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ENGINEERED SUPPORT SYSTEMS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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PRESS RELEASE
For further information, please contact:
Daniel E. Kreher
314/553-4915
ENGINEERED SUPPORT COMMENTS ON
STOCK PRICE DECLINE; TRADING VOLUME
ST. LOUIS, MO., AUGUST 5, 2004 - ENGINEERED SUPPORT
SYSTEMS, INC. (Nasdaq: EASI) is currently in a quiet period concerning its
financial results for its third quarter ended July 31, 2004, which will be
released at the end of August. However, MICHAEL F. SHANAHAN, SR., CHAIRMAN,
today commented on several recent developments within the Company that may
have negatively affected its stock price and increased its share trading
volume over the past few days.
o The retirement of Gerald E. Daniels announced by
the Company yesterday is in no way connected to
the state of its operations, financial condition
or business prospects. Mr. Daniels resigned the
Vice Chairman and Chief Executive Officer
position which he had held for a sixteen-month
period after a long career with the Boeing
Company in order to devote more time to the
various business boards, civic and charitable
organizations that he has been involved with over
the years.
o The promotion of Gerald A. Potthoff to the
position of Vice Chairman, Chief Executive
Officer and President in response to Mr. Daniels'
retirement will provide Mr. Potthoff the
opportunity to lead the day-to-day operations of
Engineered Support as a member of its Office of
Chairman, the managing body of the Company. The
Office of the Chairman will continue to be led by
Mr. Shanahan, with its members being Mr.
Potthoff, Gary C. Gerhardt, Vice Chairman and
Chief Financial Officer, and Ronald W. Davis,
President - Business Development.
Shanahan stated, "The recent changes within our management team are
in no way related to any operational problems or potential weakness in our
business prospects, in fact, our overall business outlook has never been
better. In addition, our rock solid balance sheet and strong cash flow
generation position us for continued growth. The corporation will remain
under the guidance of the Office of the Chairman with oversight provided by
our seasoned Board of Directors. This structure has worked extremely well
for us in executing the Company's highly successful business strategy over
the past five years. This will not be altered going forward."
On July 28, 2004, the Company filed a Preliminary Proxy Statement
with the SEC providing notice of a special meeting of shareholders to occur
on September 15, 2004. The special meeting was called for shareholders to
vote for the approval of various matters including an increase in the number
of authorized common shares and the approval of an executive incentive plan.
o The proposed amendment to the Company's Articles
of Incorporation to increase the authorized
number of common shares from 30 million shares to
90 million shares will provide additional
flexibility to the Board of Directors, in its
discretion, to issue or reserve additional shares
of common stock without the delay or expense of a
meeting of shareholders. Shares of common stock
may be used for general corporate purposes,
including acquisitions, financing activities,
employee compensation plans or stock splits. The
proposal does not call for the issuance of any
additional shares and the Board of Directors has
no current plans to issue additional shares.
o The approval of the Executive Incentive
Performance Plan is intended to insure the income
tax deductibility of any qualifying
performance-based compensation amounts paid to
certain covered senior executives of the Company.
The Compensation Committee of the Board of
Directors believes that it is in the best
interest of the Company to maximize the tax
deductibility of executive compensation without
compromising the essential framework of the
existing total compensation program. Future
incentive compensation levels for such senior
executives are not expected to be materially
different from historical levels as previously
disclosed by the Company.
Shanahan concluded, "The proposed increase in authorized shares
simply provides the Company with additional flexibility in pursuing paths
that will continue to drive shareholder value. These may include raising
capital for synergistic acquisitions, financing activities or splitting the
stock as we've done quite successfully in recent years. I emphasize that
presently we have no intentions of raising capital via the issuance of
additional shares. Adoption of the executive incentive plan by shareholders
is necessary to reduce future income taxes. Given their somewhat perfunctory
nature, we anticipate that both of these proposals will receive overwhelming
approval from our shareholders.
Although we cannot comment on the recently completed quarter, we remain
quite optimistic in our outlook for the business going forward and
appreciate our shareholders' trust and commitment during a somewhat volatile
time in the stock market. On our upcoming quarterly earnings call at the end
of this month, we will provide preliminary financial guidance for fiscal
2005 which hopefully will be viewed favorably by our investors."
Engineered Support Systems, Inc. designs and manufactures integrated
military electronics, support equipment and provides technical and logistics
services for all branches of America's armed forces and certain foreign
militaries, homeland security forces and selected governmental and
intelligence agencies. The Company also produces specialized equipment and
systems for commercial and industrial applications. For additional
information, please visit our website at www.engineeredsupport.com.
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