Breeze-Eastern Corporation (AMEX:BZC) today reported that net
income for the 2008 fiscal third quarter was $1.5 million versus
$1.6 million in the prior-year period or income of $.16 per diluted
share in the 2008 fiscal third quarter compared to $.17 per diluted
share in the prior year period. Operating income for the third
quarter of fiscal 2008 was $3.4 million compared to $3.8 million
for the third quarter of fiscal 2007. Sales of $18.1 million in the
fiscal third quarter of 2008 declined slightly from $18.9 million
for the same period in the prior year. Adjusted EBITDA, as
described under �Non-GAAP Financial Measures� in this press
release, for the third quarter of fiscal 2008 was $3.8 million
versus $4.2 million in the prior year period. New orders received
during the 2008 fiscal third quarter were $19.1 million compared to
$9.8 million in the prior fiscal year�s third quarter. The
Company�s book-to-bill ratio for the fiscal 2008 third quarter was
1.1 compared with 0.5 for last year�s fiscal third quarter. For the
nine month period ended December 30, 2007, the Company reported net
income of $3.0 million versus $2.6 million for the same period last
year or income of $.32 per diluted share in the first nine months
of fiscal 2008 compared to $.27 per diluted share for the same
period in fiscal 2007. The first nine months of fiscal 2007
included a pretax charge of $1.3 million related to the refinancing
of the Company�s debt. Operating income for the first nine months
of fiscal 2008 was $7.7 million versus $9.0 million for the same
period in fiscal 2007. Sales for the first nine months of fiscal
2008 declined slightly to $51.6 million from $52.8 million for the
same period last year. Adjusted EBITDA was $8.7 million for the
first nine months of fiscal 2008 versus $10.2 million for the same
period last year. New orders received during the first nine months
of fiscal 2008 were $54.8 million compared to $83.1 million for the
same period in fiscal 2007. The fiscal 2007 figure included an
order from Airbus for $21.5 million relating to the A400M Military
Transport Program which is expected to commence shipping in late
calendar 2009 and continue through 2020. The book-to-bill ratio for
the first nine months of fiscal 2008 was 1.1 versus 1.2 for the
first nine months of fiscal 2007 excluding the $21.5 million Airbus
order. Robert L. G. White, President and Chief Executive Officer of
the Company, said, �In spite of lower spare parts sales in the
third quarter of fiscal 2008 as compared to the same period in
fiscal 2007, we reported a gross margin in the quarter of 45% that
was the result of better performance in the production of new
equipment and the overhaul and repair sales. The shift in product
mix which we experienced in the first six months of fiscal 2008
continued in the third quarter as sales of new equipment accounted
for 61% of total sales in the third quarter bringing the nine month
total of new equipment shipments to 56% of sales compared to 46%
for the first nine months of fiscal 2007. The demand for spare
parts remained weak during the third quarter due primarily, we
believe, to the delay in passage of the 2008 Federal Government
Defense budget and this delay had the biggest impact on the shift
in sales mix. While we remain confident that the unrealized portion
of the spare parts sales will eventually be ordered, it is clear
that much of the delayed order flow previously expected in fiscal
2008 will fall into fiscal 2009. Accordingly, on December 12, 2007
we issued a press release revising our sales and Adjusted EBITDA
targets for fiscal 2008 to $74 million and $13.3 million,
respectively, from the previously reported sales and Adjusted
EBITDA targets of $77 million and $15.9 million, respectively.� Mr.
White continued, �The gross margin of 42% for the first nine months
of fiscal 2008 versus 44% for the same period last year reflects
the decline in spare parts sales which have substantially higher
margins than our sales of new equipment and overhaul and repair. As
mentioned above, the recovery of the shipment pattern to more
historical trends we have been expecting has not yet occurred due,
we believe, to the continued delay associated with appropriations
under the 2008 Federal Government Defense budget. In spite of this,
we are very pleased that the order rate for the overall business
continued to show strength with a book-to-bill ratio for the third
quarter of 1.1 following the second quarter�s very strong
book-to-bill ratio of 1.6. The decrease in general, administrative
and selling expenses in the third quarter of fiscal 2008 compared
to the same period last year was mainly due to lower costs related
to compliance with Section 404 of the Sarbanes-Oxley Act of 2002.
For the first nine months of fiscal 2008, the general,
administrative and selling expenses were approximately $0.5 million
below our plan reflecting measures taken by us during the period to
contain or reduce costs in view of the order patterns mentioned
above. Our debt, net of cash on hand, at the end of the third
quarter of fiscal 2008 was $35.6 million, a decrease of $2.6
million from the end of the second fiscal quarter of 2008 and a
decrease of $3.4 million from the end of fiscal 2007. The decrease
in the third quarter was principally due to decreased accounts
receivable and decreased inventory levels. We are working down the
inventory levels that were previously built up to accommodate a
product mix more heavily weighted to new equipment sales. We
anticipate a substantial reduction in debt, net of cash, in the
fourth quarter through operating results as well as the previously
announced sale and lease-back of our Union, New Jersey facility
currently expected to close in the fourth quarter.� Outlook for the
Remainder of Fiscal 2008 Mr. White concluded, �As noted above and
discussed more fully in our press release of December 12, 2007, we
believe that the delay in certain appropriations associated with
the Federal Government Defense budget has resulted in a delay in
the orders for sales of spare parts. Although we expect that
greater than expected sales of new production for fiscal 2008 will
partially offset the shortfall in sales of spare parts, we have
revised our sales and Adjusted EBITDA targets for fiscal 2008 to
$74 million and $13.3 million from the previously reported sales
and Adjusted EBITDA targets of $77 million and $15.9 million,
respectively.� Breeze-Eastern Corporation
(http://www.breeze-eastern.com) is the world�s leading designer and
manufacturer of sophisticated lifting devices for military and
civilian aircraft, including rescue hoists, cargo hooks, and
weapons-lifting systems. The Company, formerly known as
TransTechnology Corporation, which employs approximately 180 people
at its facility in Union, New Jersey, reported sales of $73.3
million in the fiscal year ended March 31, 2007. Non�GAAP Financial
Measures In addition to disclosing financial results that are
determined in accordance with Generally Accepted Accounting
Principles (�GAAP�), the Company also discloses operating income
(gross profit less general, administrative and selling expenses)
and Adjusted EBITDA (earnings before interest, taxes, depreciation
and amortization, interest and other income/expense and loss on
extinguishment of debt). These are presented as supplemental
measures of performance. The Company presents Adjusted EBITDA
because it considers it an important supplemental measure of
performance. Measures similar to Adjusted EBITDA are widely used by
the Company and by others in the Company's industry to evaluate
performance and price potential acquisition candidates. The Company
believes Adjusted EBITDA facilitates operating performance
comparisons from period to period and company to company by backing
out potential differences caused by variations in capital structure
(affecting relative interest expense), tax positions (such as the
impact on periods or companies of changes in effective tax rates or
net operating losses) and the age and book depreciation of
facilities and equipment (affecting relative depreciation expense).
The Company also presents Adjusted EBITDA because it believes it is
frequently used by investors and other interested parties as a
basis for evaluating performance to formulate investment decisions.
Adjusted EBITDA has limitations as an analytical tool, and should
not be considered in isolation or as a substitute for analysis of
the Company's results as reported under GAAP. Some of the
limitations of Adjusted EBITDA are that (i) it does not reflect the
Company's cash expenditures for capital assets, (ii) it does not
reflect the significant interest expense or cash requirements
necessary to service interest or principal payments on the
Company's debt, and (iii) it does not reflect changes in, or cash
requirements for, the Company's working capital. Furthermore, other
companies in the aerospace and defense industry may calculate these
measures differently than the manner presented above. Accordingly,
the Company focuses primarily on its GAAP results and uses Adjusted
EBITDA only supplementally. INFORMATION ABOUT FORWARD-LOOKING
STATEMENTS Certain statements in this press release constitute
�forward-looking statements� within the meaning of the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended (the "Acts"). Any statements contained herein that are
not statements of historical fact are deemed to be forward-looking
statements. The forward-looking statements in this press release
are based on current beliefs, estimates and assumptions concerning
the operations, future results, and prospects of the Company. As
actual operations and results may materially differ from those
assumed in forward-looking statements, there is no assurance that
forward-looking statements will prove to be accurate.
Forward-looking statements are subject to the safe harbors created
in the Acts. Any number of factors could affect future operations
and results, including, without limitation, closing on the contract
for the sale of the Company�s Union, New Jersey facility,
competition from other companies; changes in applicable laws, rules
and regulations affecting the Company in the locations in which it
conducts its business; the availability of equity and/or debt
financing in the amounts and on the terms necessary to support the
Company�s future business; interest rate trends; continuing delay
in passage of the 2008 Federal Government Defense budget;
determination by the Company to dispose of or acquire additional
assets; general industry and economic conditions; events impacting
the U.S. and world financial markets and economies; and those
specific risks that are discussed in the Company�s previously filed
Annual Report on Form 10-K for the fiscal year ended March 31,
2007, and Quarterly Report on Form 10-Q for the period ended
September 30, 2007. The Company undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new
information or future events. BREEZE-EASTERN CORPORATION STATEMENTS
OF CONSOLIDATED OPERATIONS (In Thousands of Dollars Except Share
Data) � � Three Months Ended � Nine Months Ended 12/30/07 �
12/31/06 12/30/07 � 12/31/06 � Net sales $ 18,061 $ 18,894 $ 51,556
$ 52,818 Cost of sales � 9,919 � 10,079 � 29,763 � 29,404 Gross
profit 8,142 8,815 21,793 23,414 � General, administrative and
selling expenses 4,714 5,050 14,069 14,385 Interest expense 846
1,000 2,670 3,286 Other expense-net 38 62 107 141 Loss on
extinguishment of debt � - � - � - � 1,331 Income before income
taxes 2,544 2,703 4,947 4,271 Provision for income taxes � 1,018 �
1,081 � � 1,979 � � 1,708 � Net income $ 1,526 $ 1,622 $ 2,968 $
2,563 � Basic earnings per share: Net income $ 0.16 $ 0.17 $ 0.32 $
0.28 Diluted earnings per share: Net income $ 0.16 $ 0.17 $ 0.32 $
0.27 � Weighted average basic shares 9,327,000 9,275,000 9,308,000
9,252,000 Weighted average diluted shares 9,404,000 9,383,000
9,395,000 9,353,000 BALANCE SHEET INFORMATION � � 12/30/07 �
3/31/07 � Current assets $ 43,407 $ 44,955 Property, plant and
equipment � net 4,654 4,779 Other assets � 30,115 � 30,737 Total
assets $ 78,176 $ 80,471 � Current portion of long-term debt and
short term borrowings $ 7,129 $ 8,346 Other current liabilities �
10,979 � 13,469 Total current liabilities 18,108 21,815 Long-term
debt 30,454 32,750 Other non-current liabilities 9,475 9,007
Stockholders' equity � 20,139 � 16,899 Total liabilities and
stockholders' equity $ 78,176 $ 80,471 Reconciliation of Reported
Income to Adjusted EBITDA � � � Three Months Ended � Nine Months
Ended 12/30/07 � 12/31/06 12/30/07 � 12/31/06 � Net sales $ 18,061
$ 18,894 $ 51,556 $ 52,818 Cost of sales � 9,919 � 10,079 � 29,763
� 29,404 Gross Profit 8,142 8,815 21,793 23,414 � General,
administrative and selling expenses � 4,714 � 5,050 � 14,069 �
14,385 � Operating income 3,428 3,765 7,724 9,029 � Add back:
depreciation and amortization � 397 � 434 � 987 � 1,132 � Adjusted
EBITDA $ 3,825 $ 4,199 $ 8,711 $ 10,161 � Net income $ 1,526 $
1,622 $ 2,968 $ 2,563 Provision for income taxes 1,018 1,081 1,979
1,708 Depreciation and amortization 397 434 987 1,132 Interest
expense 846 1,000 2,670 3,286 Other expense-net 38 62 107 141 Loss
on extinguishment of debt � - � - � - � 1,331 Adjusted EBITDA $
3,825 $ 4,199 $ 8,711 $ 10,161
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