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FOR IMMEDIATE RELEASE
Esterline Reports 3Q Earnings of $8.4 Million on $140.5
Million Sales
EPS of $.40 Includes $.09 Gain from Currency Hedging
Associated with Recent Acquisition
BELLEVUE, Wash., 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 £55.0 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.
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Consolidated Statement of Operations
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