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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 January 31, 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 February 24, 1995:
Common Stock, par value $.20 per share-- 6,517,504 shares.
Page 1 of 11 Pages
Exhibit Index at Page 10
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PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEET
As of January 31, 1995 and October 31, 1994
(In thousands)
<TABLE>
<CAPTION>
January 31, October 31,
1995 1994
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ASSETS (unaudited)
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<S> <C> <C>
Current Assets
Cash and equivalents $ 15,225 $ 9,076
Accounts receivable, net of allowances
of $2,218 and $2,201 for doubtful accounts 56,654 63,685
Inventories
Finished goods 6,030 6,016
Work in process 17,520 16,887
Raw materials and purchased parts 9,268 8,770
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32,818 31,673
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Deferred income taxes 13,002 13,002
Prepaid expenses 2,810 1,876
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Total Current Assets 120,509 119,312
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Property, Plant and Equipment 145,592 145,673
Accumulated depreciation 96,646 94,070
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48,946 51,603
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Cost in Excess of Net Assets Acquired 22,749 22,960
Intangibles & Other 21,628 21,437
Deferred Income Taxes 663 663
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$ 214,495 $ 215,975
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LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts payable $ 16,738 $ 18,927
Accrued liabilities 66,728 67,877
Notes payable 983 58
Current maturities of long-term debt 20,541 20,588
Federal and foreign income taxes 960 1,320
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Total Current Liabilities 105,950 108,770
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Long-Term Debt, net of current maturities 41,530 41,714
Shareholders' Equity
Common stock, par value $.20 per share,
authorized 30,000,000 shares, issued and
outstanding 6,517,504 and 6,513,057 shares 1,303 1,302
Capital in excess of par value 10,476 10,482
Retained earnings 57,149 54,951
Cumulative translation adjustment (1,913) (1,244)
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Total Shareholders' Equity 67,015 65,491
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$ 214,495 $ 215,975
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</TABLE>
See Notes to Consolidated Financial Statements
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ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended January 31, 1995 and 1994
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
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<S> <C> <C>
1995 1994
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Net Sales $ 83,332 $ 57,872
Costs and Expenses
Cost of sales 49,938 36,147
Selling, general and administrative 28,902 20,885
Interest expense, net 1,252 1,466
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80,092 58,498
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Earnings (Loss) Before Income Taxes 3,240 (626)
Income Tax Expense (Benefit) 1,042 (222)
Net Earnings (Loss) $ 2,198 $ (404)
======== ========
Net Earnings (Loss) Per Share $ .32 $ (0.06)
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
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ESTERLINE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended January 31, 1995 and 1994
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
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<S> <C> <C>
1995 1994
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Cash Flows Provided (Used) by Operating Activities
Net earnings (loss) $ 2,198 $ (404)
Depreciation and amortization 4,105 4,060
Working capital changes
Accounts receivable 7,031 5,908
Inventories (1,145) (1,361)
Prepaid expenses (934) 215
Accounts payable (2,189) (3,285)
Accrued liabilities (1,149) (3,552)
Federal and foreign income taxes (360) (268)
Other, net (735) (227)
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6,822 1,086
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Cash Flows Used by Investing Activities
Capital additions, net (698) (2,540)
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Cash Flows Provided (Used) by Financing Activities
Net change in notes payable 925 946
Repayment of long-term debt (231) (2,577)
Cumulative translation adjustment (669) 45
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25 (1,586)
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Net Increase (Decrease) in Cash and Equivalents 6,149 (3,040)
Cash and Equivalents - Beginning of Period 9,076 3,218
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Cash and Equivalents - End of Period $15,225 $ 178
======= ======
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Interest expense $ 1,949 $ 205
Income taxes 1,446 223
</TABLE>
See Notes to Consolidated Financial Statements
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ESTERLINE TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended January 31, 1995 and 1994
1. The consolidated balance sheet as of January 31, 1995 and the
consolidated statements of operations and cash flows for the three
months ended January 31, 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 first quarter of fiscal 1995 (ended January 31) were
$2.2 million, or $.32 per share, on sales of $83.3 million. This compares
with a net loss of $404,000, or $.06 per share, on sales of $57.9 million in
the first quarter of fiscal 1994. The 1994 quarter's net loss was after a
tax benefit of $222,000.
The 44% first quarter 1995 sales improvement over the year-ago quarter was
primarily due to continuing strong performance at key Automation Group
companies. Group sales in the current quarter were nearly double those of
the year-ago period, and resulted in significantly improved operating
earnings. Group performance was keyed by the operation producing automated
manufacturing equipment for the production of printed circuit boards.
Performance for the first quarter of fiscal 1995 in the Aerospace/Defense
and Instrumentation Groups also was modestly improved.
Gross margin as a percent of sales was 40.1% in 1995's first quarter,
compared with 37.5% in the first quarter of fiscal 1994. The change was
primarily due to improved business conditions and differences in product
mix of sales. Margins in all three of the Company's business groups
increased on a quarter-over-quarter basis and ranged from 39% to 41%.
Selling, general and administrative expenses in the first quarter of fiscal
1995 totaled $28.9 million, $8 million higher than in the year-ago period.
The increase was primarily due to higher selling expenses associated with
the current quarter's sales volume, and increased spending in research,
development and engineering. Interest expense was $214,000 less in the
first quarter of fiscal 1995 primarily due to lower debt levels and interest
income earned on cash balances. The effective income tax rate was 32.2% in
the current quarter, versus a 35.5% tax benefit in the year-ago quarter.
Backlog at January 31, 1995 was $88.9 million, compared with $77.3 million a
year earlier. Orders for the first quarter of fiscal 1995 were $75.4 million
compared with $60.8 million in the prior-year quarter. This improvement was
primarily attributable to the above noted strength in key Automation Group
markets. Approximately $14.8 million of company-wide backlog at
January 31, 1995 was scheduled to be shipped after fiscal 1995.
The fourth quarter 1993 restructuring, which contemplated a number of actions,
remains substantially on schedule. There were no significant actions completed
in the first quarter of fiscal 1995. Management believes that provisions
remain adequate to cover future actions based on current estimates.
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Financial Condition
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Cash and equivalents on hand increased $6.1 million during the first quarter
of fiscal 1995 to $15.2 million at January 31, 1995. The increase was
generated primarily from operations and from significant collections of
accounts receivable. Accordingly, working capital increased $4 million during
the quarter to $14.6 million. Debt at the end of the current quarter was
$63.1 million, virtually unchanged from the prior fiscal year end
(October 31, 1994).
Capital expenditures are anticipated to be approximately $12 million during
fiscal 1995, compared with $11.3 million in fiscal 1994. At January 31, 1995,
$1.6 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 January 31, 1995 of approximately $38 million
will adequately service cash requirements. Cash requirements of future
actions associated with the 1993 restructuring, 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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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 ended January 31, 1995 and 1994.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter for which
this report is filed.
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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.
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<S> <C>
Esterline Technologies Corporation
(Registrant)
Date: March 16, 1995 By: /s/ Robert W. Stevenson
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Robert W. Stevenson
Executive Vice President and
Chief Financial Officer,
Secretary and Treasurer
(Principal Financial and Accounting Officer)
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ESTERLINE TECHNOLOGIES CORPORATION
Form 10-Q Report for Fiscal Quarter Ended
January 31, 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 earnings per common 11
share for the three months ended January 31, 1995 and 1994.
27. Financial Data Schedule.
</TABLE>
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EXHIBIT 11
ESTERLINE TECHNOLOGIES CORPORATION
Computation of Earnings Per Common Share
For the Three Months Ended January 31, 1995 and 1994
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
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<S> <C> <C>
1995 1994
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Primary
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Net earnings (loss) $ 2,198 $ (404)
======== =========
Average number of common shares
outstanding 6,515 6,513
Add - net shares assumed to be issued
for stock options 322 ---
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Total average primary common
shares outstanding 6,837 6,513
======== =========
Primary net earnings (loss) per common share $ 0.32 $ (0.06)
======== =========
Fully Diluted
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Net earnings (loss) $ 2,198 $ (404)
======== =========
Average number of common shares
outstanding 6,515 6,513
Add - net shares assumed to be issued
for stock options 384 ---
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Total average common shares on
a fully diluted basis 6,899 6,513
======== =========
Fully diluted net earnings (loss) per common share $ 0.32 $ (0.06)
======== =========
Primary net earnings (loss) per common share $ 0.32 $ (0.06)
======== =========
Dilutive effect per common share None None
======== =========
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> The Schedule Contains Summary Financial Information
Extracted From the Esterline Technologies Corporation
Consolidated Balance at January 31, 1995 and the Related
Consolidated Statement of Operations for the Three
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> JAN-31-1995
<PERIOD-TYPE> 3-MOS
<CASH> 15,225
<SECURITIES> 0
<RECEIVABLES> 58,872
<ALLOWANCES> 2,218
<INVENTORY> 32,818
<CURRENT-ASSETS> 120,509
<PP&E> 145,592
<DEPRECIATION> 96,646
<TOTAL-ASSETS> 214,495
<CURRENT-LIABILITIES> 105,950
<BONDS> 41,530
0
0
<COMMON> 1,302
<OTHER-SE> 65,713
<TOTAL-LIABILITY-AND-EQUITY> 214,495
<SALES> 83,332
<TOTAL-REVENUES> 83,332
<CGS> 49,938
<TOTAL-COSTS> 49,938
<OTHER-EXPENSES> 28,902
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,252
<INCOME-PRETAX> 3,240
<INCOME-TAX> 1,042
<INCOME-CONTINUING> 2,198
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,198
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
</TABLE>
