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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 report): July 31, 2003
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 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
Exhibit No. Description of Exhibit
99.1 Press Release dated July 31, 2003
ITEM 9. REGULATION FD DISCLOSURE
On July 31, 2003, the Company issued a press release announcing the Company's
decision to divest its Microfiltration and Separations businesses included in
its Filtration / Fluid Flow segment. The press release also announced the
decision to close out the Company's synthetic lease obligation by purchasing the
three domestic manufacturing properties covered by the synthetic lease facility
and to repay and cancel the interest rate swap associated with this obligation.
This press release also announced that a web cast of a related conference call
would be held on August 1, 2003 at 9:00 a.m., Central time. This press release
is furnished as Exhibit 99.1, and incorporated herein by reference.
The press release furnished herewith will be posted to the Company's website
located at http://www.escotechnologies.com and can be viewed through the
Investor Relations page of the website under the tab "Press Releases", although
the Company reserves the right to discontinue that availability at any time.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 31, 2003, the Company issued a press release (Exhibit 99.1 to this
report) announcing the Company's decision to divest its Microfiltration and
Separations businesses included in its Filtration / Fluid Flow segment. The
press release also announced the decision to close out the Company's synthetic
lease obligation by purchasing the three domestic manufacturing properties
covered by the synthetic lease facility and to repay and cancel the interest
rate swap associated with this obligation. This press release also announced
that a web cast of a related conference call would be held on August 1, 2003 at
9:00 a.m., Central time.
Other Matters
The information contained in this report, including Exhibit 99.1, shall not be
deemed to be "filed" for the 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 Company specifically incorporates it by reference in
a document filed under the Securities Act of 1933 as amended or the Exchange
Act.
Statements in this report, including Exhibit 99.1, regarding the Company's
planned divestiture of its Microfiltration and Separations businesses, results
after the divestiture, its ability to meet longer-term objectives, and other
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 report. 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 timing and terms of the
divestiture; further weakening of economic conditions in served markets; changes
in customer demands or customer insolvencies; competition; intellectual property
rights; the Company's successful exploitation of acquired intellectual property
rights; the success of future Filtration initiatives adopted by Management; the
performance of discontinued operations prior to completing the divestiture;
successful execution of planned facility closures, consolidations and
relocations with regard to the Company's Puerto Rico facility and U.K. facility;
the impact of FASB Interpretation No. 46; consolidation of internal operations;
integration of recently acquired businesses; delivery delays or defaults by
customers; termination for convenience of customer contracts; timing and
magnitude of future contract awards; performance issues with key suppliers and
subcontractors; collective bargaining and labor disputes; changes in laws and
regulations including changes in accounting standards and taxation requirements;
litigation uncertainty; and the Company's successful execution of internal
operating plans.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Action 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: July 31, 2003 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 July 31, 2003
Exhibit 99.1_
ESCO TECHNOLOGIES
NEWS FROM
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 DECISION TO SELL ITS
MICROFILTRATION AND SEPARATIONS BUSINESSES
AND WEBCAST OF RELATED CONFERENCE CALL
AUGUST 1 AT 9:00 A.M. CENTRAL TIME
St. Louis, MO, July 31, 2003, - ESCO Technologies Inc. (NYSE: ESE) today
announced it has reached a decision regarding its Microfiltration and
Separations businesses.
Victor L. Richey, Chairman and Chief Executive Officer, commented, "After a
comprehensive review of the actions required to best position the Company to
meet its long-term objectives, we have decided to sell our Microfiltration and
Separations businesses. As such, the businesses will be reported as
"Discontinued Operations" beginning with our fiscal 2003 fourth quarter.
"These businesses include PTI Advanced Filtration Inc., located in Oxnard,
CA, PTI Technologies Limited, located in Sheffield, England, and PTI S.p.A,
located in Milan, Italy.
"As we explained in our May 13, 2003 press release, the Microfiltration and
Separations businesses have been significantly dilutive to our earnings.
Specifically, for the first six months of fiscal 2003, these businesses reduced
the reported Filtration segment Earnings Before Interest and Taxes (EBIT) by
approximately ($5.0) million on sales of approximately $21 million.
"We are making this strategic change in direction based on a very thorough
and objective evaluation of our market position and the competitive landscape
for these businesses. The continued investments required to materially improve
our market position are beyond what we believe is appropriate given our other
opportunities.
"This was a difficult decision because our employees in these businesses
have worked extremely hard to build a solid foundation for success. Nonetheless,
we believe that the businesses and our people will achieve more in a shorter
time under the ownership of a company with a more established presence in these
markets. The Company plans to use Robert W. Baird & Co. as its financial advisor
to manage the divestiture process.
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"From a shareholder perspective, although this action will necessitate an
estimated non-cash pretax charge of $65 million to $75 million in the fiscal
2003 fourth quarter, primarily related to goodwill and other intangible assets,
ESCO will be better focused, more profitable, and have higher margins and
returns as a result of these actions. Perhaps more importantly, all of ESCO's
remaining operating units have market positions which support my belief that we
will meet our previously established longer-term objectives. In addition to what
we can accomplish organically, our growth focus will be on developing new
partners in the Automatic Meter Reading (AMR) marketplace, including
opportunities that provide direct access to the water and gas utility markets.
We will also focus our growth in the area of filtration-related medical devices,
medical shielding and drop-in acquisitions for our aerospace filtration
businesses. At this point in time, I do not anticipate any additional
divestitures.
"In part to facilitate the divestiture, but also to improve our financing
flexibility going forward, we will close out our synthetic lease obligation
covering three of our domestic manufacturing locations including PTI Advanced
Filtration Inc.'s facility in Oxnard, CA by purchasing the three properties at
their original cost of $31.5 million. We also intend to repay and cancel the
interest rate swap associated with this obligation which will result in a pretax
cash charge of approximately $3.0 million in our fiscal fourth quarter.
" Mr. Richey concluded, "The decisions I have announced today, while
difficult, are right for our Company and our shareholders. I can now tell you
with confidence that we have addressed the Microfiltration and Separations
situation and our remaining businesses all have strong market positions and the
opportunity for sustainable growth. Upon completion of this divestiture, we
believe ESCO's operating results will be significantly improved and more
predictable.
"I feel good about the future of our business and can assure you that all
of the actions taken are focused on enhancing shareholder value."
Conference Call
ESCO will host a conference call on Friday, August 1, 2003, at 9:00 a.m.,
central time, to discuss the decision to divest its Microfiltration and
Separations businesses. A live audio webcast will be available on the Company's
web site at www.escotechnologies.com. Please access the web site at least
fifteen minutes prior to the call to register, download and install any
necessary audio software.
A replay of the conference call will be available August 1, 2003 from 12:30
p.m. central time until 11:59 p.m. central time on August 8, 2003. To access the
replay, please dial 1-888-203-1112 and use the passcode 449934 at any time
during that period. In addition, a replay will be available for seven days on
the Company's web site at www.escotechnologies.com.
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Forward-Looking Statements
Statements in this press release regarding the Company's planned
divestiture, results after the divestiture, its ability to meet longer-term
objectives, and other 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. 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
timing and terms of the divestiture; further weakening of economic conditions in
served markets; changes in customer demands or customer insolvencies;
competition; intellectual property rights; the Company's successful exploitation
of acquired intellectual property rights; the success of future Filtration
initiatives adopted by Management; the performance of discontinued operations
prior to completing the divestiture; successful execution of planned facility
closures, consolidations and relocations with regard to the Company's Puerto
Rico facility and U.K. facility; the impact of FASB Interpretation No. 46;
consolidation of internal operations; integration of recently acquired
businesses; delivery delays or defaults by customers; termination for
convenience of customer contracts; timing and magnitude of future contract
awards; performance issues with key suppliers and subcontractors; collective
bargaining and labor disputes; changes in laws and regulations including changes
in accounting standards and taxation requirements; litigation uncertainty; and
the Company's successful execution of internal operating plans.
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.