Exhibit 99.1
Esterline Reports 1Q EPS Of $.09; Full-Year Outlook Unchanged; First
Quarter Includes a Tax Benefit and Higher than Previously Announced
Severance Expense
BELLEVUE, Wash.--(BUSINESS WIRE)--Feb. 26, 2004--Esterline
Technologies (NYSE:ESL)(www.esterline.com), a leading specialty
manufacturer serving aerospace/defense markets, today reported fiscal
2004 first quarter (ended January 30) net earnings of $1.9 million, or
$.09 per diluted share, on $132.6 million sales. The results include a
$1.9 million tax benefit, or $.09 per share, from a reduction of
previously estimated tax liabilities for U.S. research and development
tax credits, and a $2.9 million after-tax, or $.14 per share,
severance expense related to the merger of a recently acquired
UK-based operation with an existing France-based operation. The prior
year's comparable earnings were $5.8 million, or $.28 per diluted
share, on sales of $126.3 million.
Robert W. Cremin, Esterline CEO said, "...a number of issues, not
altogether unexpected, dampened our first quarter performance. More
importantly, however, our outlook remains unchanged, with full-year
EPS expected to be in the $1.50 to $1.60 range." Cremin said, "...the
severance expense that we discussed in our year-end release in
December was impacted by additional complexities to get regulatory
approvals, and exchange rate changes. In addition, we experienced a
number of customer requested delivery delays and other negative timing
issues during the quarter, all of which are expected to be compensated
for during the remainder of the year."
Cremin emphasized that, "...order rates are improving, the backlog
is solid and growing, and industry trends appear to be turning in our
favor." He noted that industry wide, defense spending continues to
strengthen, and U.S. and international airline traffic is picking up,
"...a trend that bodes well for the spare parts and retrofit portion
of our business." Orders received in the first quarter totaled $153.3
million compared with $140.0 million just three months ago,
"...reflecting good balance across our operating units." Backlog at
January 30, 2004, was $321.6 million compared with $283.7 million at
the end of the prior-year period, and $300.9 million at the end of
fiscal 2003.
Cremin said the company continues to focus on good-fit
acquisitions and invest in research and development to advance the
technological solutions offered to customers. In December, the company
acquired the outstanding stock of Avista Inc., a $10 million in sales
Wisconsin-based developer of embedded software for mission critical
applications. He said that, "...embedded software is expanding
exponentially with each successive generation of hardware, and
Avista's capabilities are an excellent fit with our operations."
R&D spending rose $1.7 million, totaling $5.9 million, or 4.5% of
sales, for the first fiscal quarter of 2004 compared with $4.2
million, or 3.3% of sales, for the first fiscal quarter of 2003.
The effective tax rate for the first fiscal quarter of 2004 was
29.6% (before a $1.9 million reduction of previously estimated tax
liabilities) compared with 30.7% for the first quarter of 2003. The
$1.9 million reduction was based upon the receipt of a Notice of
Proposed Adjustment (NOPA) from the Internal Revenue Service covering
the audit of research and development tax credits for fiscal years
1997 through 1999. As a result of the NOPA and the expectation of a
similar result for fiscal years 2000 through 2003, the company revised
its estimated liability for income taxes as of January 30, 2004. The
revision resulted in a $1.9 million reduction of previously estimated
tax liabilities.
Cremin also noted that in addition to severance expense, the
company continues to absorb integration expenses associated with
acquisitions. "There are real costs associated with the
rationalization of facilities and product lines, and the integration
of new employees, but once the transition period is behind us these
efforts will bring significant positive results going forward," he
said.
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 and 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 31, 2003.
EDITOR: See attached Consolidated Statement of Operations and
Consolidated Balance Sheet
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Statement of Operations
- ------------------------------------
In thousands, except per share amounts
Three months ended
Jan 30, Jan 31,
2004 2003
-------- --------
Segment Sales
Avionics & Controls $ 46,316 $ 48,336
Sensors & Systems 37,796 26,160
Advanced Materials 48,398 51,624
Other 88 209
-------- --------
Net Sales 132,598 126,329
Cost of Sales 92,596 87,656
-------- --------
40,002 38,673
Expenses
Selling, general and administrative 30,694 24,417
Research, development and engineering 5,916 4,182
-------- --------
Total Expenses 36,610 28,599
-------- --------
Operating Earnings from
Continuing Operations 3,392 10,074
Other (income) expense (556) 1
Interest income (313) (142)
Interest expense 4,293 1,782
-------- --------
Other Expense, Net 3,424 1,641
-------- --------
Income (Loss) from Continuing Operations
Before Income Taxes (32) 8,433
Income Tax (Benefit) Expense (1,910) 2,590
-------- --------
Income from Continuing Operations 1,878 5,843
Loss from Discontinued Operations, Net of
Tax -- --
-------- --------
Net Earnings $ 1,878 $ 5,843
======== ========
Earnings Per Share--Basic:
Continuing operations $ .09 $ .28
Discontinued operations -- --
-------- --------
Earnings Per Share--Basic $ .09 $ .28
======== ========
Earnings Per Share--Diluted:
Continuing operations $ .09 $ .28
Discontinued operations -- --
-------- --------
Earnings Per Share--Diluted $ .09 $ .28
======== ========
Weighted Average Number
of Shares Outstanding--Basic 21,099 20,796
Weighted Average Number
of Shares Outstanding--Diluted 21,436 21,027
Consolidated Balance Sheet
- --------------------------
In thousands Jan 30, Jan 31,
2004 2003
--------- --------
Assets
Current Assets
Cash and cash equivalents $107,501 $ 28,344
Cash in escrow 4,542 4,500
Short-term investments 7,776 --
Accounts receivable, net 86,560 71,711
Inventories 78,854 77,950
Income tax refundable 11,655 4,942
Deferred income tax benefits 13,524 21,991
Prepaid expenses 7,867 6,629
--------- --------
Total Current Assets 318,279 216,067
Property, Plant and Equipment, Net 118,770 103,318
Net Assets of Discontinued Operations -- 15,097
Other Non-Current Assets
Goodwill 192,396 160,023
Intangibles, net 117,776 65,213
Debt issuance costs, net 6,253 --
Other assets 23,557 22,425
--------- ---------
$777,031 $582,143
========= =========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 20,782 $ 18,562
Accrued liabilities 68,334 58,778
Credit facilities 3,031 14,567
Current maturities of long-term debt 490 30,418
Federal and foreign income taxes -- --
--------- ---------
Total Current Liabilities 92,637 122,325
Long-Term Liabilities
Long-term debt, net of current maturities 247,913 72,247
Deferred income taxes 25,621 22,021
Net Liabilities of Discontinued Operations 2,292 --
Shareholders' Equity 408,568 365,550
--------- ---------
$777,031 $582,143
========= =========
CONTACT: Esterline Technologies
Brian Keogh, 425-453-9400