Exhibit 99.1
Esterline 3Q EPS $.33 from Continuing OPS; Earnings $7.0 Million on
$150.6 Million Sales
BELLEVUE, Wash.--(BUSINESS WIRE)--Sept. 2, 2004--Esterline
Corporation (NYSE:ESL) (www.esterline.com), a leading specialty
manufacturer serving aerospace/defense markets, today reported fiscal
2004 third quarter (ended July 30) income from continuing operations
of $7.0 million, or $.33 per diluted share, on $150.6 million sales.
Comparable earnings a year ago were $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.
Robert W. Cremin, Esterline CEO said that he continues to be
encouraged by steady improvements in commercial aerospace markets.
"Increases in the world airlines' scheduled available seat miles,
departures, and flight hours are having a positive impact on our
business," Cremin said.
Esterline's defense business also remains solid. Revenue activity
in the company's combustibles and countermeasure operations was
particularly strong; however, Cremin advised that the product mix was
skewed toward lower margin components.
Cremin further indicated that expenses and production
inefficiencies associated with acquisition integration activity also
impacted the quarter. He noted that, "...in connection with a
previous acquisition, we closed two plants in our Avionics & Controls
segment during the quarter, and moved the operations into a single new
facility. The new plant will enhance operating efficiencies going
forward, but due to zoning and other similar regulatory issues, the
move took longer and proved more disruptive than first anticipated."
Responding to the practicality of offsetting these third quarter
events by fiscal year end, Cremin said the company is reducing its
full-year guidance to the range of $1.40 to $1.50 from its previous
guidance of $1.50 to $1.60. Cremin emphasized, though, that
fundamentally nothing has changed. "These kinds of timing issues have
their way of smoothing themselves out in a few quarters," he said.
"Our solid backlog and order book are good indicators that longer term
we remain firmly on track. Orders received in the third quarter
totaled $151.9 million compared with $147.4 million a year ago.
Year-to-date orders are up 5% to $463.7 million from $441.5 million a
year ago. Backlog at July 30, 2004, was $331.1 million compared with
$321.2 million at the end of the prior year period, and $329.9 million
at the end of last quarter.
Year-to-date income from continuing operations was $18.1 million,
or $.84 per diluted share, on sales of $433.4 million. The results
include a previously reported first quarter $1.9 million tax benefit
and a $2.9 million after-tax severance expense. For the first nine
months of fiscal 2003, income from continuing operations was $20.3
million, or $.97 per share, including the previously noted $.09 per
share foreign currency gain, on sales of $402.1 million.
The company also reported $0.6 million in net income, or $.03 per
diluted share, in the third quarter from a discontinued operation, W.
A. Whitney. In July 2002, Esterline discontinued its Automation
segment to focus on its core aerospace/defense business. On Tuesday,
August 31, Esterline signed a definitive agreement for the sale of the
Whitney operation. An after-tax gain of approximately $6 million is
expected to be recorded in the fourth quarter.
Including discontinued operations, the company reported net
earnings in the third quarter of fiscal 2004 of $7.6 million, or $.36
per diluted share, compared with $8.4 million, or $.40 per diluted
share, in the prior year period. Year-to-date net earnings were $19.4
million, or $.90 per diluted share, compared with $14.5 million, or
$.69 per diluted share, in the prior-year period. The year-ago period
included a loss from discontinued operations of $5.8 million, or
($.28) per diluted share and the previously noted foreign currency
gain.
Subsequent to the quarter close, Esterline finalized the
acquisition of Leach Holding Corporation for approximately $145
million in cash. Leach is a leading producer of high-performance
electromechanical relays, solid-state switching devices and advanced
power distribution assemblies primarily for aerospace applications.
The transaction brings more than 1,000 new employees to Esterline and
is expected to add nearly $120 million to Esterline's current
annualized revenue base of $600 million. Cremin noted that,
"...following a reasonable period of integration, the Leach business
is expected to contribute significant positive results."
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.
ESTERLINE TECHNOLOGIES CORPORATION
Consolidated Statement of Operations
- ------------------------------------
In thousands, except per share amounts
Three months ended Nine months ended
July 30, August 1, July 30, August 1,
2004 2003 2004 2003
---------- ----------- ----------- -----------
Segment Sales
Avionics &
Controls $ 48,705 $ 49,596 $ 147,313 $ 147,729
Sensors &
Systems 44,919 39,500 125,967 102,465
Advanced
Materials 56,931 51,340 159,739 151,525
Other 59 82 387 409
---------- ----------- ----------- -----------
Net Sales 150,614 140,518 433,406 402,128
Cost of Sales 103,469 94,812 295,955 277,179
---------- ----------- ----------- -----------
47,145 45,706 137,451 124,949
Expenses
Selling, general and
administrative 26,758 26,056 84,318 77,704
Research,
development and
engineering 6,464 6,185 18,822 14,342
---------- ----------- ----------- -----------
Total Expenses 33,222 32,241 103,140 92,046
---------- ----------- ----------- -----------
Operating Earnings
from Continuing
Operations 13,923 13,465 34,311 32,903
Loss on sale of
product line -- 929 -- 66
Gain on
derivative
financial
instruments -- (2,696) -- (2,622)
Other (income)
expense 1 64 (574) 62
Interest income (450) (299) (1,047) (565)
Interest expense 4,410 3,887 12,867 7,388
---------- ----------- ----------- -----------
Other Expense, Net 3,961 1,885 11,246 4,329
---------- ----------- ----------- -----------
Income from Continuing
Operations
Before Income
Taxes 9,962 11,580 23,065 28,574
Income Tax Expense 2,939 3,136 4,924 8,245
---------- ----------- ----------- -----------
Income from Continuing
Operations 7,023 8,444 18,141 20,329
Income (Loss) from
Discontinued
Operations, Net of
Tax 626 -- 1,298 (5,808)
---------- ----------- ----------- -----------
Net Earnings $ 7,649 $ 8,444 $ 19,439 $ 14,521
========== =========== =========== ===========
Earnings (Loss) Per
Share--Basic:
Continuing
operations $ .33 $ .40 $ .86 $ .97
Discontinued
operations .03 -- .06 (.27)
---------- ----------- ----------- -----------
Earnings Per
Share--Basic $ .36 $ .40 $ .92 $ .70
========== =========== =========== ===========
Earnings (Loss) Per
Share--Diluted:
Continuing
operations $ .33 $ .40 $ .84 $ .97
Discontinued
operations .03 -- .06 (.28)
---------- ----------- ----------- -----------
Earnings Per
Share--Diluted $ .36 $ .40 $ .90 $ .69
========== =========== =========== ===========
Weighted Average
Number of Shares
Outstanding--Basic 21,202 20,976 21,156 20,857
Weighted Average
Number of Shares
Outstanding--
Diluted 21,535 21,136 21,489 21,058
Consolidated Balance Sheet
- --------------------------
In thousands July 30, August 1,
2004 2003
---------- -----------
Assets
Current Assets
Cash and cash equivalents $ 130,847 $ 120,522
Cash in escrow 1,008 4,598
Accounts receivable, net 95,821 85,534
Inventories 85,998 83,676
Income tax refundable 3,640 4,806
Deferred income tax benefits 15,477 17,003
Prepaid expenses 7,842 6,107
---------- -----------
Total Current Assets 340,633 322,246
Property, Plant and Equipment, Net 120,962 115,174
Other Non-Current Assets
Goodwill 191,768 183,283
Intangibles, net 114,159 115,997
Debt issuance costs, net 5,987 7,350
Other assets 22,731 24,242
---------- -----------
$ 796,240 $ 768,292
========== ===========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 24,567 $ 20,902
Accrued liabilities 66,064 68,380
Credit facilities 2,727 2,630
Current maturities of long-term debt 432 30,403
Federal and foreign income taxes 875 865
---------- -----------
Total Current Liabilities 94,665 123,180
Long-Term Liabilities
Long-term debt, net of current maturities 246,936 247,173
Deferred income taxes 26,547 20,669
Net Liabilities of Discontinued Operations 2,818 32
Shareholders' Equity 425,274 377,238
---------- -----------
$ 796,240 $ 768,292
========== ===========
CONTACT: Esterline Corporation
Brian Keogh, 425-453-9400