-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HCmxHQsDUdvaCuoS6LW6nrYF2oMTu5IJEK35xErEvqjr8uHGfrokJFo6LGuuofUd ykUczyJe+0VwjyKcEinqUw== 0001157523-04-007053.txt : 20040729 0001157523-04-007053.hdr.sgml : 20040729 20040729082001 ACCESSION NUMBER: 0001157523-04-007053 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040729 ITEM INFORMATION: FILED AS OF DATE: 20040729 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDO CORP CENTRAL INDEX KEY: 0000031617 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 110707740 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03985 FILM NUMBER: 04937411 BUSINESS ADDRESS: STREET 1: 60 EAST 42ND STREET STREET 2: 42ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10165 BUSINESS PHONE: 2127162000 MAIL ADDRESS: STREET 1: 60 EAST 42ND STREET STREET 2: 42ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10165 8-K 1 a4690974.txt EDO CORP. 8-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 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): July 29, 2004 EDO Corporation (Exact name of Registrant as specified in its charter) New York 3812 11-0707740 (State or Other Jurisdiction (Primary Standard (I.R.S. Employer of Incorporation Industrial Classification Identification No.) or Organization) Code Number) -------- 60 East 42nd Street 42nd Floor New York, NY 10165 212.716.2000 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) -------- Not applicable (Former name or former address, if changed since last report) -------- ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On July 29, 2004, EDO Corporation issued an earnings release announcing its financial results for the quarter ended June 26, 2004. A copy of this earnings release is attached hereto as Exhibit 99. The information in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing. SIGNATURE Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: July 29, 2004 EDO CORPORATION By: /s/ Frederic B. Bassett ------------------------------------ Name: Frederic B. Bassett Title: Vice President-Finance, Treasurer and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description of Exhibit - ------------------- --------------------------------------------------- 99 Earnings Press Release of EDO Corporation dated July 29, 2004. - -------------------------------------------------------------------------------- EX-99 2 a4690974ex99.txt PRESS RELEASE EXHIBIT 99 EDO Revenue Up 13 Percent in Second Quarter; Results Include Strong Increases in Cash Flow and Backlog NEW YORK--(BUSINESS WIRE)--July 29, 2004--EDO Corporation (NYSE: EDO) recorded revenue of $126.3 million in the second quarter of 2004, up $14.6 million or 13.0 percent from the $111.7 million recorded in the second quarter of 2003. Net earnings for the quarter were $4.2 million, or $0.23 per diluted share, versus a loss of $0.2 million, or ($0.01) per share, for the second quarter of 2003. For the six-month period ended June 26, 2004, revenue was $237.2 million, up $31.1 million or 15.1 percent from the $206.1 million recorded in the first half of 2003. Net earnings for the first half of 2004 were $8.0 million, or $0.45 per diluted share, versus $2.8 million, or $0.16 per diluted share, for the same period last year. "EDO's organic growth during the quarter met our forecasts," said Chief Executive Officer James M. Smith. "In addition, we added major contract wins that build on our foundation for continued growth in the future. These wins include C4I contracts for Marine Corps communications, our participation with Lockheed Martin's successful proposal for the Joint Common Missile, and a significant new contract for our interference-cancellation technology. "Operating earnings continue to improve in most of our business units, and we expect a strong second half. In fact, 55 percent of annual revenue and more than 60 percent of operating earnings are projected to occur over the two remaining quarters. We remain confident of achieving our forecasted 13 to 14 percent EBITDA margin on full-year revenue of $525 million to $535 million." Revenue Growth Organic revenue growth, which excludes acquisitions owned for less than one year, exceeded 8 percent for the quarter. Revenue growth was aided by strong sales in defense electronics, aircraft armament systems and C4I professional services. With the anticipated revenue from force-protection devices in the second half, the company continues to forecast organic growth in the range of 7 to 9 percent for the full year. Operating Earnings Operating earnings increased by approximately $10.2 million, to $9.4 million. This increase compared to last year's quarter was due primarily to a non-recurring charge of $9.2 million incurred in 2003 related to the sale of our Deer Park facility. This year's second quarter operating earnings were reduced by $5.2 million as a result of revised cost estimates for certain "percent-of-completion" contracts. This was partially offset by a $3.4 million increase to earnings upon the successful completion of a contract for minesweeping equipment. Thus, the net impact for the quarter was a reduction in operating earnings of $1.8 million. Operating earnings otherwise showed healthy results, including solid margins generated by recently acquired businesses, as well as synergies related to the facilities consolidations accomplished to date. These synergies contributed to a 12.4 percent reduction in selling, general and administrative expenses. Cash Flow Cash flow from operations for the second quarter was $17.2 million. This resulted in a $14.9 million increase in the net cash balance during the three month period. At the end of the second quarter, the cash balance was $80.7 million, up from $65.8 million at the end of the first quarter. As anticipated, the temporary working-capital increases experienced in the first quarter are being reduced. For the full year, EDO expects to generate positive cash flow from operations in a range consistent with historical performance. Backlog The funded backlog of unfilled orders increased 4.4 percent over the past three months, and 15.9 percent since year end. As of June 29, the funded backlog stood at a record $535.9 million, up from $513.5 million on March 27 and $462.3 million on Dec. 31, 2003. Backlog does not include portions of contracts for which the U.S. government has not yet appropriated funds, nor does it include unexercised options in any contract. Such unfunded contracts and unexercised contract options add more than $570 million in high-confidence future revenue, for a total of more than $1.1 billion, an increase of 20 percent during the second quarter. Non-GAAP Financial Measures In addition to the financial results contained on the attached statements of earnings, which are presented according to Generally Accepted Accounting Principles, or GAAP, we are providing adjusted EBITDA, as well as pro-forma earnings for the comparative periods last year. Management believes that such adjustments will help investors to compare results to the prior year and to understand the underlying trends in the business. As detailed on the attached reconciliation schedule, pro-forma earnings for the second quarter of 2004 were $4.2 million, or $0.23 per diluted share, versus $3.9 million, or $0.22 per diluted share, in the second quarter of 2003. For the year-to-date, pro-forma earnings for 2004 were $8.0 million, or $0.45 per diluted share, versus $7.0 million, or $0.40 per diluted share, in 2003. EBITDA, as adjusted, (see attached "Calculation of EBITDA" worksheet) was $15.1 million, or 12.0 percent of revenue, for the second quarter of 2004, versus $15.0 million in the second quarter of 2003. For the year-to-date, EBITDA was $29.5 million, or 12.4% of revenue, versus $27.9 million in 2003. Conference Call EDO will conduct a conference call at 10:30 a.m. EDT on July 29 to review these results in more detail. A live web cast of the conference call will be available at www.edocorp.com. For those who cannot listen to the live broadcast, a replay of the call will be available on the corporate site. There will also be a telephone replay of the call available until August 6. To listen to the telephone replay, dial 1-800-633-8284 (outside the U.S. dial 1-402-977-9140), and enter reservation #21200544. About EDO Corporation EDO Corporation provides military and commercial products and professional services, with core competencies in a wide range of critical defense areas, including: -- Aircraft Armament -- Defense Electronics -- Undersea Warfare -- C4I - Command, Control, Communications, Computers, and Intelligence -- Integrated Composite Structures EDO (www.edocorp.com) was founded in 1925, and is headquartered in New York City. The company employs 2,700 people. Forward-Looking Statements Certain statements made in this release, including statements about future profitability, future revenues and long-term organic revenue growth, as well as annual revenue and earnings expectations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: changes in demand for the Company's products, product mix, the timing of customer orders and deliveries, changes in the government's funding priorities, the impact of competitive products and pricing, the inability to successfully execute business strategies, difficulties encountered in the integration of acquired businesses, the inability to secure required regulatory approvals and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release. EDO Corporation and Subsidiaries Condensed Consolidated Statements of Earnings ($000's omitted, except per share data) Three months ended Six months ended June 26, June 28, June 26, June 28, 2004 2003 2004 2003 ----------- --------- ----------- --------- (unaudited) (unaudited) Net sales $126,290 $111,736 $237,167 $206,113 Costs and expenses: Cost of sales 95,264 79,190 175,922 149,020 Selling, general and administrative 18,824 21,493 38,911 36,700 Research and development 2,851 2,498 4,316 4,488 Acquisition-related costs - 215 - 420 Impairment loss on assets held for sale - 9,160 - 9,160 ----------- --------- ----------- --------- 116,939 112,556 219,149 199,788 ----------- --------- ----------- --------- Operating earnings (loss) 9,351 (820) 18,018 6,325 Interest income 202 165 444 400 Interest expense (2,244) (2,247) (4,467) (4,474) Other, net (47) 95 (25) 128 ----------- --------- ----------- --------- Non-operating expense, net (2,089) (1,987) (4,048) (3,946) ----------- --------- ----------- --------- Earnings (loss) before income taxes and discontinued operations 7,262 (2,807) 13,970 2,379 Income tax (expense) benefit (3,086) 1,181 (5,937) (1,023) ----------- --------- ----------- --------- Earnings (loss) before discontinued operations 4,176 (1,626) 8,033 1,356 Earnings from discontinued operations, net of tax - 1,398 - 1,398 ----------- --------- ----------- --------- Net earnings (loss) $4,176 $(228) $8,033 $2,754 =========== ========= =========== ========= Earnings (loss) per common share: Basic: Continuing operations $0.24 $(0.09) $0.46 $0.08 Discontinued operations - 0.08 - 0.08 ----------- --------- ----------- --------- Net basic earnings (loss) per common share $0.24 $(0.01) $0.46 $0.16 =========== ========= =========== ========= Diluted: (a) Continuing operations $0.23 $(0.09) $0.45 $0.08 Discontinued operations - 0.08 - 0.08 ----------- --------- ----------- --------- Net diluted earnings (loss) per common share $0.23 $(0.01) $0.45 $0.16 =========== ========= =========== ========= Weighted average shares outstanding Basic 17,670 17,276 17,610 17,253 =========== ========= =========== ========= Diluted (a) 17,927 17,276 17,880 17,493 =========== ========= =========== ========= Backlog of unfilled orders $535,901 $447,417 =========== ========= (a) Assumes exercise of dilutive stock options. The 5.25% Convertible Subordinated Notes were not dilutive. EDO Corporation and Subsidiaries Condensed Consolidated Balance Sheets ($000's omitted) June 26, Dec 31, 2004 2003 -------- -------- (unaudited) Assets Current Assets: Cash and cash equivalents $ 80,741 $ 86,632 Accounts receivable, net 136,107 134,303 Inventories 49,403 34,733 Deferred income tax asset, net 3,594 3,594 Prepayments & other 6,145 5,954 --------- -------- Total Current Assets 275,990 265,216 Property, plant and equipment, net 30,073 31,355 Notes receivable 6,670 6,538 Goodwill 92,249 92,527 Other intangible assets 53,027 55,898 Deferred income tax asset, net 21,610 21,774 Other assets 19,182 21,388 --------- -------- Total Assets $498,801 $494,696 ========= ======== Liabilities and Shareholders' Equity Current Liabilities: Accounts payable and accrued liabilities $ 73,760 $ 84,743 Contract advances and deposits 12,232 8,195 --------- -------- Total Current Liabilities 85,992 92,938 Long-term debt 137,800 137,800 Post-retirement benefits obligations 72,413 71,898 Environmental obligation 1,697 1,728 Shareholders' equity 200,899 190,332 --------------------- Total Liabilities & Shareholders' Equity $498,801 $494,696 ======= ======== EDO Corporation and Subsidiaries SEGMENT DATA ($000's omitted) Three months ended Six months ended June 26, June 28, June 26, June 28, 2004 2003 2004 2003 -------- -------- -------- -------- (unaudited) (unaudited) Net sales: Defense $ 99,427 $ 86,925 $187,467 $156,943 Communications and Space Products 14,510 13,323 26,062 27,703 Engineered Materials 12,353 11,488 23,638 21,467 -------- -------- -------- -------- $126,290 $111,736 $237,167 $206,113 ======== ======== ======== ======== Operating earnings (loss): Defense (1) $ 8,970 $ 7,364 $ 18,000 $ 12,739 Communications and Space Products 97 827 (994) 2,051 Engineered Materials 284 149 1,012 695 Impairment loss on assets held for sale - (9,160) - (9,160) -------- -------- -------- -------- 9,351 (820) 18,018 6,325 Net interest expense (2,042) (2,082) (4,023) (4,074) Other, net (47) 95 (25) 128 -------- -------- -------- -------- Earnings (loss) from operations before income taxes $ 7,262 $ (2,807) $ 13,970 $ 2,379 ======== ======== ======== ======== (1) Acquisition-related costs included above. - 215 - 420 EDO Corporation and Subsidiaries Reconciliation from GAAP to Pro Forma Earnings ($000's omitted, except per share data) (Before Discontinued Operations in 2003) Three months ended Six months ended June 26, June 28, June 26, June 28, 2004 2003 2004 2003 -------- -------- -------- -------- (unaudited) (unaudited) Earnings (loss) from continuing operations before income taxes $ 7,262 $(2,807) $13,970 $ 2,379 Impairment loss on assets held for sale - 9,160 - 9,160 Acquisition-related costs - 215 - 420 Compensation expense re: accelerated options - 292 - 292 ------- ------- ------- ------- Pro forma earnings before income taxes 7,262 6,860 13,970 12,251 Income tax expense (3,086) (2,977) (5,937) (5,268) ------- ------- ------- ------- Pro forma net earnings $ 4,176 $ 3,883 $ 8,033 $ 6,983 ------- ------- ------- ------- Diluted shares outstanding 17,927 17,515 17,880 17,493 Pro forma diluted earnings per share $ 0.23 $ 0.22 $ 0.45 $ 0.40 ======= ======= ======= ======= Calculation of EBITDA Three months ended Six months ended June 26, June 28, June 26, June 28, 2004 2003 2004 2003 -------- -------- -------- -------- (unaudited) (unaudited) Earnings (loss) from continuing operations before income taxes $ 7,262 $(2,807) $13,970 $ 2,379 Interest expense 2,244 2,247 4,467 4,474 Interest income (202) (165) (444) (400) ------- ------- ------- ------- Net interest expense 2,042 2,082 4,023 4,074 Depreciation 2,870 3,103 5,455 5,998 Amortization 1,444 1,165 2,885 2,105 ------- ------- ------- ------- Total depreciation & amortization 4,314 4,268 8,340 8,103 ------- ------- ------ ------- EBITDA 13,618 3,543 26,333 14,556 Impairment loss on assets held for sale - 9,160 - 9,160 Acquisition-related costs - 215 - 420 Compensation expense re: accelerated options - 292 - 292 ESOP compensation expense 977 744 2,028 1,510 Pension expense 550 1,000 1,100 2,000 ------- ------- ------- ------- EBITDA, as adjusted $15,145 $14,954 $29,461 $27,938 Diluted shares outstanding 17,927 17,515 17,880 17,493 EBITDA, as adjusted, per share $ 0.84 $ 0.85 $ 1.65 $ 1.60 ======= ======= ======= ======= EDO Corporation and Subsidiaries GUIDANCE DATA ESTIMATES Fiscal 2004 ---------------------------- Revenue range $525 million - $535 million Pension costs $2.2 million Effective operating tax rate 42.0% - 43.0% EBITDA, as adjusted, margin range 13.0% - 14.0% ESOP shares issued per quarter 42,376 Average diluted shares outstanding*: - If Note conversion is NOT dilutive 17.9 million - If Note conversion is dilutive 22.3 million * "If-converted method" (FAS 128) to determine diluted EPS: (Shares to be issued if 5.25% Notes are converted at $31.26/share would be 4,408,189.) - - Quarterly Dilution Test Since the after-tax interest on Notes would reduce Net Earnings by $1,039,959 per quarter, the decision point for the dilution test is $1,039,959 / 4,408,189, or $0.2359 per share. If basic EPS for the quarter are more than $0.2359, the impact of the Notes is dilutive. The Notes were not dilutive to EPS this quarter nor for the year to date. - - Annual Dilution Test Since the after-tax interest on Notes reduces Net Earnings by $4,159,838 per year, the decision point for the dilution test is $4,159,838 / 4,408,189, or $0.9437 per share. If basic EPS for the year are more than $0.9437, the impact of the Notes is dilutive. Based on current projections, the Notes are expected to be dilutive for the 2004 full-year. If so, the EPS calculation will be based on 22.3 million shares. This table contains estimates based on management's current expectations. This information is forward-looking, and actual results may differ materially. CONTACT: EDO Corporation William A. Walkowiak, 212-716-2038 ir@edocorp.com -----END PRIVACY-ENHANCED MESSAGE-----