THE COMPANY
ESCO Technologies Inc. (“ESCO”) is a producer of engineered products and systems sold to
customers worldwide, primarily for utility, industrial, aerospace and commercial applications. ESCO
operates in three operating segments which, together with the primary operating subsidiaries within
each segment, are as follows:
Utility Solutions Group (“Utility Solutions”):
Aclara Power-Line Systems Inc. (“Aclara PLS”)
Aclara RF Systems Inc. (“Aclara RF”)
Aclara Software Inc.
Doble Engineering Company
Doble Lemke AG
Doble Lemke GmbH
Doble PowerTest Limited
Doble TransiNor AS
RF Shielding and Test (“Test”):
Beijing Lindgren ElectronMagnetic Technology Co., Ltd.
ETS Lindgren Engineering India Private Limited
ETS Lindgren Japan, Inc.
ETS Lindgren Limited
ETS-Lindgren L.P.
ETS-Lindgren OY
Lindgren R.F. Enclosures, Inc.
Filtration/Fluid Flow (“Filtration”):
Crissair, Inc.
PTI Technologies Inc. (“PTI”)
TekPackaging LLC
VACCO Industries (“VACCO”)
The Aclara entities listed above are hereinafter collectively referred to as “Aclara”. The
Doble entities listed above are hereinafter collectively referred to as “Doble”. All of the Test
segment entities listed above are hereinafter collectively referred to as “ETS-Lindgren”.
The above operating subsidiaries are engaged primarily in the research, development,
manufacture, sale and support of the products and systems described below, and are subsidiaries of
ESCO Technologies Holding Inc., a wholly-owned direct subsidiary of ESCO. ESCO and its direct and
indirect subsidiaries are hereinafter collectively referred to as the “Company”. The Company’s
businesses are subject to a number of risks and uncertainties, including without limitation those
discussed in Item 1A. below. See also “Management’s Discussion and Analysis” appearing in the 2010
Annual Report, which is herein incorporated by reference, and “Forward-Looking Information” below.
Effective July 31, 2010, the Company acquired the capital stock of Crissair, Inc. for a
purchase price of approximately $27 million, net of cash acquired. Crissair, Inc., headquartered
in Palmdale, California, is a manufacturer of high-quality hydraulic, fuel and pneumatic system
components for the aerospace industry.
On September 3, 2010, the Company acquired the capital stock of Xtensible Solutions, Inc.,
headquartered in Greenwood Village, Colorado, for a purchase price of approximately $4 million in
cash plus contingent consideration in the form of an earnout. Xtensible is a provider of
enterprise information management and integration services to the utility industry worldwide, and
operates as a part of Aclara.
1
PRODUCTS
The Company’s products are described below. See Note 15 of the Notes to Consolidated Financial
Statements in the 2010 Annual Report for financial information regarding segments, which Note is
herein incorporated by reference.
UTILITY SOLUTIONS
The Utility Solutions segment accounted for approximately 57%, 60% and 57% of the Company’s
total revenue in fiscal years 2010, 2009 and 2008, respectively.
Aclara PLS is a leading manufacturer of two-way power line communication systems for the
electric utility industry (the “TWACS® systems”), which are composed of equipment
(primarily meter modules and equipment for central stations and substations), software and support
services. The TWACS® systems provide electric utilities with a proprietary
communication technology for automatic meter reading, load control, interval data, outage
assessment/restoration monitoring, remote service disconnect/connect, time-of-use data for critical
peak pricing, tamper/theft detection and pre-paid metering. Revenue from the TWACS® systems, which
may be considered a class of similar products, accounted for approximately 22%, 19% and 25% of the
Company’s total revenue in fiscal years 2010, 2009 and 2008, respectively.
Aclara RF provides, through its STAR® network, wireless radio frequency (“RF”) data
communications systems to gas, water and electric utilities for advanced metering infrastructure
(“AMI”) applications. The STAR® network provides accurate and timely billing, high/low
consumption reporting, and non-revenue water loss detection. In November 2005, Aclara RF entered
into a contract with Pacific Gas & Electric Company (“PG&E”) to provide its communications system
for the gas meter portion of PG&E’s AMI project, and also gave PG&E the option to purchase Aclara
RF’s fixed network systems for the electric portion of the Project. In fiscal 2010, total revenue
received by the Company from PG&E for all sales was $55.9 million, representing 9.2% of the
Company’s consolidated revenue. Of this amount, $53.5 million was attributable to the 2005 gas
meter contract. Total revenue of $244 million from this contract had been recorded through
September 30, 2010. Sales under this contract are currently nearing completion. Revenue from
STAR® network products, which may be considered a class of similar products, accounted
for approximately 17%, 25% and 17% of the Company’s total revenue in fiscal years 2010, 2009 and
2008, respectively.
Aclara Software Inc. provides utilities with software systems for energy and water
information, delivering a scalable meter data management system (“MDMS”), comprehensive AMI/meter
device records and asset management, proven business applications addressing areas such as revenue
assurance and distribution asset analysis, and the industry’s leading customer presentment and
analysis applications. Aclara’s analytics-based software applications are used by over 100 major
energy organizations worldwide.
Doble provides electric utility customers with products and services intended to achieve the
reliability and sustainability of electric power infrastructure. It combines three core elements
for customers — diagnostic test instruments, expert consulting and testing services — and
provides access to its large reserve of related knowledge. It has been operating for over 80 years,
and serves over 5,500 companies in 100 countries. Revenue from Doble’s products and services,
which may be considered a class of similar products and services, accounted for approximately 15%,
14% and 12% of the Company’s total revenue in fiscal years 2010, 2009 and 2008, respectively.
TEST
The Test segment accounted for approximately 23%, 22% and 24% of the Company’s total revenue
in fiscal years 2010, 2009 and 2008, respectively.
ETS-Lindgren designs and manufactures products to measure and contain magnetic,
electromagnetic and acoustic energy. It supplies customers with a broad range of isolated
environments including RF test enclosures, acoustic test enclosures, RF and magnetically shielded
rooms, secure communication facilities and broadcast and recording studios. Many of these
facilities include proprietary features such as shielded doors and windows. ETS-Lindgren also
provides the design, program management, installation and integration
services required to successfully complete these types of facilities.
ETS-Lindgren also supplies customers with a broad range of components including RF absorptive
materials, RF filters, active compensation systems, antennas, antenna masts, turntables and
electric and magnetic probes, RF test cells, proprietary measurement software and other test
accessories required to perform a variety of tests. ETS-Lindgren also offers a variety of services
including calibration for antennas and field probes, chamber certification, field surveys, customer
training and a variety of product tests. ETS-Lindgren operates the following accredited test labs:
American Association for Laboratory Accreditation (“A2LA”), National Voluntary Laboratory
Accreditation Program (“NAVLAP”) and CATL (CTIA-The Wireless Association (“CTIA”) Accredited Test
Lab). ETS-Lindgren serves the acoustics, medical, health and safety, electronics, wireless
communications, automotive and defense markets.
FILTRATION
The Filtration segment accounted for approximately 20%, 17% and 19% of the Company’s total
revenue in fiscal years 2010, 2009 and 2008, respectively.
PTI is a leading supplier of filtration products serving the commercial aerospace, military
aerospace and various industrial markets. The industrial markets include chemical processing,
automotive and mobile equipment. Products include filter elements, assemblies, modules, indicators
and other related components. All products must meet stringent quality requirements and withstand
severe operating conditions. Product applications include aircraft, helicopters and mobile
equipment hydraulic systems, aircraft engines and plant equipment. PTI supplies products worldwide
to original equipment manufacturers and the U.S. government under long term contracts, and to the
commercial aftermarkets through distribution channels.
VACCO supplies flow control products, valves and premium filters to the space, defense and
commercial industries for use in aircraft, satellite propulsion systems, satellite launch vehicles
and other space transportation systems such as the Space Shuttle and its successor. VACCO also uses
its etched disc technology to produce quiet valves and manifolds for U.S. Navy applications.
Crissair, Inc. supplies a wide variety of custom and standard valves and other various
components to the aerospace, defense and commercial industries. Platform applications include
fixed and rotary wing aircraft, air transport and business jets, and defense systems.
TekPackaging LLC produces highly engineered thermoformed products and packaging materials for
medical, retail, food and electronic applications.
MARKETING AND SALES
The Filtration and Test segments’ products, as well as Doble’s products, generally are
distributed to customers through a domestic and foreign network of distributors, sales
representatives and in-house salespersons. Aclara’s sales to investor-owned utilities are made
directly to the utilities through its sales team. Aclara utilizes distributors and direct sales
representatives to sell its systems to the electric utility cooperative and municipal markets, and
to non investor-owned gas, water and combination utilities. Aclara’s software products are
marketed utilizing its in-house sales force.
The Company’s international sales accounted for approximately 23%, 18% and 21% of the
Company’s total revenue in the fiscal years ended September 30, 2010, 2009 and 2008, respectively.
See Note 15 of the Notes to Consolidated Financial Statements in the 2010 Annual Report for
financial information regarding geographic areas, which Note is herein incorporated by reference.
See also Item 1A. Risk Factors for a discussion of risks of the Company’s international operations.
Some of the Company’s products are sold directly or indirectly to the U.S. Government under
contracts with the Army, Navy and Air Force and subcontracts with prime contractors of such
entities. Direct and indirect sales to the U.S. Government, primarily related to the Filtration
segment, accounted for approximately 8%, 5% and 6% of the Company’s total revenue in the fiscal
years ended September 30, 2010, 2009 and 2008, respectively.
INTELLECTUAL PROPERTY
The Company owns or has other rights in various forms of intellectual property (i.e., patents,
trademarks, service marks, copyrights, mask works, trade secrets and other items). As a major
supplier of engineered products to industrial and commercial markets, the Company emphasizes
developing intellectual property and protecting its rights therein. However, the scope of
protection afforded by intellectual property rights, including those of the Company, is often
uncertain and involves complex legal and factual issues. Some intellectual property rights, such
as patents, have only a limited term. Also, there can be no assurance that third parties will not
infringe or design around the Company’s intellectual property. Policing unauthorized use of
intellectual property is difficult, and copyright infringement is a persistent problem for many
companies, particularly in some international markets. In addition, the Company may not elect to
pursue an unauthorized user due to the high costs and uncertainties associated with litigation.
Further, there can be no assurance that courts will ultimately hold issued patents valid and
enforceable. See Item 1A. Risk Factors.
In the Utility Solutions segment, many of the products are based on patented or otherwise
proprietary technology, including the Company’s TWACS® technology. The
TWACS® systems are protected primarily by a number of patents expiring on various dates
ending in 2017. Patents covering significant aspects of the TWACS® technology expired in
2010 for outbound signal reception and will expire in 2017 for inbound signal generation. The
expiration of the foregoing patents is not expected to have a material effect on the Company’s
operations. Other patents covering inbound and outbound signal detection expired in 2007. The
Utility Solutions segment policy is to seek patent and/or other forms of intellectual property
protection on new and improved products, components of products and methods of operation for its
businesses, as such developments are made. The Company protects the TWACS NG™ software code as a
trade secret, although certain discrete features and functionality have been or may be patented.
The Company holds two significant patents which cover the operation of its STAR® network
communications systems. These will expire in 2015 and 2016. Doble holds an extensive library of
apparatus performance information useful to Doble employees and to entities that generate,
distribute or consume electric energy. Doble makes part of this library available to registered
users via an Internet portal.
In the Test segment, patent protection has been sought for significant inventions. Examples
of such inventions include novel designs for window and door assemblies used in shielded enclosures
and anechoic chambers, improved acoustic techniques for sound isolation and a variety of unique
antennas.
With respect to the Filtration segment, a number of products are based on patented or
otherwise proprietary technology that sets them apart from the competition. VACCO’s proprietary
quieting technology, which it protects as trade secrets, is a significant differentiator for
products supplied to the U.S. Navy submarine fleet.
The Company considers its patent and other intellectual property to be of significant value in
each of its segments. The Utility Solutions segment owns intellectual property, including its
TWACS® technology, which it deems necessary or desirable for the manufacture, use or
sale of its products. No other segment is materially dependent on any single patent, group of
patents or other intellectual property.
BACKLOG
Total Company backlog at September 30, 2010 was $360.6 million, representing an increase of
$61.2 million (20.4%) from the beginning of the fiscal year backlog of $299.4 million. The backlog
of firm orders at September 30, 2010 and September 30, 2009, respectively, was: $153.5 million and
$132.4 million for Utility Solutions; $74.3 million and $54.2 million for Test; and $132.8 million
and $112.8 million for Filtration. As of September 30, 2010, it is estimated that domestic
customers accounted for approximately 75% of the Company’s total firm orders, and international
customers accounted for approximately 25%. Of the Company’s total backlog of orders at September
30, 2010, approximately 88% is expected to be completed in the fiscal year ending September 30,
2011.
PURCHASED COMPONENTS AND RAW MATERIALS
The Company’s products require a wide variety of components and materials. Although the
Company has multiple sources of supply for most of its materials requirements, certain components and
raw materials are supplied by sole-source vendors, and the Company’s ability to perform certain
contracts depends on their performance. In the past, these required raw materials and various
purchased components generally have been available in sufficient quantities. However, in each of
the Company’s segments, there are instances of some risk of shortages of materials or components
due to reliance on sole or limited sources of supply. See Item 1A. Risk Factors.
In the Utility Solutions segment, in addition to its internal manufacturing of RF
end-products, Aclara RF has contracts with three independent manufacturers which produce and supply
a significant amount of such end-products, as well as contracts with several of the suppliers of
the raw materials that are incorporated into such end-products. Aclara PLS has arrangements with
three independent manufacturers which produce and supply substantially all of Aclara PLS’s
power-line end-products. Two of these manufacturers are industry leaders with worldwide
operations. Each of these manufacturers is directed by Aclara PLS to purchase certain unique raw
material components from suppliers designated by Aclara PLS. Aclara PLS also has contracts with
certain of the raw material suppliers, directing them to supply such raw materials to Aclara PLS’s
manufacturers. The Company believes that the above-described manufacturers and suppliers will be
reliable sources for Aclara’s end-products for the foreseeable future.
The Test segment is a vertically integrated supplier of electro-magnetic (“EM”) shielding
products, producing most of its critical RF components. However, this segment purchases significant
quantities of raw materials such as steel, copper, nickel and wood. Accordingly, the segment is
subject to price fluctuations in the worldwide raw materials markets, although ETS-Lindgren has
contracts with three suppliers of certain raw materials.
The Filtration segment purchases supplies from a wide array of vendors. In most instances,
multiple vendors of raw materials are screened during a qualification process to ensure that there
will not be an interruption of supply should one of them discontinue operations. Nonetheless, in
some situations, there is a risk of shortages due to reliance on a limited number of suppliers or
because of price fluctuations due to the nature of the raw materials. For example, aerospace-grade
titanium, an important raw material for VACCO and PTI, may continue to sometimes be in short
supply.
COMPETITION
Competition in the Company’s major markets is broadly based and global in scope. The Company
faces intense competition from a large number of companies for nearly all of its products.
Competition can be particularly intense during periods of economic slowdown, and this has been
experienced in some of the Filtration markets. Although the Company is a leading supplier in
several of the markets it serves, it maintains a relatively small share of the business in many of
the other markets it serves. Individual competitors range in size from annual revenues of less
than $1 million to billion dollar enterprises. Because of the specialized nature of the Company’s
products, its competitive position with respect to its products cannot be precisely stated.
However, Aclara is believed to be a leading supplier in the fixed network segment of the AMI
market. This fixed network segment comprises a substantial part of the total AMI market for
utilities. Substantial efforts are required in order to maintain existing business levels. In the
Company’s major served markets, competition is driven primarily by quality, technology, price and
delivery performance. See Item 1A. Risk Factors.
Primary competitors of Aclara in the utility communications market include Itron, Inc., Silver
Spring Networks, Landis+Gyr, Cannon Technologies Inc., Sensus Metering Systems Inc., Trilliant
Inc., Elster Electricity, L.L.C., Comverge, Inc., Neptune Technology Group, e-Meter Corporation,
Oracle Corporation, APOGEE Interactive Inc., Opower, Inc., Ecologic Analytics, LLC, SmartSynch,
Inc. and Tantalus Systems Corp. OMICRON Electronics Corp. USA has for some time been a primary
competitor of Doble in the international market, and has recently increased competition in the
North America market. OMICRON has the ability to heavily fund research and development. In
addition, Megger Group Limited has recently emerged as a significant competitor to Doble.
The Test segment is the global leader in the EM shielding market. Significant competitors in
this served market include TDK RF Solutions Inc., Albatross GmbH, IMEDCO AG and Cuming Corporation.
Primary competitors of the Filtration segment include Pall Corporation, Moog, Inc., SoFrance
and Clarcor Inc.
RESEARCH AND DEVELOPMENT
Research and development and the Company’s technological expertise are important factors in
the Company’s business. Research and development programs are designed to develop technology for
new products or to extend or upgrade the capability of existing products, and to enhance their
commercial potential.
The Company performs research and development at its own expense, and also engages in research
and development funded by customers. For the fiscal years ended September 30, 2010, 2009 and 2008,
total Company-sponsored research and development expenses were approximately $32.2 million, $32.0
million and $33.0 million, respectively. Total customer-sponsored research and development expenses
were approximately $4.0 million, $2.9 million and $5.3 million for the fiscal years ended September
30, 2010, 2009 and 2008, respectively. All of the foregoing expense amounts exclude certain
engineering costs primarily associated with product line extensions, modifications and maintenance,
which amounted to approximately $13.3 million, $14.4 million and $8.6 million for the fiscal years
ended September 30, 2010, 2009 and 2008, respectively.
ENVIRONMENTAL MATTERS
The Company is involved in various stages of investigation and cleanup relating to
environmental matters. It is very difficult to estimate the potential costs of such matters and
the possible impact of these costs on the Company at this time due in part to: the uncertainty
regarding the extent of pollution; the complexity of Government laws and regulations and their
interpretations; the varying costs and effectiveness of alternative cleanup technologies and
methods; the uncertain level of insurance or other types of cost recovery; and in the case of
off-site waste disposal facilities, the uncertain level of the Company’s relative involvement and
the possibility of joint and several liability with other contributors under applicable law. Based
on information currently available, the Company does not believe that the aggregate costs involved
in the resolution of any of its environmental matters will have a material adverse effect on the
Company’s financial condition or results of operations.
GOVERNMENT CONTRACTS
The Company’s contracts with the U.S. Government and subcontracts with prime contractors of
the U.S. Government are primarily firm fixed-price contracts under which work is performed and paid
for at a fixed amount without adjustment for the actual costs experienced in connection with the
contracts. Therefore, unless the customer actually or constructively alters or impedes the work
performed, all risk of loss due to cost overruns is borne by the Company. All Government prime
contracts and virtually all of the Company’s subcontracts provide that they may be terminated at
the convenience of the Government. Upon such termination, the Company is normally entitled to
receive equitable compensation from the customer. See “Marketing and Sales” in this Item 1, and
Item 1A. Risk Factors for additional information regarding Government contracts.
EMPLOYEES
As of October 31, 2010, the Company employed approximately 2,290 persons.
FINANCING
The Company maintains a $330 million five-year revolving credit facility with a $50 million
increase option. The facility is available for direct borrowings and/or the issuance of letters of
credit, and is provided by a group of sixteen banks, led by PNC Bank (successor to National City
Bank) as agent, with a maturity of November 30, 2012. The facility is secured by the unlimited
guaranty of the Company’s material domestic
subsidiaries and a 65% pledge of the material foreign
subsidiaries’ share equity. The Company’s ability to access the $50 million increase option of the
facility is subject to acceptance by the participating banks or other outside banks. See
“Management’s Discussion and Analysis — Bank Credit Facility” in the 2010 Annual Report, and Note
9 of the Notes to Consolidated Financial Statements in the 2010 Annual Report, which information is herein incorporated by reference.
HISTORY OF THE BUSINESS
ESCO was incorporated in Missouri in August 1990 as a wholly owned subsidiary of Emerson
Electric Co. (“Emerson”) to be the indirect holding company for several Emerson subsidiaries, which
were primarily in the defense business. Ownership of ESCO and its subsidiaries was distributed on
October 19, 1990 by Emerson to its shareholders through a special distribution. Since that time,
through a series of acquisitions and divestitures, the Company has shifted its primary focus from
defense contracting to the production and supply of engineered products and systems marketed to
utility, industrial, aerospace and commercial users. Effective July 10, 2000, ESCO changed its
name from ESCO Electronics Corporation to ESCO Technologies Inc. In fiscal year 2008, ESCO
acquired Doble Engineering Company, and sold the filtration business of Filtertek, Inc. In fiscal
year 2006, ESCO acquired Aclara RF Systems Inc. (formerly Hexagram, Inc.) and Aclara Software Inc.
(formerly Nexus Energy Software, Inc.) See Notes 2 and 3 of the Notes to Consolidated Financial
Statements in the 2010 Annual Report, which Notes are herein incorporated by reference.
AVAILABLE INFORMATION
The Company makes available free of charge on or through its Internet website,
www.escotechnologies.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after
such material is electronically filed with or furnished to the Securities and Exchange Commission.
Item 1A. Risk Factors
This Form 10-K, including Item 1 “Business,” Item 2 “Properties”, Item 3 “Legal Proceedings”
and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
(incorporated by reference to “Management’s Discussion and Analysis” appearing in the 2010 Annual
Report), contains “forward-looking statements” within the meaning of the safe harbor provisions of
the federal securities laws. In addition to the risks and uncertainties discussed elsewhere in
this Form 10-K, the following are important risk factors which could cause actual results and
events to differ materially from those contained in any forward-looking statements.
MOST UTILITY SOLUTIONS SEGMENT SALES ARE TO OR FOR THE UTILITY INDUSTRY, KNOWN FOR LONG SALES
CYCLES AND UNCERTAINTY, WHICH COULD AFFECT THE TIMING OF REVENUE.
Most of the Utility Solutions segment’s sales are to or for the utility industry, where sales
cycles are long and often unpredictable due to budgeting, purchasing and regulatory approval
processes that can take up to several years to complete. Most Aclara sales involve large dollar
amounts, and are marked by extended and complex competitive procurements. These factors often
cause delays in the timing of sales, and such delays could result in order postponement, reduction
in size or cancellation, thereby reducing or delaying the Company’s future revenue. In addition,
delays in the receipt of grants by certain utility customers under the American Recovery and
Reinvestment Act of 2009 may cause delays in the placement of orders with Aclara. Also, these
customers’ selection of vendors may be influenced by the specific terms of such grants, such as
buy-American requirements, which may prohibit the supply by Aclara of products produced outside the
U.S.
NEGATIVE WORLDWIDE ECONOMIC CONDITIONS AND RELATED CREDIT SHORTAGES COULD RESULT IN A DECREASE IN
THE COMPANY’S SALES AND AN INCREASE IN ITS OPERATING COSTS, WHICH COULD ADVERSELY AFFECT ITS
BUSINESS AND OPERATING RESULTS.
If there is a worsening of current global and U.S. economic and financial market conditions
and
additional tightening of global credit markets, many of the Company’s customers may further
delay or reduce their purchases of its products. The current uncertainties in the global economy
may cause the utility industry to experience shortages in available credit, which could limit
capital spending. To the extent this problem affects customers of the Utility Solutions segment,
the sales and profits of this segment could be adversely affected. Likewise, if the Company’s
suppliers face challenges in obtaining credit, they may have to increase their prices or become unable to continue to offer the products and services the Company uses
to manufacture its products, which could have an adverse effect on its business, results of
operations and financial condition.
A SIGNIFICANT PORTION OF THE UTILITY SOLUTIONS SEGMENT REVENUES MAY BE GENERATED BY A LIMITED
NUMBER OF LARGE CONTRACTS.
A significant portion of the Utility Solutions segment’s business may be dependent on several
large contracts with customers. The loss of revenue which would result from such a customer’s
selection of other suppliers, cancellations, delays, reductions, regulatory actions or the
Company’s failure to perform in connection with such a contract could have a material adverse
effect on the Company’s business, results of operations and financial condition. For example, if
the anticipated Aclara contract for the AMI project for Southern California Gas Co. fails to
materialize, the Company would suffer a significant loss of expected revenue.
THE COMPANY’S QUARTERLY RESULTS MAY FLUCTUATE SUBSTANTIALLY.
The Company has experienced variability in quarterly results and believes its quarterly
results will continue to fluctuate as a result of many factors, including the size and timing of
customer orders, Federal Communications Commission or other governmental actions, changes in
existing taxation rules or practices, the gain or loss of significant customers, timing and levels
of new product developments, shifts in product or sales channel mix, increased competition and
pricing pressure, and general economic conditions affecting enterprise spending for the utility
industry.
FAILURE OR DELAY IN NEW PRODUCT DEVELOPMENT COULD REDUCE THE COMPANY’S FUTURE SALES.
Much of the Company’s business is dependent on the continuous development of new products and
technologies to meet the changing needs of the Company’s markets on a cost-effective basis. Many of
these markets are highly technical from an engineering standpoint, and the relevant technologies
are subject to rapid change.
If the Company fails to timely enhance existing products or develop new products, sales
opportunities could be lost, which would adversely affect business. In addition, in some existing
contracts with customers, the Company has made commitments to develop and deliver new products. If
the Company fails to meet these commitments, the default could result in the imposition of
contractual penalties including termination. The inability to enhance existing products in a
timely manner could make the products less competitive, while the inability to successfully develop
new products may limit growth opportunities. Delays in product development may also require greater
investment in research and development. Increased costs associated with new product development
and product enhancements could adversely affect operating results. The costs of new product
development may not be recoverable if demand for the products is not as anticipated.
A SIGNIFICANT PORTION OF THE COMPANY’S CAPITALIZED SOFTWARE IS SUBJECT TO IMPAIRMENT RISK BASED ON
THE ABILITY TO MARKET THE SOFTWARE.
A significant portion of the Company’s capitalized software value is contingent on the future
sales of TWACS NG™ software. Failure to generate sufficient sales to recoup costs could result in
the impairment of the capitalized software costs.
CERTAIN MANUFACTURING OPERATIONS ARE DEPENDENT ON A SMALL NUMBER OF THIRD-PARTY SUPPLIERS
A significant part of the Utility Solutions segment’s manufacturing operations relies on a
small number of third-party manufacturers to supply the segment’s products. For example, Aclara
has arrangements with four manufacturers which produce and supply substantially all of Aclara’s
end-products. Two of these suppliers produce these end-products in Mexico. A significant
disruption (for example, a strike) in the supply of those products could negatively affect the
timely delivery of Aclara’s products to customers and future sales. Also, most of Doble’s
manufacturing operations rely on third-party manufacturers to supply its products. Disruption
in the supply of critical components such as integrated circuit components could have an
adverse impact on business by, among other things, increasing costs and reducing margins.
Certain of the Company’s other businesses are dependent upon sole source or a limited number
of third-party manufacturers of parts and components. Many of these suppliers are small
businesses. Since alternative supply sources are limited, there is an increased risk of adverse
impacts on the Company’s production schedules and profits if the Company’s suppliers were to
default in fulfilling their price, quality or delivery obligations.
PRODUCT DEFECTS COULD RESULT IN COSTLY FIXES, LITIGATION AND DAMAGES.
If there are claims related to defective products (under warranty or otherwise), particularly
in a product recall situation, the Company could be faced with significant expenses in replacing or
repairing the product. For example, the Aclara meter modules are installed in thousands of
residences and other buildings. The replacement/repair costs for such products, if defective, could
have a material adverse effect on the Company’s financial condition. Also, the Filtration segment
obtains raw materials, machined parts and other product components from suppliers who provide
certifications of quality which are relied on by the Company. Should these product components be
defective and pass undetected into finished products, there could be significant costs to the
Company for repairs, re-work or replacement.
In addition, if a dispute over product claims cannot be settled, arbitration or litigation may
result, involving attorneys’ fees and the potential of damage awards against the Company.
INCREASES IN RAW MATERIAL PRICES AND DECREASED AVAILABILITY OF RAW MATERIALS COULD ADVERSELY AFFECT
THE COMPANY’S BUSINESS.
The cost of raw materials is a major element of the total cost of many of the Company’s
products. For example, the Test segment’s critical components rely on purchases of raw materials
from third parties. Increases in the prices of raw materials (such as steel, copper, nickel, zinc,
wood and petrochemical products) could have an adverse impact on business by, among other things,
increasing costs and reducing margins.
In addition, the Company’s reliance on sole or limited sources of supply of raw materials in
each of its segments could adversely affect the business. Weather-created disruptions in supply,
in addition to affecting costs, could impact the Company’s ability to procure an adequate supply of
these raw materials and delay or prevent deliveries of products to customers.
ECONOMIC, POLITICAL AND OTHER RISKS OF THE COMPANY’S INTERNATIONAL OPERATIONS COULD ADVERSELY
AFFECT BUSINESS.
In fiscal 2010, approximately 23% of the Company’s sales were made to international customers.
An economic downturn or an adverse change in the political situation in certain foreign countries
in which the Company does business could cause a decline in revenues and adversely affect the
Company’s financial condition. For example, the Test segment does significant business in Asia and
Europe. Changes in the Asian political climate or political changes in specific Asian countries
could negatively affect the Company’s business. Weakness in the European economy could have a
significant adverse effect on the Company’s European revenues. For example, several Doble and
ETS-Lindgren companies are based in Europe, and could be negatively impacted by weakness in the
European economy.
The Company’s international sales are also subject to other risks inherent in foreign
commerce, including currency fluctuations and devaluations, the risk of war and terrorism,
differences in foreign laws, uncertainties as to enforcement of contract rights, and difficulties
in negotiating and resolving disputes with
foreign customers.
The U.S. International Traffic in Arms Regulations (“ITAR”), which impose certain restrictions
on the U.S. export of defense articles and services, may be viewed as too restrictive by
international customers, who may develop their own domestic products or elect to procure products
from other international suppliers, which are not subject to such export restrictions.
SALES OF GOVERNMENT PRODUCTS DEPEND UPON CONTINUED GOVERNMENT FUNDING.
During the past three fiscal years, from 5% to 8% of the Company’s revenues have been
generated from sales to the U.S. Government or its contractors. These sales are dependent on
continuous government funding of its programs. There could be reductions or terminations of the
government funding on programs which are applicable to the Company or its customers. These funding
effects could adversely affect the Company’s sales and profit, and could bring about a
restructuring of Company operations, which could result in an adverse effect on its financial
condition or results of operations.
For example, a significant part of VACCO’s sales involve major U.S. Government defense and
space programs. Government reduction in spending on these programs could have a significant
adverse impact on Company financial results.
THE END OF CUSTOMER PRODUCT LIFE CYCLES COULD NEGATIVELY AFFECT FILTRATION SEGMENT RESULTS.
Many of the Company’s filtration products are sold to be components in the customers’
end-products. If a customer discontinues a certain end-product line, the ability of the Company to
continue to sell those components will be reduced or eliminated. The result could be a significant
decrease in Company sales.
For example, a substantial portion of PTI’s revenue is generated from commercial aviation
aftermarket sales. As certain aircraft are retired and replaced by newer aircraft, there could be
a corresponding decrease in sales associated with the Company’s current products. Such a decrease
could adversely affect the Company’s operating results. In addition, if the Government cuts back
the space program (for example, the Space Shuttle), VACCO’s sales of space products would be
reduced, and its revenues could be adversely affected.
ACQUISITIONS OF OTHER COMPANIES CARRY RISK.
Acquisitions of other companies involve numerous risks, including difficulties in the
integration of the operations, technologies and products of the acquired companies, the potential
exposure to unanticipated and undisclosed liabilities, the potential that expected benefits or
synergies are not realized and that operating costs increase, the potential loss of key personnel,
suppliers or customers of acquired businesses and the diversion of management’s time and attention
from other business concerns. Although management will attempt to identify and evaluate the risks
inherent in any future transaction, the Company may not properly ascertain all such risks.
CREDIT SHORTAGES COULD AFFECT THE PRICING OF THE COMPANY’S CREDIT FACILITY INCREASE OPTION.
Tightening of the global credit markets could cause an increase in the pricing or fees related
to the Company’s overall credit facility if the Company exercises its $50 million increase option.
DESPITE ITS EFFORTS, THE COMPANY MAY BE UNABLE TO ADEQUATELY PROTECT ITS INTELLECTUAL PROPERTY.
Despite the Company’s efforts to protect its intellectual property, unauthorized parties or
competitors may copy or otherwise obtain and use the Company’s products and technology,
particularly in foreign countries where the laws may not protect the Company’s proprietary rights
as fully as in the United States. Current and future actions to enforce the Company’s proprietary
rights may result in substantial costs and
diversion of resources, and may not be successful. In
addition, the Company may not elect to pursue an unauthorized user due to the high costs and
uncertainties associated with litigation. The Company may also face exposure to claims by others
challenging its intellectual property rights.
CHANGES IN TEST STANDARDS COULD ADVERSELY IMPACT TEST SEGMENT SALES.
A significant portion of the Test segment’s business involves sales to technology customers,
which results from these customers needing to meet specific international and domestic test
standards. If demand for product testing from these customers decreases, the Company’s business
could be adversely affected. Likewise, if regulatory agencies eliminate or reduce certain domestic or international test
standards, the Company’s sales could be adversely affected. For example, if it were determined
that there is no need to include Wi-Fi technology in mobile phones, there may be no need for
certain testing on mobile phones. Also, if a regulatory authority relaxes the test standards for
certain electronic devices because they do not interfere with the broadcast spectrum, sales of
certain Test products could be reduced.
DISPUTES WITH CONTRACTORS COULD ADVERSELY AFFECT THE TEST SEGMENT’S COSTS.
A major portion of the Test segment’s business involves working in conjunction with general
contractors to produce end-products, such as electronic test chambers, secure communication rooms,
MRI facilities, etc. If there are performance problems caused by either the Company or a
contractor, these often result in cost overruns and may lead to a dispute as to which party is
responsible. The resolution of such disputes can result in arbitration or litigation, and could
involve significant expense including attorneys’ fees. In addition, these disputes may result in
reduction in revenue, a loss on a particular project, or even a significant damages award against
the Company.
THE LOSS OF SPECIALIZED KEY EMPLOYEES COULD AFFECT PERFORMANCE AND REVENUES.
There is a risk of the Company’s losing key employees having engineering and technical
expertise to other employers. For example, the Utility Solutions segment relies heavily on
engineers with significant experience and reputation in the utility industry to furnish expert
consulting services and support to customers. There is a current trend of a shortage of these
qualified engineers because of hiring competition from other companies in the industry. Loss of
these employees to other employers could reduce the segment’s ability to provide services and
affect revenues negatively.
ENVIRONMENTAL OR REGULATORY REQUIREMENTS COULD INCREASE EXPENSES AND ADVERSELY AFFECT
PROFITABILITY.
The Company’s operations and properties are subject to U.S. and foreign environmental laws and
regulations governing, among other things, the generation, storage, emission, discharge,
transportation, treatment and disposal of hazardous materials and the clean up of contaminated
properties. These regulations, and changes therein, could increase the cost of compliance. Failure
to comply could result in the imposition of significant fines, suspension of production, alteration
of product processes, cessation of operations or other actions, which could materially and
adversely affect the Company’s business, financial condition and results of operations. For
example, the Company is currently involved as a responsible party in several on-going
investigations and remediations of contaminated properties, both Company-owned and off-site.
Future costs associated with these situations are difficult to quantify. These and any future
costs associated with environmental issues currently unknown could have a significant effect on the
Company’s financial condition. See Item 1, Business-Environmental Matters for a discussion of
these factors.
COMPETITION IS BROADLY BASED AND GLOBAL IN SCOPE.
The Company faces competition from a large number of manufacturers and distributors for
nearly all of its products. Some of the Company’s competitors are larger, more diversified
corporations, global in scope, with greater financial, marketing, production and research and
development resources. If the Company cannot compete successfully against current or future
competitors, it could have a material adverse effect on the Company’s business, financial condition
and results of operations.
FORWARD-LOOKING INFORMATION
Statements contained in this Form 10-K regarding future events and the Company’s future
results that are based on current expectations, estimates, forecasts and projections about the
Company’s performance and the industries in which the Company operates, 2011 revenues, EBIT,
adequacy of the Company’s credit facilities and future cash flows, the likelihood, size and timing
of an AMI contract with SoCalGas, estimates of anticipated contract costs and revenues, anticipated
future product deliveries by Aclara RF to PG&E, the timing of completion of the CFE and EMCALI AMI
deployments,
and the likelihood, timing and amount of any follow-on orders from CFE and EMCALI
the anticipated timing of deliveries by Aclara RF to Toho and the city of
Toronto, the anticipated timing of deliveries by VACCO for the
U.S. Navy’s Virginia Class
submarine program and the
anticipated timing and value of deliveries for the
U.S. Army’s T-700 valve program, the anticipated total value of
TekPackaging’s five year production contract, the outcome of current litigation, claims and
charges, the anticipated timing and amount of lost deferred tax assets, continued reinvestment of
foreign earnings, the timing, total value and period of performance of contracts awarded to the
Company, the accuracy of the Company’s estimates utilized in software revenue recognition, the
accuracy of the Company’s estimates utilized to project costs at completion in the Test segment and
Filtration segment, income tax liabilities, the effective tax rate, the amount, timing and ability
to use net research tax credits, the timing and amount of the reduction of unrecognized tax
benefits, repayment of debt within the next twelve months, the recognition of costs related to
share-based compensation arrangements, future costs relating to environmental matters, share
repurchases, investments, sustained performance improvement, performance improvement initiatives,
growth opportunities, new product development, the Company’s ability to increase shareholder value,
acquisitions, and the beliefs and assumptions of Management contained in the letter “To Our
Shareholders”, and “Management’s Discussion and Analysis” in the 2010 Annual Report, and other
statements contained herein which are not strictly historical are considered “forward-looking
statements” within the meaning of the safe harbor provisions of the Federal securities laws. Words
such as expects, anticipates, targets, goals, projects, intends, plans, believes, estimates,
variations of such words, and similar expressions are intended to identify such forward-looking
statements. Investors are cautioned that such statements are only predictions, speak only as of the
date of this report, and the Company undertakes no duty to update. The Company’s actual results in
the future may differ materially from those projected in the forward-looking statements due to
risks and uncertainties that exist in the Company’s operations and business environment including,
but not limited to those described herein under “Item 1A. Risk Factors” and the following: the
success of negotiations and the ultimate terms and timing of any contract with SoCalGas; changes in
requirements or financial constraints impacting SoCalGas; the receipt of necessary regulatory
approvals pertaining to SoCalGas’ project; the timing and content of future customer orders;
termination for convenience of customer contracts; timing and magnitude of future contract awards;
weakening of economic conditions in served markets; the success of the Company’s competitors;
changes in customer demands or customer insolvencies; competition; intellectual property rights;
technical difficulties; the availability of selected acquisitions; delivery delays or defaults by
customers; performance issues with key customers, suppliers and subcontractors; material changes in
the costs of certain raw materials; labor disputes; changes in laws and regulations including but
not limited to changes in accounting standards and taxation requirements; costs relating to
environmental matters; litigation uncertainty; and the Company’s successful execution of internal
operating plans.
Item 1B. Unresolved Staff Comments
None
Item 2. Properties
The Company’s principal buildings contain approximately 1,121,458 square feet of floor space.
Approximately 682,900 square feet are owned by the Company and approximately 438,558 square feet
are leased. See Note 7 of the Notes to Consolidated Financial Statements in the 2010 Annual
Report, which information is herein incorporated by reference. The principal plants and offices
are as follows:
Oxnard, CA
Cedar Park, TX
Cleveland, OH
South El Monte, CA
Durant, OK
Huntley, IL
Watertown, MA
St. Louis, MO
Glendale Heights, IL
Beijing, China
Eura, Finland
Palmdale, CA
Minocqua, WI
Wellesley, MA
Morrisville, NC
Stevenage, England
Kesselsdorf, Germany
The Company believes its buildings, machinery and equipment have been generally well
maintained, are in good operating condition and are adequate for the Company’s current production
requirements and other needs.
Item 3. Legal Proceedings
As a normal incident of the businesses in which the Company is engaged, various claims,
charges and litigation are asserted or commenced from time to time against the Company. With
respect to claims and litigation asserted or commenced against the Company, it is the opinion of
management that final judgments, if any, which might be rendered against the Company are adequately
reserved or covered by insurance, and are not likely to have a material adverse effect on its
financial condition or results of operation.
Item 4. (Removed and Reserved)
Executive Officers of the Registrant
The following sets forth certain information as of November 24, 2010 with respect to ESCO’s
executive officers. These officers have been elected to terms which expire at the first meeting of
the Board of Directors after the next annual meeting of Stockholders.
Victor L. Richey, Jr.*
Gary E. Muenster
Alyson S. Barclay
There are no family relationships among any of the executive officers and directors.
Since April 2003, Mr. Richey has been Chairman and Chief Executive Officer of ESCO. Since
October 2006, he has also been President.
Mr. Muenster was Senior Vice President and Chief Financial Officer of ESCO from November 2005
until February 2008. Since the latter date, he has been Executive Vice President and Chief
Financial Officer.
Ms. Barclay was Vice President, Secretary and General Counsel of ESCO from October 1999 until
November 2008. Since the latter date, she has been Senior Vice President, Secretary and General
Counsel.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
The information required by this item is incorporated herein by reference to Notes 10 and 11
of the Notes to Consolidated Financial Statements, “Common Stock Market Price” and “Shareholders’
Summary—Capital Stock Information” appearing in the 2010 Annual Report. As of November 10, 2010,
there were approximately 2,360 record holders of Common Stock (including Company employees holding
shares under the Employee Stock Purchase Plan). No cash dividends on ESCO’s common stock were paid
for fiscal years 2008 or 2009. However, the Board of Directors, on November 12, 2009, adopted a
resolution to initiate quarterly cash dividends payable at an annual rate of $0.32 per share on the
common stock. The first quarterly dividend of $0.08 per share was paid on January 19, 2010 to
stockholders of record as of January 4, 2010. Like quarterly dividends have been, and will be,
paid each quarter thereafter until such time as the Board of Directors may terminate or amend the
dividend declaration.
ISSUER PURCHASES OF EQUITY SECURITIES*:
July 1-31, 2010
August 1-31, 2010
Sep. 1-30, 2010
Total
Item 6. Selected Financial Data
The information required by this item is incorporated herein by reference to “Five-Year
Financial Summary” and Notes 2 and 3 of the Notes to Consolidated Financial Statements appearing in
the 2010 Annual Report.
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 “Management’s
Discussion and Analysis” appearing in the 2010 Annual Report.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by this item is incorporated herein by reference to “Market Risk
Analysis” and “Quantitative And Qualitative Disclosures About Market Risk” in “Management’s
Discussion and Analysis” appearing in the 2010 Annual Report.
Item 8. Financial Statements and Supplementary Data
The information required by this item is incorporated herein by reference to the Consolidated
Financial
Statements of the Company on pages 21 through 42 and the report thereon of KPMG LLP, an
independent
registered public accounting firm, appearing on page 45 of the 2010 Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Not Applicable.
Item 9A. Controls and Procedures
The Company carried out an evaluation, under the supervision and with the participation of the
Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of the Company’s disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d—15(e) under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). Based upon that evaluation, the Company’s Chief Executive Officer
and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were
effective as of September 30, 2010. Disclosure controls and procedures are controls and procedures
that are designed to ensure that information required to be disclosed in Company reports filed or
submitted under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission’s rules and forms.
Management’s Report on Internal Control Over Financial Reporting and the attestation report
thereon of KPMG LLP are incorporated herein by reference to pages 44 and 45, respectively, in the
2010 Annual Report.
There were no changes in the Company’s internal control over financial reporting (as defined
in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter ended September 30, 2010 that
have materially affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information regarding nominees and directors appearing under “Nominees and Continuing
Directors” in the 2011 Proxy Statement is hereby incorporated by reference. Information regarding
executive officers is set forth in Part I of this Form 10-K. Information regarding the Audit and
Finance Committee and its members appearing under “Board of
Directors and Committees” and under the separate section
“Committees” in the 2011
Proxy Statement is hereby incorporated by reference.
Information appearing under “Section 16(a) Beneficial Ownership Reporting Compliance” in the
2011 Proxy Statement is hereby incorporated by reference.
The Company has adopted codes of ethics which apply to its chief executive officer, chief
financial officer, principal accounting officer, controller and all other senior executives, as
well as all Company employees. The following documents are available free of charge through the
Company’s internet website at www.escotechnologies.com and in print to any person who requests
them: Corporate Governance Guidelines; Charters of the Audit and Finance Committee, Human Resources
and Compensation Committee, and Nominating and Corporate Governance Committee; Code of Business
Conduct and Ethics; and Code of Ethics for Senior Financial Officers. Direct your request for
printed documents to Director of Investor Relations, ESCO Technologies Inc., 9900A Clayton Road,
St. Louis, MO 63124.
Item 11. Executive Compensation
Information appearing under “Board of Directors and Committees,” “Executive Compensation,”
“Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report”
in the 2011 Proxy Statement is hereby incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The information regarding beneficial ownership of shares of common stock by nominees and
directors, by executive officers, by directors and executive officers as a group and by any known
five percent stockholders appearing under “Security Ownership of Directors and Executive Officers”
and “Security Ownership of Certain Beneficial Owners” in the 2011 Proxy Statement is hereby
incorporated by reference.
Equity Compensation Plan Information:
The following table summarizes certain information regarding Common Shares that may be issued
by the Company pursuant to its equity compensation plans existing as of September 30, 2010.
Equity compensation
plans approved by
security holders
(2)
Equity compensation
plans not approved
by security holders
Total
Item 13. Certain Relationships and Related Transactions and Director Independence
Information regarding the Company’s directors, nominees for directors and members of the
committees of the board of directors, and their status of independence appearing under “Board of
Directors and Committees” in the 2011 Proxy Statement is hereby incorporated by reference.
There was no transaction since the beginning of the Company’s last fiscal year, or any
currently proposed transaction, in which the Company was or is to be a participant and the amount
involved exceeds $120,000, and in which any related person had or will have a direct or indirect
material interest.
The Company has implemented a written policy to ensure that all “Interested Transactions” with
“Related Parties” will be at arm’s length and on terms generally available to an unaffiliated
third-party under the same or similar circumstances. Interested Transactions are any Company
transactions in which any Related Party has or will have a direct or indirect interest. Related
Parties are executive officers, directors, director nominees and persons owning more than 5% of
Company common stock, or any immediate family member of such parties. The policy contains
procedures requiring Related Parties to notify the Company of potential Interested
Transactions and for the Nominating and Corporate Governance Committee (“Committee”) to
review
and approve or disapprove of such transaction. The Committee will consider whether the Interested
Transaction with a Related Party is on terms no less favorable than terms generally available to an
unaffiliated third-party under the same or similar circumstances. If advance Committee approval is
not feasible or is not obtained, the policy requires submission of the transaction to the Committee
after the fact, and the Committee is empowered to approve, ratify, amend, rescind or terminate the
transaction. In such event, the Committee will also request the General Counsel to evaluate the
Company’s controls and procedures to ascertain whether any changes to the policy are recommended.
Item 14. Principal Accounting Fees and Services
Information regarding the Company’s independent registered public accounting firm, its fees
and services, and the Company’s Audit and Finance Committee’s pre-approval policies and procedures
regarding such fees and services appearing under “Independent Registered Public Accounting Firm
Services And Fees” in the 2011 Proxy Statement is hereby incorporated by reference.
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) Documents filed as a part of this report:
| |
1. |
|
The Consolidated Financial Statements of the Company
on pages 21 through 42 and the Report of Independent Registered
Public Accounting Firm thereon of KPMG LLP appearing on page 45 of
the 2010 Annual Report. |
| |
| |
2. |
|
Financial statement schedules have been omitted
because the subject matter is disclosed elsewhere in the financial
statements and notes thereto, not required or not applicable, or
the amounts are not sufficient to require submission. |
3.1
3.2
3.3
3.4
3.5
3.6
4.1
4.2
4.3
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
10.46
10.47
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58
10.59
10.60
10.61
10.62
10.63
10.64
10.65
13
• Management’s Discussion and
Analysis (pgs. 10-20)
• Consolidated Financial Statements
(pgs. 21-42)
• Management’s Report on Internal
Control over Financial Reporting (p. 44)
• Report of Independent Registered
Public Accounting Firm (p. 45)
• Five-year Financial Summary (p. 46)
• Common Stock Market Price (p. 46)
• Shareholders’ Summary—Capital
Stock Information (p. 48)
21
23
31.1
31.2
32
101.INS
101.SCH
101.CAL
101.LAB
101.PRE
101.DEF
Attached as Exhibit 101 to this report are documents formatted in XBRL (Extensible Business
Reporting Language). Users of this data are advised pursuant to Rule 406T of Regulation S-T that
the interactive data file is deemed not filed or part of a registration statement or prospectus for
purposes of section 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of
section 18 of the Securities Exchange Act of 1934, and otherwise not subject to liability under
these sections.
|
|
|
| [7] |
|
Incorporated by reference to Form l0-K for the fiscal year ended September 30, 1991,
at the Exhibit indicated. |
| |
| [8] |
|
Incorporated by reference to Form 10-K for the fiscal year ended September 30, 1993,
at the Exhibit indicated. |
| |
| [9] |
|
Incorporated by reference to Form 10-K for the fiscal year ended September 30, 2001,
at the Exhibit indicated. |
| |
| [10] |
|
Incorporated by reference to Form 10-K for the fiscal year ended September 30,
2000, at the Exhibit indicated. |
| |
| [11] |
|
Incorporated by reference to Form 10-Q for the fiscal quarter ended December 31,
2000, at the Exhibit indicated. |
| |
| [12] |
|
Incorporated by reference to Form 10-Q for the fiscal quarter ended June 30, 2002,
at the Exhibit indicated. |
| |
| [13] |
|
Incorporated by reference to Form 10-Q for the fiscal quarter ended March 31, 2002,
at the Exhibit indicated. |
| |
| [14] |
|
Identical Employment Agreements between ESCO and executive officers A.S. Barclay,
G.E. Muenster and V.L. Richey, Jr., except that in the cases of Ms. Barclay and Mr.
Muenster the minimum annual salary is $94,000 and $108,000, respectively. |
| |
| [15] |
|
Identical Amendments to Employment Agreements between ESCO and executive officers
A.S. Barclay, G.E. Muenster and V.L. Richey, Jr. |
| |
| [16] |
|
Incorporated by reference to Notice of Annual Meeting of the Stockholders and Proxy
Statement dated December 11, 2000, at the Exhibit indicated. |
| |
| [17] |
|
Incorporated by reference to Form 10-K for the fiscal year ended September 30,
2002, at the Exhibit indicated. |
| |
| [18] |
|
Incorporated by reference to Notice of Annual Meeting of the Stockholders and Proxy
Statement dated December 29, 2003, at the Appendix indicated. |
| |
| [19] |
|
Incorporated by reference to Form 10-Q for the fiscal quarter ended June 30, 2004,
at the Exhibit indicated. |
| |
| [20] |
|
Incorporated by reference to Form 10-Q for the fiscal quarter ended December 31,
2004, at the Exhibit indicated. |
| |
| [21] |
|
Incorporated by reference to Current Report on Form 8-K dated August 3, 2010, at
the Exhibit indicated. |
| |
| [22] |
|
Incorporated by reference to Form 10-K for the fiscal year ended September 30,
2006, at the Exhibit indicated. |
| |
| [23] |
|
Incorporated by reference to Current Report on Form 8-K dated November 12, 2007, at
the Exhibit indicated. |
| |
| [24] |
|
Incorporated by reference to Form 10-K for the fiscal year ended September 30,
2007, at the Exhibit indicated. |
| |
| [25] |
|
Identical Amendments to Employment Agreements between ESCO and executive officers
G.E. Muenster and A.S. Barclay, except that (i) the termination amounts payable under
Paragraph 9.a(1) are equal to base salary for 12 months, and (ii) under Paragraph
9.a(1)(B), such |
26
(b) Exhibits: Reference is made to the list of exhibits in this Part IV, Item 15(a)3 above.
(c) Financial Statement Schedules: Reference is made to Part IV, Item 15(a)2 above.
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.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below on November 29, 2010, by the following persons on behalf of the registrant and in the
capacities indicated.
/s/ V.L. Richey, Jr.
V.L. Richey, Jr.
/s/ G.E. Muenster
G.E. Muenster
/s/ J.M. McConnell
J.M. McConnell
/s/ L.W. Solley
L.W. Solley
/s/ J.M. Stolze
J.M. Stolze
/s/ D.C. Trauscht
D.C. Trauscht
/s/ J.D. Woods
J.D. Woods
INDEX TO EXHIBITS
Exhibits are listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K.
• Management’s Discussion and Analysis (pgs. 10-20)
• Consolidated Financial Statements (pgs. 21-42)
• Management’s Report on Internal Control over Financial
Reporting (p. 44)
• Report of Independent Registered Public Accounting Firm (p.
45)
• Shareholders’ Summary—Capital Stock Information (p. 48)
See Item 15(a)3 for a list of exhibits incorporated by reference.