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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the year ended October 31, 1999 Commission file number 0-13880
ENGINEERED SUPPORT SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
Missouri 43-1313242
(State of Incorporation) (IRS Employer Identification No.)
1270 North Price Road, St. Louis, Missouri 63132
(Address of principal executive officer) (Zip Code)
Registrant's telephone number including area code: (314) 993-5880
Securities registered pursuant to Section 12(b) of the Securities
Exchange Act of 1934:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
Common stock, $.01 par value Over the counter
National Market System
National Association of
Security Dealers
No securities are registered pursuant to Section 12(g) of the Securities
Exchange Act of 1934.
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 such filing requirement for the past 90 days.
Yes X No .
--- ---
Based on the closing price on January 17, 2000, the aggregate
market value of the voting stock held by non-affiliates of the
Registrant was approximately $78,358,000.
The number of shares of the Registrant's common stock, $.01 par
value, outstanding at January 17, 2000 was 6,897,958.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II incorporate by reference portions of the Engineered
Support Systems, Inc. Annual Report to Shareholders (the Annual Report)
for the year ended October 31, 1999. Part III incorporates by reference
portions of the Engineered Support Systems, Inc. Proxy Statement for the
Annual Shareholders Meeting to be held on March 7, 2000 (the Definitive
Proxy Statement) to be filed within 120 days after the close of the year
ended October 31, 1999.
PART I
ITEM 1. BUSINESS
- ------- --------
Engineered Support Systems, Inc. is a holding company for six
wholly-owned subsidiaries: Systems & Electronics Inc. (SEI), Engineered
Air Systems, Inc. (Engineered Air), Keco Industries, Inc. (Keco),
Engineered Coil Company, d/b/a Marlo Coil (Marlo Coil), Engineered
Electric Company, d/b/a Fermont (Fermont) and Engineered Specialty
Plastics, Inc. (ESP). Engineered Support Systems, Inc. and its
subsidiaries (Company) are a leading designer and manufacturer of
military support equipment and electronics for the United States armed
forces. The Company also engineers and manufactures air handling and
heat transfer equipment, material handling equipment and custom molded
plastic products for commercial and industrial products.
Engineered Air was incorporated under the laws of the State of
Missouri on December 24, 1981, and acquired the assets of the Defense
Systems Division of Allis-Chalmers Corporation on March 30, 1982. The
Company was incorporated under the laws of the State of Missouri in
December 1983, and exchanged all of its outstanding common stock for
two-thirds of the common stock of Engineered Air held by the Company's
founders. The Company purchased the remaining one-third of the common
stock of Engineered Air in January 1984, effective as of November 1,
1983. The Company became a publicly owned corporation on August 21,
1985. On March 9, 1993, the Company purchased all of the outstanding
stock of Associated Products, Inc. (subsequently changed to Engineered
Specialty Plastics, Inc.). Effective February 1, 1998, Engineered Coil
Company acquired substantially all of the net assets of Nuclear Cooling,
Inc., d/b/a Marlo Coil. On June 24, 1998, the Company acquired all of
the outstanding common stock of Keco. On February 22, 1999, Engineered
Electric Company acquired substantially all of the net assets of the
Fermont Division of Dynamics Corporation of America, d/b/a Fermont. On
September 30, 1999, the Company, acquired all of the outstanding common
stock of Systems & Electronics Inc.
PRODUCTS
Products are manufactured by the Company within four operating
segments: heavy military support equipment, electronics and automation
systems, light military support and related industrial/commercial
equipment and custom molded plastic products. The heavy military
support equipment segment engineers and manufactures load management and
transport systems primarily for the U.S. Department of Defense (DoD).
Segment products include aircraft load management equipment, tank
transport systems and bridging systems. The electronics and automation
systems segment engineers and manufactures radar and electronic warfare
systems, fire support systems and avionics test equipment primarily for
the DoD. The segment also engineers and manufactures material handling
equipment primarily for the U.S. Postal Service and for the
pharmaceutical industry throughout the United States. The light
military support and related industrial/commercial equipment segment
engineers and manufactures a broad range of military support equipment
primarily for the DoD, as well as unrelated heat transfer and air
handling equipment for domestic commercial and industrial users.
Segment products include environmental control systems, petroleum and
water systems, chemical and biological defense systems and other
multipurpose military support equipment. The custom molded plastic
products segment manufactures a broad range of injection molded resin
products, as well as a proprietary line of plastic faucets, primarily
for commercial customers in the south-central United States.
See pages 7 through 12 and page 16 of the 1999 Annual Report which
are incorporated herein by reference.
2
ENGINEERING AND DESIGN
The Company employs 447 people engaged in the design and
development of new products and the improvement of existing products.
The majority of these development activities are conducted pursuant to,
and funded by, DoD contracts in response to designated performance
specifications. However, with the acquisition of SEI, the Company
anticipates that it will perform substantially more research and
development at its own expense. The Company's expenditures on research
and development were approximately $0.2 million for the year ended
October 31, 1999, and were insignificant during the two-year period
ended October 31, 1998. The Company anticipates that unfunded internal
research and development will exceed $2.0 million in fiscal year 2000.
The Company believes that its engineering expertise gives it a
significant advantage over smaller competitors who do not have such
capabilities
The Company's engineering capabilities are in the areas of
systems, electro-mechanics, electro-chemical, mechanics, electrical
systems and electronics, and acoustics include expertise in
thermodynamics, air flow, liquid pumping, stress analysis, liquid fuel
combustion, dynamic and climatic environmental engineering, biological
and chemical decontamination, non-pyrotechnic smoke generation, and
filtration of chemically and biologically contaminated air.
The Company's design and development of ground support equipment
is enhanced by computer-aided design and manufacturing (CAD/CAM) systems
used by engineers and draftsmen to design complex products and component
parts in three-dimensional view. The Company's engineering technologies
and expertise provide it with the ability to adapt its production
process to new product needs on a timely basis. The Company also has
the capability to provide complete technical data support for the
products it manufactures. This includes integrated logistics support,
spare parts provisioning and preparation of technical manuals.
MARKETING
The Company's marketing of military equipment focuses, in part, on
determining the current and future needs of the DoD for support
equipment. To identify those needs, the Company gathers information
from primary sources such as the DoD budget and its supporting
documents, and military requirement documents such as the Air Force's
Statement of Need, the Navy's Operational Requirements and the Army's
Required Operational Capability, along with direct interface with its
customers. The Company analyzes this data through an established new
business opportunity procedure and then determines whether or not to bid
on specific projects based upon determinations of potential
profitability and the likelihood of being awarded the contract.
For its defense products, the Company maintains a domestic field
marketing/sales network with offices located in the Washington, D.C.
area and at several major U.S. Government defense procurement centers.
The Washington, D.C. office carries out legislative activities, and
conducts customer liaison activities with all branches of the U.S. armed
services and with foreign government offices in the Washington, D.C.
area. The primary responsibility for individual products or programs is
handled within the product line organizations, with the field
organization providing closely coordinated assistance.
3
In addition, the Company supplies electronic sorting and material
handling equipment to the U.S. Postal Service and other customers.
Sales of custom commercial, industrial and marine air handling units and
coils are effected both directly and through sales representatives
located primarily in the United States, parts of Canada, and Puerto
Rico, with the pharmaceutical, telecommunications and healthcare
industries representing a significant portion of current sales volume.
Principal customers for injection molded custom and specialty plastic
products include large, well-established producers of consumer and
industrial products. Sales of injection molded plastic products are
effected both directly and through sales representatives. The Company's
sales of its proprietary line of kitchen and lavatory faucets are
effected primarily through sales representatives, and marketing efforts
focus on service and price.
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, sole-source vendors supply certain
components, 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.
GOVERNMENT CONTRACTING
The Company's government contracts are obtained through the DoD
procurement process as governed by the Federal Acquisition Regulations
and related agency supplements, and are typically fixed-price contracts.
This means that the price is agreed upon before the contract is awarded
and the Company assumes complete responsibility for any difference
between estimated and actual costs.
Under the Truth in Negotiations Act of 1962 (Negotiations Act),
the U.S. government has the right for three years after final payment on
certain negotiated contracts, subcontracts and modifications thereto, to
determine whether the Company furnished the U.S. government with
complete, accurate and current cost or pricing data as defined by the
Negotiations Act. In the event the Company fails to satisfy this
requirement, the U.S. government has the right to adjust a contract or
subcontract price by the amount of any overstatement as defined by the
Negotiations Act.
U.S. government contracts typically contain terms permitting the
contract to be terminated at the convenience of the U.S. government. In
the event of such termination, the Company is entitled to reimbursement
for certain expenditures and overhead as provided for in applicable U.S.
government procurement regulations. Generally, this results in the
contractor being reasonably compensated for work actually done, but not
for anticipated profits. The U.S. government may also terminate
contracts for cause if the Company fails to perform in strict accordance
with contract terms. The Company has never had a contract terminated by
the U.S. government for failure to perform in accordance with contract
terms. Termination of, or elimination of appropriation for, a
significant government contract could have a material adverse effect on
the Company's business, financial condition and results of operations in
subsequent periods. Similarly, U.S. government contracts typically
permit the U.S. government to change, alter or modify the contract at
its discretion. If the U.S. government were to exercise this right, the
Company would be entitled to reimbursement of all allowable and
allocable costs incurred in making the change plus a reasonable profit.
4
The U.S. government typically finances a substantial portion of
the Company's contract costs through progress payments. The Company
historically received progress payments in accordance with DoD contract
terms for "small business" concerns. These terms provide progress
payments at a specified rate applied on the basis of costs incurred
while progress payments for concerns other than small business provide
for payment based on costs actually paid at a rate that is 15% lower
than that paid to small businesses. The Company's recent acquisitions
have caused it to exceed certain thresholds relating to small business
qualification, and the Company will therefore qualify as a small
business only for specific government contracting purposes. The Company
is, however, reducing its emphasis on small business qualification for
purposes of future government work.
INTELLECTUAL PROPERTY
The Company owns various patents and other forms of intellectual
property. From time to time, the Company develops proprietary
information and trade secrets regarding the design and manufacture of
various products. The Company considers its proprietary information and
intellectual property to be valuable assets. However, the Company's
business is not materially dependent on their protection.
COMPETITION
The markets for all of the Company's products are highly competitive.
In order to obtain U.S. government contracts, the Company must comply
with detailed and complex procurement procedures adopted by the DoD
pursuant to regulations promulgated by the U.S. government. The regulations
and procurement procedures are adopted to promote competitive bidding.
In addition, the Company competes with a number of businesses with plastic
injection molding capabilities and competes with a large number of
suppliers to commercial and industrial air handling customers. In all
phases of its operations, the Company competes in both performance and
price with companies, some of which are considerably larger, more
diversified and have greater financial resources than the Company.
DEFENSE BACKLOG
The Company records its defense backlog as either funded backlog
or government options. The Company's funded backlog as of October 31,
1999 was approximately $277.2 million. The Company's funded backlog is
subject to fluctuations and is not necessarily indicative of future
sales. Funded backlog represents products the government has committed
by contract to purchase from the Company. Government options include
products the government has the option to purchase under contract with
the Company, including, with respect to contracts which include a
maximum amount purchasable by the government thereunder, such maximum
amount, and with respect to contracts without a specified maximum
amount, the Company's estimate of the amount it expects the government
to purchase using the government's Best Estimated Quantity (BEQ) as a
guide where a BEQ is specified. There are no commitments by the
government to purchase products included in government options and there
can be no assurance that any or all amounts included therein will
generate revenue for the Company. Moreover, cancellations of purchase
orders or reductions of product quantities in existing contracts could
substantially reduce the Company's funded backlog and, consequently,
future net revenues. Failure of the Company to replace canceled or
reduced backlog, whether funded backlog or government options, could
have a material adverse effect on the Company's business, financial
condition and results of operations in subsequent periods.
5
The following table summarizes funded backlog and government
options on funded backlog (in millions) as of the indicated dates:
Government Options
Funded Backlog On Funded Backlog
-------------- -----------------
October 31, 1999 $277.2 $850.5
October 31, 1998 80.8 319.6
October 31, 1997 44.1 155.0
October 31, 1996 90.7 153.8
October 31, 1995 90.4 100.2
EMPLOYEES
As of October 31, 1999, the Company employed 2,510 persons, of
which 1,470 were engaged in manufacturing activities, 447 in engineering
activities, and 593 in office administration and management functions.
District No. 9 of the International Association of Machinists and
Aerospace Workers (AFL-CIO) represents approximately 427 employees under
a collective bargaining agreement, which expires February 13, 2000.
Although negotiations continue, the date of any new agreement with these
employees is uncertain at this time. Lodge 1012 of the International
Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers
and Helpers (AFL-CIO) represents approximately 126 employees under a
collective bargaining agreement, which expires January 31, 2002.
The Company considers its overall employee relations to be
satisfactory.
6
ITEM 2. PROPERTIES
- ------- ----------
The Company conducts its business from 12 manufacturing and office
facilities. All owned facilities are owned by the Company and are
subject to deeds of trust in favor of the Company's lender.
Leased or
Location Description Size in Sq. Feet Owned
-------- ----------- ---------------- ---------
St. Louis County, Manufacturing/Office 171,000 Owned
Missouri
St. Louis County, Manufacturing 31,000 Leased
Missouri
Hot Springs, Manufacturing/Office 110,000 Owned
Arkansas
Bossier City, Manufacturing 80,000 Owned
Louisiana
High Ridge, Manufacturing/Office 185,000 Owned
Missouri
Florence, Kentucky Manufacturing/Office 174,000 Leased
Blue Ash, Ohio Manufacturing 132,000 Owned
West Plains, Missouri Manufacturing 405,000 Owned
St. Louis County, Office 260,000 Owned
Missouri
Sanford, Florida Manufacturing 177,000 Owned
St. Louis County, Warehouse 25,000 Leased
Missouri
Bridgeport, Manufacturing/Office 109,000 Owned
Connecticut
The Company believes that its current facilities are sufficient for
the conduct of its current level of operations.
ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------
The Company and its subsidiaries are from time to time parties
to various other legal proceedings arising out of their business.
Management believes that there are no such other proceedings pending or
threatened against them which, if determined adversely, would have a
material adverse effect on the business or financial condition of the
Company.
7
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
- ------- -----------------------------------------------
There were no matters submitted to a vote of shareholders during
the fourth quarter of the year ended October 31, 1999.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
- ------- ----------------------------------------------------
SHAREHOLDER MATTERS
-------------------
Information concerning the principal market on which the Company's
common stock is traded and the high and low sales prices for such stock
during 1999 is shown in Supplemental Information on page 28 of the 1999
Annual Report, incorporated herein by reference. During 1995, the
Company initiated a semi-annual dividend program. The most recently
declared dividend was in the amount of $.018 per share payable January
31, 2000 to shareholders of record as of December 31, 1999.
ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------
Financial data required under this section is shown in the Summary
of Selected Financial Data on page 1 of the 1999 Annual Report,
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- ------- -----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
Management's Discussion and Analysis of Financial Condition and
Results of Operations, shown on pages 13 through 16 of the 1999 Annual
Report, is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
The following consolidated financial statements of Engineered
Support Systems, Inc. included in the Annual Report for the year ended
October 31, 1999 at the pages indicated, are incorporated herein by
reference:
Consolidated Balance Sheets, October 31, 1999 and 1998, page 17.
Consolidated Statements of Income, years ended October 31, 1999,
1998 and 1997, page 18.
Consolidated Statements of Shareholders' Equity, years ended
October 31, 1999, 1998 and 1997, page 18.
Consolidated Statements of Cash Flows, years ended October 31,
1999, 1998 and 1997, page 19.
Notes to Consolidated Financial Statements, pages 20 through 26.
The quarterly financial information included in Supplementary
Information on page 28 of the 1999 Annual Report is incorporated herein
by reference.
All other schedules are omitted because they are not applicable or the
required information is included in the consolidated financial statements
or the notes thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
- ------- -----------------------------------------------------------
AND FINANCIAL DISCLOSURES
-------------------------
None.
8
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
The directors, executive officers and key employees of the Company
as of January 17, 2000 are as follows:
Name Age Position
---- --- --------
Michael F. Shanahan Sr. 60 Chairman, Chief Executive Officer and
Director (Company)
Gerald A. Potthoff 59 President, Chief Operating Officer and
Director (Company)
Gary C. Gerhardt 54 Vice Chairman-Administration,
Chief Financial Officer and Director
(Company)
R. Bruce Earls 53 Director (Company) and
President and Chief Executive Officer (Marlo Coil)
John J. Wichlenski 56 Director (Company) and President and
Chief Executive Officer
(Engineered Air)
MG George E. Friel 57 Director (Company)
Thomas J. Guilfoil 80 Director (Company)
LTG Kenneth E. Lewi 69 Director (Company)
Michael F. Shanahan Jr. 33 Director (Company)
Earl E. Walker 79 Director (Company)
Earl W. Wims 60 Director (Company)
Ronald W. Davis 53 Vice President-Planning and
Development (Company)
Steven J. Landmann 40 Vice President-Controller
(Company)
David D. Mattern 41 Secretary and General Counsel
(Company)
John E. Capeless 54 President and Chief Executive Officer
(ESP)
Daniel A. Rodrigues 44 Senior Vice President and
General Manager (SEI)
9
Thomas C. Santoro 46 President and Chief Executive Officer
(Fermont)
Marvin L. Smith 62 President and Chief Executive Officer
(Keco)
Member of Executive Committee of the Board
Member of Audit Committee of the Board
Member of Compensation Committee of the Board
EXECUTIVE OFFICERS
- ------------------
The officers serve at the discretion of the Board of Directors,
subject to the terms and conditions of their employment agreements.
Michael F. Shanahan Sr. has been a director of the Company since
its formation. Mr. Shanahan was named Chief Executive Officer of the
Company in 1985. He was named Chairman of the Company in 1987.
Gerald A. Potthoff was appointed as a director in October 1999.
At the same time, he was named President and Chief Operating Officer
of the Company. Mr. Potthoff has served as President of Systems &
Electronics Inc. since October 1991.
Gary C. Gerhardt has been a director of the Company since March
1998. He was named Vice Chairman-Administration of the Company in
October 1999 and prior thereto served as Executive Vice President of the
Company since 1994. He has been Chief Financial Officer of the Company
since 1994. Mr. Gerhardt joined Engineered Air in 1982 as Manager of
Contract Administration.
R. Bruce Earls has been a director of the Company since March
1998. He has been President and Chief Executive Officer of Marlo Coil
since 1994. Prior thereto, he was Managing Partner of a KPMG Peat
Marwick Business Unit.
John J. Wichlenski has been a director of the Company since 1992.
He has been President and Chief Executive Officer of Engineered Air
since 1992. Mr. Wichlenski joined Engineered Air as Vice President
of Engineering in 1986.
Ronald W. Davis has been Vice President-Planning and Development
of the Company since December 1999. Prior thereto, he served as Vice
President-Marketing for the Company since April 1999 and for Engineered
Air since 1990. Mr. Davis joined Engineered Air in 1983.
Steven J. Landmann has been Vice President-Controller of the
Company since December 1999. Prior thereto, he served as Controller
for the Company since September 1998 and for Engineered Air since 1994.
Mr. Landmann joined Engineered Air in 1988.
David D. Mattern was appointed Secretary and General Counsel of
the Company in December 1999. Prior thereto, he served as the Company's
Secretary since 1992 and as outside counsel to the Company.
John E. Capeless has been President and Chief Executive Officer of
ESP since April 1999. Prior thereto, he served as Vice President and
General Manager of ESP since 1996. Before joining ESP, he was Vice
President of Operations for Atlantis Plastics, Inc. from 1994. Mr.
Capeless served as Director of Manufacturing for Frem Corporation from
1989 to 1994.
10
Daniel A. Rodriques has been Senior Vice President and General
Manager of Systems & Electronics Inc. since July 1999. Prior thereto,
he served as SEI's Vice President of Program Administration since
October 1995. Mr. Rodriques joined SEI in 1977.
Thomas C. Santoro has been President and Chief Executive Officer
of Fermont since February 1995. Prior thereto, he served as Fermont's
Executive Vice President since 1993. Mr. Santoro joined Fermont as
Director of Finance in 1989.
Marvin L. Smith has been President and Chief Executive Officer of
Keco since April 1999. Prior thereto, he served as Keco's Executive
Vice President since 1990. Mr. Smith joined Keco in 1988 as Vice
President of Operations.
11
NON-EMPLOYEE DIRECTORS
- ----------------------
MG George E. Friel (U.S. Army, Retired) has been a director of the
Company since September 1998. He retired from the U.S. Army in July
1998 after 38 years of service. In the six years preceding his
retirement, he headed the U.S. Army Chemical and Biological Defense
Command (CBDCOM).
Thomas J. Guilfoil has been a director of the Company since 1993.
He is the senior and founding partner of the St. Louis law firm of
Guilfoil, Petzall & Shoemake and serves as Vice Chairman of the Arizona
Football Cardinals. His legal career began in St. Louis in 1941.
LTG Kenneth E. Lewi (U.S. Army, Retired) has been a director of
the Company since 1990. He retired from the U.S. Army in August 1989
after 34 years of service. His career in the U.S. Army centered
primarily on providing logistical support to U.S. armed forces.
Michael F. Shanahan Jr. has been a director of the Company since
1994. He has been a Producer for Lockton Companies, an insurance
concern, since 1994. Prior thereto he served as Assistant to the
Chairman of the Board of the Company since 1991. He joined Engineered
Air in 1990 as Marketing Representative.
Earl E. Walker has been a director of the Company since 1996.
He has been the President and principal shareholder of Carr Lane
Manufacturing since founding it in 1952.
Earl W. Wims has been a director of the Company since 1991.
He has been Chairman of Marketing Horizons, a marketing research and
consulting firm, since 1986.
ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------
Information concerning executive compensation is shown in the
Company's Definitive Proxy Statement (to be filed within 120 days after
the close of the fiscal year ended October 31, 1999) incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
- -------- ---------------------------------------------------
MANAGEMENT
----------
Information relating to the ownership of the Company's securities
by certain beneficial owners and management is shown in the Definitive
Proxy Statement (to be filed within 120 days after the close of the
year ended October 31, 1999) incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
Information on certain relationships, related transactions and
affiliation of directors is shown in the Definitive Proxy Statement (to
be filed within 120 days after the close of the year ended October 31,
1999) incorporated herein by reference.
12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
- -------- --------------------------------------------------------
FORM 8-K
--------
(a) (1) and (2) Index of Financial Statements and Financial Statement
Schedules
The following consolidated financial statements of Engineered
Support Systems, Inc., included in the 1999 Annual Report of the
registrant to its shareholders, are incorporated by reference in Item 8:
Report of Independent Accountants
Consolidated Balance Sheets-October 31, 1999 and 1998
Consolidated Statements of Income-years ended October 31, 1999,
1998 and 1997
Consolidated Statements of Shareholders' Equity-years ended
October 31, 1999, 1998 and 1997
Consolidated Statement of Cash Flows-years ended October 31, 1999,
1998 and 1997
Notes to Consolidated Financial Statements-October 31, 1999
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and
therefore have been omitted.
3.0 Lists of Exhibits (listed by numbers corresponding to
exhibit table of Item 601 in regulation S-K)
3.1 Articles of Incorporation of Engineered Support Systems,
Inc.
3.2 Amendment of Articles of Incorporation
3.3 Amended and Restated By-Laws of Engineered Support Systems,
Inc.
4.1 Credit Agreement dated as of September 30, 1999 among
Engineered Support Systems, Inc., Bank of America, National
Association, as Agent and as Swing Line Lender, and the
Other Financial Institutions Party Hereto
4.2 Engineered Support Systems, Inc. 1992 Stock Option Plan for
Nonemployee Directors
4.3 Engineered Support Systems, Inc. 1993 Stock Option Plan
4.4 Engineered Support Systems, Inc. 1997 Stock Option Plan for
Nonemployee Directors
4.5 Engineered Support Systems, Inc. 1998 Stock Option Plan
4.6 Engineered Air Systems, Inc. Employee Stock Ownership Plan,
subsequently renamed the Engineered Support Systems, Inc.
Employee Stock Ownership Plan
4.7 Trust Agreement for the Engineered Air Systems, Inc.
Employee Stock Ownership Trust
13
10.1 Employee Agreement with Michael F. Shanahan Sr.
10.2 Form of Indemnification Agreement with Directors
10.3 Engineered Support Systems, Inc. Amended and Restated
Executive Incentive Plan
11 Statement Re: Computation of Earnings Per Share
13 Engineered Support Systems, Inc. Annual Report for the year
ended October 31, 1999 (the Annual Report). Except for the
portions incorporated herein by reference as evidenced in
the Form 10-K, the Annual Report is furnished for the
information of the Securities and Exchange Commission and is
not deemed filed as part of this 10-K
21 Subsidiary of Registrant
23 Consent of PricewaterhouseCoopers LLP, Independent
Accountants
27 Statement Re: Financial Data Schedule
14
This information is incorporated herein by reference from
Form S-1 Registration Statement filed on July 10, 1985,
registration number 2-98909 as amended on August 13, 1985
and August 21, 1985.
This information is incorporated herein by reference from
Form 10-K Annual Report filed on January 30, 1989.
This information is incorporated herein by reference from
Form 10-K Annual Report filed on January 29, 1990.
This information is incorporated herein by reference from
Form S-8 registration statement, effective April 5, 1994,
registration number 33-77340.
This information is incorporated herein by reference from
Form S-8 registration statement, effective June 11, 1987,
registration number 33-14504.
This information is incorporated herein by reference from
Form S-8 registration statement, effective April 5, 1994,
registration number 33-77342.
This information is incorporated herein by reference from
Form S-8 registration statement, effective May 23, 1997,
registration number 333-27695.
This information is incorporated herein by reference from
Form 10-K Annual Report filed on January 27, 1996.
This information is incorporated herein by reference from
Form 8-K/A filed on December 14, 1999.
This information is incorporated herein by reference from
Form S-8 registration statement, effective May 15, 1998,
registration number 333-52753.
(b) During the fourth quarter of 1999, the Company filed one report on
Form 8-K. This filing was with regard to the acquisition by the
Company on September 30, 1999 of the outstanding stock of Systems
& Electronics Inc. This initial filing was amended on Form 8-K/A
dated December 14, 1999.
(c) Exhibits
The response to this portion of Item 14 is submitted as a separate
section of this Report.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a separate
section of this Report.
15
SIGNATURES
- ----------
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
annual report to be signed on its behalf by the undersigned thereunto
duly authorized.
ENGINEERED SUPPORT SYSTEMS, INC.
--------------------------------
Dated: January 17, 2000 By: /s/ Gary C. Gerhardt
----------------------- ---------------------------------
GARY C. GERHARDT
Vice Chairman-Administration
and Chief Financial Officer
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Michael F. Shanahan Sr. Chairman of the Board January 17, 2000
- ------------------------------- of Directors and ----------------
MICHAEL F. SHANAHAN SR. Chief Executive Officer
/s/ Gary C. Gerhardt Vice Chairman-Administration and January 17, 2000
- ------------------------------- Chief Financial Officer ----------------
GARY C. GERHARDT
16
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
DIRECTORS
---------
/s/ Michael F. Shanahan Sr. January 17, 2000 /s/ Thomas J. Guilfoil January 17, 2000
- ----------------------------- ---------------- ---------------------------- ----------------
MICHAEL F. SHANAHAN SR. THOMAS J. GUILFOIL
/s/ Gerald A. Potthoff January 17, 2000 /s/ Kenneth E. Lewi January 17, 2000
- ----------------------------- ---------------- ---------------------------- ----------------
GERALD A. POTTHOFF KENNETH E. LEWI
/s/ Gary C. Gerhardt January 17, 2000 /s/ Michael F. Shanahan Jr. January 17, 2000
- ----------------------------- ---------------- ---------------------------- ----------------
GARY C. GERHARDT MICHAEL F. SHANAHAN JR.
/s/ R. Bruce Earls January 17, 2000 /s/ Earl E. Walker January 17, 2000
- ----------------------------- ---------------- ---------------------------- ----------------
R. BRUCE EARLS EARL E. WALKER
/s/ John J. Wichlenski January 17, 2000 /s/ Earl W. Wims January 17, 2000
- ----------------------------- ---------------- ---------------------------- ----------------
JOHN J. WICHLENSKI EARL W. WIMS
/s/ George E. Friel January 17, 2000
- ----------------------------- ----------------
GEORGE E. FRIEL
17
ENGINEERED SUPPORT SYSTEMS, INC.
EXHIBIT INDEX
Page No.
--------
11. Statement Re: Computation of Earnings Per Share
13. Engineered Support Systems, Inc. Annual Report for year ended
October 31, 1999 (the Annual Report). Except for the portions
incorporated herein by reference as evidenced in the Form 10-K,
the Annual Report is furnished for the information of the
Securities and Exchange Commission and is not deemed filed as
part of this Form 10-K.
23. Consent of PricewaterhouseCoopers LLP, Independent Accountants
27. Statement Re: Financial Data Schedule
18