EASI Engineered Support Systems (MM)

-- Quarterly Revenues up 2% to $262.3 Million; Exceed $1 Billion for Year ST. LOUIS, Dec. 13 /PRNewswire-FirstCall/ -- Engineered Support Systems, Inc. (NASDAQ:EASI) reported record quarterly net earnings from continuing operations of $24.0 million, or $.55 per diluted share, for the fourth quarter ended October 31, 2005, compared to $21.3 million, or $.51 per diluted share, for the fourth quarter of last year. Net revenues increased 2% to $262.3 million compared to the fourth quarter of last year. Fourth quarter operating income from continuing operations of $38.1 million increased 13% above the $33.7 million reported for the fourth quarter of the prior year. As a percentage of net revenues, operating income from continuing operations was 14.5% for the most recently completed quarter as compared to 13.1% for the fourth quarter of 2004. Reported operating results for the fourth quarter of 2005 included legal, accounting and other costs totaling $1.7 million, or $.02 per diluted share after-tax, related to the Company's pending merger with DRS Technologies, Inc. (NYSE:DRS), a global provider of defense electronics products and systems, which was announced on September 22, 2005. Pending required shareholder and regulatory approvals, the merger transaction is expected to be completed during the first calendar quarter of 2006. The Company's operating results for the fourth quarter of 2005 were also negatively impacted by temporary production delays on its Deployable Power Generation and Distribution System (DPGDS) program. However, the program was returned to full rate production during the latter half of the most recently completed quarter as previously reported by the Company. Revenue contributions from the DPGDS program totaled $12.2 million and $37.9 million, respectively, for the fourth quarters of 2005 and 2004. It should also be noted that the fourth quarter's results in the prior year included an after- tax charge of $3.1 million, or $.07 per diluted share, related to the departure of a former executive in August of 2004. Quarterly net revenues for the fourth quarter of 2005 also were impacted by variations at existing business units primarily due to the completion of certain long-term production programs during the current year. The Company's most recently acquired subsidiaries, Prospective Computer Analysts (PCA), Spacelink International, LLC (Spacelink) and Mobilized Systems, Inc. (MSI) added a combined $29.5 million of incremental revenues during the fourth quarter of 2005. Net income from continuing operations for the fourth quarter advanced 12% to $24.0 million (9.1% of net revenues) compared to $21.3 million (8.3% of net revenues) for the fourth quarter of the prior year. Profit contributions in the fourth quarter of 2005 from the Company's most recently acquired businesses combined with the inclusion of the aforementioned one-time severance costs in the fourth quarter of the prior year were primarily responsible for the increase in reported earnings for the most recently completed quarter. In addition, as a result of the Company's ongoing income tax savings initiatives, its overall effective income tax rate was reduced to 37.5% for fiscal 2005 during the fourth quarter generating a cumulative benefit of $0.5 million, or $0.01 per share during the period. As reported previously, during the second quarter of 2005, the Company settled its arbitration with the purchas

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