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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[x] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act Of 1934 For the fiscal year ended February 25, 2000
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [no fee required]
For the transition period from ____________ to ____________.
Commission File Number 1-10655
ENVIRONMENTAL TECTONICS CORPORATION
-----------------------------------
(Exact name of small business issuer in its charter)
Pennsylvania 23-1714256
- ------------------------------- ------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
County Line Industrial Park
Southampton, Pennsylvania 18966
- ---------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (215) 355-9100
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $.05 per share
--------------------------------------
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act: None
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes x No
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
As of May 19, 2000, the aggregate market value of the Registrant's common stock
held by non-affiliates of the Registrant was approximately $32,852,000. As of
May 19, 2000, there were 7,088,646 shares of Registrant's common stock, $0.05
par value per share, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE. Portions of Registrant's 2000 Annual Report
to Stockholders (the "Annual Report") are incorporated by reference in Part II,
Items 5, 6, 7, and 8. Proxy statement to be used with the Registrant's annual
meeting to be held August 31, 2000, is incorporated by reference in response to
Item 11 of Part 3 hereof.
Transitional Small Business Disclosure Format: Yes ___ No x
---
Certain statements under Item 1 and Item 7 contained herein or as may
otherwise be incorporated by reference herein constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements include but are not limited to: statements
regarding future product development, technological advances and market
acceptance of products. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Environmental Tectonics Corporation (the
"Company"), or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, general
economic and business conditions, competition, technological advances, political
unrest in customer countries, contract cancellations and other risk factors that
are detailed in this document and in other periodic reports and registration
statements filed by Environmental Tectonics Corporation with the Securities and
Exchange Commission. All forward-looking statements included in this document
are based on information available to the company on the date hereof, and the
Company assumes no responsibility to update any such forward-looking statements.
Accordingly, past results and trends should not be used by investors to
anticipate future results or trends.
PART I
Item 1. Description of Business
(a) Business Development
Environmental Tectonics Corporation ("ETC" or the "Company"), a
Pennsylvania corporation, incorporated in 1969, is principally engaged in the
design, manufacture and sale of software driven products used to A) create and
monitor the physiological effects of motion on humans and equipment and B)
control, modify, simulate and measure environmental conditions. These products
include aircrew training systems, entertainment products, sterilizers,
environmental and hyperbaric chambers, and other products which involve similar
manufacturing techniques and engineering technologies.
Since February 26, 1999, there has been no material change in the
Company's mode of conducting business.
(b) Business of the Company
The company operates in two primary business segments, Aircrew Training
Systems and Industrial Group.
Aircrew Training Systems. This segment includes three primary product
groups.
The Company's aircrew training devices are used for medical research,
advanced flight training, and for the indoctrination and testing of military and
commercial pilots. The major devices sold in this product area are commercial
flight simulators, night vision trainers, water survival training equipment,
disorientation training equipment, human centrifuges, ejection seat trainers and
vehicle and tank simulators. The Company provides operation and maintenance
services for installed equipment it manufactures as well as equipment produced
by others.
The Company's entertainment products consist of motion-based simulation
rides and other products.
The Company's Disaster Management Systems line includes real-time
interactive training programs that allow instruction on various disaster
situations.
2
The aircrew training system class of products as a whole represented
75%, 84% and 75% of consolidated revenues of the Company for the years ended
February 25, 2000, February 26,1999 and February 27, 1998, respectively.
Industrial Group. This segment includes three primary product groups:
Sterilizers. The Company manufactures steam and gas sterilizers used
for various industrial and pharmaceutical applications. The Company concentrates
on marketing the larger custom-designed sterilizers to the pharmaceutical and
medical device industries.
Environmental Systems and Other Products. The Company's environmental
systems business consists of the design and fabrication of sampling and analysis
systems, and test equipment and systems. The simulation systems generally
consist of an enclosed chamber with instrumentation and equipment which enable
the customer to control and modify such environmental factors as temperature,
pressure, humidity, wind velocity and gas content to produce desired conditions.
These products include controlled air systems for automotive companies and
environmental chambers
The Company's Hyperbaric line includes monoplace and multiplace
chambers for decompression and wound care applications.
Sales in this class of products were 25%, 16% and 25% of consolidated
revenues of the Company for the years ended February 25,2000, February 26, 1999
and February 27, 1998, respectively.
The Company also provides control operator repair and upgrades and
maintenance service for its own and other manufacturers' equipment.
Marketing
The Company currently markets its products and services primarily
through its sales offices and employees. At February 25, 2000, approximately 19
employees were committed to sales and marketing functions. The Company uses
branch offices in the United Kingdom, the Middle East, and Asia as well as the
services of approximately 100 independent sales organizations in seeking foreign
orders for its products.
3
Product Development
New products and improvements in existing products are being
continually developed in response to inquiries from customers and to
management's determination that particular products should be produced or
significantly improved. Although the Company does not have a separate research
and development group, there are a few technical personnel whose main activity
is the development and integration of new technologies into our existing
products. These personnel include the Vice-President of Engineering and the
Vice-President of New Product Development whose additional activity is the
introduction of product extensions and new applications of existing technology.
Within the Aircrew Training Segment, product development emphasizes
enhancing control systems and software graphics and exploring commercial
possibilities. The Company's product development efforts will be focused on
three areas:
- Disaster Management Simulation. The Company is in
production of a major contract from the City of Chicago
to develop, install and maintain a computer-based
Incident Command Simulator. The company will continue to
explore product applications and extensions to this
Intelligent Virtual Reality product.
- G-force and Disorientation trainers. The Company is
updating all software to a windows based platform.
- Entertainment. The Company is evaluating product
extensions to motion based amusement rides.
On April 16, 1999, the Company formed a new wholly owned subsidiary,
Entertainment Technology Corporation, to handle all of the Company's future
entertainment projects. Product development in this class will emphasize
entertainment applications of our proven ATS simulation technology.
The Company reported research and development costs of $920,000,
$397,000 and $148,000 for the years ended February 25,2000, February 26, 1999
and February 27, 1998, respectively. However, the majority of the Company's
research and development efforts are not separately identified and recorded.
Instead, they are expressed as part of project job costs in the cost of sales.
4
Supplies
The components being used in the assembly of systems and the parts used
to manufacture the Company's products are purchased from equipment
manufacturers, electronics supply firms and others. To date, the Company has had
no difficulty in obtaining supplies. Further, all raw materials, parts,
components, and other supplies used by the Company in the manufacture of its
products can be obtained at competitive prices from alternate sources should
existing sources of supply become unavailable.
Patents and Trademarks
The Company has no patents or trademarks which it considers significant
to its operations, except a patent on the GYROLAB Spatial Disorientation Trainer
which expires in December 2004.
Customers
In the current year and recent past, it has been the Company's
experience that a substantial portion of sales are made to a small number of
customers that vary within any given year. The Company's business does not
depend upon repeat orders from these same customers. Sales of aircrew training
systems are made principally to U.S. and foreign governmental agencies. Sales of
sterilizers and environmental systems are made to commercial and governmental
entities worldwide.
In fiscal 2000, the Company's major customers included Mend's
International $8,107,000, the United Kingdom Ministry of Defense $4,821,000, and
the Walt Disney companies, $3,681,000. These companies do not have any
relationship with the Company other than as customers.
Foreign and Domestic Operations and Export Sales
During the years ended February 25,2000, February 26, 1999 and February
27, 1998, approximately $1,587,000 (5%), $1,158,000 (4.0%) and $2,936,000 (10%),
respectively, of the Company's net revenues were attributable to contracts with
agencies of the U.S. Government or with other customers who had prime contracts
with agencies of the federal government.
During the years ended February 25,2000, February 26, 1999 and February
27, 1998, $23,907,000 (69%), $22,876,000 (78%) and $17,490,000 (60%),
respectively, of the Company's net revenues were attributable to export sales or
sales for export. (See Note 11 to the Company's consolidated financial
statements incorporated herein by reference to the Annual Report.) On export
sales, customers' obligations to the Company are normally secured by irrevocable
letters of credit based on the credit worthiness of the Customer.
5
The Company does not believe that the distribution of its sales for any
particular period is necessarily indicative of the distribution expected for any
other period.
A large portion of the Company's sales are under long-term contracts
requiring more than one year to complete. The Company accounts for sales under
long-term contracts on the percentage of completion basis. (See Note 1 to
consolidated financial statements incorporated herein by reference to the annual
report).
The Company's U.S. Government contracts contain standard terms
permitting termination for the convenience of the Government. In the event of
termination of such contracts, the Company is entitled to receive reimbursement
on the basis of work completed (cost incurred plus a reasonable profit),
recording the amounts anticipated to be recovered from termination claims in
income as soon as those amounts can be reasonably determined rather than at the
time of final settlement. All costs applicable to a termination claim are
charged as an offsetting expense concurrently with the recognition of income
from the claim.
Backlog
The Company's sales backlog at February 25, 2000, and February 26,
1999, for work to be performed and revenue to be recognized under written
agreements after such dates was approximately $44,146,000 and $32,141,000,
respectively. In addition, the Company's training and maintenance contracts
backlog at February 25, 2000 and February 26, 1999, for work to be performed and
revenue to be recognized after that date under written agreements was
approximately $1,288,000 and $1,311,000, respectively. Of the February 25,2000
backlog, approximately $38,725,000 is under contracts for aircrew training
systems and maintenance support including $25,755,000 for the Walt Disney
companies. Approximately 64% of the February 25, 2000, backlog is expected to be
completed prior to February 23, 2001.
6
Competition
The Company's business strategy in recent years has been to seek niche
markets in which there are not numerous competitors. However, in some areas of
its business the Company competes with well-established firms, some of which
have substantially greater financial and personnel resources.
Some competitor firms have technical expertise and production
capabilities in one or more of the areas involved in the design and production
of physiological flight training equipment, environmental systems, and other
specially designed products, and compete with the Company for this business. The
competition for any particular project generally is determined by the
technological requirements of the project, with consideration also being given
to a bidder's reliability, product performance, past performance, and price.
The Company faces particularly intense competition from a number of
firms in the sale of hospital sterilizers but faces less competition in the sale
of the larger custom-designed industrial sterilizers.
The Company believes that it is a significant participant in the
markets in which it competes, especially in aircrew training systems in which
the Company believes it is a principal provider of this type of equipment and
training in its market area.
Compliance with Environmental Laws
The Company has not incurred during fiscal 2000 nor does it anticipate
incurring during fiscal 2001 any material capital expenditures to maintain
compliance with Federal, state and local statutes, rules and regulations
concerning the discharge of materials into the environment, nor does the Company
anticipate that compliance with these provisions will have a material adverse
effect on its earnings or competitive position.
Employees
On February 25, 2000, the Company had 292 full-time employees, of whom
6 were employed in executive positions, 109 were engineers, engineering
designers, or draftspeople, 67 were administrative (sales, accounting, etc.) and
clerical personnel, and 110 were engaged principally in production and
operations.
7
Item 2. Description of Property
The Company owns its executive offices and principal production
facilities located on a 5-acre site in the County Line Industrial Park,
Southampton, Pennsylvania in an approximately 70,000 square foot steel and
masonry building. Approximately 55,000 square feet are devoted to manufacturing,
and 15,000 square feet to office space. The original building was erected in
1969 and additions were made in 1973, 1976, 1985 and 1991. This property serves
as collateral for the Company's revolving credit facility. Additionally, the
Company rents office space at various sales and support locations throughout the
world and at its Polish subsidiary.
The Company considers its machinery and plant to be in satisfactory
operating condition. It plans to construct an addition to its main building in
Southampton, PA, in fiscal 2001. Increases in the level of operations beyond
that expected in the current fiscal year might require the Company to obtain
additional facilities and equipment.
Item 3. Legal Proceedings
Certain claims, suits and complaints arising in the ordinary course of
business have been filed or are pending against the Company. In the opinion of
management, all such matters are reserved for or are adequately covered by
insurance or, if not so covered, are without merit or are of such kind, or
involve such amounts as would not have a significant effect on the financial
position of the Company if disposed of unfavorably.
Item 4. Submission of Matters to a Vote of Security Holders
None.
8
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
See information appearing under the heading "Market for the
Registrant's Common Stock and Related Stockholder Matters" in the Annual Report,
attached hereto as Exhibit 13 and incorporated herein by reference.
Item 6. Selected Financial Data
See information appearing under the heading "Financial Review" in the
annual report, attached hereto as Exhibit 13 and incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
See information appearing under the heading "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in the Annual
Report, attached hereto as Exhibit 13 and incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 8. Financial Statements
See the information appearing under the headings "Consolidated
Financial Statements" and "Notes to Consolidated Financial Statements" in the
Annual Report, attached hereto as Exhibit 13 and incorporated herein by
reference.
9
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant;
The following table sets forth certain information with respect to the
directors and executive officers of the Registrant:
Served
as Principal Occupations
Director and Positions and
or Officer Offices with the
Name Age Since(1) Company
- ---- --- ---------- ---------------------
William F. Mitchell(2) 58 1969 Chairman of the Board,
President and Director
Richard E. McAdams(3) 64 1985 Executive Vice President
and Director
Philip L. Wagner, Ph.D.(4) 63 1993 Director
Pete L. Stephens, M.D.(5) 62 1974 Director
Craig Macnab(6) 44 1997 Director
Duane D. Deaner(7) 52 1996 Chief Financial Officer
- --------------------
(1) Directors serve one-year terms.
(2) Mr. Mitchell has been Chairman of the Board, President and Chief Executive
Officer of the Company since 1969, except for the period from January 24,
1986 through January 24, 1987, when he was engaged principally in
soliciting sales for the Company's products in the overseas markets.
(3) Mr. McAdams has been with the Company since 1970. He became a Vice
President in 1978 with responsibility for contract administration. Mr.
McAdams became Executive Vice President of the Company in 1990.
(4) Dr. Wagner is an organic chemist with over 30 years of diversified
experience managing research and development and new business development
at E.I. du Pont de Nemours & Company and thereafter founded Chadds Ford
Technologies, Inc., a consulting firm. He is currently President of Chadds
Ford Technologies, Inc.
(5) Dr. Stephens has been a physician engaged in the private practice of
medicine for 30 years.
(6) Mr. Macnab has served as Director of the Company since June 1997. Since
January 1997, Mr. Macnab had been the President of Tandem Capital, Inc.
which makes investments in micro-cap public companies. On February 24,
1999, Mr. Macnab tendered his resignation from the Board of Directors as a
designee of Sirrom Capital Corporation, following which he then accepted
the Board's invitation to serve as an independent member of the Board.
Subsequent to fiscal year end Mr. Macnab terminated his position with
Tandem Capital Corporation. From 1993 to 1996, Mr. Macnab served as the
general partner of MacNiel Advisors, Inc., the general partner of three
private funds that invested in the publicly traded securities of small
public companies. From 1987 to 1993, Mr. Macnab was a partner of J.C.
Bradford & Co., a regional brokerage firm, jointly responsible for the
merger and acquisition department and a private mezzanine capital fund.
From 1981 to 1987, Mr. Macnab was employed by Lazard Freres & Co. Mr.
Macnab is also a director of JDN Realty, Smart Choice Automotive Group and
Teltronics, Inc.
(7) Mr. Deaner has served as Chief Financial Officer of the Company since
January 1996. Mr. Deaner served as Vice President of Finance for Pennfield
Precision Incorporated from September 1988 to December 1995.
10
Committees of the Board of Directors
During the year ended February 25, 2000, the Company had an Audit
Committee consisting of the following directors: Messrs. Mitchell, Philip L.
Wagner and Dr. Pete L. Stephens. The independent outside directors also served
on the Company's Compensation Committee during the year ended February 25, 2000.
The Audit Committee is charged with reviewing and overseeing the Company's
financial systems and internal control procedures and conferring with the
Company's independent accountants with respect thereto. The Compensation
Committee is charged with reviewing the compensation and incentive plans of
officers and key personnel.
During the year ended February 25, 2000, the Board of Directors held 3
meetings and the Audit Committee and Compensation Committee each held 1 meeting.
All members of the Board attended all of the meetings of the Board held while
they were members of the Board. All members of the Audit Committee and
Compensation Committee attended all meetings of the Committee held while they
were members thereof.
Compliance With Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission ("SEC") and
the American Stock Exchange. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) Forms they file. The rules of the SEC regarding the filing
of such statement require that "late filings" of such statements be disclosed in
the Company's proxy statement.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the fiscal year
ended February 25, 2000, its officers, directors and greater than ten percent
beneficial owners complied with all applicable filing requirements except for
Mr. Mitchell who had 1 late filing of Form 4 and Mr. McAdams who had 3 late
filings of Form 4.
11
Item 11. Executive Compensation
REMUNERATION OF DIRECTORS AND OFFICERS
The following table sets forth compensation paid by the Company to the
Chief Executive Officer for services rendered during fiscal years 2000,1999,1998
. There are no other executive officers whose total annual salary and bonus
exceeds $100,000. The footnotes to the table provide additional information
concerning the Company's compensation and benefit programs.
SUMMARY COMPENSATION TABLE
Annual Compensation
Other
Name and Annual All Other
Principal Fiscal Compen- Compen-
Position Year Salary($) Bonus($) sation($)(1) sation($)(2)
- --------- ------ --------- -------- ------------ ------------
William F. Mitchell, 2000 $225,000 $12,023 $ - $4,000
President and Chief 1999 207,085 126,563 - 3,876
Executive Officer 1998 178,450 - - 3,876
(1) The Company's executive officers receive certain perquisites. For fiscal
years 2000, 1999 and 1998, the perquisites received by Mr. Mitchell did not
exceed the lesser of $50,000 or 10% of his salary and bonus.
(2) These amounts represent the Company's contribution to the Retirement
Savings Plan.
Directors of the Company who are not officers of the Company are paid $600 for
Board of Directors meetings which they attend. Additional compensation is not
paid for committee meetings.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of May 19, 2000, the number of shares
and percentage of the Company's Common Stock owned beneficially by each
director, each executive officer named in the Summary Compensation Table, and
each person holding, to the Company's knowledge, more than 5% of the outstanding
Common Stock. The table also sets forth the holdings of all directors and
executive officers as a group.
12
Amount and
Nature of Percent
Beneficial of
Name and Address of Beneficial Owner Ownership Class
- ------------------------------------ --------- --------
William F. Mitchell (1) 1,777,998 25.1%
c/o Environmental Tectonics
Corporation
County Line Industrial Park
Southampton, PA 18966
Pete L. Stephens, M.D. (2) 675,300(3) 9.5%
40 Bridgetown Rd
Hilton Head Island
South Carolina 29928
Richard E. McAdams (2) 33,742(4) *
c/o Environmental Tectonics
Corporation
County Line Industrial Park
Southampton, PA 18966
Philip L. Wagner, Ph.D. (2) 12,000(5) *
Chadds Ford Technologies, Inc.
P.O. Box 377
Chadds Ford, PA 19317
Duane D. Deaner 8,750(6) *
c/o Environmental Tetonics
Corporation
County Line Industrial Park
Southampton, PA 18966
Craig Macnab(2) 0 *
428 Westview Avenue
Nashville, TN 37205
FINOVA Mezzanine Capital 840,986(7) 11.3%
500 Church Street, Suite 200
Nashville, TN 37219
Emerald Advisors, Inc. 635,840(8) 9.0%
1857 William Penn Way
P.O. Box 10666
Lancaster, PA 17605-0666
All directors, executive
officers and 5% owners as a group (8 persons) 3,984,616(9) 53.5%
* less than 1%
- --------------------
13
(1) Chairman of the Board, President and Director of the Corporation. Shares of
Common Stock include 192,000 shares held by Mr. Mitchell's wife.
(2) Director of the Corporation.
(3) Includes 25,500 shares held by or for the benefit of Dr. Stephens' wife and
two of his children.
(4) Includes options to purchase 12,500 shares of Common Stock held under the
Company's Incentive Stock Option Plan which are presently exercisable.
(5) Includes 8,000 shares of Common Stock held by or for the benefit of Dr.
Wagner's wife.
(6) Includes options to purchase 8,750 shares of Common Stock held under the
Company's Incentive Stock Option Plan which are currently exercisable.
(7) These shares include 332,820 shares of Common Stock underlying a presently
exercisable warrant to purchase shares of Common Stock.
(8) As reported in a Schedule 13G, dated February 1,2000, filed by Emerald
Advisors, Inc., Emerald has sole voting power with respect to 432,880
shares of Common Stock and sole dispositive power over 202,960 shares of
Common Stock.
(9) Includes options to purchase 12,500 and 8,750 shares of Common Stock which
may be acquired by Director McAdams and Duane Deaner, Chief Financial
Officer, respectively, upon the exercise of options granted under the
Company's Incentive Stock Option Plan.
Item 12. Certain Relationships and Related Transactions
None
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Number Item
3.1 Registrant's Articles of Incorporation, as amended, were filed as
Exhibit 3.1. to Registrant's Form 10-K for the year ended February 28,
1997 and are incorporated herein by reference.
3.2 Registrant's By-Laws, as amended, were filed as Exhibit 3(ii) to
Registrant's Form 10-K for the year ended February 25, 1994 and are
incorporated herein by reference.
4.1 12% Subordinated Debenture due March 27, 2004 was filed as Exhibit 4.1
to Registrant's Form 10-K for the year ended February 28, 1997 and is
incorporated herein by reference.
14
10.1 Registrant's 1988 Incentive Stock Option Plan was filed as Exhibit
10(v) to Registrant's Form 10-K for the year ended February 23, 1990
and is incorporated herein by reference.*
10.2 Registrant's Employee Stock Purchase Plan was filed on July 6, 1988 as
Exhibit A to the Prospectus included in Registrant's Registration
Statement (File No. 33-42219) on Form S-8 and is incorporated herein
by reference.*
10.3 Registrant's Stock Award Plan adopted April 7, 1993, filed as Exhibit
10(ix) to the Registrant's Form 10-K for the fiscal year ended
February 25, 1994 and is incorporated herein by reference.*
10.4 Form of 1996 Warrant Agreement between the Registrant and Chase
Manhattan Capital Corporation, filed as Exhibit 10(xiv) to the
Registrant's Form 10-KSB for the fiscal year ended February 23, 1996
and is incorporated herein by reference.
10.5 Revolving Credit Agreement, dated as of March 27, 1997, between the
Registrant and First Union National Bank was filed as Exhibit 10.6 to
Registrant's Form 10-K for the year ended February 28, 1997 and is
incorporated herein by reference.
10.6 Amendment to Revolving Credit Agreement dated as of November 28, 1997,
as filed as Exhibit 10.6 to registrant's Form 10-KSB for the year
ended February 27, 1998, and is incorporated herein by reference.
10.7 Debenture Purchase Agreement, dated March 27, 1997, between the
Registrant and Sirrom Capital Corporation was filed as Exhibit 10.7 to
the Registrant's Form 10-KSB for the fiscal year ended February 28,
1997 and is incorporated herein by reference.
10.8 Preferred Stock Purchase Agreement, dated March 27, 1997, between the
Registrant and Sirrom Capital Corporation was filed as Exhibit 10.8 to
the Registrant's Form 10-KSB for the fiscal year ended February 28,
1997 and is incorporated herein by reference.
10.9 Stock Purchase Warrant, dated March 27, 1997, issued by the Registrant
to Sirrom Capital Corporation was filed as Exhibit 10.9 to the
Registrant's Form 10-KSB for the fiscal year ended February 28, 1997
and is incorporated herein by reference.
15
13 Portions of Registrant's 1999 Annual Report to Shareholders which are
incorporated by reference into this Form 10-K.
21 List of subsidiaries.
23 Consent of Grant Thornton LLP.
27 Financial Data Schedule
- ---------------
* Represents a management contract or a compensatory plan or arrangement.
(b) Reports on Form 8-K:
None.
16
SIGNATURES
In accordance with Section 13 or 15 (d) of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ENVIRONMENTAL TECTONICS CORPORATION
By /s/ William F. Mitchell
--------------------------------
William F. Mitchell,
President and Chief Executive Officer
In accordance with 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.
Name Position Date
---- -------- ----
/s/ William F. Mitchell
- -------------------------- Chairman of the Board, May 25, 2000
William F. Mitchell Chief Executive Officer,
President and Director
/s/ Duane D. Deaner
- -------------------------- Chief Financial May 25, 2000
Duane D. Deaner Officer (Principal
Accounting Officer)
/s/ Richard E. McAdams
- -------------------------- Director May 25, 2000
Richard E. McAdams
/s/ Craig Macnab
- -------------------------- Director May 25, 2000
Craig Macnab
/s/ Pete L. Stephens
- -------------------------- Director May 25, 2000
Pete L. Stephens, M.D.
/s/ Philip L. Wagner
- -------------------------- Director May 25, 2000
Philip L. Wagner, Ph.D.
17
ENVIRONMENTAL TECTONICS CORPORATION AND SUBSIDIARIES
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
($ in thousands)
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Charges/
Balance at (Credits) Balance At
Beginning to Costs/ End of
Description of Period Expenses Reductions(A) Period
----------- --------- -------- ------------- ------
Year ended February 25, 2000:
Valuation and qualifying accounts related to:
Accounts receivables $ 385 $ - $ 18 $ 367
Inventory $ 625 $ 95 $ - $ 720
Property, plant and equipment $7,527 $ 535 $ 58 $8,004
Software development costs $4,619 $ 596 $ - $5,215
Other assets $ 25 $ 36 $ - $ 61
Year ended February 26, 1999
Valuation and qualifying accounts related to:
Accounts receivable $ 379 $ 83 $ 77 $ 385
Inventory $1,040 $(315) $100 $ 625
Property, plant and equipment $6,729 $ 798 $ - $7,527
Software development costs $3,914 $ 705 $ - $4,619
Other assets $ 0 $ 25 $ - $ 25
Year ended February 27, 1998
Valuation and qualifying accounts related to:
Accounts receivables $ 237 $ 142 $ - $ 379
Inventory $ 756 $ 284 $ - $1,040
Property, plant and equipment $6,258 $ 482 $ 11 $6,729
Software development costs $3,244 $ 670 $ - $3,914
Other assets $ 0 $ - $ - $ 0
(A) Amounts written off or retired
18
EXHIBIT INDEX
Exhibit No. Item
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3.1 Registrant's Articles of Incorporation, as amended, were filed as
Exhibit 3.1 to Registrant's Form 10-K for the year ended February
28, 1997 and are incorporated herein by reference.
3.2 Registrant's By-Laws, as amended, were filed as Exhibit 3(ii) to
Registrant's Form 10-K for the year ended February 25, 1994 and
are incorporated herein by reference.
4.1 12% Subordinated Debenture due March 27, 2004 was filed as
Exhibit 4.1 to Registrant's Form 10-K for the year ended February
28, 1997 and is incorporated herein by reference.
10.1 Registrant's 1988 Incentive Stock Option Plan was filed as
Exhibit 10(v) to Registrant's Form 10-K for the year ended
February 23, 1990 and is incorporated herein by reference.*
10.2 Registrant's Employee Stock Purchase Plan was filed on July 6,
1988 as Exhibit A to the Prospectus included in Registrant's
Registration Statement (File No. 33-42219) on Form S-8 and is
incorporated herein by reference.*
10.3 Registrant's Stock Award Plan adopted April 7, 1993, filed as
Exhibit 10(ix) to the Registrant's Form 10-K for the fiscal year
ended February 25, 1994 and is incorporated herein by reference.*
10.4 Form of 1996 Warrant Agreement between the Registrant and Chase
Manhattan Capital Corporation, filed as Exhibit 10(xiv) to the
Registrant's Form 10-KSB for the fiscal year ended February 23,
1996 and is incorporated herein by reference.
10.5 Revolving Credit Agreement, dated as of March 27, 1997, between
the Registrant and First Union National Bank was filed as Exhibit
10.6 to Registrant's Form 10-K for the year ended February 28,
1997 and is incorporated herein by reference.
10.6 Amendment to Revolving Credit Agreement dated as of November 28,
1997, as filed as Exhibit 10.6 to registrant's Form 10-KSB for
the year ended February 27, 1998, and is incorporated herein by
reference.
10.7 Debenture Purchase Agreement, dated March 27, 1997, between the
Registrant and Sirrom Capital Corporation was filed as Exhibit
10.7 to the Registrant's Form 10-KSB for the fiscal year ended
February 28, 1997 and is incorporated herein by reference.
10.8 Preferred Stock Purchase Agreement, dated March 27, 1997, between
the Registrant and Sirrom Capital Corporation was filed as
Exhibit 10.8 to the Registrant's Form 10-KSB for the fiscal year
ended February 28, 1997 and is incorporated herein by reference.
10.9 Stock Purchase Warrant, dated March 27, 1997, issued by the
Registrant to Sirrom Capital Corporation was filed as Exhibit
10.9 to the Registrant's Form 10-KSB for the fiscal year ended
February 28, 1997 and is incorporated herein by reference.
13 Portions of Registrant's 1999 Annual Report to Shareholders which
are incorporated by reference into this Form 10-KSB.
21 List of subsidiaries.
23 Consent of Grant Thornton LLP.
27 Financial Data Schedule
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* Represents a management contract or a compensatory plan or arrangement.