-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QHD0pKPg0qj3Mh9BmAeW/jIuwA3YduBycVmpOsRzHBO5zSYClFMUZU4yy6ZjTSRn Ju9qdp6lqVXjQli6YRosaA== 0000866706-99-000010.txt : 19990518 0000866706-99-000010.hdr.sgml : 19990518 ACCESSION NUMBER: 0000866706-99-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESCO ELECTRONICS CORP CENTRAL INDEX KEY: 0000866706 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 431554045 STATE OF INCORPORATION: MO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10596 FILM NUMBER: 99626772 BUSINESS ADDRESS: STREET 1: 8888 LADUE RD STREET 2: SUITE 200 CITY: ST LOUIS STATE: MO ZIP: 63124 BUSINESS PHONE: 3142137200 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1999 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______to______ Commission file number 1-10596 ESCO ELECTRONICS CORPORATION (Exact name of registrant as specified in its charter) Missouri 43-1554045 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8888 Ladue Road, Suite 200 63124-2090 St. Louis, Missouri (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code:(314)213-7200 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 Number of common stock trust receipts outstanding at April 30, 1999: 12,369,969 receipts. PART I. FINANCIAL INFORMATION Item 1. Financial Statements ESCO ELECTRONICS CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except per share amounts)
Three Months Ended March 31, ------------------ 1999 1998 ---- ---- Net sales $ 96,214 86,030 ------- ------ Costs and expenses: Cost of sales 71,178 61,434 Selling, general and administrative expenses 18,593 17,285 Interest expense 1,704 1,952 Other, net 1,580 647 ------- ------- Total costs and expenses 93,055 81,318 ------- ------- Earnings before income taxes 3,159 4,712 Income tax expense 1,112 1,472 ------- ------- Net earnings 2,047 3,240 ======= ======= Earnings per share: - Basic $ .17 .27 - Diluted .16 .26 ======= ======= See accompanying notes to condensed consolidated financial statements
ESCO ELECTRONICS CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except per share amounts)
Six Months Ended March 31, ---------------- 1999 1998 ---- ---- Net sales 184,407 164,107 ------- ------- Costs and expenses: Cost of sales 136,477 117,482 Selling, general and administrative expenses 35,814 32,817 Interest expense 3,436 3,643 Other, net 3,190 1,718 ------- ------- Total costs and expenses 178,917 155,660 ------- ------- Earnings before income taxes 5,490 8,447 Income tax expense 1,928 2,597 ------- ------- Net earnings before accounting change 3,562 5,850 ------- ------- Cumulative effect of accounting change, net of tax (25,009) - -------- ------- Net earnings (loss) (21,447) 5,850 ======== ======= Earnings (loss) per share: Earnings before accounting change: - Basic $ .29 .49 - Diluted .28 .47 ======= ======= Net earnings (loss) - Basic $ (1.74) .49 - Diluted (1.74) .47 ======= ======= See accompanying notes to condensed consolidated financial statements
ESCO ELECTRONICS CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Dollars in thousands)
March 31, September 30, 1999 1998 ---- ---- Assets (Unaudited) Current assets: Cash and cash equivalents $ 6,503 4,241 Accounts receivable, less allowance for doubtful accounts of $573 and $664, respectively 46,071 51,530 Costs and estimated earnings on long-term contracts, less progress billings of $30,153 and $51,529, respectively 20,263 26,995 Inventories 63,361 81,579 Other current assets 3,794 2,776 ------- ------- Total current assets 139,992 167,121 ------- ------- Property, plant and equipment, at cost 151,661 150,332 Less accumulated depreciation and amortization 58,484 52,323 ------- ------- Net property, plant and equipment 93,177 98,009 Excess of cost over net assets of purchased businesses, less accumulated amortization of $5,738 and $4,557, respectively 71,018 72,512 Deferred tax assets 54,746 44,740 Other assets 23,357 26,920 ------- ------- $382,290 409,302 ======= ======= Liabilities and Shareholders' Equity Current liabilities: Short-term borrowings and current maturities of long-term debt $ 39,000 30,111 Accounts payable 37,119 39,908 Advance payments on long-term contracts, less costs incurred of $34,674 and $5,046, respectively 10,889 11,442 Accrued expenses and other current liabilities 21,527 25,346 ------- ------- Total current liabilities 108,535 106,807 ------- ------- Other liabilities 27,700 28,339 Long-term debt 46,044 50,077 ------- ------- Total liabilities 182,279 185,223 ------- ------- Commitments and contingencies _ _ Shareholders' equity: Preferred stock, par value $.01 per share, authorized 10,000,000 shares _ _ Common stock, par value $.01 per share, authorized 50,000,000 shares; issued 12,684,535 and 12,641,664 shares, respectively 127 126 Additional paid-in capital 201,495 200,913 Retained earnings since elimination of deficit at September 30, 1993 5,830 27,277 Cumulative foreign currency translation adj. (1,147) 520 Minimum pension liability (2,260) (2,260) ------- ------- 204,045 226,576 Less treasury stock, at cost; 407,525 and 234,025 common shares, respectively (4,034) (2,497) ------- ------- Total shareholders' equity 200,011 224,079 ------- ------- $382,290 409,302 ======= ======= See accompanying notes to condensed consolidated financial statements.
ESCO ELECTRONICS CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (Dollars in thousands)
Six Months Ended March 31, --------- 1999 1998 ---- ---- Cash flows from operating activities: Net earnings (loss) $(21,447) 5,850 Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities: Depreciation and amortization 9,022 9,168 Changes in operating working capital, net of accounting change (13,107) (23,233) Effect of accounting change, net of tax 25,009 _ Other 3,649 3,313 ------- ------- Net cash provided (used) by operating activities 3,126 (4,902) ------- ------- Cash flows from investing activities: Capital expenditures (4,295) (6,539) Acquisition of businesses, less cash acquired - (4,722) ------- ------- Net cash used by investing activities (4,295) (11,261) ------- ------- Cash flows from financing activities: Net increase in short-term borrowings 9,000 20,976 Proceeds from long-term debt 96 - Principal payments on long-term debt (4,241) (3,052) Other (1,424) (990) ------- ------- Net cash provided by financing activities 3,431 16,934 ------- ------- Net increase in cash and cash equivalents 2,262 771 Cash and cash equivalents, beginning of period 4,241 5,818 ------- ------- Cash and cash equivalents, end of period $ 6,503 6,589 ======= ======= See accompanying notes to condensed consolidated financial statements.
ESCO ELECTRONICS CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Basis of Presentation The accompanying condensed consolidated financial statements, in the opinion of management, include all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the results for the interim periods presented. The condensed consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all the disclosures required by generally accepted accounting principles. For further information refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 1998. Certain prior year amounts have been reclassified to conform with the fiscal 1999 presentation. The results for the three and six month periods ended March 31, 1999 are not necessarily indicative of the results for the entire 1999 fiscal year. 2. Earnings Per Share Basic earnings per share is calculated using the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated using the weighted average number of common shares outstanding during the period plus shares issuable upon the assumed exercise of dilutive common share options and performance shares by using the treasury stock method. The net loss per share for the first six months of fiscal 1999, for both basic and diluted loss per share, is calculated using the weighted average number of common shares outstanding during the period. The number of shares used in the calculation of earnings (loss) per share for each period presented is as follows (in thousands): Three Months Ended Six Months Ended March 31, March 31, --------- --------- 1999 1998 1999 1998 ---- ---- ---- ---- Weighted Average Shares Outstanding - Basic 12,274 11,848 12,294 11,833 Dilutive Options and Performance Shares 300 731 294 741 ------ ------ ------ ------ Adjusted Shares- Diluted 12,574 12,579 12,588 12,574 ====== ====== ====== ======
Options to purchase 691,000 shares of common stock at prices ranging from $10.00-$19.22 per share and options to purchase 62,000 shares of common stock at approximately $18.00 were outstanding during the six month periods ended March 31, 1999 and March 31, 1998, respectively, but were not included in the respective computations of diluted EPS because the options' exercise price was greater than the average market price of the common shares. These options expire in 2007 and 2008. Approximately 166,000 and 157,000 performance shares were outstanding but unearned at March 31, 1999, and 1998, respectively, and therefore, were not included in the respective computations of diluted EPS. The unearned performance shares expire in 2001. 3. Inventories Inventories consist of the following (dollars in thousands): March 31, September 30, 1999 1998 ---- ---- Finished goods $ 9,102 9,491 Work in process, including long-term contracts 35,959 54,754 Raw materials 18,300 17,334 ------- ------- Total inventories $ 63,361 81,579 ======= =======
Under the contractual arrangements by which progress payments are received, the U.S. Government has a security interest in the inventories associated with specific contracts. Inventories are net of progress payment receipts of $24.4 million and $14 million at March 31, 1999 and September 30, 1998, respectively. 4. Change in Accounting Principle In April 1998, the American Institute of Certified Public Accountants (AICPA) issued Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-up Activities". This SOP is applicable to all non-governmental entities and provides guidance on accounting for start-up activities, including pre-contract start-up costs and organization costs. SOP 98-5 broadly defines start-up costs as those one-time activities related to opening a new facility, introducing a new product or service, conducting business in a new territory, conducting business with a new class of customer or beneficiary, initiating a new process in an existing facility, or commencing some new operation. Start-up activities also include activities related to organizing a new entity, commonly referred to as organization costs. The Company had previously accounted for these costs under the existing guidance provided by SOP 81-1, "Accounting for Performance of Construction- type Contracts." Under SOP 81-1, costs incurred for a specific anticipated contract were capitalized if those costs could be directly associated with the specific anticipated contract, and fi their recoverability from that contract was probable. SOP 98-5 amends SOP 81-1 by requiring precontract, start-up and organization costs to be expensed as incurred. The Company is required to adopt this change in accounging principle no later than the first quarter of fiscal year 2000. The Company decided to adopt the provisions of SOP 98-5 in the first quarter of fiscal year 1999 ended December 31, 1998. This change in accounting principle resulted in a non-cash, after-tax charge of approximately $25 million, and was recognized as a cumulative effect of an accounting change. The $13.5 million tax impact of this change in accounting principle is included in deferred tax assets at March 31, 1999. The after-tax charge related to precontract start-up, and organization costs incurred in anticipation of specific future contract awards which were based on specific customer-identified requirements. The after-tax charge is comprised of the following programs: the Tunner 60K aircraft cargo loader at SEI ($17.2 million); the Quiktrak automatic vehicle location system at the Comtrak division of SEI ($2 million); the advanced video surveillance system (Securvision) at Comtrak ($2 million); the Seawolf (U.S.Navy attack submarine) valve and manifold ship set program at Vacco Industries ($1.9 million); and other minor programs which aggregate $1.9 million. The impact of adopting SOP 98-5 on the results of operations for six month period ended March 31, 1999 was an increase to net earnings of approximately $.8 million, or $.06 per share. The favorable impact noted is primarily the net result of the absence of amortization expense related to the previously capitalized start-up costs, net of additional costs expensed . The after tax charge to net earnings of adopting SOP 98-5 amounted to $25.0 million, or $2.03 per basic and diluted share. 5. Comprehensive Income (Loss) Effective October 1, 1998, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income". SFAS No. 130 requires the Company to disclose all non-owner changes included in equity but not included in net earnings (loss) in a financial statement that is displayed with the same prominence as other financial statements. Prior year amounts have been conformed to the current year presentation. Comprehensive income for the three month periods ended March 31, 1999 and 1998 was $1.0 million and $3.0 million, respectively. Comprehensive income (loss) for the six month periods ended March 31, 1999 and 1998 was ($22.5) million and $5.4 million, respectively. The Company's comprehensive income and loss is impacted only by foreign currency translation adjustments, net of tax. Item 2. Management's Discussionand Analysis of Results of Operations and Financial Condition Results of Operations - Three months ended March 31, 1999 compared with three months ended March 31, 1998. Net sales of $96.2 million for the second quarter of fiscal 1999 increased $10.2 million (11.9%) from net sales of $86.0 million for the second quarter of fiscal 1998. The sales increase in the current quarter is the result of increased commercial sales related to: additional sales of filtration products at Filtertek; increased electro-magnetic compatibility (EMC) chamber sales at EMC Test Systems (ETS); higher sales at Distribution Control Systems, Inc. (DCSI) related to the PREPA contract; and the impact of the fiscal 1998 acquisition of PTI Advanced Filtration (PTA). Commercial sales increased approximately 29% and were $57.1 million (59.4%) and defense sales were $39.1 million (40.6%) for the second quarter of fiscal 1999, compared with commercial and defense sales of $44.2 million (51.4%) and $41.8 million (48.6%), respectively, in the second quarter of fiscal 1998. Order backlog increased $51.4 million (15.5%) to $382.4 million at March 31, 1999, from $331.0 million at December 31, 1998. During the fiscal 1999 second quarter, new orders aggregating $147.7 million were received, compared with $100.5 million (46.9% increase) in the second quarter of fiscal 1998. The most significant orders in the current period were for TUNNER aircraft cargo loaders, filtration/fluid flow products, and automatic meter reading equipment. The gross profit margin was 26.0% in the second quarter of fiscal 1999 and 28.6% in the second quarter of fiscal 1998. The gross margin decreased in the second quarter of fiscal 1999 due to lower margins in the defense segment, primarily at SEI. The gross profit margin was also lower due to the residual impact of Hurricane Georges on Filtertek's Puerto Rican operation, and a general slowdown experienced in some industrial markets. Selling, general and administrative (SG&A) expenses for the second quarter of fiscal 1999 were $18.6 million, or 19.3% of net sales, compared with $17.3 million, or 20.1% of net sales, for the same period a year ago. The percentage decrease is the result of the higher sales level in fiscal 1999. The increase in SG&A spending is primarily related to the fiscal 1998 acquisition of PTA being included in the fiscal 1999 results. Interest expense was $1.7 million in the second quarter of fiscal 1999 compared to $2.0 million in the same period of fiscal 1998. The decrease is due to the reduction of average outstanding borrowings resulting from a more favorable timing of cash flows. Other costs and expenses, net, were $1.6 million in the second quarter of fiscal 1999, compared with the $.6 million in the same period of fiscal 1998. The increase in fiscal 1999 reflects additional goodwill amortization associated with the acquisition of PTA and increases in other miscellaneous charges. The effective income tax rate in the second quarter of fiscal 1999 was 35.2% compared to 31.2% in the second quarter of fiscal 1998. The effective tax rate in the fiscal 1998 second quarter was favorably impacted by the earnings contributed by the Company's Puerto Rican operations. Results of Operations - Six months ended March 31, 1999 compared with six months ended March 31, 1998 Net sales of $184.4 million for the first six months of fiscal 1999 increased $20.3 million (12.4%) from net sales of $164.1 million for the first six months of fiscal 1998. The increase was primarily due to significantly higher PREPA sales at DCSI; the impact of the fiscal 1998 acquisition of PTA; additional sales of filtration products at Filtertek; and increased sales at SEI. Commercial sales increased approximately 20% over prior year and were $109.3 million (59.3%) and defense sales were $75.1 million (40.7%) for the first six months of fiscal 1999, compared with commercial and defense sales of $90.8 million (55.3%) and $73.3 million, (44.7%) respectively, in the first six months of fiscal 1998. Order backlog increased $90.3 million (30.9%) to $382.4 million at March 31, 1999, compared with $292.1 million at September 30, 1998. During the first six months of fiscal 1999, new orders aggregating $274.7 million were received, compared with $189.3 million (45.1% increase) in the first six months of fiscal 1998. The most significant orders in the current period were for filtration/fluid flow products, TUNNER aircraft cargo loaders, M1000 Tank Transporters, electromagnetic compatibility test equipment, and automatic meter reading equipment. The gross profit percentage was 26.0% in the first six months of fiscal 1999 and 28.4% in the first six months of fiscal 1998. The fiscal 1999 gross profit percentage decreased from fiscal 1998 due to lower margins in the defense segment, primarily at SEI. The gross margin was also lower due to the residual impact of Hurricane Georges on Filtertek's Puerto Rican operation, and a general slowdown experienced in some industrial markets. Selling, general and administrative expense for the first six months of fiscal 1999 were $35.8 million, or 19.4% of net sales, compared with $32.8 million or 20.0% of net sales, for the same period a year ago. The increase in fiscal 1999 SG&A spending is primarily related to the fiscal 1998 acquisitions of PTA and Euroshield being included in the fiscal 1999 results. Interest expense decreased to $3.4 million from $3.6 million as a result of lower average outstanding borrowings in fiscal 1999 compared to fiscal 1998. Other costs and expenses, net, were $3.2 million in the first six months of fiscal 1999 compared to $1.7 million in the same period of fiscal 1998. The net increase in fiscal 1999 reflects additional goodwill amortization expense associated with the acquisitions of PTA and Euroshield and increases in other miscellaneous charges. The fiscal 1998 amount is impacted by the favorable modification of a royalty agreement. The effective income tax rate in the first six months of fiscal 1999 was 35.1% compared with 30.7% for the first six months of fiscal 1998. The lower effective tax rate for the first six months of fiscal 1998 is attributable to the earnings contributed from the Company's Puerto Rican operations, and refunds received relating to state and local taxes. Management estimates the annual effective tax rate for fiscal 1999 to be approximately 35%. As discussed in Note 4 of Notes to Condensed Consolidated Financial Statements, the Company adopted the provisions of SOP 98-5 in the first quarter of fiscal 1999. This change in accounting principle resulted in a non-cash, after-tax charge of approximately $25 million, and was recognized as a cumulative effect of an accounting change. Financial Condition Working capital decreased to $31.5 million at March 31, 1999 from $60.3 million at September 30, 1998, primarily due to the inventory adjustments related to the change in accounting principle noted above (SOP 98-5). During the first six months of fiscal 1999: accounts receivable decreased by $5.5 million as a result of the timing of sales and collections throughout the period; costs and estimated earnings on long-term contracts and inventories decreased in the aggregate by $25.0 million primarily due to the adoption of SOP 98-5, partially offset by increased production requirements to satisfy the additional sales requirements expected over the balance of fiscal 1999; and accounts payable and accrued expenses decreased by $6.6 million due to the timing of payments. Net cash provided by operating activities was $3.1 million in the first six months of fiscal 1999 compared to net cash used by operating activities of $4.9 million in the same period of fiscal 1998. The prior year cash used by operating activities was primarily impacted by inventory requirements and vendor payments. Cash flow from operations and borrowings under the bank credit facility are expected to provide adequate resources to meet the Company's capital requirements and operational needs for the foreseeable future. The Company's primary market risk exposure is its debt. All of the Company's debt is priced at a percentage over LIBOR. The Company has reduced this risk through a rate swap agreement that provides a cap on LIBOR of 7% on $40 million of the long-term debt through September 30, 1999 The Company does not have significant risk or exposure to fluctuations in foreign currencies, which are hedged through the purchase of forward currency contracts. Capital expenditures were $4.3 million in the first six months of fiscal 1999 compared with $6.5 million in the comparable period of fiscal 1998. Major expenditures in the current period included manufacturing equipment at Filtertek and PTI. The Year 2000 Issue The Year 2000 ("Y2K") issue refers to the inability of a date-sensitive computer program to recognize a two-digit date field designated as "00" as the year 2000. Mistaking "00" for 1900 could result in a system failure or miscalculations causing disruptions to operations, including manufacturing, a temporary inability to process transactions, send invoices, or engage in other normal business activities. This is a significant issue for most, if not all, companies with far reaching implications, some of which cannot be anticipated or predicted with any degree of certainty. State of Readiness The Company has designated a corporate Y2K coordination team comprised of various senior management members. Each operating unit has identified a Y2K coordinator responsible for planning and monitoring their Y2K program and reporting on a regular basis to the corporate team. The Company continues to assess the magnitude of its Y2K issue and has already determined that it may be required to modify or replace certain portions of its software and hardware so that its computer systems including information technology and non-information technology will be able to function properly beyond December 31, 1999. This may require replacement, reprogramming or other remedial action. The Company is also communicating with its suppliers and customers to determine the extent of the Company's vulnerability to the failure of third parties to remediate their own Y2K issue. In conjunction with this assessment, the Company is finalizing its action plans to address the Y2K issue, including contingencies to address unforeseen problems. The Company plans to use both internal and external resources to complete Y2K reprogramming, software replacement and testing. Costs to Address the Y2K Issue Preliminary plans anticipate completion of the Y2K remedial work by September 30, 1999. To date, the Company has incurred approximately $2.75 million related to the Y2K remedial work. The total cost of the Y2K remedial work is estimated to be less than $5 million and will be expensed as incurred over the next 6 months. The expected costs of the project and the date on which the Company plans to complete the Y2K remediationwork are based on management's best estimates, which were derived from numerous assumptions about future events, including the availability of certain resources, third-party modification plans and other factors. However, there can be no guarantee that these estimates will be achieved and actual results could differ materially from those plans. Specific factors that might cause material differences include, but are not limited to, the availability and cost of personnel trained in this area and the ability to identify and correct all relevant computer codes. Risk Analysis Like most large business entities, the Company is dependent upon its own internal technology and relies upon timely performance by its business partners. The Company's Y2K program is designed to identify and minimize its Y2K risk and includes significant testing and refinement of its internal systems to ensure, to the extent feasible, all systems will function before and after the Year 2000. The Company is continually updating its understanding of the Y2K risks posed to its business partners based on information obtained through surveys and interviews. This review will continue throughout calendar year 1999. Contingency Plans Followingits risk analysis as described above, the Company's Y2K program includes a contingency planning phase in which appropriate plans are currently being made to attempt to minimize disruption to the Company's operations in the event of a Y2K failure. The Company is formulating plans to handle a variety of failure scenarios, including failures of its internal systems, as well as failures of significant business partners. The level of planning required is a function of the risks ascertained through the Company's investigating efforts. The Company anticipates contingency planning across the enterprise will be completed by the end of calendar year 1999. While no assurances can be given, because of the Company's extensive efforts to formulate and carry-out an effective Y2K program, the Company believes its program will be completed on a timely basis and should effectively minimize disruption to the Company's operations due to the Year 2000 issue. Forward Looking Statements Statements in this report that are not strictly historical are "forward looking" statements within the meaning of the safe harbor provisions of the federal securities laws. Investors are cautioned that such statements are only predictions, and speak only as of the date of this report. Actual results may differ due to risks and uncertainties which are described in the Company's Form 10-K for fiscal year 1998, on page 39 of the 1998 Annual Report to Shareholders and in "The Year 2000 Issue" section above. Item 3. Quantitative and Qualitative Disclosures About Market Risk. See discussion at "Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition". PART II OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. The Annual Meeting of the Company's shareholders was held on Tuesday, February 9, 1999. Voted on at the meeting was the election of two directors. The voting for directors was as follows: For Withheld J. J. Adorjan 10,543,281 39,904 W. S. Antle III 10,469,613 113,572 The only other matter voted on at the meeting was a proposal to approve the 1999 Stock Option Plan. The voting on this proposal was as follows: Broker For Against Abstentions Non-Votes 9,991,563 535,605 56,014 0 Item 6. Exhibits and Reports on Form 8-K. a) Exhibits. NONE b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended March 31 1999. SIGNATURE 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. ESCO ELECTRONICS CORPORATION /s/Philip M. Ford Philip M. Ford Senior Vice President and Chief Financial Officer (as duly authorized officer and principal financial Dated: May 13, 1999 officer of the registrant) EX-27 2
5 1,000 6-MOS SEP-30-1999 MAR-31-1999 6,503 0 46,644 573 63,361 139,992 151,661 58,484 382,290 108,535 0 0 0 127 199,071 382,290 184,407 184,407 136,477 172,291 3,190 0 3,436 5,490 1,928 0 0 0 (25,009) (21,447) (1.74) (1.74) THIS NUMBER DOES NOT INCLUDE $20.3 MILLION OF COSTS AND ESTIMATED EARNINGS ON LONG-TERM CONTRACTS
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