Exhibit 99
[L3 COMMUNICATIONS LETTERHEAD]
Contact: Cynthia Swain
Vice President, Corporate Communications
L-3 Communications
212-697-1111
Contact: Financial Dynamics
Investors: Eric Boyriven, Olivia Pirovano For Immediate Release
Media: Evan Goetz ---------------------
212-850-5600
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L-3 COMMUNICATIONS ANNOUNCES FIRST QUARTER 2004 RESULTS
-SALES, OPERATING INCOME AND DILUTED EARNINGS PER SHARE INCREASE
39.7%, 39.3% AND 34.0%, RESPECTIVELY
NEW YORK, NY, April 27, 2004 - L-3 Communications (NYSE: LLL) today announced
strong results for the 2004 first quarter, including sales of $1,521.6 million,
operating income of $151.6 million, diluted earnings per share of $0.67, net
cash from operating activities of $104.8 million and free cash flow(1) of $92.3
million.
For the 2004 first quarter, sales increased by $432.6 million, or 39.7%, to
$1,521.6 million from sales of $1,089.0 million for the 2003 first quarter. The
increase in sales from acquired businesses was $283.7 million. Consolidated
organic(2) sales growth was 13.7%, or $148.9 million. Organic sales growth for
the company's defense businesses was 18.1%, or $170.9 million, driven by
continued strong demand for secure communications and intelligence, surveillance
and reconnaissance (ISR) systems and products, aircraft modernization,
simulation and training, communication software and engineering support and
displays. Organic sales for the company's commercial and other non-military
businesses declined by 15.5%, or $22.0 million, primarily due to lower sales for
explosives detection systems (EDS).
Consolidated operating income for the 2004 first quarter increased by $42.8
million, or 39.3%, to $151.6 million from $108.8 million for the 2003 first
quarter. Consolidated operating income as a percentage of sales (operating
margin) was unchanged at 10.0% for the 2004 first quarter compared to the 2003
first quarter. The changes in the operating margins for the company's segments
are discussed below.
Net income for the 2004 first quarter increased by $22.3 million, or 44.9%, to
$72.0 million, compared to net income of $49.7 million for the 2003 first
quarter. Diluted earnings per share (EPS) increased by $0.17, or 34.0%, to
$0.67, compared to $0.50 for the 2003 first quarter.
For the 2004 first quarter, the company received funded orders of $1,670.3
million, an increase of 37.4%, or $454.8 million, compared to funded orders of
$1,215.5 million for the 2003 first quarter. At March 31, 2004, funded backlog
was $4,042.0 million, an increase of 3.8%, or $148.7 million, over funded
backlog of $3,893.3 million at December 31, 2003.
Net cash from operating activities for the 2004 first quarter decreased by $1.3
million, or 1.2%, to $104.8 million from $106.1 million for the 2003 first
quarter. Free cash flow for the 2004 first quarter increased by $2.2 million, or
2.4%, to $92.3 million, compared to free cash flow of $90.1 million for the 2003
first quarter.
Notes:
(1) See discussions and calculations of free cash flow on the financial tables
attached to this press release.
(2) Organic growth is defined as the current period vs. prior period increase
(decrease) in sales or orders excluding the increase from acquired
businesses.
L-3 COMMUNICATIONS ANNOUNCES FIRST QUARTER 2004 RESULTS PAGE 2
At March 31, 2004, the company had $205.5 million in cash, an increase of $70.6
million from $134.9 million at December 31, 2003. Total debt declined by $300.2
million to $2,157.1 million at March 31, 2004 from $2,457.3 million at December
31, 2003. Total debt as a percentage of book capitalization (total debt plus
minority interest plus shareholders' equity) decreased to 41.6% at March 31,
2004 from 48.1% at December 31, 2003. Additionally, shareholders' equity
increased by $382.6 million to $2,957.1 million at March 31, 2004, from $2,574.5
million at December 31, 2003. Available borrowings under the company's revolving
credit facilities were $678.5 million at March 31, 2004. The decline in debt and
the increase in shareholders' equity is primarily due to the conversion of
$298.2 million of convertible notes into 7.3 million shares of L-3
Communications Holdings common stock in January of 2004.
"I am pleased to report that L-3 had a very good start to 2004 with solid
results in our major businesses," said Frank C. Lanza, chairman and chief
executive officer of L-3 Communications. "Our secure communications and
intelligence, surveillance and reconnaissance, training, simulation and support
services and aircraft modernization and maintenance businesses all performed
very well in the first quarter of 2004."
SEGMENT RESULTS
SECURE COMMUNICATIONS & ISR
Secure Communications & ISR (SC&ISR) 2004 first quarter sales increased by $56.6
million, or 17.3%, to $384.3 million from $327.7 million for the 2003 first
quarter. The increase in sales from acquired businesses was $8.2 million. The
acquired businesses include Aeromet and certain defense and aerospace assets of
IPICOM, Inc. Organic sales growth was $48.4 million, or 14.8%, reflecting
continued strong demand from the U.S. Department of Defense (DoD) and other U.S.
Government agencies for the company's secure communications and ISR systems and
products. SC&ISR generated operating income of $46.1 million for the 2004 first
quarter, compared with $32.4 million for the 2003 first quarter. Operating
margin increased to 12.0% for the 2004 first quarter, from 9.9% for the 2003
first quarter, primarily because of organic sales growth and incremental cost
improvements arising from higher sales volume.
Orders for the SC&ISR segment were $425.3 million during the 2004 first quarter
and included:
o An announcement by Bell Helicopter that L-3 will provide the data
links to support the Eagle Eye Vertical Take Off and Landing Unmanned
Aerial Vehicle (VUAV) for the U.S. Coast Guard's Deepwater program.
o Follow-on funding from the U.S. Air Force for airborne systems
including Predator, Global Hawk, U-2 Support, FAB-T and Integrated
RF/Optical Networked Tactical Targeting Network Technology (TTNT) and
Terminal System Integration (IRON-T2). IRON-T2 is a new classified
contract in the company's airborne systems family of products.
o Additional funding for ongoing support of the Compass Call program,
including life cycle support and contractor support services.
o Continued funding for proprietary aircraft modification and support to
provide aircraft procurement, field teams, spares, life cycle support
and contractor management efforts.
o Additional orders for Secure Terminal Equipment (STE) in support of
ongoing military efforts and the Department of Homeland Security.
o Additional awards for Advanced EHF COMSEC/TRANSEC Systems (ACTS) for
system security development, including the new Key Management
Architecture.
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L-3 COMMUNICATIONS ANNOUNCES FIRST QUARTER 2004 RESULTS PAGE 3
o Funding for a High Speed Encryption Technology (HSET(2)) study. This
study for the National Reconnaissance Office (NRO) will develop
initial architectures for next generation high-speed encryption
products for the U.S. Government.
o Additional funding for Remote Battlefield Sensor Systems (REMBASS) in
support of the military efforts in Iraq and Afghanistan.
TRAINING, SIMULATION AND SUPPORT SERVICES
Training, Simulation and Support Services (TS&SS) sales for the 2004 first
quarter increased by $27.1 million, or 11.2%, to $268.5 million from $241.4
million for the 2003 first quarter, driven by increased sales of training,
simulation and communication software and engineering support services. There
were no acquisitions that affected TS&SS' results. Operating income was $31.9
million for the 2004 first quarter, compared to $29.9 million for the 2003 first
quarter. Operating margin decreased to 11.9% from 12.4% due to higher sales from
cost-reimbursable type and time and material type contracts, which generally are
less profitable than fixed-priced type contracts.
Orders for the TS&SS segment were $259.5 million during the 2004 first quarter
and included:
o An award from the U.S. Army Communications - Electronic Command
(CECOM) to continue providing Satellite Communications (SATCOM)
software engineering support.
o An award to continue providing Tactical Communications (TACCOM)
software engineering support to the CECOM Software Engineering Center
(SEC).
o Continued strong demand from the U.S. Army Recruiting Command (USAREC)
for direct recruiting and recruiting support activities throughout the
United States.
o Follow-on funding from the U.S. Defense Intelligence Agency (DIA) to
provide recruiting and personnel support, interpreters/translators,
quality control supervisors, intelligence analysts, report writers,
collection management support and deployment management support.
o An award to provide functional training for civilians selected to fill
high level positions in the Iraqi Ministry of Defense (MoD).
o An award to provide program management and technical services support
for the U.S. Navy's new San Antonio class of Amphibious Transport Dock
Ships (LPDs) for the Naval Sea Systems Command (NAVSEA) PM-317
program.
o An award to provide E-6B Weapons Systems Trainer and Mission Crew
instructional materials.
o The exercise of an option to develop a second F/A-18C Distributed
Mission Training (DMT) suite.
o The exercise of an option for operation and support of the C-141 Total
Training System by the U.S. Air
Force.
AVIATION PRODUCTS & AIRCRAFT MODERNIZATION
Aviation Products and Aircraft Modernization (AP&AM) 2004 first quarter sales
increased by $370.1 million, or 242.7%, to $522.6 million from $152.5 million in
the 2003 first quarter. The increase in sales from acquired businesses was
$272.0 million. The acquired businesses include Avionics Systems, Vertex
Aerospace, Military Aviation Services and Flight Systems Engineering, which were
all acquired during 2003. Organic sales growth was $98.1 million, or 64.3%,
driven by higher sales of aircraft modernization and modification and displays
due to strong DoD demand, and sales from the recently awarded U.S. Army Aviation
and
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L-3 COMMUNICATIONS ANNOUNCES FIRST QUARTER 2004 RESULTS PAGE 4
Missile Command (AMCOM) contract for the maintenance and logistics support for
rotary-wing aircraft at Fort Rucker, Alabama (excluding the contract's sales
attributable to Vertex Aerospace's ownership interest prior to the date of
acquisition by L-3). AP&AM generated operating income of $49.8 million for the
2004 first quarter, compared with $20.7 million for the 2003 first quarter. As
expected, operating margin decreased to 9.5% from 13.6%, primarily because of
lower operating margins from the Vertex Aerospace acquired business and the
AMCOM Fort Rucker contract.
Orders for the AP&AM segment were $497.3 million during the 2004 first quarter
and included:
o Funding for ongoing support of Special Operations Forces, Support
Activity (SOF-SA). The SOF-SA provides full service logistics support
to the United States Special Operations Command (USSOCOM). The Joint
Operations Group (JOG) is the contractor/operator specializing in
systems integration/modification for Special Operations Aviation (SOA)
and SOF unique equipment.
o An award to provide mission systems upgrades to the U.S. Navy's E-6B.
L-3 will provide an upgrade to the power and cooling systems, develop
aircraft A-Lists and integrate and test the upgraded mission systems.
o An award from a major regional carrier of the new T2CAS (collision and
terrain avoidance system).
o Funding from the U.S. Air Force to support an effort to upgrade the
mission communications systems on executive aircraft for the U.S.
Government.
o Interim funding from the Canadian Government to L-3 Canadian units to
provide F-18 fighter aircraft engineering, modification and
maintenance. In addition, funding was received to design and install
structural repairs on the Royal Australian Air Force F/A-18 fleet.
o Continued funding for Electronic Countermeasure Officer (ECMO)
Displays and Pilot Displays for the EA-6B.
o Funding to support UH-1 and HH-60 helicopters for the U.S. Air Force.
o Funding from the Department of Homeland Security Bureau of
Investigation and Customs Enforcement to improve P-3 aircraft
inspection including aircraft maintenance and repairs.
SPECIALIZED PRODUCTS
Specialized Products sales for the 2004 first quarter declined by $21.2 million,
or 5.8%, to $346.2 million from $367.4 million in the 2003 first quarter. The
increase in sales from the Klein Associates acquired business was $3.5 million.
Organic sales declined by $24.7 million, or 6.7%, primarily because of lower EDS
volume of $19.0 million. Volume declined for ruggedized military computers and
displays and communication terminals and shipboard electronic racks due to
contractual timing of shipments, which are expected to increase during the
remainder of the year. Volume also declined for undersea warfare products due to
contracts nearing completion. These sales decreases were partially offset by
volume increases for training devices and fuzing products due to higher demand
from the DoD. Sales of naval power equipment increased due to higher shipments
on contracts in backlog. Operating income was $23.8 million for the 2004 first
quarter, compared with $25.8 million for the 2003 first quarter. Operating
margin declined slightly to 6.9% from 7.0%, primarily because of volume declines
for security systems, which were partially offset by margin improvement for
naval power equipment.
Orders for the Specialized Products segment were $488.2 million during the 2004
first quarter and included:
o Continued funding from Boeing to upgrade the F/A-18C Weapons Tactics
Trainer (WTT) forty-foot dome to an F/A-18E/F aircraft configuration
and integrate it with a new technology visual system.
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L-3 COMMUNICATIONS ANNOUNCES FIRST QUARTER 2004 RESULTS PAGE 5
o A contract from Bombardier to deliver state-of-the-art training
systems for the Canadian Air Force's CF-18 Advanced Distributed Combat
Training System (ADCTS) program.
o An announcement of an award from the Computer Sciences Corporation to
develop and support the U.S. Army's Flight School XXI program.
o An initial order for the Model 12 Dual Sensor 200 EO/IR Surveillance
System for the Schweizer 333 helicopter used by the Mexican federal
police for Homeland Security operations.
o Funding for the Integrated Electronics Assembly (IEA) for use on the
Space Shuttle.
o An award from the Joint Communications Support Element (JCSE) for the
Quadband Dual Hub Terminals (QDHT).
o A follow-on award from the Naval Air Warfare Center for the Unified
Command Suites to supply specialty vehicles for on-scene
communications for Weapons of Mass Destruction (WMD) situations to the
National Guard Bureau.
o Notification from MIT Lincoln Labs for a Phase II upgrade of the
Haystack Antenna program to complete the upgrade of the 120-foot
x-Band antenna.
o Initial funding from the Israel Airport Authority (IAA) to supply
eXaminerTM 3DX-6000 explosive detection systems to the new Ben Gurion
Airport Terminal.
o An award from Northrop Grumman Newport News to overhaul air circuit
breakers for the CVN-70 program.
o The selection of L-3 by Bath Iron Works to provide Air Cooled
Frequency Converters for the DDG-51 Class AEGIS Destroyer.
o An award from the U.S. Army for the Tactical Quiet Generators (TQG).
GOVERNMENT AND COMMERCIAL BUSINESSES RESULTS
For the 2004 first quarter, sales from the company's government businesses
increased by $427.3 million, or 45.1%, to $1,374.1 million from $946.8 million
for the 2003 first quarter. Operating income from the company's government
businesses for the 2004 first quarter increased by $38.0 million, or 36.5%, to
$142.0 million from $104.0 million for the 2003 first quarter. Operating margin
declined to 10.3% from 11.0%, primarily due to lower margins from acquired
businesses.
Sales from the company's commercial businesses (which includes L-3's EDS
business) increased by $5.3 million, or 3.7%, to $147.5 million, compared to
$142.2 million for the 2003 first quarter. Operating income from the company's
commercial businesses for the 2004 first quarter increased by $4.8 million, or
100%, to $9.6 million, compared to operating income of $4.8 million for the 2003
first quarter. Operating margin increased to 6.5% from 3.4%, primarily due to
higher margins from acquired businesses.
OUTLOOK
"L-3 is very well positioned as we continue into 2004 and beyond," said Mr.
Lanza. "In 2004, there is approximately $140 billion in the investment account
available in the DoD budget. We participate in this segment of the budget with
our ISR and secure communications businesses and we offer the broadest catalog
of defense products in the industry - ranging from cockpit and ruggedized
displays, wireless visualization
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L-3 COMMUNICATIONS ANNOUNCES FIRST QUARTER 2004 RESULTS PAGE 6
systems and ocean products to munitions products, telemetry and instrumentation,
satellite communications, antennas, and navigation and guidance products."
"Additionally, there is about $120 billion in the DoD Operations and Maintenance
(O&M) budget," continued Mr. Lanza, "with almost $30 billion available to
defense contractors such as L-3. Our company is a significant player in this
budget area -- serving as prime contractor for a number of aircraft
modernization initiatives, as a leading supplier of training and simulation
systems and as a provider of high-end government services."
"L-3 participates in a third major budget area not included in the DoD
budget--Department of Homeland Security (DHS)," said Mr. Lanza. "Of the overall
annual $40 billion DHS budget, about $12 billion is earmarked for products and
services procured from U.S. Government contractors, and we presently participate
in about a third of that market."
"L-3 offers key systems, products and services in this market, including
aviation, cargo, port and maritime security equipment as well as crisis
management systems and communications command and control and bioterrorism
vehicles to assist first responders. In fact, L-3 has already become one of the
top three providers of products and services in the U.S. for this market."
Because of a rising federal budget deficit and greater domestic
non-discretionary demands, the administration and Congress potentially could
reduce discretionary spending increases in the range of 2% to 4% for the fiscal
year 2005. Mr. Lanza noted that L-3 can grow substantially even if topline
defense spending is reduced. He said that the DoD would likely delay investments
in new platforms rather than sacrifice readiness or reduce its ongoing
transformation efforts given the kinds of threats facing the U.S.
"As a result, we believe there will be strong emphasis by the DoD in connection
with the modernization of present assets," said Mr. Lanza, "as well as in
connection with investment in precision delivery systems, command and control,
network-centric communications, ISR, unmanned aerial vehicles (UAVs) and
advanced sensors. In addition, networked combined arms training and spiral
insertion of advanced technology products will provide growth opportunities for
L-3 even if the defense budget is modest or flat."
"There is also growth in areas of homeland security where L-3 has a broad
portfolio of products and services. We believe that cargo, port and maritime
security, crisis management as well as vehicles for restoral communications and
chemical analysis are growth areas for the company as the federal government,
states and port authorities focus on vulnerabilities in the national
infrastructure."
Passenger rail travel has begun to be a focus area due to the March terrorist
bombing in Madrid, and as a result the U.S. Transportation Security
Administration (TSA) is planning to test techniques to improve security in a
suburban Maryland rail station. The results from this test could pave the way
for a new rail security market at strategic rail ports.
"The pipeline for acquisitions remains full," said Mr. Lanza. "There are a large
number of properties with annual revenues ranging from $50 million to $300
million that could add substantially to L-3's business segments. We will
continue to be selective in our acquisitions, choosing ones that increase the
products and services that we provide to customers, as well as expand our
product base and add value in our growing sub-system marketplace. The net result
is that even in a reduced budget environment, L-3 can still deliver strong
organic growth by adding products that support its sub-systems and by continuing
its increased participation in the investment account and the O&M and homeland
security budgets."
"For 2004, we expect to achieve our objective of 20% top-line and bottom-line
growth, including 10% to 12% organic sales growth," Mr. Lanza continued. "The
defense company acquisition pipeline continues to be robust and there are in
process many opportunities to add affordable companies to L-3 that are
synergistic with our existing businesses at reasonable EBITDA purchase price
multiples. We are confident that 2004
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L-3 COMMUNICATIONS ANNOUNCES FIRST QUARTER 2004 RESULTS PAGE 7
will be another year of strong profitable growth for L-3 and will include
introduction of many new products for which the development effort will be
completed in 2004."
Specifically, the company expects its total sales for 2004 compared to 2003 to
grow in excess of 28% to about $6.5 billion, including organic sales growth of
between 10% and 12% and increases due to sales from acquisitions. Operating
income is expected to grow by more than 23%, resulting in 2004 diluted earnings
per share of between $3.35 and $3.40. Free cash flow for 2004 is expected to
exceed $425 million. The company's free cash flow estimate for 2004 is comprised
of cash from operating activities expected to exceed $525 million, less
approximately $100 million of capital expenditures, net of dispositions of
property, plant and equipment.
CONFERENCE CALL
In conjunction with this release, L-3 Communications will host a conference
call, which will be simultaneously broadcast live over the Internet. Frank C.
Lanza, chairman and chief executive officer, Robert V. LaPenta, president and
chief financial officer, and Cynthia Swain, vice president-corporate
communications, will host the call today, Tuesday, April 27, 2004, at 4:00 pm
EDT. Listeners may access the conference call live over the Internet at the
following locations:
http://www.firstcallevents.com/service/ajwz403982471gf12.html
or
http://www.L-3com.com
Please allow fifteen minutes prior to the call to download and install any
necessary audio software. The archived version of the call may be accessed at
these sites or by dialing (800) 642-1687 (passcode: 6746382), beginning
approximately two hours after the call ends through May 4, 2004.
Headquartered in New York City, L-3 Communications is a leading provider of
Intelligence, Surveillance and Reconnaissance (ISR) systems, secure
communications systems, aircraft modernization, training and government services
and is a merchant supplier of a broad array of high technology products. Its
customers include the Department of Defense, Department of Homeland Security,
selected U.S. Government intelligence agencies and aerospace prime contractors.
To learn more about L-3 Communications, please visit the company's web site at
www.L-3Com.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical information contained herein, the matters set forth in
this news release are forward-looking statements. The forward-looking statements
set forth above involve a number of risks and uncertainties that could cause
actual results to differ materially from any such statement, including the risks
and uncertainties discussed in the company's Safe Harbor Compliance Statement
for Forward-looking Statements included in the company's recent filings,
including Forms 10-K and 10-Q, with the Securities and Exchange Commission. The
forward-looking statements speak only as of the date made, and the company
undertakes no obligation to update these forward-looking statements.
# # #
- FINANCIAL TABLES FOLLOW -
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L-3 COMMUNICATIONS HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
MARCH 31,
2004 2003
------------- ------------
SALES:
CONTRACTS, PRIMARILY U.S. GOVERNMENT(A) $ 1,374.1 $ 946.8
COMMERCIAL, PRIMARILY PRODUCTS(A) 147.5 142.2
------------- ------------
CONSOLIDATED SALES $ 1,521.6 $ 1,089.0
------------- ------------
COSTS AND EXPENSES:
CONTRACTS, PRIMARILY U.S. GOVERNMENT 1,232.1 842.8
COMMERCIAL, PRIMARILY PRODUCTS:
COST OF SALES 88.2 94.9
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 34.3 32.7
RESEARCH AND DEVELOPMENT EXPENSES 15.4 9.8
------------- ------------
CONSOLIDATED COSTS AND EXPENSES 1,370.0 980.2
------------- ------------
OPERATING INCOME(A) 151.6 108.8
INTEREST AND OTHER INCOME (EXPENSE) (1.1) 1.4
INTEREST EXPENSE 36.5 32.2
MINORITY INTEREST 0.6 0.3
------------- ------------
INCOME BEFORE INCOME TAXES 113.4 77.7
PROVISION FOR INCOME TAXES 41.4 28.0
------------- ------------
NET INCOME $ 72.0 $ 49.7
============= ============
EARNINGS PER SHARE:
BASIC $ 0.69 $ 0.52
============= ============
DILUTED (B) $ 0.67 $ 0.50
============= ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 104.6 95.1
============= ============
DILUTED 108.1 105.0
============= ============
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(a) Due to the realignment of certain businesses in 2004, $18.0 million of 2003
first quarter sales and $2.1 million of 2003 first quarter operating income
was reclassified from "Contracts, primarily U.S. Government" to
"Commercial, primarily products."
(b) In order to calculate diluted earnings per share for the three months ended
March 31, 2003, the after-tax interest expense savings of $2.6 million on
the assumed conversion of the Convertible Notes must be added to net income
and then divided by the weighted average number of shares outstanding.
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L-3 COMMUNICATIONS HOLDINGS, INC.
SELECTED UNAUDITED FINANCIAL DATA
(IN MILLIONS)
THREE MONTHS ENDED
MARCH 31,
----------------------
2004 2003
--------- --------
FUNDED ORDERS $ 1,670.3 $ 1,215.5
REPORTABLE SEGMENT OPERATING DATA:
SALES:
SECURE COMMUNICATIONS & ISR(C) $ 384.3 $ 327.7
TRAINING, SIMULATION & SUPPORT SVS. (C) 268.5 241.4
AVIATION PDTS. & AIRCRAFT MODERNIZATION(C) 522.6 152.5
SPECIALIZED PRODUCTS(C) 346.2 367.4
--------- --------
CONSOLIDATED $ 1,521.6 $ 1,089.0
========= =======
OPERATING INCOME:
SECURE COMMUNICATIONS & ISR(C) $ 46.1 $ 32.4
TRAINING, SIMULATION & SUPPORT SVS. (C) 31.9 29.9
AVIATION PDTS. & AIRCRAFT MODERNIZATION(C) 49.8 20.7
SPECIALIZED PRODUCTS(C) 23.8 25.8
--------- --------
CONSOLIDATED $ 151.6 $ 108.8
========= =======
OPERATING MARGIN:
SECURE COMMUNICATIONS & ISR 12.0% 9.9%
TRAINING, SIMULATION & SUPPORT SVS. 11.9% 12.4%
AVIATION PDTS. & AIRCRAFT MODERNIZATION 9.5% 13.6%
SPECIALIZED PRODUCTS 6.9% 7.0%
CONSOLIDATED 10.0% 10.0%
DEPRECIATION AND AMORTIZATION:
SECURE COMMUNICATIONS & ISR $ 8.3 $ 7.1
TRAINING, SIMULATION & SUPPORT SVS. 1.8 2.0
AVIATION PDTS. & AIRCRAFT MODERNIZATION 8.2 3.9
SPECIALIZED PRODUCTS 11.4 9.8
--------- --------
CONSOLIDATED $ 29.7 $ 22.8
========= =======
CASH FLOW DATA:
NET CASH FROM OPERATING ACTIVITIES $ 104.8 $ 106.1
NET CASH USED IN INVESTING ACTIVITIES (38.2) (213.4)
NET CASH FROM FINANCING ACTIVITIES 4.0 6.8
--------- --------
NET INCREASE (DECREASE) IN CASH $ 70.6 $ (100.5)
========= =======
RECONCILIATION OF GAAP TO NON-GAAP MEASUREMENTS:
NET CASH FROM OPERATING ACTIVITIES $ 104.8 $ 106.1
LESS: CAPITAL EXPENDITURES (15.0) (16.5)
ADD: DISPOSITIONS 2.5 0.5
--------- -------
FREE CASH FLOW(D) $ 92.3 $ 90.1
========= =======
|
MARCH 31, DECEMBER 31,
2004 2003
----------- ------------
PERIOD END DATA:
FUNDED BACKLOG $ 4,042.0 $3,893.3
CASH & CASH EQUIVALENTS $ 205.5 $ 134.9
TOTAL DEBT $ 2,157.1 $2,457.3
MINORITY INTEREST $ 74.8 $ 76.2
SHAREHOLDERS' EQUITY $ 2,957.1 $2,574.5
|
(c) Due to the realignment of certain businesses in 2004, $6.5 million of 2003
first quarter sales and $0.9 million of 2003 first quarter operating loss
was reclassified from Aviation Products & Aircraft Modernization to Secure
Communications & ISR, and $10.0 million of 2003 first quarter sales and
$1.4 million of 2003 first quarter operating income was reclassified from
Specialized Products to Training, Simulation & Support Services.
(d) The company discloses free cash flow because the company believes that,
subject to the limitations discussed below, it is one indicator of the cash
flow generated that is available for investing and financing activities.
Free cash flow is defined as net cash from operating activities less net
capital expenditures (capital expenditures less cash proceeds from
dispositions of property, plant and equipment). Free cash flow represents
cash generated after paying for interest on borrowings, income taxes,
capital expenditures and changes in working capital, but before repaying
principal amount of outstanding debt, paying cash dividends on common stock
and investing cash to acquire businesses and make other strategic
investments. Thus, key assumptions underlying free cash flow are that the
company will be able to refinance its existing debt when it matures with
new debt, and that the company will be able to supplementally finance any
new acquisitions it makes by raising new debt or equity capital. Because of
these assumptions, free cash flow is not a measure that can be relied upon
to represent the residual cash flow available for discretionary
expenditures.
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