<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended July 31, 1994 Commission file number 1-6357
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ESTERLINE TECHNOLOGIES CORPORATION
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-2595091
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10800 NE 8th Street, Bellevue, Washington 98004
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code 206/453-9400
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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
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Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of August 31, 1994:
Common Stock, par value $.20 per share--6,512,641 shares.
Page 1 of 10 Pages
Exhibit Index at Page 9
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
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ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEET
As of July 31, 1994 and October 31, 1993
(In thousands)
<TABLE>
<CAPTION>
July 31, October 31,
1994 1993
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ASSETS (unaudited)
- - ------
<S> <C> <C>
Current Assets
Cash and equivalents $ 814 $ 3,218
Accounts receivable, net of allowances
of $2,597 and $2,417 for doubtful accounts 45,493 45,778
Inventories
Finished goods 8,319 9,508
Work in process 18,743 17,340
Raw materials and purchased parts 12,590 11,582
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39,652 38,430
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Deferred income taxes 7,271 7,882
Prepaid expenses 1,957 1,838
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Total Current Assets 95,187 97,146
Property, Plant and Equipment 148,610 140,891
Accumulated depreciation 92,846 84,326
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55,764 56,565
Cost in Excess of Net Assets Acquired 23,062 23,802
Intangibles & Other 23,085 23,679
Deferred Income Taxes 4,140 4,480
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$ 201,238 $ 205,672
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LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Current Liabilities
Accounts payable $ 16,017 $ 14,647
Accrued liabilities 58,543 60,063
Notes payable 5,264 5,157
Current maturities of long-term debt 477 7,062
Federal and foreign income taxes 348 1,153
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Total Current Liabilities 80,649 88,082
Long-Term Debt, net of current maturities 61,885 62,267
Shareholders' Equity
Common stock, par value $.20 per share,
authorized 30,000,000 shares, issued and
outstanding 6,512,641 shares 1,302 1,302
Capital in excess of par value 10,482 10,482
Retained earnings 49,653 47,388
Cumulative translation adjustment (2,733) (3,849)
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Total Shareholders' Equity 58,704 55,323
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$ 201,238 $ 205,672
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</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE> 3
ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months and Nine Months Ended July 31, 1994 and 1993
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
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<S> <C> <C> <C> <C>
1994 1993 1994 1993
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Net Sales $ 71,676 $ 69,131 $ 200,415 $ 208,043
Costs and Expenses
Cost of sales 43,180 42,401 122,327 128,614
Selling, general and administrative 24,728 24,550 70,194 72,774
Interest expense, net 1,390 1,508 4,309 4,629
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69,298 68,459 196,830 206,017
----------- ----------- ----------- -----------
Earnings Before Income Taxes 2,378 672 3,585 2,026
Income Tax Expense 863 268 1,320 808
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Net Earnings $ 1,515 $ 404 $ 2,265 $ 1,218
=========== =========== =========== ===========
Net Earnings Per Share $ .23 $ .06 $ .35 $ .18
=========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE> 4
ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Nine Months Ended July 31, 1994 and 1993
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
July 31,
--------------------------
<S> <C> <C>
1994 1993
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Cash Flows Provided (Used) by Operating Activities
Net earnings $ 2,265 $ 1,218
Depreciation and amortization 12,275 14,040
Deferred income taxes 951 (287)
Working capital changes
Accounts receivable 285 5,907
Inventories (1,222) 183
Prepaid expenses (119) (407)
Accounts payable 1,370 (2,620)
Accrued liabilities (1,520) (5,510)
Federal and foreign income taxes (805) (1,894)
Other, net (1,033) (1,933)
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12,447 8,697
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Cash Flows Used by Investing Activities
Capital additions, net (9,107) (6,442)
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Cash Flows Provided (Used) by Financing Activities
Net change in notes payable 107 3,999
Repayment of long-term debt (6,967) (7,055)
Cumulative translation adjustment 1,116 (1,920)
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(5,744) (4,976)
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Net Increase (Decrease) in Cash and Equivalents (2,404) (2,721)
Cash and Equivalents - Beginning of Period 3,218 3,117
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Cash and Equivalents - End of Period $ 814 $ 396
=========== ===========
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Interest expense $ 4,033 $ 4,147
Income taxes 2,204 2,129
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE> 5
ESTERLINE TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended July 31, 1994 and 1993
1. The consolidated balance sheet as of July 31, 1994 and
the consolidated statements of operations for the
three months and nine months ended July 31, 1994 and
1993 and cash flows for the nine months ended July 31, 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.
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<PAGE> 6
Item 2. Management's Discussion and Analysis of Results of Operations
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and Financial Condition
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Results of Operations
- - ---------------------
Net earnings for the third quarter of fiscal 1994 (ended July 31) were
$1.5 million, or $.23 per share, on sales of
$71.7 million, compared with net earnings of $404,000, or
$.06 per share, on sales of $69.1 million in the year-ago
quarter. For the nine months ended July 31, 1994, net
earnings were $2.3 million, or $.35 per share, on sales of
$200.4 million, compared with net earnings of $1.2 million,
or $.18 per share, on sales of $208 million in the prior-
year period. Earnings in both fiscal 1994 periods reflect
lower amortization expense resulting from a restructuring
plan effected at the end of fiscal 1993.
Performance in the Automation Group improved as group
markets continued to strengthen, and as a result, sales and
profitability for the current quarter and year-to-date
periods were ahead of comparable prior-year periods. Sales
and operating earnings in the Instrumentation Group improved
slightly during the third quarter, and were lower in the
Aerospace and Defense Group.
Company-wide gross margin as a percent of sales for the
quarter and nine months ended July 31, 1994 increased to 40%
and 39%, respectively, compared with 39% and 38% for the
same year-ago periods. Individual operating group gross
margin percentages ranged from 37% to 41%. Selling, general
and administrative expenses in 1994's third quarter totaled
$24.7 million and were slightly higher than the prior-year
quarter. However, for the nine months ended July 31, 1994,
these expenses were $2.6 million lower than a year ago,
primarily due to reduced sales commissions resulting from
the lower sales level in the first quarter of 1994, reduced
amortization expense and continuing cost containment
efforts. Interest expense was $118,000 lower in the third
quarter of 1994 compared with the same prior-year quarter.
Effective income tax rates for the third quarter and nine-month
periods of 1994 were 36% and 37%, respectively, compared with 40%
for the yearago periods.
Order input in the third quarter of 1994 totaled
$90.5 million, compared with $64.4 million in the prior-year
quarter. For the nine months ended July 31, 1994, order
input was $235.4 million, compared with $189.6 million a year
earlier. The increases were primarily attributable to
continued strengthening in domestic markets for key
Automation Group operations and to the favorable timing of
longer-term orders in the Aerospace and Defense Group.
Backlog at July 31, 1994 was $106.4 million, compared with $78.8
million a year earlier. At July 31, 1994, $51 million of
Company-wide backlog was scheduled to be delivered after
fiscal 1994.
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<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, $17.7 million is
related to actions completed prior to July 31, 1994,
including the write-off of intangible assets, employee
severance and the sale of assets (excluding plant) of a
subsidiary. The remaining $22.9 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.
Financial Condition
- - -------------------
Cash requirements in connection with the fourth quarter 1993
restructuring plan have not been significant, and on an
overall basis, are not anticipated to be significant.
The Company's total debt and working capital increased
during the third quarter to $67.6 million and $14.5 million,
respectively, primarily due to increased levels of inventory
and receivables offset by a slight increase in notes
payable. Capital expenditures are anticipated to be
approximately $12 million during fiscal 1994, compared with
$9.6 million in fiscal 1993. At July 31, 1994, $8.4 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 July 31, 1994
consisted of cash on hand of $814,000, plus approximately
$33 million available under shortterm commitments with domestic
and foreign banks.
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<PAGE> 8
PART II - OTHER INFORMATION
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<CAPTION>
Item 6. Exhibits and Reports on Form 8-K
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<S> <C>
(a) Exhibits.
11. Schedule setting forth computation of earnings
per common share for the three months and nine
months ended July 31, 1994 and 1993.
27. Financial Data Schedule.
(b) No reports on Form 8-K were filed during the
quarter for which this report is filed.
</TABLE>
SIGNATURES
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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: September 12, 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>
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<PAGE> 9
ESTERLINE TECHNOLOGIES CORPORATION
Form 10-Q Report for Fiscal Quarter Ended
July 31, 1994
INDEX TO EXHIBITS
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<TABLE>
<CAPTION>
Exhibit Page
Number Exhibit Number
- - ------ ------- ------
<S> <C> <C>
11 Schedule setting forth computation of earnings per common 10
share for the three months and nine months
ended July 31, 1994 and 1993.
27 Financial Data Schedule.
</TABLE>
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<PAGE> 1
EXHIBIT 11
ESTERLINE TECHNOLOGIES CORPORATION
Computation of Earnings Per Common Share
For the Three Months and Nine Months Ended July 31, 1994 and 1993
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
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<S> <C> <C> <C> <C>
1994 1993 1994 1993
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Primary
- - -------
Net earnings $ 1,515 $ 404 $ 2,265 $ 1,218
=========== =========== =========== ===========
Average number of common shares
outstanding 6,513 6,511 6,513 6,511
Add - net shares assumed to be issued
for stock options 6 91 6 91
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Total average primary common
shares outstanding 6,519 6,602 6,519 6,602
=========== =========== =========== ===========
Primary net earnings per
common share $ .23 $ .06 $ .35 $ .18
Fully Diluted
- - -------------
Net earnings $ 1,515 $ 404 $ 2,265 $ 1,218
Add - interest on convertible debentures
net of federal income taxes 268 268 804 804
----------- ----------- ----------- -----------
Net earnings and interest on
convertible debentures, net $ 1,783 $ 672 $ 3,069 $ 2,022
=========== =========== =========== ===========
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 118 91 118 91
Add - shares assumed to be issued on
conversion of convertible debentures 504 504 504 504
----------- ----------- ----------- -----------
Total average common shares on
a fully diluted basis 7,135 7,106 7,135 7,106
=========== =========== =========== ===========
Fully diluted net earnings per
common share $ .25 $ .09 $ .43 $ .28
=========== =========== =========== ===========
Primary net earnings per
common share $ .23 $ .06 $ .35 $ .18
=========== =========== =========== ===========
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.
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The Schedule Contains Summary Financial Information
Extracted From the Esterline Technologies Corporation
Consolidated Balance at July 31, 1994 and the Related
Consolidated Statement of Operations for the Nine
Months then Ended and is Qualified in its Entirety
by Reference to Such Financial Statements.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-START> NOV-01-1993
<PERIOD-END> JUL-31-1994
<PERIOD-TYPE> 9-MOS
<CASH> 814
<SECURITIES> 0
<RECEIVABLES> 48,090
<ALLOWANCES> 2,597
<INVENTORY> 39,652
<CURRENT-ASSETS> 95,187
<PP&E> 148,610
<DEPRECIATION> 92,846
<TOTAL-ASSETS> 201,238
<CURRENT-LIABILITIES> 80,649
<BONDS> 61,885
0
0
<COMMON> 1,302
<OTHER-SE> 57,402
<TOTAL-LIABILITY-AND-EQUITY> 201,238
<SALES> 200,415
<TOTAL-REVENUES> 200,415
<CGS> 122,327
<TOTAL-COSTS> 122,327
<OTHER-EXPENSES> 70,194
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,309
<INCOME-PRETAX> 3,585
<INCOME-TAX> 1,320
<INCOME-CONTINUING> 2,265
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,265
<EPS-PRIMARY> .35
<EPS-DILUTED> .43
</TABLE>
