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): May 10, 2005
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.)
8888 Ladue Road, Suite 200, St. Louis, Missouri 63124-2056
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 314-213-7200
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Today, May 10, 2005, the Registrant is issuing a press release (Exhibit 99.1 to
this report) announcing its fiscal 2005 second 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 announcing its fiscal 2005
second quarter financial and operating results. This press release is furnished
herewith as Exhibit 99.1 and will be posted on the Registrant's website located
at http://www.escotechnologies.com. It can be viewed through the "Investor
Relations" page of the website 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 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 "operational" net earnings,
earnings per share and results of operations, as well as "EBIT from continuing
operations," "EBIT margin," "operational" EBIT margin, "free cash flow from
continuing operations" and Filtration segment "operational" EBIT.
The Registrant defines "operational" net earnings, earnings per share, and
results of operations as net earnings, earnings per share, and results of
operations in accordance with GAAP, except for the exclusion of (i) exit costs
and severance charges related to the shutdown and relocation of the Filtration
segment Puerto Rico facility, and (ii) the results of operations from the
MicroSep businesses which were divested in fiscal 2004 and are shown as
"discontinued operations" in fiscal 2004. The Registrant defines "operational"
EBIT margin as EBIT margin (defined below) with the foregoing exclusions. The
Registrant's management uses these "operational" results in evaluating the
measures of continuing operations of the Registrant and believes that this
information provides investors with additional insight into the period over
period financial performance of the Registrant.
The Registrant defines "EBIT from continuing operations" as earnings before
interest and taxes. The Registrant defines "EBIT margin" as EBIT from continuing
operations as a percent of net sales. The Registrant's management evaluates the
performance of its operating segments based on EBIT from continuing operations
and EBIT margin, and believes that EBIT from continuing operations 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 from continuing operations is also one of the measures used by management
in determining resource allocations within the Registrant and incentive
compensation.
The Registrant defines "Free cash flow from continuing operations" as "Net cash
provided by operating activities-continuing operations" less "Capital
expenditures-continuing operations." The Registrant's management believes that
free cash flow from continuing operations is useful to investors and management
as a supplemental financial measurement in the evaluation of the Registrant's
business and believes that free cash flow may provide additional information
with respect to the Registrant's ability to meet its future debt service,
capital expenditures and working capital requirements. Free cash flow can also
be reinvested in the Registrant for future growth.
The Registrant defines Filtration segment "operational" EBIT as segment EBIT,
excluding the costs related to the shutdown of the Puerto Rico facility.
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, cash flows, financial position,
comprehensive income (loss), or any other measure as determined in accordance
with GAAP.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit No. Description of Exhibit
99.1 Press Release dated May 10, 2005
OTHER MATTERS
The information contained in this report, 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: May 10, 2005 By: /s/G.E. Muenster
G.E. Muenster
Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description of Exhibit
99.1 Press release dated May 10, 2005
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 SECOND QUARTER RESULTS
St. Louis, MO, May 10, 2005 - ESCO Technologies Inc. (NYSE: ESE) today
announced its results for the fiscal 2005 second quarter ended March 31, 2005.
Net earnings for the fiscal 2005 second quarter were $10.4 million, or
$0.80 per share compared to net earnings of $5.4 million, or $0.40 per share in
the second quarter of fiscal 2004. The prior year's second quarter results
included a net loss from discontinued operations of ($2.2) million, or ($0.17)
per share, and the after-tax charges related to the exit and shutdown of the
Puerto Rican facility of ($0.5) million, or ($0.03) per share. Excluding these
items, prior year second quarter "Operational" earnings as defined in earlier
releases were $8.1 million, or $0.60 per share.
Net earnings for the first six months of fiscal 2005 were $20.9 million, or
$1.60 per share compared to net earnings of $11.5 million, or $0.87 per share
for the first six months of fiscal 2004. The prior year results included a net
loss from discontinued operations of ($2.6) million, or ($0.19) per share, and
the after-tax charges related to the exit and shutdown of the Puerto Rican
facility of ($1.0) million, or ($0.08) per share. Excluding these items, prior
year first six months "Operational" earnings as defined in earlier releases were
$15.2 million, or $1.14 per share.
- more -
Add One A reconciliation of the prior year GAAP reported earnings to
"Operational" earnings is included in the Exhibits attached to this release. The
Company believes that the presentation of fiscal 2004 "Operational" earnings
provides meaningful additional insight into the Company's performance.
Sales
Fiscal 2005 second quarter sales of $106.2 million were $4.0 million, or
4 percent higher than 2004 second quarter sales of $102.2 million. Fiscal 2005
year-to-date sales of $210.5 million were $12.0 million, or 6 percent higher
than 2004 year-to-date sales of $198.6 million. Favorable foreign currency
values resulted in approximately $0.8 million and $2.4 million of the sales
increases realized in the 2005 second quarter and year-to-date periods,
respectively.
On a segment basis for the fiscal 2005 second quarter, Communications sales
increased 19 percent; Filtration / Fluid Flow ("Filtration") sales decreased 3
percent; and Test sales decreased 2 percent as compared to the prior year
period. Year-to-date, fiscal 2005 Communications sales increased 13 percent;
Filtration sales increased 4 percent; and Test sales increased 2 percent as
compared to the first six months of fiscal 2004.
Communications segment sales increased in the second quarter as a result of
higher shipments of Comtrak's SecurVision video security products, which
generated $3.5 million in sales during the second quarter of 2005 versus $0.4
million of sales in the 2004 second quarter. Year-to-date sales of SecurVision
products were $10.6 million in 2005 as compared to $0.9 million in 2004.
Also within the Communications segment, sales of DCSI's Automatic Meter
Reading (AMR) equipment to electric utility customers were $32.6 million in the
2005 second quarter compared to $29.9 million in the prior year second quarter.
Sales to PPL Electric Utilities Corporation (PPL) decreased approximately $7.0
million in the current-year's second quarter compared to the second quarter of
fiscal 2004 due to the completion of the PPL contract. Sales
- more -
Add Two
to PPL were $0.4 million and $7.4 million in the second quarters of fiscal 2005
and 2004, respectively. DCSI's sales to electric utility cooperative customers
(COOP) and customers other than PPL increased 43 percent during the 2005 second
quarter to $32.2 million, from $22.5 million in the prior year second quarter.
Filtration segment sales decreased during the second quarter of fiscal 2005
primarily as a result of lower defense spares shipments at VACCO and lower
automotive shipments at Filtertek. These decreases were partially offset by
higher shipments of commercial and military aerospace products at PTI.
Year-to-date, Filtration segment sales increased due to the additional volume of
commercial and military aerospace products at PTI.
Test segment sales decreased slightly during the second quarter of 2005 due
to higher sales realized in 2004 at the Company's European operations from two
large chamber projects. In addition, current-year sales were lower-than-expected
due to the timing of the completion of a test chamber installation in Japan and
certain government shielding projects, which were completed in April 2005 and
will be recognized in the fiscal 2005 third quarter. These second quarter timing
items were partially offset by significantly higher components sales.
Year-to-date, the sales increase was the result of additional test chamber
installations, component sales, and government shielding projects.
Earnings Before Interest and Taxes(EBIT)
- ----------------------------------------
On a segment basis, items that impacted EBIT as a percent of sales ("EBIT
margin") during the second quarter of fiscal 2005 included the following.
In the
Communications segment, EBIT margin for the 2005 second quarter was higher than
the prior year period due to the significant increase in shipments of
SecurVision products. The 2005 second quarter EBIT margin was also positively
impacted by the favorable sales mix of AMR products resulting from additional
sales to the COOP market and cost reductions realized on certain components.
- more -
Add Three
In the Filtration segment, EBIT margin improved during the 2005 second
quarter and year-to-date periods primarily due to higher aerospace sales at PTI
and improved operating efficiencies realized at Filtertek subsequent to exiting
the Puerto Rican facility. In addition, Filtertek's current-year EBIT margin was
favorably impacted by $0.3 million in the second quarter and $0.9 million
year-to-date as a result of a cost reimbursement realized at Filtertek from a
medical device customer related to a shortfall in their actual purchases versus
the minimum contractually guaranteed amount. During the second quarter of 2005,
Filtertek signed an agreement to license certain of its patents related to
Needle-Free Connectors to a third party for $1.5 million in cash and recognized
$0.2 million of profit related to this transaction. These improvements were
partially offset by lower margins realized during the second quarter of 2005 at
VACCO resulting from the decreased sales of defense spares. The prior year EBIT
margin in the Filtration segment was negatively impacted by the exit and move
costs incurred and the inefficiencies being absorbed at Filtertek during the
first six months of fiscal 2004 as a result of operating in both the Puerto Rico
and Juarez facilities.
In the Test segment, EBIT margin was higher in the second quarter of 2005
due to the favorable changes in sales mix resulting from additional component
sales, but was lower in the current year-to-date period primarily as a result of
approximately $0.3 million in installation cost overruns incurred during the
first quarter of fiscal 2005 on government-shielding projects located in
particularly volatile areas of the world, and higher costs of steel and copper.
The Corporate office operating expenses were comparable in the second
quarters of fiscal 2005 and 2004, respectively. EBIT from continuing operations
for the prior year periods was affected by certain charges which are presented
in detail in the financial Exhibits attached at the end of this release.
- more -
Add Four
In the second quarter and year-to-date periods of fiscal 2004, the pretax
charges in continuing operations related to these items were $0.6 million and
$1.3 million, respectively. These items are included in "Earnings before income
taxes" in the Exhibits.
New Orders
- ----------
New orders received during fiscal 2005 were $113.8 million and $215.4
million for the second quarter and six-month periods, resulting in a backlog of
$253.9 million at March 31, 2005. New orders received in Filtration,
Communications and Test were $60.5 million, $27.4 million, and $25.9 million in
the 2005 second quarter, respectively. Year-to-date, fiscal 2005 new orders
received in Filtration, Communications and Test were $99.8 million, $62.7
million, and $53.0 million, respectively.
The Filtration amounts noted above include the orders for anti-icing valves
for the T-700 engine utilized on numerous airframes including the Blackhawk
Helicopter, and for quiet valves and manifold assemblies used on the Virginia
Class Submarine. Both orders were multi-year follow-on awards and were
previously discussed in the February 4, 2005, Earnings Release.
Cash Flow
- ---------
The Company generated $12.2 million and $24.5 million of free cash flow
during the second quarter and year-to-date periods ended March 31, 2005,
respectively. Free cash flow is defined as "Net Cash Provided by Operating
Activities" less "Capital Expenditures." For a reconciliation of free cash flow,
see the Exhibits attached to this release.
Stock Repurchase Program
- ------------------------
No shares were repurchased during the second quarter of fiscal 2005. The
Company spent $24.9 million during the first quarter of fiscal 2005 to
repurchase 335,000 shares of its outstanding stock under its existing stock
repurchase program. As of March 31, 2005, approximately 575,000 shares remain
available for repurchase by the Company under the current program, which expires
September 30, 2006.
- more -
Add Five
Chairman's Commentary
- ---------------------
Vic Richey, Chairman and Chief Executive Officer, commented, "Our fiscal
2005 second quarter revenues were at the low end of our internal expectations
largely as a result of the well-publicized weakness in the automotive sector,
which impacted our sales of fuel and transmission filters. Despite the lower
automotive related revenues, our second quarter earnings per share were at the
high end of our previous guidance, primarily resulting from mix-driven
improvements in our Test segment and higher-than-anticipated sales of video
security products."
Mr. Richey continued, "While our full year outlook has not changed
significantly, as a result of the strength of our second quarter results, and
given the additional visibility we have at mid-year, our full year EPS guidance
is being raised and the range tightened. Our current expectations are for full
year EPS in the range of $3.10 to $3.20 per share, versus our previous guidance
of $2.95 to $3.15 per share.
"While we are taking nothing for granted, I believe we are very
well-positioned to deliver our 2005 numbers. The bulk of our attention at this
point is directed at capturing opportunities and successfully implementing
near-term initiatives which will support continued profitable growth in 2006 and
beyond.
"In Filtration, we have several niche opportunities for growth and more
substantial opportunities for margin expansion through additional utilization of
our manufacturing locations in Mexico and Brazil, as well as through material
cost reductions. We are actively working initiatives in each of these areas.
"In Communications, we are currently experiencing a significantly higher
level of proposal activity for investor-owned utilities. We are focused not only
on delivering best value solutions for the opportunities in process, but also on
enhancing and expanding our product offering through both internal development
and acquisitions. In the AMR space, we continue to actively pursue acquisitions
but progress to date has been limited. I believe this is, in part,
- more -
Add Six
because the potential sellers may be reluctant to act until they understand the
outcome of the significant, pending opportunities. With or without near-term
acquisitions, we continue to have very substantial long-term prospects for
growth within the AMR market.
"From an opportunities standpoint, the Test business fits somewhere between
Filtration and Communications. While there are size limitations within our
served market, we continue to capitalize on our strong market position and to
expand the foothold we have established in Asia. On the cost side, we have made
substantial progress on a near-term initiative to reduce our material costs. We
are also working on acquisitions which would increase our product content on
significant test and shielding projects.
"I continue to believe our shareholders will be well-served by the
combination of our growth opportunities and initiatives and our end market
diversification."
Fiscal 2005 Business Outlook
- ----------------------------
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 fiscal 2005 Business Outlook described below does not include the
impact of potential acquisitions, or the impact of any significant orders from
new investor-owned utility customers that may be entered into during the balance
of the fiscal year.
Revenues
- --------
Management currently expects fiscal 2005 year-over-year revenue in
Filtration to be essentially flat due to continued weakness in the automotive
sector, which is down from the previous expectation of sales growth in the range
of 2 to 5 percent. In Test, Management now expects revenue growth of 8 to 10
percent, an increase from the previous guidance of 4 to 8 percent. In
Communications, Management continues to expect revenue to be flat to down 3
- more -
Add Seven
percent. The expected flatness in Communications is due to the fiscal 2004
wind-down of the PPL contract that generated $21.6 million in sales, and the
Idaho Power phase one and Bangor Hydro contracts that generated combined sales
of approximately $8.5 million in fiscal 2004.
EBIT Margin
- -----------
Management expects EBIT margins to be in the following ranges, which are
consistent with previous guidance: Filtration margins should be in the range of
13 to 15 percent; Test margins should be in the range of 9 to 11 percent; and
Communications margins should be in the range of 27 to 29 percent.
Corporate operating expenses are expected to be consistent with fiscal 2004
amounts.
Earnings Per Share
- ------------------
Management currently estimates fiscal 2005 EPS to be in the range of $3.10
to $3.20 per share, which is increased from the previous guidance of $2.95 to
$3.15 per share. The current expectations on a quarterly basis for the remainder
of 2005 are that the fourth quarter EPS will be higher than the third quarter
EPS as a result of a more favorable sales mix.
The effective tax rate for fiscal 2005 is expected to be approximately 37.5
percent, a slight improvement from the previous expectation of 38 percent.
Conference Call
- ---------------
The Company will host a conference call today, May 10, at 9:30 a.m.,
Central Time, to discuss the Company's second quarter operating results. A live
audio webcast will be available on the Company'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 website noted above or by phone (dial 1-888-203-1112 and enter the
pass code 1523374).
- more -
Add Eight
Forward-Looking Statements
- --------------------------
Statements in this press release regarding future revenues and the level of
revenue contributions from each segment, potential acquisitions, potential
customer contracts, growth in the AMR market, the success of cost reduction
efforts, fiscal 2005 corporate operating expenses, the fiscal 2005 effective tax
rate, future fiscal 2005 results, earnings, fiscal 2006 and beyond revenue
growth, EBIT margins, EPS, long term success of the Company, and 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: weakening of economic conditions in
served markets; changes in customer demands or customer insolvencies;
competition; intellectual property rights; technical difficulties; the
availability of selected acquisitions; unforeseen charges impacting corporate
operating expenses; the performance of the Company's international operations;
successful execution of the planned sale of the Company's Puerto Rico facility;
material changes in the costs of certain raw materials including steel, copper
and petroleum based resins; delivery delays or defaults by customers;
termination for convenience of customer contracts; timing and magnitude of
future contract awards; performance issues with key customers, suppliers and
subcontractors; collective bargaining and labor disputes; changes in laws and
regulations including changes in accounting standards and taxation requirements;
changes in foreign or U.S. business conditions affecting the distribution of
foreign earnings; costs relating to environmental matters; litigation
uncertainty; and the Company's successful execution of internal operating plans.
- more -
Add Nine
ESCO, headquartered in St. Louis, is a leading supplier of engineered
filtration products to the process, health care and transportation markets
worldwide. In addition, the Company markets proprietary, special purpose
communications systems and is the industry leader in RF shielding and EMC test
products.
- tables attached -
Add Ten
ESCO Technologies Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended
------------------
March 31, 2005
--------------
Net Sales $ 106,160
Cost and Expenses:
Cost of sales 68,989
SG&A 21,269
Interest (income) expense, net (303)
Other (income) expenses, net (236)
----
Total costs and expenses 89,719
------
Earnings before income taxes 16,441
Income taxes 6,014
-----
Net earnings $ 10,427
=========
Earnings per share:
Basic
Net earnings $ 0.83
=========
Diluted
Net earnings $ 0.80
=========
Average common shares O/S:
Basic 12,633
======
Diluted 13,017
======
- more -
Add Eleven
ESCO Technologies Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended March 31, 2004
---------------------------------
(1)
GAAP Adj. "Operational"
---- ---- -------------
Net Sales $102,171 102,171
Cost and Expenses:
Cost of sales 70,781 70,781
SG&A 19,111 (176) (2) 18,935
Interest (income) expense, net (483) (483)
Other (income) expenses, net 513 (468) (3) 45
--- ---- --
Total costs and expenses 89,922 (644) 89,278
------ ---- ------
Earnings before income taxes 12,249 644 12,893
Income taxes 4,684 155 (4) 4,839
----- --- -----
Net earnings from
continuing operations 7,565 489 8,054
Loss from discontinued
operations, net of tax (2,200) 2,200 (5) --
------ ----- --
Net earnings (loss) $ 5,365 2,689 8,054
======== ===== =====
Earnings (loss) per share:
Basic
Net earnings from
continuing operations $ 0.59 0.63
Net loss from
discontinued operations (0.17) 0.00
----- ----
Net earnings $ 0.42 0.63
======== ====
Diluted
Net earnings from
continuing operations $ 0.57 0.60
Net loss from
discontinued operations (0.17) 0.00
----- ----
Net earnings $ 0.40 0.60
======== ====
Average common shares O/S:
Basic 12,874 12,874
====== ======
Diluted 13,325 13,325
====== ======
(1) Represents results on an adjusted basis, after removing the
items described below in (2)-(4).
(2) Represents severance charges related to the exit of the Puerto
Rico facility.
(3) Represents shutdown costs related to the exit of the Puerto
Rico facility.
(4) Represents the tax impact of items described above in (2)-(3).
(5) Relates to the Microfiltration and Separations businesses
which are classified as "discontinued operations."
- more -
Add Twelve
ESCO Technologies Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
Six Months Ended
----------------
March 31, 2005
--------------
Net Sales $ 210,535
Cost and Expenses:
Cost of sales 137,498
SG&A 41,082
Interest (income) expense, net (783)
Other (income) expenses, net (690)
----
Total costs and expenses 177,107
-------
Earnings before income taxes 33,428
Income taxes 12,479
------
Net earnings $ 20,949
=========
Earnings per share:
Basic
Net earnings $ 1.65
=========
Diluted
Net earnings $ 1.60
=========
Average common shares O/S:
Basic 12,722
======
Diluted 13,118
======
- more -
Add Thirteen
ESCO Technologies Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
Six Months Ended March 31, 2004
-------------------------------
(1)
GAAP Adj. "Operational"
---- ---- -------------
Net Sales $198,567 198,567
Cost and Expenses:
Cost of sales 137,051 137,051
SG&A 37,880 (470) (2) 37,410
Interest (income) expense, net (519) (519)
Other (income) expenses, net 1,127 (860) (3) 267
----- ---- -- ---
Total costs and expenses 175,539 (1,330) 174,209
------- ------ -------
Earnings before income taxes 23,028 1,330 24,358
Income taxes 8,875 305 (4) 9,180
----- --- -- -----
Net earnings from
continuing operations 14,153 1,025 15,178
Loss from discontinued
operations, net of tax (2,637) 2,637 (5) --
------ ----- --
Net earnings (loss) $ 11,516 3,662 15,178
======== ===== ======
Earnings (loss) per share:
Basic
Net earnings from
continuing operations $ 1.10 1.18
Net loss from
discontinued operations (0.20) 0.00
----- ----
Net earnings $ 0.90 1.18
======== ====
Diluted
Net earnings from
continuing operations $ 1.06 1.14
Net loss from
discontinued operations (0.19) 0.00
----- ----
Net earnings $ 0.87 1.14
======== ====
Average common shares O/S:
Basic 12,857 12,857
====== ======
Diluted 13,305 13,305
====== ======
(1) Represents results on an adjusted basis, after removing the
items described below in (2)-(4).
(2) Represents severance charges related to the exit of the Puerto
Rico facility.
(3) Represents shutdown costs related to the exit of the Puerto
Rico facility.
(4) Represents the tax impact of items described above in (2)-(3).
(5) Relates to the Microfiltration and Separations businesses
which are classified as "discontinued operations."
- more -
Add Fourteen
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Business Segment Information
(Unaudited)
(Dollars in millions)
Three Months Ended Six Months Ended
March 31, March 31,
--------- ---------
2005 2004 2005 2004
---- ---- ---- ----
Net Sales-GAAP
Filtration $ 41.0 42.2 85.0 82.1
Communications 36.1 30.4 69.6 61.8
Test 29.1 29.6 55.9 54.7
---- ---- ---- ----
Totals $106.2 102.2 210.5 198.6
====== ===== ===== =====
EBIT-GAAP basis (1)
Filtration $ 5.0 4.2 (2) 12.1 7.7 (2)
Communications 10.6 7.2 20.3 14.6
Test 3.3 3.3 5.4 5.5
Corporate (2.8) (2.9) (5.2) (5.3)
---- ---- ---- ----
Totals $ 16.1 11.8 32.6 22.5
====== ==== ==== ====
Note: Prior year amounts presented above exclude the operations
of the MicroSep businesses, which are classified as
"discontinued operations." Depreciation and amortization
expense for continuing operations was $3.0 million and
$3.1 million for the fiscal quarters ended March 31, 2005
and 2004, respectively, and $6.1 million and $5.9 million
for the six-month periods ended March 31, 2005 and 2004,
respectively.
(1) EBIT is defined as earnings from continuing operations before
interest and taxes.
(2) The reconciliation to Operational Revenue/EBIT for the Filtration
segment is below:
Q2 FY 04 YTD FY 04
-------- ---------
Net Sales EBIT Net Sales EBIT
--------- ---- --------- ----
Filtration Segment - GAAP $42.2 $4.2 $82.1 $7.7
Add: Puerto Rico facility
exit costs -- 0.6 -- 1.3
----- --- ----- ---
Filtration Segment-
"Operational" $42.2 $4.8 $82.1 $9.0
===== ==== ===== ====
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Add Fifteen
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(Dollars in millions)
EBIT (1) - As Reported
Three Months Ended Six Months Ended
March 31, March 31,
--------- ---------
2005 2004 2005 2004
---- ---- ---- ----
EBIT $16.1 $11.8 $32.6 $22.5
Interest income 0.3 0.5 0.8 0.5
Less: Income taxes 6.0 4.7 12.5 8.8
--- --- ---- ---
Net earnings from
continuing operations $10.4 $ 7.6 $20.9 $14.2
===== ===== ===== =====
(1) EBIT is defined as earnings from continuing operations before
interest and taxes. Excludes the operations of the MicroSep
businesses, which are classified as "discontinued operations"
in fiscal 2004.
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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
March 31, September 30,
2005 2004
---- ----
Assets
Cash and cash equivalents $ 74,567 $ 72,281
Accounts receivable, net 72,624 77,729
Costs and estimated earnings
on long-term contracts 2,680 2,476
Inventories 49,498 44,287
Current portion of deferred
tax assets 21,057 27,810
Other current assets 8,933 8,947
----- -----
Total current assets 229,359 233,530
Property, plant and equipment, net 68,919 69,103
Goodwill 69,215 68,949
Deferred tax assets 6,809 10,055
Other assets 23,051 20,803
------ ------
$397,353 $402,440
======== ========
Liabilities and Shareholders' Equity
Short-term borrowings and current
maturities of long-term debt $ 79 151
Other current liabilities 60,211 68,171
------ ------
Total current liabilities 60,290 68,322
Deferred income 2,509 2,738
Other liabilities 24,475 23,396
Long-term debt 386 368
Shareholders' equity 309,693 307,616
------- -------
$397,353 $402,440
======== ========
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Add Seventeen
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Six Months Ended
March 31, 2005
--------------
Cash flows from operating activities:
Net earnings $ 20,949
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 6,080
Changes in operating working capital (1,504)
Effect of deferred taxes 3,246
Other 337
---
Net cash provided by operating activities 29,108
Cash flows from investing activities:
Capital expenditures (4,568)
------
Net cash used by investing activities (4,568)
------
Cash flows from financing activities:
Principal payments on long-term debt (81)
Purchases of common stock into treasury (24,928)
Other, including exercise of stock options 2,755
-----
Net cash used by financing activities (22,254)
-------
Net increase in cash and cash equivalents 2,286
Cash and cash equivalents, beginning of period 72,281
------
Cash and cash equivalents, end of period $ 74,567
========
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Add Eighteen
ESCO Technologies Inc. and Subsidiaries
Reconciliation of Free Cash Flow - YTD FY 2005 - March 31, 2005
(Dollars in thousands)
Total
-----
Net cash provided by operating activities $ 29,108
Less: Capital expenditures (4,568)
------
Free cash flow $ 24,540
========
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Add Nineteen
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Other Selected Financial Data
(Unaudited)
(Dollars in thousands)
Backlog And Entered
- -------------------
Orders-Q2 FY 2005 Filtration Comm. Test Total
- ----------------- ---------- ----- ---- -----
Beginning Backlog-
12/31/04 $ 72,961 110,436 62,956 246,353
Entered Orders 60,537 27,355 25,860 113,752
Sales (40,975) (36,085) (29,100) (106,160)
------- ------- ------- --------
Ending Backlog-
3/31/05 $ 92,523 101,706 59,716 253,945
= == == ========= ======= ====== =======
Backlog And Entered
- -------------------
Orders-YTD FY 2005 Filtration Comm. Test Total
- ------------------ ---------- ----- ---- -----
Beginning Backlog-
9/30/04 $ 77,753 108,661 62,664 249,078
Entered Orders 99,749 62,663 52,990 215,402
Sales (84,979) (69,618) (55,938) (210,535)
------- ------- ------- --------
Ending Backlog-
3/31/05 $ 92,523 101,706 59,716 253,945
========= ======= ====== =======
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