<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, 1995 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 May 26, 1995:
Common Stock, par value $.20 per share--6,547,218 shares.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
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ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEET
As of April 30, 1995 and October 31, 1994
(In thousands)
<TABLE>
<CAPTION>
April 30, October 31,
1995 1994
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ASSETS (unaudited)
- - ------
<S> <C> <C>
Current Assets
Cash and equivalents $ 26,166 $ 9,076
Accounts receivable, net of allowances
of $2,291 and $2,201 for doubtful accounts 51,868 63,685
Inventories
Finished goods 6,109 6,016
Work in process 20,634 16,887
Raw materials and purchased parts 10,678 8,770
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37,421 31,673
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Deferred income taxes 13,929 13,002
Prepaid expenses 2,853 1,876
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Total Current Assets 132,237 119,312
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Property, Plant and Equipment 149,191 145,673
Accumulated depreciation 99,835 94,070
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49,356 51,603
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Cost in Excess of Net Assets Acquired 22,552 22,960
Intangibles & Other 21,308 21,437
Deferred Income Taxes 416 663
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$ 225,869 $ 215,975
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LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Current Liabilities
Accounts payable $ 19,678 $ 18,927
Accrued liabilities 71,008 67,877
Notes payable 1,340 58
Current maturities of long-term debt 20,593 20,588
Federal and foreign income taxes 337 1,320
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Total Current Liabilities 112,956 108,770
Long-Term Debt, net of current maturities 41,297 41,714
Shareholders' Equity
Common stock, par value $.20 per share,
authorized 30,000,000 shares, issued and
outstanding 6,545,857 and 6,513,057 shares 1,308 1,302
Capital in excess of par value 10,515 10,482
Retained earnings 60,200 54,951
Cumulative translation adjustment (407) (1,244)
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Total Shareholders' Equity 71,616 65,491
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$ 225,869 $ 215,975
=========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
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ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months and Six Months Ended April 30, 1995 and 1994
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Net Sales $ 84,812 $ 70,867 $ 168,144 $ 128,739
Costs and Expenses
Cost of sales 50,219 43,000 100,157 79,147
Selling, general and 28,871 24,581 57,773 45,466
administrative
Interest expense, net 1,238 1,453 2,490 2,919
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80,328 69,034 160,420 127,532
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Earnings Before Income Taxes 4,484 1,833 7,724 1,207
Income Tax Expense 1,433 679 2,475 457
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Net Earnings $ 3,051 $ 1,154 $ 5,249 $ 750
========== ========= ========== ==========
Net Earnings Per Share $ .44 $ .18 $ .76 $ .12
========== ========= ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
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ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended April 30, 1995 and 1994
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
April 30,
----------------
1995 1994
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<S> <C> <C>
Cash Flows Provided (Used) by Operating Activities
Net earnings $ 5,249 $ 750
Depreciation and amortization 8,097 8,160
Deferred income taxes (680) ---
Working capital changes
Accounts receivable 11,817 3,801
Inventories (5,748) 1,025
Prepaid expenses (977) (807)
Accounts payable 751 (961)
Accrued liabilities 3,131 (1,972)
Federal and foreign income taxes (983) (212)
Other, net (890) (238)
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19,767 9,546
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Cash Flows Used by Investing Activities
Capital additions, net (4,384) (5,084)
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Cash Flows Provided (Used) by Financing Activities
Net change in notes payable 1,282 (999)
Repayment of long-term debt (412) (6,926)
Cumulative translation adjustment 837 343
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1,707 (7,582)
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Net Increase (Decrease) in Cash and Equivalents 17,090 (3,120)
Cash and Equivalents - Beginning of Period 9,076 3,218
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Cash and Equivalents - End of Period $ 26,166 $ 98
========= ========
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Interest expense $ 2,379 $ 2,113
Income taxes 4,153 932
See Notes to Consolidated Financial Statements
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</TABLE>
<PAGE> 5
ESTERLINE TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended April 30, 1995 and 1994
1. The consolidated balance sheet as of April 30, 1995 and the
consolidated statements of operations for the three months and six
months ended April 30, 1995 and 1994 and cash flows for the six
months ended April 30, 1995 and 1994 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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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
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FINANCIAL CONDITION
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Results of Operations
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Net earnings for the second quarter of fiscal 1995 (ended April 30) were
$3.1 million, or $.44 per share, on sales of $84.8 million, compared with net
earnings of $1.2 million, or $.18 per share, on sales of $70.9 million in the
year-ago quarter. For the six months ended April 30, 1995, net earnings were
$5.2 million, or $.76 per share, on sales of $168.1 million, versus net
earnings of $750,000, or $.12 per share, on sales of $128.7 million in the
prior-year period.
Continuing strong performance throughout the Automation Group in the current
quarter was the primary reason for the Company's 20% improvement in sales
volume and significant earnings advance versus the prior-year quarter.
Performance was particularly strong at the operation producing automated
manufacturing equipment for the production of printed circuit boards, as
demand for its equipment was high in U.S. and Southeast Asian markets.
Performance for the second quarter and first half periods of fiscal 1995
in the Company's other two groups, Aerospace/Defense and Instrumentation,
also was modestly improved when compared to the prior-year periods.
Gross margin as a percent of sales increased to 40% in 1995's second quarter
and first half periods, versus 39% and 38%, respectively, in the comparable
prior-year periods. These changes in gross margin percentages primarily
reflect improved business conditions and differences in product mix of sales,
principally in Automation Group companies. On a business segment basis,
gross margin percentages for the three and six months ended April 30, 1995
improved over comparable year-ago periods, and ranged from 38% to 43%.
Selling, general and administrative expenses for the three and six months
ended April 30, 1995 totaled $28.9 million and $57.8 million, respectively,
compared with $24.6 million and $45.5 million, respectively, in the year-ago
periods. Current-year expense levels continue to exceed prior-period amounts
primarily because of increased selling and other expenses associated with
higher sales volumes. However, as a percent of sales in each current-year
period, they have remained essentially stable at 34%, versus 35% in the
year-ago periods.
Interest expense for the second quarter and first half of fiscal 1995 was
$1.2 million and $2.5 million, respectively, compared with $1.5 million and
$2.9 million in the prior-year periods. The savings were primarily the result
of lower debt levels -- average debt for the first six months of fiscal 1995
was approximately $10 million lower versus the same year-ago period. The
effective income tax rate for the second quarter and first-half periods of
1995 was 32%, compared with 37% and 38%, respectively, in the year-ago periods
primarily because of the availability of foreign tax offsets.
Backlog at April 30, 1995 was $97.9 million, compared with $87.7 million a
year earlier. Orders for the second quarter of fiscal 1995 improved to
$93.8 million versus $84.2 million in the prior-year quarter primarily
because of the above noted strength in key Automation Group markets.
Approximately $18 million of company-wide backlog at April 30, 1995 was
scheduled to be shipped after fiscal 1995.
The Company's restructuring plan remains substantially on schedule as
actions to implement the plan continue. Management believes that provisions
remain adequate to cover future actions based on current estimates.
Financial Condition
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Cash and equivalents on hand increased $10.9 million during the second quarter
of fiscal 1995 to $26.2 million at April 30, 1995. The increase was generated
primarily from improved results of operations. Total debt at April 30, 1995
was $63.2 million, $3.3 million lower than a year ago and virtually unchanged
since the prior fiscal year end (October 31, 1994). However, on April 17 the
Company announced its plan to redeem its $20 million 8.25% convertible
debentures. This action was effected on May 18 using available cash.
Capital expenditures are anticipated to be approximately $12 million during
fiscal 1995, compared with $11.3 million in fiscal 1994. At April 30, 1995,
$5.1 million had been expended. Capital expenditures primarily consist of
machinery and equipment and computers.
Management believes cash on hand, funds generated from operations, and
available bank credit lines at April 30, 1995 of approximately $38 million
will adequately service cash requirements. Cash requirements of future
actions associated with the restructuring plan, net of anticipated proceeds
from asset sales, are not expected to have a material effect on the Company's
cash flows. The Company's financing arrangements contain various
restrictions, including maintenance of net worth, payment of dividends,
interest coverage, and limitations on additional borrowings.
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<PAGE> 8
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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The Company has various lawsuits and claims, both offensive and defensive, 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
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At the Company's annual meeting of shareholders held on March 8, 1995,
shareholders approved the following proposals:
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<CAPTION>
(a) The election of the following directors for three-year terms
expiring at the 1998 annual meeting:
Votes Cast
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Name For Withheld
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<S> <C> <C>
John F. Clearman 5,591,337 329,442
Edwin I. Colodny 5,586,337 334,442
Paul G. Schloemer 5,589,737 331,042
</TABLE>
Current directors whose terms will continue after the 1995
annual meeting are Gilbert W. Anderson, E. John Finn,
Robert F. Goldhammer, Wendell P. Hurlbut, Jerome J. Meyer,
and Malcolm T. Stamper.
<TABLE>
<S> <C>
(b) The amendment to the Company's 1987 Stock Option Plan
authorizing the issuance of options to purchase an additional
275,000 shares of the Company's Common Stock and increasing
the maximum shares available for grant to any individual key
employee from 300,000 to 350,000. The number of affirmative
votes on the matter was 4,559,243, the number of negative
votes was 1,278,494, and the number of abstentions was 83,042.
(c) The establishment of the Company's Non-Employee Directors'
Stock Compensation Plan authorizing the annual issuance to
each director of up to $5,000 worth of fully-paid Company
Common Stock. The number of affirmative votes on the matter
was 4,635,289, the number of negative votes was 1,200,870,
and the number of abstentions was 84,620.
(d) The selection of Deloitte & Touche LLP as independent auditors
for the fiscal year ending October 31, 1995. The number of
affirmative votes on the matter was 5,882,590, the number of
negative votes was 20,514, and the number of abstentions
was 17,675.
</TABLE>
There were no broker non-votes on any of the above proposals.
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<TABLE>
<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 six months ended
April 30, 1995 and 1994.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
A current report on Form 8-K was filed with the Securities and
Exchange Commission on April 25, 1995 with respect to the
company's public announcement of its intention to redeem its 8.25% convertible debentures on May 18, 1995.
</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: June 13, 1995 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> 10
ESTERLINE TECHNOLOGIES CORPORATION
Form 10-Q Report for Fiscal Quarter Ended
April 30, 1995
INDEX TO EXHIBITS
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<CAPTION>
Exhibit Page
Number Exhibit Number
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<S> <C> <C>
11. Schedule setting forth computation of 11
earnings per common share for the three
months and six months ended
April 30, 1995 and 1994.
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 Six Months Ended April 30, 1995 and 1994
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30, April 30, April 30,
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<S> <C> <C> <C> <C>
1995 1994 1995 1994
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Primary
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Net earnings $ 3,051 $ 1,154 $ 5,249 $ 750
======== ========= ======= =======
Average number of common
shares outstanding 6,524 6,513 6,524 6,513
Add - net shares assumed to
be issued for stock options 374 2 374 2
-------- --------- ------- -------
Total average common shares
on a primary basis 6,898 6,515 6,898 6,515
======== ========= ======= =======
Primary net earnings per
common share $ .44 $ .18 $ .76 $ .12
======== ========= ======= =======
Fully Diluted
- - -------------
Net earnings $ 3,051 $ 1,154 $ 5,249 $ 750
======== ========= ======= =======
Average number of common
shares outstanding 6,524 6,513 6,524 6,513
Add - net shares assumed
to be issued for stock
options 487 2 487 2
-------- --------- ------- -------
Total average common shares
on a fully diluted basis 7,011 6,515 7,011 6,515
======== ========= ======= =======
Fully diluted net earnings
per common share $ .43 $ .18 $ .75 $ .12
======== ========= ======= =======
Primary net earnings per
common share $ .44 $ .18 $ .76 $ .12
======== ========= ======= =======
Dilutive effect per
common share $ .01 None $ .01 None
======== ========= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The Schedule Contains Summary Financial Information
Extracted From the Esterline Technologies Corporation
Consolidated Balance at April 30, 1995 and the Related
Consolidated Statement of Operations for the Six
Months then Ended and is Qualified in its Entirety
by Reference to Such Financial Statements.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> APR-30-1995
<PERIOD-TYPE> 6-MOS
<CASH> 26,166
<SECURITIES> 0
<RECEIVABLES> 54,159
<ALLOWANCES> 2,291
<INVENTORY> 37,421
<CURRENT-ASSETS> 132,237
<PP&E> 149,191
<DEPRECIATION> 99,835
<TOTAL-ASSETS> 225,869
<CURRENT-LIABILITIES> 112,956
<BONDS> 41,297
0
0
<COMMON> 1,308
<OTHER-SE> 70,308
<TOTAL-LIABILITY-AND-EQUITY> 225,869
<SALES> 168,144
<TOTAL-REVENUES> 168,144
<CGS> 100,157
<TOTAL-COSTS> 100,157
<OTHER-EXPENSES> 57,773
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,490
<INCOME-PRETAX> 7,724
<INCOME-TAX> 2,475
<INCOME-CONTINUING> 5,249
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,249
<EPS-PRIMARY> .76
<EPS-DILUTED> .75
</TABLE>
