UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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):
February 9, 2006 (February 8, 2006)
DRS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-08533 13-2632319
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification Number)
5 Sylvan Way, Parsippany, New Jersey 07054
(Address of principal executive offices)
(973) 898-1500
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On February 9, 2006, DRS Technologies, Inc. announced financial results for the
third quarter and nine-month period of fiscal 2006 ended December 31, 2005. The
press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K
and is incorporated herein by reference.
The press release includes the non-GAAP financial measures "EBITDA" and
"free cash flow." We reference these non-GAAP financial measures frequently in
our decision-making because it provides supplemental information that
facilitates internal comparisons to historical operating performance of prior
periods and external comparisons to competitors' historical operating
performance. We define EBITDA as net earnings from continuing operations before
net interest and related expenses (primarily amortization of debt issuance
costs), income taxes, depreciation and amortization. EBITDA is presented as
additional information because we believe it to be a useful indicator of an
entity's debt capacity and its ability to service its debt. EBITDA is not a
substitute for operating income, net earnings or cash flows provided by
operating activities of continuing operations, as determined in accordance with
generally accepted accounting principles (GAAP). EBITDA is not a complete cash
flow measure because EBITDA is a measure of liquidity that does not include
reductions for cash payments for an entity's obligation to service its debt,
fund its working capital, business acquisitions and capital expenditures, pay
its income taxes and fund its discontinued operations. Rather, EBITDA is one
potential indicator of an entity's ability to fund these cash requirements.
EBITDA also is not a complete measure of an entity's profitability because it
does not include costs and expenses for depreciation and amortization, interest
and related expenses, income taxes and the results of operations of discontinued
operations. We disclose free cash flow because we believe that it is a
measurement of cash flow generated that is available for investing and financing
activities. Free cash flow is defined as net cash provided by operating
activities of continuing operations less capital expenditures. We believe that
the most directly comparable GAAP financial measure to free cash flow is net
cash provided by operating activities from continuing operations. Free cash flow
represents cash generated after paying for interest on borrowings, income taxes,
capital expenditures and changes in working capital, but before repaying
outstanding debt, investing cash to acquire businesses, make other strategic
investments and fund discontinued operations. Thus, key assumptions underlying
free cash flow are that the Company will be able to refinance its existing debt
when it matures with new debt and that the Company will be able to finance any
new acquisitions it makes by raising new debt or equity capital.
The information furnished pursuant to this Current Report on Form 8-K shall
be considered to be "filed" under the Securities Exchange Act of 1934, as
amended (other than information under the headings "New Contract Awards and
Backlog" and "Fiscal 2006 Outlook," and information related to organic revenue
growth and projections regarding future performance).
ITEM 8.01. OTHER EVENTS
On February 8, 2006, the initial purchasers in DRS's recent private placement of
$300.0 million of 2.0% convertible senior notes due 2026 elected to exercise
their option to purchase an additional $45.0 million in principal amount of the
notes. DRS expects to use the net proceeds to repay indebtedness under its
revolving credit facility.
DRS will pay interest on the convertible notes at an annual rate equal to
2.0 percent until maturity on February 1, 2026, subject to earlier repurchase,
redemption or conversion. The notes will have an initial conversion rate of
16.7504 shares of DRS's common stock per $1,000 principal amount of convertible
notes, representing an initial conversion price of $59.70.
DRS will settle each $1,000 principal amount of convertible notes
surrendered for conversion by delivering cash in an amount equal to the lesser
of the principal amount of convertible notes surrendered for conversion or the
conversion value; if the conversion value is greater than the principal amount,
DRS will deliver an amount of shares equal to the sum of the daily share amounts
for each trading day during the applicable conversion period.
DRS may redeem all or some of the convertible notes for cash at any time
after February 1, 2009, subject to certain conditions. The holders of the
convertible notes may require DRS to repurchase the convertible notes for cash
on February 1, 2011, 2016 and 2021 at the par amount plus accrued interest, if
any.
The notes and common stock issuable upon conversion of the notes have not
been registered under the Securities Act of 1933, as amended, or applicable
state securities laws, and unless so registered, may not be offered or sold in
the United States, except pursuant to an applicable exemption from the
registration requirements of the Securities Act of 1933, as amended, and
applicable state securities laws.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The following press release is included as an exhibit to this report:
Exhibit No. Description
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99.1 DRS Technologies, Inc. Press Release (including financial
tables) dated February 9, 2006.
DRS TECHNOLOGIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DRS TECHNOLOGIES, INC.
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(Registrant)
Date: February 9, 2006 By: /s/ RICHARD A. SCHNEIDER
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Richard A. Schneider
Executive Vice President, Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Description
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99.1 DRS Technologies, Inc. Press Release (including financial tables)
dated February 9, 2006.