SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15 (d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 4, 2003
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ENGINEERED SUPPORT SYSTEMS, INC.
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MISSOURI 0-13880 43-1313242
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
201 Evans Lane, St. Louis, Missouri 63121
(Address of principal executive officer) (Zip Code)
Registrant's telephone number including area code: (314) 553-4000
Item 5. Other Events.
On March 4, 2003, Engineered Support Systems, Inc. (the
Company) announced that it had entered into a non-binding
letter of intent to purchase all of the outstanding stock
of Technical and Management Services Corporation (TAMSCO),
a provider of information technology logistics and
digitization services and a designer and integrator of
telecommunication systems primarily for the U.S.
Department of Defense. According to the terms of the
letter of intent, the Company will pay TAMSCO shareholders
cash of $66.5 million, subject to certain purchase price
adjustments to be finalized after closing. The proposed
transaction is subject, among other things, to the
completion of satisfactory due diligence on TAMSCO and the
negotiation and execution of a definitive agreement. Once
the proposed transaction is entered into, it will be
subject to the satisfaction of customary closing
conditions. There can be no assurance that the parties
will enter into a definitive agreement for the proposed
transaction, or that the proposed transaction will be
consummated. However, the Company expects to complete the
proposed transaction within the next sixty days.
Item 7. Financial Statements and Exhibits
(c) (1) Engineered Support Systems, Inc. press release,
dated March 4, 2003, announcing the letter of intent to
acquire TAMSCO.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ENGINEERED SUPPORT SYSTEMS, INC.
Date: March 4, 2003 BY: /s/ Gary C. Gerhardt
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Gary C. Gerhardt
Vice Chairman - Administration and
Chief Financial Officer
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Item 7(c) (1) - Engineered Support Systems, Inc. press release, dated
March 4, 2003, announcing the letter of intent to acquire
TAMSCO.
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[Letterhead of Engineered Support Systems, Inc.]
For further information, please contact:
Gary C. Gerhardt
314/553-4982
ENGINEERED SUPPORT SYSTEMS
TO ACQUIRE TAMSCO
ST. LOUIS, MO., MARCH 4, 2003 - ENGINEERED SUPPORT SYSTEMS, INC.
(Nasdaq: EASI) announced today that it has entered into a letter of intent
to purchase all the outstanding equity of Technical and Management Services
Corporation (TAMSCO), a Calverton, Maryland-based provider of information
technology (IT) logistics and digitization services and a designer and
integrator of telecommunications systems primarily for the U.S. Department
of Defense (DoD). The pending acquisition of TAMSCO is expected to be
immediately accretive to earnings, according to MICHAEL F. SHANAHAN, SR.,
CHAIRMAN AND CEO.
Founded in 1982, privately-held TAMSCO provides products and services in
several key growth areas. TAMSCO's IT logistics offerings include management
of the repair and return of F-15 Fighter components and other weapons
systems, logistics support for the Predator unmanned aircraft and
digitization of technical manuals. Its telecommunications expertise includes
the demonstrated ability to provide voice-over IP, video and data solutions
to remote and mobile locations anywhere in the world. Of its approximately
535 employees, 52% hold security clearances from the federal government,
providing the necessary qualifications to win and execute highly specialized
and mission-critical task orders for various federal agencies in the defense
and intelligence segments. TAMSCO maintains a significant presence at
numerous key military locations including the U.S. Air Force's Warner Robins
Air Logistics Center in Warner Robins, Georgia as well as the U.S. Army's
Communications - Electronics Command at Ft. Monmouth, New Jersey.
TAMSCO has a significant business development pipeline due to its successful
track record of securing multi-year government contracts and subsequently
winning task orders for work under these contracts. Through its various
contract vehicles TAMSCO is pursuing task orders valued at well over $2.4
billion and has been granted unfunded task orders of $272 million with a
current funded backlog of $72 million. The majority of TAMSCO's backlog is
with its two largest customers, the U.S. Army and U.S. Air Force. The DoD
accounted for over 95% of TAMSCO's revenues that approximated $115 million
for calendar 2002.
Commenting on the proposed TAMSCO acquisition, Shanahan commented, "We are
extremely pleased to welcome the TAMSCO team to the Engineered Support
family. We feel that they are an excellent complement to both our
manufacturing and logistics operations that support America's military. We
look forward to leveraging several of TAMSCO's existing business development
initiatives, particularly tech manual digitization, the repair and return of
electronics subsystems and the rapid deployment of mobile communications
systems in remote areas around the globe as we move forward. The marriage of
our two organizations solidifies our base of business with existing Air
Force and Army customers at WRALC and CECOM, respectively, as well as opens
up new mutual growth opportunities. Similar to our Radian acquisition last
year, we think that TAMSCO is a perfect fit for Engineered Support."
TAMSCO has seen rapid growth within its defense business over the past few
years. Since 1999, its revenues have posted an impressive compound annual
organic growth rate 17% with substantial expansion of operating margins
realized during that time. With the projected growth in both the defense
budget in general and in federal government IT spending in particular over
the next several years, TAMSCO is extremely well positioned to benefit from
these spending increases.
TAMSCO's growth will be aided by its recently being named as one of eight
prime contractors under the U.S. Army's new Rapid Response (R2) Contract
that has an anticipated contract value of up to $3 billion over the 8-year
life of the program. The R2 contract award, announced on January 31, 2003 by
CECOM at Fort Monmouth, New Jersey, is a contract vehicle to provide federal
government support for new and existing platforms in a variety of areas
including research and development, technology insertion, installation,
fabrication, test and evaluation, certification, technical data management,
logistics support, training and acquisition support. The R2 contract is
similar to the U.S. Air Force's Flexible Acquisition and Sustainment Tool
(FAST) Contract, a $7.4 billion multi-year contract vehicle under which
TAMSCO has been one of the top performing contractors in terms of revenues
since its award in 2001. TAMSCO is one of only two contractors to have been
chosen as primes for both the FAST and R2 contracts.
According to the terms of the agreement, Engineered Support will pay cash of
$66.5 million to acquire all the outstanding equity of TAMSCO, subject to
certain purchase price adjustments to be finalized after closing.
The proposed transaction is subject to, among other things, the completion
of satisfactory due diligence on TAMSCO and the negotiation and execution of
a definitive agreement. Once the proposed transaction is entered into, it
will be subject to the satisfaction of customary closing conditions. There
can be no assurance that the parties will enter into a definitive agreement
for the proposed transaction, or that the proposed transaction will be
consummated. However, the Company expects to complete the proposed
transaction within the next sixty days.
Additional details of the proposed transaction and a more complete
description of TAMSCO's operations will be provided during Engineered
Support Systems' 18th Annual Shareholders' Meeting, which will be web cast
live at 10 AM CST this morning. The web cast can be accessed by clicking on
the link on the homepage of the Company's website at
www.engineeredsupport.com.
Engineered Support Systems, Inc. is a diversified supplier of high-tech,
integrated military electronics, support equipment and logistics services
for all branches of America's armed forces and certain foreign militaries.
The Company also serves a variety of commercial customers.
Certain statements in this press release are forward looking in nature and,
accordingly, are subject to risks and uncertainties. The actual results may
differ materially from those described or contemplated.
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