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 8, 2007
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, May 8, 2007, the Registrant is issuing a press release (Exhibit 99.1 to
this report) announcing its fiscal year 2007 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 year 2007
second quarter financial and operating results, and will conduct a related
Webcast conference call at 4:00 p.m. central time. 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 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" and
"EBIT margin".
The Registrant defines "EBIT" as earnings before interest and taxes. 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 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 May 8, 2007
OTHER MATTERS
The information 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 8, 2007 By: /s/ G.E. Muenster
G.E. Muenster
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description of Exhibit
99.1 Press Release dated May 8, 2007
Exhibit 99.1
ESCO TECHNOLOGIES INC
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 8, 2007 - ESCO Technologies Inc. (NYSE: ESE) today
announced its results for the second quarter ended March 31, 2007, and also
reaffirmed full year earnings per share (EPS) guidance of $1.50 to $1.65 per
share.
Within this release, references to "quarters" and "year-to-date" relate to
the fiscal quarters and six month periods ended March 31 for the respective
fiscal years noted.
Net earnings for the 2007 second quarter were $9.6 million, or $0.36 per
share compared to net earnings of $7.3 million, or $0.28 per share for the
second quarter of 2006. The 2007 second quarter net earnings included a $2.2
million research tax credit, which favorably impacted net earnings by $0.08 per
share.
Net earnings for the six months of fiscal 2007 were $8.2 million, or $0.31
per share compared to $9.5 million, or $0.36 per share for the first half of
2006.
Sales
Second quarter 2007 sales were $129.1 million, or 5.0 percent higher than
second quarter 2006 sales of $122.9 million. Favorable foreign currency exchange
rates in the 2007 second quarter resulted in $1.3 million of this increase.
Fiscal 2007 year-to-date sales were $227.9 million, or 6.7 percent higher
than the $213.5 million of sales in the 2006 year-to-date period. Favorable
foreign currency exchange rates in the first six months of 2007 resulted in $2.4
million of increased sales.
Communications sales of $49.2 million increased $6.0 million, or 13.9
percent in the 2007 second quarter compared to the second quarter of 2006,
primarily due to $8.1 million of additional sales at Hexagram, partially offset
by a $2.9 million decrease in sales at DCSI. Hexagram's sales increased
significantly in the second quarter due to the ramp-up of advanced metering
projects in Kansas City and at PG&E. DCSI's sales decreased in the 2007 second
quarter due to lower sales to TXU and PREPA, partially offset by additional
sales to Duke Energy and Florida Power & Light. In the 2007 second quarter, DCSI
sales to COOP and public power (Municipal) customers were $23.7 million compared
to $20.5 million in the second quarter of 2006. Year-to-date 2007 Communications
sales increased $16.9 million, or 27.1 percent compared to 2006 primarily due to
the acquisitions of Hexagram and Nexus, both of which had increased sales on a
monthly basis in 2007 compared to 2006.
Filtration sales of $45.9 million increased $0.9 million, or 2.0 percent
during the second quarter of 2007 as compared to 2006, primarily driven by a
$1.4 million increase in commercial aerospace sales at PTI, partially offset by
lower automotive sales at Filtertek. Year-to-date Filtration sales were
consistent in 2007 compared to 2006, with PTI's sales increasing $2.3 million,
or 10.3 percent, reflecting the continued strength of the commercial aerospace
market, and VACCO and Filtertek both having sales decreases due to lower demand
in the defense spares and automotive end markets, respectively.
Test segment sales of $34.0 million decreased $0.6 million, or 1.7 percent,
during the second quarter of 2007 compared to 2006, and year-to-date sales of
$62.2 million, decreased $2.4 million, or 3.7 percent from 2006 due to the
timing of installations described in the February 5, 2007 earnings release.
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 second quarter of fiscal 2007 included the
following.
In the Communications segment, EBIT for the 2007 second quarter was $6.1
million (12.4 percent of sales), compared to $9.7 million (22.5 percent of
sales) in the 2006 second quarter. The primary factors of the $3.6 million
decrease in EBIT dollars in 2007 include a $4.6 million decrease at DCSI
resulting from the lower sales noted above, TNG software amortization
(incrementally higher by $1.5 million in the 2007 second quarter) and PG&E
related program support costs. EBIT at the other operating units within
Communications increased $1.0 million as a result of additional sales volume.
The 2007 year-to-date Communications segment EBIT of $3.3 million decreased $5.5
million compared to 2006 due to TNG amortization in 2007 of $2.7 million
compared to $0.3 million in 2006, lower sales in 2007 and additional PG&E
program support costs.
In the Filtration segment, the 2007 second quarter EBIT was $6.4 million
(13.9 percent of sales) compared to $4.7 million (10.4 percent of sales) in the
prior year second quarter. The $1.7 million increase in EBIT was due to: a $1.0
million increase at PTI related to an increase in commercial aerospace sales; a
$0.8 million increase at VACCO due to an improved sales mix resulting in more
favorable overhead absorption; partially offset by a $0.2 million decrease at
Filtertek resulting from the decrease in domestic automotive sales. Year-to-date
Filtration EBIT of $8.2 million decreased $0.6 million primarily due to lower
sales at VACCO and Filtertek, partially offset by the increased EBIT
contribution at PTI related to the sales increase.
In the Test segment, EBIT was $4.1 million (12.1 percent of sales) in the
second quarter of 2007 compared to $4.3 million (12.4 percent of sales) in 2006,
and 2007 year-to-date EBIT was $6.2 million compared to $7.3 million. The 2007
EBIT decreases are primarily due to the timing of installations and an
additional $1.5 million of year-to-date SG&A costs. Corporate operating costs
included in EBIT were $1.8 million higher in the second quarter of 2007 compared
to 2006 as the prior year amount included a $1.8 million pretax gain from a
previously divested defense subsidiary. The Corporate 2007 year-to-date costs
are $3.2 million higher due to the absence of the $1.8 million gain in 2006
noted above, higher purchase accounting amortization, higher stock option
expenses and tax related professional fees.
Effective Tax Rate
The effective tax rate in the second quarter of 2007 was 20.0 percent and
included $2.2 million of additional research tax credits. This credit favorably
impacted the 2007 second quarter tax rate by approximately 19 percent. The 2006
second quarter effective tax rate was 53.5 percent resulting from a $1.7 million
charge related to foreign cash repatriation.
New Orders
New orders received in the 2007 second quarter were $135.8 million compared
to $128.7 million received in the 2006 second quarter.
Backlog at March 31, 2007 was $307.7 million, which has increased $54.2
million since the beginning of the fiscal year and $6.7 million during the
second quarter.
New orders received in the second quarter of 2007 compared to the second
quarter of 2006, respectively, were: in Filtration, $54.7 million and $43.2
million; in Communications, $44.4 million and $55.5 million (including the $6.0
million of Hexagram acquired backlog); and in Test, $36.7 million and $30.0
million.
Cash
At March 31, 2007, the Company had $28.0 million in cash and no debt,
compared to $36.8 million in cash and no debt at September 30, 2006. The $8.8
million decrease in cash in the first six months of 2007 reflects $15.3 million
spent on software upgrades (primarily TNG), $7.2 million spent on capital
equipment, and $1.3 million of additional payments (earn out) related to the
Hexagram acquisition.
Chairman's Commentary - 2007 Second Quarter
Vic Richey, Chairman and Chief Executive Officer, commented, "As
anticipated, our second quarter operating results rebounded strongly from our
first quarter performance and significantly exceeded our internal expectations.
While all three segments contributed to the better-than-expected earnings, the
most significant contributions came from the Filtration segment and in
particular, the aerospace businesses at PTI and VACCO.
"Our consolidated second quarter entered orders remained strong as we grew
our backlog again during the quarter. Together with the strength of the first
quarter orders, our six month consolidated book-to-bill ratio is 124 percent
with all segments in excess of 100 percent. Our year-to-date order performance
supports the significant growth we anticipate for the remainder of the year.
"Although we continue to expect strong second half performance, our full
year outlook in the Communications segment is down due to two water AMR projects
beginning their deployments later in 2007 than previously expected. These delays
are partially offset by improved operating performance from our aerospace
businesses, and given the improvement in our estimated full year tax rate, our
EPS guidance is unchanged.
"While our operating management remains squarely focused on delivering on
our second half commitments, we are also continuing to fully support the growth
initiatives necessary to meet our longer term objectives."
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 Business Outlook described below does not include the impact of
potential acquisitions or divestitures, but does include the amortization of
identifiable intangible assets related to Nexus and Hexagram, as well as the
amortization of the TNG software.
Additionally, refer to the "Business Outlook - 2007" section of the
November 14, 2006 earnings release for a comprehensive discussion of "Purchase
Accounting - Identifiable Intangible Assets," "TNG Software Amortization," and
the "PG&E Contract."
The 2007 revenue and EPS estimates described below include approximately
$20 million of sales and approximately $8 million of EBIT related to DCSI's
portion of the PG&E contract which is subject to revenue deferral until delivery
of TNG version 3.0 is achieved. Version 3.0 is currently expected to be
delivered in the fourth quarter of fiscal 2007, at which time the Company
expects to recognize the cumulative deferred revenue on the units delivered up
to that date.
The November 14, 2006 earnings release also contains Management's "Fiscal
2008 Preliminary Long-Term Outlook" and "Chairman's Commentary on Business
Outlook."
Earnings Per Share - 2007
Management estimates of 2007 EPS continue to be in the range of $1.50 to
$1.65 per share, which includes approximately $9.0 million of pretax
amortization expense, or $0.21 per share, related to purchase accounting
intangible assets and TNG software.
The 2007 second half EPS is expected to be in the range of $1.19 to $1.34
per share. Stock option expense for 2007, which is included in the EPS guidance,
is still expected to be in the range of $0.10 to $0.12 per share, or $0.03 to
$0.04 per quarter.
The effective tax rate for the second half of fiscal 2007 is expected to
remain at 39 percent. Due to the tax research credits favorably impacting the
tax rate in the first half of the year, the total year effective tax rate is
estimated to be approximately 35 percent.
Revenues and EBIT Margins - 2007
Management expects 2007 consolidated revenues to increase approximately 22
percent compared to 2006 and be in the range of $555 to $560 million, and the
consolidated EBIT margins should be in the range of 11 to 11.5 percent
(including the impact of the amortization of identifiable intangible assets and
the TNG amortization).
On a segment and operating unit basis for 2007, Management now expects the
following (as compared to the February 5, 2007 Business Outlook):
o PTI sales are now expected to increase approximately 17 percent (versus 4.5
percent) and should be between $54 and $55 million (versus $48 and $49
million) and EBIT margins should be in the range of 18 to 18.5 percent
(versus 15 to 15.5 percent) based on the continued strength of the
commercial aerospace business.
o VACCO's sales are now expected to increase approximately 12.5 to 13 percent
(versus 8 percent) and should be between $36 and $37 million (versus $35
and $36 million) with EBIT margins remaining in the range of 18 to 19
percent as the sales mix changes between defense spares and space products
compared to 2006.
o Filtertek sales are now expected to increase approximately 6 to 7 percent
(versus 7 to 9 percent) and be in the range of $100 to $102 million (versus
$102 to $104 million) with EBIT margins now in the range of 6.5 to 7.5
percent (versus 7 to 8 percent).
o The Test segment sales now are expected to increase 8.5 to 9 percent
(versus 7.5 to 8.5 percent) and be in the range of $139 to $141 million
(versus $138 and $140 million) with EBIT margins remaining in the range of
12 to 12.5 percent.
o The Communications segment sales are now expected to increase approximately
46 to 48 percent (versus 48 to 50 percent) and be in the range of $227 to
$230 million (versus $231 to $234 million) and EBIT margins should be in
the range of 17 to 19 percent (versus 18 to 20 percent). These changes are
the result of a more refined delivery schedule from PG&E and two water AMR
contracts starting their 2007 deployments later in the year than previously
expected. Nexus sales are now expected to be in the range of $15 to $16
million (versus $16 to $18 million) and EBIT margins should now be in the
range of 5 to 6 percent (versus 6 to 7 percent). Hexagram sales are now
expected to be in the range of $57 to $59 million (versus $60 to $63
million) and EBIT margins are now expected to be in the range of 18 to 20
percent (versus 22 to 24 percent). Sales of AMR products at DCSI remain
unchanged and are expected to be in the range of $144 to $147 million with
EBIT margin expectations remaining at approximately 20 percent, which
includes approximately $7.0 million of TNG amortization costs. At March 31,
2007, the Company had approximately $48 million in external TNG development
costs capitalized on the balance sheet in other assets, and is expected to
incur another $10 million in costs over the next year. Additional non-TNG
related engineering and development costs are being expensed as period
costs.
o Corporate operating cost expectations for 2007 remain at approximately $18
million and include $2.1 million of pretax amortization of identifiable
intangible assets related to Nexus and Hexagram.
Conference Call
The Company will host a conference call today, May 8, at 4:00 p.m., Central
time, to discuss the Company's second quarter and year-to-date 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
web site noted above or by phone (dial 1-888-203-1112 and enter the pass code
9465998).
Forward-Looking Statements
Statements in this press release regarding the amounts and timing of fiscal
2007 future revenues, results, earnings, sales, EBIT, EPS, sales and EBIT
margins on a consolidated basis and on a segment and operating unit basis,
growth in the AMR IOU market, fiscal 2007 corporate operating expenses, fiscal
2007 effective tax rate, long-term success of the Company, stock option
expensing, successful development, delivery and customer acceptance of the TNG
software, and the timing and amount of future costs to be incurred in connection
with the TNG software, the timing of deferred revenue on products previously
delivered to PG&E, the ultimate number, value and timing of DCSI and Hexagram
products ordered and deployed by PG&E, the Company's ability to increase
shareholder value 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:
actions by the California Public Utility Commission; PG&E's Board of Directors
or PG&E's Management impacting PG&E's AMI projects; the success of the Company's
competitors; changes in or the effect of the Federal Energy Bill; the timing and
success of DCSI's software development efforts; the timing and content of
purchase order releases under the PG&E contracts; DCSI's and Hexagram's
successful performance of the PG&E 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; 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; 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
communications systems for electric, gas and water utilities, including hardware
and software to support advanced metering applications. In addition, the Company
provides engineered filtrations products to the transportation, health care 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 website 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 Ended Three Months Ended
March 31, 2007 March 31, 2006
-------------- --------------
Net Sales $ 129,068 122,884
Cost and Expenses:
Cost of sales 83,021 80,514
SG&A 31,432 26,703
Amortization of intangible assets 2,909 1,536
Interest (income) expense (217) (100)
Other (income) expenses, net (93) (1,548)
--- ------
Total costs and expenses 117,052 107,105
Earnings before income taxes 12,016 15,779
Income taxes 2,398 8,436
----- -----
Net earnings $ 9,618 7,343
========= =====
Earnings per share:
Basic
Net earnings $ 0.37 0.29
========= ====
Diluted
Net earnings $ 0.36 0.28
========= ====
Average common shares O/S:
Basic 25,895 25,659
====== ======
Diluted 26,491 26,448
====== ======
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Add Nine
ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
Six Months Ended Six Months Ended
March 31, 2007 March 31, 2006
-------------- --------------
Net Sales $ 227,881 213,470
Cost and Expenses:
Cost of sales 154,366 144,501
SG&A 60,816 50,189
Amortization of intangible assets 5,046 2,049
Interest (income) expense (555) (817)
Other (income) expenses, net (607) (1,926)
---- ------
Total costs and expenses 219,066 193,996
Earnings before income taxes 8,815 19,474
Income taxes 578 9,926
--- -----
Net earnings 8,237 9,548
===== =====
Earnings per share:
Basic
Net earnings $ 0.32 0.37
========= ====
Diluted
Net earnings $ 0.31 0.36
========= ====
Average common shares O/S:
Basic 25,885 25,620
====== ======
Diluted 26,477 26,402
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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Business Segment Information
(Unaudited)
(Dollars in millions)
Three Months Ended Six Months Ended
March 31, March 31,
--------- ---------
2007 2006 2007 2006
---- ---- ---- ----
Net Sales
Communications 49.2 43.2 79.3 62.4
PTI $ 13.1 11.7 24.7 22.4
VACCO 8.5 8.3 15.1 16.4
Filtertek 24.3 25.0 46.6 47.7
---- ---- ---- ----
Filtration subtotal 45.9 45.0 86.4 86.5
Test 34.0 34.6 62.2 64.6
---- ---- ---- ----
Totals $129.1 122.8 227.9 213.5
====== ===== ===== =====
EBIT
Communications 6.1 9.7 3.3 8.8
PTI $ 2.6 1.6 3.7 2.8
VACCO 2.3 1.4 2.6 3.3
Filtertek 1.5 1.7 1.9 2.7
--- --- --- ---
Filtration subtotal 6.4 4.7 8.2 8.8
Test 4.1 4.3 6.2 7.3
Corporate (4.8)(1) (3.0)(2) (9.4)(3) (6.2)(4)
---- ---- ---- ----
Totals $ 11.8 15.7 8.3 18.7
====== ==== === ====
Note: Depreciation and amortization expense was $5.7 million and
$4.2 million for the quarters ended March 31, 2007 and 2006,
respectively, and $10.6 million and $7.2 million for the six-
month periods ended March 31, 2007 and 2006, respectively.
(1) Includes $0.6 million of amortization of acquired intangible
assets for Hexagram and Nexus.
(2) Includes a $1.8 million gain related to an indemnification
obligation with respect to a previously divested subsidiary and
$0.8 million of amortization of acquired intangible assets for
Hexagram and Nexus.
(3) Includes $1.2 million of amortization of acquired intangible
assets for Hexagram and Nexus.
(4) Includes a $1.8 million gain related to an indemnification
obligation with respect to previously divested subsidiary and
$0.9 million of amortization of acquired intangible assets for
Hexagram and Nexus.
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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
EBIT Margin Outlook - FY 2007
- -----------------------------
Consolidated EBIT margin in the range of 11 percent to 11.5 percent,
PTI EBIT margin in the range of 18 percent to 18.5 percent, VACCO EBIT
margin in the range of 18 percent to 19 percent, Filtertek EBIT
margin in the range of 7 percent to 8 percent, Test segment EBIT
margin in the range of 12 percent to 12.5 percent, Communications
segment EBIT margin in the range of 17 percent to 19 percent, Nexus EBIT
margin in the range of 5 percent to 6 percent, Hexagram EBIT margin in the
range of 18 percent to 20 percent and DCSI's EBIT margin remaining at
approximately 20 percent under "Revenues and EBIT Margins-2007" cannot be
reconciled with a GAAP measure as this represents a forward-looking measure
with no comparable GAAP measurement quantifiable at this time.
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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
March 31, September 30,
2007 2006
---- ----
Assets
Cash and cash equivalents $ 28,045 36,819
Accounts receivable, net 91,362 83,816
Costs and estimated earnings
on long-term contracts 3,046 1,345
Inventories 59,270 50,984
Current portion of deferred
tax assets 39,129 24,251
Other current assets 15,863 10,042
------ ------
Total current assets 236,715 207,257
Property, plant and equipment, net 71,129 68,754
Goodwill 144,430 143,450
Deferred tax assets - -
Other assets 76,733 69,233
------ ------
$529,007 488,694
======== =======
Liabilities and Shareholders' Equity
Accounts payable $ 47,421 39,496
Other current liabilities 45,031 36,399
------ ------
Total current liabilities 92,452 75,895
Deferred income 3,761 7,458
Other liabilities 43,427 28,907
Long-term debt - -
Shareholders' equity 389,367 376,434
------- -------
$529,007 488,694
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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Six Months Ended
March 31, 2007
--------------
Cash flows from operating activities:
Net earnings $ 8,237
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 10,571
Stock compensation expense 2,932
Changes in operating working capital (10,097)
Effect of deferred taxes (267)
Change in deferred revenues and costs, net 2,982
Other (25)
------
Net cash provided by operating activities 14,333
Cash flows from investing activities:
Acquisition of business (1,250)
Capital expenditures (7,180)
Capitalized software expenditures (15,320)
-------
Net cash used by investing activities (23,750)
Cash flows from financing activities:
Proceeds from / payments of long-term debt -
Other, including exercise of stock options 643
---
Net cash provided by financing activities 643
---
Net decrease in cash and cash equivalents (8,774)
Cash and cash equivalents, beginning of period 36,819
------
Cash and cash equivalents, end of period $ 28,045
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ESCO TECHNOLOGIES INC. AND SUBSIDIARIES
Other Selected Financial Data
(Unaudited)
(Dollars in thousands)
Backlog And Entered
Orders-Q2 FY 2007 Comm. Filtration Test Total
- ----------------- ----- ---------- ---- -----
Beginning Backlog-
12/31/06 $ 150,740 83,290 66,918 300,948
Entered Orders 44,432 * 54,693 36,650 135,775
Sales (49,226)* (45,926) (33,916) (129,068)
------- ------- ------- --------
Ending Backlog-
3/31/07 $ 145,946 92,057 69,652 307,655
========= ====== ====== =======
Backlog And Entered
Orders-YTD FY 2007 Comm. Filtration Test Total
- ------------------ ----- ---------- ---- -----
Beginning Backlog-
9/30 /06 $ 118,986 78,569 55,857 253,412
Entered Orders 106,220 * 99,992 75,912 282,124
Sales (79,260)* (86,504) (62,117) (227,881)
------- ------- ------- --------
Ending Backlog-
3/31/07 $ 145,946 92,057 69,652 307,655
========= ====== ====== =======
Q2 FY YTD FY
2007 Q2 FY 2007 YTD FY
Entered 2007 Entered 2007
*Communications Recap: Orders Sales Orders Sales
- ---------------------- ------ ----- ------ -----
DCSI $23,778 33,387 62,720 49,598
Comtrak 363 356 2,969 2,956
Nexus Energy 2,186 3,542 8,565 7,146
Hexagram 18,105 11,941 31,966 19,560
------ ------ ------ ------
Total 44,432 49,226 106,220 79,260
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