UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): August 3, 2006
ESCO TECHNOLOGIES INC.
(Exact Name of Registrant as Specified in Charter)
Missouri 1-10596 43-1554045
(State or Other (Commission (I.R.S. Employer
Jurisdiction of Incorporation) File Number) Identification No.)
9900A Clayton Road, St. Louis, Missouri 63124-1186
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 314-213-7200
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 (see General Instruction A.2. below):
[ ] 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 240.113d-4 (c))
ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
The actions listed below in this Item 1.02 reflect the decision by Charles J.
Kretschmer, currently the President and Chief Operating Officer ("COO") of the
Registrant, to reduce his responsibilities and make more time for his other
interests. Mr. Kretschmer has elected to resign as a director and as President
and COO, but will continue his employment with the Registrant. See Item 5.02
below.
By mutual agreement of the parties on August 3, 2006, the Employment Agreement
between the Registrant and Charles J. Kretschmer, dated as of November 3, 1999,
as amended, has been terminated effective September 30, 2006. This Agreement
covered the compensation and employee benefits to be provided to Mr. Kretschmer
and certain rights in the event of termination of his employment. Further
information concerning this Agreement is incorporated herein by reference to the
Registrant's Proxy Statement dated December 21, 2005 under the heading
"EMPLOYMENT AGREEMENTS."
Also by mutual agreement of the parties on August 3, 2006, Mr. Kretschmer's
participation in the Registrant's Severance Plan, adopted August 10, 1995 and
restated February 5, 2002, has been terminated effective September 30, 2006.
This Plan provided that in the event of a change in control of the Registrant,
Mr. Kretschmer would continue to be employed for a two-year period with
specified compensation and employee benefits. Further information concerning
this Plan is incorporated herein by reference to the Registrant's Proxy
Statement dated December 21, 2005 under the heading "SEVERANCE PLAN."
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Today, August 8, 2006, the Registrant is issuing a press release (Exhibit 99.1
to this report) announcing its fiscal 2006 third quarter financial and operating
results. See Item 7.01, Regulation FD Disclosure below.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS;
ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS
Charles J. Kretschmer, a director and President and COO of the Registrant,
resigned as a director effective August 3, 2006. On that date, he also submitted
his resignation as President and COO, to become effective September 30, 2006.
See Item 1.02 above. After September 30, 2006, Mr. Kretschmer will become a Vice
President (a non-"executive officer" position) of the Registrant with
responsibility primarily for acquisition / divestiture activity, contract
manufacturing for the Communications segment, selected major contract
negotiations and profit improvement initiatives. Mr. Kretschmer has been
President and COO of the Registrant since October 2002.
Victor L. Richey, Jr., currently Chairman and Chief Executive Officer ("CEO") of
the Registrant, will also become President effective September 30, 2006. Mr.
Richey has been CEO of the Registrant since October 2002. Since April 2003, he
has also been Chairman. Further information concerning Mr. Richey is
incorporated herein by reference to (i) the Registrant's Proxy Statement dated
December 21, 2005 under the headings "NOMINEES AND CONTINUING DIRECTORS" and
"EMPLOYMENT AGREEMENTS", and (ii) Registrant's Form 10-K for the fiscal year
ended September 30, 2005 under the heading "EXECUTIVE OFFICERS OF THE
REGISTRANT."
ITEM 7.01 REGULATION FD DISCLOSURE
Today, the Registrant is issuing a press release announcing its fiscal 2006
third quarter financial and operating results, and will conduct a related
Webcast conference call at 4:00 p.m. central time. This press release is
furnished herewith as Exhibit 99.1, and will be posted on the Registrant's
website located at http://www.escotechnologies.com. It can be viewed through the
"Investor Relations" page of the website under the tab "Press Releases,"
although the Registrant reserves the right to discontinue that availability at
any time.
NON-GAAP FINANCIAL MEASURES
The press release furnished herewith as Exhibit 99.1 contains financial measures
and financial terms not calculated in accordance with generally accepted
accounting principles in the United States of America ("GAAP") in order to
provide investors and management with an alternative method for assessing the
Registrant's operating results in a manner that is focused on the performance of
the Registrant's ongoing operations. The Registrant has provided definitions
below for the non-GAAP financial measures utilized in the press release,
together with an explanation of why management uses these measures, and why
management believes that these non-GAAP financial measures are useful to
investors. The press release uses the non-GAAP financial measures of "EBIT" and
"EBIT margin".
The Registrant defines "EBIT" as earnings before interest and taxes. The
Registrant defines "EBIT margin" as EBIT as a percent of net sales. The
Registrant's management evaluates the performance of its operating segments
based on EBIT and EBIT margin, and believes that EBIT and EBIT margin are useful
to investors to demonstrate the operational profitability of the Registrant's
business segments by excluding interest and taxes, which are generally accounted
for across the entire Registrant on a consolidated basis. EBIT is also one of
the measures used by management in determining resource allocations within the
Registrant and incentive compensation.
The presentation of the information described above is intended to supplement
investors' understanding of the Registrant's operating performance. The
Registrant's non-GAP financial measures may not be comparable to other
companies' non-GAAP financial performance measures. Furthermore, these measures
are not intended to replace net earnings, cash flows, financial position,
comprehensive income (loss), or any other measure as determined in accordance
with GAAP.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit No. Description of Exhibit
99.1 Press Release dated August 8, 2006
OTHER MATTERS
The information in this report furnished pursuant to Item 2.02 or Item 7.01,
including Exhibit 99.1, shall not be deemed to be "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934 as amended ("Exchange Act") or
otherwise subject to the liabilities of that section, unless the Registrant
incorporates it by reference into a filing under the Securities Act of 1933 as
amended or the Exchange Act.
SIGNATURE
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.
ESCO TECHNOLOGIES INC.
Dated: August 8, 2006 By: /s/ G.E. Muenster
G.E. Muenster
Senior Vice President and
Chief Financial Officer