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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the six months ended April 30, 2000 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 Number)
201 Evans Lane, St. Louis, Missouri 63121
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (314) 553-4000
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 requirements for the past 90 days.
Yes X No
----- -----
The number of shares of the Registrant's common stock, $.01 par
value, outstanding at May 31, 2000 was 6,992,700.
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<TABLE>
ENGINEERED SUPPORT SYSTEMS, INC.
INDEX
<CAPTION>
Page
----
<S> <C>
Part I - Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of April 30, 2000 and
October 31, 1999. 3
Condensed Consolidated Statements of Income for the three and six months
ended April 30, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flows for the six
months ended April 30, 2000 and 1999. 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II - Other Information
Items 1-6 13
Signatures 14
Exhibits 15
</TABLE>
2
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<TABLE>
ENGINEERED SUPPORT SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
April 30 October 31
2000 1999
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 4,647,045 $ 310,446
Accounts receivable 26,661,621 23,594,040
Contracts in process and inventories 56,067,220 68,350,836
Other current assets 6,183,003 8,294,307
------------ ------------
Total Current Assets 93,558,889 100,549,629
Property, plant and equipment, less accumulated
depreciation of $19,979,536 and $16,667,784 58,159,772 60,014,422
Cost in excess of net assets acquired, less accumulated
amortization of $3,898,546 and $2,320,084 75,242,909 74,354,061
Other assets 4,262,989 4,478,030
------------ ------------
Total Assets $231,224,559 $239,396,142
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable $ 25,000,000 $ 23,900,000
Current maturities of long-term debt 13,537,500 10,037,500
Accounts payable 18,703,676 27,876,474
Other current liabilities 22,969,272 24,430,159
------------ ------------
Total Current Liabilities 80,210,448 86,244,133
Long-term debt 71,556,250 80,075,000
Other liabilities 9,077,211 9,077,211
ESOP guaranteed bank loan 504,300 578,100
Shareholders' Equity
Common stock, par value $.01 per share; 10,000,000
shares authorized; 7,520,354 and 7,503,854 shares issued 75,204 75,039
Additional paid-in capital 38,065,666 37,032,274
Retained earnings 35,800,991 30,780,853
------------ ------------
73,941,861 67,888,166
Less ESOP guaranteed bank loan 504,300 578,100
Less treasury stock at cost, 527,654 and 614,896 shares 3,561,211 3,888,368
------------ ------------
69,876,350 63,421,698
------------ ------------
Total Liabilities and Shareholders' Equity $231,224,559 $239,396,142
============ ============
See notes to condensed consolidated financial statements.
</TABLE>
3
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<TABLE>
ENGINEERED SUPPORT SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
April 30 April 30
----------------------------- ------------------------------
2000 1999 2000 1999
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net revenues $86,015,430 $40,697,195 $172,541,910 $68,934,170
Cost of revenues 69,941,022 32,986,319 140,408,864 54,641,948
----------- ----------- ------------ -----------
Gross profit 16,074,408 7,710,876 32,133,046 14,292,222
Selling, general and administrative
expense 9,576,827 4,140,063 18,896,175 7,776,028
----------- ----------- ------------ -----------
Income from operations 6,497,581 3,570,813 13,236,871 6,516,194
Interest expense (2,316,542) (671,423) (4,786,592) (1,365,184)
Interest income 49,329 34,651 70,270 91,417
Gain on sale of assets 50,731 54,193 50,821 56,209
----------- ----------- ------------ -----------
Income before income taxes 4,281,099 2,998,234 8,571,370 5,298,636
Income tax provision 1,711,000 1,196,000 3,427,000 2,118,000
----------- ----------- ------------ -----------
Net income $ 2,570,099 $ 1,792,234 $ 5,144,370 $ 3,180,636
=========== =========== ============ ===========
Basic earnings per share $.37 $.35 $.74 $.64
=========== =========== ============ ===========
Diluted earnings per share $.36 $.34 $.72 $.62
=========== =========== ============ ===========
See notes to condensed consolidated financial statements.
</TABLE>
4
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<TABLE>
ENGINEERED SUPPORT SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
April 30
-----------------------------
2000 1999
----------- ------------
<S> <C> <C>
From operating activities:
Net income $ 5,144,370 $ 3,180,636
Depreciation and amortization 5,242,089 1,766,084
Gain on sale of assets (50,821) (56,209)
----------- ------------
Cash provided (used) before changes in operating
assets and liabilities 10,335,638 4,890,511
Net (increase) decrease in non-cash current assets 8,068,028 (584,173)
Net increase (decrease) in non-cash current liabilities (9,839,177) 679,756
(Increase) decrease in other assets 1,106,852 1,239,771
----------- ------------
Net cash provided by (used in) operating activities 9,671,341 6,225,865
----------- ------------
From investing activities:
Purchase of Fermont, net of cash acquired (9,907,238)
Additions to property, plant and equipment (1,458,253) (1,041,704)
Proceeds from sale of property, plant and equipment 50,821 79,249
----------- ------------
Net cash provided by (used in) investing activities (1,407,432) (10,869,693)
----------- ------------
From financing activities:
Net borrowings (payments) under line-of-credit
agreement 1,100,000
Payments of long-term debt (5,018,750) (26,468,754)
Net proceeds from issuance of common stock 25,550,000
Purchase of treasury stock (65,052)
Exercise of stock options 115,575 124,172
Cash dividends (124,135) (87,397)
----------- ------------
Net cash provided by (used in) financing activities (3,927,310) (947,031)
----------- ------------
Net increase (decrease) in cash and cash equivalents 4,336,599 (5,590,859)
Cash and cash equivalents at beginning of period 310,446 5,773,529
----------- ------------
Cash and cash equivalents at end of period $ 4,647,045 $ 182,670
=========== ============
See notes to condensed consolidated financial statements.
</TABLE>
5
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ENGINEERED SUPPORT SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
APRIL 30, 2000
NOTE A - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements
have been prepared by the Company without audit. In the opinion of
management, all adjustments (including normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three and six month periods ended April 30,
2000 are not necessarily indicative of the results to be expected for
the entire fiscal year.
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial statements and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report to shareholders for the year ended October 31,
1999.
NOTE B - EARNINGS PER SHARE
Average diluted common shares outstanding include common stock
equivalents, which represent common stock options as computed based on
the treasury stock method.
Basic earnings per share for the three months ended April 30, 2000
and 1999 is based on average basic common shares outstanding of
6,984,016 and 5,052,423, respectively. Diluted earnings per share for
the three months ended April 30, 2000 and 1999 is based on average
diluted common shares outstanding of 7,161,094 and 5,230,602,
respectively.
Basic earnings per share for the six months ended April 30, 2000
and 1999 is based on average basic common shares outstanding of
6,953,217 and 4,950,724, respectively. Diluted earnings per share for
the six months ended April 30, 2000 and 1999 is based on average diluted
common shares outstanding of 7,116,687 and 5,129,827, respectively.
6
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NOTE C - CONTRACTS IN PROCESS AND INVENTORIES
Contracts in process and inventories of Systems & Electronics
Inc., Engineered Air Systems, Inc., Keco Industries, Inc. and Engineered
Electric Company represent accumulated contract costs, estimated
earnings thereon based upon the percentage of completion method and
contract inventories reduced by the contract value of delivered items.
Inventories of Engineered Specialty Plastics, Inc. and Engineered Coil
Company are valued at the lower of cost or market using the first-in,
first-out method. Contracts in process and inventories are comprised of
the following:
<TABLE>
<CAPTION>
April 30, 2000 October 31, 1999
-------------- ----------------
<S> <C> <C>
Raw materials $ 5,317,359 $ 4,579,038
Work-in-process 1,134,248 990,727
Finished goods 1,313,397 1,357,946
Inventories substantially applicable to
government contracts in process, less
progress payments of $55,013,312 and
$63,041,677 48,302,216 61,423,125
----------- -----------
$56,067,220 $68,350,836
=========== ===========
</TABLE>
NOTE D - ACQUISITIONS
On February 22, 1999, Engineered Electric Company, a wholly-owned
subsidiary of the Company, acquired substantially all of the net assets
of the Fermont division of Dynamics Corporation of America, a
manufacturer of electrical generator sets primarily for the Department
of Defense, for approximately $10.1 million. The fair value of assets
acquired was $14.4 million and liabilities assumed totaled $4.3 million.
The purchase price was financed with available cash resources and short-
term borrowings under the Company's revolving credit facility. The
operating results of Engineered Electric Company (Fermont) are included
in the Company's consolidated results of operations from the date of
acquisition.
Effective July 1, 1999, Engineered Specialty Plastics, Inc., a
wholly-owned subsidiary of the Company, acquired the inventory, fixed
assets, existing operations and customer base of the Bossier City
division of Engineered Products, Inc. (Bossier City) for approximately
$3.1 million. The fair value of assets acquired was $3.1 million.
The purchase price was financed with short-term borrowings under the
Company's revolving credit facility. The operating results of the
Bossier City division are included in the Company's consolidated results
of operations from the date of acquisition.
Effective September 30, 1999, Engineered Systems and Electronics,
Inc., a wholly-owned subsidiary of the Company, acquired all of the
outstanding stock of Systems & Electronics, Inc. (SEI), a manufacturer
of military support equipment, from ESCO Electronics Corporation for
approximately $81.7 million. (The purchase price is net of $4.2 million
of cash acquired. The transaction will be treated as an asset purchase
pursuant to Section 338(h)(10) of the Internal Revenue Code.) The fair
value of the assets acquired, including goodwill of $53.2 million, was
$125.7 million and liabilities assumed totaled $44.0 million. The
purchase price was financed with term debt as provided under the
7
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Company's credit agreement. The operating results of SEI are included
in the Company's consolidated results of operations from the date of
acquisition.
The following unaudited pro forma summary presents the combined
historical results of operations for the six months ended April 30,
1999 as adjusted to reflect the purchase transactions assuming the
acquisitions had occurred at November 1, 1998. These pro forma results
are not necessarily indicative of the combined results that would have
occurred had the acquisitions actually taken place on November 1, 1998,
nor are they necessarily indicative of the combined results that may
occur in the future.
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1999
----------------
<S> <C>
Net revenues $173,627,170
============
Net income $ 2,971,460
============
Basic earnings per share $.60
============
Diluted earnings per share $.58
============
</TABLE>
NOTE E - PUBLIC OFFERING OF COMMON STOCK
On April 23, 1999, the Company issued an additional 2,000,000
shares of common stock through a public offering, resulting in net
proceeds of $25,550,000. A portion of the proceeds was used to repay
borrowings under the Company's line-of-credit agreement with the
remainder used to repay a portion of the Company's long-term debt.
Shares outstanding at April 30, 2000 and October 31, 1999 were 6,992,700
and 6,888,958, respectively.
8
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NOTE F - SEGMENT INFORMATION
The Company operates in four segments: heavy military support
equipment, electronics and automation systems, light military support
and related industrial/commercial equipment, and custom molded plastic
products. Intersegment revenues for the three and six months ended
April 30, 2000 and 1999, respectively were not significant. Total
assets by segment as disclosed in the Company's annual report for the
year ended October 31, 1999 have not changed materially since that date.
In addition, there have been no changes in either the basis of
segmentation or the measurement of segment profit since October 31,
1999.
Information by segment is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30 April 30
----------------------------- ------------------------------
2000 1999 2000 1999
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net revenues:
Light military support and related
industrial/commercial equipment $43,038,498 $36,148,111 $ 80,679,838 $58,469,952
Heavy military support equipment 23,322,445 54,926,071
Electronics and automation systems 13,156,711 25,495,830
Custom molded plastic products 6,497,776 4,549,084 11,440,171 10,464,218
----------- ----------- ------------ -----------
Total $86,015,430 $40,697,195 $172,541,910 $68,934,170
=========== =========== ============ ===========
Income from operations:
Light military support and related
industrial/commercial equipment $ 4,803,503 $ 3,786,042 $ 8,881,841 $ 6,025,139
Heavy military support equipment 664,794 2,828,420
Electronics and automation systems 1,062,639 1,629,282
Custom molded plastic products (33,355) (215,229) (102,672) 491,055
----------- ----------- ------------ -----------
6,497,581 3,570,813 13,236,871 6,516,194
Interest expense (2,316,542) (671,423) (4,786,592) (1,365,184)
Interest income 49,329 34,651 70,270 91,417
Gain on sale of assets 50,731 54,193 50,821 56,209
----------- ----------- ------------ -----------
Income before income taxes $ 4,281,099 $ 2,988,234 $ 8,571,370 $ 5,298,636
=========== =========== ============ ===========
</TABLE>
9
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ENGINEERED SUPPORT SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Revenues. Consolidated net revenues increased $45.3 million, or
111.4%, in the second quarter of 2000 to $86.0 million from $40.7 million
in the second quarter of 1999. For the six months ended April 30, 2000,
consolidated net revenues were $172.5 million compared to $68.9 million
for the first half of 1999, representing an increase of 150.3%. Net
revenues from the light military support and related industrial/
commercial equipment segment increased by $6.9 million in the second
quarter of 2000 to $43.0 million as compared to $36.1 million in
the second quarter of 1999. Net revenues for this segment increased by
$22.2 million for the six months ended April 30, 2000 to $80.7 million
from $58.5 million for the first half of 1999. These increases were
primarily due to net revenues generated by Fermont subsequent to its
acquisition on February 22, 1999. Fermont's net revenues accounted for
$4.0 million of the $6.9 million second quarter increase and $15.7
million of the $22.2 million increase in the six months ended April 30,
2000. Net revenues from the heavy military support equipment and the
electronics and automation systems segments totaled $23.3 million and
$13.2 million, respectively, for the second quarter of 2000 and totaled
$54.9 million and $25.5 million, respectively, for the first half of 2000
due to the acquisition of SEI on September 30, 1999. During the second
quarter of 2000, approximately 420 employees within the Company's heavy
military support equipment segment (Local 2782, District 9 of the
International Association of Machinists and Aerospace Workers) initiated
a five-week work stoppage upon expiration of the existing labor agreement
on February 13, 2000. The Company estimates that net revenues were
reduced by approximately $6.0 to $7.0 million because of the work
stoppage. The Company and the bargaining unit subsequently agreed to a
new three-year labor contract. Net revenues for the Company's custom
molded plastic products segment increased $2.0 million to $6.5 million
for the quarter ended April 30, 2000 compared to $4.5 million for the
second quarter of 1999, primarily as a result of the acquisition of the
Bossier City division on July 1, 1999. Net revenues for the Company's
custom molded plastic products segment increased $1.0 million to $11.4
million for the first half of 2000 compared to $10.4 million for the same
period in 1999 as a result of the Bossier City acquisition net of the
loss of a major customer in early 1999.
Gross Profit. Consolidated gross profit for the second quarter of
2000 increased 108.5% to $16.1 million (18.7% of consolidated net
revenues) from $7.7 million (18.9% of consolidated net revenues) in the
second quarter of 1999. For the six months ended April 30, 2000,
consolidated gross profit increased 124.8% to $32.1 million (18.6% of
consolidated net revenues) from $14.3 million (20.7% of consolidated net
revenues) in the first half of 1999. Gross profit for the light military
support and related industrial/commercial equipment segment increased to
$7.6 million (17.7% of segment net revenues) from $7.1 million (19.5% of
segment net revenues) in the second quarter of 1999, and increased to
$14.5 million (17.9% of segment net revenues) from $12.4 million (21.1%
of segment net revenues) in the first six months of 1999. The increases
in gross profit for the segment are primarily a result of the addition of
Fermont ($0.8 million in the second quarter and $1.7 million in the first
half of 2000). The decline in gross margin for the segment resulted from
a less profitable product mix (generator sets) as compared to the
Company's historical defense business operations. Gross profit for the
heavy military support equipment and the electronics and automation
systems segments totaled $4.6 million (19.5% of segment net revenues) and
$3.2 million (24.5% of segment net revenues), respectively, for the
second quarter of 2000 due to the acquisition of SEI. For the six months
ended April 30, 2000, gross profit for the heavy military support
equipment and the electronics and automation systems segments were $11.0 million
(20.1% of segment net revenues) and $5.3 million (20.9% of segment net
revenues), respectively. Gross profit for the custom molded plastic
products segment was $0.7 million (10.2% of segment net revenues) in the
second quarter of 2000 compared to $0.7 million (14.3% of segment net
revenues). For the six months ended April 30, 2000, gross profit for the
custom molded plastic products segment was $1.3 million (11.2% of segment
net revenues) compared to $1.9 million (18.4% of segment net revenues)
for the same period in 1999.
10
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Selling, General and Administrative Expense. Consolidated selling,
general and administrative expense increased by $5.4 million, or 131.3%,
to $9.6 million (11.1% of consolidated net revenues) in the second
quarter of 2000 from $4.1 million (10.2% of consolidated net revenues) in
the second quarter of 1999. For the first half of 2000, consolidated
selling, general and administrative expense increased by $11.1 million,
or 143.0%, to $18.9 million (11.0% of consolidated net revenues) from
$7.8 million (11.3% of consolidated net revenues) for the first six
months of 1999. Selling, general and administrative expense for the light
military support and related industrial/commercial equipment segment
decreased to $2.8 million in the second quarter of 2000 from $3.3 million
in the prior year, and decreased to $5.6 million in the first half of
2000 from $6.3 million in the comparable period for 1999. Selling,
general and administrative expense for the heavy military support
equipment and the electronics and automation systems segments totaled
$3.9 million and $2.2 million, respectively, for the second quarter of
2000, and totaled $8.2 million and $3.7 million, respectively, for the
six months ended April 30, 2000. Selling, general and administrative
expense for the custom molded plastic products segment was $0.7 million
in the second quarter of 2000 compared to $0.9 million in the second
quarter of 1999, and totaled $1.4 million for the first six months of
both 1999 and 2000.
Income from Operations. Consolidated income from operations
increased by $2.9 million, or 82.0%, to $6.5 million in the second
quarter of 2000 from $4.1 million in the second quarter of 1999. For the
first half of 2000, consolidated income from operations increased by $6.7
million, or 103.1%, to $13.2 million from $6.5 million for the same
period in 1999. Income from operations for the light military support and
related industrial/commercial equipment segment increased to $4.8 million
in the second quarter of 2000 from $3.8 million in the prior year, and
increased to $8.9 million for the six months ended April 30, 2000 from
$6.0 million for the same period in 1999. The increase was primarily a
result of the inclusion of Fermont operating results following its
February 22, 1999 acquisition ($0.8 million for the second quarter and
$1.4 million for the first six months of 2000), as well as to operating
income gains at historical operations. Income from operations for the
heavy military support equipment and the electronics and automation
systems segments totaled $0.7 million and $1.1 million, respectively, in
the second quarter of 2000, and totaled $2.8 million and $1.6 million,
respectively, for the first half of 2000. As previously mentioned, a
five-week work stoppage within the Company's heavy military support
equipment segment had a significant impact on the results of operations
for this segment. The Company estimates that income from operations for
the second quarter of 2000 was reduced by approximately $1.2 to
$1.5 million as a result of the stoppage. Income from operations for the
custom molded plastic products segment were essentially break-even in the
second quarter of 2000 compared to a loss of $0.2 million in the second
quarter of 1999, and reflected a loss of $0.1 million for the first six
months of 2000 compared to operating income of $0.5 million for the
comparable period in 1999.
Net Interest Expense. Net interest expense increased by $1.6 million
to $2.3 million in the second quarter of 2000, and increased by $3.4
million to $4.7 million in the first six months of 2000 compared to $1.3
million in the prior year, primarily as a result of higher outstanding
borrowings on the Company's revolving and term debt credit facilities as
compared to the prior year. Higher borrowing levels were required to
finance the Company's acquisitions of Fermont on February 22, 1999 and
SEI on September 30, 1999 partially offset by the receipt of net proceeds
of $25.6 million in conjunction with a follow-on public stock offering of
2.0 million shares completed in April 1999.
Income Tax Provision. The effective income tax rate was 40.0% for
the quarter ended April 30, 2000 and 39.9% for the quarter ended April
30, 1999 and was 40.0% for the six month periods ended April 30, 2000
and 1999.
11
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Net Income. As a result of the forgoing, the net income of the
Company increased by 43.4% to $2.6 million (3.0% of net revenues) for
the quarter ended April 30, 2000 from $1.8 million (4.4% of net revenues)
for the second quarter of 1999. For the first half of 2000, net income
increased by 61.7% to $5.1 million (3.0% of net revenues) from $3.2
million (4.6% of net revenues) for the comparable period in 1999.
LIQUIDITY AND CAPITAL RESOURCES
In April 1999, the Company issued an additional 2.0 million
shares of common stock through a public offering, resulting in net
proceeds of $25.6 million. A portion of the proceeds was used to
repay borrowings under the Company's revolving line of credit agreement
with the remainder used to repay a portion of the Company's term
debt.
In conjunction with the acquisition of SEI in September 1999,
the Company entered into a new credit agreement to provide a $90.0
million term loan and a $55.0 million revolving credit facility. The
Company's primary sources of short-term financing are from cost
reimbursements under contracts with the U.S. government via receipt
of progress payments, billings for delivered products and borrowings
under the revolving line of credit. As of April 30, 2000, the
Company had $25.0 million outstanding against the revolving line of
credit, remaining availability under the revolving line of credit
of $18.3 million, and a cash balance of $4.6 million.
The Company's working capital needs are generally funded through
cash flow from operations and the revolving line of credit. At
April 30, 2000, the Company's working capital and ratio of current
assets to current liabilities were $13.3 million and 1.17 to 1 as
compared with $14.3 million and 1.17 to 1 at October 31, 1999. The
Company generated $9.7 million in the six months ended April 30, 2000
and generated $6.2 million in the first half of 1999 in cash flow from
operations. Investment in property, plant and equipment totaled $1.5
million and $1.0 million for the first halves of 2000 and 1999,
respectively. The Company anticipates that capital expenditures in
2000 should not exceed $6.0 million. Management believes that cash
flow generated from operations, together with the available line of
credit, will provide the necessary resources to meet the needs of the
Company in the foreseeable future.
BUSINESS AND MARKET CONSIDERATIONS
Approximately 86% of consolidated net revenues for the six
months ended April 30, 2000 were directly or indirectly derived
from defense orders by the U.S. government and its agencies. As
of April 30, 2000, the Company's combined backlog of defense
orders totaled $366.9 million, with related government options
of an additional $650.8 million.
Management continues to pursue potential acquisitions, primarily
of those companies providing strategic consolidation within the
defense industry.
FORWARD-LOOKING STATEMENTS
In addition to historical information, this report includes
certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created thereby. The forward-looking
statements involve certain risks and uncertainties, including, but not
limited to acquisitions, additional financing requirements, the decision
of any of the Company's key customers (including the U.S. government) to
reduce or terminate orders with the Company, cutbacks in defense
spending by the U.S. government and increased competition in the Company's
markets, which could cause the Company's actual results to differ
materially from those projected in, or inferred by, the forward-looking
statements.
12
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PART II
OTHER INFORMATION
Items 1-5 Not applicable
Item 6 (a) Exhibits
11. Statement Re: Computation of Earnings Per Share
27. Statement Re: Financial Data Schedule
(b) No reports on Form 8-K were filed during the three
months ended April 30, 2000.
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENGINEERED SUPPORT SYSTEMS, INC.
Date: June 14, 2000 By: Michael F. Shanahan Sr.
------------------- -----------------------------------
Michael F. Shanahan Sr.
Chairman of the Board and
Chief Executive Officer
Date: June 14, 2000 By: Gary C. Gerhardt
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Gary C. Gerhardt
Vice Chairman - Administration
and Chief Financial Officer
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