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of the units reported improved performance. The C3ISR net sales
for the 2007 increased by 3.4%; sales of secure communications
products were unchanged. Yet, on a half-year basis, the C3ISR
unit's operating income decreased by 2.7% compared to the 2006
first half, primarily because of lower operating margin, partially
offset by higher sales volume. The Government Services net sales
increased by 11.9%, primarily from volume on existing contracts
and, in several cases, recent new business awards for linguist,
intelligence, training and law enforcement services to support
the U.S. military operations in Iraq and Afghanistan as well
as the broader global war on terrorism. The linguist services
contract was extended until September 2007. For the 2007 first
half, Government Services net sales increased by 13.1% with
operating income increased by 15.6%
April 23, 2007: The
first quarter of 2007 “was a very good start to the year,”
said Michael T. Strianese, President and Chief
Executive Officer of L-3 Communications.
Since December 2004 the company has invested about $200 million
in stock repurchase, and in February 2007, announced a 33% increase
in the quarterly cash dividend by 33%. "Our anticipated
share repurchases for 2007 together with our increased dividend
will result in at least a three-fold increase in cash returned
to our shareholders, compared to 2006.” Strianese Said.
The company announced the planned acquisition of satellite communications
provider Global Communications Solutions, Inc. (GCS) and the
acquisition of UAV guidance systems specialist Geneva Aerospace,
Inc.
L-3 reported today a 14.2% increase in Earnings per Diluted
Share (EPS) for the first quarter of 2007, amounting to $1.29
(compared to $1.13 in Q1/06). Net Sales increased 13.6% to a
total of $3.3 Billion; L3 added $3.9 billion in funded new orders
to a total funded backlog of $9.3 Billion as of March 31, 2007.
The company concluded the quarter with net income of $162 million
from net sales of 3.3 billion (up 9.1% from Q1/06), leaving
$224 Million in net cash from Operating Activities (an increases
of 19.4%).
The sales growth was driven primarily by strong demand for
government services, aircraft modernization, base support operations,
intelligence, surveillance and reconnaissance (ISR) systems,
secure networked communications products and several specialized
products, including power and control systems, propulsion systems,
electro-optic/infrared (EO/IR) and precision engagement products.
About half of this growth is attributed to acquired businesses.
The total operating margin remained at 9.9%. Three business
segments contributed to higher margins: government services,
aircraft modernization and special products. In contrast, margins
of L3's C4ISR and defense electronics were lower, due to lower
sales volumes of secure terminals and higher development cost
of new products.
In general, C3ISR net sales for the 2007 first quarter increased
by 18.7% compared to the 2006 first quarter. Organic sales growth
was 12.6%, reflecting strong demand from the U.S. Department
of Defense (DoD) for secure networked communications products
and ISR systems. These increases were partially offset by lower
sales of STE, a product with declining demand as it continues
to approach full deployment in the marketplace. The increase
in net sales from acquired businesses was 6.1%, primarily due
to the acquisition of TRL Electronics plc (TRL) on July 12,
2006. TRL is specializing in defense electronics, and is offering
portable and mobile jamming systems designed to disrupt remotely
controlled IEDs.
Among the most significant operations in the past quarter
L3 mentioned two contracts awarded related to UK programs, including
Nimrod Electronic Support aircraft (Project HELIX), and the
planned delivery of electro-optical payloads for the UK Future
Lynx Program. Construction of four networked F/A-18C Tactical
Operational Flight Trainers as part of the Swiss Air Force's
F/A-18 Flight Simulator Upgrade Program and delivery of three
F/A-18 Tactical Readiness Trainers for the Royal Australian
Air Force. The company will also supply the US Army additional
five Aviation Combined Arms Tactical Trainer (AVCATT) suites.
L3 is also under contract to supply of several thousand AN/PSS-14
advanced mine detection systems to the US Army. The U.S. Navy
selected L-3 to serve as the prime contractor for its C-9 Contractor
Logistics Support Program. A major win was the contract awarded
L3 by the Joint Warfare Support Division (JWSD), Space and Naval
Warfare Systems Center to support the division and Joint Warfighting
Community. L3 will also support the US Army Space and Missile
Defense Command with software solutions for integration of space
technologies and applications.
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