0
million net of tax, or $.09 per share, on sales of $140.5 million.
Midway through the quarter, Esterline acquired Weston Aerospace from
The Roxboro Group PLC for GBP55.0 million (approximately $95.3 million
at the closing exchange rate, including acquisition costs). The
foreign currency gain resulted when Esterline hedged the purchase
price using foreign currency forward contracts. Year-ago income from
continuing operations was $6.9 million, or $.33 per diluted share, on
$112.4 million sales.
Robert W. Cremin, Esterline CEO, said that operating performance
in the quarter was in line with the company's earlier published
full-year guidance of $1.20. Cremin said, "...considering the foreign
currency gain, full-year diluted EPS from continuing operations should
now be about $1.30." He said that although a favorable product mix
during the quarter improved gross margins, he remained cautious about
predicting any short-term upward trend. "The commercial aerospace down
cycle and its impact on our spare parts business continues to be a
factor," he said.
However, Cremin emphasized that Esterline is well positioned in
defense and other high-end specialty markets where business is
relatively strong. The company also continues to invest in new product
development and good-fit acquisitions. Research and development
spending in the third quarter was 4.4% of sales, compared with 3.9% a
year ago, and on the acquisition front, Cremin said the company is
"...just beginning to feel the advantage gained from integrating
acquisitions completed 12 to 15 months ago."
As previously reported, Esterline sold substantially all the
assets of its discontinued Excellon Automation subsidiary during the
quarter to a private party. The sale was part of a formal plan adopted
on July 25, 2002, to sell its Automation segment, which included
Excellon. As part of this decision, the Automation segment was
recorded as a "discontinued operation" as defined by GAAP (Generally
Accepted Accounting Principles) in the company's fiscal third quarter
of 2002 ended July 26. Esterline continues to report the one remaining
business in this segment as a "discontinued operation."
Year-to-date income from continuing operations was $20.3 million,
or $.97 per diluted share, on sales of $402.1 million. This
performance compared with the prior-year period's income from
continuing operations of $20.8 million, or $.99 per diluted share, on
sales of $309.9 million.
Including charges for losses in its discontinued operations,
year-to-date net earnings were $14.5 million, or $.69 per diluted
share, compared to a loss of $8.9 million, or ($.42) per diluted
share, in the prior-year period. The year-to-date period includes a
$5.8 million charge, net of a $3.5 million tax benefit, recorded in
the second quarter for losses in excess of earlier estimates in its
discontinued operations. The year-ago period included a loss from
discontinued operations of $22.1 million, or ($1.05) per diluted
share, and a $7.6 million charge, or ($.36) per diluted share, for the
cumulative effect of an accounting change as a result of the adoption
of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets," in the first quarter of fiscal 2002.
Orders received in the third quarter totaled $147.4 million,
compared with $131.0 million a year ago. Backlog at August 1, 2003,
was $321.2 million, compared with $251.4 million at the end of the
prior-year period.
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act 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, 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 changes in
aerospace/defense industry demand or because of current uncertainties
associated with other risks detailed in the company's public filings
with the Securities and Exchange Commission, including the company's
Annual Report on Form 10-K for the year ended October 25, 2002.
EDITOR: See attached Consolidated Statement of Operations.
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Statement of Operations
- ------------------------------------
In thousands, except per share amounts
Three months ended Nine months ended
Aug. 1, July 26, Aug. 1, July 26,
2003 2002 2003 2002
---- ---- ---- ----
Segment Sales
Avionics & Controls $ 49,596 $ 43,174 $147,729 $125,008
Sensors & Systems 39,500 29,898 102,465 76,316
Advanced Materials 51,340 39,153 151,525 108,054
Other 82 198 409 544
------- ------- ------- -------
Net Sales 140,518 112,423 402,128 309,922
Cost of Sales 94,812 76,070 277,179 208,788
------- ------- ------- -------
45,706 36,353 124,949 101,134
Expenses
Selling, general and
administrative 26,056 19,849 77,704 55,550
Research, development and
engineering 6,185 4,440 14,342 10,720
------- ------- ------- -------
Total Expenses 32,241 24,289 92,046 66,270
------- ------- ------- -------
Operating Earnings from
Continuing Operations 13,465 12,064 32,903 34,864
Interest income (299) (245) (565) (1,368)
Interest expense 3,887 1,806 7,388 5,406
Other expense 64 -- 62 --
Loss on sale of product line 929 -- 66 --
Loss (gain) on derivative
financial instruments (2,696) -- (2,622) 1
------- ------- ------- -------
Other Expense, Net 1,885 1,561 4,329 4,039
------- ------- ------- -------
Income from Continuing
Operations Before Income Taxes 11,580 10,503 28,574 30,825
Income Tax Expense 3,136 3,577 8,245 10,046
------- ------- ------- -------
Income from Continuing
Operations 8,444 6,926 20,329 20,779
Loss from Discontinued
Operations, Net of Tax -- (17,529) (5,808) (22,114)
------- ------- ------- -------
Earnings (Loss) Before
Cumulative Effect of Change
in Accounting 8,444 (10,603) 14,521 (1,335)
Cumulative Effect of Change in
Accounting, Net of Tax -- -- -- (7,574)
------- ------- ------- -------
Net Earnings (Loss) $ 8,444 $(10,603) $ 14,521 $ (8,909)
======= ======= ======= =======
Earnings (Loss) Per Share --
Basic:
Continuing operations $ .40 $ .33 $ .97 $ 1.00
Discontinued operations -- (.84) (.27) (1.06)
------- ------- ------- -------
Earnings (loss) per share
before cumulative effect
of change in accounting .40 (.51) .70 (.06)
Cumulative effect of change
in accounting -- -- -- (.37)
------- ------- ------- -------
Earnings (Loss) Per Share --
Basic $ .40 $ (.51) $ .70 $ (.43)
======= ======= ======= =======
Earnings (Loss) Per Share --
Diluted:
Continuing operations $ .40 $ .33 $ .97 $ .99
Discontinued operations -- (.83) (.28) (1.05)
------- ------- ------- -------
Earnings (loss) per share
before cumulative effect
of change in accounting .40 (.50) .69 (.06)
Cumulative effect of change
in accounting -- -- -- (.36)
------- ------- ------- -------
Earnings (Loss) Per Share --
Diluted $ .40 $ (.50) $ .69 $ (.42)
======= ======= ======= =======
Weighted Average Number
of Shares Outstanding --
Basic 20,976 20,764 20,857 20,742
Weighted Average Number
of Shares Outstanding --
Diluted 21,136 21,086 21,058 21,023
Consolidated Balance Sheet
- --------------------------
In thousands
Aug. 1, July 26,
2003 2002
---- ----
Assets
Current Assets
Cash and cash equivalents $120,522 $ 88,329
Cash in escrow 4,598 --
Accounts receivable, net 85,534 69,949
Inventories 83,676 69,797
Income tax refundable 4,806 --
Deferred income tax benefits 17,003 23,094
Prepaid expenses 6,107 5,227
------- -------
Total Current Assets 322,246 256,396
Property, Plant and Equipment, Net 115,174 91,410
Net Assets of Discontinued Operations -- 14,964
Other Non-Current Assets
Goodwill 183,283 142,460
Intangibles, net 115,997 21,833
Debt issuance costs, net 7,350 --
Other assets 24,242 22,887
------- -------
$768,292 $549,950
======= =======
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 20,902 $ 17,603
Accrued liabilities 68,380 58,985
Credit facilities 2,630 2,588
Current maturities of long-term debt 30,403 6,234
Federal and foreign income taxes 865 2,027
------- -------
Total Current Liabilities 123,180 87,437
Long-Term Liabilities
Long-term debt, net of current maturities 247,173 102,203
Deferred income taxes 20,669 12,922
Net Liabilities of Discontinued Operations 32 --
Shareholders' Equity 377,238 347,388
------- -------
$768,292 $549,950
======= =======
CONTACT: Esterline Technologies Corporation, Bellevue
Brian Keogh, 425-453-9400