This is a partial transcript from Your World with Neil Cavuto, January 30, 2002. Click here for complete access to all of Neil Cavuto's CEO interviews.
NEIL CAVUTO, HOST: You heard it last night when the president spoke. Defense spending is up and it's going to be up a lot more. That's a good thing for companies like L-3 Communications, whose business thrives on defense, but not only abroad, but here at home as well.
Straight from the earnings trail, L-3's chairman and CEO, Frank Lanza. Frank, good to have you.
FRANK LANZA, CHAIRMAN & CEO, L-3 COMMUNICATIONS: Hi, Neil. Thank you.
CAVUTO: Across the board, fourth-quarter sales up almost 27 percent. Fourth-quarter income almost 23 percent, earnings per share up close to 20 percent.
LANZA: Had a good year, a good quarter.
CAVUTO: In a way, this whole September 11 thing has been the wind at your back, right?
LANZA: Well, it hasn't yet rippled yet. In other words, we had these earnings well before 9/11 and now...
CAVUTO: Well, we should preface. You do the scanning devices for luggage and security.
LANZA: Well, that's for airline security. That's part of our commercial business.
CAVUTO: Right. And oddly enough, it was a very tiny part of your business, and most of it abroad at that.
LANZA: That's right. Very true.
CAVUTO: But post-September 11, it's become a booming potential for you.
LANZA: Could be a booming business, right.
CAVUTO: You say could be. Why?
LANZA: Well, we know that Congress has mandated that there be 100 percent inspection by the end of the year, right? That may or may not be possible. Congress hasn't appropriated any money yet.
CAVUTO: Really, still not?
LANZA: No. We appropriated $140 million in the '02 budget, which is nothing compared to the $4 billion they need.
CAVUTO: But, they have a pretty hefty demand to get hundreds of these things out in the next year.
CAVUTO: Right. So there are only a couple of companies doing it. You and Envision Technologies are among the more prominent players.
LANZA: That's a true statement, yes.
CAVUTO: So they got to get hopping.
LANZA: Well, they claim in the next two weeks, we're going to get the road map. They have been studying it. They've got...
CAVUTO: And then you both get the road map. In other words, it wouldn't be all...
LANZA: All companies involved will get a road map within a couple weeks. They'll start making contract awards in February, they claim. And we're standing by geared and ready in production to crank up as soon as they give us the word.
CAVUTO: When you saw this San Francisco International Airport incident today, traffic ground to a halt...
CAVUTO: ... and all because this guy had residue on his shoe. We still don't know what happened to the guy with the residue or if his shoes are still there. But this heightened the urgency for this kind of stuff, right?
LANZA: Well, yes. Neil, you know, it's a knee-jerk reaction, right. We did nothing for 10 years, right? And then all of a sudden, a horrendous thing occurred, right...
LANZA: ... 9/11, right. And now all of a sudden, it's an emergency and a panic. It's got to be done. Airport security is more than just checking checked baggage, as you know. You have a whole myriad of things that have to be done. Carry-on, right, is just as important as checked baggage. Weapons that you conceal going through your metal detectors.
CAVUTO: But you also do, you know, you do aircraft sensor upgrades and that sort of stuff. But primarily, Wall Street now knows you for this, oddly enough, this small part of your business.
LANZA: Well, I hope they don't, but...
CAVUTO: But that's what they do know.
LANZA: It's being hyped now.
CAVUTO: So if you get part of a big government contract, you're off to the races, right?
LANZA: Well, sure it's going to be an upcheck for us, but it's not in our plan. In other words, next year, we projected in the Street '02 to have another growth from $2.7 billion to $3.7 billion, right, assuming that a very no-airport security business. If the FAA comes through...
CAVUTO: It's just gravy, just gravy. All right. Frank Lanza, thank you very much, the CEO and chairman of L-3 Communications.
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