SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant X
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Filed by a Party other than the Registrant |_|
Check the appropriate box
Preliminary Proxy Statement
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X Definitive Proxy Statement
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Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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Diagnostic/Retrieval Systems, Inc. d.b.a. DRS Technologies, Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required
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Fee computed on table below per Exchange Act Rules 14a(6)(i)(4) and 0-11.
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1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total Fee Paid:
________________________________________________________________________________
Fee paid previously with preliminary materials
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- --- Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:___________________________________________________
2) Form, Schedule or Registration Statement No.______________________________
3) Filing party:_____________________________________________________________
4) Date Filed:_______________________________________________________________
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PASTE LOGO
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 6, 1997
To the Stockholders of
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. d.b.a. DRS TECHNOLOGIES, INC.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Diagnostic/Retrieval Systems, Inc. d.b.a. DRS Technologies,
Inc., a Delaware corporation (the "Company"), will be held at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York
at 10:00 A.M., local time, on August 6, 1997, for the following purposes:
(1) To elect two Class II directors, each to hold office for a term of
three years;
(2) To consider and act upon a proposal to change the Company's name
to DRS Technologies, Inc.; and
(3) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Only stockholders of record at the close of business on June 23, 1997 are
entitled to notice of and to vote at the Meeting and any adjournment thereof.
By Order of the Board of Directors,
Diagnostic/Retrieval Systems, Inc.
d.b.a. DRS Technologies, Inc.
/s/ Nancy R. Pitek
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NANCY R. PITEK
Secretary
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YOUR VOTE IS IMPORTANT
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD(S)AS SOON AS POSSIBLE, EVEN IF YOU ARE CURRENTLY
PLANNING TO ATTEND THE MEETING. THIS WILL NOT PREVENT YOU FROM VOTING IN
PERSON, BUT WILL ASSURE THAT YOUR VOTE IS COUNTED IF YOU ARE UNABLE TO
ATTEND THE MEETING.
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PASTE LOGO
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PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 6, 1997
This proxy statement and the accompanying proxy are to be mailed to holders
of Common Stock, $.01 par value (the "Common Stock"), of Diagnostic/Retrieval
Systems, Inc. d.b.a. DRS Technologies, Inc. (the "Company"), commencing on or
about June 27, 1997 in connection with the solicitation of proxies by the Board
of Directors (the "Board") for the 1997 Annual Meeting of Stockholders (the
"Meeting") of the Company to be held Wednesday, August 6, 1997 at 10:00 A.M.,
local time, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919
Third Avenue, New York, New York.
The Board has fixed the close of business on June 23, 1997 as the record
date for determining the stockholders of the Company entitled to vote at the
Meeting. As of June 23, 1997, the Company had outstanding 5,588,349 shares of
Common Stock (exclusive of 421,117 shares held in the treasury, which will not
be voted at the Meeting).
VOTING AND REVOCATION OF PROXIES
If a proxy card is returned by a stockholder properly signed and is not
revoked, the shares of Common Stock represented will be voted by the persons
named on the proxy card, or their substitutes, in accordance with the
stockholder's directions. Stockholders are urged to grant or withhold authority
to vote for the nominees for election as directors and to specify their choice
between approval or disapproval of, or abstention with respect to, any other
matter by marking the appropriate boxes on the proxy card. If a proxy card is
signed and returned without instructions marked on it, it will be voted for the
nominees named on the card and as recommended by the Board of Directors with
respect to other matters.
The execution of a proxy does not affect the right of a stockholder to
attend the Meeting and vote in person. A stockholder giving a proxy may revoke
it at any time before it is voted by giving written notice of its revocation to
the Secretary of the Company at the address indicated above, by executing and
delivering to the Company another proxy dated after the proxy to be revoked or
by attending the Meeting and voting in person.
VOTING RIGHTS
The holders of Common Stock are entitled to one vote for each share held on
the record date to elect directors and one vote per share on all matters for
which a vote of stockholders is required by Delaware law. The presence at the
Meeting, in person or by proxy, of a
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majority of the shares of the Common Stock shall constitute a quorum for the
election of directors and for the transaction of other business at the Meeting.
ELECTION OF DIRECTORS
The Board is divided into three classes: Class I directors, Class II
directors and Class III directors, with each class consisting of as nearly an
equal number of directors as possible. The members of one of the three classes
of directors are elected each year; such directors hold office for three-year
terms and until their successors are elected and qualified.
If a quorum of stockholders is present in person or by proxy at the
Meeting, the holders of Common Stock will elect two Class II directors by a
plurality of the votes cast by such holders. The Class III directors, Messrs.
Jack Rachleff, Stuart F. Platt and William F. Heitmann, will continue to serve
until the expiration of their terms in 1998. The Class I directors, Messrs. Mark
S. Newman, Theodore Cohn and Donald C. Fraser, will continue to serve until the
expiration of their terms in 1999.
Set forth below is certain information concerning the persons nominated by
the Board of Directors for election at the Meeting, as well as the directors
whose terms of office will continue after the Meeting, including their ages, any
positions held with the Company and its subsidiaries, and their business
experience. If any of the nominees listed below are unavailable to stand for
election, an event which is not anticipated, the proxies named on the relevant
proxy card may vote for a substitute nominee(s) chosen by the Board of
Directors.
NOMINEES FOR ELECTION AS CLASS II DIRECTORS
Unless instructed otherwise, the proxies named on the enclosed proxy card
intend to vote the shares of Common Stock that they represent to elect the
following persons as Class II directors for three-year terms of office expiring
at the 2000 Annual Meeting of Stockholders of the Company:
MARK N. KAPLAN--
Partner-Skadden, Arps, Slate, Meagher & Flom LLP
Mark N. Kaplan, age 67, became a director of the Company in 1986. Mr.
Kaplan has been a member of the law firm of Skadden, Arps, Slate, Meagher & Flom
LLP since 1979. Mr. Kaplan also serves as director of American Biltrite Inc.,
Grey Advertising Inc., MovieFone Inc., REFAC Technology Inc., Congoleum
Corporation and Volt Information Sciences, Inc.
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IRA ALBOM--
Senior Vice President-Teleflex, Inc.
Ira Albom, age 68, became a director of the Company in February 1997. Mr.
Albom has been employed since 1977 by Teleflex, Inc., a defense and aerospace
company, and has been a Senior Vice President at Teleflex since 1987. Mr. Albom
has over forty years of operations and management experience in the defense and
aerospace industry. Since 1987, he has been actively involved in leading
diligence teams and negotiating terms of mergers and acquisitions, as well as
negotiating major contracts for Teleflex's Defense/Aerospace Group. Mr. Albom
also serves as a director of Continental Bank of New Jersey.
CLASS III DIRECTORS CONTINUING IN OFFICE FOR TERMS EXPIRING AT THE
1998 ANNUAL MEETING OF STOCKHOLDERS OF THE COMPANY
JACK RACHLEFF--
Jack Rachleff, age 83, became a director of the Company in 1968. Prior to
his retirement in December, 1996, Mr. Rachleff was President of Fablok Mills,
Inc., a textile manufacturer. Mr. Rachleff was employed by Fablok Mills since
1952 and was its President since 1982.
STUART F. PLATT--
Vice President of the Company; President-DRS Data Systems Group
RADM Stuart F. Platt, USN (Ret.), age 63, became a director of the Company
in 1991 and in July 1992 became the President of DRS Precision Echo, Inc., a
wholly-owned subsidiary of the Company ("Precision Echo"). In May 1994, he
became a Vice President of the Company and presently serves as the President of
the Company's Data Systems Group, of which Precision Echo is a part. Rear
Admiral Platt held various high level positions as a military officer in the
Department of the Navy, retiring as Competition Advocate General of the Navy in
1987.
WILLIAM F. HEITMANN--
Vice President-NYNEX Corporation
William F. Heitmann, age 48, became a director of the Company in February,
1997. Mr. Heitmann has been employed by NYNEX Corporation and its predecessors
since 1971, and has been a Vice President of NYNEX since 1996. Mr. Heitmann is
involved in merger integration activities, including the merger of NYNEX and
Bell Atlantic. Previously, he was president and chief investment officer of
NYNEX Asset Management Co. Prior to that, he was corporate director of finance
and president of NYNEX Credit Co. Mr. Heitmann also serves as director for NYNEX
Asset Management Co. and NYNEX Credit Co.
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CLASS I DIRECTORS, CONTINUING IN OFFICE FOR TERMS EXPIRING AT THE
1999 ANNUAL MEETING OF STOCKHOLDERS OF THE COMPANY
MARK S. NEWMAN--
Chairman of the Board, President and Chief Executive Officer of the Company
Mark S. Newman, age 47, became a director of the Company in 1988. Mr.
Newman has been employed by the Company since 1973, was named Vice
President-Finance, Chief Financial Officer and Treasurer in 1980 and Executive
Vice President in 1987. In May 1994, Mr. Newman became the President and Chief
Executive Officer of the Company and in August 1995, he became Chairman of the
Board.
THEODORE COHN--
Management Consultant
Theodore Cohn, age 74, became a director of the Company in 1980. He has
been an independent management consultant since 1974.
DONALD C. FRASER--
Professor-Boston University
The Honorable Dr. Donald C. Fraser, age 56, became a director of the
Company in 1993. He currently serves as Director of the Boston University
Photonics Center and as Professor of Engineering and Physics at such
university. From 1991 to 1993, Dr. Fraser was the Principal Deputy Under
Secretary of Defense, Acquisition, with primary responsibility for managing the
Department of Defense acquisition process, including setting policy and
executing programs. He also served as Deputy Director of Operational Test and
Evaluation for Command, Control, Communication and Intelligence, from 1990 to
1991, a position which included top level management and oversight of the
operational test and evaluation of all major Department of Defense
communication, command and control, intelligence, electronic warfare, space and
information management system programs. From 1981 to 1988, Dr. Fraser was
employed as the Vice President, Technical Operations at Charles Stark Draper
Laboratory and, from 1988 to 1990, as its Executive Vice President.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES.
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PROPOSAL TO CHANGE THE NAME OF THE COMPANY TO
"DRS TECHNOLOGIES, INC."
At the Meeting, the Company will seek stockholder approval to amend its
Amended and Restated Certificate of Incorporation (the "Certificate of
Incorporation") to change its name to "DRS Technologies, Inc." (the "Name Change
Amendment"). The Board believes that "DRS Technologies, Inc." better reflects
the broad scope of the Company's business than its current name.
This name change is part of an overall corporate identity program for the
Company and several of its first-tier, second-tier and third-tier subsidiaries.
Many of the Company's customers, suppliers and others have informally referred
to the Company as "DRS" for many years. The purpose of the corporate identity
program is to establish "DRS" as the consistent identity for the Company and its
subsidiaries. As part of this program, the names of many of the Company's
subsidiaries have been changed so that each name begins with "DRS." In January,
1997, the Board authorized the Company to adopt "DRS Technologies, Inc." as its
trade name. Adoption of the Name Change Amendment to change the Company's legal
name to "DRS Technologies, Inc." will be one of the last steps to fully
implement the corporate identity program.
If the Name Change Amendment is approved by the stockholders, Article FIRST
of the Company's Certificate of Incorporation will be amended to read as
follows:
FIRST: The name of the corporation (hereinafter called the
"corporation") is DRS Technologies, Inc.
In order for the Name Change Amendment to go into effect, the Name Change
Amendment must be approved by the affirmative vote of a majority of the
stockholders entitled to vote at the Meeting. Under applicable Delaware law,
abstentions and broker non-votes will have the same effect as a vote against the
Name Change Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE NAME CHANGE AMENDMENT.
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SECURITY OWNERSHIP
The following table shows as of June 3, 1997, the number of shares of
Common Stock beneficially owned by each director and nominee, each executive
officer and by all directors, nominees and executive officers of the Company as
a group.
COMMON STOCK(a)
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PERCENT
SHARES OF CLASS
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Mark S. Newman 231,689(b)(c)(d) 4.1
Ira Albom 12,000 0.2
Theodore Cohn 10,900(c) 0.2
Donald C. Fraser 5,000(c) 0.1
William F. Heitmann -- --
Mark N. Kaplan 6,000(c) 0.1
Stuart F. Platt 27,810(c) 0.5
Jack Rachleff 6,000(c) 0.1
Paul G. Casner, Jr. 33,048(c) 0.6
Nancy R. Pitek 15,627(b)(c) 0.3
Richard Ross 22,858(c) 0.4
All directors and executive
officers as a group (11 persons) 357,905(b)(c)(d) 6.2
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(a) As of June 3, 1997, the Company had outstanding 5,588,349 shares of Common
Stock (excluding 421,117 shares held in the treasury). Unless otherwise
noted, each director and nominee had sole voting power and investment power
over the shares of Common Stock indicated opposite such director's and
executive officer's name.
(b) Includes 13,027 shares of Common Stock held by the trustee of the Company's
Retirement/Savings Plan. Mr. M. Newman and Ms. N. Pitek share the power to
direct the voting of such shares as members of the administrative committee
of such plan. Mr. M. Newman and Ms. N. Pitek disclaim beneficial ownership
as to and of such shares.
(c) Includes shares of Common Stock which might be purchased upon exercise of
options which were exercisable on June 3, 1997 or within 60 days
thereafter, as follows: Mr. T. Cohn, 5,000 shares; Dr. D. Fraser, 5,000
shares; Mr. M. Kaplan, 5,000 shares; Mr. J. Rachleff, 5,000 shares; Mr. M.
Newman, 120,000 shares; Mr. P. Casner, Jr., 20,000 shares; Ms. N. Pitek,
1,600 shares; Mr. S. Platt, 24,000 shares; Mr. R. Ross, 20,000 shares; and
all directors and executive officers as a group, 205,600 shares.
(d) Includes 4,800 shares of Common Stock held by Mr. M. Newman as custodian
for his daughter, over which Mr. M. Newman has sole voting and investment
power.
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The following table sets forth certain information, as of June 3, 1997,
with respect to each person, other than executive officers and directors of the
Company, which has advised the Company that it may be deemed to be the
beneficial owner (within the meaning of Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended) of more than
five percent of a class of voting securities of the Company. Such information
has been derived from statements on Schedule 13D or 13G filed with the
Securities and Exchange Commission by the person(s) listed below.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
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<S> <C> <C>
First Pacific Advisors, Inc.................................. 1,670,309(a) 26.9
10301 West Pico Blvd., Los Angeles, CA 90064
Palisade Capital Management L.L.C............................ 885,924(b) 15.9
One Bridge Plaza, Suite 695, Fort Lee, NJ 07024
Michael N. Taglich........................................... 529,850(c) 9.5
Taglich Brothers, D'Amadeo, Wagner, & Company,
Incorporated
100 Wall Street, New York, NY 10005
David E. Gross............................................... 335,701(d) 6.0
27 Cameron Road, Saddle River, NJ 07458
</TABLE>
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(a) Includes 508,475 shares of Common Stock from the assumed conversion of
$4,500,000 principal amount of the Company's 9% Senior Subordinated
Convertible Debentures due 2003, 104,734 shares of Common Stock from the
assumed conversion of $1,571,000 principal amount of the Company's 8-1/2%
Convertible Subordinated Debentures due 1998 and 1,057,100 shares of Common
Stock beneficially owned by First Pacific Advisors, Inc. ("First Pacific")
through control of FPA Capital Fund, Inc. ("FPA"), Source Capital, Inc.
("Source Capital") and FPA New Income, Inc. ("New Income") to which First
Pacific serves as investment advisor. The Company has been advised that
First Pacific has sole voting power with respect to 300,000 shares and
shared dispositive power with respect to 1,670,309 shares, FPA has sole
voting power and shared dispositive power with respect to 510,000 shares,
Source Capital has sole voting power and shared dispositive power with
respect to 273,923 shares and New Income has sole voting power and shared
dispositive power with respect to 282,789 shares.
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(b) Represents shares of Common Stock held by Palisade Capital Management
L.L.C., acting as investment advisor to (i) Chrysler Corp. Emp. #1 Pension
Plan Dtd. 4-1-89, (ii) IBM Corp. Retirement Plan Trust Dtd. 12-18-45, (iii)
G.E. Pension Trust, and (iv) NYNEX Master Pension Trust Dtd. 1-1-84.
(c) Consists of 312,450 shares of Common Stock held by Lancer Partners, Inc.
("Lancer Partners"), 11,500 shares of Common Stock held by Antrade, N.V.
("Antrade"), 15,200 shares of Common Stock held by Album N.V. ("Album"),
11,600 shares of Common Stock held by Ralco Investments Group ("Ralco"),
156,850 shares of Common Stock held by Lancer Offshore, Inc. ("Lancer
Offshore") and 22,250 shares of Common Stock held by Michael Lauer. The
Company has been advised that Michael Lauer has sole voting power and sole
dispositive power with respect to 22,250 shares. Michael N. Taglich and
Michael Lauer serve as general partners of Lancer Partners and managing
partners of Lancer Offshore. The Company has been advised that Messrs.
Taglich and Lauer also share voting and dispositive authority over the
shares held by Album, Antrade and Ralco resulting in shared voting and
shared dispositive power with respect to a total of 507,600 shares.
(d) Includes 282,381 shares of Common Stock held by Mr. Gross for which he has
sole voting and dispositive power. Also included are 26,000 shares of
Common Stock held by Mr. Gross' wife personally and 27,320 shares of Common
Stock held by her as custodian for her two children. Mr. Gross has neither
voting power nor investment power over the shares of Common Stock held by
his wife, either personally or as custodian for her children, and disclaims
any beneficial interest in such shares.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission ("SEC") and the American Stock Exchange. Officers, directors
and greater-than-ten-percent shareowners are required by SEC regulation to
furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file Forms 5 for the Company's most recent fiscal year, the
Company believes that all its officers, directors, and greater-than-ten-percent
beneficial owners complied with all filing requirements applicable to them with
respect to transactions during fiscal 1997, except that: Paul G. Casner, an
executive officer of the Company, failed to file on a timely basis one report
relating to the common stock of the Company beneficially owned by him pursuant
to a grant of incentive stock options and one report relating to the common
stock of the Company beneficially owned by him pursuant to a stock bonus award;
and Ira Albom, a director of the Company, failed to file on a timely basis one
report relating to the common stock of the Company beneficially owned by him at
the time he became a director.
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THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
The Board of Directors has appointed from its members an Audit Committee,
an Executive Compensation Committee and a Stock Option Committee with the
following areas of responsibility:
The Audit Committee oversees, and reports to the Board concerning the
general policies and practices of the Company and its subsidiaries with
respect to accounting, financial reporting and internal controls. It also
maintains a direct exchange of information between the Board and the
Company's independent auditors. Until May 29, 1996, the Audit Committee
consisted of Theodore Cohn, Mark N. Kaplan, Leonard Newman and Jack
Rachleff. At a meeting of the Board on May 29, 1996, the composition of
the Audit Committee was changed to Theodore Cohn, Mark N. Kaplan and Jack
Rachleff. The Audit Committee held four meetings during fiscal 1997.
The function of the Executive Compensation Committee (the
"Compensation Committee") is to establish the compensation of the Chief
Executive Officer and the other executive officers of the Company. During
fiscal 1997, the Compensation Committee consisted of Theodore Cohn, Donald
C. Fraser, Mark N. Kaplan and Jack Rachleff. The Compensation Committee met
five times during fiscal 1997.
The function of the Stock Option Committee is to administer the
Company's 1991 Stock Option Plan and the 1996 Omnibus Plan. In compliance
with Rule 16b-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, no person appointed to the Stock Option
Committee, for at least one year prior to such appointment or during such
appointment, will be granted or awarded equity securities of the Company or
any of its affiliates pursuant to certain plans of the Company or its
affiliates, except as permitted by Rule 16b-3. Until August 7, 1996, the
Stock Option Committee consisted of Donald C. Fraser, Mark N. Kaplan and
Jack Rachleff. At a meeting of the Board on August 7, 1996, the composition
of the Stock Option Committee was changed to Donald C. Fraser and Jack
Rachleff. The Stock Option Committee met one time during fiscal 1997.
The Board held seven meetings during the Company's fiscal year ended
March 31, 1997. In the same period, no director of the Company attended
fewer than 75% of the meetings of the Board or meetings of the committees
on which the director served during the period of his service as a
director.
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COMPENSATION OF DIRECTORS
Directors who are employees of the Company or its subsidiaries do not
receive directors' fees. During fiscal 1997, each director who was not an
employee of the Company or one of its subsidiaries received a retainer of
$15,000 for his services, plus a fee of $2,500 for each meeting of the Board
attended. Such directors who also served on committees of the Board received an
additional $1,250 for services rendered in connection with committee meetings
attended which were not held on the same day as meetings of the full Board.
On February 7, 1996, the Stock Option Committee adopted and the Board
ratified resolutions which instituted an arrangement under the Company's 1991
Stock Option Plan by which each director who was not or has never been an
employee of the Company or one of its subsidiaries (a "Non-Employee Director")
as of such date would be (a) immediately granted a Non-Qualified Stock Option to
purchase 5,000 shares of Common Stock of the Company and (b) on the date of each
annual meeting, commencing with the annual meeting following the annual meeting
at which these resolutions were approved, granted a Non-Qualified Stock Option
to purchase 2,500 shares of Common Stock. These resolutions were approved by the
stockholders of the Company on August 7, 1996. The Company's 1996 Omnibus Plan
(the "Plan") was approved by the Board on June 17, 1996 and approved by the
stockholders of the Company on August 7, 1996. The Non-Employee Directors
described above are also eligible under the Plan to receive grants of options to
purchase 2,500 shares of Common Stock on the dates described above. However,
provisions in each of the resolutions and the Plan state that a Non-Employee
Director may not be granted options to purchase more than 2,500 shares of Common
Stock under the Plan or any other stock option plan of the Company during any
tax year of the Company, thus avoiding any potential for overlap.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is currently occupying and leasing a building at 138 Bauer
Drive (the "LDR Building") owned by LDR Realty Co. ("LDR"), a partnership wholly
owned, in equal amounts, by David E. Gross, a co-founder and the former
President and Chief Technical Officer of the Company, and Leonard Newman, a
co-founder and the former Chairman of the Board, Chief Executive Officer and
Secretary of the Company and the father of Mark S. Newman, the current Chairman
of the Board, President and Chief Executive Officer of the Company. The current
renegotiated lease agreement is for a ten-year term beginning June 1, 1988 at a
monthly rental of $19,439. The Company is required to pay all real estate taxes
and is responsible for all repairs and maintenance, structural and otherwise,
subject to no cumulative limits. The terms of the LDR lease were determined by
the Company and LDR, based on the formal appraisal of an appraisal firm and
informal appraisals from real estate brokers in the area. Such appraisals
indicated that the rental provided for in the LDR lease is not in excess of the
range of fair market rentals in the relevant area.
Skadden, Arps, Slate, Meagher & Flom LLP, a law firm of which Mark N.
Kaplan, a director, is a member, provided legal services to the Company during
its 1997 fiscal year.
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In July 1993, the Company and Donald C. Fraser, a director, entered into a
consulting agreement pursuant to which Dr. Fraser will provide consultation to
the Company concerning defense technologies. Under the terms of the consulting
agreement, as amended, consulting services are to be provided to the Company on
an as-requested basis, for a fee of $1,500 per day plus approved travel and
miscellaneous expenses. During fiscal 1997, total remuneration paid to Dr.
Fraser under this agreement approximated $14,161.
In October 1993, the Company issued a Demand Grid Note (the "Grid Note") in
the principal amount of $100,000 to Paul G. Casner, Jr., Vice President of the
Company and President of the Company's Electronic Systems Group. The loan bears
interest at the applicable federal rate necessary under the Internal Revenue
Code of 1986, as amended, to avoid an imputed rate of interest.
In May 1995, the Company became a party to a loan with Mark S. Newman, the
Chairman of the Board, President and Chief Executive Officer of the Company, to
provide an amount equal to the exercise price of incentive stock options which
had been granted to him under the Company's 1981 Incentive Stock Option Plan.
The loan is evidenced by a promissory note in the principal amount of $104,500
and bears interest at an annual rate of 8%. The loan is payable on the earlier
of (i) the sale or disposition of the shares of stock obtained pursuant to the
exercise of the stock options, (ii) cessation of Mr. M. Newman's employment by
the Company or (iii) May 25, 2005. Interest is payable on May 25 of each
calendar year or at such earlier time as the loan is repaid.
On March 28, 1996, the Company entered into an Employment, Non-Competition
and Termination Agreement (the "Newman Agreement") with Leonard Newman, the
co-founder and former Chairman of the Board and Chief Executive Officer of the
Company and the father of Mark S. Newman, the current Chairman of the Board,
President and Chief Executive Officer of the Company. Pursuant to the Newman
Agreement, Mr. L. Newman received a lump sum payment of approximately $2.0
million. Under the terms of the Newman Agreement, Mr. L. Newman has agreed to
provide consulting services, as required from time to time, to the Company for a
five-year period and also has agreed not to compete with the Company during this
same period. Also, under the Newman Agreement, the Company will continue to
provide to Mr. L. Newman, on an annual basis, the sum sufficient to pay the
scheduled premium on a keyman policy previously transferred to Mr. L. Newman.
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EXECUTIVE COMPENSATION
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended March 31, 1997, 1996 and 1995, of those persons who were, at March 31,
1997, (i) the chief executive officer and (ii) the four most highly compensated
executive officers of the Company other than the chief executive officer (the
"Named Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(j) LONG-TERM COMPENSATION AWARDS
RESTRICTED
STOCK ALL OTHER
AWARD(S)($) COMPENSATION ($)
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) (i) OPTIONS (#) (a) (b) (c)
- --------------------------- ----------- ---------- --------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Mark S. Newman 1997 342,739 192,000 48,000 50,000(f) 30,699
Chairman of the Board, 1996 295,899 160,000 66,199 0 21,866
President & Chief 1995 281,344 120,000 0 150,000(d) 19,440
Executive Officer
Nancy R. Pitek 1997 134,127 60,000 15,000 5,000(g) 8,476
Vice President, Finance 1996 111,466 29,750 8,688 0 5,577
Treasurer & Secretary
Paul G. Casner, Jr. 1997 209,139 56,000 14,000 10,000(g) 39,621(h)
Vice President & 1996 198,000 64,000 26,480 0 57,887(h)
President--Electronic 1995 198,000 40,000 0 0 32,201(h)
Systems Group
Stuart F. Platt 1997 255,008 80,000 20,000 10,000(g) 19,802
Vice President & 1996 255,008 80,000 33,099 50,000(e) 8,206
President--Data 1995 256,970 50,000 0 0 4,414
Systems Group
Richard Ross 1997 211,808 63,200 15,800 10,000(g) 12,723
Vice President & 1996 209,674 60,000 24,829 50,000(e) 9,740
President--Electro-Optical 1995 198,618 36,000 0 0 9,070
Systems Group
</TABLE>
- --------------
(a) Includes the amounts of employer contributions which vested pursuant to the
Company's Retirement/Savings Plan (See "Retirement/Savings Plan") in the
fiscal years ended March 31, 1997, 1996 and 1995, respectively, in the
accounts of the Named Officers, as follows: Mr. M. Newman, $4,920, $4,629
and $4,838; Ms. N. Pitek, $2,536 and $1,275; Mr. P. Casner, Jr., $3,820,
$3,706 and $3,000; Mr. S. Platt, $2,748, $3,556 and $0; and Mr. R. Ross,
$3,890, $3,696 and $3,486.
12
<PAGE>
(b) Includes the fixed annual amounts, computed on a fiscal year basis,
provided by the Company for the benefit of the Named Officers, to reimburse
such officers for the amounts of medical and hospital expenses actually
incurred by them which are not covered or paid to them under the Company's
group medical and hospitalization plans during the fiscal years ended March
31, 1997, 1996 and 1995, respectively, as follows: Mr. M. Newman, $10,000,
$7,000 and $4,500; Ms. N. Pitek, $5,000 and $4,250; Mr. P. Casner, Jr.,
$5,000, $1,250 and $0; Mr. S. Platt, $5,000, $4,250 and $4,000; and Mr. R.
Ross, $5,000, $4,250 and $4,000.
(c) The Company pays the cost of policies of life insurance and long-term
disability insurance, in excess of the amounts furnished under the group
coverage provided to all employees, for the benefit of the Named Officers.
In addition, the Company pays premiums on policies maintained in connection
with its Supplemental Executive Retirement Plan (see "Supplemental
Executive Retirement Plan"). Under certain of the life insurance policies,
the Company is a beneficiary to the extent of the premiums paid. The total
amounts of the premiums paid by the Company or the economic benefit to the
Named Officers for such insurance policies during the fiscal years ended
March 31, 1997, 1996 and 1995, respectively, were as follows: Mr. M.
Newman, $15,779, $10,237 and $10,102; Ms. N. Pitek, $940 and $0; Mr. P.
Casner, Jr., $4,685, $531, and $124; Mr. S. Platt, $10,599, $400 and $414;
and Mr. R. Ross, $3,833, $1,794 and $1,584.
(d) Represents non-qualified stock options to purchase 50,000 shares of Common
Stock and incentive stock options to purchase 100,000 shares of Common
Stock issued to Mr. M. Newman under the Company's 1991 Stock Option Plan.
Such options, granted on June 9, 1994, became exercisable six months from
the date of grant with respect to 20% of such options and are further
exercisable cumulatively at 20% per year on each of the first four
anniversaries of the date of grant.
(e) Represents incentive stock options to purchase shares of Common Stock
issued to the Named Officers under the Company's 1991 Stock Option Plan.
Such options, granted on February 7, 1996, became exercisable six months
from the date of grant with respect to 20% of such options and are further
exercisable cumulatively at 20% per year on each of the first four
anniversaries of the date of grant.
(f) Represents non-qualified stock options to purchase 50,000 shares of Common
Stock issued to Mr. M. Newman under the Company's 1996 Omnibus Plan. Such
options, granted on November 26, 1996, become exercisable cumulatively at
25% per year on each of the first four anniversaries of the date of grant.
(g) Represents total incentive and non-qualified stock options to purchase
shares of Common Stock issued to the Named Officers under the Company's
1996 Omnibus Plan. Such options, granted on November 26, 1996, become
exercisable three years from the date of grant.
13
<PAGE>
(h) Includes forgiveness of principal and interest owed pursuant to the Grid
Note in an amount equal to $26,125, $52,400 and $29,077, during the fiscal
years ending March 31, 1997, 1996 and 1995, respectively.
(i) During the fiscal years ending March 31, 1997 and 1996, respectively, a
portion (15% or 20%) of the total bonus awarded to the Named Officers was
payable in shares of restricted stock of the Company. The shares are
restricted for a period of three years and may not be sold or transferred
until May 20, 2000 and May 29, 1999, respectively. In the event a Named
Officer leaves the employ of the Company before such time as the
restrictions lapse, all rights to the shares may be forfeited.
(j) The dollar value of perquisites and other personal benefits provided for
the benefit of the Named Officers during the fiscal years ended March 31,
1997, 1996 and 1995, respectively, did not exceed the lesser of either
$50,000 or 10% of the total annual salary and bonus reported for the Named
Officers in those periods. There were no other amounts of compensation
required to be reported as "Other Annual Compensation" by Item 402 of
Regulation S-K of the Securities and Exchange Commission earned by the
Named Officers.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
In April 1994, the Company entered into an agreement with Richard Ross
which provided for a severance benefit in the event of i) termination of his
employment other than for cause, ii) diminution in compensation and/or
responsibilities and iii) the change in ownership of the Company or Photronics
Corp., a wholly-owned subsidiary of the Company. The severance benefit is equal
to 30 months of Mr. Ross' then current salary plus reimbursement of outplacement
expenses up to a maximum of $15,000.
In November, 1996, the Company entered into an agreement with Mark S.
Newman (the "Employment Agreement"), which provides for severance benefits in
the event of (i) termination of his employment by the Company other than for
cause, (ii) termination of the Employment Agreement by Mr. Newman for good
reason, as defined therein, or (iii) a change in control of the Company.
Severance benefits in the event of termination include continuation of salary
and certain benefits for the remaining term of the Employment Agreement or
twelve (12) months, whichever is greater, plus payment of a pro-rata portion of
the bonus earned for the previous fiscal year. In the event of a change in
control, the severance benefit would be equal to 2.99 times Mr. Newman's base
salary plus the bonus earned in the previous fiscal year. In either case, the
Company also would be required to provide outplacement assistance to Mr. Newman.
In addition, all stock options granted to Mr.Newman would immediately vest and
would become exerciseable during the twelve (12) month period following
termination.
14
<PAGE>
RETIREMENT/SAVINGS PLAN
The Summary Compensation Table above includes amounts deferred by the Named
Officers pursuant to the Company's Retirement/Savings Plan under Section 401(k)
of the Internal Revenue Code of 1986. The value of a participant's contributions
to the Retirement/Savings Plan is fully vested at all times; the value of
employer contributions becomes 50% vested after the employee has completed three
years of service, 75% vested after completion of four years of service, and 100%
vested after completion of five years of service.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
On February 1, 1996, the Company established a Supplemental Executive
Retirement Plan (the SERP) for the benefit of certain key executives which
includes the Chief Executive Officer and the four most highly compensated
executive officers of the Company. Pursuant to the SERP, the Company will
provide retirement benefits to each key executive, based on years of service and
final average annual compensation as defined therein. In addition, the Company
advances premiums for life insurance policies which provide a death benefit
equal to five times the participants' salary at time of death. In the event of a
change in control, as defined therein, benefits become fully vested. The SERP is
non-contributory and unfunded.
MEDICAL REIMBURSEMENT PLAN
At the beginning of each calendar year, the Company accrues fixed annual
amounts for the benefit of certain officers to be paid as needed to reimburse
such officers for the amounts of medical and hospital expenses actually incurred
by such officers which are not covered under the Company's group medical and
hospitalization plans. The amount accrued for the benefit of each such officer
is included in such officer's compensation for tax purposes regardless of
whether such accrued amount is actually paid to him. The excess of the amount
accrued over the amounts paid is used to offset the administrative expenses
payable by the Company to the medical insurance carrier.
15
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 1996 Omnibus Plan to the Named Officers during the
Company's last fiscal year.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM ($)
------------------------------------------------------------ -----------------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED(#) 1997 ($/SH) DATE 0% 5%(c) 10%(c)
---- ---------- -------------- -------- ----------- ----- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Mark S. Newman 50,000 (a) 32.07% $9.81 11/25/06 $40,750 $374,725 $887,301
Nancy R. Pitek 5,000 (b) 3.21% $9.81 11/25/06 $4,075 $37,473 $88,730
Paul G. Casner 10,000 (b) 6.41% $9.81 11/25/06 $8,150 $74,945 $177,460
Stuart F. Platt 10,000 (b) 6.41% $9.81 11/25/06 $8,150 $74,945 $177,460
Richard Ross 10,000 (b) 6.41% $9.81 11/25/06 $8,150 $74,945 $177,460
</TABLE>
- -----------
(a) The options granted were for shares of the Company's Common Stock at an
exercise price equal to the fair market value of Common Stock on the date
of grant. The options, granted on November 26, 1996, become exercisable in
increments of 25% per year on each of the first four anniversaries of the
date of grant.
(b) The options granted were for shares of the Company's Common Stock at an
exercise price equal to the fair market value of Common Stock on the date
of grant. The options, granted on November 26, 1996, become exercisable
three years from the date of grant.
(c) The amounts shown under these columns are the result of calculations at the
5% and 10% rates required by the Securities and Exchange Commission and are
not intended to forecast future appreciation of the Company's stock price.
16
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the aggregate stock options
exercised by the Named Officers during fiscal 1997 as well as the unexercised
options to purchase the Company's Common Stock granted through March 31, 1997
under the Company's 1991 Stock Option Plan and the 1996 Omnibus Plan to the
Named Officers and held by them at that date.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT MARCH 31, 1997 MARCH 31, 1997 ($) (a)
------------------------- -----------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark S. Newman -- -- 120,000 80,000 $878,600 $260,275
Nancy R. Pitek -- -- 1,600 5,400 $ 11,200 $ 6,863
Paul G. Casner, Jr. 20,000 $214,800 20,000 20,000 $212,300 $114,275
Stuart F. Platt -- -- 24,000 41,000 $ 85,500 $ 32,000
Richard Ross 4,000 $ 28,625 20,000 41,000 $ 57,500 $ 32,000
</TABLE>
- -------
(a) Based on the difference between the exercise price of each grant and the
closing price on the American Stock Exchange-Composite Transactions of the
Company's Common Stock on that date, which was $10.625.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, the members of the Board's Executive Compensation
Committee were Theodore Cohn, Donald C. Fraser, Mark N. Kaplan and Jack
Rachleff. Skadden, Arps, Slate, Meagher & Flom LLP, a law firm of which Mr.
Kaplan is a director, provided legal services to the Company during its 1997
fiscal year.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During fiscal 1997, the Compensation Committee established the compensation
of the Chief Executive Officer of the Company. The bonus awards of the Named
Officers in respect of the 1997 fiscal year were determined at a meeting of the
Compensation Committee as constituted on May 21, 1997. See "The Board of
Directors and Certain Committees." In determining the individual elements of
compensation, the Compensation Committee strives to enable the Company to
attract and retain key executives critical to the long-term success of the
Company and each of its subsidiaries, provide compensation opportunities which
are comparable to those offered by similar companies, reward long-term strategic
management and the enhancement of stockholder value and create a
performance-oriented environment.
17
<PAGE>
In order to meet the foregoing objectives, the Compensation Committee has
attempted to design and choose components of compensation. The Compensation
Committee consulted with Compensation Resources, Inc. to assist in this process
and provide competitive information, advice, documentation and recommendations
relating to compensation issues. Compensation packages consist of cash, certain
benefits and equity-based compensation. The Company's compensation provides for
competitive base salaries which reflect individual performance, level of
responsibility and are based on compensation paid by companies of relatively
similar size in the same industry as that of the Company. Annual bonuses, when
given, are linked to the financial performance of the Company and its
subsidiaries as a whole, job performance and the meeting of specified goals.
Also included are plans which reward the enhancement of long-term values to the
Company's stockholders. The other components of the Company's compensation focus
on both short-term and long-term performance, rewarding profitability and growth
in stockholder value and delivering competitive levels of compensation.
The compensation of the Chief Executive Officer was based on the policies
described above. The Chief Executive Officer's compensation for the fiscal year
ending March 31, 1997 was based on a comparison of compensation provided to
chief executive officers and other members of senior management of companies of
relatively similar size within the same industry as that of the Company. The
bonus award for fiscal 1997 was computed on the basis of a formula that applied
a weighted performance factor to a target award established for the Chief
Executive Officer's salary level. The weighted performance factor was derived as
a result of the Chief Executive Officer's achievement of certain Company and
individual performance targets including, but not limited to, the achievement of
a certain level of consolidated earnings before interest and income taxes for
fiscal 1997.
For fiscal 1997, the Chief Executive Officer recommended the compensation,
including the bonus awards, for the other Named Officers, based on substantially
the same criteria as described above. Bonus awards for the other Named Officers
were computed by the Committee on a similar basis as that used for the Chief
Executive Officer using specific target awards that had been established for
each individual's salary level.
The Compensation Committee has not formally addressed the restrictions
under Section 162(m) of the Internal Revenue Code because the Compensation
Committee does not anticipate paying compensation to its executive officers in
an amount to which Section 162(m) would apply.
Mark N. Kaplan, Chairman
Theodore Cohn
Donald C. Fraser
Jack Rachleff
18
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock against
the total return of the AMEX Market Index and a peer group index consisting of
companies comprising the Standard Industrial Classification (SIC) Codes 3812,
Search and Navigation Equipment and 3827, Optical Instruments and Lenses. A
listing of the companies included in these SIC Codes is available through
publications, such as the Standard Industrial Classification Manual, and
computer data bases, such as Dialog Information Systems. Prior to the start of
the Company's 1997 fiscal year, the Company had two classes of common stock:
Class A Common Stock and Class B Common Stock. At the start of the Company's
1997 fiscal year, the Class A Common Stock and the Class B Common Stock were
reclassified into a single class of stock, the Common Stock. The information in
the line graph for the cumulative total stockholder return on the Company's
Common Stock for fiscal years prior to the 1997 fiscal year represents the
weighted average of the cumulative total stockholder returns for both the Class
A Common Stock and the Class B Common Stock for those fiscal years.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. D.B.A.
DRS TECHNOLOGIES, INC. ("DRS") COMMON STOCK
AMEX MARKET INDEX AND PEER GROUP INDEX
--GRAPHICAL REPRESENTATION OF DATA TABLE BELOW--
1992 1993 1994 1995 1996 1997
------ ------ ------ ------ ------ ------
DRS Common Stock 100.00 165.78 177.25 249.83 373.32 499.73
AMEX Market Index 100.00 107.57 110.85 116.91 141.34 142.75
Peer Group 100.00 122.64 142.32 161.41 229.04 215.02
- --------
* Assumes that the value of the investment in DRS Common Stock and each index
was $100 on April 1, 1991 and that all dividends were reinvested.
19
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has appointed KPMG Peat Marwick LLP
as independent public accountants of the Company for the year ending March 31,
1998. The Company has been advised by KPMG Peat Marwick LLP that neither that
firm nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between independent
certified public accountants and clients. KPMG Peat Marwick LLP will have a
representative at the Meeting who will have an opportunity to make a statement,
if he or she so desires, and who will be available to respond to appropriate
questions.
STOCKHOLDERS' PROPOSALS
Any stockholder who desires to submit a proposal for inclusion in the
Company's proxy materials for the 1998 Annual Meeting of Stockholders must
comply with the requirements concerning both the eligibility of the proponent
and the form and substance of the proposal established by applicable law and
regulations. Such proposal must be received by the Company at its offices at 5
Sylvan Way, Parsippany, New Jersey 07054 no later than the close of business on
February 27, 1998.
The Advance Notice Provisions of the By-Laws provide that stockholders are
required to give advance notice to the Company of (i) any stockholder-proposed
director nomination or (ii) any business to be introduced by a stockholder at
any annual meeting. The Advance Notice Provisions provide that any stockholder
entitled to vote in the election of directors generally may nominate one or more
persons for election as director or directors at an annual meeting only if
written notice of such stockholder's intent has been given to the Secretary of
the Company not less than 60 days nor more than 90 days prior to the anniversary
date of the immediately preceding annual meeting. In the event the annual
meeting is called for a date that is not within 30 days before or after such
anniversary date, the stockholder's written notice of such intent must be given
within 10 days before or after such anniversary date. In the case of a special
meeting of stockholders called for the purpose of electing directors, to be
timely, a stockholder's notice must be delivered to or mailed and received not
later than the close of business on the tenth day following the day on which
notice of the date of the special meeting was mailed or public disclosure of the
date of the special meeting was made by the Company, whichever first occurs. The
Chairman of the meeting may determine that the nomination of any person was not
made in compliance with the Advance Notice Provisions.
The Advance Notice Provisions further provide that, for business to be
properly introduced by a stockholder of the Company where such business is not
specified in the notice of meeting or brought by or at the direction of the
Board, the stockholder must have given notice not less than 60 nor more than 90
days prior to the anniversary date of the immediately preceding annual meeting
of the stockholders. In the event the annual meeting is called for a date that
is not within 30 days before or after such anniversary date, notice by the
stockholder must be given 10 days before or after such anniversary date. The
Chairman of the Board may, if the facts warrant,
20
<PAGE>
determine and declare that any business was not properly brought before such
meeting and such business will not be transacted.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, the
proxies confer discretionary authority with respect to acting thereon, and the
persons named in such proxies intend to vote, act and consent in accordance with
their best judgment with respect thereto.
SOLICITATION EXPENSES
The costs of this solicitation will be paid by the Company. Proxies will be
solicited principally by mail, but some telephone, telegraph or personal
solicitations of stockholders may be made by officers and employees of the
Company. Officers or employees of the Company who make or assist in such
solicitations will receive no compensation for doing so other than their regular
salaries, but may be reimbursed for out-of pocket expenses in connection with
the solicitation. The Company will request brokers, banks and other custodians
or fiduciaries holding shares in their names or in the names of nominees to
forward copies of the proxy soliciting materials to the beneficial owners of the
shares, and the Company will reimburse them for their reasonable expenses
incurred in doing so.
GENERAL
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED MARCH 31, 1997 AND THE EXHIBITS THERETO REQUIRED TO BE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED. SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO PATRICIA
WILLIAMSON, ASSISTANT VICE PRESIDENT, CORPORATE COMMUNICATIONS, DRS
TECHNOLOGIES, INC., 5 SYLVAN WAY, PARSIPPANY, NEW JERSEY 07054. THE FORM 10-K IS
NOT PART OF THE PROXY SOLICITATION MATERIALS.
Dated: June 27, 1997
By Order of the Board of Directors,
/s/ Nancy R. Pitek
----------------------------
NANCY R. PITEK
Secretary
21
<PAGE>
APPENDIX
(Pursuant to Rule 304 of Regulation S-T)
1. Page 19 contains a description in tabular form of a graph entitled
"Performance Graph" which represents the comparison of the cumulative total
stockholder return on the Company's Common Stock against the cumulative total
return of the Amex Market Index and the Peer Group for the period of five years
commencing April 1, 1991 and ending March 31, 1997, which graph is contained in
the paper format of this Proxy Statement being sent to Stockholders.
<PAGE>
- --------------------------------------------------------------------------------
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
(d.b.a. DRS Technologies, Inc.)
Proxy Solicited on Behalf of the Board of Directors
For the Annual Meeting of Stockholders to Be Held August 6, 1997
The undersigned, revoking all previous proxies, appoints Mark S. Newman and
Nancy R. Pitek, and each of them, acting unanimously if more than one be
present, attorneys and proxies of the undersigned, with power of substitution,
to represent the undersigned at the annual meeting of stockholders of
Diagnostic/Retrieval Systems, Inc. d.b.a. DRS Technologies, Inc. (the "Company")
to be held on August 6, 1997, and at any adjournments thereof, and to vote all
shares of Common Stock of the Company which the undersigned is entitled to vote,
on all matters coming before said meeting. Such proxies are instructed to vote
as directed below with respect to the matters listed hereon and in their
discretion on all other matters coming before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
<TABLE>
<CAPTION>
<S> <C> <C>
1. ELECTION OF CLASS II [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
DIRECTORS: (except as marked to the contrary below) vote for all nominees listed below
</TABLE>
(INSTRUCTION: To withhold authority to vote for any of the nominees, strike a
line through the nominee's name below.)
Nominee: MARK N. KAPLAN, IRA ALBOM
2. PROPOSAL to amend the Article FIRST of the Company's Amended and Restated
Certificate of Incorporation to change the name of the Company to "DRS
Technologies, Inc."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on reverse side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(continued from reverse side)
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
"FOR" Items 1 and 2.
DATE:____________________________________
_________________________________________
Signature
_________________________________________
Signature of joint holder, if any
Please sign as your name appears on the
left. Executors, administrators, trustees,
etc, should give full title as such. If
the signor is a corporation, please sign
full corporate name by a duly authorized
officer.
PLEASE DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
