B/E Aerospace, Inc. (Nasdaq: BEAV), the world’s leading
manufacturer of aircraft cabin interior products and the world’s
leading distributor of aerospace fasteners and consumables, today
announced third quarter 2009 financial results.
THIRD QUARTER
HIGHLIGHTS
- 2009 third quarter revenues of
$459.8 million declined 26.9 percent as compared with third quarter
2008 proforma revenues. Proforma third quarter 2008 results include
the results of the acquired Honeywell Consumables Solutions
distribution business (HCS), as if the acquisition had occurred on
January 1, 2008.
- 2009 third quarter operating
earnings were $69.6 million. Operating earnings declined by 32.5
percent as compared with third quarter 2008 proforma operating
earnings of $103.1 million. Third quarter 2009 results were
negatively impacted by $1.7 million of foreign exchange translation
adjustments compared with a $7.3 million positive impact in the
2008 period. Adjusting both periods to exclude foreign exchange
impacts, adjusted operating earnings in the current period declined
by 25.6 percent as compared with proforma adjusted operating
earnings in the 2008 period, and the 2009 third quarter adjusted
operating margin of 15.5 percent was 30 basis points higher than
the 2008 period.
- 2009 third quarter net earnings
were $36.1 million or $0.36 per diluted share. Adjusted net
earnings, which exclude foreign exchange impacts, were $37.4
million or $0.38 per diluted share.
- 2009 third quarter free cash
flow was $21.7 million.
THIRD QUARTER CONSOLIDATED
RESULTS
Revenues for the third quarter of $459.8 million declined by
$168.9 million, or 26.9 percent, as compared with proforma revenues
of $628.7 million in the third quarter of the prior year. The
$168.9 million decrease in consolidated revenues was the result of
a $79.1 million, or 30.4 percent, decrease in consumables
management segment revenues, a $78.3 million, or 26.0 percent,
decrease in commercial aircraft segment revenues, and a $11.5
million, or 17.0 percent, decrease in business jet segment
revenues.
2009 third quarter operating earnings were $69.6 million.
Operating earnings declined by 32.5 percent as compared with third
quarter 2008 proforma operating earnings of $103.1 million. The
U.S. dollar strengthened substantially as compared with the British
pound in the third quarter of 2008, positively impacting operating
earnings by $7.3 million compared to a $1.7 million negative impact
in the 2009 period. Excluding the foreign exchange impact from both
periods, adjusted operating margin expanded 30 basis points to 15.5
percent of sales for the 2009 period. The 2009 third quarter tax
rate of approximately 23 percent was lower than the expected 31
percent tax rate for all of 2009, primarily due to a higher level
of R&D tax credits generated by recently completed tax
reduction initiatives.
2009 third quarter net earnings were $36.1 million or $0.36 per
diluted share.
Commenting on the company’s recent performance, Amin J. Khoury,
Chairman and Chief Executive Officer of B/E Aerospace, Inc. said,
“The global economic crisis appears to be abating; however, our
global airline customers continue to suffer from high fuel costs,
weak demand for passenger travel and significantly lower ticket
prices, all of which have resulted in sharply lower yields. As we
reported earlier, the airline industry’s lower yields are forcing
airlines and MROs to continue their stringent cash conservation
measures, including retrofit program pushouts and aircraft
refurbishment deferrals, which together with a significant decrease
in revenue passenger miles (RPMs) and a significant reduction in
aircraft capacity have caused the 26.9 percent decline in B/E
Aerospace revenues during the third quarter.”
Mr. Khoury continued, “Based upon the uptick in demand for
consumables orders in September and discussions with a number of
our major customers relative to their planned spares purchases,
combined with a marked pick-up in request for quote activity (RFQ),
the company believes that the third quarter of 2009 represents the
trough quarter for B/E Aerospace orders and backlog during this
aerospace cycle downturn. However, we do not expect favorable
quarterly earnings comparisons to the prior year periods to begin
until the second quarter of 2010. And while the company expects
relatively flat revenues and earnings in 2010 versus 2009, the
company expects a substantial increase in both revenues and
earnings in 2011.”
Amounts presented in this earnings release on a proforma basis
have been calculated as if the HCS acquisition had occurred on
January 1, 2008. See the table in “Third Quarter Segment Results”
and “Nine-Month Segment Results” for a presentation of the actual
and proforma amounts for the third quarter of 2008 and for the
first nine months of 2008. Additionally, (i) adjusted operating
earnings, adjusted net earnings and adjusted net earnings per
diluted share, each on a consolidated basis, (ii) consumables
management segment and commercial aircraft segment adjusted
operating earnings, (iii) adjusted operating margin, (iv) free cash
flow and free cash flow conversion rate are non-GAAP financial
measures. For more information see "Reconciliation of Non-GAAP
Financial Measures."
References to “AIT costs” in this news release refer to the
acquisition, integration and transition expenses related to the
integration of the HCS business, which was acquired in July 2008,
with the company’s consumables management segment.
THIRD QUARTER SEGMENT
RESULTS
The following is a tabular summary and commentary of net sales
and operating earnings by segment on an as reported and proforma
basis:
NET SALES Three Months Ended September 30,
($ in millions) 2009 2008
2008 % Change As Reported
Proforma Proforma Consumables management $ 181.0 $
219.2 $ 260.1 -30.4 % Commercial aircraft 222.5 300.8 300.8 -26.0 %
Business jet 56.3 67.8 67.8 -17.0 % Total $
459.8 $ 587.8 $ 628.7 -26.9 %
OPERATING EARNINGS
Three Months Ended September 30, ($ in millions)
2009 2008 2008 % Change As
Reported Proforma Proforma Consumables management
$ 33.5 $ 42.1 $ 43.9 -23.7 % Commercial aircraft 29.8 49.4 49.4
-39.7 % Business jet 6.3 9.8 9.8 -35.7 % Total
$ 69.6 $ 101.3 $ 103.1 -32.5 %
Consumables management segment revenues were $181.0 million or
30.4 percent lower than third quarter 2008 proforma revenues of
$260.1 million. The decline in consumables management segment
revenues in the current period was due to reduced activity at
airline and MRO maintenance facilities, reduced aircraft capacity,
a decrease in revenue passenger miles flown, and substantially
reduced activity at business jet manufacturers, all as compared to
the same period in the prior year. Consumables management segment
third quarter 2009 adjusted operating earnings were $37.4 million
or 20.7 percent of sales (excluding AIT costs of $3.9 million) as
compared with third quarter 2008 proforma adjusted operating
earnings of $47.5 million or 18.3 percent of proforma sales
(excluding AIT costs of $3.6 million).
Commercial aircraft segment revenues of $222.5 million decreased
26.0 percent reflecting retrofit program push outs, reduced
activity at airline and MRO maintenance facilities, reduced
aircraft capacity and a decrease in revenue passenger miles flown,
all as compared to the same period in the prior year. Third quarter
2009 operating earnings were $29.8 million or 13.4 percent of sales
as compared with third quarter 2008 operating earnings of $49.4
million or 16.4 percent of sales. Excluding the foreign exchange
impact from both periods, adjusted operating margin in the current
period of 14.0 percent increased by 10 basis points as compared
with the prior year period reflecting successful cost reduction
activities and improved manufacturing efficiencies.
Business jet segment third quarter revenues of $56.3 million
decreased 17.0 percent, and operating earnings decreased by $3.5
million, or 35.7 percent, reflecting severance costs, an
unfavorable mix of products and the negative impact of reduced
operating leverage in the current year period.
NINE-MONTH CONSOLIDATED
RESULTS
For the nine months ended September 30, 2009, revenues of
$1,458.3 million declined $470.6 million, or 24.4 percent, as
compared with proforma revenues in the same period in the prior
year.
For the nine months ended September 30, 2009, operating earnings
were $224.2 million or 15.4 percent of sales and declined 26.0
percent as compared with proforma operating earnings in the 2008
period of $302.9 million or 15.7 percent of sales. Excluding the
foreign exchange impact from both periods, 2009 adjusted operating
margin expanded 50 basis points as compared to the 2008 adjusted
operating margin.
For the nine months ended September 30, 2009, net earnings were
$108.7 million or $1.10 per diluted share.
NINE-MONTH SEGMENT
RESULTS
The following is a tabular summary and commentary of net sales
and operating earnings by segment on an as reported and proforma
basis:
NET SALES Nine Months Ended September 30,
($ in millions) 2009 2008
2008 % Change As Reported
Proforma Proforma Consumables management $ 617.0 $
464.8 $ 810.5 -23.9 % Commercial aircraft 672.3 905.5 905.5 -25.8 %
Business jet 169.0 212.9 212.9 -20.6 % Total $
1,458.3 $ 1,583.2 $ 1,928.9 -24.4 %
OPERATING
EARNINGS Nine Months Ended September 30, ($ in
millions) 2009 2008 2008 % Change
As Reported Proforma Proforma
Consumables management $ 116.7 $ 109.0 $ 148.9 -21.6 % Commercial
aircraft 89.9 124.5 124.5 -27.8 % Business jet 17.6
29.5 29.5 -40.3 % Total $ 224.2 $ 263.0 $ 302.9 -26.0 %
For the first nine months of 2009, consumables management
segment revenues of $617.0 million were 23.9 percent lower than the
2008 period proforma revenues of $810.5 million. The decline in
consumables management segment revenues in the current period was
due to reduced activity at airline and MRO maintenance facilities,
reduced aircraft capacity, a decrease in revenue passenger miles
flown, and substantially reduced activity at business jet
manufacturers, all as compared to the same period in the prior
year. Consumables management segment operating earnings were $116.7
million for the nine months ended September 30, 2009. 2009 adjusted
operating earnings, excluding AIT costs of $13.6 million, were
$130.3 million or 21.1 percent of sales. Prior year proforma
adjusted operating earnings, excluding AIT costs of $3.6 million,
were $152.5 million or 18.8 percent of proforma sales.
For the first nine months of 2009, commercial aircraft segment
revenues of $672.3 million decreased 25.8 percent reflecting
retrofit program push outs, reduced activity at airlines and MRO
maintenance facilities, reduced aircraft capacity and a decrease in
revenue passenger miles flown, all as compared to the same period
in the prior year. 2009 operating earnings were $89.9 million or
13.4 percent of sales as compared with the same period in the prior
year operating earnings of $124.5 million or 13.7 percent of sales.
Excluding the foreign exchange impact from both periods, adjusted
operating margin in the current period of 14.8 percent increased by
160 basis points as compared with the prior year period reflecting
successful cost reduction activities and improved manufacturing
efficiencies.
For the first nine months of 2009, business jet segment revenues
of $169.0 million decreased 20.6 percent, and operating earnings
decreased by $11.9 million, or 40.3 percent, to $17.6 million
reflecting an unfavorable mix of products, severance costs and the
negative impact of reduced operating leverage in the current year
period.
LIQUIDITY AND BALANCE SHEET
METRICS
As of September 30, 2009, cash and cash equivalents were $165.8
million, an increase of $19.4 million as compared with the end of
the second quarter of 2009. Net debt was $952.9 million, which
represents total debt of $1,118.7 million less cash and cash
equivalents of $165.8 million. The company’s net
debt-to-net-capital ratio improved by 130 basis points to 40.3
percent reflecting current period net earnings of $36.1 million and
a $19.4 million increase in cash and cash equivalents during the
current quarter. Working capital as of September 30, 2009 was
$1,309.7 million, an increase of $136.0 million as compared with
working capital as of December 31, 2008. There were no borrowings
outstanding on the company’s $350 million revolving credit facility
and the company has no debt maturities until 2014.
Commenting on the company's balance sheet and liquidity, Mr.
Khoury stated, "We generated free cash flow of $21.7 million during
the third quarter of 2009 and absent the $13 million decrease in
accrued interest as a result of our semi-annual interest payment,
our free cash flow conversion rate would have been approximately
100 percent. During 2009 we completed our initiative to bring the
HCS inventories in-line with our distribution stocking model. This
effort was the primary driver behind the $112.5 million increase in
our inventories during the nine month year-to-date period,
essentially all of which occurred in the first half of the year.
With these inventory investments now behind us, we remain confident
in our free cash flow outlook for the fourth quarter of 2009 and
for the coming year. We expect a free cash flow conversion rate of
approximately 100 percent during the fourth quarter of 2009 and to
end the year with approximately $200 million of cash on hand before
a planned $100 million debt prepayment."
BOOKINGS AND
ORDERS
Bookings during the third quarter of 2009 were approximately
$400 million, a book-to-bill ratio of approximately 0.9 to 1.
Backlog at the end of the quarter was approximately $2.65 billion,
a decrease of approximately 9 percent as compared with the
company’s September 30, 2008 backlog.
Mr. Khoury commented, “As expected, bookings for the quarter
were soft, reflecting weak aftermarket demand. However, consumables
management segment bookings in September noticeably improved as
compared to the month of August and as compared to the five-month
April through August period. In addition, a number of our major
customers have shared with us their plans to increase their spares
purchases. Finally, we have seen a marked pick-up in RFQ activity
for our cabin interior products for both new build and retrofit
aircraft. We expect an expansion in orders and backlog in 2010 due
to an expected improvement in demand for consumables and spares,
the conversion of a portion of the supplier furnished equipment
(SFE) programs awards, which we have already won to purchase
orders, and we expect to win some healthy new orders arising from
the increase in current RFQ activity.”
OUTLOOK
Commenting on the company’s outlook, Mr. Khoury stated, “It
appears that global inventory destocking has run its course and we
are beginning to see some stabilization in our consumables and
commercial aircraft spares businesses, albeit at a much lower
level. The airline industry has reduced global capacity by
approximately 10 percent, while reducing its purchases of
consumables and spares in excess of 30 percent. We believe that
many of the aircraft idled during the past year were flown right up
until scheduled heavy maintenance was required. As such, we believe
there is a growing heavy maintenance backlog that will likely
create additional demand for consumables and spares once revenue
passenger miles turn positive on a year-over-year basis and demand
for lift begins to improve,” concluded Mr. Khoury.
The company’s financial guidance for the remainder of 2009 is as
follows:
- 2009 fourth quarter book-to-bill
ratio is expected to improve to approximately 1:1.
- 2009 fourth quarter revenues and
operating earnings are expected to be approximately equal to that
of the 2009 third quarter.
- 2009 fourth quarter earnings per
diluted share are expected to be lower than 2009 third quarter
earnings per diluted share due to a higher fourth quarter tax rate
and a debt prepayment charge of approximately $0.02 per diluted
share related to a planned $100 million prepayment of long-term
debt in the fourth quarter. As a result fourth quarter earnings per
diluted share, including the debt prepayment charge of $0.02 per
diluted share, are expected to be approximately $0.31.
- The company expects a free cash
flow conversion rate in excess of 100 percent during the fourth
quarter of 2009 and to end the year with approximately $200 million
of cash on hand before a planned $100 million debt prepayment.
The company’s financial guidance for 2010 is as
follows:
- The company expects an expansion
in orders and backlog in 2010 due to an expected improvement in
demand for consumables and spares, the conversion of a portion of
unbooked SFE awards to bookings and an expected increase in orders
for cabin interior products for both new build and retrofit
aircraft arising from the recent increase in RFQ activity related
thereto.
- 2010 revenues are expected to be
approximately $1.85 billion, reflecting a lower level of commercial
aircraft and business jet deliveries in 2010 and the weak 2009
bookings which the company has experienced.
- 2010 net earnings per diluted
share are expected to be flat at approximately $1.40 per diluted
share, including AIT costs of approximately $0.03 per diluted
share, due to improved margins on the approximately 5 percent lower
revenue level.
- Beginning in the second quarter
of 2010 the company expects favorable quarterly year-over-year
earnings comparisons.
- The company expects to generate
positive free cash flow in excess of $140 million for 2010
reflecting a free cash flow conversion rate in excess of 100
percent.
- The company expects a
substantial increase in both revenues and earnings in 2011.
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Such forward-looking
statements include, but are not limited to, B/E Aerospace’s
financial guidance and industry expectations for the next several
years and the expected benefits from the HCS acquisition. Such
forward-looking statements involve risks and uncertainties. B/E
Aerospace’s actual experience and results may differ materially
from the experience and results anticipated in such statements.
Factors that might cause such a difference include changes in
market and industry conditions and those discussed in B/E
Aerospace’s filings with the Securities and Exchange Commission,
which include its Proxy Statement, Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. For
more information, see the section entitled “Forward-Looking
Statements” contained in B/E Aerospace’s Annual Report on Form 10-K
and in other filings. The forward-looking statements included in
this news release are made only as of the date of this news release
and, except as required by federal securities laws, we do not
intend to publicly update or revise any forward-looking statements
to reflect subsequent events or circumstances.
About B/E Aerospace, Inc.
B/E Aerospace, Inc. is the world’s leading manufacturer of
aircraft cabin interior products and the world’s leading
distributor of aerospace fasteners and consumables. B/E Aerospace
designs, develops and manufactures a broad range of products for
both commercial aircraft and business jets. B/E Aerospace
manufactured products include aircraft cabin seating, lighting,
oxygen, and food and beverage preparation and storage equipment.
The company also provides cabin interior design, reconfiguration
and passenger-to-freighter conversion services. Products for the
existing aircraft fleet – the aftermarket – generate approximately
50 percent of sales. B/E Aerospace sells and supports its products
through its own global direct sales and product support
organization. For more information, visit the B/E Aerospace, Inc.
website at www.beaerospace.com.
BE AEROSPACE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS (UNAUDITED)
(In Millions, Except Per Share
Data)
THREE MONTHS ENDED NINE MONTHS
ENDED September 30, September 30,
September 30, September 30, 2009
2008 2009 2008 Net sales $ 459.8 $
587.8 $ 1,458.3 $ 1,583.2 Cost of sales 297.7 394.4 954.2 1,040.9
Selling, general and administrative 65.2 58.6 205.3 176.6
Research, development and
engineering
27.3 33.5 74.6 102.7 Operating earnings 69.6 101.3 224.2
263.0
Operating earnings, as percentage
of net sales
15.1% 17.2% 15.4% 16.6% Interest expense, net 22.7 19.8 67.7
24.9 Debt prepayment costs -- 3.6 -- 3.6 Earnings before
income taxes 46.9 77.9 156.5 234.5 Income taxes 10.8 26.1
47.8 80.3 Net earnings $ 36.1 $ 51.8 $ 108.7 $ 154.2
Net earnings per common share: Basic $ 0.37 $ 0.54 $ 1.10 $
1.66 Diluted $ 0.36 $ 0.54 $ 1.10 $ 1.65 Weighted average
common shares: Basic 98.5 96.0 98.4 93.1 Diluted 99.5 96.3 99.1
93.5
BE AEROSPACE, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
(In Millions)
September 30, December 31, 2009
2008 ASSETS Current assets: Cash and
cash equivalents $ 165.8 $ 168.1 Accounts receivable, net 239.1
271.4 Inventories, net 1,309.5 1,197.0 Deferred income taxes, net
1.4 22.1 Other current assets 24.5 24.8 Total current
assets 1,740.3 1,683.4 Long-term assets 1,246.2
1,246.7 $ 2,986.5 $ 2,930.1
LIABILITIES AND STOCKHOLDERS’
EQUITY Total current liabilities $ 430.6 $ 509.7 Total
long-term liabilities 1,146.0 1,153.9 Total stockholders' equity
1,409.9 1,266.5
$ 2,986.5
$ 2,930.1
BE AEROSPACE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)(In millions)
NINE MONTHS ENDED September 30,
September 30, 2009 2008 CASH FLOWS FROM
OPERATING ACTIVITIES: Net earnings $ 108.7 $ 154.2
Adjustments to reconcile net
earnings to net cash flows used in operating activities:
Depreciation and amortization 36.9 28.9 Provision for doubtful
accounts (0.2 ) 2.0 Non-cash compensation 17.9 11.2 Deferred income
taxes 35.8 68.7 Debt prepayment costs -- 3.6 Loss on disposal of
property and equipment 2.5 0.2 Changes in operating assets and
liabilities: Accounts receivable 37.4 (87.7 ) Inventories (135.6 )
(165.6 ) Other current assets and other assets 14.3 (5.1 )
Payables, accruals and other liabilities (95.2 ) 35.6
Net cash provided by operating activities 22.5
46.0
CASH FLOWS FROM INVESTING
ACTIVITIES: Capital expenditures (21.8 ) (20.7 )
Acquisitions, net of cash
acquired
-- (912.2 ) Net cash used in investing
activities (21.8 ) (932.9 )
CASH FLOWS FROM
FINANCING ACTIVITIES: Proceeds from common stock issued 0.8 1.0
Proceeds from long-term debt -- 1,124.5 Principal payments on
long-term debt (4.5 ) (151.4 )
Debt origination and prepayment
costs
-- (50.2 ) Borrowings on line of credit -- 40.0 Repayments on line
of credit -- (40.0 ) Net cash (used in)
provided by financing activities (3.7 ) 923.9
Effect of foreign exchange rate changes on cash and cash
equivalents Effect of foreign exchange rate changes
on cash and cash equivalents 0.7 (3.0 )
Net (decrease) increase in cash and cash equivalents (2.3 )
34.0
Cash and cash equivalents, beginning of period
168.1 81.6
Cash and cash
equivalents, end of period $ 165.8 $ 115.6
Supplemental disclosures of cash flow information: Cash paid
during period for: Interest, net $ 76.8 $ 9.2 Income taxes, net 3.6
4.5
Supplemental schedule of non-cash activities:
Common stock issued in connection
with acquisition
$ - $ 158.3
B/E Aerospace, Inc.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
This release includes the financial measures “adjusted operating
earnings” and “adjusted operating margin” on a consolidated basis
and for the consumables management and commercial aircraft
segments, and “adjusted net earnings” and “adjusted net earnings
per diluted share” on a consolidated basis, each of which are
“non-GAAP financial measures” as defined in Regulation G of the
Securities and Exchange Act of 1934. We define “adjusted operating
earnings” as operating earnings reported under GAAP less (i) in the
case of adjusted operating earnings on a consolidated basis and for
the commercial aircraft segment, the impact of foreign currency
translation adjustments and (ii) in the case of adjusted operating
earnings for the consumables management segment, acquisition,
integration and transition (AIT) costs related to our acquisition
of Honeywell’s Consumables Solutions distribution business (HCS).
We define “adjusted operating margin” as the ratio of adjusted
operating earnings to net sales, expressed as a percentage. We
define “adjusted net earnings” and “adjusted net earnings per
diluted share” as consolidated net earnings and net earnings per
diluted share, respectively, reported under GAAP less the impact of
foreign currency translation adjustments. The company incurred $3.9
million and $13.6 million of AIT costs relating to the HCS
acquisition in the third quarter of 2009 and for the first nine
months of 2009. Third quarter 2009 results were negatively impacted
by $1.7 million of foreign exchange translation adjustments
compared to a $7.3 million positive impact in the third quarter
2008.
We use adjusted operating earnings, adjusted operating margin,
adjusted net earnings and adjusted net earnings per diluted share
to evaluate and assess the operational strength and performance of
our business and of particular segments of our business. We believe
these financial measures are relevant and useful for investors
because it allows investors to have a better understanding of the
company’s actual operating performance unaffected by the
acquisition, integration and transition costs associated with the
HCS acquisition and the impact of foreign currency translation
adjustments. These financial measures should not be viewed as a
substitute for, or superior to, net earnings, net earnings per
diluted share or operating earnings, both on a consolidated and on
a segment basis, the most comparable GAAP measures, as a measure of
the company’s operating performance.
In addition, this release includes the financial measure "free
cash flow," which is also a non-GAAP financial measure. We define
"free cash flow" as net cash flows provided by operating activities
less capital expenditures. We use free cash flow to provide
investors with an additional perspective on the company's cash
flows provided by operating activities after taking into account
reinvestments. Free cash flow does not take into account debt
service requirements and therefore does not reflect an amount
available for discretionary purposes. This release also includes
the financial measure “free cash flow conversion rate”, which we
define as our free cash flow expressed as a percentage of net
earnings. We use free cash flow conversion rate to provide
investors with a measurement of our ability to convert our earnings
into free cash flow.
Pursuant to the requirements of Regulation G, the company is
providing the following tables which reconcile (i) consolidated net
earnings and net earnings per diluted share to consolidated
adjusted net earnings and consolidated adjusted net earnings per
diluted share, (ii) consolidated operating earnings to consolidated
adjusted operating earnings, (iii) consumables management operating
earnings to adjusted consumables management operating earnings,
(iv) commercial aircraft segment operating earnings to adjusted
commercial aircraft segment operating earnings and (v) net cash
flow provided by operating activities to free cash flow. In each
case, the most comparable GAAP measure has been reconciled to the
non-GAAP measure presented in this press release.
RECONCILIATION OF NET EARNINGS TO ADJUSTED NET
EARNINGS (In Millions, Except Per Share Data)
Three Months Ended
Proforma September 30, September 30,
2009 2008 Net earnings, as reported $ 36.1 $ 52.9
Foreign exchange translation (benefit) cost 1.7 (7.3 )
Income taxes on foreign
exchange
translation (benefit) costs
(effective tax rate of 23.0% for 2009 & 35.0% for 2008)
(0.4 ) 2.6 Adjusted net earnings $ 37.4
$ 48.2 Adjusted net earnings per diluted share $ 0.38
$ 0.50 Net earnings per diluted share, as
reported $ 0.36 $ 0.54
RECONCILIATION OF
OPERATING EARNINGS TO ADJUSTED OPERATING EARNINGS (In
Millions) Three Months Ended Nine Months
Ended Proforma Proforma September 30,
September 30, September 30, September 30,
2009 2008 2009 2008 Operating earnings,
as reported $ 69.6 $ 103.1 $ 224.2 $ 302.9 Foreign exchange
translation (benefit) cost 1.7 (7.3 )
10.1 (2.6 ) Adjusted operating earnings $ 71.3 $ 95.8
$ 234.3 $ 300.3
RECONCILIATION OF
CONSUMABLES MANAGEMENT SEGMENT OPERATING EARNINGS TO
ADJUSTED OPERATING EARNINGS (In Millions)
Three Months Ended Nine Months Ended Proforma
Proforma September 30, September 30,
September 30, September 30, 2009 2008
2009
2008
Operating earnings, as reported $ 33.5 $ 43.9 $ 116.7 $ 148.9
Acquisition, integration and
transition costs
3.9 3.6 13.6 3.6
Adjusted operating earnings $ 37.4 $ 47.5 $ 130.3 $
152.5
RECONCILIATION OF COMMERCIAL
AIRCRAFT SEGMENT OPERATING EARNINGS
TO ADJUSTED OPERATING EARNINGS (In Millions)
Three Months Ended Nine Months Ended September
30, September 30, September 30, September
30, 2009 2008 2009 2008 Operating
earnings, as reported $ 29.8 $ 49.4 $ 89.9 $ 124.5 Foreign exchange
translation (benefit) cost 1.4 (7.6 )
9.3 (4.8 ) Adjusted operating earnings $ 31.2 $ 41.8
$ 99.2 $ 119.7
RECONCILIATION OF NET
CASH FLOW FROM OPERATIONS TO FREE CASH FLOW (In
Millions)
Three Months Ended
September 30, 2009 Net cash flow provided by
operating activities $ 28.0 Less: capital expenditures (6.3
) Free cash flow $ 21.7
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