28630--6/12/2006--DRS_TECHNOLOGIES

related topics

{debt, indebtedness, cash}

{acquisition, growth, future}

{customer, product, revenue}

{cost, contract, operation}

{product, market, service}

{regulation, government, change}

{cost, regulation, environmental}

{property, intellectual, protect}

{personnel, key, retain}

{operation, international, foreign}

{product, candidate, development}

{stock, price, operating}

{competitive, industry, competition}

Our revenues depend on our ability to maintain our level of government business. The loss of our contracts with domestic and non-U.S. government agencies could adversely affect our revenues. Our revenues will be adversely affected if we fail to receive renewal or follow-on contracts. Our operating results may fluctuate. We may not be successful in implementing our growth strategy if we are unable to identify , acquire and finance suitable acquisition targets. Integration of the operations of recent acquisitions will be complex, time-consuming and expensive and may adversely affect the results of our operations after the acquisition. If we are unable to successfully integrate ESSI and other companies we acquire into our operations on a timely basis, our profitability could be negatively affected. Failure to anticipate technical problems, estimate costs accurately or control costs during performance of a fixed-price contract may reduce our profit or cause a loss. We may experience production delays if suppliers fail to deliver materials to us. Our backlog is subject to reduction and cancellation, which could negatively impact our revenues and results of operations. Our international operations expose us to risks of losses. We face competition in the military electronics and services industries. We are dependent in part upon our relationships and alliances with industry participants in order to generate revenue. The U.S. government s right to use technology developed by us limits our intellectual property rights. We are subject to government regulation, which may require us to obtain additional licenses and could limit our ability to sell our products outside the United States. We are subject to environmental laws and regulations, and our ongoing operations may expose us to environmental liabilities. ESSI currently is subject to investigations by the Enforcement Division of the SEC and the Office of the U.S. Attorney for the Eastern District of Missouri, each of which could require significant management attention and legal resources and could have a material adverse effect on the Company. A failure to attract and retain technical and other key personnel could reduce our revenues and our operational effectiveness. Our operations involve rapidly evolving products and technological change. Our level of indebtedness could limit cash flow available for our operations and could adversely affect our ability to service our debt or obtain additional financing, if necessary. We may incur substantial additional indebtedness in the future. Despite current indebtedness levels, we and our subsidiaries still may be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage. Our ability to service our debt and meet our cash requirements depends on many factors, some of which are beyond our control. The covenants in our amended and restated senior secured credit facility and the indentures governing our notes impose restrictions that may limit our ability and the ability of most of our subsidiaries to take certain actions. Some of our debt, including borrowings under our amended and restated senior secured credit facility, is based on variable rates of interest, which could result in higher interest expenses in the event of an increase in interest rates.

Full 10-K form ▸

28630--6/12/2006--DRS_TECHNOLOGIES_INC