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04 Aug 05. DRS Technologies, Inc. (NYSE: DRS – News) today reported record financial results for the first quarter of fiscal 2006 ended June 30, 2005. Results for the quarter included significant increases in revenues, operating income and diluted earnings per share. A quarterly record in new orders for products and services increased funded backlog at the end of the period to a new high.

“DRS posted solid results for the first quarter of the new fiscal year,” said Mark S. Newman, chairman, president and chief executive officer of DRS Technologies. “Higher sales and profitability were achieved for the three-month period, and we set a quarterly record in new orders, driving funded backlog at the end of the period to the highest level achieved by the company to date. These results, in combination with industry factors, support our positive outlook for fiscal 2006.”

Fiscal 2006 First Quarter Results

Fiscal 2006 first quarter revenues were $338.5 million, 16 percent higher than revenues of $291.2 million for last year’s first quarter. Organic revenue growth accounted for approximately 9.0 percent of the increase, with the balance from acquisitions completed during fiscal 2005 and the first quarter of fiscal 2006. Operating income of $35.1 million was 23 percent higher than the $28.5 million reported for the same quarter of fiscal 2005. Record operating income for the first quarter of fiscal 2006 was attributable to the higher overall sales volume and the strong performance of the company’s operating segments. Operating income as a percentage of sales was 10.4 percent, compared with 9.8 percent for the same quarter in the prior fiscal year.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $44.9 million for the three-month period, 18 percent higher than EBITDA from continuing operations of $38.0 million reported for the first quarter a year earlier. EBITDA as a percentage of sales was 13.2 percent, compared with 13.0 percent for the fiscal 2005 first quarter.

Earnings for the first quarter of fiscal 2006 were $14.0 million, or $0.49 per diluted share, on weighted average diluted shares outstanding of 28.4 million. For the first quarter last year, earnings from continuing operations were $11.0 million, or $0.40 per diluted share, on 27.5 million weighted average diluted shares outstanding.

Free cash flow (net cash provided by operating activities of continuing operations less capital expenditures) was a negative $20.9 million for the first quarter, in line with company expectations. Cash flow performance reflected the effect of higher tax payments, a $7.5 million payment in connection with the settlement of litigation(1) and higher interest expense as a result of the company’s fiscal 2005 $200 million debt offering of 6-7/8 percent senior subordinated notes due 2013. Capital asset expenditures were $6.3 million. The company reiterated that it expects to generate positive free cash flow as the year progresses, estimating $40 million to $50 million in free cash flow for fiscal 2006.

New Contract Awards and Backlog

DRS secured a quarterly record of $520.5 million in new orders for products and services during the first three months of fiscal 2006, 52 percent above bookings for the comparable prior-year period. Funded backlog at June 30, 2005 climbed to a record $1.50 billion, 20 percent above $1.24 billion in funded backlog at the same time last year and 14 percent higher than funded backlog at March 31, 2005, the company’s fiscal 2005 year-end.

The company’s C4I segment booked $235.9 million in new contracts during the first quarter of fiscal 2006, including: $58 million to provide data collection and processing equipment, including receivers, tuners, signal processing systems and recorders supporting U.S. intelligence operations; $53 million to provide electronic manufacturing services, primarily asso

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