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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period _____ to _____
Commission file number: 1-10596
ESCO Electronics Corporation
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Missouri 43-1554045
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8888 Ladue Road, Ste. 200
St. Louis, Missouri 63124-2090
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(314) 213-7200
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each
Exchange on
Title of Each Class Which Registered
------------------- ----------------
Common Stock Trust Receipts New York Stock
Exchange, Inc.
Common Stock, par value $0.01 per New York Stock
share Exchange, Inc.
Preferred Stock Purchase Rights New York Stock
Exchange, Inc.
(Cover page 1 of 2 pages)
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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 filing requirements
for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant 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 l0-K or any amendment to this
Form l0-K. [X]
Aggregate market value of the Common Stock Trust Receipts held by non-affiliates
of the registrant as of close of business on December 20, 1999: $134,021,591*
* For purpose of this calculation only, without determining whether the
following are affiliates of the registrant, the registrant has assumed
that (i) its directors and executive officers are affiliates, and (ii)
no party who has filed a Schedule 13D or 13G is an affiliate.
Number of Common Stock Trust Receipts outstanding at December 20, 1999:
12,437,814 Receipts.
DOCUMENTS INCORPORATED BY REFERENCE:
1. Portions of the registrant's Annual Report to Stockholders for fiscal year
ended September 30, 1999 (the "1999 Annual Report") (Parts I and II).
2. Portions of the registrant's Proxy Statement dated December 9, 1999 (Part
III).
(Cover page 2 of 2 pages)
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ESCO ELECTRONICS CORPORATION
INDEX TO ANNUAL REPORT ON FORM 10-K
Item Description Page
- ---- ----------- ----
Part I
1. Business ............................................................ 1
The Company................................................. 1
Products.................................................... 1
Divested Business........................................... 3
Marketing and Sales......................................... 3
Intellectual Property....................................... 4
Backlog..................................................... 4
Purchased Components and Raw Materials...................... 4
Competition................................................. 4
Research and Development.................................... 5
Environmental Matters....................................... 5
Government Contracts........................................ 5
Employees................................................... 6
Financing................................................... 6
History of the Business..................................... 6
Forward-Looking Information................................. 7
2. Properties............................................................ 7
3. Legal Proceedings..................................................... 9
4. Submission of Matters to a Vote of Security Holders...................10
Executive Officers of the Registrant..........................................10
Part II
5. Market for the Registrant's Common Equity and Related
Stockholder Matters...................................................10
6. Selected Financial Data...............................................10
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................11
7A. Quantitative and Qualitative Disclosures About Market Risk............11
8. Financial Statements and Supplementary Data...........................11
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure..................................................11
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Item Description Page
- ---- ----------- ----
Part III
10. Directors and Executive Officers of the Registrant....................11
11. Executive Compensation................................................11
12. Security Ownership of Certain Beneficial Owners and Management........11
13. Certain Relationships and Related Transactions........................12
Part IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K......12
SIGNATURES .....................................................18
INDEX TO EXHIBITS .....................................................19
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PART I
ITEM 1. BUSINESS
THE COMPANY
ESCO Electronics Corporation ("ESCO") is a producer of products and
systems for industrial and commercial applications sold to customers world-wide.
ESCO's operating subsidiaries are: PTI Technologies Inc., PTI Advanced
Filtration Inc., PTI Technologies Limited, Filtertek Inc. ("Filtertek"),
Filtertek BV, Filtertek de Puerto Rico, Inc., Filtertek Do Brazil, Filtertek SA,
VACCO Industries ("VACCO"), EMC Test Systems, L.P. ("ETS"), Euroshield OY,
Distribution Control Systems, Inc. ("DCSI"), Rantec Microwave & Electronics,
Inc. ("Rantec"), and Comtrak Technologies, L.L.C. ("Comtrak"). These operating
subsidiaries are engaged primarily in the research, development, manufacture,
sale and support of the above-mentioned products and systems, and are
subsidiaries of Defense Holding Corp., a wholly-owned direct subsidiary of ESCO.
ESCO and its direct and indirect subsidiaries are hereinafter referred to
collectively as the "Company". The Company's businesses are subject to a number
of risks and uncertainties, including without limitation those discussed below.
See Item 3. "Legal Proceedings" in this report and "Management's Discussion and
Analysis" appearing in the 1999 Annual Report.
PRODUCTS
The Company operates in four principal industry segments:
Filtration/Fluid Flow, Test, Communications and Other Products. See Note 11 of
the Notes to Consolidated Financial Statements in the 1999 Annual Report, which
Note is herein incorporated by reference.
FILTRATION/FLUID FLOW
The Company's Filtration/Fluid Flow segment accounted for approximately
70 % of Company revenues in fiscal year 1999 (excluding revenues from Systems &
Electronics Inc. ("SEI"), which was divested on September 30, 1999).
PTI Technologies Inc., PTI Advanced Filtration Inc. and PTI Technologies
Limited develop and manufacture a wide range of filtration products. PTI
Technologies Inc. is a leading supplier of filters to the commercial aerospace
market. Its major industrial business is derived from microfiltration products
that are used in a variety of markets and applications. The filtration membranes
for many of these applications are, or will be, produced by PTI Advanced
Filtration Inc., which also supplies filtration systems for use in the dairy
industry and industrial coatings. The industrial business also includes the
supply of filtration products for process and mobile fluid power applications.
PTI Technologies Limited manufactures and distributes filter products primarily
in the European industrial marketplace. In fiscal year 1998, PTI Technologies
Inc. formed a joint venture in India, known as "SANMAR-PTI Filters Limited",
with SANMAR Engineering Corporation to manufacture and sell filtration products
for the Indian and other international markets. VACCO and PTI Technologies Inc.
jointly develop and manufacture industrial filtration elements and systems
primarily used within the petrochemical and nuclear industries, where a premium
is placed on superior performance in a harsh environment. VACCO supplies
filters, latch valves and check valves to the aerospace industry, primarily for
use in satellite propulsion systems. VACCO also uses its etched disk technology
to produce quiet valves and manifolds for U.S. Navy applications.
Filtertek develops and manufactures a broad range of high-volume,
original equipment manufacturer ("OEM") filtration products at its facilities in
North America, South America and Europe. Filtertek's products, which are
centered around its insert injection-molding technology wherein a filter medium
is inserted into the tooling prior to injection-molding of the filter housing,
have widespread applications in the medical and health care markets, automotive
fluid systems, and other commercial and industrial markets. A typical
application can require daily production of many thousands of units, at very
high levels of quality, that are generally
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produced in highly-automated manufacturing cells. Many of Filtertek's products
are patented or incorporate proprietary product or process design, or both.
Filtertek's products are typically supplied to OEM customers under long term
contracts. In fiscal year 1999, Filtertek introduced a number of new products
including several automotive transmission sump filters, medical flow control
devices and intravenous (IV) filters, and fuel filters for fuel pump
applications. Development of a number of new products with applications in water
filtration, Leukocyte blood filtration and depth media fuel filtration was
completed in fiscal year 1999, and these products are expected to provide
revenue growth in fiscal year 2000 and beyond.
TEST
The Company's Test segment accounted for approximately 14% of Company
revenues in fiscal year 1999 (excluding SEI revenues).
ETS designs and manufactures electromagnetic compatibility ("EMC") test
equipment. It also supplies controlled radio frequency testing environments
(anechoic chambers), shielded rooms for high security data processing and secure
communication, and electromagnetic absorption materials. ETS's products include
antennas, antenna masts, turntables, current probes, field probes, TEM
(transverse electromagnetic) cells, GTEM (gigahertz transverse electromagnetic)
cells, microwave absorber, calibration equipment and other test accessories
required to do EMC testing. ETS also provides all the design, program management
and integration services required to supply customers with turnkey EMC
solutions. In fiscal year 1999, ETS was awarded a contract by General Motors,
valued at more than $20 million, to design and equip an EMC test facility. It is
expected that in fiscal years 2000 and 2001 revenues from this contract will
constitute approximately 20% to 25% of total revenues of the Test segment. This
project is expected to be completed in 2002. Euroshield OY designs and
manufactures a broad range of modular shielding systems and shielded doors, some
of which are proprietary, for the world market. It also provides the design,
program management and integration services to supply the European market with
turnkey EMC solutions.
COMMUNICATIONS
In fiscal year 1999, approximately 10% of Company revenues (excluding SEI
revenues) was derived from its Communications segment.
DCSI is a leading manufacturer of two-way power line communication
systems for the utility industry. These systems provide electric utilities with
a patented communication technology for demand-side management, distribution
automation, and automatic meter reading capabilities, thus improving the
efficiency of power delivery to the consumer of electric energy. During fiscal
year 1999, DCSI experienced substantial revenue growth from the first full year
of shipments of an automatic meter reading ("AMR") system to the Puerto Rico
Electric Power Authority ("PREPA") under a multi-year contract signed in fiscal
year 1998 which is valued at more than $50 million. Revenue from this contract
amounted to approximately 56% of total Communications segment revenues in fiscal
year 1999. It is anticipated that in fiscal year 2000 the PREPA contract revenue
will constitute approximately 50% to 55% of total segment revenues. The current
contract will expire in fiscal year 2001. Also during 1999, DCSI was chosen to
supply the first phase of an AMR project to Wisconsin Public Service Co. ("WPS")
which covers roughly seventeen percent of WPS' customer base. DCSI anticipates
possible expansion of this system in fiscal years 2001-2003.
OTHER PRODUCTS
The Company's Other Products segment represented approximately six
percent of Company revenues in fiscal year 1999 (excluding SEI revenues).
Rantec designs and manufactures high voltage and low voltage power
supplies, dc/dc converters and
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power systems which are marketed to a broad range of customers worldwide.
Applications include medical and avionics CRT displays, as well as ground-based,
shipboard and airborne power systems for a wide variety of military platforms.
Rantec's newest development is a state-of-the-art, patented, miniature high
voltage technology which achieves the same basic functions of today's high
voltage power supplies in only 5% of the size. These products can meet a broad
range of display applications, from hand-held devices and notebook computers to
helmet-mounted displays and military avionics.
Comtrak has developed a proprietary video security monitoring system,
which has applications in commercial and industrial security systems. Currently,
Comtrak is working jointly with ADT Security Services, Inc., who is selling this
system under its SecurVision7 trademark to a variety of markets.
As previously disclosed, the Company intends to sell its Rantec microwave
antenna business, including its owned operations facility located in Calabasas,
California. This business includes the production of antennas for wireless
communications applications and airborne systems.
DIVESTED BUSINESS
On September 30, 1999, ESCO sold SEI, its last major defense business, to
Engineered Systems and Electronics, Inc. ("Engineered Systems"). See Notes 2 and
11 of the Notes to Consolidated Financial Statements in the 1999 Annual Report,
which Notes are herein incorporated by reference. SEI is primarily in the
defense systems and electronics business, and principally supplies high-capacity
aircraft cargo loaders and transportation systems and weapon subsystems to the
armed forces. In addition, SEI designs and manufactures launching and guidance
systems and airborne radar systems. In fiscal year 1999, SEI accounted for
approximately 42% of total Company revenues. As a result of the sale of SEI, the
Company's defense-related sales have been reduced to approximately ten percent
of total sales.
MARKETING AND SALES
The following comments relate to the Company's business in general:
The Company's products generally are distributed to customers through a
domestic and foreign network of distributors, sales representatives and factory
salespersons. Utility communication systems are sold directly to the electric
utilities.
The Company's defense products are sold directly or indirectly to the
U.S. Government under contracts with the Army, Navy and Air Force and
subcontracts with prime contractors of such entities. Including SEI results,
direct and indirect sales to the U.S. Government accounted for approximately
41%, 41% and 44% of the Company's total sales in the fiscal years ended
September 30, 1999, 1998 and 1997, respectively. See Note 11 of the Notes to
Consolidated Financial Statements in the 1999 Annual Report, which Note is
herein incorporated by reference.
International sales (including SEI) accounted for approximately 18%, 16%
and 18% of the Company's total sales in the fiscal years ended September 30,
1999, 1998 and 1997, respectively. The increase in fiscal year 1999 was
primarily due to higher Far East sales at SEI. See Note 11 of the Notes to
Consolidated Financial Statements in the 1999 Annual Report. Historically, the
majority of these international sales have involved defense products. With the
divestiture of SEI, future international sales will predominantly involve
industrial and commercial products.
The Company's international sales are subject to risks inherent in
foreign commerce, including currency fluctuations and devaluations, the risk of
war, changes in foreign governments and their policies, differences in foreign
laws, uncertainties as to enforcement of contract rights, and difficulties in
negotiating and litigating with foreign sovereigns.
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INTELLECTUAL PROPERTY
The Company owns or has other rights in various forms of intellectual
property (i.e., patents, trademarks, service marks, copyrights, mask works,
trade secrets and other items). As the Company has expanded its presence in
commercial markets, it is placing greater emphasis on developing intellectual
property and protecting its rights therein. The Company believes that this
increased emphasis should better position the Company to secure new business and
protect existing business for certain products. Although the Company considers
its patents to be of significant value in its operations, none of its business
segments is materially dependent on any single patent or group of patents.
BACKLOG
The following information excludes backlog attributable to SEI. The
backlog of firm orders was approximately $142.9 million at September 30, 1999
and approximately $139.3 million at September 30, 1998. As of September 30,
1999, it is estimated that: (i) commercial business accounted for approximately
90% of the firm orders and defense business accounted for approximately 10%, and
(ii) domestic customers accounted for approximately 79% of the firm orders and
foreign customers accounted for approximately 21%. Of the total backlog of
orders at September 30, 1999, approximately 73% (including all commercial
orders) is expected to be completed in the fiscal year ending September 30,
2000.
PURCHASED COMPONENTS AND RAW MATERIALS
The Company's products require a wide variety of components and
materials. Although the Company has multiple sources of supply for most of its
material requirements, certain components are supplied by sole-source vendors,
and the Company's ability to perform certain contracts depends on their
performance. In the past, these required raw materials and various purchased
components generally have been available in sufficient quantities. In the
Communications segment, DCSI utilizes a single source or a limited number of
sources to produce substantially all of DCSI's end-products. Although the
Company believes alternative suppliers of components and end-products are
available, the inability of DCSI to develop alternative sources quickly or
cost-effectively could have a material adverse effect on the Communications
segment.
COMPETITION
The following comments apply to each of the Company's four segments:
The Company faces intense competition from a large number of firms for
nearly all of its products. Although the Company is a leading supplier in
several of the markets it serves, the Company maintains a relatively small share
of the business in many of the markets in which it participates. Because of the
specialized nature of the Company's products, it is impossible to state
precisely its competitive position with respect to each of its products.
Substantial efforts are required in order to maintain existing business levels.
In the Company's major served markets, competition is driven primarily by
quality, price, technology and delivery performance. For most of its products,
the Company's competitors are larger and have greater financial resources than
the Company.
Competition in the Company's major markets is broadly based, and global
in scope. Individual competitors range in size from annual revenues of less than
$1 million to billion dollar enterprises, such as Pall Corporation, a major
competitor in the filtration/fluid flow market. Competition can be particularly
intense during periods of economic slowdown, a situation which the Company
recently experienced in some of its filtration/fluid flow markets.
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RESEARCH AND DEVELOPMENT
Research and development and the Company's technological expertise are
important factors in the Company's business. Research and development programs
are designed to develop technology for new products or to extend or upgrade the
capability of existing products and to assess their commercial potential.
In addition to its work under development contracts, the Company performs
research and development at its own expense. For the fiscal years ended
September 30, 1999, 1998 and 1997, total Company-sponsored research and
development expenses were approximately $7.7 million, $5.9 million and $6.2
million, respectively. Company-sponsored research and development expenses
attributable to SEI were approximately $1.5 million, $1.4 million and $1.1
million, respectively, for those years. Total customer-sponsored research and
development expenses were approximately $8.3 million, $10.2 million and $6.3
million for the fiscal years ended September 30, 1999, 1998 and 1997,
respectively. Such customer-sponsored expenses attributable to SEI were
approximately zero, zero and $0.1 million, respectively, for those years. The
decrease in fiscal year 1999 for customer-sponsored research and development
expenses was due to decreased activity at Rantec, partially offset by an
increase at Filtertek. The increase in fiscal year 1998 for such research and
development expenses was due to increased activity at Rantec and Filtertek.
ENVIRONMENTAL MATTERS
The Company is involved in various stages of investigation and cleanup
relating to environmental matters. These matters primarily relate to Company
facilities located in Newbury Park, California and Riverhead, New York. Textron,
Inc. has indemnified the Company in respect of the cleanup expenses at the
Newbury Park facility, which is leased from a third party. In connection with
the sale of Hazeltine Corporation ("Hazeltine") in 1996, the Company retained
ownership of the Riverhead facility, and agreed to indemnify Hazeltine and
GEC-Marconi against certain environmental remediation expenses related to
Hazeltine's facility at Quincy, Massachusetts. The Company recently sold the
Riverhead facility, but has retained responsibility for any remaining
contamination issues. The relevant state agency has recently agreed that
remediation at the Riverhead facility may cease. The Company is also indirectly
involved in the remediation of off-site waste disposal facilities located in
Winter Park, Florida and Jackson County, Arkansas, with regard to both of which
the Company is one of a number of potentially responsible parties, and thus
bears a proportionate share of the total remediation expenses. It is very
difficult to estimate the potential costs of such matters and the possible
impact of these costs on the Company at this time due in part to: the
uncertainty regarding the extent of pollution; the complexity of Government laws
and regulations and their interpretations; the varying costs and effectiveness
of alternative cleanup technologies and methods; the uncertain level of
insurance or other types of cost recovery; and in the case of off-site waste
disposal facilities, the uncertain level of the Company's relative involvement
and the possibility of joint and several liability with other contributors under
applicable law. Based on information currently available, the Company does not
believe that the aggregate costs involved in the resolution of these
environmental matters will have a material adverse effect on the Company's
financial statements. See Item 3. "Legal Proceedings".
GOVERNMENT CONTRACTS
A portion of the Company's contracts with the U.S. Government and
subcontracts with prime contractors of the U.S. Government are firm fixed-price
contracts. Under firm fixed-price contracts, work is performed and paid for at a
fixed amount without adjustment for the actual costs experienced in connection
with the contracts. Therefore, unless the customer actually or constructively
alters or impedes the work performed, all risk of loss due to cost overruns is
borne by the Company. All Government prime contracts and virtually all of the
Company's subcontracts provide that they may be terminated at the convenience of
the Government. Upon such termination, the Company is normally entitled to
receive the purchase price for delivered items, reimbursement for allowable
costs incurred and allocable to the contract (which do not include many ordinary
costs of doing business in a commercial context) and an allowance for profit on
the allowable costs incurred or adjustment for loss if completion of performance
would have resulted in a loss. The Company is also
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normally entitled to reimbursement of the cost it incurs to prepare and to
negotiate a settlement of the termination for convenience.
The Company's backlog includes firm fixed-price U.S. Government
contracts, development programs and production programs in their early phases.
These programs have inherently high risks associated with design, first article
testing and customer acceptance. The profitability of such programs cannot be
assured, and they could represent exposure to the Company.
The Company periodically reviews U.S. Government contracts in the
ordinary course to ascertain if customer actions or inactions have caused or
will cause increased costs. In the past, the Company has submitted requests for
equitable adjustments ("REAs") and claims seeking additional compensation, which
involved substantial amounts of money. Currently, the Company has no such REAs
or claims outstanding. However, in the future, to the extent any such REAs and
claims are finally resolved for less than the amounts anticipated, the Company's
financial position and operating results could be adversely affected.
EMPLOYEES
As of October 31, 1999, the Company employed approximately 2,000 persons.
FINANCING
The Company has a credit agreement, which has been amended and restated
as of February 7, 1997, and further amended as of May 6, 1997, November 21,
1997, June 29, 1998 and August 30, 1999, for a $40 million revolving credit
facility (together the "Credit Facility") with a group of banks agented by
Morgan Guaranty Trust Company of New York. The Credit Facility will mature and
expire on September 30, 2000, and contains customary events of default,
including change in control of the Company. Substantially all of the assets of
the Company are pledged under the credit facility. See "Management's Discussion
and Analysis - Capital Resources & Liquidity" in the 1999 Annual Report, and
Note 7 of the Notes to Consolidated Financial Statements in the 1999 Annual
Report, which Note is herein incorporated by reference.
HISTORY OF THE BUSINESS
ESCO was incorporated in Missouri in August 1990 as a wholly-owned
subsidiary of Emerson Electric Co. ("Emerson") to be the indirect holding
company for Electronics & Space Corp. ("E&S"), Hazeltine, Southwest Mobile
Systems Corporation ("Southwest"), Rantec, VACCO and DCSI, which were then
Emerson subsidiaries. Ownership of ESCO and its subsidiaries was distributed on
October 19, 1990 (the "Distribution Date") by Emerson to its shareholders
through a special distribution (the "Distribution"). By means of the
Distribution, Emerson distributed one share of ESCO's common stock, par value
$0.01 per share (the "Common Stock"), for every 20 shares of Emerson common
stock owned on October 5, 1990. Pursuant to a Deposit and Trust Agreement (the
"Deposit and Trust Agreement") by and among Emerson, ESCO and Boatmen's Trust
Company, as voting trustee, in lieu of receiving a share of Common Stock on the
Distribution Date, each Emerson shareholder received a Common Stock trust
receipt (a "Receipt") representing the Common Stock and its associated preferred
stock purchase rights.
In connection with the Distribution, Emerson, ESCO and ESCO's
subsidiaries entered into various agreements which dealt with, among other
things, Emerson's guarantee of certain contracts of ESCO's subsidiaries existing
at September 30, 1990. The Deposit and Trust Agreement provided that, if ESCO
should default in its obligations to indemnify Emerson with respect to the
aforesaid contract guarantee obligations of Emerson, Emerson would have the
right to direct the voting of the ESCO Common Stock represented by the Receipts
with respect to the election of directors. On November 10, 1999, Emerson gave
notice that its contract guarantee obligations have been discharged, and the
Deposit and Trust Agreement is being terminated. On or about January 17, 2000,
ESCO shareholders will receive shares of Common Stock in
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exchange for their Receipts. See Notes 8 and 12 of the Notes to Consolidated
Financial Statements in the 1999 Annual Report.
Effective September 30, 1993, ESCO's Board of Directors authorized an
accounting readjustment of the Company's balance sheet in accordance with the
accounting provisions applicable to a "quasi-reorganization," an elective
accounting procedure intended to restate assets and liabilities to fair values
and to eliminate any accumulated deficit in retained earnings. See Note 1(b) of
the Notes to Consolidated Financial Statements in the 1999 Annual Report, which
Note is herein incorporated by reference.
On September 30, 1992, ESCO acquired ownership of Textron Filtration
Systems, Inc. from Textron, Inc. and renamed the entity "PTI Technologies Inc."
On March 12, 1993, ESCO acquired The Electro-Mechanics Company, a privately held
company, from its shareholders. On December 1, 1993, ESCO acquired all
outstanding stock of Schumacher Filters Limited (located in England) from
Kraftanlagen, AG of Germany, and renamed this entity "PTI Technologies Limited".
On December 29, 1994, ESCO acquired the assets of Ray Proof North America, a
division of Shielding Systems Corporation, a subsidiary of Bairnco Corporation.
Effective September 30, 1995, E&S was merged into Southwest.
Subsequently, the latter entity's name was changed to Systems & Electronics Inc.
Effective October 19, 1995, the assets of EMCO, the assets acquired from
Ray Proof North America, and the assets comprising Rantec's California and
Oklahoma radio/frequency anechoics business were transferred to a newly-formed
Texas limited partnership, EMC Test Systems, L.P. ("ETS"). The sole general
partner of ETS is Rantec Commercial, Inc., a wholly-owned subsidiary of Rantec.
The sole limited partner of ETS is Rantec Holdings, Inc., a wholly-owned
subsidiary of Defense Holding Corp.
On July 22, 1996, ESCO sold 100% of the capital stock of Hazeltine to
GEC-Marconi Electronic Systems Corporation ("GEC-Marconi") . On February 7,
1997, ESCO acquired the filtration products and the thermoform packaging
businesses ("Filtertek") of Schawk, Inc. On December 31, 1997, ESCO acquired the
stock of Euroshield OY (located in Finland), and on July 1, 1998, ESCO acquired
the stock of Advanced Membrane Technology, Inc. and renamed it "PTI Advanced
Filtration Inc." See Note 2 of the Notes to Consolidated Financial Statements in
the 1999 Annual Report.
On September 30, 1999, ESCO sold 100% of the capital stock of SEI to
Engineered Systems.
FORWARD-LOOKING INFORMATION
The statements contained in this Item 1. "Business" and in Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" concerning the Company's future revenues, profitability, financial
resources, utilization of net deferred tax assets, costs of Year 2000
compliance, product mix, production and deliveries, market demand, product
development, competitive position, impact of environmental matters and
statements containing phrases such as "believes", "anticipates", "may", "could",
"should", and "is expected to" are forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. The Company's actual results in the future may differ materially from
those projected in the forward-looking statements due to risks and uncertainties
that exist in the Company's operations and business environment including, but
not limited to: changing economic conditions in served markets; delivery delays
or defaults by customers; performance issues with key suppliers and
subcontractors; and the Company's successful execution of internal operating
plans.
ITEM 2. PROPERTIES
The Company's principal buildings contain approximately 1,133,900 square
feet of floor space. Approximately 778,600 square feet are owned by the Company
and approximately 355,300 square feet are
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leased. Substantially all of the Company's owned properties are encumbered in
connection with the Company's Credit Facility. See Item 1. "Business -
Financing" and Note 7 of the Notes to Consolidated Financial Statements in the
1999 Annual Report. The principal plants and offices are as follows:
SQ. FT. LEASE
SIZE OWNED/ EXPIRATION PRINCIPAL USE
LOCATION (SQ. FT.) LEASED DATE (INDUSTRY SEGMENT)
- -------- --------- ------ ----------- ------------------
Huntley, IL 127,000 Owned Manufacturing (Filtration/Fluid
Flow)
Patillas, PR 110,000 Owned Manufacturing (Filtration/Fluid
Flow)
Durant, OK 100,000 Owned Manufacturing (Test)
Hebron, IL 99,800 Owned Management, Engineering and
Manufacturing (Filtration/Fluid
Flow)
South El Monte, CA 80,800 Owned Management, Engineering and
Manufacturing (Filtration/Fluid
Flow)
Newbury Park, CA 79,000 Leased 12-31-00 Management, Engineering and
Manufacturing (Filtration/Fluid
Flow)
Calabasas, CA 54,700 Owned Management, Engineering and
Manufacturing (Other Products)
Stockton, CA 55,000 Leased 5-21-03 Manufacturing (Filtration/Fluid
(w/two 5-year Flow)
renewal options)
Austin, TX 50,000 Leased 1-20-02 Management, Engineering and
(w/one 5-year Manufacturing (Test)
renewal option)
Newbury Park, CA 46,100 Leased 10-31-01 Management, Engineering and
(w/two 5-year Manufacturing (Filtration/Fluid
renewal options) Flow)
Los Osos, CA 40,000 Owned Engineering and Manufacturing
(Other Products)
San Diego, CA 38,000 Leased 2-29-00 Management, Engineering and
Manufacturing (Filtration/Fluid
Flow)
Newcastle West, 37,000 Owned Manufacturing (Filtration/Fluid
Ireland Flow)
St. Louis, MO 35,000 Owned Management, Engineering and
Manufacturing (Communications)
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Juarez, Mexico 34,400 Leased 12-31-01 Engineering and Manufacturing
(Filtration/Fluid Flow)
Sheffield, England 33,500 Owned Management, Manufacturing
and Distributor (Filtration/Fluid
Flow)
Plailly, France 33,000 Owned Manufacturing (Filtration/Fluid
Flow)
Sao Paulo, Brazil 31,000 Leased 12-14-02 Manufacturing (Filtration/Fluid
Flow)
Eura, Finland 27,800 Owned Management, Engineering and
Manufacturing (Test)
St. Louis, MO 21,800 Leased 8-31-05 ESCO Headquarters
(w/two 5-year
renewal options)
In fiscal year 1999, the Company entered into a financing lease arrangement
covering (i) a property in Oxnard, California consisting of a 126,000 square
feet building, and (ii) a second property in Oxnard, California upon which a
127,000 square feet building will be constructed. All of the Company's current
Newbury Park and San Diego facilities will be transferred in fiscal year 2000 to
these new Oxnard properties, which will then comprise the management,
engineering and manufacturing operations for PTI Technologies Inc. and PTI
Advanced Filtration Inc. (Filtration/Fluid Flow segment).
The Company believes its buildings, machinery and equipment have been
generally well maintained, are in good operating condition and are adequate for
the Company's current production requirements.
ITEM 3. LEGAL PROCEEDINGS
In August 1994, a class action lawsuit was filed by Ronald and Angela Aprea
and other persons against Hazeltine in the Supreme Court of the State of New
York, Suffolk County, alleging personal injury and property damage caused by
Hazeltine's purported releases of hazardous materials at Hazeltine's facility at
Greenlawn, New York. In connection with the sale of Hazeltine, the Company
indemnified Hazeltine and GEC-Marconi against expenses and potential liability
related to this suit. The suit seeks compensatory and punitive damages, and an
order enjoining Hazeltine from discharging further hazardous materials and for
Hazeltine to remediate all damage to the property of the plaintiffs. The Company
believes that no one and no property has been injured by any release of
hazardous materials from Hazeltine's facility. In fiscal year 1995, the Court
dismissed two counts of the complaint as a result of Hazeltine's motion to
dismiss, and the plaintiffs filed an amended complaint. The plaintiffs filed a
motion to be certified as a class, and, early in fiscal year 1997, the Court
denied this motion. The plaintiffs appealed, and the state appellate court
affirmed the denial in fiscal year 1998. Management believes the Company will be
successful in defending this action and that the outcome will not have a
material adverse effect on the Company's financial statements. Currently,
settlement negotiations are underway. See Note 13 of the Notes to Consolidated
Financial Statements in the 1999 Annual Report, which Note is herein
incorporated by reference. See also Item 1. "Business - Environmental Matters"
in this report.
9
14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT.
The following sets forth certain information as of December 13 , 1999 with
respect to ESCO's executive officers. These officers have been elected to terms
which expire at the first meeting of the Board of Directors after the next
annual meeting of stockholders.
Name Age Position(s)
- ---- --- -----------
Dennis J. Moore* 61 Chairman, President and Chief Executive Officer
Charles J. Kretschmer 43 Vice President and Chief Financial Officer
Alyson S. Barclay 40 Vice President, Secretary and General Counsel
Victor L. Richey, Jr. 42 Vice President, Administration
- ------------
* Also a director and Chairman of the Executive Committee of the Board of
Directors.
There are no family relationships among any of the executive officers and
directors.
Since October 1992, Mr. Moore has been Chairman, President and Chief
Executive Officer of ESCO.
Mr. Kretschmer has been Vice President of ESCO since February 9, 1999
and Vice President and Chief Financial Officer since October 11, 1999.
Ms. Barclay has been Vice President, Secretary and General Counsel of ESCO
since October 11, 1999.
Mr. Richey has been Vice President, Administration of ESCO since May 7,
1998.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information required by this item is incorporated herein by reference
to Notes 7 and 8 of the Notes to Consolidated Financial Statements, "Common
Stock Market Prices" and "Shareholders' Summary - Capital Stock Information"
appearing in the 1999 Annual Report. A special cash distribution of $3.00 per
share was paid to Stockholders in September 1996. No other cash dividends have
been declared on the Common Stock, and ESCO does not anticipate, currently or in
the foreseeable future, paying cash dividends on the Common Stock, although it
reserves the right to do so to the extent permitted by applicable law and
agreements. ESCO's dividend policy will be reviewed by the Board of Directors at
such future time as may be appropriate in light of relevant factors at that
time, based on ESCO's earnings and financial position and such other business
considerations as the Board deems relevant at that time.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item, with respect to selected financial
data, is incorporated herein by
10
15
reference to "Five-Year Financial Summary" and Note 2 of the Notes to
Consolidated Financial Statements appearing in the 1999 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is incorporated herein by reference
to "Management's Discussion and Analysis" appearing in the 1999 Annual Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated herein by reference
to "Management's Discussion and Analysis - Market Risk Analysis" appearing in
the 1999 Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference
to the Consolidated Financial Statements of the Company on pages 19 through 37
and the report thereon of KPMG LLP, independent certified public accountants,
appearing on page 39 of the 1999 Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding nominees and directors appearing under "Nominees and
Continuing Directors" in ESCO's Notice of the Annual Meeting of the Stockholders
and Proxy Statement dated December 9, 1999 (the "2000 Proxy Statement") is
hereby incorporated by reference. Information regarding executive officers is
set forth in Part I of this Form 10-K.
Information appearing under "Section 16(a) Beneficial Ownership Reporting
Compliance" in the 2000 Proxy Statement is hereby incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information appearing under "Board of Directors and Committees" and
"Executive Compensation" (except for the "Report of the Human Resources And
Ethics Committee On Executive Compensation" and the "Performance Graph") in the
2000 Proxy Statement is hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information regarding beneficial ownership of Receipts representing
shares of common stock by nominees and directors, by executive officers, by
directors and executive officers as a group and by any five percent stockholders
appearing under "Security Ownership of Management" and "Security Ownership of
Certain Beneficial Owners" in the 2000 Proxy Statement is hereby incorporated by
reference.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as a part of this report:
1. The Consolidated Financial Statements of the Company on pages
19 through 37 and the Independent Auditors' Report thereon of
KPMG LLP appearing on page 39 of the 1999 Annual Report.
2. Financial statement schedules have been omitted because the
subject matter is disclosed elsewhere in the financial
statements and notes thereto, is not required or not applicable,
or the amounts are not sufficient to require submission.
3. Exhibits
2(a)(i) Stock Purchase Agreement dated as of May Incorporated by Reference, Exhibit 2
23, 1996 between ESCO and GEC-Marconi [1]
2(a)(ii) First Amendment Agreement dated as of July Incorporated by Reference, Exhibit 2
19, 1996 to Stock Purchase Agreement listed [1]
as Exhibit 2(a)(i) above
2(b)(i) Acquisition Agreement dated December 18, Incorporated by Reference, Exhibit
1996 between the Company and Schawk, Inc. 2(a)[2]
2(b)(ii) First Amendment dated as of February 6, Incorporated by Reference, Exhibit
1998 to Acquisition Agreement listed as 2(b) [2]
Exhibit 2(b)(i) above
2(c) Stock Purchase Agreement dated as of Incorporated by Reference, Exhibit
August 23, 1999, as amended September 23, 2[3]
1999 and September 30, 1999, among
Engineered Systems and Electronics, Inc.,
ESCO and Defense Holding Corp.
3(a) Restated Articles of Incorporation of ESCO
3(b) Bylaws of ESCO, as amended Incorporated by Reference, Exhibit
3(b)[4]
4(a) Specimen certificate for ESCO's Common Incorporated by Reference, Exhibit
Stock Trust Receipts 4(a) [5]
4(b) Rights Agreement dated as of September 24, Incorporated by Reference, Exhibit
1990 between ESCO and Boatmen's Trust 4.2 [6]
Company, as Rights Agent
12
17
4(c)(i) Credit Agreement dated as of September 23, Incorporated by Reference, Exhibit 4
1990 (as amended and restated as of December [2]
30, 1992, amended as of January 15, 1993,
October 15, 1993 and November 29, 1993,
amended and restated as of May 27, 1994,
amended as of August 5, 1994, amended and
restated as of September 29, 1995, amended as
of June 6, 1996 and August 2, 1996, and
amended and restated as of February 7, 1997)
among ESCO, Defense Holding Corp., the Banks
listed therein and Morgan Guaranty Trust
Company of New York, as Agent
4(c)(ii) Amendment dated as of May 6, 1997 to Credit Incorporated by Reference, Exhibit
Agreement listed as Exhibit 4(c)(i) above 4(c)(ii)[7]
4(c)(iii) Amendment dated as of November 21, 1997 Incorporated by Reference, Exhibit
to Credit Agreement listed as Exhibit 4(c)(i) 4(c)(iii)[7]
above
4(c)(iv) Amendment dated as of June 29, 1998 to Incorporated by Reference, Exhibit
Credit Agreement listed as Exhibit 4(c)(i) 4[8]
above
4(c)(v) Amendment dated as of August 30, 1999 to
Credit Agreement listed as Exhibit 4(c)(i)
above
No other long-term debt instruments are filed
since the total amount of securities
authorized under any such instrument does not
exceed ten percent of the total assets of
ESCO and its subsidiaries on a consolidated
basis. ESCO agrees to furnish a copy of such
instruments to the Securities and Exchange
Commission upon request.
4(d) Deposit and Trust Agreement dated as of Incorporated by Reference, Exhibit
September 24, 1990 among ESCO, Emerson 4.3 [6]
Electric Co., Boatmen's Trust Company, as
Trustee, and the holders of Receipts from
time to time
10(a) Distribution Agreement dated as of Incorporated by Reference, Exhibit
September 24, 1990 by and among ESCO, 2.1 [6]
Emerson Electric Co., and ESCO's direct and
indirect subsidiaries
10(b) Tax Agreement dated as of September 24, Incorporated by Reference, Exhibit
1990 by and among ESCO, Emerson Electric 2.2 [6]
Co., and ESCO's direct and indirect
subsidiaries
10(c)(i) 1990 Stock Option Plan* Incorporated by Reference, Exhibit
10.3[6]
13
18
10(c)(ii) Amendment to 1990 Stock Option Plan dated Incorporated by Reference, Exhibit
as of September 4, 1996* 10(c)(ii) [9]
10(d) Form of Incentive Stock Option Agreement* Incorporated by Reference, Exhibit
10(g) [5]
10(e) Form of Incentive Stock Option Agreement - Incorporated by Reference, Exhibit
Alternative* 10(h) [5]
10(f) Form of Non-Qualified Stock Option Incorporated by Reference, Exhibit
Agreement* 10(i) [5]
10(g) Form of Split Dollar Agreement* Incorporated by Reference, Exhibit
10(j) [4]
10(h) Form of Indemnification Agreement with each Incorporated by Reference, Exhibit
of ESCO's directors. 10(k) [4]
10(i) Stock Purchase Agreement dated as of Incorporated by Reference, Exhibit
August 20, 1992 by and between Textron, 10(l) [10]
Inc. and ESCO
10(j)(i) 1993 Performance Share Plan* Incorporated by Reference [11]
10(j)(ii) Amendment to 1993 Performance Share Incorporated by Reference, Exhibit
Plan dated as of September 4, 1996* 10(j)(ii) [9]
10(k) Supplemental Executive Retirement Plan as Incorporated by Reference, Exhibit
amended and restated as of August 2, 1993* 10(n) [12]
10(l)(i) Directors' Extended Compensation Plan* Incorporated by Reference, Exhibit
10(o) [12]
10(l)(ii) Compensatory Arrangement with former Incorporated by Reference, Exhibit
ESCO director* 10(l)(ii) [9]
10(m)(i) 1994 Stock Option Plan* Incorporated by Reference [13]
10(m)(ii) Amendment to 1994 Stock Option Plan dated Incorporated by Reference, Exhibit
as of September 4, 1996* 10(m)(ii) [9]
10(n) Form of Incentive Stock Option Agreement* Incorporated by Reference, Exhibit
10(n)[14]
10(o) Form of Non-Qualified Stock Option Incorporated by Reference, Exhibit
Agreement* 10(o) [14]
10(p) Severance Plan* Incorporated by Reference, Exhibit
10(p)[14]
10(q) Performance Compensation Plan dated as of Incorporated by Reference, Exhibit
August 2, 1993 (as amended and restated as 10(q) [9]
of October 1, 1995)*
10(r) 1997 Performance Share Plan* Incorporated by Reference [15]
10(s) Notice Of Award--stock award to executive Incorporated by Reference, Exhibit
officer* 10(s)[7]
14
19
10(t) Notice of Award--stock award to executive Incorporated by Reference, Exhibit
officer* 10(a)[8]
10(u) Notice of Award--stock award to executive Incorporated by Reference, Exhibit
officer* 10(b)[8]
10(v) 1999 Stock Option Plan* Incorporated by Reference, Exhibit
4d[16]
10(w) Form of Non-Qualified Stock Option Incorporated by Reference, Exhibit
Agreement* 4e[16]
10(x) Form of Non-Qualified Stock Option Incorporated by Reference, Exhibit
Agreement-Alternative* 4f[16]
10(y) Form of Incentive Stock Option Agreement* Incorporated by Reference, Exhibit
4g[16]
10(z) Form of Incentive Stock Option Agreement- Incorporated by Reference, Exhibit
Alternative* 4h[16]
10(aa) Employment Agreement with Executive
Officer*
10(bb) Employment Agreement with Executive
Officer*[17]
10(cc) Special Separation Agreement with Former
Executive Officer*
10(dd) Severance Agreement with Former Executive
Officer*
13 The following-listed sections of the Annual
Report to Stockholders for the year ended
September 30, 1999:
Five-Year Financial Summary (p. 40)
Management's Discussion and Analysis
(pgs. 10-18)
Consolidated Financial Statements (pgs.
19-37) and Independent Auditors' Report
(p. 39)
Shareholders' Summary--Capital Stock
Information (p. 41)
Common Stock Market Prices (p. 40)
21 Subsidiaries of ESCO
23 Independent Auditors' Consent
27 Financial Data Schedule
- ---------------
[1] Incorporated by reference to Current Report on Form 8-K--date of
earliest event reported: July
15
20
22, 1996, at the Exhibit indicated.
[2] Incorporated by reference to Form 10-Q for the fiscal quarter ended
December 31, 1996, at the Exhibit indicated.
[3] Incorporated by reference to Current Report on Form 8-K--date of
earliest event reported: September 30, 1999, at the Exhibit indicated.
[4] Incorporated by reference to Form l0-K for the fiscal year ended
September 30, l991, at the Exhibit indicated.
[5] Incorporated by reference to Form 10-K for the fiscal year ended
September 30, 1990, at the Exhibit indicated.
[6] Incorporated by reference to Registration Statement on Form 10, as
amended on Form 8 filed September 27, 1990, at the Exhibit indicated.
[7] Incorporated by reference to Form 10-K for the fiscal year ended
September 30, 1997, at the Exhibit indicated.
[8] Incorporated by reference to Form 10-Q for the fiscal quarter ended
June 30, 1998, at the Exhibit indicated.
[9] Incorporated by reference to Form 10-K for the fiscal year ended
September 30, 1996, at the Exhibit indicated.
[10] Incorporated by reference to Form 10-K for the fiscal year ended
September 30, 1992, at the Exhibit indicated.
[11] Incorporated by reference to Notice of the Annual Meeting of the
Stockholders and Proxy Statement dated December 9, 1992.
[12] Incorporated by reference to Form 10-K for the fiscal year ended
September 30, 1993, at the Exhibit indicated.
[13] Incorporated by reference to Notice of the Annual Meeting of the
Stockholders and Proxy Statement dated December 8, 1994.
[14] Incorporated by reference to Form 10-K for the fiscal year ended
September 30, 1995, at the Exhibit indicated.
[15] Incorporated by reference to Notice of the Annual Meeting of the
Stockholders and Proxy Statement dated December 6, 1996.
[16] Incorporated by reference to Form S-8 Registration Statement filed
December 17, 1999, at the Exhibit indicated.
[17] Identical Employment Agreements between ESCO and executive officers
Alyson S. Barclay and Victor L. Richey, except that in the case of Ms.
Barclay the minimum annual salay is $94,000.
* Represents a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-K pursuant to Item 14(c)
of this Part IV.
(b) No report on Form 8-K was filed during the quarter ended September 30,
1999.
16
21
(c) Exhibits: Reference is made to the list of exhibits in this Part IV,
Item 14(a)3 above.
(d) Financial Statement Schedules: Reference is made to Part IV, Item
14(a)2 above.
17
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(D) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ESCO ELECTRONICS CORPORATION
By (s) D. J. Moore
_____________________________________
D.J. Moore
Chairman, President and
Chief Executive Officer
Dated: December 17, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below effective December 17, 1999, by the following
persons on behalf of the registrant and in the capacities indicated.
SIGNATURE TITLE
(s) D. J. Moore Chairman, President, Chief
_______________________________ Executive Officer and Director
D.J. Moore
(s) C.J. Kretschmer Vice President and Chief Financial
_______________________________ Officer (Principal Accounting Officer)
C.J. Kretschmer
(s) W.S. Antle III Director
_______________________________
W.S. Antle
(s) J.J. Carey Director
_______________________________
J.J. Carey
(s) J.M. McConnell Director
_______________________________
J.M. McConnell
(s) L.W. Solley Director
_______________________________
L.W. Solley
(s)J.M. Stolze Director
_______________________________
J.M. Stolze
(s) D.C. Trauscht Director
_______________________________
D.C. Trauscht
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23
INDEX TO EXHIBITS
Exhibits are listed by numbers corresponding to the Exhibit Table of Item 601 in
Regulation S-K.
Exhibit No. Exhibit
3(a) Restated Articles of Incorporation of ESCO
4(c)(v) Amendment Dated as of August 30, 1999 to Credit Agreement
Listed as Exhibit 4(c)(i) herein
10(aa) Employment Agreement with Executive Officer
10(bb) Employment Agreement with Executive Officer
10(cc) Special Separation Agreement with Former Executive Officer
10(dd) Severance Agreement with Former Executive Officer
13 The following-listed sections of the Annual Report to
Stockholders for the year ended September 30, 1999:
Five-year Financial Summary (p. 40)
Management's Discussion and Analysis (pgs. 10-18)
Consolidated Financial Statements (pgs. 19-37)
and Independent Auditors' Report (p. 39)
Shareholders' Summary--Capital Stock Information
(p. 41)
Common Stock Market Prices (p. 40)
21 Subsidiaries of ESCO
23 Independent Auditors' Consent
27 Financial Data Schedule
See Item 14(a)3 for a list of exhibits incorporated by reference
19