Company to Receive $32 Million in Addition to Earlier Payments
BELLEVUE, Wash., June 28, 2007 — Esterline Corporation (NYSE:ESL www.esterline.com) today announced an agreement with its insurance carrier to settle property damage and business interruption claims related to last year’s explosion at Esterline’s UK-based countermeasure flares operation, Wallop Defence Systems. The agreement calls for a payment to Wallop of £16 million upon settlement. Including payments already received, the total settlement is equal to £24 million, or approximately $48 million.
Robert W. Cremin, Esterline's chief executive officer, said he hopes the settlement brings some closure for employees. He said, “…this has been a trying time for all Wallop employees and passing this major milestone will allow us to move forward with the rebuilding and, hopefully, healing process.”
The insurance recovery will be recorded in the company’s fiscal third quarter and is estimated to be $23 million net of tax, or $.87 per diluted share. Cremin reiterated comments he made to investors in May, reminding them that, “…we would much rather be shipping product than booking insurance proceeds.” Cremin said the settlement does not change the fundamental outlook of the company. He said, “…our earnings guidance for fiscal 2007 remains unchanged at $2.50 to $2.60 per share, plus the incremental effect from the settlement.”
Regarding plans to rebuild the damaged facility, Cremin said, “… we have begun the formal process by submitting plans to appropriate jurisdictions. We’re working very closely with our principal customer and strategic partner, the British Ministry of Defence, to provide current and future countermeasure requirements. Our hope is to have a new facility fully qualified and operational by the third or fourth quarter of fiscal ’08.”
Esterline is a leading world-wide supplier to the aerospace and defense industry specializing in three core areas: Avionics & Controls, Sensors & Systems, and Advanced Materials.
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