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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1995 Commission File Number 1-8533
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2632319
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Sylvan Way, Parsippany, New Jersey 07054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 898-1500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Class A Common Stock, $.01 par value American Stock Exchange
Class B Common Stock, $.01 par value American Stock Exchange
8 1/2% Convertible Subordinated American Stock Exchange
Debentures due August 1, 1998
Securities registered pursuant to Section 12(g) of the Act:
None
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 the
filing requirements for the past 90 days.
Yes [X] No [ ]
The aggregate market value of shares of Class A Common Stock and Class B
Common Stock held by non-affiliates, based on the closing prices for such stock
on the American Stock Exchange on June 20, 1995, was approximately $27,000,000.
The number of shares of Class A Common Stock and Class B Common Stock
outstanding as of June 20, 1995 was 3,307,324 and 2,166,134, respectively
(exclusive of 432,639 shares of Class A Common Stock and 21,619 shares of Class
B Common Stock held in the treasury).
DOCUMENTS INCORPORATED BY REFERENCE
1. Diagnostic/Retrieval Systems, Inc. 1995 Annual Report (for the fiscal year
ended March 31, 1995), incorporated in Part II.
2. Definitive Proxy Statement, dated July 7, 1995, for the 1995 Annual Meeting
of Stockholders, incorporated in Part III.
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PART I
Item 1. Business
General
Diagnostic/Retrieval Systems, Inc. (the "Company" or "DRS") was
incorporated in Delaware in 1968. The operating units of the Company conduct
their business in both military and commercial markets; however, revenues are
derived principally from contracts or subcontracts with domestic and foreign
government agencies of which a significant portion is attributed to U.S. Navy
("Navy") procurements. The Company's principal products and services fall within
five broad categories: signal processors and display systems, trainer and
simulation systems, data storage and playback systems, optics and manufacturing
and technical services. Products within these categories include advanced
integrated display workstations, sonar trainer systems, simulators, data
recording playback systems and aircraft boresight systems. Manufacturing and
technical services are provided in both military and commercial environments and
encompass a wide range of activities that include field service support for the
Navy fleet, refurbishment of video recording products and the manufacture of
complex cable and harness assemblies and consumable magnetic head products.
The Company's growth over the years has been enhanced through the
technological development of its products and services, and, since 1984, by the
acquisition of several companies. In May 1984, DRS made its first acquisition
with the purchase of Precision Echo, Inc. ("Precision Echo"), a company located
in Santa Clara, California, engaged in the design and manufacture of magnetic
recording devices, including those used in antisubmarine warfare. In August
1988, the Company acquired Photronics Corp. ("Photronics"), located in
Hauppauge, New York, a company principally engaged in the design and manufacture
of optical components, assemblies and optical systems used in the targeting and
fire-control instrumentation of a variety of advanced military weapons. During
fiscal 1994, the Company added three new operations. In October 1993, the
Company acquired Technology Applications & Service Company ("TAS"), located in
Gaithersburg, Maryland. TAS applies state-of-the-art technology to produce
inexpensive displays and computer peripheral emulators that can replace more
expensive militarized display consoles and computer peripherals used by the
military. TAS also produces simulators, stimulators and training products used
primarily for testing and training at military land-based sites. The acquisition
of TAS provides an enhancement to the Company's display and trainer systems
product lines as well as broadens the Company's scope of technical services. In
December 1993, through its subsidiary DRS Systems Management Corporation, the
Company formed a partnership called Laurel Technologies ("Laurel") in which it
has an 80% controlling interest. The partnership operates from a manufacturing
facility in Johnstown, Pennsylvania and provides manufacturing services to a
variety of customers including the Company's other operating units. Also in
December 1993, DRS acquired certain assets of CMC Technology ("CMC"), located in
Santa Clara, California, providing the Company with a customer base in the
commercial video recording systems industry and an opportunity to diversify from
its traditional military and industrial markets. The Company's commercial
business base was further expanded in November 1994, with the acquisition of the
net assets of Ahead Technology Corporation ("Ahead") located in Los Gatos,
California. Ahead designs and manufactures a variety of consumable magnetic head
products used in the production of computer disk drives.
Products
Signal Processors and Display Systems
The Company's signal processor and display business has its roots in the
area of underwater surveillance with products which were designed initially for
the Navy's antisubmarine warfare ("ASW") program. Detection of subsurface
targets is an extremely difficult technical task due to a variety of factors,
which include wide variations in salinity, temperature, the generally unknown
contour of the subsurface floor, and, in the case of submarines, their ability
to operate quietly and take evasive actions to avoid detection.
In 1972, the Company pioneered passive sonar detection with its AN/SQS-54
Spectrum Analyzer Set. This system was deployed on Navy surface combatants and
was utilized to detect submarines. The Company then developed the AN/SQR-17, the
AN/SQR-17A Sonar Signal Processor systems and the signal processor and
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display generator of the AN/SQR-18A Tactical Towed Array Sonar System, which
totally integrated submarine detection, classification, display and recording
capabilities by processing information from the most advanced
helicopter-deployed and ship-launched sonobuoys, as well as passive sonar data
from hull-mounted and towed array sonars. These systems remain a vital part of
the Navy's core, reserve and international program capabilities. Using this
technology, the Company produced AN/SQR-17A(V)3 processors for Mobile In-shore
Undersea Warfare ("MIUW") systems. The current MIUW systems are electronically
equipped vans, which utilize standard issue deployable sonobuoys or anchored
passive sonobuoys to conduct underwater surveillance for harbor defense, coastal
defense and amphibious-operation surveillance. MIUW also is used to enhance drug
interdiction and underwater sonar systems. The system includes radars, radar
intercept systems, thermal and visual imaging systems and underwater sonar
systems. The Company also provides AN/SQR-17A(V)3 system upgrade units for sonar
processing and display for the next generation MIUW system, the MIUW-SU (system
upgrade). The AN/SQR-17A(V)3 upgrade system, the seventh generation in the
product line, provides improved underwater surveillance capabilities in
detection, classification, localization and neutralization of military and
paramilitary threats. This is an integrated system which, along with sonobuoys,
utilizes retrievable, bottom-mounted acoustic arrays and omni-hydrophone barrier
strings as the primary underwater sensors. The Company, through a subcontract
with a sensor manufacturer, is responsible for designing and delivery of the
underwater sensor for this program. The Company currently is planning delivery
of an AN/SQR-17A(V)3-SU for the new MIUW-SU vans in August 1995 and expects to
produce an additional 22 systems.
Backed by years of experience in display technology, DRS provides
high-resolution display processing systems. Data are presented in enhanced
formats, incorporating alphanumerics and graphics with human-factor
considerations to aid military personnel in target analysis and tactical
coordination. The Company, under contract with the Navy, has developed AN/UYQ-65
Data Processing and Display Sets. These systems are high-resolution,
dual-monitor, color raster display workstations. When deployed on Navy ships,
they will support both tactical graphics and acoustic sensor display formats and
have been designed to replace the tactical and acoustic sensor displays in the
AN/SQQ-89 Combat System. The AN/UYQ-65 is a Commercial-Off-The-Shelf
("COTS")-based workstation that is compliant with the stringent environmental
requirements specified for sheltered shipboard systems used on U.S. Navy vessels
such as the DDG-51 Aegis ships. With the delivery and acceptance of three
engineering development models in April 1995, the Company has transitioned to
the production phase of the program. It is expected that up to 148 production
units may be manufactured under this contract.
The Company, through its teammate, the Government Systems Group of Unisys
Corporation, now called Loral Corporation Defense Systems-Eagan, was awarded a
contract to provide a next-generation tactical workstation-the AN/UYQ-70
Advanced Display System ("ADS"). The Company has developed significant portions
of hardware and software for these workstations utilizing commercial and Navy
standards and has delivered the first prototypes. The open-system architecture
design of both the ADS and the AN/UYQ-65 systems provide built-in growth
capabilities for future upgrades and incorporate the latest in commercial
processing, graphics, networking and data storage technologies.
With the acquisition of TAS, DRS expanded into the Military Display
Emulator ("MDE") market. TAS applies commercial technology to design, develop
and produce MDEs, which are low-cost, microprocessor-based information
processing and display workstations that emulate existing military display
consoles and computer peripherals. The Company produces a product line that
provides plug-compatible emulation of Navy display equipment at a fraction of
the military equipment cost. The MDE product line includes commercial grade
equivalents of fully militarized tactical and acoustic display equipment, video
signal simulator and communication systems. Many fully militarized units have
been emulated with MDE products. Applications for emulation products include
software development, software maintenance, system test and integration and
operator training. Emulators support cost-effective replacement of land-based
military display equipment without sacrificing operational requirements. Cost
savings on these systems are typically 75% of their military equivalents.
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Under contract with the Navy, the Company has produced display emulators
and central data buffers for the Navy's Aegis program. The Company received a
multiple year contract to produce complete units and/or components of display
emulators for various training facilities.
Using the MDE concept, the Company, under contract with the Navy, was
engaged to demonstrate the feasibility of using MDE equipment in a shipboard
environment. The study included a determination of the applicability of
replacing fully militarized equipment with ruggedized COTS equipment, as well as
the design, development and production of displays for shipboard applications.
Three units were delivered in February 1994 and delivery of the remaining eight
units and final software development were completed during fiscal 1995.
Revenues during fiscal 1995, 1994 and 1993 for the Company's signal
processors and display systems totalled $20,300,000, $22,800,000 and
$17,300,000, respectively.
Trainers and Simulation Systems
For many years, DRS has emphasized the need for "on-board" training to
maintain operator proficiency. The Company's ASW acoustic stimulator systems
were developed to train new military personnel as well as to maintain the highly
perishable skills of veteran sensor operators. Through technological upgrades,
these systems have been adapted for new sensors and a variety of training
requirements.
The Company's AN/SQQ-T1 On-Board Trainer ("OBT") is an acoustic trainer
designed and built for the AN/SQR-17A and AN/SQR-18A systems, and has been used
on Navy FF-1052 frigates. The OBT, a high-fidelity, modular, acoustic
stimulator, is used to sharpen the skills of sonar operators through target
identification, analysis and classification. It generates simulated
high-fidelity acoustic signals closely resembling those of actual targets under
various environmental conditions. As a result of the decommissioning of the
FF-1052 frigates, DRS is currently under contract with the Navy to upgrade the
three existing OBT units and deliver three additional units. These six units
will be portable and will be used at 20 different MIUW van sites around the
United States. The newly configured OBT, designated the AN/SQQ-T1A, will be used
for training in existing MIUW vans. The AN/SQQ-T1A will furnish training for
acoustic sensor operators and radar operators by providing simulated inputs to
the AN/SQR-17A and SPS-64, both part of the MIUW van's sensor signal processing
equipment.
As part of the MIUW-SU program, the Company is providing an embedded
readiness trainer system for the van. This system provides acoustic proficiency
training, Graphical Data Fusion System proficiency training and overall
coordinated team training for the operators and supervisors assigned to operate
the new MIUW-SU surveillance vans.
Under a contract award received during fiscal 1994 from the Oceanic
Division of Westinghouse Electric Company ("Westinghouse"), DRS has developed
and delivered three Sonar Image Display Simulators ("SIDS"). SIDS is a major
subsystem of the AN/AQS-14 Mod 2 Side Looking Sonar ("SLS") Trainer. Using a
COTS-oriented workstation approach, the high-fidelity software-based display
simulator produces realistic, ready-to-display images of typical SLS returns.
The SIDS workstation software generates various background textures, bottom
features and objects of interest along a search plan as specified by a mission
scenario. Integrated as part of the ground-based AN/AQS-14 trainer system, the
sonar image display simulators will be utilized to train operators in
preparation for critical mine hunting missions.
Revenues from the Company's trainers and simulation systems during fiscal
1995, 1994 and 1993 amounted to $8,400,000, $4,700,000 and $2,600,000,
respectively.
-4-
Data Storage and Playback Systems
The positive feedback of multi-source, time-correlated mission data has
become essential to crew operational effectiveness and training. Using magnetic
tape recording systems with multiple signal acquisition interfaces, the crew can
capture the mission context for verification of target contacts and validation
of tactics employment. Using the mission tape during post-mission analysis and
reconstruction, the crew can improve tactics and target acquisition/recognition.
DRS provides a variety of military and security-related recording products.
A substantial portion of the military recorders has been related to the Navy's
ASW program. The Company's ASW recording products are utilized in ships,
aircraft and helicopters and, in some instances, incorporated with its other ASW
products. These recorders are used to store processed data gathered during ASW
missions. The recorders are more rugged in construction than those used
commercially and are suited for application in environments where vibration,
temperature or contamination are potential problems.
The Company's AN/AQH-4A(V)2 recorders/reproducers are used for ASW
information gathering on board patrol aircraft, such as the Navy's P-3C. These
recorder/reproducer systems record data transmitted from sonobuoys regarding the
location of submerged vessels. DRS also produces digital annotation kits, which
consist of board sets that enhance post-mission analysis when installed in the
AN/AQH-4A(V)2 recorders. The Company is under contract to install digital
annotation kits into U.S. Government-owned recorders.
A variant of the AN/AQH-4A(V)2 recorder/reproducer system records side
looking sonar data on board the MH-53E mine hunting helicopter. The Westinghouse
AN/AQS-14 mine detection system is used to detect mines in critical areas on the
ocean floor, such as ship transit lanes and harbors. Under contract to
Westinghouse, the Company is developing a digital cassette recorder, the
AN/AQH-12, as a follow-on to the current analog recorder. The new digital
recorder, using a low-cost, half-inch tape format to record digitized sensor
data, will replace the existing reel-to-reel machine in the mine hunting mission
and also will be capable of reproducing the data. The basic design will have
many general-purpose instrumentation applications where severe environments are
encountered.
The Company produces the AN/AQH-9 analog mission tape recording systems and
the follow-on AN/AQH-11 digital mission recorders. These two systems were
developed with the weight and volume constraints of ASW helicopters in mind.
Both systems utilize low-cost, VHS style half-inch tape cassettes. The digital
technology used in the AN/AQH-11 has improved throughput capacity up to five
times that of the AN/AQH-9. The AN/AQH-9 system is employed on the Navy's SH-60F
ASW helicopter and the Republic of China Navy's S-70(C)M helicopter. The
AN/AQH-11 system is used on the U.S. Navy's SH-2G helicopter.
The Company produces the AN/GSH-65 mission data playback system to
reconstruct mission tapes from both the AN/AQH-9 and AN/AQH-11 mission
recorders. The AN/GSH-65 has been configured to accept tapes from both airborne
systems in one common ground replay system. The AN/GSH-65 is a transportable and
environmentally protected system for use in severe shipboard environments. The
AN/GSH-65 is now being deployed to operational squadrons and ships.
Under contract with the Naval Air Systems Command, DRS has developed the
AN/USH-42 Mission Recorder/Reproducer System ("MR/RS"). The AN/USH-42 MR/RS is a
military-specification quality, multiple input data recorder using a half-inch,
VHS style high-performance tape cassette. The AN/USH-42 has completed flight
testing on a Navy A-6E aircraft at the Naval Air Test Center at Patuxent River.
The AN/USH-42 can record multiple sensor video channels with full motion frame
rates plus digital data and voice. The AN/USH-42 incorporates many user
enhancements, such as in-flight replay and freeze frame, and contains embedded
digital video scan converters to record radar signals in VHS format.
-5-
The AN/USH-42 architecture has been selected by the Naval Air Systems
Command to replace wet film recording in the S-3B Viking carrier-based aircraft.
The AN/USH-42 embedded video scan converters will be used to transform the
non-standard video formats in the S-3B weapons system into standard television
format for rapid replay and radar and infrared dissemination. Several
developmental options of the AN/USH-42 architecture are being evaluated for
product improvement upgrades.
For single-channel raster video recording applications, the Company sells
the WRR-812 and WRR-818 8mm video cassette recorders. Both of these recorders
employ the high band, color video format which yields 400-line horizontal
resolution performance. The 8 mm recorders are used where environmental
conditions are severe. Currently, these recorders are being installed onto the
Canadian Light Armored Vehicle, the U.S. Army OH-58D Kiowa Warrier Scout
helicopter and the U.S. Navy's F/A-18 Hornet carrier-based aircraft. Both
recorders feature high-performance recording, a flexible control interface and
low weight for video recording applications in harsh environments.
The 8 mm video recording product line is being expanded to include a triple
deck video recorder carrying the model designation WRR-833. The same
high-performance video recording capability found in the single-channel models
is available in a multiple-deck unit. Additionally, a system multiplexer has
been designed which can digitally merge multiple video, analog and digital data
streams onto one 8 mm tape cassette. With the flexibility of the new multiplex
design, recording problems that previously could only be solved by multiple,
asynchronous recorders can now be handled by a single recording system.
Revenues from the Company's data storage and playback systems comprised
$14,800,000, $15,900,000 and $18,200,000 of total revenues in fiscal 1995, 1994
and 1993, respectively.
Optics
The Company's optical products include boresighting systems and missile
components. Through the generic boresight technology developed by the Company,
named Multiple Platform Boresight Equipment ("MPBE"), DRS produces boresight
systems that are adaptable to multiple military platforms, including fixed-wing
and rotary-wing aircraft, as well as armored vehicles. This equipment features
the Triaxial Measurement System, which is a single beam instrument that
simultaneously measures azimuth, elevation and roll. Through the use of
airframe-specific mounting adapters, the MPBE can be tailored for boresighting
virtually any aircraft's, naval vessel's and ground vehicle's navigation, sensor
and weapons systems. By using an off-the-shelf configuration, these products
have been designed to address the military's emphasis on cost-effective,
expediently produced products that are more readily upgradable to accommodate
future technology and military budget objectives.
The Company has designed and developed boresight support equipment for the
U.S. Army's AH-64A Apache Helicopter--the Captive Boresight Harmonization Kit
("CBHK"). CBHK is a portable, ground-support system that aligns the aircraft's
navigation, targeting and weapons systems with the pilot's optical gear to
assure optimum accuracy in target acquisition.
The Company is currently under contract to produce 33 Rapid Armament
Boresighting Systems ("RABS") for the Marine Corps' AH-1W Cobra helicopter.
Similar in scope to the CBHK, RABS provides the ability to harmonize and align
the Cobra's weapons, targeting and navigation systems to insure increased
accuracy. The Company is also under contract to produce eight units for a
boresighting system for Cobra helicopters used by Taiwan, Republic of China.
-6-
Since the early 1970s, DRS has manufactured optical components utilized in
the guidance systems of various heat seeking missiles, including the FIM-92
Stinger ("Stinger"), AIM-9 Sidewinder and the RIM-166 RAM missile systems. These
missile optics are used to focus incoming infrared energy onto the missile's
electronic detector, allowing it to accurately track and destroy its target. The
Stinger is a man-portable, infrared homing missile designed to provide air
defense coverage. DRS is the manufacturer of the primary assemblies for this
missile and has produced over thirty thousand mirrors in support of the Stinger
program. The Stinger currently is being produced in the United States and
Germany. The AIM-9 Sidewinder is a short-range air-to-air missile in service in
at least forty nations. DRS has been producing mirror assemblies in support of
the AIM-9 program since 1965.
The Company also has been active in the development of mirror assemblies
for the next generation of missile systems. These advanced new missile systems
include the Brilliant Anti-Tank program, the AIM-9X advanced missile and the
THAAD missile program.
DRS also manufactures optical components and assemblies using specialized
techniques, such as diamond turning and electron beam deposition coating. These
components are utilized on such defense systems as the Avenger sighting system,
the Nite-Hawk targeting system and the TOW/Cobra weapon system.
Revenues for the Company's optics products were $12,600,000, $10,100,000
and $8,800,000 during fiscal 1995, 1994 and 1993, respectively.
Manufacturing and Technical Services
Through a partnership formed during fiscal 1994 with Laurel Technologies,
Inc., the Company has established a manufacturing facility in Johnstown,
Pennsylvania to provide high-quality, cost-effective manufacturing services for
military and industrial products. These services include manufacturing,
integration and testing of military-quality electronic assemblies, complex
cables and harnesses and circuit card assemblies. Laurel provides these services
to aerospace and industrial companies, as well as to other operating units
within the Company.
DRS also provides a variety of technical services for its own products, as
well as those manufactured by other companies. The Company maintains field
service operations at locations near the principal Navy shipyards in Norfolk,
Virginia and San Diego, California, which provide support services to the Navy
and, to a lesser extent, commercial ship repair companies. The scope of
technical services includes equipment installation, field changes, configuration
audit, repair, testing and integrated logistics support and maintenance of
combat system test procedures. The Company also engages in technical service
support to foreign governments.
With the decommissioning of the FF-1052 class frigates, the Navy has
started a program of leasing these ships to foreign navies, including the
Republic of China, Egypt, Turkey and Greece. In support of this leasing program,
DRS has been tasked to provide AN/SQR-17A system grooms and repairs, as well as
training for foreign military personnel in the maintenance of this equipment.
The Company expects to continue to be involved in the Navy's support plan to
provide spare parts and repair services to these foreign navies.
Through its acquisition of certain assets of CMC in fiscal 1994, and the
more recent acquisition of the net assets of Ahead in fiscal 1995, the Company
has taken steps toward diversifying beyond its traditional military and
industrial product base by exploring opportunities in technologically-related
commercial business areas. Through CMC, the Company refurbishes and rebuilds
magnetic video recording rotary-head scanner assemblies for post-production
facilities and television broadcast stations around the world and also provides
upper drum refurbishment services for broadcast-quality video recording
products. Through Ahead, the Company designs and manufactures a variety of
consumable magnetic head products used in the production of computer disk
drives. These include burnishing heads, glide heads and speciality test heads.
As a result of these acquisitions, the Company's customer base has been expanded
to include customers in the commercial video recording systems industry and
several prominent manufacturers of computer disk drives.
-7-
Revenues for manufacturing and technical services, as adjusted to eliminate
intercompany transactions, were $13,800,000, $4,300,000 and $900,000 in fiscal
1995, 1994 and 1993, respectively.
Customers
A significant portion of the Company's products are sold to agencies of the
U.S. Government, primarily the Department of Defense, to foreign government
agencies or to prime contractors or subcontractors thereof. Approximately 84%,
94% and 83% of total consolidated revenues for fiscal 1995, 1994 and 1993,
respectively, were derived directly or indirectly from defense contracts for end
use by the U.S. Government and its agencies.
For information concerning sales to foreign governments, see "Export Sales"
below.
Backlog
The following table sets forth the Company's backlog by major product group
(including enhancements, modifications and related logistics support) at the
dates indicated:
March 31, March 31, March 31,
1995 1994 1993
--------- --------- ---------
Government Products:
U.S. Government ....... $115,200,000 $123,700,000 $123,900,000
Foreign Government .... 8,600,000 5,800,000 1,000,000
------------ ------------ ------------
123,800,000 129,500,000 124,900,000
Commercial Products ... 2,200,000 5,100,000 1,200,000
------------ ------------ ------------
$126,000,000 $134,600,000 $126,100,000
============ ============ ============
"Backlog" refers to the aggregate revenues remaining to be earned at the
specified date under contracts held by the Company, including, for U.S.
Government contracts, the extent of the funded amounts thereunder which have
been appropriated by Congress and allotted to the contract by the procuring
Government agency. Fluctuations in backlog amounts relate principally to the
timing and amount of Government contract awards.
Approximately 54% of the backlog at March 31, 1995 is expected to result in
revenues during the fiscal year ending March 31, 1996.
-8-
Research and Development
The Company's technological expertise has been an important factor in its
growth. A portion of its research and development activities has taken place in
connection with customer-sponsored research and development contracts. All such
customer-sponsored activities are the result of contracts directly or indirectly
with the U.S. Government. The Company also invests in Company-sponsored research
and development.
Revenues recorded by the Company for customer-sponsored research and
development and expenditures for Company-sponsored research and development are
as follows during the fiscal years indicated:
Revenues Expenditures
-------- ------------
Fiscal Year Ended:
March 31, 1995 ................. $18,800,000 $800,000
March 31, 1994 ................. $27,500,000 $500,000
March 31, 1993 ................. $19,200,000 $500,000
The military electronics industry is subject to rapid technological changes
and the Company's future success will depend in large part upon its ability to
improve existing product lines and to develop new products and technologies in
the same or related fields.
Contracts
The Company's contracts are normally for production, service or
development. Production and service contracts are typically of the fixed-price
variety with development contracts currently of the cost-type variety. Because
of their inherent uncertainties and consequent cost overruns, development
contracts historically have been less profitable than production contracts.
Fixed-price contracts may provide for a firm-fixed price or they may be
fixed-price-incentive contracts. Under the firm-fixed-price contracts, the
Company agrees to perform for an agreed-upon price and, accordingly, derives
benefits from cost savings, but bears the entire risk of cost overruns. Under
the fixed-price-incentive contracts, if actual costs incurred in the performance
of the contracts are less than estimated costs for the contracts, the savings
are apportioned between the customer and the Company. However, if actual costs
under such a contract exceed estimated costs, excess costs are apportioned
between the customer and the Company up to a ceiling. The Company bears all
costs that exceed the ceiling.
Cost-type contracts typically provide for reimbursement of allowable costs
incurred plus a fee (profit). Unlike fixed-price contracts in which the Company
is committed to deliver without regard to performance cost, cost-type contracts
normally obligate the Company to use its best efforts to accomplish the scope of
work within a specified time and a stated contract dollar limitation. In
addition, Government procurement regulations mandate lower profits for cost-type
contracts because of the Company's reduced risk. Under cost-plus-incentive-fee
contracts, the incentive may be based on cost or performance. When the incentive
is based on cost, the contract specifies that the Company is reimbursed for
allowable incurred costs plus a fee adjusted by a formula based on the ratio of
total allowable costs to target cost. Target cost, target fee, minimum and
maximum fee and adjustment formula are agreed upon when the contract is
negotiated. In the case of performance-based incentives, the Company is
reimbursed for allowable incurred costs plus an incentive, contingent upon
meeting or surpassing stated performance targets. The contract provides for
increases in the fee to the extent that such targets are surpassed and for
decreases to the extent that such targets are not met. In some instances,
incentive contracts also may include a combination of both cost and performance
incentives. Under cost-plus-
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fixed-fee contracts, the Company is reimbursed for costs and receives a fixed
fee, which is negotiated and specified in the contract. Such fees have statutory
limits.
The percentages of revenues during fiscal 1995, 1994 and 1993 attributable
to the Company's contracts by contract type were as follows:
Year Ended March 31,
------------------------
1995 1994 1993
---- ---- ----
Firm-fixed-price ........... 74% 65% 88%
Fixed-price-incentive ...... -- 1% --
Cost-plus-incentive-fee .... 6% 17% 10%
Cost-plus-fixed-fee ........ 20% 17% 2%
The Company negotiates for and generally receives progress payments from
its customers of between 80-100% of allowable costs incurred on the previously
described contracts. Included in its reported revenues are certain amounts which
the Company has not billed to customers. These amounts, approximately
$7,900,000, $5,900,000 and $8,100,000 as of March 31, 1995, 1994 and 1993,
respectively, consist of costs and related profits, if any, in excess of
progress payments for contracts on which sales are recognized on a
percentage-of-completion basis.
Under generally accepted accounting principles, all Government contract
costs, including applicable general and administrative expenses, are charged to
work-in-progress inventory and are written off to costs and expenses as revenues
are recognized. The Federal Acquisition Regulations ("FAR"), incorporated by
reference in Government contracts, provide that Company-sponsored research and
development costs are allowable general and administrative expenses. To the
extent that general and administrative expenses are included in inventory,
research and development costs also are included. Unallowable costs, pursuant to
the FAR, have been excluded from costs accumulated on Government contracts.
General and administrative costs, which include Company-sponsored research and
development costs, aggregating $6,600,000 and $3,800,000 at March 31, 1995 and
1994, respectively, are included in work-in-process inventory.
All domestic defense contracts and subcontracts to which the Company is a
party are subject to audit, various profit and cost controls, and standard
provisions for termination at the convenience of the customer. Multi-year
Government contracts and related orders are subject to cancellation if funds for
contract performance for any subsequent year become unavailable. In addition, if
certain technical or other program requirements are not met in the developmental
phases of the contract, then the follow-on production phase may not be realized.
Upon termination other than for a contractor's default, the contractor normally
is entitled to reimbursement for allowable costs, but not necessarily all costs,
and to an allowance for the proportionate share of fees or earnings for the work
completed. Foreign defense contracts generally contain comparable provisions
relating to termination at the convenience of the foreign government.
Companies engaged primarily in supplying defense-related equipment to the
Government are subject to certain business risks peculiar to the defense
industry. These risks include the ability of the Government to unilaterally
suspend the Company from receiving new contracts, pending resolution of alleged
violations of procurement laws or regulations. In addition, all defense
businesses are subject to risks associated with dependence on Government
appropriations, changes in Government procurement policies, uncertain cost
factors related to technologically scarce skills and exotic components, the
frequent need to bid on programs in advance of design completion (which may
result in unforeseen technological difficulties and/or cost overruns),
substantial time and effort required for relatively unproductive design and
development, design complexity and rapid obsolescence, and the constant
necessity for design improvement.
-10-
Government expenditures for defense products are likely to be flat or
reduced during the 1990s. These reductions may or may not have an effect on the
Company's programs; however, in the event expenditures for products of the type
manufactured by the Company are reduced and not offset by greater foreign sales,
commercial sales or other new programs or products, there will be a reduction in
the volume of contracts or subcontracts awarded to the Company. Unless offset,
such reductions would have an adverse affect on the Company's earnings.
Marketing
The Company's marketing activities are conducted by its own staff of
marketing personnel and engineers. The Company's domestic marketing approach
begins with the development of information concerning the present and future
requirements of its current and potential customers for defense electronics, as
well as those in the security and commercial communities serviced by the
Company's products. Such information is gathered in the course of contract
performance, research into the enhancement of existing systems and inquiries
into advances being made in hardware and software development, and is then
evaluated and exchanged among marketing, research and engineering groups within
the Company to devise proposals responsive to the perceived needs of customers.
The Company markets its products abroad through independent marketing
representatives.
Competition
The Company's products are sold in markets containing a number of
competitors which are substantially larger than the Company with greater
financial resources. The extent of competition for any single project generally
varies according to the complexity of the product and the dollar volume of the
anticipated award. The Company believes that it competes on the basis of the
performance of its products, its reputation for prompt and responsive contract
performance, and its accumulated technical knowledge and expertise.
Patents
The Company has patents on many of its recording and certain commercial
products. The Company does not believe patent protection to be significant to
its current operations; however, future programs may generate the need for
patent protection.
Manufacturing and Suppliers
The Company's manufacturing process for its products, excluding optical
products, consists primarily of the assembly of purchased components and testing
of the product at various stages in the assembly process. Purchased components
include integrated circuits, circuit boards, sheet metal fabricated into
cabinets, resistors, capacitors, semiconductors and insulated wire and cables.
In addition, many of the Company's products use machined castings and housings,
motors and recording and reproducing heads. Many of the purchased components
have been fabricated to Company designs and specifications. The manufacturing
process for the Company's optics products includes the grinding, polishing and
coating of various optical materials and the machining of metal components.
Although materials and purchased components generally are available from a
number of different suppliers, several suppliers are the Company's sole source
of certain components. If a supplier should cease to deliver such components,
other sources probably would be available; however, added cost and manufacturing
delays might result. The Company has not experienced significant production
delays attributable to supply shortages, but occasionally experiences
procurement problems with respect to certain components, such as semiconductors
and connectors. In addition, certain exotic materials, such as germanium, zinc
sulfide and cobalt, may not always be readily available.
-11-
The Company believes that quality control and testing are essential for
manufacturing reliable products. The Company's testing and quality control
procedures for products manufactured pursuant to Government contracts follow
military specifications and are designed to reduce the likelihood of product
failure after delivery.
Export Sales
DRS currently sells several of its products and services in the
international marketplace to countries such as Canada, Germany, Australia and
the Republic of China. Foreign sales accounted for approximately 7%, 3% and 17%
of the Company's revenues in fiscal 1995, 1994 and 1993, respectively. Foreign
sales are derived under export licenses granted on a case-by-case basis by the
United States Department of State. Foreign contracts at March 31, 1995 generally
were payable in United States' dollars.
Executive Officers of the Registrant
The names of the executive officers of the Company, their positions and
offices with the Company, and their ages are set forth below:
NAME POSITIONS WITH THE COMPANY AGE
- ---- -------------------------- ---
Leonard Newman Chairman of the Board and Secretary of the Company 71
Mark S. Newman President, Chief Executive Officer and Director of 45
the Company
Nancy R. Pitek Controller and Treasurer of the Company 38
Paul G. Casner, Jr. Vice President of the Company; President of DRS 57
Electronic Systems Group; President of Technology
Applications & Service Company
Stuart F. Platt Vice President and Director of the Company; 61
President of Precision Echo, Inc.
Richard Ross Vice President of the Company; President of 40
Photronics Corp.
Leonard Newman has been a Director of the Company since 1968 and Chairman
of the Board and Secretary of the Company since 1971. From 1971 until May 1994,
Mr. Newman also served as the Company's Chief Executive Officer. Leonard Newman
is the father of Mark S. Newman.
Mark S. 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. Mr. Newman became a Director of the Company in 1988. In
May 1994, Mr. Newman became the President and Chief Executive Officer of the
Company. Mark Newman is the son of Leonard Newman.
Nancy R. Pitek joined the Company in 1984 as Manager of Accounting. She
became Assistant Controller in 1985 and Director of Internal Audit in 1988. Ms.
Pitek became Director of Corporate Finance in 1990 and has been the Controller
since 1993. In May 1994, she also was appointed to the position of Treasurer.
Paul G. Casner, Jr. joined the Company in 1993 as President of TAS. In 1994
he also became President of the DRS Electronic Systems Group and a Vice
President of the Company. Mr. Casner has over 30 years of experience in the
defense electronics industry and has held positions in engineering, marketing
and general management. He was the president of TAS prior to its acquisition by
the Company.
-12-
Stuart F. Platt has been a Director of the Company since 1991 and became
the President of Precision Echo in July 1992. He was named Vice President of the
Company in May 1994. Rear Admiral Platt was a co-founder and director of FPBSM
Industries, Inc., a holding company and management consulting firm for defense,
aerospace and other technology-based companies and the Chairman of Stuart Platt
& Partners, a management consulting firm handling principally defense-related
issues. He also serves as director for Harding Associates, Inc. None of these
companies is a parent, subsidiary or affiliate of the Company. Rear Admiral
Platt held various positions as a military officer in the Department of the
Navy, retiring as Competition Advocate General of the Navy in 1986.
Richard Ross was employed by the Company as Assistant Vice President and
Director, Sales in 1986 and Assistant Vice President, Corporate Development in
1987. In 1988, he became Vice President of the Company, and in 1990, he became
President of Photronics.
Employees
At March 31, 1995, the Company employed 565 employees. None of the
Company's employees are represented by a labor union, and the Company has
experienced no work stoppages.
There is a continuing demand for qualified technical personnel, and the
Company believes that its future growth and success will depend upon its ability
to attract, train and retain such personnel.
Item 2. Properties
During fiscal 1995, the Company leased administrative and engineering
facilities in neighboring buildings at 16 Thornton Road ("Thornton") and 138
Bauer Drive ("Bauer"), Oakland, New Jersey. The Thornton and Bauer facilities
contain approximately 45,000 and 25,000 square feet, respectively. Upon
expiration of the Thornton lease in March 1995, the Company moved administrative
and engineering personnel, excluding the corporate staff, from the Thornton
building to the Bauer building. The Company leases the Bauer building from LDR
Realty Co., a partnership wholly-owned by Leonard Newman and David E. Gross, the
former President and Chief Technical Officer of the Company, under a lease which
expires in fiscal 1999. The Company currently leases approximately 6,000 square
feet of office space for its corporate headquarters in an office building at 5
Sylvan Way, Parsippany, New Jersey under a lease which expires in fiscal 2001.
Precision Echo's engineering and principal operations are located in a
55,000 square foot building at 3105 Patrick Henry Drive, Santa Clara,
California, under a lease which expires in fiscal 1997. The operations of CMC
and Ahead are conducted from leased facilities in Santa Clara, California and
Los Gatos, California, respectively. These leased facilities, containing 71,000
square feet and 12,000 square feet, respectively, are covered by leases, which,
with respect to the CMC facility, is on a month-to-month basis, and for the
Ahead facility, expires in fiscal 1998.
Photronics' principal and manufacturing facilities are located in a 45,000
square foot building at 270 Motor Parkway, Hauppauge, New York. The building,
which is owned by the Company, was built in 1983. See Note 6 of Notes to
Consolidated Financial Statements.
TAS leases 40,000 square feet in a building at 200 Professional Drive,
Gaithersburg, Maryland that houses its executive offices and principal
engineering and manufacturing facilities. It also conducts field service
operations from locations in Virginia Beach and National City, California. These
leased facilities, comprising 15,000 square feet and 6,000 square feet,
respectively, are covered by leases, which, with respect to the Virginia
location, expire in fiscal 1997, and for the California location, is on a
month-to-month basis.
-13-
Laurel's manufacturing facilities and administrative offices are located in
a 29,000 square-foot building at 423 Walters Avenue in Johnstown, Pennsylvania.
The lease for this facility expires in fiscal 1999.
The Company also leases approximately 2,000 square feet of office space in
Arlington, Virginia under a lease which expires in fiscal 1998.
Item 3. Legal Proceedings
The Company is a party to various legal actions and claims arising in the
ordinary course of its business. In management's opinion, the Company has
adequate legal defenses for each of the actions and claims and believes that
their ultimate disposition will not have a material adverse effect on the
Company's consolidated financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended March 31, 1995.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The information required by this item with respect to the market prices for
the Company's common equity securities is incorporated herein by reference to
page 31 of the Diagnostic/Retrieval Systems, Inc. 1995 Annual Report (for the
fiscal year ended March 31, 1995).
The Company has not paid any cash dividends since 1976. The Company intends
to retain future earnings for use in its business and does not expect to declare
cash dividends in the foreseeable future. As of June 20, 1995, the Class A
Common Stock and Class B Common Stock of the Company was held by 325 and 219
stockholders of record, respectively.
In July 1994, pursuant to a Stock Purchase Agreement (the "Stock Purchase
Agreement") between the Company and David E. Gross, its former President and
Chief Technical Officer, the Company purchased 659,220 shares of its Class A
Common Stock and 45,179 shares of its Class B Common Stock owned by Mr. Gross,
at a price of $4.125 and $4.00 per share, respectively, totaling approximately
$2.9 million in cash (the "Buy-back"). On October 18, 1994, the Company filed a
Registration Statement on Form S-2, and on November 10, 1994, the Company filed
Amendment No. 1 to such Registration Statement (the "Registration Statement")
with the Securities and Exchange Commission for the purpose of selling shares of
its common stock purchased in the Buy-back. Pursuant to the Registration
Statement, the Company sold 650,000 shares of its Class A Common Stock and
45,000 shares of its Class B Common Stock at prices of $4.125 and $4.00 per
share, respectively, totaling approximately $2.9 million.
Item 6. Selected Financial Data
The information required by this item is incorporated herein by reference
to page 13 of the Diagnostic/Retrieval Systems, Inc. 1995 Annual Report (for the
fiscal year ended March 31, 1995).
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required by this item is incorporated herein by reference
to pages 14 through 17 of the Diagnostic/Retrieval Systems, Inc. 1995 Annual
Report (for the fiscal year ended March 31, 1995).
-14-
Item 8. Financial Statements and Supplementary Data
The information required by this item is incorporated herein by reference
to pages 18 through 31 of the Diagnostic/Retrieval Systems, Inc. 1995 Annual
Report (for fiscal year ended March 31, 1995). See Part IV Item 14 herein for
additional information.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
The information required by this Part is incorporated herein by reference
to the Definitive Proxy Statement of the Company, dated July 7, 1995, for the
1995 Annual Meeting of Stockholders. Reference also is made to the information
under Executive Officers of the Registrant in Part I of this report.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements
The following financial statements of Diagnostic/Retrieval Systems,
Inc. and subsidiaries have been incorporated herein by reference to
the Diagnostic/Retrieval Systems, Inc. 1995 Annual Report (for the
fiscal year ended March 31, 1995), pursuant to Item 8 of this report:
1995 Annual
Report Page(s)
--------------
Independent Auditors' Report ....................... 31
Consolidated Balance Sheets--
March 31, 1995 and 1994 ............................ 18
Consolidated Statements of Earnings--
Years ended March 31, 1995, 1994 and 1993 .......... 19
Consolidated Statements of Stockholders' Equity--
Years ended March 31, 1995, 1994 and 1993 .......... 19
Consolidated Statements of Cash Flows--
Years ended March 31, 1995, 1994 and 1993 .......... 20
Notes to Consolidated Financial Statements ......... 21-30
2. Financial Statement Schedules
See Appendix A hereto.
3. Exhibits
Incorporated by reference to the Exhibit Index at the end of this
report.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter
ended March 31, 1995.
-15-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
Dated: June 28, 1995 /s/ MARK S. NEWMAN
-------------------------------------
Mark S. Newman,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ LEONARD NEWMAN Chairman of the Board, June 28, 1995
- ---------------------- Secretary and Director
Leonard Newman
/s/ MARK S. NEWMAN President, Chief Executive June 28, 1995
- ---------------------- Officer and Director
Mark S. Newman
/s/ NANCY R. PITEK Controller and Treasurer June 28, 1995
- ----------------------
Nancy R. Pitek
/s/ STUART F. PLATT Vice President, President of June 28, 1995
- ---------------------- Precision Echo and Director
Stuart F. Platt
/s/ THEODORE COHN Director June 28, 1995
- ----------------------
Theodore Cohn
Director June , 1995
- ----------------------
Donald C. Fraser
/s/ MARK N. KAPLAN Director June 28, 1995
- ----------------------
Mark N. Kaplan
/s/ JACK RACHLEFF Director June 28, 1995
- ----------------------
Jack Rachleff
-16-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
Dated: June , 1995
-------------------------------------
Mark S. Newman,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chairman of the Board, June , 1995
- ---------------------- Secretary and Director
Leonard Newman
President, Chief Executive June , 1995
- ---------------------- Officer and Director
Mark S. Newman
Controller and Treasurer June , 1995
- ----------------------
Nancy R. Pitek
Vice President, President of June , 1995
- ---------------------- Precision Echo and Director
Stuart F. Platt
Director June , 1995
- ----------------------
Theodore Cohn
/s/ DONALD C. FRASER Director June 28, 1995
- ----------------------
Donald C. Fraser
Director June , 1995
- ----------------------
Mark N. Kaplan
Director June , 1995
- ----------------------
Jack Rachleff
-16-
Appendix A
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES
INDEX
Independent Auditors' Report
Financial Statement Schedules
Schedule II--Valuation and Qualifying Accounts
All other financial statement schedules have been omitted because they are
not required, not applicable, or the required information is shown in the
consolidated financial statements or notes thereto.
-17-
Independent Auditors' Report on Consolidated
Financial Statement Schedule
The Board of Directors and Stockholders
Diagnostic/Retrieval Systems, Inc.:
Under date of May 18, 1995, we reported on the consolidated balance sheets
of Diagnostic/Retrieval Systems, Inc. and subsidiaries as of March 31, 1995 and
1994, and the related consolidated statements of earnings, stockholders' equity
and cash flows for each of the years in the three-year period ended March 31,
1995 as contained in the 1995 Annual Report to stockholders. These consolidated
financial statements and our report thereon are incorporated by reference in the
Annual Report on Form 10-K for the year 1995. In connection with our audits of
the aforementioned consolidated financial statements we also have audited the
related consolidated financial statement schedule as listed in the accompanying
index. The consolidated financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on the
consolidated financial statement schedule based on our audits.
In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Short Hills, New Jersey
May 18, 1995
-18-
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES
Schedule II. Valuation and Qualifying Accounts
Years Ended March 31, 1995, 1994 and 1993
Col. A Col. B Col. C Col. D Col. E
- ------ ------ ------ ------ ------
Description Balance at Additions (a) Deductions (b) Balance at
- ----------- Beginning of ---------------------- ----------------------- End of
Period (1) (2) (1) (2) Period
------------ Charged to Charged to Credited to Credited to ----------
Costs and Other Costs and Other
Expenses Accounts- Expenses Accounts-
Describe Describe
---------- ---------- ---------- ----------
Inventory Reserve
Year ended March 31, 1995 $2,409,000 $ 439,000 $ -- $ 83,000(d) $1,365,000(c) $1,400,000
Year ended March 31, 1994 $2,620,000 $ 674,000 $ -- $ 885,000(e) $ -- $2,409,000
Year ended March 31, 1993 $8,200,000 $2,277,000 $ 33,000(c) $7,648,000(d) $ 242,000(c) $2,620,000
Losses & Future Costs
Accrued on Uncompleted
Contracts
Year ended March 31, 1995 $3,214,000 $2,168,000 $ -- $ 291,000 $ 536,000(c) $4,555,000
Year ended March 31, 1994 $3,722,000 $1,735,000 $254,000(g) $2,497,000(f) $ -- $3,214,000
Year ended March 31, 1993 $3,835,000 $2,665,000 $242,000(c) $2,987,000 $ 33,000(c) $3,722,000
(a) Represents, on a full-year basis, net credits to reserve accounts.
(b) Represents, on a full-year basis, net charges to reserve accounts.
(c) Represents amounts reclassified.
(d) Represents amounts credited to costs and expenses associated with the
corresponding write-off of related inventory costs.
(e) Includes $801,000 representing amounts credited to costs and expenses
associated with the corresponding write-off of related inventory costs.
(f) Includes $2,302,000 representing amounts credited to costs and expenses
associated with the corresponding write-off of related inventory costs.
(g) Includes an increase to reserves of $111,000 as a result of business
combinations and a charge of $143,000 to revenues.
-19-
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND SUBSIDIARIES
Schedule II. Valuation and Qualifying Accounts (Cont'd.)
Years Ended March 31, 1995, 1994 and 1993
Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Description Balance at Additions (a) Deductions (b) Balance at
----------- Beginning of ---------------------- ----------------------- End of
Period (1) (2) (1) (2) Period
------------ Charged to Charged to Credited to Credited to ----------
Costs and Other Costs and Other
Expenses Accounts- Expenses Accounts-
Describe Describe
---------- ---------- ---------- ----------
Other
Year ended March 31, 1995 $290,000 $ -- $ -- $ -- $ -- $290,000
-------- ----- ----- ----- ----- --------
Year ended March 31, 1994 $290,000 $ -- $ -- $ -- $ -- $290,000
-------- ----- ----- ----- ----- --------
Year ended March 31, 1993 $290,000 $ -- $ -- $ -- $ -- $290,000
-------- ----- ----- ----- ----- --------
-20-
EXHIBIT INDEX
Certain of the following exhibits, designated with an asterisk (*), are
filed herewith. Certain of the following exhibits, designated with a P, are
being filed in paper, pursuant to a hardship exemption Rule 202 of Regulation
S-T. The exhibits not so designated have been previously filed with
the Commission and are incorporated herein by reference to the documents
indicated in brackets following the descriptions of such exhibits.
Page No.
Exhibit No. Description of Paper Filing
- ----------- ----------- ---------------
3.1 - Restated Certificate of Incorporation of the
Company [Registration Statement No. 2-70062-NY,
Amendment No. 1, Exhibit 2(a)]
3.2 - Certificate of Amendment of the Restated
Certificate of Incorporation of the Company, as
filed July 7, 1983 [Registration Statement on
Form 8-A of the Company, dated July 13, 1983,
Exhibit 2.2]
3.3 - Composite copy of the Restated Certificate of
Incorporation of the Company, as amended
[Registration Statement No. 2-85238,
Exhibit 3.3]
*3.4 - By-laws of the Company, as amended to November 7, 1994
*3.5 - Certificate of Amendment of the Certificate of
Incorporation of Precision Echo Acquisition
Corp., as filed March 10, 1995
4.1 - Indenture, dated as of August 1, 1983, between
the Company and Bankers Trust Company, as Trustee
[Form 10-Q, quarter ended September 30, 1983, File
No. 1-8533, Exhibit 4.2]
4.2 - Indenture of Trust, dated December 1, 1991, among
Suffolk County Industrial Development Agency,
Manufacturers and Traders Trust Company, as Trustee
and certain bondholders [Form 10-K, fiscal year
ended March 31, 1992, File No. 1-8533, Exhibit 4.2]
4.3 - Reimbursement Agreement, dated December 1, 1991,
among Photronics Corp., the Company and Morgan
Guaranty Trust Company of New York [Form 10-K,
fiscal year ended March 31, 1992, File No. 1-8533,
Exhibit 4.3]
10.1 - Stock Purchase Agreement, dated as of August 6,
1993, among TAS Acquisition Corp., Technology
Applications and Service Company, Paul G. Casner,
Jr. and Terrence L. DeRosa [Form 10-Q, quarter
ended December 31, 1993, File No. 1-8533, Exhibit
6(a)(1)]
-21-
Page No.
Exhibit No. Description of Paper Filing
- ----------- ----------- ---------------
10.2 - Waiver Letter, dated as of September 30, 1993,
among TAS Acquisition Corp., Technology
Applications and Service Company, Paul G. Casner, Jr.
and Terrence L. DeRosa [Form 10-Q, quarter ended
December 31, 1993, File No. 1-8533, Exhibit 6(a)(2)]
10.3 - Joint Venture Agreement, dated as of November 3, 1993,
by and between DRS Systems Management Corporation and
Laurel Technologies, Inc. [Form 10-Q, quarter ended
December 31, 1993, File No. 1-8533, Exhibit 6(a)(3)]
10.4 - Waiver Letter, dated as of December 13, 1993, by and
between DRS Systems Management Corporation and Laurel
Technologies, Inc. [Form 10-Q, quarter ended December
31, 1993, File No. 1-8533, Exhibit 6(a)(4)]
10.5 - Partnership Agreement, dated December 13, 1993, by and
between DRS Systems Management Corporation and Laurel
Technologies, Inc. [Form 10-Q, quarter ended December
31, 1993, File No. 1-8533, Exhibit 6(a)(5)]
10.6 - Lease, dated as of June 1, 1983, between LDR Realty Co.
and the Company [Form 10-K, fiscal year ended March 31,
1984, File No. 1-8533, Exhibit 10.7]
10.7 - Renegotiated Lease, dated June 1, 1988, between LDR
Realty Co. and the Company [Form 10-K, fiscal year ended
March 31, 1989, File No. 1-8533, Exhibit 10.8]
10.8 - Lease, dated July 20, 1988, between Precision Echo,
Inc. and Bay 511 Corporation [Form 10-K, fiscal year
ended March 31, 1991, File No. 1-8533, Exhibit 10.9]
10.9 - Amendment to Lease, dated July 1, 1993, between
Precision Echo, Inc. and Bay 511 Corporation [Form 10-K,
fiscal year ended March 31, 1994, File No. 1-8533,
Exhibit 10.12]
10.10 - Lease Modification Agreement, dated February 22, 1994,
between Technology Applications and Service Company
and Atlantic Real Estate Partners II [Form 10-K,
fiscal year ended March 31, 1994, File No. 1-8533,
Exhibit 10.13]
*10.11 - Amendment to Lease Modification, dated June 1, 1994,
between Technology Applications and Service Company and
Atlantic Estate Partners II
-22-
Page No.
Exhibit No. Description of Paper Filing
- ----------- ----------- ---------------
10.12 - Triple Net Lease, dated October 22, 1991, between
Technology Applications and Service Company and
Marvin S. Friedberg [Form 10-K, fiscal year ended
March 31, 1994, File No. 1-8533, Exhibit 10.14]
10.13 - Lease, dated May 21, 1991, between Technology
Applications and Service Company and Collins
Development Company [Form 10-K, fiscal year ended
March 31, 1994, File No. 1-8533, Exhibit 10.16]
10.14 - Lease, dated November 10, 1993, between DRS
Systems Management Corp. and Skateland Roller
Rink, Inc. [Form 10-K, fiscal year ended March 31,
1994, File No. 1-8533, Exhibit 10.17]
*10.15 - Lease, dated March 23, 1992, between Ahead
Technology Corporation and Vasona Business Park
P10.16 - Amendment to Lease, dated May 21, 1992, between
Ahead Technology Corporation and Vasona Business Park 1
P10.17 - Revision to Lease Modification, dated August 25, 1992,
between Ahead Technology Corporation and Vasona
Business Park ........................................ 3
*10.18 - Lease, dated January 13, 1995, between the Company and
Sammis New Jersey Associates
*10.19 - Memorandum of Understanding, dated March 23, 1995,
between Laurel Technologies and West Virginia Air
Center
10.20 - 1991 Stock Option Plan of the Company [Registration
Statement No. 33-42886, Exhibit 28.1]
10.21 - Contract No. N00024-92-C-6102, dated September 28,
1992, between the Company and the Navy [Form 10-K,
fiscal year ended March 31, 1993, File No. 1-8533,
Exhibit 10.45]
P10.22 - Modification No. P00005, dated August 24, 1994, to
Contract No. N00024-92-C-6102 ........................ 5
P10.23 - Modification No. P00006, dated September 7, 1994, to
Contract No. N00024-92-C-6102 ........................ 8
10.24 - Contract No. N00024-92-C-6308, dated April 1, 1992,
between the Company and the Navy [Form 10-K, fiscal
year ended March 31, 1993, File No. 1-8533, Exhibit
10.46]
-23-
Page No.
Exhibit No. Description of Paper Filing
- ----------- ----------- ---------------
10.25 - Modification No. P00001, dated July 30, 1992, to
Contract No. N00024-92-C-6308 [Form 10-K, fiscal
year ended March 31, 1993, File No. 1-8533,
Exhibit 10.47]
10.26 - Modification No. P00002, dated September 25,
1992, to Contract No. N00024-92-C-6308 [Form 10-K,
fiscal year ended March 31, 1993, File No. 1-8533,
Exhibit 10.48]
10.27 - Modification No. P00003, dated October 22, 1992,
to Contract No. N00024-92-C-6308 [Form 10-K, fiscal
year ended March 31, 1993, File No. 1-8533, Exhibit
10.49]
10.28 - Modification No. P00004, dated February 24, 1993,
to Contract No. N00024-92-C-6308 [Form 10-K, fiscal
year ended March 31, 1993, File No. 1-8533, Exhibit
10.50]
10.29 - Modification No. P00005, dated June 11, 1993, to
Contract No. N00024-92-C-6308 [Form 10-K, fiscal
year ended March 31, 1994, File No. 1-8533, Exhibit
10.26]
10.30 - Modification No. P00006, dated March 26, 1993, to
Contract No. N00024-92-C-6308 [Form 10-K, fiscal
year ended March 31, 1993, File No. 1-8533, Exhibit
10.51]
10.31 - Modification No. P00007, dated May 3, 1993, to
Contract No. N00024-92-C-6308 [Form 10-K, fiscal
year ended March 31, 1994, File No. 1-8533, Exhibit
10.28]
10.32 - Modification No. PZ0008, dated June 11, 1993, to
Contract No. N00024-92-C-6308 [Form 10-K, fiscal
year ended March 31, 1994, File No. 1-8533, Exhibit
10.29]
10.33 - Contract No. N39998-94-C-2228, dated November 30,
1993, between the Company and the Navy [Form 10-K,
fiscal year ended March 31, 1994, File No. 1-8533,
Exhibit 10.30]
10.34 - Order No. 87KA-SG-51484, dated December 10, 1993,
under Contract No. N00024-93-G-6336, between the
Company and Westinghouse Electric Corporation
Oceanic Division [Form 10-K, fiscal year ended March
31, 1994, File No. 1-8533, Exhibit 10.31]
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Page No.
Exhibit No. Description of Paper Filing
- ----------- ----------- ---------------
P10.35 - Purchase Order Change Notice Order No.
87KA-SX-51484-P, dated April 21, 1994, under
Contract No. N00024-93-G-6336, between the Company
and Westinghouse Electric Corporation Oceanic
Division............................................. 10
10.36 - Letter Subcontract No. 483901(L), dated February
18, 1994, under Contract No. N00024-94-D-5204,
between the Company and Unisys Government Systems
Group [Form 10-K, fiscal year ended March 31, 1994,
File No. 1-8533, Exhibit 10.32]
P10.37 - Subcontract No. 483901(D), dated June 24, 1994,
under Contract No. N00024-94-D-5204, between the
Company and Unisys Corporation Government Systems
Group................................................ 11
10.38 - Contract No. N00019-89-G-0223-XR05, dated September
30, 1992, between Precision Echo and the Navy [Form
10-K, fiscal year ended March 31, 1993, File No.
1-8533, Exhibit 10.53]
10.39 - Purchase Order Change Notice Order No. 87KA-IX-58687,
dated March 3, 1994, between Precision Echo, Inc. and
Westinghouse Electric Corporation [Form 10-K, fiscal
year ended March 31, 1994, File No. 1-8533, Exhibit
10.34]
P10.40 - Purchase Order Change Notice Order No. 87KA-IX-58687,
dated April 5, 1994, between Precision Echo and
Westinghouse Electric Corporation.................... 308
P10.41 - Purchase Order Change Notice Order No. 87KA-IX-58687,
dated August 16, 1994, between Precision Echo and
Westinghouse Electric Corporation.................... 309
P10.42 - Purchase Order Change Notice Order No. 87KA-IX-58687,
dated September 13, 1994, between Precision Echo and
Westinghouse Electric Corporation.................... 310
P10.43 - Purchase Order Change Notice Order No. 87KA-IX-58687,
dated February 2, 1995, between Precision Echo and
Westinghouse Electric Corporation.................... 311
P10.44 - Purchase Order Change Notice Order No. 87KA-IX-58687,
dated February 24, 1995, between Precision Echo and
Westinghouse Electric Corporation..................... 312
10.45 - Contract No. N00019-90-G-0051, dated March 1, 1990,
between Precision Echo, Inc. and the Navy [Form 10-K,
fiscal year ended March 31, 1994, File No. 1-8533,
Exhibit 10.35]
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Page No.
Exhibit No. Description of Paper Filing
- ----------- ----------- ---------------
10.46 - Amendment 1A, dated February 26, 1992, to
Contract No. N00019-90-G-0051 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.36]
10.47 - Amendment 1B, dated April 23, 1993, to
Contract No. N00019-90-G-0051 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.37]
10.48 - Contract No. N00019-93-C-0041, dated January
29, 1993, between Photronics Corp. and the Navy
[Form 10-K, fiscal year ended March 31, 1993,
File No. 1-8533, Exhibit 10.54]
10.49 - Modification No. P00001, dated March 29, 1993,
to Contract No. N00019-93-C-0041 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.39]
10.50 - Modification No. PZ0002, dated November 12,
1993, to Contract No. N00019-93-C-0041 [Form
10-K, fiscal year ended March 31, 1994, File
No. 1-8533, Exhibit 10.40]
10.51 - Modification No. P00003, dated February 1, 1994,
to Contract No. N00019-93-C-0041 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.41]
10.52 - Contract No. N00019-93-C-0202, dated August 30,
1993, between Photronics Corp. and the Navy
[Form 10-K, fiscal year ended March 31, 1994,
File No. 1-8533, Exhibit 10.42]
10.53 - Modification No. P00001, dated March 30, 1994,
to Contract No. N00019-93-C-0202 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.43]
10.54 - Modification No. P00002, dated April 29, 1994,
to Contract No. N00019-93-C-0202 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.44]
P10.55 - Modification No. P00003, dated August 9, 1994,
to Contract No. N00019-93-C-0202................... 313
P10.56 - Modification No. P00004, dated March 30, 1994,
to Contract No. N00019-93-C-0202................... 320
10.57 - Contract No. DAAJ09-93-C-0684, dated September
28, 1993, between Photronics Corp. and the Army
[Form 10-K, fiscal year ended March 31, 1994,
File No. 1-8533, Exhibit 10.45]
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Page No.
Exhibit No. Description of Paper Filing
- ----------- ----------- --------------
10.58 - Modification No. P00001, dated December 28,
1993, to Contract DAAJ09-93-C-0684 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.46]
10.59 - Modification No. P00002, dated March 21, 1994,
to Contract No. DAAJ09-93-C-0684[Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.47]
10.60 - Modification No. P00003, dated March 23, 1994,
to Contract No. DAAJ09-93-C-0684 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.48]
10.61 - Purchase Order No. 2228, dated September 29,
1993, between Photronics Corporation and
International Precision Products N.V. [Form
10-K, fiscal year ended March 31, 1994, File
No. 1-8533, Exhibit 10.49]
10.62 - Amendment No. 1, dated December 30, 1993, to
Purchase Order No. 2228 [Form 10-K, fiscal
year ended March 31, 1994, File No. 1-8533,
Exhibit 10.50]
10.63 - Amendment No. 2, dated March 17, 1994, to
Purchase Order No. 2228 [Form 10-K, fiscal
year ended March 31, 1994, File No. 1-8533,
Exhibit 10.51]
P10.64 - Amendment No. 3, dated June 6, 1994, to
Purchase Order No. 2228........................... 323
10.65 - Contract No. N00024-93-C-5204, dated November
18, 1992, between Technology Applications and
Service Company and the Navy [Form 10-K, fiscal
year ended March 31, 1994, File No. 1-8533,
Exhibit 10.53]
10.66 - Modification No. P00001, dated May 6, 1993, to
Contract No. N00024-93-C-5204 [Form 10-K, fiscal
year ended March 31, 1994, File No. 1-8533,
Exhibit 10.54]
10.67 - Modification No. P00002, dated August 24, 1993,
to Contract No. N00024-93-C-5204 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.55]
10.68 - Modification No. PZ0003, dated September 30,
1993, to Contract No. N00024-93-C-5204 [Form
10-K, fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.56]
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Page No.
Exhibit No. Description of Paper Filing
- ----------- ----------- ---------------
10.69 - Contract No. N00174-94-D-0006, dated February
17, 1994, between Technology Applications &
Service Company and the Navy [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.57]
10.70 - Modification No. P00001, dated March 7, 1994,
to Contract No. N00174-94-D-0006 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.58]
10.71 - Modification No. P00003, dated May 19, 1994,
to Contract No. N00174-94-D-0006 [Form 10-K,
fiscal year ended March 31, 1994, File No.
1-8533, Exhibit 10.59]
10.72 - Purchase Order No. N538010, dated March 28,
1994, between Laurel Technologies, Inc. and
Short Brothers PLC [Form 10-K, fiscal year
ended March 31, 1994, File No. 1-8533, Exhibit
10.60]
P10.73 - Purchase Order No. 2285, dated June 6, 1994,
between Photronics Corporation and
International Precision Products N.V. .......... 324
P10.74 - Amendment No. 1, dated December 1, 1994, to
Purchase Order No. 2285......................... 325
P10.75 - Purchase Order No. 2286, dated June 6, 1994,
between Photronics Corporation and
International Precision Products N.V. .......... 326
P10.76 - Purchase Order No. CN74325, dated December
14, 1994, between Precision Echo and Lockheed
Aeronautical Systems Company.................... 327
P10.77 - Contract No. N39998-94-C-2239, dated July 26,
1993, between the Company and the Navy.......... 331
P10.78 - Contract No. N00019-95-C-0057, dated December
16, 1994, between Precision Echo, Inc. and
Naval Air Systems Command....................... 369
10.79 - Employment, Non-Competition and Termination
Agreement, dated July 20, 1994, between
Diagnostic/Retrieval Systems, Inc. and David E.
Gross [Form 10-Q, quarter ended June 30, 1994,
File No. 1-8533, Exhibit 1]
10.80 - Stock Purchase Agreement, dated as of July 20,
1994, between Diagnostic/Retrieval Systems, Inc.
and David E. Gross [Form 10-Q, quarter ended
June 30, 1994, File No. 1-8533, Exhibit 2]
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Page No.
Exhibit No. Description of Paper Filing
- ----------- ----------- --------------
10.81 - Asset Purchase Agreement, dated October 28,
1994, Acquisition by PE Acquisition Corp.,
a subsidiary of Precision Echo, Inc. Of All
Of The Assets of Ahead Technology Corporation
[Form 10-Q, quarter ended December 31, 1994,
File No. 1-8533, Exhibit 1]
* 11 - Computation of earnings per share
* 13 - Portions of Diagnostic/Retrieval Systems, Inc.'s
1995 Annual Report to Stockholders
* 21 - List of subsidiaries of the Company
* 23 - Consent of KPMG Peat Marwick LLP
* 27 - Financial Data Schedule
-29-