UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 4, 2009
ESCO TECHNOLOGIES INC.
(Exact Name of Registrant as Specified in Charter)
Missouri 1-10596 43-1554045
(State or Other (Commission (I.R.S. Employer
Jurisdiction of Incorporation) File Number) Identification No.)
9900A Clayton Road, St. Louis, Missouri 63124-1186
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 314-213-7200
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2 (b) under the
Exchange Act (17 CFR 240.14d-2 (b))
[ ] Pre-commencement communications pursuant to Rule 13e-4 (c) under the
Exchange Act (17 CFR 240.113d-4 (c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Today, August 4, 2009, the Registrant is issuing a press release (furnished
herewith as Exhibit 99.1 to this report) announcing its fiscal year 2009 third
quarter financial and operating results. See Item 7.01, Regulation FD Disclosure
below.
ITEM 7.01 REGULATION FD DISCLOSURE
Today, the Registrant is issuing a press release (Exhibit 99.1) announcing its
fiscal year 2009 third quarter financial and operating results. The Registrant
will conduct a related Webcast conference call today at 4:00 p.m. central time.
This press release will be posted on the Registrant's web site located at
http://www.escotechnologies.com. It can be viewed through the "Investor
Relations" page of the web site under the tab "Press Releases", although the
Registrant reserves the right to discontinue that availability at any time.
NON-GAAP FINANCIAL MEASURES
The press release furnished herewith as Exhibit 99.1 contains financial measures
and financial terms not calculated in accordance with generally accepted
accounting principles in the United States of America ("GAAP") in order to
provide investors and management with an alternative method for assessing the
Registrant's operating results in a manner that is focused on the performance of
the Registrant's ongoing operations. The Registrant has provided definitions
below for the non-GAAP financial measures utilized in the press release,
together with an explanation of why management uses these measures, and why
management believes that these non-GAAP financial measures are useful to
investors. The press release uses the non-GAAP financial measures of EBIT, EBIT
margin, "operational" EPS, USG segment "operational" EBIT, EPS-"Operational"
Basis and EPS-Adjusted Basis.
The Registrant defines EBIT as earnings before interest and taxes from
continuing operations. The Registrant defines EBIT margin as EBIT as a percent
of net sales. The Registrant's management evaluates the performance of its
operating segments based on EBIT and EBIT margin, and believes that EBIT and
EBIT margin are useful to investors to demonstrate the operational profitability
of the Registrant's business segments by excluding interest and taxes, which are
generally accounted for across the entire Registrant on a consolidated basis.
EBIT is also one of the measures used by management in determining resource
allocations within the Registrant and incentive compensation. The Registrant
defines each of "operational" EPS and EPS-"Operational" Basis as EPS-GAAP
exclusive of Aclara RF facility exit/relocation costs. The Registrant defines
USG segment "operational" EBIT as Utility Solutions Group EBIT exclusive of
Aclara RF facility exit/relocation costs. The Registrant defines EPS-Adjusted
Basis as EPS-GAAP exclusive of pre-tax intangible asset amortization expense
related to TWACS NG software, purchase accounting intangible asset amortization
related to the Registrant's acquisitions within the past three years, the
expense related to the purchase accounting step-up of Doble Engineering Company
inventory, and the Aclara RF facility exit/relocation costs.
The Registrant's management believes using "operational" EPS, USG segment
"operational" EBIT, EPS-"Operational" Basis and EPS-Adjusted Basis as financial
measures is important for management and investors to understand the Company's
operations and its ability to service its debt. The Registrant believes that the
presentation of these operational measures provides important supplemental
information to management and investors regarding financial and business trends
relating to the Registrant's financial condition and results of operations. The
Registrant's management believes that these measures provide an alternative
method for assessing the Registrant's expected future performance that is useful
because they facilitate comparisons with other companies in the Utility
Solutions Group segment industry, many of which use similar non-GAAP financial
measures to supplement their GAAP results. The Registrant provides this
information to investors to enable them to perform additional analyses of
present and future operating performance, compare the Registrant to other
companies, and evaluate the Registrant's ongoing financial operations.
The presentation of the information described above is intended to supplement
investors' understanding of the Registrant's operating performance. The
Registrant's non-GAAP financial measures may not be comparable to other
companies' non-GAAP financial performance measures. Furthermore, these measures
are not intended to replace net earnings (loss), cash flows, financial position,
comprehensive income (loss), or any other measure as determined in accordance
with GAAP.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
Exhibit No. Description of Exhibit
99.1 Press Release dated August 4, 2009
OTHER MATTERS
The information in this report furnished pursuant to Item 2.02 and Item 7.01,
including Exhibit 99.1, shall not be deemed to be "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934 as amended ("Exchange Act") or
otherwise subject to the liabilities of that section, unless the Registrant
incorporates it by reference into a filing under the Securities Act of 1933 as
amended or the Exchange Act.
SIGNATURE
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.
ESCO TECHNOLOGIES INC.
Dated: August 4, 2009 By: /s/ G.E. Muenster
G.E. Muenster
Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description of Exhibit
99.1 Press Release dated August 4, 2009
Exhibit 99.1
NEWS FROM ESCO TECHNOLOGIES
For more information contact: For media inquiries:
Patricia K. Moore David P. Garino
Director, Investor Relations (314) 982-0551
ESCO Technologies Inc.
(314) 213-7277
ESCO ANNOUNCES THIRD QUARTER RESULTS
ST. LOUIS, August 4, 2009 - ESCO Technologies Inc. (NYSE: ESE) today
announced its results for the third quarter ended June 30, 2009.
Within this release, references to "quarters" and "year-to-date" (YTD)
relate to the fiscal quarters and nine-month periods ended June 30 for the
respective fiscal years noted.
Net earnings and EPS are presented from "Continuing Operations" and
"Discontinued Operations." Continuing Operations represent the results of the
ongoing businesses of the Company. Discontinued Operations represent the results
of Comtrak which was sold in March 2009 and the filtration business of Filtertek
which was sold in November 2007 (first quarter fiscal 2008).
The results for the third quarter ended June 30, 2009 include a pretax
charge of $2.3 million, or $0.07 per share after tax, related to the Aclara RF
facility relocation which was completed in June. Management believes adding back
this cost to the quarterly earnings results ("operational" basis) is a more
relevant measure for investors to understand the Company's ongoing operating
results for the current period.
The third quarter effective tax rate contributed positively to both the
2009 and 2008 results of operations, and was 23.1 percent and 23.2 percent in
third quarters of 2009 and 2008, respectively. The favorable rates were the
result of approximately $2 million in income tax benefits realized in each of
the noted periods.
The following discussion of the 2009 results compared to 2008 is based on
the "operational" amounts for 2009.
2009 vs. 2008 Highlights - Continuing Operations
- ------------------------------------------------
o Third quarter 2009 "operational" EPS was $0.49 per share compared to $0.47
per share in 2008, reflecting a 4.3 percent increase in the current period.
GAAP EPS was $0.42 per share for the 2009 third quarter reflecting the RF
facility relocation charges.
o YTD "operational" EPS was $1.11 per share in 2009 compared to $1.05 per
share in 2008. The 2008 YTD EPS amount includes a $0.20 per share
contribution from the recognition of the PG&E / TWACS NG software
deferred revenue described below.
o The effective tax rates in the third quarters of 2009 and 2008 were both
favorably impacted by approximately $2 million in income tax benefits,
resulting in comparable tax rates of 23.1 percent and 23.2 percent.
o Sales decreased 2.1 percent in the third quarter, but increased 6.8 percent
YTD.
o Cash flow from operating activities generated $17.1 million during the
third quarter, and $37 million YTD. As a result, net debt outstanding was
reduced to $165.4 million at June 30, 2009 reflecting a leverage ratio of
1.92x.
o Entered orders were $157.6 million in the third quarter, reflecting a
book-to-bill ratio of 106 percent, and YTD entered orders were $453.8
million, or 102 percent of YTD sales.
o Orders in the third quarter for Aclara RF AMI gas products with PG&E were
$18.1 million bringing total gas product orders to approximately 3.4
million units and $193 million to date.
o Orders for RF AMI products with New York City Water were $13.3 million in
the quarter, bringing the total New York City Water project to 427,000
units and $34.3 million to date.
o Orders of Aclara PLS AMI products in the 2009 third quarter were $46.9
million, reflecting the highest quarterly order amount at PLS in two years.
o Aclara PLS orders from COOP's and Muni's were $39.1 million in the quarter,
and $69.3 million YTD, bringing total YTD Aclara PLS orders to $88.6
million, including $5.4 million of load control / demand response devices.
Chairman's Commentary
- ---------------------
Vic Richey, Chairman and Chief Executive Officer, commented, "I am pleased
with our operating results during the quarter and year-to-date, especially given
today's challenging global economy. While several of our end markets continued
to see a push-out of product deliveries, mainly commercial aerospace and Doble
hardware, we were able to achieve the majority of our internal operating goals.
"Our Filtration and Test businesses continue to maintain their focus on
appropriate cost structures, and we are extremely confident that we will come
out the other side of this unprecedented downturn stronger and more profitable
than before.
"Our Aclara group continues to see solid order growth, evidenced by the
positive book-to-bill ratio for the quarter and the year. While pleased with the
strong order book, we, like others in the AMI space, have experienced a push-out
of some expected orders and sales as a result of the Government's planned
Stimulus spending. Several of our customers have told us that they are waiting
on placing orders until they fully clarify their position with the DOE on how
and when to effectively proceed with their infrastructure spending. The
customers' goal is to maximize the impact of the available grant money.
"As a result, while the confidence in our longer-term outlook remains
bullish, we believe the overall impact of the Stimulus funding is having a
negative impact on the near term. We are actively engaged in assisting several
AMI customers in navigating through the grant process, and we are expecting that
once the administrative process is completed, we will benefit from this program.
"While we continue to aggressively manage our operational cost structure
through regular and detailed planning meetings with our Management teams, the
uncertainties of today's macro environment and the delays caused by the Stimulus
program are causing us to take a more conservative earnings posture as we
address the last two months of 2009. As a result, and as discussed later in this
release, we are adjusting our total year expectations to reflect this modest
level of uncertainty.
"Despite today's economic conditions, we are maintaining our focus on
creating significant growth opportunities so that once the economy rebounds, we
will be best-positioned to capitalize on these opportunities. To ensure our
future growth, we are maintaining our R&D and engineering expenditures, which
are directed toward new product development initiatives in the AMI and Smart
Grid area, along with a significant amount of new Space program opportunities. I
am confident that our new products currently being introduced will position us
well for the future.
"In closing, we continue making meaningful progress on all of our major AMI
projects, including PG&E gas, New York City Water, and Idaho Power."
Sales
- -----
For 2009, sales decreased 2.1 percent during the third quarter and
increased 6.8 percent for the first nine months compared to the same periods of
2008. As noted in earlier releases, the prior year's YTD sales amount included
$20.5 million of revenues recognized that had previously been deferred from
prior periods related to PG&E / TWACS NG software revenue recognition. YTD sales
increased 12.3 percent excluding the 2008 PG&E deferred revenue recognized.
Utility Solutions Group (USG) sales in 2009 increased 4.3 percent for the
third quarter and 13.5 percent for the first nine months compared to the third
quarter and first nine months of 2008, respectively. Absent the TNG sales
deferral in 2008, YTD sales increased 24.1 percent from the prior year. The USG
sales increases in 2009 were primarily driven by significantly higher deliveries
of fixed network RF AMI products to PG&E (gas) and continued increases in water
AMI product deliveries. Additionally, having Doble for nine months of 2009
versus seven months in 2008 contributed an additional $11.6 million of YTD
sales.
Test sales in 2009 decreased in the third quarter and YTD periods,
primarily due to the timing of large chamber deliveries to the international
wireless and electronics end-markets.
Filtration sales in 2009 decreased in the third quarter and YTD as sales
increases in the defense aerospace and space product lines were offset by lower
commercial aerospace product deliveries.
Earnings Before Interest and Taxes (EBIT)
- -----------------------------------------
On a segment basis, items that impacted EBIT dollars and EBIT as a percent
of sales ("EBIT margin") during the third quarter and YTD periods of fiscal 2009
included the following:
In the USG segment, "operational" EBIT for the 2009 third quarter was $15.5
million ($13.2 million on a GAAP basis) compared to 2008's third quarter EBIT of
$16.2 million. USG's EBIT was impacted by a significant sales increase of RF AMI
products, offset by lower sales of PLS AMI products and lower Doble hardware
sales. The RF AMI business contributed the largest increase to EBIT during the
first nine months of 2009.
The 2009 YTD increase in USG's EBIT was partially mitigated by the 2008 YTD
EBIT contribution of $8.5 million associated with the PG&E deferred revenue
recognized in the prior year first quarter.
In the Test segment, EBIT dollars and EBIT margins were significantly
higher in 2009 due to favorable changes in sales mix and rigorous cost controls
throughout the organization.
In the Filtration segment, EBIT dollars decreased in 2009 due to lower
sales of high margin commercial aerospace products, an increase in research and
development costs and higher bid and proposal costs incurred in the pursuit of a
significant number of Space related projects. For the third quarter of 2009,
Filtration's EBIT margin increased due to stringent cost management across the
segment.
Corporate operating costs in the third quarter were lower in 2009 due to
reduced discretionary spending, partially offset by higher amortization expenses
related to recent acquisitions which included identifiable intangible assets.
Effective Tax Rate
- ------------------
The effective tax rate from Continuing Operations in the third quarter of
2009 was 23.1 percent compared to 23.2 percent in the third quarter of 2008. The
2009 and 2008 third quarter tax rates were favorably impacted by approximately
$2 million of income tax benefits. The 2009 YTD rate was 30.1 percent compared
to 31.9 percent and was also favorably impacted by income tax benefits
recognized.
New Orders
- ----------
New orders received were $157.6 million and $453.8 million in the 2009
third quarter and YTD periods, respectively, reflecting a positive book-to-bill
in both the quarter and nine month periods. Backlog at June 30, 2009 grew to
$270.3 million compared to $266.1 million at the beginning of the fiscal year.
Orders from PG&E for AMI gas products and from New York City for AMI water
products are noted on page one of this release. Orders-to-date for the $25
million Idaho Power AMI project were $8.2 million.
Business Outlook - 2009
- -----------------------
Statements contained in the preceding and following paragraphs are based on
current expectations. Statements that are not strictly historical are considered
forward-looking, and actual results may differ materially.
The Business Outlook described below excludes the impact of any future
acquisitions or divestitures, and reflects the impact of the amortization of
identifiable intangible purchase accounting assets related to Aclara Software,
Aclara RF, Doble and LDIC; the impact of the Doble inventory step-up resulting
in "lost" profit; and the amortization of TWACS NG software.
Aclara RF Facility Relocation
- -----------------------------
Due to the significant sales growth since its acquisition, Aclara RF
Systems Inc. (formerly Hexagram, Inc.) relocated its operations from three
leased facilities to a single, newer, more efficient leased facility in the
greater Cleveland area. As a result, approximately $2.3 million, or $0.07 per
share, of exit and relocation costs were incurred during the fiscal 2009 third
quarter in the Utility Solutions Group. These costs primarily related to the
noncash write-off of leasehold improvements, vacant facility charges, and moving
costs.
Revenues and Earnings Per Share - 2009
- --------------------------------------
Based on Management's current expectations, the outlook for fiscal 2009 is
as follows:
o Revenues of approximately $625 million to $630 million;
o EPS is expected to be in the following ranges:
EPS - GAAP Continuing Operations $ 1.82 to 1.87
Add: Aclara RF Facility Exit / Relocation $ 0.07 0.07
------ ----
EPS - "Operational" Basis $ 1.89 to 1.94
====== ====
Add: Intangible Amort. & Inventory Step-Up $ 0.42 0.42
------ ----
EPS - "Adjusted" Basis $ 2.31 to 2.36
====== ====
EPS - Adjusted Basis excludes approximately $0.42 per share of costs
related to TWACS NG software amortization, purchase accounting intangible
asset amortization, and Doble's purchase accounting inventory step-up, as
well as the $0.07 per share of Aclara RF facility exit and relocation
costs.
The 2009 full-year tax rate is expected to be approximately 33
percent, consistent with the full year tax rate of 33.3 percent for 2008.
The favorable rates are the result of approximately $2 million in income
tax benefits realized in each of the years noted.
Management believes using EPS - "Operational" Basis and EPS -
"Adjusted" Basis as financial measures is an important metric for investors
to understand the Company's operations and its ability to service its debt.
Chairman's Commentary - Wrap-Up
- -------------------------------
Mr. Richey concluded, "As noted above, while 2009 has been a tough
year as it relates to today's global economic challenges, I remain
optimistic about our current business prospects both domestically and
internationally. Through rigorous management oversight and a disciplined
planning process, I am confident that we have sufficient opportunities and
the appropriate contingencies in place to allow us to execute our strategic
plan and to achieve our long-term goal of increasing shareholder value."
Conference Call
- ---------------
The Company will host a conference call today, August 4, at 4 p.m.
Central Time, to discuss the Company's third quarter operating results. A
live audio webcast will be available on theCompany's web site at
www.escotechnologies.com. Please access the web site at least 15 minutes
prior to the call to register, download, and install any necessary audio
software. A replay of the conference call will be available for seven days
on the Company's web site noted above or by phone (dial 1-888-203-1112 and
enter the pass code 8004952).
Forward-Looking Statements
- --------------------------
Statements in this press release regarding the amounts and timing of
fiscal 2009 future revenues, results, earnings, EBIT, EBIT margins, EPS -
GAAP Continuing Operations, EPS - Operational Basis, EPS - Adjusted Basis,
EPS - GAAP Basis, sales growth, orders, growth opportunities, success of
new products and technologies, the fiscal 2009 effective annual tax rate,
the timing and certainty of utility customer spending, the impact of the
Stimulus funding, the long-term success of the Company, and any other
written or oral statements which are not strictly historical are
"forward-looking" statements within the meaning of the safe harbor
provisions of the federal securities laws. Investors are cautioned that
such statements are only predictions and speak only as of the date of this
release, and the Company undertakes no duty to update. The Company's actual
results in the future may differ materially from those projected in the
forward-looking statements due to risks and uncertainties that exist in the
Company's operations and business environment including, but not limited
to: the risk factors described in Item 1A of the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 2008; the effect of the
American Recovery and Reinvestment Act of 2009; the success of the
Company's competitors; changes in Federal or State energy laws; the timing
and content of purchase order releases under the Company's AMI contracts;
the Company's successful performance of its AMI contracts; site readiness
issues with Test segment customers; weakening of economic conditions in
served markets; changes in customer demands or customer insolvencies;
competition; intellectual property rights; technical difficulties;
unforeseen charges impacting corporate operating expenses; the performance
of the Company's international operations; material changes in the costs of
certain raw materials including steel and copper; delivery delays or
defaults by customers; termination for convenience of customer contracts;
timing and magnitude of future contract awards; containment of engineering
and development costs; performance issues with key customers, suppliers and
subcontractors; labor disputes; changes in laws and regulations including
but not limited to changes in accounting standards and taxation
requirements; costs relating to environmental matters; uncertainty of
disputes in litigation or arbitration; and the Company's successful
execution of internal operating plans.
ESCO, headquartered in St. Louis, is a proven supplier of special
purpose utility solutions for electric, gas, and water utilities, including
hardware and software to support advanced metering applications and fully
automated intelligent instrumentation. In addition, the Company provides
engineered filtration products to the aviation, space, and process markets
worldwide and is the industry leader in RF shielding and EMC test products.
Further information regarding ESCO and its subsidiaries is available on the
Company's web site at www.escotechnologies.com.
- tables attached -
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Three Months
Ended Ended
June 30, 2009 June 30, 2008
------------- -------------
Net Sales $148,102 151,351
Cost and Expenses:
Cost of sales 88,040 89,787
SG&A 36,636 37,896
Amortization of intangible assets 4,792 4,444
Interest expense 1,587 2,572
Other expenses, net 2,617 514
----- ---
Total costs and expenses 133,672 135,213
------- -------
Earnings before income taxes 14,430 16,138
Income taxes 3,337 3,737
----- -----
Net earnings from continuing
operations 11,093 12,401
Earnings from discontinued operations,
net of tax benefit of $456 and expense
of $560, respectively 332 907
--- ---
Net earnings $ 11,425 13,308
======== ======
Earnings per share:
Basic
Continuing operations 0.42 0.48
Discontinued operations 0.02 0.03
---- ----
Net earnings $ 0.44 0.51
======== ====
Diluted
Continuing operations 0.42 0.47
Discontinued operations 0.01 0.03
---- ----
Net earnings $ 0.43 0.50
======== ====
Average common shares O/S:
Basic 26,241 25,977
====== ======
Diluted 26,586 26,402
====== ======
Add Nine
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
Nine Months Nine Months
Ended Ended
June 30, 2009 June 30, 2008
------------- -------------
Net Sales $449,615 421,023
Cost and Expenses:
Cost of sales 272,880 251,858
SG&A 114,158 108,882
Amortization of intangible assets 14,379 12,377
Interest expense 5,961 7,101
Other expenses, net 2,860 164
----- ---
Total costs and expenses 410,238 380,382
======= =======
Earnings before income taxes 39,377 40,641
Income taxes 11,839 12,945
------ ------
Net earnings from continuing operations 27,538 27,696
Earnings (loss) from discontinued operations,
net of tax benefit of $568 and $565,
respectively 135 (516)
Loss on sale from discontinued operations,
net of tax benefit of $905 and expense
of $4,809, respectively (32) (4,974)
--- ------
Net earnings (loss) from discontinued
operations 103 (5,490)
--- ------
Net earnings $ 27,641 22,206
======== ======
Earnings per share:
Basic
Continuing operations 1.05 1.07
Discontinued operations 0.01 (0.21)
---- -----
Net earnings $ 1.06 0.86
======== ====
Diluted
Continuing operations 1.04 1.05
Discontinued operations 0.00 (0.21)
---- -----
Net earnings $ 1.04 0.84
======== ====
Average common shares O/S:
Basic 26,176 25,862
====== ======
Diluted 26,494 26,290
====== ======
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Business Segment Information
(Unaudited)
(Dollars in thousands)
Three Months Ended Nine Months Ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
Net Sales
- ---------
Utility Solutions
Group $ 91,113 87,335 273,380 240,771
Test 29,108 33,039 98,310 98,599
Filtration 27,881 30,977 77,925 81,653
------ ------ ------ ------
Totals $148,102 151,351 449,615 421,023
======== ======= ======= =======
EBIT
- ----
Utility Solutions
Group $ 13,158 16,182 39,851 42,147
Test 3,400 2,794 10,382 7,526
Filtration 4,837 5,216 11,927 13,778
Corporate (5,378) (1) (5,482) (2) (16,822) (3) (15,709) (4)
------ ------ ------- -------
Consolidated EBIT 16,017 18,710 45,338 47,742
Less: Interest
expense (1,587) (2,572) (5,961) (7,101)
------ ------ ------ ------
Earnings before
income taxes $ 14,430 16,138 39,377 40,641
======== ====== ====== ======
Note: Depreciation and amortization expense was $7.6 million and $7.1
million for the quarters ended June 30, 2009 and 2008,
respectively, and $22.7 million and $19.5 million for the nine-month
periods ended June 30, 2009 and 2008, respectively.
(1) Includes $1.2 million of amortization of acquired intangible assets.
(2) Includes $1.2 million of amortization of acquired intangible assets.
(3) Includes $3.5 million of amortization of acquired intangible assets.
(4) Includes $3.0 million of amortization of acquired intangible assets.
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
EPS - Operational - Q3 FY 2009 and YTD Q3 FY 2009
- -------------------------------------------------
Q3 FY 2009 YTD Q3 FY 2009
---------- --------------
EPS - GAAP $0.42 $1.04
Adjustments (1) 0.07 0.07
---- ----
EPS - Operational $0.49 $1.11
===== =====
(1) Adjustments exclude the $2.3 million of Aclara RF facility
exit/relocation costs.
EPS - Operational and EPS - Adjusted Basis Reconciliation - FY 2009
- -------------------------------------------------------------------
EPS - GAAP - FY 2009 Range $1.82 $1.87
Adjustments (1) 0.07 0.07
---- ----
EPS - Operational Basis $1.89 $1.94
Adjustments (2) 0.42 0.42
---- ----
EPS - Adjusted Basis - FY 2009 Range $2.31 $2.36
===== =====
(1) Adjustments exclude the Aclara RF facility exit/relocation costs.
(2) Adjustments exclude the pre-tax intangible asset amortization
expense related to TWACS NG software, purchase accounting
intangible amortization related to the Company's acquisitions
within the last three years and the expense related to the purchase
accounting step-up of Doble Engineering Company inventory.
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
June 30, September 30,
2009 2008
---- ----
Assets
- ------
Cash and cash equivalents $ 29,450 28,667
Accounts receivable, net 113,102 134,710
Costs and estimated earnings on
long-term contracts 3,395 9,095
Inventories 86,983 65,019
Current portion of deferred tax assets 16,635 15,368
Other current assets 22,110 14,888
Current assets from discontinued operations - 2,889
------- -----
Total current assets 271,675 270,636
Property, plant and equipment, net 69,895 72,353
Goodwill 330,090 328,878
Intangible assets, net 224,304 236,192
Other assets 18,588 17,665
Other assets from discontinued operations - 2,349
-------- -----
$914,552 928,073
======== =======
Liabilities and Shareholders' Equity
- ------------------------------------
Short-term borrowings and current
Maturities of long-term debt $ 50,000 50,000
Accounts payable 40,541 48,982
Current portion of deferred revenue 20,431 18,226
Other current liabilities 45,307 49,934
Current liabilities from discontinued
operations - 1,541
------- -----
Total current liabilities 156,279 168,683
Deferred tax liabilities 81,519 83,515
Other liabilities 23,689 23,988
Long-term debt 152,485 183,650
Shareholders' equity 500,580 468,237
------- -------
$914,552 928,073
======== =======
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Nine Months Ended
June 30, 2009
---------------
Cash flows from operating activities:
Net earnings $ 27,641
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Net earnings from discontinued operations (103)
Depreciation and amortization 22,692
Stock compensation expense 3,176
Changes in current assets and liabilities (14,098)
Effect of deferred taxes (4,646)
Change in deferred revenue and costs, net 2,311
Other 10
------
Net cash provided by operating activities -
continuing operations 36,983
Net cash provided by operating activities -
discontinued operations 142
------
Net cash provided by operating activities 37,125
======
Cash flows from investing activities:
Acquisition of business (1,250)
Additions to capitalized software (3,419)
Capital expenditures - continuing operations (6,898)
------
Net cash used by investing activities -
continuing operations (11,567)
Proceeds from divestiture of business, net -
discontinued operations 3,100
-----
Net cash used by investing activities (8,467)
------
Cash flows from financing activities:
Proceeds from long-term debt 29,000
Principal payments on long-term debt (60,165)
Proceeds from exercise of stock options 3,155
Other 1,080
------
Net cash used by financing activities (26,930)
-------
Effect of exchange rate changes on cash and cash equivalents (945)
----
Net decrease in cash and cash equivalents 783
Cash and cash equivalents, beginning of period 28,667
------
Cash and cash equivalents, end of period $ 29,450
========
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Other Selected Financial Data
(Unaudited)
(Dollars in thousands)
Backlog And Entered
Orders - Q3 FY 2009 Utility Solutions Test Filtration Total
------------------- ----------------- ---- ---------- -----
Beginning Backlog -
3/31/09 continuing
opers $124,736 56,547 79,541 260,824
Entered Orders 103,586 32,810 21,172 157,568
Sales (91,113) (29,108) (27,881) (148,102)
------- ------- ------- --------
Ending Backlog -
6/30/09 $137,209 60,249 72,832 270,290
======== ====== ====== =======
Backlog And Entered
Orders - YTD Q3
FY 2009 Utility Solutions Test Filtration Total
------- ----------------- ---- ---------- -----
Beginning Backlog -
9/30/08 continuing
opers $124,847 69,823 71,463 266,133
Entered Orders 285,742 88,736 79,294 453,772
Sales (273,380) (98,310) (77,925) (449,615)
-------- ------- ------- --------
Ending Backlog -
6/30/09 $137,209 60,249 72,832 270,290
======== ====== ====== =======
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