<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended April 30, 1994 Commission file number 1-6357
-------------- ------
ESTERLINE TECHNOLOGIES CORPORATION
----------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-2595091
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10800 NE 8th Street, Bellevue, Washington 98004
- - ----------------------------------------- -----
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code 206/453-9400
------------
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
------ -----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of May 27, 1994:
Common Stock, par value $.20 per share--6,512,641 shares.
Page 1 of 11 Pages
Exhibit Index at Page 10
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
- - ------- --------------------
ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEET
As of April 30, 1994 and October 31, 1993
(In thousands)
<TABLE>
<CAPTION>
April 30, October 31,
1994 1993
-------- -------
ASSETS (unaudited)
- - ------
<S> <C> <C>
Current Assets
Cash and equivalents $ 98 $ 3,218
Accounts receivable,
net of allowances
of $2,486 and $2,417
for doubtful accounts 41,977 45,778
Inventories
Finished goods 8,881 9,508
Work in process 17,813 17,340
Raw materials and purchased parts 10,711 11,582
-------- --------
37,405 38,430
-------- --------
Deferred income taxes 7,882 7,882
Prepaid expenses 2,645 1,838
-------- --------
Total Current Assets 90,007 97,146
Property, Plant and Equipment 141,623 140,891
Accumulated depreciation 86,539 84,326
-------- --------
55,084 56,565
Cost in Excess of Net Assets Acquired 23,263 23,802
Intangibles & Other 22,861 23,679
Deferred Income Taxes 4,480 4,480
-------- --------
$195,695 $205,672
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Current Liabilities
Accounts payable $ 13,686 $ 14,647
Accrued liabilities 58,091 60,063
Notes payable 4,158 5,157
Current maturities of long-term debt 463 7,062
Federal and foreign income taxes 941 1,153
-------- --------
Total Current Liabilities 77,339 88,082
Long-Term Debt, net of current
maturities 61,940 62,267
Shareholders' Equity
Common stock, par value $.20
per share, authorized 30,000,000
shares, issued and outstanding
6,512,641 shares 1,302 1,302
Capital in excess of par value 10,482 10,482
Retained earnings 48,138 47,388
Cumulative translation adjustment (3,506) (3,849)
-------- --------
Total Shareholders' Equity 56,416 55,323
-------- --------
$195,695 $205,672
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
-2-
<PAGE> 3
ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months and Six Months Ended April 30, 1994 and 1993
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
-------------------- --------------------
<S> <C> <C> <C> <C>
1994 1993 1994 1993
--------- --------- --------- ---------
Net Sales $ 70,867 $ 71,588 $ 128,739 $ 138,912
Costs and Expenses
Cost of sales 43,000 44,300 79,147 86,213
Selling, general and administrative 24,581 24,934 45,466 48,224
Interest expense, net 1,453 1,552 2,919 3,121
--------- --------- --------- ---------
69,034 70,786 127,532 137,558
--------- --------- --------- ---------
Earnings Before Income Taxes 1,833 802 1,207 1,354
Income Tax Expense 679 319 457 540
--------- --------- --------- ---------
Net Earnings $ 1,154 $ 483 $ 750 $ 814
========= ========= ========= =========
Net Earnings Per Share $ 0.18 $ 0.07 $ 0.12 $ 0.12
========= ========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements
-3-
<PAGE> 4
ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended April 30, 1994 and 1993
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
April 30,
----------------------
<S> <C> <C>
1994 1993
--------- --------
Cash Flows Provided (Used) by Operating Activities
Net earnings $ 750 $ 814
Depreciation and amortization 8,160 9,315
Deferred income taxes --- (287)
Working capital changes
Accounts receivable 3,801 6,223
Inventories 1,025 (1,581)
Prepaid expenses (807) (834)
Accounts payable (961) (1,487)
Accrued liabilities (1,972) (3,726)
Federal and foreign income taxes (212) (1,813)
Other, net (238) (623)
--------- ---------
9,546 6,001
--------- ---------
Cash Flows Used by Investing Activities
Capital additions, net (5,084) (3,656)
--------- ---------
Cash Flows Provided (Used) by Financing Activities
Net change in notes payable (999) 1,646
Repayment of long-term debt (6,926) (4,573)
Cumulative translation adjustment 343 (625)
--------- ---------
(7,582) (3,552)
--------- ---------
Net Increase (Decrease) in Cash and Equivalents (3,120) (1,207)
Cash and Equivalents - Beginning of Period 3,218 3,117
--------- ---------
Cash and Equivalents - End of Period $ 98 $ 1,910
========= =========
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Interest expense $ 2,113 $ 2,251
Income taxes 932 2,359
</TABLE>
See Notes to Consolidated Financial Statements
-4-
<PAGE> 5
ESTERLINE TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended April 30, 1994 and 1993
1. The consolidated balance sheet as of April 30, 1994 and
the consolidated statements of operations for the three
months and six months ended April 30, 1994 and 1993 and
cash flows for the six months ended April 30, 1994 and
1993 are unaudited, but in the opinion of management all
adjustments necessary to present fairly the financial
statements referred to above have been made, none of
which were other than normal recurring accruals.
-5-
<PAGE> 6
Item 2. Management's Discussion and Analysis of Results of Operations and
- - ------- -----------------------------------------------------------------
Financial Condition
-------------------
Results of Operations
- - ---------------------
Net earnings for the second quarter of fiscal 1994 (ended
April 30) were $1.2 million, or $.18 per share, on sales of
$70.9 million, compared with net earnings of $483,000, or $.07
per share, on sales of $71.6 million in the year-ago quarter.
Earnings increased on substantially level sales primarily due
to improved margins on favorable product sales mix and reduced
amortization expense as a result of the write-off of
intangible assets associated with the fourth quarter 1993
restructuring plan. For the six months ended April 30, 1994,
net earnings were $750,000, or $.12 per share, on sales of
$128.7 million, compared with net earnings of $814,000, or
$.12 per share, on sales of $138.9 million in the prior-year
period.
Second quarter 1994 sales in each of the Company's three
business segments were essentially level compared with the
prior-year quarter, but improved compared with first quarter
1994's exceptionally low sales volume. For the six months
ended April 30, 1994, individual group sales were
approximately 7% lower than a year earlier. Recent
strengthening in Automation Group markets is reflected in
improved group operating earnings for both the three- and six-
month periods ended April 30, 1994. In the Instrumentation
Group, operating earnings for the current quarter and year-to-
date periods decreased primarily due to continuing competitive
pressures in the utilities and industrial manufacturing
markets.
Company-wide gross margin as a percent of sales for the three
months ended April 30, 1994 improved to 39.3% compared with
38.1% for the year-ago period. Individual operating group
gross margin percentages ranged from 38% to 41%. Selling,
general and administrative expenses in 1994's second quarter
decreased $353,000 from the prior year. For the first-half
periods, these expenses were $2.8 million lower than a year
ago. The decreases are primarily due to reduced sales
commissions resulting from the lower sales level in the first
quarter of 1994, and to reduced amortization expense resulting
from the 1993 restructuring plan and continuing cost
containment efforts. Interest expense was $99,000 lower in
the second quarter of 1994 compared with the same prior-year
quarter due to lower debt levels. Effective income tax rates
for the second quarter and first half of 1994 were 37% and
38%, respectively, compared with 40% for the year-ago periods.
Order input in the second quarter of 1994 totaled
$84.2 million, compared with $62.6 million in the prior-year
quarter. For the first six months of 1994, order input was
$144.9 million, compared with $125.2 million a year earlier.
The increases are primarily attributable to a pickup in
domestic markets for key Automation Group operations and to
the favorable timing of receipt of long lead-time orders in
the Aerospace and Defense Group. Backlog at April 30, 1994
was $87.7 million, compared with $83.6 million a year ago and
$77.3 million at the beginning of the current quarter. At
April 30, 1994, Company-wide backlog expected to be delivered
after fiscal 1994 was $24 million.
-6-
<PAGE> 7
The Company's fourth quarter 1993 restructuring plan remains
substantially on schedule. Of the $40.6 million pre-tax
restructuring charge recorded in fiscal 1993, $16 million is
related to actions completed prior to April 30, 1994,
including the write-off of intangible assets and the sale of
assets (excluding plant) of a subsidiary, Republic Electronics
Co. The remaining $24.6 million relates to ongoing actions
which, in management's opinion, is adequate based on current
cost estimates and includes the sale or shutdown of certain
small operations, anticipated losses on sale of vacant
facilities, employee severance, and consolidation of
facilities for increased efficiency.
Financial Condition
- - -------------------
Cash requirements in connection with the fourth quarter 1993
restructuring plan have not been significant, and in the case
of the Republic sale, proceeds exceeded out-of-pocket sale
costs. On an overall basis, no significant cash requirement
as a result of the restructuring is anticipated.
The Company's total debt at April 30, 1994 was $66.6 million,
a reduction during 1994's second quarter of $6.3 million which
was financed by cash generated from operations and with
proceeds from the Republic sale discussed above. Working
capital increased $2.8 million during the second quarter to
$12.7 million primarily due to paydown of current debt,
partially with proceeds from the Republic sale. Capital
expenditures are anticipated to be approximately $10 million
during fiscal 1994, compared with $9.6 million in fiscal 1993.
At April 30, 1994, $5 million had been expended. Capital
expenditures primarily consist of machinery and equipment and
computers. The Company expects to finance its foreseeable
working capital requirements and capital expenditures from
available cash resources, including bank credit lines and
funds generated from operations. Total funds available at
April 30, 1994 consisted of cash on hand of $98,000, plus
approximately $34 million available under short-term
commitments with domestic and foreign banks.
-7-
<PAGE> 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- - ------- -----------------
In late 1992, Korry Electronics received a subpoena for
records from the Department of Defense, Office of the
Inspector General, relating to a government investigation
focusing on whether Korry properly certified that certain
switches used in military equipment were in compliance with
applicable specifications and testing standards. Without
admission of any wrongdoing on Korry's part, in April 1994 the
government and Korry settled the matter for $250,000.
The Company has various lawsuits, claims, investigations and
contingent liabilities arising from the conduct of business,
including those associated with government contracting
activities, none of which, in the opinion of management, is
expected to have a material effect on the Company's financial
position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
- - ------- ---------------------------------------------------
At the Company's annual meeting of shareholders held on
March 30, 1994, shareholders approved the following proposals:
(a) The election of the following persons as directors for
the terms indicated:
<TABLE>
<CAPTION>
Votes Cast
----------
Name Term For Withheld
---- ---- --- --------
<S> <C> <C> <C>
Gilbert W. Anderson 3 Years 5,755,698 56,726
Wendell P. Hurlbut 3 Years 5,758,331 54,093
Paul G. Schloemer 1 Year 5,757,548 54,876
Malcolm T. Stamper 3 Years 5,758,073 54,351
</TABLE>
(b) The selection of Deloitte & Touche as independent
auditors for the fiscal year ending October 31, 1994.
The number of affirmative votes on the matter was
5,776,990, the number of negative votes was 15,979,
and the number of abstentions was 19,455.
-8-
<PAGE> 9
<TABLE>
<CAPTION>
Item 6. Exhibits and Reports on Form 8-K
- - ------- --------------------------------
<S> <C>
(a) Exhibits.
11. Schedule setting forth computation of earnings
per common share for the three months and six
months ended April 30, 1994 and 1993.
(b) No reports on Form 8-K were filed during the
quarter for which this report is filed.
</TABLE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
<TABLE>
<S> <C>
Esterline Technologies Corporation
(Registrant)
Date: June 13, 1994 By: /s/ Robert W. Stevenson
------------------------
Robert W. Stevenson
Executive Vice President and
Chief Financial Officer,
Secretary and Treasurer
(Principal Financial and Accounting Officer)
</TABLE>
-9-
<PAGE> 10
ESTERLINE TECHNOLOGIES CORPORATION
Form 10-Q Report for Fiscal Quarter Ended
April 30, 1994
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit Page
Number Exhibit Number
- - ------ ------- ------
<S> <C> <C>
11 Schedule setting forth computation of earnings per common 11
share for the three months and six months ended April 30, 1994
and 1993.
</TABLE>
-10-
<PAGE> 1
EXHIBIT 11
ESTERLINE TECHNOLOGIES CORPORATION
Computation of Earnings Per Common Share
For the Three Months and Six Months Ended April 30, 1994 and 1993
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
-------------------- --------------------
<S> <C> <C> <C> <C>
1994 1993 1994 1993
--------- --------- --------- ---------
Primary
- - -------
Net earnings $ 1,154 $ 483 $ 750 $ 814
========= ========= ========= =========
Average number of common shares
outstanding 6,513 6,511 6,513 6,511
Add - net shares assumed to be issued
for stock options 2 122 2 122
--------- --------- --------- ---------
Total average primary common
shares outstanding 6,515 6,633 6,515 6,633
========= ========= ========= =========
Primary net earnings per
common share $ 0.18 $ 0.07 $ 0.12 $ 0.12
========= ========= ========= =========
Fully Diluted
- - -------------
Net earnings $ 1,154 $ 483 $ 750 $ 814
Add - interest on convertible debentures
net of federal income taxes 268 272 536 544
--------- --------- --------- ---------
Net earnings and interest on
convertible debentures, net $ 1,422 $ 755 $ 1,286 $ 1,358
========= ========= ========= =========
Average number of common shares
outstanding (above) 6,513 6,511 6,513 6,511
Add - net shares assumed to be issued
for stock options 2 122 2 122
Add - shares assumed to be issued on
conversion of convertible
debentures 504 504 504 504
--------- --------- --------- ---------
Total average common shares on
a fully diluted basis 7,019 7,137 7,019 7,137
========= ========= ========= =========
Fully diluted net earnings per
common share $ 0.20 $ 0.11 $ 0.18 $ 0.19
========= ========= ========= =========
Primary net earnings per
common share $ 0.18 $ 0.07 $ 0.12 $ 0.12
========= ========= ========= =========
Dilutive effect per common share None None None None
========= ========= ========= =========
</TABLE>
Note: The computation of earnings per share on a fully
diluted basis results in earnings per share which are
anti-dilutive in all periods.
-11-
