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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1996 Commission File Number 1-8533
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2632319
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Sylvan Way, Parsippany, New Jersey 07054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 898-1500
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- ------------------------
Common Stock, $.01 par value American Stock Exchange
8 1/2% Convertible Subordinated Debentures American Stock Exchange
due August 1, 1998
9% Senior Subordinated Convertible Debentures American Stock Exchange
due October 1, 2003
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days.
Yes [ ] No [X]
The market value of shares of Common Stock held by non-affiliates, based on
the closing prices for such stock on the American Stock Exchange on June 24,
1996, was approximately $57,900,000. The number of shares of Common Stock
outstanding as of June 24, 1996 was 5,505,207 (exclusive of 463,859 shares of
Common Stock held in the treasury).
DOCUMENTS INCORPORATED BY REFERENCE
1. Diagnostic/Retrieval Systems, Inc. 1996 Annual Report (for the fiscal year
ended March 31, 1996), incorporated in Part II.
2. Definitive Proxy Statement, dated June 28, 1996, for the 1996 Annual
Meeting of Stockholders, incorporated in Part III.
PART I
ITEM 1. BUSINESS
GENERAL
The registrant, Diagnostic/Retrieval Systems, Inc. (hereinafter, the
"Company" or "DRS") was incorporated in 1968 and is a diversified,
high-technology company serving global government and commercial markets.
Principally a developer and manufacturer of a variety of sophisticated, leading
edge systems used for the processing, display and storage of data, the Company
provides its customers with a broad range of products, including electronic
sensor, electronic imaging and electro-optical systems, and offers a full
complement of technical support services.
The Company is organized into three operating groups: the Electronic
Systems Group ("ESG"), which primarily designs, manufactures and markets
high-technology computer workstations for military customers and also provides
technical support services; the Electro-Optical Systems Group ("EOSG") which
produces electro-optical sighting and targeting systems for military customers;
and the Media Technologies Group ("MTG"), which designs and manufactures data
storage and media technology products for both military and commercial
customers.
In response to a 1992 mandate by the Joint Chiefs of Staff, the Company
focuses on "Commercial Off-The-Shelf" ("COTS") product designs, whereby
commercial electronic components are integrated, adapted, upgraded and
"ruggedized" for application in harsh military environments. Using COTS designs,
the Company develops and delivers its products with significantly less
development time and expense compared to traditional military product cycles,
generally resulting in shorter lead times, lower costs and the employment of the
latest information and computing technologies. The design and manufacture of
COTS-based products is a complex process requiring specific engineering
capabilities, extensive knowledge of military platforms to which the equipment
will be applied and in-depth understanding of military operating environments
and requirements.
STRATEGY
The Company believes that the nature of modern warfare has changed,
dictating increasing reliance on real-time, accurate battlefield information
derived from increasingly sophisticated defense systems and electronics.
Additionally, the nature of military procurement programs has changed, requiring
suppliers to become more efficient and adaptable to current and future market
needs. In recent years, the Company has restructured its management team and
implemented strategies to exploit the changing nature of military procurement
programs brought on by the end of the Cold War, military budget constraints and
the COTS mandate. In addition to winning contracts for new programs and
supporting existing programs, the Company's strategies include:
o designing new products and adapting existing products for use by all
branches of the military;
o transferring technologies developed in the defense sector to
commercial and industrial markets; and
o acquiring businesses that will further strengthen and complement the
technology, product and market reach in the electronic systems, data
storage systems and electro-optical systems segments of the
marketplaces targeted by the Company.
To effect these strategies, the Company has (i) acquired several businesses
with complementary military and commercial products and technologies over the
last three years; (ii) entered into strategic relationships with other defense
suppliers such as Lockheed-Martin Tactical Defense Systems (formerly, Loral
Corporation) and Northrop-Grumman (formerly, Westinghouse Electric Corporation),
among others; (iii) emphasized the development of COTS-based products, as well
as products and systems that are easily adapted to similar weapons platforms
used by all branches of the military; and (iv) implemented cost reduction
initiatives to reduce its fixed-cost base, to allow for growth and to maintain
the flexibility of its operations. The implementation of these strategies has
resulted in increasing revenues and profits over the last three fiscal years.
Acquisitions. In October 1993, the Company acquired Technology
Applications & Service Company ("TAS"), a designer and supplier of advanced
command and control software and hardware. TAS' business, which
focuses primarily on radar displays, augments the Company's core expertise in
sonar signal processing, allowing the Company to offer complete command and
control system solutions to its naval customers. In December 1993, the Company
purchased its 80% interest in Laurel Technologies ("Laurel"), then primarily an
assembler of wire harness products for aerospace customers. The addition of
Laurel provided the Company with the opportunity to consolidate the
manufacturing operations of ESG and has enabled the Company to solicit and bid
effectively for long-term system development and manufacturing contracts. Also
in December 1993, the Company acquired the assets of CMC Technology ("CMC")
which provided the Company with a key customer base in the commercial video
recording systems industry. In November 1994, the Company acquired Ahead
Technology Corporation ("Ahead"), now located with CMC in San Jose, California.
Ahead designs and manufactures a variety of consumable magnetic head products
used in the production of computer disk drives.
In July 1995, the Company acquired substantially all of the assets of Opto
Mechanik, Inc., which now constitute OMI Corp. ("OMI"). This acquisition enables
EOSG to expand its electro-optical targeting products and consolidate certain
manufacturing activities in a lower cost facility while adding backlog in
complementary product areas.
In February 1996, the Company acquired substantially all of the assets of
Mag-Head Engineering Company, Inc. ("MEC"), a manufacturer of audio and flight
recorder heads. This acquisition provides the Company with an established
manufacturing capability in the area of magnetic recorder heads and, when
coupled with CMC and Ahead, allows the Company to apply its expertise in
high-technology recorder head products in select commercial markets.
In furtherance of its strategic plan, in February 1996, the Company
acquired a 90% interest in DRS Medical Systems, a partnership formed to develop,
manufacture and market medical ultrasound imaging equipment. The DRS Medical
Systems partnership provides a means for the Company to apply its expertise in
sonar and image processing technology to related commercial applications.
Adaptable Product Designs. The Company's recent focus has been on the
design and development of products that can be used by all branches of the
military. This enables the Company to increase revenues, reduce product costs
and decrease reliance on U.S. Navy procurement programs. The Company's display
systems, originally designed under a U.S. Navy development contract, are
open-architecture information processing workstations that can be adapted for
use in other branches of the military. Similarly, the Company's boresight
products, originally designed for use with the U.S. Army's Apache attack
helicopter, were specifically designed to be adaptable to other air, sea or
land-based weapons platforms. The boresight system has been successfully applied
to the U.S. Marine Corps' Cobra helicopter and to the U.S. Air Force's AC-130
Spectre gunship platforms; recently, proposals have been submitted for its use
on F-15 fixed-wing aircraft.
Cost-Reduction Initiatives. The Company continues to focus on streamlining
its operations and, during fiscal 1996, the Company consolidated several of its
manufacturing facilities.
COMMERCIAL OFF-THE-SHELF (COTS) PRODUCT DESIGNS
The concept of designing and manufacturing military products and systems
through the integration and adaptation of existing commercial and military
products was developed in response to both decreasing military budgets and the
increasing pace of technology. The use of COTS designs entails the purchasing,
refitting, upgrading and "ruggedization" (repackaging, remounting and stress
testing to withstand harsh military environments) of available commercial
components. The Company strives to apply COTS designs to most of its new
products. Management believes that the adaptation of available commercial
components to existing as well as to new military systems and applications
offers two primary advantages over traditional military systems development and
procurement cycles: (i) it has the potential to save significant amounts of time
and expenditures in the area of research
and development and (ii) as commercial product development and production cycles
become shorter than their military equivalents, the adaptation of commercial
technology to battlefield systems has the potential to shorten military product
cycles.
MARKET OVERVIEW
The Company believes that the market for military electronics and related
equipment will be influenced by two primary factors:
First, the nature of modern warfare dictates increasing reliance on timely
and accurate battlefield information to ensure that increasingly costly assets
are deployed efficiently and to minimize destruction of nonmilitary targets. In
general, military engagements have evolved from large-scale undertakings, where
numerical superiority was the key to dominance, to "surgical strikes" where the
ability to observe and strike accurately and at will from afar has become a
major means of both deterrence and loss minimization. Advancing technology has
been a major factor in increasing the precision strike capability of the U.S.
military and has increased the "per shot" cost of arms. These factors combine to
produce a military, economic and political environment requiring increased
weapons efficiency and accuracy. In addition, real time data is needed for
in-theater evaluation, damage assessment and training, as well as to reduce and
minimize incidents of U.S. casualties due to friendly fire.
Second, it is often more cost-effective to refit and upgrade existing
weapons platforms than to replace them. With the development and unit costs of
new platforms increasing rapidly amid a political and economic environment
demanding decreasing overall military expenditures, Congress and the military
have delayed or canceled the implementation of many proposed weapons systems,
opting instead to improve the performance, and extend the life, of existing
weapons through improved battlefield intelligence and equipment enhancements.
This increasing focus on cost efficiencies has manifested itself in the
military's COTS program.
COMPANY ORGANIZATION AND PRODUCTS
The Company is organized into three operating groups: ESG, EOSG and MTG. A
description of the groups and their products follows below:
ELECTRONIC SYSTEMS GROUP
ESG consists of DRS Military Systems ("Military Systems"), located in
Oakland, New Jersey, TAS, located in Gaithersburg, Maryland, Laurel, located in
Johnstown, Pennsylvania, and DRS Medical Systems, located in Mahwah, New Jersey.
Also, under the direction of TAS is the Technical Services Division ("TSD"),
located in Virginia Beach, Virginia and San Diego, California.
Military Systems designs, manufactures and markets signal processors and
display workstations which are installed on naval ships for antisubmarine
warfare ("ASW") purposes and in land-based surveillance systems used for
underwater surveillance of harbors and coastal locations. These workstations
receive signals from a variety of sonar-type sensors, processing the information
and arranging it in a display format enabling operators to quickly interpret the
data and inform command personnel of potential threats. Major product lines and
contracts include:
o AN/UYQ-65: The AN/UYQ-65 is the first COTS-based tactical workstation
to be qualified by the U.S. Navy and was designed to comply with the
stringent requirements of the Aegis (DDG-51) shipbuilding program.
Replacing the sensor displays in the SQQ-89 ASW Combat Suite, it
employs dual processors enabling simultaneous I/O and graphics
processing. This new approach allows for required high bandwidth
processing, while maintaining response times for opera tor/machine
interfaces. The system architecture can be adapted to meet various
interface, cooling, memory, storage and processing requirements.
o AN/SQR-17A(V)3: The Mobile In-Shore Undersea Warfare (MIUW) system is
deployed in land-based vans, utilizing sonobuoys and anchored passive
detectors for harbor defense, coastal defense and amphibious
operations surveillance, as well as to enhance drug interdiction
efforts. This system currently is being procured for utilization in 22
field installations. Military Systems is under contract to provide
various upgrades to these field installations.
o AN/SQQ-TIA: This portable training system is used on board MIUW vans
to simulate actual sonar signal processing sets currently used by the
U.S. Navy and is employed primarily for Naval Reserve training.
o Airborne Separation Video Systems ("ASVS"): In fiscal 1996, Military
Systems was selected as the prime contractor on this tri-service
(Army, Navy and Air Force) program to develop ASVS for the test and
evaluation of weapons separation events on board various fixed- and
rotary-wing military aircraft. The systems include an
electronically-shuttered, fast-frame, high-resolution, digital imaging
camera and a high-density, digital data storage device. Military
Systems is also incorporating a color readiness capability and is
miniaturizing the system's high-speed, electronic camera to assure
compatibility with air platforms, such as the Air Force's F-16.
TAS produces tactical (e.g., combat/attack) information systems and
training systems. Major product lines and contracts include:
o AN/UYQ-70: The AN/UYQ-70 is an advanced, open-architecture display
system designed for widespread application through software
modification, and is to be deployed on Aegis and other surface ships,
submarines and airborne platforms. This system was developed for the
U.S. Navy under subcontract with the Government Systems Group of Loral
Corporation (currently, Lockheed- Martin Tactical Defense Systems).
The AN/UYQ-70 is a self-contained, microprocessor-based unit complete
with mainframe interface software offering advanced computing and
graphic capabilities. These units replace previous generation units
that are dependent upon a shipboard mainframe computer at
approximately 25% of the cost of the older units. This program is
currently in the production phase. Based upon the size of the naval
surface fleet and the average number of workstations to be deployed on
each ship, the Company believes that the potential market for this
workstation product may be in excess of 5,000 units over the next
decade.
o Military Display Emulators: These workstations are functionally
identical to existing U.S. Navy shipboard display consoles built to
military specifications, but are manufactured using low cost COTS
components suitable for land-based laboratory environments. These
Military Display Emulators are used in U.S. Navy development, test and
training sites as plug-compatible replacements for the more expensive
shipboard qualified units. The Company is currently delivering these
Military Display Emulators for use in the Aegis and other U.S. Navy
programs.
Laurel, which is 80% owned by DRS through a partnership with Laurel
Technologies, Inc. formed in December 1993, functions as a cost efficient
manufacturing facility and focuses on two areas. First, Laurel provides
manufacturing and product integration services for Military Systems, TAS and
Photronics Corp. ESG's workstation and simulator systems, among other products,
are manufactured in this facility. In addition, in fiscal 1996, Laurel was
awarded a subcontract to manufacture AN/UYQ-70 workstations for Lockheed-Martin
Tactical Defense Systems. Second, Laurel manufactures complex cable and wire
harness assemblies for large industrial customers that are involved in the
military and commercial aerospace industry. These products are then installed by
the customers in a wide variety of rotary-blade and fixed-wing aerial platforms.
DRS Medical Systems is 90% owned by the Company through a partnership with
Universal Sonics Corporation and was formed to develop, manufacture and market
high-quality, low-cost medical ultrasound equipment. DRS Medical Systems
currently manufactures ultrasound and sonographic systems principally for
original equipment manufacturers.
TSD performs field service and depot level repairs for ESG products, as
well as other manufacturers' systems. Principal locations are in close proximity
to U.S. Naval yards in Norfolk, Virginia and San Diego, California. Services,
including equipment and field change installation, configuration audit, repair,
testing and maintenance, are performed for the U.S. Navy and, to a lesser
extent, commercial customers. TSD also has performed work for foreign navies,
including those of Australia, the Republic of China, Egypt, Turkey and Greece.
ELECTRO-OPTICAL SYSTEMS GROUP
EOSG consists of Photronics Corp. ("Photronics"), located in Hauppauge, New
York and OMI located in Palm Bay, Florida.
Photronics produces boresighting equipment used to align and harmonize the
navigation, targeting, and weapons systems on rotary- and fixed-wing aircraft
and armored vehicles. Multiple Platform Boresighting Equipment (MPBE) is
Photronics' main product line. These products can be used on both rotary- and
fixed-wing aircraft, as well as on armored vehicles. MPBE currently is used on
the Army's Apache helicopters and Apache Longbow helicopters, the Marine Corps'
Cobra helicopters and on the Air Force's AC-130 Spectre gunship, the Company's
first award for this equipment involving fixed-wing aircraft. Proposals have
been submitted to employ the system on the F-15 fighter. This technology is
proprietary to the Company.
Until the latter part of fiscal 1996, Photronics also produced
electro-optical components used in Sidewinder, Stinger and new generation
air-to-air and surface-to-air missiles in its Hauppauge facility. In order to
reduce its production costs, Photronics consolidated its missile component
manufacturing operations to OMI's new facility in Palm Bay, Florida. In
addition, the move created space for the expansion of Photronics' MPBE programs
in Hauppauge.
OMI designs and manufactures electro-optical targeting and sighting systems
and missile components. Major product programs at OMI include:
o Night Vision Binoculars: OMI is currently under contract to develop
and manufacture 1,182 units for the Israeli military. The Night Vision
Binocular is a hand-held viewing binocular that incorporates an image
intensifier tube, laser rangefinder and digital compass in a compact
lightweight system suited for infantry units, special forces and night
operations involving forward observers and reconnaissance patrols. The
Night Vision Binocular displays range and azimuth data in the
soldier's eyepieces, allowing identification of targets and providing
essential fire support data for nighttime engagement. These units have
a range of 20 to 2,000 meters.
o Gunners Auxiliary Sight: This is an electro-optical device used as a
primary or backup sight on M-1 Abrams battle tanks and contains a very
sophisticated electro-optical train and a laser protective filter. OMI
has produced more than 2,000 of these instruments and continues to
operate as a repair and retrofit facility for the M-1A2 upgrade
program, which will continue through 1997, with options through 1999.
o TOW Optical Sight: OMI is currently the only U.S. qualified producer
of this device. This complex electro-optical system is the main
component of the U.S.'s premier antitank weapons system.
o TOW Traversing Unit: This unit provides target tracking accuracy for
the TOW antitank weapon, acting as the mount for the TOW Optical Sight
and the associated missile launch tube. OMI is currently the only
qualified manufacturer of this tightly toleranced assembly, and is
currently working on modification and retrofit programs. OMI has also
been contracted to modify a version for use by an overseas customer.
o Improved TOW Acquisition System: Working with the primary contractor
for the TOW sighting system, this antitank system was developed for
the U.S. Army's HMVE vehicle.
o Day/Night Tank Sighting System: This system was developed in concert
with a major primary contractor. OMI is a major subcontractor,
currently supplying three of the major assemblies.
o Eyesafe Laser Rangefinder: OMI competed against the U.S. Army's
historical primary laser supplier for this contract and was awarded an
initial contract for preproduction units.
o Missile Components: The components originally consisted of primary
mirrors used in the nose-mounted infrared seeker of Sidewinder and
Stinger missiles. Development efforts have resulted in the ability to
provide increased content to include the secondary, tertiary and fold
mirrors, housing and nose dome. The Company is currently under
contract to produce infrared components and subassemblies on many of
the next-generation infrared missile systems.
MEDIA TECHNOLOGIES GROUP
MTG consists of Precision Echo, Inc. ("PE"), located in Santa Clara,
California, Ahead and CMC, located in San Jose, California and MEC, located in
Golden Valley, Minnesota.
PE manufactures a variety of digital and analog recording systems utilized
for military applications including reconnaissance, ASW and other information
warfare data storage requirements and is a predominant U.S. manufacturer of 8
millimeter military recorders supplied to the U.S. armed forces. PE's products
include:
o AN/USH-42: This system was developed originally for deployment in the
U.S. Navy's A-6E aircraft. PE is currently under contract to modify
the USH-42 for use on the Navy's S-3B ASW aircraft to record radar,
infrared, data bus, navigation and voice data.
o WRR-818: This ruggedized video recorder has been selected for use in
U.S. F/A-18 aircraft and several foreign military aircraft. It also
has been selected by the U.S. Army for use in its Kiowa Warrior
reconnaissance helicopters. A similar recorder, the WRR-812, has been
adapted for use in the Canadian Army's light armored reconnaissance
vehicles. These recorders provide a high-resolution video record of
missing data, operators' displays and external imagery.
o AN/AQH-9 and AN/AQH-12: These products are high quality helicopter
mission recording systems utilized to record sonar and mine hunting
information and other intelligence data.
Ahead manufactures burnish, glide and test heads used in the production of
computer disk drives. These consumable products are used by many U.S. disk drive
manufacturers to hone the surface and ensure the quality of magnetic disks used
in computer hard drives. Customers include most major computer disc drive
manufacturers.
CMC manufactures and refurbishes commercial video recording products for
broadcasters operating worldwide. CMC can refurbish pre-1993 head assemblies
located on these machines at a significant cost savings compared to replacement.
CMC is developing, in conjunction with Ahead, the ability to refurbish post-1993
recorders used by its customer base. Ahead also has the capability to
manufacture recording heads for CMC. In order to foster operational synergies
and to allow space for growth, Ahead and CMC moved into a new joint facility in
fiscal 1996.
MEC designs, manufactures and refurbishes magnetic broadcast audio heads,
magnetic flight recorder heads and magnetic strip card readers for the U.S.
Government, defense and commercial markets.
CUSTOMERS
A significant portion of the Company's products are sold to agencies of the
U.S. Government, primarily the Department of Defense, to foreign government
agencies or to prime contractors or subcontractors thereof. Approximately 78%,
84% and 94% of total consolidated revenues for fiscal 1996, 1995 and 1994,
respectively, were derived directly or indirectly from defense contracts for end
use by the U.S. Government and its agencies. See "Export Sales" below for
information concerning sales to foreign governments.
BACKLOG
The following table sets forth the Company's backlog by major product group
(including enhancements, modifications and related logistics support) at the
dates indicated:
March 31, March 31, March 31,
1996 1995 1995
------------- ------------- -------------
Government Products:
U.S. Government....... $120,000,000 $115,200,000 $123,700,000
Foreign Government.... 21,200,000 8,600,000 5,800,000
------------ ------------ ------------
141,200,000 123,800,000 129,500,000
Commercial Products......... 4,400,000 2,200,000 5,100,000
------------ ------------ ------------
$145,600,000 $126,000,000 $134,600,000
============ ============ ============
"Backlog" refers to the aggregate revenues remaining to be earned at the
specified date under contracts held by the Company, including, for U.S.
Government contracts, the extent of the funded amounts thereunder which have
been appropriated by Congress and allotted to the contract by the procuring
Government agency. Fluctuations in backlog amounts relate principally to the
timing and amount of Government contract awards.
At March 31, 1996, the Company's backlog of orders was approximately $145.6
million compared with $126.0 million at March 31, 1995. The increase in backlog
for the fiscal year was due to the net effect of bookings, partially offset by
revenues, and the addition of approximately $17 million of backlog from the OMI
asset acquisition. New contract awards of approximately $104.3 million were
booked during the fiscal year ended March 31, 1996.
Approximately 60% of the backlog at March 31, 1996 is expected to result in
revenues during the fiscal year ending March 31, 1997.
RESEARCH AND DEVELOPMENT
The military electronics industry is subject to rapid technological
changes, and the Company's future success will depend in large part upon its
ability to improve existing product lines and to develop new products and
technologies in the same or related fields. Thus, the Company's technological
expertise has been an important factor in its growth. A portion of its research
and development activities has taken place in connection with customer-sponsored
research and development contracts. All such customer-sponsored activities are
the result of contracts directly or indirectly with the U.S. Government. The
Company also invests in Company-sponsored research and development. Such
expenditures were $600,000, $800,000 and $500,000 for fiscal 1996, 1995 and
1994, respectively. Revenues recorded by the Company for customer-sponsored
research and development were $12,100,000, $18,800,000 and $27,500,000 for
fiscal 1996, 1995 and 1994, respectively.
CONTRACTS
The Company's contracts are normally for production, service or
development. Production and service contracts are typically of the fixed-price
variety with development contracts currently of the cost-type variety. Because
of their inherent uncertainties and consequent cost overruns, development
contracts historically have been less profitable than production contracts.
Fixed-price contracts may provide for a firm-fixed-price or they may be
fixed-price-incentive contracts. Under the firm-fixed-price contracts, the
Company agrees to perform for an agreed-upon price and, accordingly, derives
benefits from cost savings, but bears the entire risk of cost overruns. Under
the fixed-price-incentive contracts, if actual costs incurred in the performance
of the contracts are less than estimated costs for the contracts, the savings
are apportioned between the customer and the Company. However, if actual costs
under such a contract exceed estimated costs, excess costs are apportioned
between the customer and the Company up to a ceiling. The Company bears all
costs that exceed the ceiling.
Cost-type contracts typically provide for reimbursement of allowable costs
incurred plus a fee (profit). Unlike fixed-price contracts in which the Company
is committed to deliver without regard to performance cost, cost-type contracts
normally obligate the Company to use its best efforts to accomplish the scope of
work within a specified time and a stated contract dollar limitation. In
addition, U.S. Government procurement regulations mandate
lower profits for cost-type contracts because of the Company's reduced risk.
Under cost-plus-incentive-fee contracts, the incentive may be based on cost or
performance. When the incentive is based on cost, the contract specifies that
the Company is reimbursed for allowable incurred costs plus a fee adjusted by a
formula based on the ratio of total allowable costs to target cost. Target cost,
target fee, minimum and maximum fee and adjustment formula are agreed upon when
the contract is negotiated. In the case of performance-based incentives, the
Company is reimbursed for allowable incurred costs plus an incentive, contingent
upon meeting or surpassing stated performance targets. The contract provides for
increases in the fee to the extent that such targets are surpassed and for
decreases to the extent that such targets are not met. In some instances,
incentive contracts also may include a combination of both cost and performance
incentives. Under cost-plus-fixed-fee contracts, the Company is reimbursed for
costs and receives a fixed fee, which is negotiated and specified in the
contract. Such fees have statutory limits.
The percentages of revenues during fiscal 1996, 1995 and 1994 attributable
to the Company's contracts by contract type were as follows:
Year Ended March 31,
----------------------------
1996 1995 1994
---- ---- ----
Firm-fixed-price ........... 87% 74% 65%
Fixed-price-incentive ...... - - 1%
Cost-plus-incentive-fee .... - 6% 17%
Cost-plus-fixed-fee ........ 13% 20% 17%
The increased percentage and continued predominance of fixed-price
contracts is reflective of the fact that production contracts comprise a
significant portion of the Company's U.S. Government contract portfolio.
The Company negotiates for, and generally receives, progress payments from
its customers of between 80-100% of allowable costs incurred on the previously
described contracts. Included in its reported revenues are certain amounts which
the Company has not billed to customers. These amounts, approximately $8.7
million, $7.9 million and $5.9 million as of March 31, 1996, 1995 and 1994,
respectively, consist of costs and related profits, if any, in excess of
progress payments for contracts on which sales are recognized on a
percentage-of-completion basis.
Under generally accepted accounting principles, all U.S. Government
contract costs, including applicable general and administrative expenses, are
charged to work-in-progress inventory and are written off to costs and expenses
as revenues are recognized. The Federal Acquisition Regulations ("FAR"),
incorporated by reference in U.S. Government contracts, provide that
Company-sponsored research and development costs are allowable general and
administrative expenses. To the extent that general and administrative expenses
are included in inventory, research and development costs also are included.
Unallowable costs, pursuant to the FAR, have been excluded from costs
accumulated on U.S. Government contracts. Work-in-process inventory included
general and administrative costs (which include Company-sponsored research and
development costs) of $9.9 million and $6.6 million at March 31, 1996 and 1995,
respectively.
All domestic defense contracts and subcontracts to which the Company is a
party are subject to audit, various profit and cost controls, and standard
provisions for termination at the convenience of the customer. Multi-year U.S.
Government contracts and related orders are subject to cancellation if funds for
contract performance for any subsequent year become unavailable. In addition, if
certain technical or other program requirements are not met in the developmental
phases of the contract, then the follow-on production phase may not be realized.
Upon termination other than for a contractor's default, the contractor normally
is entitled to reimbursement for allowable costs, but not necessarily all costs,
and to an allowance for the proportionate share of fees or earnings for the work
completed. Foreign defense contracts generally contain comparable provisions
relating to termination at the convenience of the foreign government.
COMPETITION
The military electronics defense industry is characterized by rapid
technological change. The Company's products are sold in markets containing a
number of competitors which are substantially larger than the Company, devote
substantially greater resources to research and development and generally have
greater financial resources. Certain of such competitors are also suppliers to
the Company. The extent of competition for any single project generally varies
according to the complexity of the product and the dollar volume of the
anticipated award. The Company believes that it competes on the basis of the
performance of its products, its reputation for prompt and responsive contract
performance, and its accumulated technical knowledge and expertise. The
Company's future success will depend in large part upon its ability to improve
existing product lines and to develop new products and technologies in the same
or related fields.
In the military sector, the Company competes with many first- and
second-tier defense contractors on the basis of product performance, cost,
overall value, delivery and reputation. As the size of the overall defense
industry has decreased in recent years, there has been an increase in the number
of consolidations and mergers of defense suppliers, and this trend is expected
to continue. As the industry consolidates, the large (first-tier) defense
contractors are narrowing their supplier base and awarding increasing portions
of projects to strategic second- and third-tier suppliers, and in the process
are becoming oriented more toward system integration and assembly.
PATENTS
The Company has patents on many of its recording products and certain
commercial products. The Company does not believe patent protection to be
significant to its current operations; however, future programs may generate the
need for patent protection. Similarly, the Company and its subsidiaries have
certain registered trademarks, none of which are considered significant to
current operations.
MANUFACTURING AND SUPPLIERS
The Company's manufacturing process for its products, excluding optical
products, consists primarily of the assembly of purchased components and testing
of the product at various stages in the assembly process. Purchased components
include integrated circuits, circuit boards, sheet metal fabricated into
cabinets, resistors, capacitors, semiconductors and insulated wire and cables.
In addition, many of the Company's products use machined castings and housings,
motors and recording and reproducing heads. Many of the purchased components are
fabricated to Company designs and specifications. The manufacturing process for
the Company's optics products includes the grinding, polishing and coating of
various optical materials and machining of metal components.
Although materials and purchased components generally are available from a
number of different suppliers, several suppliers are the Company's sole source
of certain components. If a supplier should cease to deliver such components,
other sources probably would be available; however, added cost and manufacturing
delays might result. The Company has not experienced significant production
delays attributable to supply shortages, but occasionally experiences
procurement problems with respect to certain components, such as semiconductors
and connectors. In addition, with respect to the Company's optical products,
certain exotic materials, such as germanium, zinc sulfide and cobalt, may not
always be readily available.
EXPORT SALES
The Company currently sells several of its products and services in the
international marketplace to countries such as Canada, Germany, Australia and
the Republic of China. Foreign sales are derived under export licenses granted
on a case-by-case basis by the United States Department of State. The Company's
foreign contracts are generally payable in United States dollars.
Executive Officers of the Registrant
The names of the executive officers of the Company, their positions and
offices with the Company, and their ages are set forth below:
NAME POSITIONS WITH THE COMPANY AGE
- ---- -------------------------- ---
Mark S. Newman.............. Chairman of the Board, President, Chief Executive Officer 46
and Director
Nancy R. Pitek.............. Vice President, Finance, Treasurer and Secretary 39
Paul G. Casner, Jr.......... Vice President; President of DRS Electronic Systems Group 58
Stuart F. Platt............. Vice President and Director; President of DRS Media 62
Technologies Group
Richard Ross............... Vice President; President of DRS Electro-Optical Systems 41
Group
Mark S. Newman has been employed by the Company since 1973, was named Vice
President, Finance, Chief Financial Officer and Treasurer in 1980 and Executive
Vice President in 1987. Mr. Newman became a Director of the Company in 1988. In
May 1994, Mr. Newman became the President and Chief Executive Officer of the
Company and in August 1995 became Chairman of the Board.
Nancy R. Pitek joined the Company in 1984 as Manager of Accounting. She
became Assistant Controller in 1985 and Director of Internal Audit in 1988. Ms.
Pitek became Director of Corporate Finance in 1990 and Controller in 1993. In
May 1994, she was appointed to the position of Treasurer and in August 1995
became Secretary. Ms. Pitek was named Vice President, Finance in May 1996.
Paul G. Casner, Jr. joined the Company in 1993 as President of TAS. In
1994, he also became President of DRS Electronic Systems Group and a Vice
President of the Company. Mr. Casner has over 30 years of experience in the
defense electronics industry and has held positions in engineering, marketing
and general management. He was the president of TAS prior to its acquisition by
the Company.
Stuart F. Platt has been a Director of the Company since 1991 and became
the President of Precision Echo in July 1992. He was named Vice President of the
Company in May 1994. Rear Admiral Platt also serves as President of DRS Media
Technologies Group. He is a co-founder and director of FPBSM Industries, Inc., a
holding company and management consulting firm for defense, aerospace and other
technology-based companies. He also serves as director for Harding Associates,
Inc. None of these companies is a parent, subsidiary or affiliate of the
Company. Rear Admiral Platt held various positions as a military officer in the
Department of the Navy, retiring as Competition Advocate General of the Navy in
1986.
Richard Ross was employed by the Company as Assistant Vice President and
Director of Sales in 1986 and Assistant Vice President, Corporate Development in
1987. In 1988, he became Vice President of the Company, and in 1990, he became
President of Photronics. Mr. Ross also serves as President of the DRS
Electro-Optical Systems Group.
Employees
As of March 31, 1996, the Company employed 809 employees. None of the
Company's employees are represented by labor unions, and the Company has
experienced no work stoppages.
There is a continuing demand for qualified technical personnel, and the
Company believes that its future growth and success will depend upon its ability
to attract, train and retain such personnel.
Item 2. Properties
The Company leases approximately 6,000 square feet of office space for its
corporate headquarters in an office building at 5 Sylvan Way, Parsippany, New
Jersey under a lease that expires in fiscal 2001. The Company leases
approximately 25,000 square feet of space for administrative and engineering
facilities at 138 Bauer Drive, Oakland, New Jersey. The Company leases the
Oakland building from LDR Realty Co., a partnership wholly-owned by Leonard
Newman and David E. Gross, co-founders and former executive officers of the
Company, under a lease which expires in fiscal 1999. The Company believes that
this lease was consummated on terms no less favorable than those that could have
been obtained by the Company from an unrelated third party in a transaction
negotiated on an arms-length basis.
TAS leases 40,000 square feet in a building at 200 Professional Drive,
Gaithersburg, Maryland that houses its executive offices and principal
engineering and manufacturing facilities under a lease which expires in fiscal
2000. It also conducts field service operations from locations in Virginia Beach
and Chesapeake, Virginia and National City, California. These leased facilities,
comprising approximately 15,000 square feet and 1,500 square feet, respectively,
are covered by leases, which, with respect to the Virginia location, expires in
fiscal 1997, and for the California location, expires in fiscal 1999.
Laurel's manufacturing facilities and administrative offices are located in
a 38,000 square foot building at 423 Walters Avenue in Johnstown, Pennsylvania.
The lease for this facility expires in fiscal 1999. DRS Medical Systems operates
from an 8,400 square foot facility in Mahwah, New Jersey, under a month-to-month
lease expiring in April 1997. The Company also leases approximately 2,000 square
feet of office space in Arlington, Virginia under a lease which expires in
fiscal 1998.
Photronics Corp.'s principal facilities are located in a 45,000 square foot
building at 270 Motor Parkway, Hauppauge, New York. The building, which is owned
by the Company, was built in 1983. See Note 10 of Notes to Consolidated
Financial Statements. OMI leases approximately 54,000 square feet in a building
at 2330 Commerce Park Drive, Palm Bay, Florida, for its operations and
administration offices. The related leases expire in fiscal 2006.
Precision Echo's engineering and principal operations are located in a
55,000 square foot building at 3105 Patrick Henry Drive, Santa Clara,
California, under a lease which expires in fiscal 2001. The operations of CMC
and Ahead recently have been consolidated and relocated to a new facility in San
Jose, California, comprising 32,000 square feet pursuant to a five year lease
expiring in fiscal 2001. MEC operates from a 7,000 square foot leased facility
in Golden Valley, Minnesota. This lease expires in January 1997.
Environmental Protection
The Company believes that its manufacturing operations and properties are
in material compliance with existing federal, state and local provisions enacted
or adopted to regulate the discharge of materials into the environment or
otherwise protect the environment. Such compliance has been achieved without
material effect on the Company's earnings or competitive position.
Item 3. Legal Proceedings
The Company is a party to various legal actions and claims arising in the
ordinary course of its business. In the Company's opinion, the Company has
adequate legal defenses for each of the actions and claims and believes that
their ultimate disposition will not have a material adverse effect on the
Company's consolidated financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
On February 7, 1996, the Board of Directors of the Company approved and
recommended for submission to the stockholders of the Company by a majority vote
the consideration and approval of an Amended and Restated Certificate of
Incorporation (the "Restated Certificate"), which amended and restated the
Company's certificate to (i) effect a reclassification (the "Reclassification")
of each share of Class A Common Stock, $.01 par value per share, and each share
of Class B Common Stock, $.01 par value per share, into one share of Common
Stock, $.01 par value per share, of the Company, (ii) provide that action by the
stockholders may be taken only at a duly called annual or special meeting and
not by written consent, and (iii) provide that the stockholders of the Company
would have the right to make, adopt, alter, amend, change or repeal the by-laws
of the Company only upon the affirmative vote of not less than 66 2/3% of the
outstanding capital stock of the Company entitled to vote thereon. On March 26,
1996, the stockholders approved the Restated Certificate. The Restated
Certificate was filed with the Secretary of State of the State of Delaware and
became effective on April 1, 1996.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Company has not paid any cash dividends since 1976. The Company intends
to retain future earnings for use in its business and does not expect to declare
cash dividends in the foreseeable future on the Common Stock. The indentures
relating to the Company's 8 1/2% Convertible Subordinated Debentures and 9%
Senior Subordinated Convertible Debentures limit the Company's ability to pay
dividends or make other distributions on its Common Stock. See Note 6 of Notes
to Consolidated Financial Statements for information concerning restrictions on
the declaration or payment of dividends. Any future declaration of dividends
will be subject to the discretion of the Board of Directors of the Company. The
timing, amount and form of any future dividends will depend, among other things,
on the Company's results of operations, financial condition, cash requirements,
plans of expansion and other factors deemed relevant by the Board of Directors.
Item 6. Selected Financial Data
The information required by this item is incorporated by reference herein
to page 19 of the Diagnostic/Retrieval Systems, Inc. 1996 Annual Report (for the
fiscal year ended March 31, 1996).
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by this item is incorporated by reference herein
to pages 20 through 23 of the Diagnostic/Retrieval Systems, Inc. 1996 Annual
Report (for the fiscal year ended March 31, 1996).
Item 8. Financial Statements and Supplementary Data
The information required by this item is incorporated by reference herein
to pages 24 through 39 of the Diagnostic/Retrieval Systems, Inc. 1996 Annual
Report (for the fiscal year ended March 31, 1996).
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
The information required by this Part is incorporated herein by reference
to the Definitive Proxy Statement of the Company, dated June 28, 1996, for the
1996 Annual Meeting of Stockholders. Reference is also made to the information
under "Executive Officers of the Registrant" in Part I of this report.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents filed as part of this report
1. Financial Statements
The following financial statements of Diagnostic/Retrieval Systems,
Inc. and subsidiaries have been incorporated by reference to the
Diagnostic/Retrieval Systems, Inc. 1996 Annual Report (for the fiscal
year ended March 31, 1996), pursuant to Item 8 of this report:
1996 Annual
Report Page(s)
--------------
Independent Auditors' Report ....................... 39
Consolidated Balance Sheets --
March 31, 1996 and 1995 ............................ 24
Consolidated Statements of Earnings --
Years Ended March 31, 1996, 1995 and 1994 .......... 25
Consolidated Statements of Stockholders' Equity --
Years Ended March 31, 1996, 1995 and 1994 .......... 25
Consolidated Statements of Cash Flows --
Years Ended March 31, 1996, 1995 and 1994 .......... 26
Notes to Consolidated Financial Statements ......... 27-38
2. Financial Statement Schedules
See Appendix A hereto.
3. Exhibits
Incorporated by reference to the Exhibit Index at the end of this
report.
(b) Reports on Form 8-K
The following report on Form 8-K was filed during the fiscal quarter ended
March 31, 1996:
Form 8-K, Amendment No. 2, dated February 6, 1996, File No. 1-8533,
containing Item 7(a).
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
Dated: June 28, 1996 /s/ MARK S. NEWMAN
------------------
Mark S. Newman, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ MARK S. NEWMAN Chairman of the Board, President, June 28, 1996
- ------------------------------------ Chief Executive Officer and Director
Mark S. Newman
/s/ NANCY R. PITEK Vice President, Finance, June 28, 1996
- ------------------------------------ Treasurer and Secretary
Nancy R. Pitek
Vice President, President of DRS Media June 28, 1996
- ------------------------------------ Technologies Group and Director
Stuart F. Platt
Director June 28, 1996
- ------------------------------------
Theodore Cohn
Director June 28, 1996
- ------------------------------------
Donald C. Fraser
Director June 28, 1996
- ------------------------------------
Mark N. Kaplan
Director June 28, 1996
- ------------------------------------
Leonard Newman
Director June 28, 1996
- ------------------------------------
Jack Rachleff
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
Dated: June 28, 1996
------------------
Mark S. Newman, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chairman of the Board, President, June 28, 1996
- ------------------------------------ Chief Executive Officer and Director
Mark S. Newman
Vice President, Finance, June 28, 1996
- ------------------------------------ Treasurer and Secretary
Nancy R. Pitek
/s/ STUART F. PLATT Vice President, President of DRS Media June 28, 1996
- ------------------------------------ Technologies Group and Director
Stuart F. Platt
Director June 28, 1996
- ------------------------------------
Theodore Cohn
Director June 28, 1996
- ------------------------------------
Donald C. Fraser
Director June 28, 1996
- ------------------------------------
Mark N. Kaplan
Director June 28, 1996
- ------------------------------------
Leonard Newman
Director June 28, 1996
- ------------------------------------
Jack Rachleff
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
Dated: June 28, 1996
------------------
Mark S. Newman, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chairman of the Board, President, June 28, 1996
- ------------------------------------ Chief Executive Officer and Director
Mark S. Newman
Vice President, Finance, June 28, 1996
- ------------------------------------ Treasurer and Secretary
Nancy R. Pitek
Vice President, President of DRS Media June 28, 1996
- ------------------------------------ Technologies Group and Director
Stuart F. Platt
/s/ THEODORE COHN Director June 28, 1996
- ------------------------------------
Theodore Cohn
Director June 28, 1996
- ------------------------------------
Donald C. Fraser
Director June 28, 1996
- ------------------------------------
Mark N. Kaplan
Director June 28, 1996
- ------------------------------------
Leonard Newman
Director June 28, 1996
- ------------------------------------
Jack Rachleff
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
Dated: June 28, 1996
------------------
Mark S. Newman, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chairman of the Board, President, June 28, 1996
- ------------------------------------ Chief Executive Officer and Director
Mark S. Newman
Vice President, Finance, June 28, 1996
- ------------------------------------ Treasurer and Secretary
Nancy R. Pitek
Vice President, President of DRS Media June 28, 1996
- ------------------------------------ Technologies Group and Director
Stuart F. Platt
Director June 28, 1996
- ------------------------------------
Theodore Cohn
/s/ DONALD C. FRASER Director June 28, 1996
- ------------------------------------
Donald C. Fraser
Director June 28, 1996
- ------------------------------------
Mark N. Kaplan
Director June 28, 1996
- ------------------------------------
Leonard Newman
Director June 28, 1996
- ------------------------------------
Jack Rachleff
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
Dated: June 28, 1996
------------------
Mark S. Newman, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chairman of the Board, President, June 28, 1996
- ------------------------------------ Chief Executive Officer and Director
Mark S. Newman
Vice President, Finance, June 28, 1996
- ------------------------------------ Treasurer and Secretary
Nancy R. Pitek
Vice President, President of DRS Media June 28, 1996
- ------------------------------------ Technologies Group and Director
Stuart F. Platt
Director June 28, 1996
- ------------------------------------
Theodore Cohn
Director June 28, 1996
- ------------------------------------
Donald C. Fraser
/s/ MARK N. KAPLAN Director June 28, 1996
- ------------------------------------
Mark N. Kaplan
Director June 28, 1996
- ------------------------------------
Leonard Newman
Director June 28, 1996
- ------------------------------------
Jack Rachleff
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
Dated: June 28, 1996
------------------
Mark S. Newman, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chairman of the Board, President, June 28, 1996
- ------------------------------------ Chief Executive Officer and Director
Mark S. Newman
Vice President, Finance, June 28, 1996
- ------------------------------------ Treasurer and Secretary
Nancy R. Pitek
Vice President, President of DRS Media June 28, 1996
- ------------------------------------ Technologies Group and Director
Stuart F. Platt
Director June 28, 1996
- ------------------------------------
Theodore Cohn
Director June 28, 1996
- ------------------------------------
Donald C. Fraser
Director June 28, 1996
- ------------------------------------
Mark N. Kaplan
/s/ LEONARD NEWMAN Director June 28, 1996
- ------------------------------------
Leonard Newman
Director June 28, 1996
- ------------------------------------
Jack Rachleff
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
Dated: June 28, 1996
------------------
Mark S. Newman, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chairman of the Board, President, June 28, 1996
- ------------------------------------ Chief Executive Officer and Director
Mark S. Newman
Vice President, Finance, June 28, 1996
- ------------------------------------ Treasurer and Secretary
Nancy R. Pitek
Vice President, President of DRS Media June 28, 1996
- ------------------------------------ Technologies Group and Director
Stuart F. Platt
Director June 28, 1996
- ------------------------------------
Theodore Cohn
Director June 28, 1996
- ------------------------------------
Donald C. Fraser
Director June 28, 1996
- ------------------------------------
Mark N. Kaplan
Director June 28, 1996
- ------------------------------------
Leonard Newman
/s/ JACK RACHLEFF Director June 28, 1996
- ------------------------------------
Jack Rachleff
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES
Schedule II. Valuation and Qualifying Accounts
Years Ended March 31, 1996, 1995 and 1994
- ---------------------------------------------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D Col. E
- ---------------------------------------------------------------------------------------------------------------------
Description Balance at Additions (a) Deductions (b) Balance at
Beginning of ------------------------ ---------------------------- End of
Period (1) (2) (1) Period
Charged to Charged to Credited to Credited to
Costs and Other Costs and Other
Expenses Accounts- Expenses Accounts-
Describe Describe
- ----------------------------------------- -------------------------------------------------------------------------
Inventory Reserve
Year ended March 31, 1996 .. $1,400,000 $ 670,000 $ -- $ 8,000 $ 993,000 (c) $1,069,000
Year ended March 31, 1995 .. $2,409,000 $ 439,000 $ -- $ 83,000 (d) $1,365,000 (c) $1,400,000
Year ended March 31, 1994 .. $2,620,000 $ 674,000 $ -- $ 885,000 (e) $ -- $2,409,000
Losses & Future Costs
Accrued on Uncompleted
Contracts
Year ended March 31, 1996 .. $4,555,000 $2,026,000 $ 353,000 (c) $ 945,000 $2,139,000 (c) $3,850,000
Year ended March 31, 1995 .. $3,214,000 $2,168,000 $ -- $ 291,000 $ 536,000 (c) $4,555,000
Year ended March 31, 1994 .. $3,722,000 $1,735,000 $ 254,000 (g) $2,497,000 (f) $ -- $3,214,000
Other
Year ended March 31, 1996 .. $ 290,000 $ -- $ -- $ 290,000 $ -- $ 0
Year ended March 31, 1995 .. $ 290,000 $ -- $ -- $ -- $ -- $ 290,000
Year ended March 31, 1994 .. $ 290,000 $ -- $ -- $ -- $ -- $ 290,000
(a) Represents, on a full-year basis, net credits to reserve accounts.
(b) Represents, on a full-year basis, net charges to reserve accounts.
(c) Represents amounts reclassified and credited to related asset accounts.
(d) Represents amounts credited to costs and expenses associated with the
corresponding write-off of related inventory costs.
(e) Includes $801,000 representing amounts credited to costs and expenses
associated with the corresponding write-off of related inventory costs.
(f) Includes $2,302,000 representing amounts credited to costs and expenses
associated with the corresponding write-off of related inventory costs.
(g) Includes an increase to reserves of $111,000 as a result of business
combinations and a charge of $143,000 to revenues.
EXHIBIT INDEX
Certain of the following exhibits, designated with an asterisk (*)are filed
herewith. Certain of the following exhibits, designated with a "P", are being
filed on paper, pursuant to a hardship exemption under Rule 202 of Regulation
S-T. The exhibits not so designated have been previously filed with the
Commission and are incorporated herein by reference to the documents indicated
in brackets following the descriptions of such exhibits.
Exhibit Page No.
No. Description Of Paper Filing
--- ----------- ---------------
3.1 - Restated Certificate of Incorporation of
the Company [Registration Statement No. 2-
70062-NY, Amendment No. 1, Exhibit 2(a)]
3.2 - Certificate of Amendment of the Restated
Certificate of Incorporation of the Compa-
ny, as filed July 7, 1983 [Registration
Statement on Form 8-A of the Company, dat-
ed July 13, 1983, Exhibit 2.2]
3.3 - Composite copy of the Restated Certificate
of Incorporation of the Company, as amend-
ed [Registration Statement No. 2-85238,
Exhibit 3.3]
3.4 - Amended and Restated Certificate of Incor-
poration of the Company, as filed April 1,
1996 [Registration Statement No. 33-64641,
Post-Effective Amendment No. 1, Exhibit
3.4]
3.5 - By-laws of the Company, as amended to No-
vember 7, 1994 [Form 10-K, fiscal year
ended March 31, 1995, File No. 1-8533,
Exhibit 3.4]
3.6 - Certificate of Amendment of the Certifi-
cate of Incorporation of Precision Echo
Acquisition Corp., as filed March 10, 1995
[Form 10-K, fiscal year ended March 31,
1995, File No. 1-8533, Exhibit 3.5]
3.7 - Form of Advance Notice By-Laws of the Com-
pany [Form 10-Q, quarter ended December
31, 1995, File No. 1-8533, Exhibit 3]
3.8 - Amended and Restated By-Laws of the Compa-
ny, as of April 1, 1996 [Registration
Statement No. 33-64641, Post-Effective
Amendment No. 1, Exhibit 3.8]
4.1 - Indenture, dated as of September 22, 1995,
between the Company and The Trust Company
of New Jersey, as Trustee, in respect of
the Company's 9% Senior Subordinated Con-
vertible Debentures Due 2003 [Registration
Statement No.33-64641, Amendment No. 1,
Exhibit 4.1]
4.2 - Form of 9% Senior Subordinated Convertible
Debenture Due 2003 (included as part of
Exhibit 4.1)[Registration Statement No.33-
64641, Amendment No. 1, Exhibit 4.2]
4.3 - Registration Rights Agreement, dated as of
September 22, 1995 between the Company and
Forum Capital Markets L.P.[Registration
Statement No.33-64641, Amendment No. 1,
Exhibit 4.3]
4.4 - Indenture, dated as of August 1, 1983,
between the Company and Bankers Trust Com-
pany, as Trustee [Form 10-Q, quarter ended
September 30, 1983, File No. 1-8533, Ex-
hibit 4.2]
4.5 - Indenture of Trust, dated December 1,
1991, among Suffolk County Industrial De-
velopment Agency, Manufacturers and Trad-
ers Trust Company, as Trustee and certain
bondholders [Form 10-K, fiscal year ended
March 31, 1992, File No. 1-8533, Exhibit
4.2]
4.6 - Reimbursement Agreement, dated December 1,
1991, among Photronics Corp., the Company
and Morgan Guaranty Trust Company of New
York [Form 10-K, fiscal year ended March
31, 1992, File No. 1-8533, Exhibit 4.3]
4.7 - Registration Rights Agreement, dated as of
March 27, 1996, by and between the Company
and Palisade Capital Management L.L.C.,
acting as investment adviser to the ac-
counts named therein [Registration
Statement No. 33-64641, Post-Effective
Amendment No. 1, Exhibit 4.7]
4.8 - First Supplemental Indenture, dated as of
April 1, 1996, to Indenture, dated as of
September 22, 1995, between the Company
and The Trust Company of New Jersey, as
Trustee [Registration Statement No. 33-
64641, Post-Effective Amendment No. 1,
Exhibit 4.8]
4.9 - First Supplemental Indenture, dated as of
April 1, 1996, to Indenture, dated as of
August 1, 1983, between the Company and
Bankers Trust Company, as Trustee
[Registration Statement No. 33-04929,
Exhibit 4.9]
10.1 - Stock Purchase Agreement, dated as of Au-
gust 6, 1993, among TAS Acquisition Corp.,
Technology Applications and Service Compa-
ny, Paul G. Casner, Jr. and Terrence L.
DeRosa [Form 10-Q, quarter ended December
31, 1993, File No. 1-8533, Exhibit
6(a)(1)]
10.2 - Waiver Letter, dated as of September 30,
1993, among TAS Acquisition Corp., Tech-
nology Applications and Service Company,
Paul G. Casner, Jr. and Terrence L. DeRosa
[Form 10-Q, quarter ended December 31,
1993, File No. 1-8533, Exhibit 6(a)(2)]
10.3 - Joint Venture Agreement, dated as of No-
vember 3, 1993, by and between DRS Systems
Management Corporation and Laurel Technol-
ogies, Inc. [Form 10-Q, quarter ended De-
cember 31, 1993, File No. 1-8533, Exhibit
6(a)(3)]
10.4 - Waiver Letter, dated as of December 13,
1993, by and between DRS Systems Manage-
ment Corporation and Laurel Technologies,
Inc. [Form 10-Q, quarter ended December
31, 1993, File No. 1-8533, Exhibit
6(a)(4)]
10.5 - Partnership Agreement, dated December 13,
1993, by and between DRS Systems Manage-
ment Corporation and Laurel Technologies,
Inc. [Form 10-Q, quarter ended December
31, 1993, File No. 1-8533, Exhibit
6(a)(5)]
10.6 - Lease, dated June 28, 1979, between the
Company and J.L. Williams & Co., Inc.
("Williams") [Registration Statement No.
2-70062-NY, Exhibit 9(b)(4)(i)]
10.7 - Lease, dated as of June 1, 1983, between
LDR Realty Co. and the Company [Form 10-K,
fiscal year ended March 31, 1984, File No.
1-8533, Exhibit 10.7]
10.8 - Renegotiated Lease, dated June 1, 1988,
between LDR Realty Co. and the Company
[Form 10-K, fiscal year ended March 31,
1989, File No. 1-8533, Exhibit 10.8]
10.9 - Lease, dated July 20, 1988, between Preci-
sion Echo, Inc. and Bay 511 Corporation
[Form 10-K, fiscal year ended March 31,
1991, File No. 1-8533, Exhibit 10.9]
10.10- Amendment to Lease, dated July 1, 1993,
between Precision Echo, Inc. and Bay 511
Corporation [Form 10-K, fiscal year ended
March 31, 1994, File No. 1-8533, Exhibit
10.12]
10.11- Second Amendment to Lease, dated October
17, 1995 between Precision Echo, Inc. and
Bay 511 Corporation [Registration
Statement No.33-64641, Amendment No. 1,
Exhibit 10.11]
10.12- Lease Modification Agreement, dated Febru-
ary 22, 1994, between Technology Applica-
tions and Service Company and Atlantic
Real Estate Partners II [Form 10-K, fiscal
year ended March 31, 1994, File No. 1-
8533, Exhibit 10.13]
10.13- Amendment to Lease Modification, dated
June 1, 1994, between Technology Applica-
tions and Service Company and Atlantic
Estate Partners II [Form 10-K, fiscal year
ended March 31, 1995, File No. 1-8533,
Exhibit 10.11]
10.14- Triple Net Lease, dated October 22, 1991,
between Technology Applications and Ser-
vice Company and Marvin S. Friedberg [Form
10-K, fiscal year ended March 31, 1994,
File No. 1-8533, Exhibit 10.14]
10.15- Lease, dated November 10, 1993, between
DRS Systems Management Corp. and Skateland
Roller Rink, Inc. [Form 10-K, fiscal year
ended March 31, 1994, File No. 1-8533,
Exhibit 10.17]
10.16- Lease, dated March 23, 1992, between Ahead
Technology Corporation and Vasona Business
Park [Form 10-K, fiscal year ended March
31, 1995, File No. 1-8533, Exhibit 10.15]
10.17- Amendment to Lease, dated May 21, 1992,
between Ahead Technology Corporation and
Vasona Business Park [Form 10-K, fiscal
year ended March 31, 1995, File No. 1-
8533, Exhibit 10.16]
10.18- Revision to Lease Modification, dated Au-
gust 25, 1992, between Ahead Technology
Corporation and Vasona Business Park [Form
10-K, fiscal year ended March 31, 1995,
File No. 1-8533, Exhibit 10.17]
10.19- Lease, dated January 13, 1995, between the
Company and Sammis New Jersey Associates
[Form 10-K, fiscal year ended March 31,
1995, File No.-8533, Exhibit 10.18]
*10.20- Lease, dated April 3, 1996, by and between
the Company and Los Alamos Economic
Development Corporation
10.21- 1991 Stock Option Plan of the Company
[Registration Statement No. 33-42886, Ex-
hibit 28.1]
10.22- Contract No. N00024-92-C-6102, dated Sep-
tember 28, 1992, between the Company and
the Navy [Form 10-K, fiscal year ended
March 31, 1993, File No. 1-8533, Exhibit
10.45]
10.23- Modification No. P00005, dated August 24,
1994, to Contract No. N00024-92-C-6102
[Form 10-K, fiscal year ended March 31,
1995, File No. 1-8533, Exhibit 10.22]
10.24- Modification No. P00006, dated September
7, 1994, to Contract No. N00024-92-C6102
[Form 10-K, fiscal year ended March 31,
1995, File No. 1-8533, Exhibit 10.23]
10.25- Contract No. N00024-92-C-6308, dated April
1, 1992, between the Company and the Navy
[Form 10-K, fiscal year ended March 31,
1993, File No. 1-8533, Exhibit 10.46]
10.26- Modification No. P00001, dated July 30,
1992, to Contract No. N00024-92-C-6308
[Form 10-K, fiscal year ended March 31,
1993, File No. 1-8533, Exhibit 10.47]
10.27- Modification No. P00002, dated September
25, 1992, to Contract No. N00024-92-C-6308
[Form 10-K, fiscal year ended March 31,
1993, File No. 1-8533, Exhibit 10.48]
10.28- Modification No. P00003, dated October 22,
1992, to Contract No. N00024-92-C-6308
[Form 10-K, fiscal year ended March 31,
1993, File No. 1-8533, Exhibit 10.49]
10.29- Modification No. P00004, dated February
24, 1993, to Contract No. N00024-92-C-6308
[Form 10-K, fiscal year ended March 31,
1993, File No. 1-8533, Exhibit 10.50]
10.30- Modification No. P00005, dated June 11,
1993, to Contract No. N00024-92-C-6308
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.26]
10.31- Modification No. P00006, dated March 26,
1993, to Contract No. N00024-92-C-6308
[Form 10-K, fiscal year ended March 31,
1993, File No. 1-8533, Exhibit 10.51]
10.32- Modification No. P00007, dated May 3,
1993, to Contract No. N00024-92-C-6308
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.28]
10.33- Modification No. PZ0008, dated June 11,
1993, to Contract No. N00024-92-C-6302
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.29]
10.34- Contract No. N39998-94-C-2228, dated No-
vember 30, 1993, between the Company and
the Navy [Form 10-K, fiscal year ended
March 31, 1994, File No. 1-8533, Exhibit
10.30]
10.35- Order No. 87KA-SG-51484, dated December
10, 1993, under Contract No. N00024-93-G-
6336, between the Company and Westinghouse
Electric Corporation Oceanic Division
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.31]
10.36- Purchase Order Change Notice Order No.
87KA-SX-51484-P, dated April 21, 1994,
under Contract No. N00024-93-G-6336, be-
tween the Company and Westinghouse Elec-
tric Corporation Oceanic Division [Form
10-K, fiscal year ended March 31, 1995,
File No. 1-8533, Exhibit 10.35]
10.37- Letter Subcontract No. 483901(L), dated
February 18, 1994, under Contract No.
N00024-94-D-5204, between the Company and
Unisys Government Systems Group [Form 10-
K, fiscal year ended March 31, 1994, File
No. 1-8533, Exhibit 10.32]
10.38- Subcontract No. 483901(D), dated June 24,
1994, under Contract No. N00024-94-D-5204,
between the Company and Unisys Corporation
Government Systems Group [Form 10-K, fis-
cal year ended March 31, 1995, File No. 1-
8533, Exhibit 10.37]
10.39- Contract No. N00019-90-G-0051, dated March
1, 1990, between Precision Echo, Inc. and
the Navy [Form 10-K, fiscal year ended
March 31, 1994, File No. 1-8533, Exhibit
10.35]
10.40- Amendment 1A, dated February 26, 1992, to
Contract No. N00019-90-G-0051 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.36]
10.41- Amendment 1B, dated April 23, 1993, to
Contract No. N00019-90-G-0051 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.37]
10.42- Contract No. N00019-93-C-0041, dated Janu-
ary 29, 1993, between Photronics Corp. and
the Navy [Form 10-K, fiscal year ended
March 31, 1993, File No. 1-8533, Exhibit
10.54]
10.43- Modification No. P00001, dated March 29,
1993, to Contract No. N00019-93-C-0041
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.39]
10.44- Modification No. PZ0002, dated November
12, 1993, to Contract No. N00019-93-C-0041
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.40]
10.45- Modification No. P00003, dated February 1,
1994, to Contract No. N00019-93-C-0041
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.41]
10.46- Modification No. P00004, dated January 29,
1993, to Contract No. N00019-93-C-0041
[Registration Statement No.33-64641,
Amendment No. 1, Exhibit 10.46]
10.47- Modification No. P00005, dated January 29,
1993, to Contract No. N00019-93-C-0041
[Registration Statement No.33-64641,
Amendment No. 1, Exhibit 10.47]
P10.48- Modification No. P00006, dated March 20,
1996, to Contract No. N00019-93-C-0041
10.49- Contract No. N00019-93-C-0202, dated Au-
gust 30, 1993, between Photronics Corp.
and the Navy [Form 10-K, fiscal year ended
March 31, 1994, File No. 1-8533, Exhibit
10.42]
10.50- Modification No. P00001, dated March 30,
1994, to Contract No. N00019-93-C-0202
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.43]
10.51- Modification No. P00002, dated April 29,
1994, to Contract No. N00019-93-C-0202
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.44]
10.52- Modification No. P00003, dated August 9,
1994, to Contract No. N00019-93-C-0202
[Form 10-K, fiscal year ended March 31,
1995, File No. 1-8533, Exhibit 10.55]
10.53- Modification No. P00004, dated March 30,
1994, to Contract No. N00019-93-C-0202
[Form 10-K, fiscal year ended March 31,
1995, File No. 1-8533, Exhibit 10.56]
10.54- Modification No. P00005, dated August 30,
1993, to Contract No. N00019-93-C-0202
[Registration Statement No.33-64641,
Amendment No. 1, Exhibit 10.53]
10.55- Modification No. P00006, dated August 30,
1993, to Contract No. N00019-93-C-0202
[Registration Statement No.33-64641,
Amendment No. 1, Exhibit 10.54]
10.56- Contract No. N00024-93-C-5204, dated No-
vember 18, 1992, between Technology Appli-
cations and Service Company and the Navy
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.53]
10.57- Modification No. P00001, dated May 6,
1993, to Contract No. N00024-93-C-5204
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.54]
10.58- Modification No. P00002, dated August 24,
1993, to Contract No. N00024-93-C-5204
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.55]
10.59- Modification No. PZ0003, dated September
30, 1993, to Contract No. N00024-93-C-5204
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.56]
10.60- Contract No. N00174-94-D-0006, dated Feb-
ruary 17, 1994, between Technology Appli-
cations & Service Company and the Navy
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.57]
10.61- Modification No. P00001, dated March 7,
1994, to Contract No. N00174-94-D-0006
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.58]
10.62- Modification No. P00003, dated May 19,
1994, to Contract No. N00174-94-D-0006
[Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.59]
10.63- Purchase Order No. 2285, dated June 6,
1994, between Photronics Corp. and Inter-
national Precision Products N.V. [Form 10-
K, fiscal year ended March 31, 1995, File
No. 1-8533, Exhibit 10.73]
P10.64- Amendment No. 1, dated January 30, 1996,
to Purchase Order No. 2285
10.65- Purchase Order No. 2286, dated June 6,
1994, between Photronics Corp. and Inter-
national Precision Products N.V. [Form 10-
K, fiscal year ended March 31, 1995, File
No. 1-8533, Exhibit 10.75]
10.66- Purchaser Order No. CN74325, dated Decem-
ber 14, 1994, between Precision Echo and
Lockheed Aeronautical Systems Company
[Form 10-K, fiscal year ended March 31,
1995, File No. 1-8533, Exhibit 10.76]
10.67- Amendment, dated February 14, 1995, to
Purchase Order No. CN74325, between Preci-
sion Echo and Lockheed Aeronautical Sys-
tems Company [Registration Statement
No.33-64641, Amendment No. 1, Exhibit
10.67]
10.68- Amendment, dated April 4, 1995, to Pur-
chase Order No. CN74325, between Precision
Echo and Lockheed Aeronautical Systems
Company [Registration Statement No.33-
64641, Amendment No. 1, Exhibit 10.68]
10.69- Amendment, dated June 20, 1995, to Pur-
chase Order No. CN74325, between Precision
Echo and Lockheed Aeronautical Systems
Company [Registration Statement No.33-
64641, Amendment No. 1, Exhibit 10.69]
10.70- Amendment, dated September 28, 1995, to
Purchase Order No. CN74325, between Preci -
sion Echo and Lockheed Aeronautical Sys-
tems Company [Registration Statement
No.33-64641, Amendment No. 1, Exhibit
10.70]
10.71- Amendment, dated November 7, 1995, to Pur-
chase Order No. CN74325, between Precision
Echo and Lockheed Aeronautical Systems
Company [Registration Statement No.33-
64641, Amendment No. 1, Exhibit 10.71]
10.72- Contract No. N39998-94-C-2239, dated July
26, 1993, between the Company and the Navy
[Form 10-K, fiscal year ended March 31,
1995, File No. 1-8533, Exhibit 10.77]
10.73- Contract No. N00019-95-C-0057, dated De-
cember 16, 1994, between Precision Echo,
Inc. and Naval Air Systems Command [Form
10-K, fiscal year ended March 31, 1995,
File No. 1-8533, Exhibit 10.78]
10.74- Employment, Non-Competition and Termina-
tion Agreement, dated July 20, 1994, be
tween Diagnostic/Retrieval Systems, Inc.
and David E. Gross [Form 10-Q, quarter
ended June 30, 1994, File No. 1-8533, Ex-
hibit 1]
10.75- Stock Purchase Agreement, dated as of July
20, 1994, between Diagnostic/Retrieval
Systems, Inc. and David E. Gross [Form 10-
Q, quarter ended June 30, 1994, File No.
1-8533, Exhibit 2]
10.76- Asset Purchase Agreement, dated October
28, 1994, Acquisition by PE Acquisition
Corp., a subsidiary of Precision Echo,
Inc. of all of the Assets of Ahead Tech-
nology Corporation [Form 10-Q, quarter
ended December 31, 1994, File No. 1-8533,
Exhibit 1]
10.77- Amendment to Agreement for Acquisition of
Assets, dated July 5, 1995, between
Photronics Corp. and Opto Mechanik, Inc.
[Form 8-K, Amendment No. 1, July 5, 1995,
File No. 1-8533, Exhibit 1]
10.78- Contract No. N00421-95-D-1067, dated Sep-
tember 30, 1995, between the Company and
the Navy [Registration Statement No.33-
64641, Amendment No. 1, Exhibit 10.78]
10.79- Lease, dated August 17, 1995, between
Ahead Technology, Inc. and South San Jose
Interests [Registration Statement No.33-
64641, Amendment No. 1, Exhibit 10.79]
10.80- Contract No. DAAH01-95-C-0308, dated July
21, 1995, between Photronics Corp. and the
Army [Registration Statement No.33-64641,
Amendment No. 1, Exhibit 10.80]
P10.81- Modification No. PZ0001, dated January 24,
1996, to Contract No. DAAH01-95-C-0308
P10.82- Modification No. P00002, dated February
24, 1996, to Contract No. DAAH01-95-C-0308
P10.83- Modification No. P00003, dated March 28,
1996, to Contract No. DAAH01-95-C-0308
10.84- Lease, dated May 25, 1995, between Tech-
nology Applications and Service Company
and Sports Arena Village, Ltd., L.P.
[Registration Statement No.33-64641,
10.85- Contract No. 2025, dated December 20,
1993, between Opto Mechanik, Inc. and the
Government of Israel, Ministry of Defense
[Registration Statement No.33-64641,
Amendment No. 1, Exhibit 10.82]
10.86- Amendment to Contract No. 2025, dated Au-
gust 31, 1995 between Opto Mechanik, Inc.
and the Government of Israel, Ministry of
Defense [Registration Statement No.33-
64641, Amendment No. 1, Exhibit 10.83]
10.87- Lease, dated August, 1995, by and between
OMI Acquisition Corp. and Fred E. Sutton
and Harold S. Sutton d/b/a Sutton Proper-
ties [Registration Statement No.33-64641,
Amendment No. 1, Exhibit 10.84]
10.88- Lease, dated August, 1995, by and between
OMI Acquisition Corp. and Fred E. Sutton
and Harold S. Sutton d/b/a Sutton Proper-
ties [Registration Statement No.33-64641,
Amendment No. 1, Exhibit 10.85]
10.89- Lease, dated August, 1995, by and between
OMI Acquisition Corp. and Fred E. Sutton
and Harold S. Sutton d/b/a Sutton Proper-
ties [Registration Statement No.33-64641,
Amendment No. 1, Exhibit 10.86]
10.90- Memorandum of Lease, dated August, 1995,
by and between OMI Acquisition Corp. and
Fred E. Sutton and Harold S. Sutton d/b/a
Sutton Properties [Registration Statement
No.33-64641, Amendment No. 1, Exhibit
10.87]
10.91- Master Lease, dated August 31, 1995, be-
tween OMI Acquisition Corp. and General
Electric Capital Corp. [Registration
Statement No. 33-64641, Post-Effective
Amendment No. 1, Exhibit 10.88]
10.92- Schedule No. 001, dated September 1, 1995,
to Master Lease between OMI Acquisition
Corp. and General Electric Capital Corp.
[Registration Statement No. 33-64641,
Post-Effective Amendment No. 1, Exhibit
10.89]
10.93- Schedule No. 002, dated October 20, 1995,
to Master Lease between OMI Acquisition
Corp. and General Electric Capital Corp.
[Registration Statement No.33-64641,
Amendment No. 1, Exhibit 10.90]
10.94- Joint Venture Agreement, dated as of Feb-
ruary 6, 1996, by and among DRS/MS, Inc.,
Universal Sonics Corporation, Ron Hadani,
Howard Fidel and Thomas S. Soulos
[Registration Statement No.33-64641,
Amendment No. 1, Exhibit 10.91]
10.95- Partnership Agreement, dated as of Febru-
ary 6, 1996, by and between DRS/MS, Inc.
and Universal Sonics Corporation
[Registration Statement No.33-64641,
Amendment No. 1, Exhibit 10.92]
10.96- Asset Purchase Agreement, dated as of Feb-
ruary 9, 1996, by and among Mag-Head Engi-
neering, Company, Inc. and Ahead Technolo-
gy Acquisition Corporation, a subsidiary
of Precision Echo, Inc. [Registration
Statement No. 33-64641, Post-Effective
Amendment No. 1, Exhibit 10.93]
10.97- Employment, Non-Competition and Termina-
tion Agreement, dated March 28, 1996, be-
tween the Company and Leonard Newman
[Registration Statement No. 33-64641,
Post-Effective Amendment No. 1, Exhibit
10.94]
P10.89- Contract No. N00024-95-G-5609, dated
January 25, 1996, between Technology
Applications and Service Company and the
Navy
*11 - Computation of earnings per share
*13 - Portions of the 1996 Annual Report to
Stockholders of the Company
*21 - List of subsidiaries of the Company as of
March 31, 1996
*23.1 - Consent of KPMG Peat Marwick LLP
*23.2 - Independant Auditors' Report Consolidated Financial
Statement schedule.