EX-99.1 2 a5160265ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 ------------ Esterline Reports 2Q Results from Continuing Operations; Income $17.7 Million, or $.68 Per Share, on $247.9 Million Sales; Revenues up 17%; Earnings up 29% Compared with Last Year BELLEVUE, Wash.--(BUSINESS WIRE)--June 1, 2006--Esterline Corporation (NYSE:ESL) (www.esterline.com), a leading specialty manufacturer serving aerospace/defense markets, today reported fiscal 2006 second quarter (ended April 28) income from continuing operations of $17.7 million, or $.68 per diluted share, on $247.9 million sales. Year-ago income from continuing operations was $13.7 million, or $.54 per diluted share, on sales of $211.6 million. Robert W. Cremin, Esterline CEO said, "...the results for the quarter were solid and reflect our continued ability to drive our operating efficiency while simultaneously investing in the R&D necessary to ensure the long-term health of the company." Cremin said that new order intake during the quarter continued strong, and backlog at the end of the quarter was "...a record $633 million, nearly 30% higher than last year." He noted that the company's backlog reflects only fully funded orders with firm release dates, and is a "...fairly good indicator of the company's future strength." In March 2006, Esterline completed the acquisition of Wallop Defence Systems in the United Kingdom, for approximately $58 million. Wallop, a leading international producer of military countermeasure flares, combines with Esterline's leading domestic market position. Cremin said that "...pyrotechnic know-how is a core strength that Esterline has been actively developing for many years." Due to the timing of the acquisition, Wallop had no significant impact on the quarter's performance, but Cremin said he is encouraged by early results. Research, development and engineering spending in the quarter increased to $12.9 million compared with $9.9 million for the second fiscal quarter of 2005. Cremin said, "...the increase in R&D reflects spending on new programs such as the Airbus A400M primary power distribution assembly and the pilot's overhead control panel for Boeing's new 787 Dreamliner." The effective tax rate for the second fiscal quarter of 2006 was 28.3%, before a $2.0 million reduction in previously estimated tax liabilities, the result of a favorable tax audit concluded on April 25, 2006. The effective tax rate a year ago was 30.3%. Year-to-date income from continuing operations was $26.0 million, or $1.01 per diluted share, on sales of $453.6 million. For the first six months of fiscal 2005, comparable earnings were $23.8 million, or $.95 per diluted share, on sales of $401.4 million. Net earnings in the fiscal 2006 second quarter and first half were unaffected by discontinued operations. Fiscal 2005 reported income from discontinued operations principally from the sale of the company's Fluid Regulators subsidiary. That sale resulted in a gain of approximately $7.0 million, net of tax of $2.4 million, or $.28 per diluted share, in the first quarter of 2005. Net earnings for the fiscal second quarter and first half of 2005 were $13.2 million, or $.52 per diluted share, and $30.8 million, or $1.23 per diluted share, respectively. This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should" or "will," or the negative of such terms, or other comparable terminology. These forward-looking statements are only predictions based on the current intent and expectations of the management of Esterline, are not guarantees of future performance or actions, and involve risks and uncertainties that are difficult to predict and may cause Esterline's or its industry's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. 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 risks detailed in Esterline's public filings with the Securities and Exchange Commission. ESTERLINE TECHNOLOGIES CORPORATION Consolidated Statement of Operations ------------------------------------ In thousands, except per share amounts Three months ended Six months ended April 28, April 29, April 28, April 29, 2006 2005 2006 2005 --------- --------- --------- --------- Segment Sales Avionics & Controls $ 71,864 $ 64,990 $134,306 $ 125,845 Sensors & Systems 83,177 84,541 156,647 158,915 Advanced Materials 92,898 62,061 162,651 116,624 --------- --------- --------- --------- Net Sales 247,939 211,592 453,604 401,384 Cost of Sales 167,200 143,054 310,006 274,746 --------- --------- --------- --------- 80,739 68,538 143,598 126,638 Expenses Selling, general and administrative 40,973 35,837 76,863 66,445 Research, development and engineering 12,939 9,866 23,272 19,113 --------- --------- --------- --------- Total Expenses 53,912 45,703 100,135 85,558 --------- --------- --------- --------- Operating Earnings from Continuing Operations 26,827 22,835 43,463 41,080 Other (income) expense (263) 28 (462) 66 Interest income (998) (1,025) (1,857) (1,560) Interest expense 5,790 4,097 10,295 8,779 Loss on extinguishment of debt -- -- 2,156 -- --------- --------- --------- --------- Other Expense, Net 4,529 3,100 10,132 7,285 --------- --------- --------- --------- Income from Continuing Operations Before Income Taxes 22,298 19,735 33,331 33,795 Income Tax Expense 4,307 5,974 6,863 9,938 --------- --------- --------- --------- Income from Continuing Operations Before Minority Interest 17,991 13,761 26,468 23,857 Minority Interest (332) (35) (445) (48) --------- --------- --------- --------- Income from Continuing Operations 17,659 13,726 26,023 23,809 Income (Loss) from Discontinued Operations, Net of Tax -- (562) -- 6,965 --------- --------- --------- --------- Net Earnings $ 17,659 $ 13,164 $ 26,023 $ 30,774 ========= ========= ========= ========= Earnings (Loss) Per Share -- Basic: Continuing operations $ .70 $ .55 $ 1.03 $ .97 Discontinued operations -- (.03) -- .28 --------- --------- --------- --------- Earnings Per Share -- Basic $ .70 $ .52 $ 1.03 $ 1.25 ========= ========= ========= ========= Earnings (Loss) Per Share -- Diluted: Continuing operations $ .68 $ .54 $ 1.01 $ .95 Discontinued operations -- (.02) -- .28 --------- --------- --------- --------- Earnings Per Share -- Diluted $ .68 $ .52 $ 1.01 $ 1.23 ========= ========= ========= ========= Weighted Average Number of Shares Outstanding -- Basic 25,385 25,120 25,361 24,577 Weighted Average Number of Shares Outstanding -- Diluted 25,817 25,484 25,780 24,953 Consolidated Balance Sheet -------------------------- In thousands April 28, April 29, 2006 2005 ---- ---- Assets Current Assets Cash and cash equivalents $ 46,256 $ 137,704 Cash in escrow 4,315 7,537 Short-term investments -- 45,486 Accounts receivable, net 171,236 128,212 Inventories 168,679 132,097 Deferred income tax benefits 26,672 24,601 Prepaid expenses 10,469 8,733 Other current assets -- 288 --------- --------- Total Current Assets 427,627 484,658 Property, Plant and Equipment, Net 166,679 137,349 Other Non-Current Assets Goodwill 360,784 246,032 Intangibles, net 245,845 166,593 Debt issuance costs, net 4,806 5,481 Deferred income tax benefits 17,773 9,986 Other assets 26,573 28,266 --------- --------- $1,250,087 $1,078,365 ========= ========= Liabilities and Shareholders' Equity Current Liabilities Accounts payable $ 59,975 $ 42,387 Accrued liabilities 108,790 95,388 Credit facilities 18,413 2,567 Current maturities of long-term debt 3,077 30,901 Federal and foreign income taxes 5,751 7,213 --------- --------- Total Current Liabilities 196,006 178,456 Long-Term Liabilities Long-term debt, net of current maturities 279,756 217,722 Deferred income taxes 74,806 45,280 Other liabilities 34,527 26,185 Minority Interest 3,158 2,427 Shareholders' Equity 661,834 608,295 --------- --------- $1,250,087 $1,078,365 ========= ========= CONTACT: Esterline Corporation Brian Keogh, 425-453-9400