<PAGE> 1
FORM 10-KSB/A No. 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
Commission File No. 0-10772
ESSEX CORPORATION
(Name of small business issuer in its charter)
Virginia 54-0846569
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9150 Guilford Road, Columbia, Maryland 21046
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (301) 953-7797
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
Title of each class Name of each exchange on which registered
- -------------------- ----------------------------------------
None None
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
Common Stock, par value $0.10 per share
---------------------------------------
(Title of Each Class)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X
--
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge,in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. YES X
--
State issuer's revenues for its most recent fiscal year.
$14,192,934
----------
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the
stock was sold, or the average bid and asked prices of such stock,
as of a specified date within the past 60 days. $8,642,000 as of
March 4, 1996 ----------
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Class Outstanding at February 29, 1996
----- --------------------------------
Common Stock, par value $0.10 per share 3,586,073
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT Part of Report on Form 10-KSB into
Which Document is Incorporated
Portions of Exhibits filed with Registration
Statement on Form SB-2,
Registration No. 33-82920 Part III, Item 13(a)(2)
===================================================================
A list of the Exhibits and Financial Statement Schedules in this
Report on Form 10-KSB appears on page 31.
<PAGE> 2
Table of Contents
FORM 10-KSB
Essex Corporation
PART I
Item No.
Page
- -- INTRODUCTORY STATEMENT 3
1. DESCRIPTION OF BUSINESS 3
2 DESCRIPTION OF PROPERTIES 11
3. LEGAL PROCEEDINGS 12
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12
PART II
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 13
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 13
7. FINANCIAL STATEMENTS 18
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 18
PART III
9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT 19
10. EXECUTIVE COMPENSATION 24
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 29
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 30
13. EXHIBITS AND REPORTS ON FORM 8-K 31
<PAGE> 24
10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the aggregate cash compensation
paid for services rendered to the Company during the last three
fiscal years by the Company's Chief Executive Officer and the
Company's four other most highly compensated executive officers who
served as such at the end of the last fiscal year and whose total
compensation exceeds $100,000.
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------------------------------------------------------------
Other Restricted Securities All Other
Annual Stock Underlying LTIP Compen-
Name and Compensation Award(s) Options/SARs Payouts sation
Principal Position Year Salary($)(1) Bonus ($) ($)(2) ($)(3) (#) (#) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Harry Letaw, Jr. 1995 113,920 10,000 0 0 0 0 0
Chairman and CEO 1994 107,536 0 0 0 0 0 0
1993 111,672 0 0 0 0 0 0
Anthony L. Ward 1995 107,680 7,500 3,235 0 8,000 0 0
Vice President and CAO 1994 105,040 0 3,151 0 0 0 0
1993 109,080 0 3,282 0 2,000 0 0
Joseph R. Kurry, Jr. 1995 106,400 7,500 3,198 0 5,000 0 0
Treasurer, Vice President 1994 104,000 0 3,123 0 20,000 0 0
and CFO 1993 100,500 0 3,018 0 2,000 0 0
Terry M. Turpin 1995 102,848 7,500 3,095 0 8,000 0 0
Vice President 1994 100,006 0 3,009 0 17,778 0 0
1993 103,853 0 3,124 0 2,000 0 0
Martin G. Every 1995 102,640 5,000 3,094 0 5,000 0 0
Senior Vice President 1994 100,360 0 3,025 0 0 0 0
1993 90,360 0 2,717 0 2,000 0 0
- ------------------------------------
<FN>
(1) The decrease in salaries shown for 1994 from 1993 is primarily
attributable to one additional pay period which occurred during
1994. The increase in salary for Mr. Kurry and Mr. Every in
1994 is attributable to raises in their annual compensation.
Includes amounts deferred at the election of the named
executive officer pursuant to Section 401(k) of the Internal
Revenue Code ("401(k)").
(2) Represents matching 401(k) contributions made on behalf of the
respective named executive officer pursuant to the Company's
Retirement Plan and Trust. Excludes other perquisites and
benefits not exceeding the lesser of $50,000 or 10% of the
named executive officer's total annual salary and bonus.
(3) No restricted stock awards were made for the periods indicated.
The number and value of the aggregate restricted stock holdings
for the named executive officers at the end of the 1995 fiscal
year, based on the closing bid price of the Common Stock on
NASDAQ on December 29, 1995, without giving effect to the
consideration paid by the named executive officer, were as
follows: Dr. Letaw, 211,357 shares, $475,553 value; Mr. Ward,
17,331 shares, $38,994 value; Mr. Kurry, 29,859 shares, $67,182
value; Mr. Turpin, 72,781 shares, $163,757 value; and Mr.
Every, 6,037 shares, $13,583 value.
</FN>
</TABLE>
<PAGE> 25
DEFINED CONTRIBUTION RETIREMENT PLAN
- ------------------------------------
The Company has a qualified defined contribution retirement
plan, the Essex Corporation Retirement Plan and Trust, which
includes a 401(k) salary reduction feature for its employees. The
Plan calls for a discretionary contribution as determined by the
Board of Directors, and an employer matching contribution of up to
3% of eligible employee compensation under the salary
reduction feature. Discretionary contributions are determined
annually by the Board of Directors. No discretionary contribution
was made by the Company to the Retirement Plan for 1995. The total
authorized contribution under the matching contribution feature of
the Plan was approximately $145,000 in 1995. All employee
contributions are 100% vested at all times and Company
contributions vest based on length of service. Vested
contributions are distributable and benefits are payable only upon
death, disability, retirement or break in service. Participants
may request that their accrued benefits under the Section 401(k)
portion of the Plan be allocated among various investment options
established by the Plan administrator.
The Company contributions under the Retirement Plan for the
persons referred to in the Summary Compensation Table are included
in that Table.
EMPLOYEE INCENTIVE PERFORMANCE AWARD PLAN
- -----------------------------------------
The Company has an Employee Incentive Performance Award Plan
under which bonuses are distributed to employees. All employees are
eligible to receive such awards under flexible criteria designed to
compensate for superior division and individual performance during
each fiscal year. Awards are generally recommended annually by
management and approved by the Board of Directors. Such awards may
be constrained by overall Company performances. There were 93 awards
in 1995 totaling $144,000. There was one award in 1994 for $500.
The incentive awards under the Performance Award Plan for the
persons referred to in the Summary Compensation Table are included
in that Table.
RESTRICTED STOCK BONUS PLAN
- ---------------------------
Essex Corporation has a Restricted Stock Bonus Plan under which
up to 50,000 shares of the Company's common stock may be reserved
for issuance to non-employee members of the Board of Directors and
key employees of the Company selected by the Board of Directors.
Shares of restricted stock may be issued under the Plan subject to
forfeiture during a restriction period, fixed in each instance by
the Board of Directors, whereby all rights of the grantee to the
stock terminate upon certain conditions such as cessation of
continuous employment during the restriction period. Upon
expiration of the restriction period, or earlier upon the death or
substantial disability of the grantee, the restrictions applicable
to all shares of restricted stock of the grantee expire. The Plan
also provides that loans may be advanced by the Company to a grantee
to pay income taxes due on the taxable value of shares granted under
the Plan. Such loans must be evidenced by an interest bearing
promissory note payable five (5) years after the date of the loan,
and be secured by shares of stock of the Company (which may be
restricted stock) having a fair market value equal to 200 percent of
the loan.
During 1995, the Board awarded a total of 12,000 shares to six
directors. During 1993, the Board awarded 2,000 shares and none
were awarded in 1994. There are approximately 22,050 shares
remaining in the Essex Corporation Restricted Stock Bonus Plan as of
December 31, 1995.
<PAGE> 26
EMPLOYMENT AGREEMENTS
- ---------------------
Since 1988, the Company has had an Agreement of Employment
with Harry Letaw, Jr., Chairman of the Board, President and Chief
Executive Officer. Dr. Letaw's annual compensation was originally
established at $120,000 but was reduced, at his recommendation to
the annual amounts shown in the Summary Compensation Table. Dr.
Letaw's annual compensation was increased to $135,200 effective
October 2, 1995. The term of this Agreement is extended on a
month-to-month basis by mutual agreement.
The Company has an Agreement of Employment with Frank E.
Manning, Chairman Emeritus and Member of the Essex Board of
Directors, whereby Mr. Manning is a part-time employee of the
Company with duties to provide advice and counsel to the management
of Essex. The Agreement may be terminated by either party with
60 days advance notice. Mr. Manning also receives reimbursement of
medical costs not covered by Medicare. Mr. Manning received
compensation of $30,000 in fiscal year 1995 for his services as an
employee of the Company and medical reimbursement of $1,250.
The above agreements restrict the individuals' rights to compete
with the Company and prohibit misappropriation of proprietary
rights of the Company, both during and after the term of employment.
OPTIONS TO PURCHASE SECURITIES
- ------------------------------
The Company has an Option and Stock Appreciation Rights Plan
(The "OSAR Plan"). The OSAR Plan as presently in effect provides
for the grant of tax qualified Incentive Stock Options ("ISOs") and
options that are not tax qualified ("NSOs") and Stock Appreciation
Rights ("SARs") which rights may be related to, but not necessarily
be granted in tandem with, options granted under the OSAR Plan.
Persons eligible to receive awards of options and SARs under the
OSAR Plan include officers, directors, key employees and other
persons who provide valuable services to the Company. SARs entitle
the holder to cash or Company Common Stock measured by the increase
in market value of the Company's Common Stock from the date of grant
to the date of exercise. The exercise price of an ISO under the
OSAR Plan may not be less than the fair market value of the Company
stock on the date of grant; the exercise price of NSOs and the
appreciation base price of SARs are determined in the discretion
of the Board of Directors except that the SAR appreciation base
price may not be less than 50% of the fair market value of a share
of Common Stock on the grant date with respect to awards to persons
who are officers or directors of the Company. As originally
adopted, the OSAR Plan reserved 400,000 shares of the Company's
Common Stock for issuance. At the 1989 and 1994 Annual Meetings,
Company stockholders approved increases in the number of shares of
Common Stock subject to the OSAR Plan by 250,000 shares and 200,000
shares respectively, making 850,000 the total number of shares
subject to the Plan. As of February 29, 1996, there remain 232,639
shares available for future grants of options or SARs.
The Company had an Incentive Stock Option Plan which expired on
March 12, 1992 with no shares available for future grants. As of
February 29, 1996, options for 88,800 shares of the Company's
Common Stock remain outstanding under this Plan and are fully
exercisable at prices ranging from $2.52 - $3.00 including options
held by officers and directors of the Company to purchase
64,000 shares.
<PAGE> 27
The following Table shows for the fiscal year ended December 31,
1995 for the persons named in the Summary Compensation Table,
information with respect to options to purchase Common Stock
granted during 1995 under the OSAR Plan. No options or stock
appreciation rights granted under the OSAR Plan have been exercised
by the persons listed below.
<TABLE>
<CAPTION>
STOCK OPTIONS GRANTS TABLE
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
Number of
Securities
Underlying % Of Total Options/
Options SARs Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#)(1) Fiscal Year ($/Sh) Date
==================================================================================================================
<S> <C> <C> <C> <C>
Harry Letaw, Jr. --- --- --- ---
Anthony L. Ward 8,000 7.4 3.08 09/10/99
Joseph R. Kurry, Jr. 5,000 4.7 3.08 09/10/99
Terry M. Turpin 8,000 7.4 3.08 09/10/99
Martin G. Every 5,000 4.7 3.08 09/10/99
- ------------------------------------
<FN>
(1) Such options become exercisable beginning September 11, 1996.
</FN>
</TABLE>
<PAGE> 28
The following Table shows for the fiscal year ended December 31,
1995 for the persons named in the Summary Compensation Table,
information with respect to option/SAR exercises and fiscal year-end
values for unexercised options/SARs.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES AND FY-END OPTION/SAR VALUES TABLE
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End($)
Name Shares Value
Acquired on Realized Exercisable/ Exercisable/
Exercise (#) ($) Unexercisable Unexercisable
================================================================================================================================
<S> <C> <C> <C> <C>
Harry Letaw, Jr. None --- 238,091/61,909 0/0
Anthony L. Ward None --- 30,000/8,000 0/0
Joseph R. Kurry, Jr. None --- 43,500/5,000 0/0
Terry M. Turpin None --- 25,778/8,000 0/0
Martin G. Every None --- 29,500/5,000 0/0
</TABLE>
REMUNERATION OF DIRECTORS
- -------------------------
The Company's Directors generally meet quarterly. Additionally,
the By-Laws provide for special meetings and, as also permitted by
Virginia law, Board action may be taken without a meeting upon
unanimous written consent of all Directors. Board members not
employed by the Company receive a maximum of $750 for each Board or
Board Committee Meeting attended. In order to improve the Company's
cash position, the Company's outside Directors, during the 1995-1996
term year, relinquished cash payments for certain board meetings.
In 1995 the Board held three meetings; the entire membership of the
Board was present at all meetings of the Board of Directors except
for one meeting when one Director was absent from the meeting.
<PAGE> 29
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table and accompanying notes set forth as of
February 29, 1996, information with respect to the beneficial
ownership of the Company's Common Stock by (i) each person or group
who beneficially own more than 5% of the Common Stock, (ii) each of
the directors of the Company, (iii) each of the officers of the
Company named in the Summary Compensation Table, and (iv) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature Percentage of Outstanding
Name and Address of Beneficial Shares of Common Stock
of Beneficial Owner* Ownership (1) Beneficially Owned
--------------------------------- ----------------------- -------------------------
<S> <C> <C>
Harry Letaw, Jr. (2) 480,698 9.21
Frank E. Manning (3) 106,275 2.04
Terry M. Turpin (4) 98,059 1.89
Joseph R. Kurry, Jr. (5) 60,909 1.17
Anthony L. Ward (6) 49,331 **
Samuel Hopkins (7) 42,875 **
Robert W. Hicks (8) 39,200 **
Harold P. Hanson (9) 30,500 **
Ray M. Keeler (10) 15,250 **
A. William Perkins (11) 15,100 **
Martin G. Every (12) 15,537 **
All Directors and Executive Officers
as a Group (16 persons) (13) 1,150,424 22.04
- ------------------------------------
<FN>
* All beneficial owners are directors and/or officers of the
Company and can be reached c/o Essex Corporation, 9150
Guilford Road, Columbia, MD 21046.
** Less than 1%
(1) Under the rules of the Commission, a person is deemed to be
a "beneficial owner" of a security if that person has or
shares the power to vote or to direct the voting of such
security, or the power to dispose or to direct the
disposition of such security. A person is also deemed to
be a beneficial owner of any securities of which that
person has the right to acquire beneficial ownership within
sixty (60) days. Under these rules, more than one person
may be deemed to be a beneficial owner of the same
securities and a person may be deemed to be a beneficial
owner of securities as to which he has no record ownership
interest. The shares listed above include options and
rights to acquire shares within sixty (60) days and shares
held of record by the Essex Corporation Retirement Trust as
to which shares the respective participant has disposition
and voting rights. The percentage ownership is computed
based upon the number of shares which would be outstanding
if such options and rights were exercised.
(2) Dr. Harry Letaw, Jr. is Chairman of the Board, President
and Chief Executive Officer of the Company. Of the 480,698
shares beneficially shown as owned by Dr. Letaw, 269,341
shares represent presently exercisable rights to acquire
Common Stock through stock options and warrants.
(3) Mr. Frank E. Manning is the record and beneficial owner of
approximately 2.04% of the outstanding shares of the
Company (106,275 shares), including presently exercisable
options to purchase 1,500 shares. Mr. Manning is the
Chairman Emeritus and a Director of the Company. Does not
include 40,000 shares of the Company's Common Stock owned
of record and beneficially by Mrs. Eva L. Manning, wife of
Mr. Frank E. Manning. Also does not include 147,500 shares
beneficially owned by six separate family trusts of which
Mrs. Manning is the sole trustee and over which trusts she
has exclusive voting and dispositive power.
(4) Terry M. Turpin is a Vice President of the Company. Of the
shares shown as beneficially owned, 25,278 represent
presently exercisable rights to acquire common stock
through stock options and warrants.
<PAGE> 30
(5) Joseph R. Kurry, Jr. is Vice President, Treasurer and Chief
Financial Officer of the Company. Of the shares shown as
beneficially owned, 31,050 represent presently exercisable
rights to acquire common stock through stock options and
warrants.
(6) Anthony L. Ward is Vice President, Chief Administrative
Officer and Assistant Secretary of the Company. Of the
shares shown as beneficially owned, 32,000 represent
presently exercisable rights to acquire common stock
through stock options and warrants.
(7) Samuel Hopkins is a Director of the Company. Of the shares
shown as beneficially owned, 9,125 represent presently
exercisable rights to acquire common stock through stock
options and warrants.
(8) Robert W. Hicks is a Director of the Company. Of the
Shares shown as beneficially owned, 6,000 represent
presently exercisable rights to acquire common stock
through stock options and warrants.
(9) Harold P. Hanson is a Director of the Company. Of the
Shares shown as beneficially owned, 7,500 represent
presently exercisable rights to acquire common stock
through stock options and warrants.
(10)Ray M. Keeler is a Director of the Company. Of the Shares
shown as beneficially owned, 5,250 represent presently
exercisable rights to acquire common stock through stock
options and warrants.
(11)A. William Perkins is a Director of the Company. Of the
Shares shown as beneficially owned, 3,500 represent
presently exercisable rights to acquire common stock
through stock options and warrants.
(12)Martin G. Every is a Senior Vice President of the Company.
Of the shares shown as beneficially owned, 9,500 represent
presently exercisable rights to acquire common stock
through stock options.
(13)Of the shares shown as beneficially owned, 512,781
represent presently exercisable rights to acquire common
stock through stock options and warrants.
</FN>
</TABLE>
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
<PAGE> 31
13. EXHIBITS AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
Report of Independent Public Accountants 33
Balance Sheet 34
Statements of Operations 35
Statements of Changes in Stockholders' Equity 36
Statements of Cash Flows 37
Notes to Financial Statements 38 - 52
(2) Exhibits
(i) Exhibit 3(i) - Articles of Incorporation
and Amendments thereto B
Exhibit 3(ii) -By-Laws, as amended.
Filed as Exhibits 3(i) and 3(ii) to
Registrant's Registration Statement on
Form SB-2 filed October 17, 1994,
Registration No. 33-82920
(ii) Exhibit 4 - Instruments defining the Rights
of Holders
4.1 Form of Warrant Agreement with Mellon
Bank C
4.2 Specimen of Warrant Certificate C
4.3 Specimen of Common Stock Certificate C
4.4 Warrant Agreement with J. Michael
Reisert, Inc. D
4.5 Specimen of Placement Agent's Warrant
Certificate D
4.6 Form of 10% Convertible Collateralized
Debenture A
4.7 Form of Series B Warrant A
(iii) Exhibit 10 - Material Contracts
10.1 Employment Agreement dated C
April 8, 1988, between
Dr. Harry Letaw, Jr. and Registrant
10.3 Restricted Stock Bonus Plan C
10.4 Option and Stock Appreciation Rights
Plan C
10.5 Incentive Stock Option Plan C
10.6 Pension Plan and Trust Agreement C
10.7 Defined Contribution Retirement Plan C
10.8 Incentive Performance Award Plan C
10.9 Line of Credit Agreement with Signet
Bank A
10.10 Settlement Agreement between the C
Company and Rumsey Associates Limited
Partnership
10.11 Option Agreement between the Company C
and Rumsey Associates Limited
Partnership
10.13 Registration Rights Agreement C
10.14 Contract between the U.S. Department of C
Energy and the Company
(iv) Exhibit 23 - Consents of Experts and Counsel
23.1 Consent of Independent Public 53
Accountants
(v) Exhibit 27 - Financial Data Schedule
27.1 Financial Data Schedule A
(b) Reports on Form 8-K
None
- -----------------------
A Filed herewith
B Incorporated by reference as indicated
C Filed as Exhibit to Registrant's Registration Statement on Form
SB-2 filed October 17, 1994, Registration No. 33-82920
D Filed as Exhibit to Registrant's Registration Statement on Form
SB-2 filed February 17, 1995, Registration No. 33-82920
<PAGE> 32
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ESSEX CORPORATION
(Registrant)
Harry Letaw, Jr.
By: ------------------------------------------------
Harry Letaw, Jr.
Chairman of the Board, Chief Executive Officer
and President; Principal Executive Officer
April 22, 1996
Joseph R. Kurry, Jr.
By: --------------------------------------------------
Joseph R. Kurry, Jr.
Vice President, Treasurer and Chief Financial
Officer; Principal Financial and Accounting Officer
April 22, 1996
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Harold P. Hanson
__________________________________________________
Harold P. Hanson, Director
April 22, 1996
Robert W. Hicks
__________________________________________________
Robert W. Hicks, Director
April 22, 1996
Samuel Hopkins
__________________________________________________
Samuel Hopkins, Director
April 22, 1996
Ray M. Keeler
__________________________________________________
Ray M. Keeler, Director
April 22, 1996
Frank E. Manning
__________________________________________________
Frank E. Manning, Director
April 22, 1996
A. William Perkins
__________________________________________________
A. William Perkins, Director
April 22, 1996
