REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Engineered Support Systems, Inc.:
Our audits of the consolidated financial statements referred to in our
report dated December 10, 2002 appearing in this Annual Report on Form 10-K
also included an audit of the financial statement schedule listed in Item
15(a)(2) of this Form 10-K. In our opinion, this financial statement
schedule presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related consolidated
financial statements.
/s/ PricewaterhouseCoopers LLP
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PricewaterhouseCoopers LLP
St. Louis, MO
December 10, 2002
50
EXHIBIT 99.3
ENGINEERED SUPPORT SYSTEMS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Additions
-----------------------
Balance at Charged to Charged to Balance
beginning costs and other at end of
Description of period expenses accounts Deductions period
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Year ended October 31, 2002
Allowance for doubtful accounts $147 $ 152 $ 5 $ 23 $281
Inventory reserves 1,125 5 311 819
Year ended October 31, 2001
Allowance for doubtful accounts $113 $ 63 $ 29 $147
Inventory reserves
Year ended October 31, 2000
Allowance for doubtful accounts $194 $ 89 $170 $113
Inventory reserves 320 (320)
51
SUPPLEMENTAL INFORMATION
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THE TABLE BELOW PRESENTS UNAUDITED QUARTERLY FINANCIAL INFORMATION IN
THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS, FOR THE YEARS ENDED OCTOBER 31,
2002 AND 2001:
QUARTER ENDED JANUARY 31 APRIL 30 JULY 31 OCTOBER 31
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2002 2001 2002 2001 2002 2001 2002 2001
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RESULTS OF CONTINUING
OPERATIONS
Net revenues $91,286 $86,130 $91,780 $94,550 $106,599 $91,332 $118,280 $93,186
Gross profit 19,912 17,377 21,762 18,684 25,791 18,823 27,713 20,730
Net income 5,902 3,805 6,564 4,360 6,933 4,649 8,267 5,455
Basic earnings per share $ 0.38 $ 0.28 $ 0.42 $ 0.32 $ 0.44 $ 0.33 $ 0.52 $ 0.37
Diluted earnings per share $ 0.37 $ 0.26 $ 0.41 $ 0.29 $ 0.43 $ 0.29 $ 0.50 $ 0.34
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AMOUNTS FOR THE QUARTERS ENDED JANUARY 31, 2002 AND 2001 DIFFER
FROM THOSE PREVIOUSLY REPORTED IN FORM 10-Q DUE SOLELY TO THE IMPACT OF
THE DISCONTINUED OPERATIONS OF ESP. AMOUNTS PREVIOUSLY REPORTED FOR THE
QUARTERS ENDED JANUARY 31, 2002 AND 2001, RESPECTIVELY, INCLUDED NET
REVENUES OF $94,116 AND $91,101, GROSS PROFIT OF $19,846 AND $17,970,
NET INCOME OF $5,524 AND $3,841, BASIC EARNINGS PER SHARE OF $0.36 AND
$0.28, AND DILUTED EARNINGS PER SHARE OF $0.35 AND $0.27.
EARNINGS PER SHARE CALCULATIONS ARE BASED ON THE AVERAGE BASIC
AND DILUTED COMMON SHARES OUTSTANDING FOR EACH QUARTER AND, THEREFORE,
THE SUM OF THE QUARTERS MAY NOT NECESSARILY BE EQUAL TO THE FULL YEAR
BASIC AND DILUTED EARNINGS PER SHARE AMOUNTS.
DIVIDENDS
THE COMPANY CURRENTLY PAYS A SEMI-ANNUAL DIVIDEND. THE MOST RECENTLY
DECLARED DIVIDEND WAS IN THE AMOUNT OF $.018 PER SHARE PAYABLE JANUARY 31,
2003 TO SHAREHOLDERS OF RECORD ON DECEMBER 31, 2002.
MARKET DATA
THE COMPANY'S COMMON STOCK TRADES ON THE NASDAQ STOCK MARKET UNDER THE
SYMBOL EASI. AS OF DECEMBER 31, 2002, THE APPROXIMATE NUMBER OF COMMON
SHAREHOLDERS WAS 9,300. THE FOLLOWING TABLE SETS FORTH THE HIGH AND LOW
STOCK PRICES FOR EACH QUARTER AS PROVIDED BY THE NASDAQ STOCK MARKET.
2002 2001
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HIGH LOW HIGH LOW
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QUARTER ENDED:
January 31 $35.67 $19.39 $15.97 $ 9.80
April 30 34.16 23.03 21.13 10.92
July 31 35.96 27.77 28.52 17.47
October 31 41.23 30.00 38.67 18.67
TRANSFER AGENT AND REGISTRAR
MELLON INVESTOR SERVICES, LLC
85 CHALLENGER ROAD
RIDGEFIELD PARK, NJ 07660
INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP
800 MARKET STREET
ST. LOUIS, MO 63101
SECRETARY AND GENERAL COUNSEL
DAVID DOUGLASS MATTERN
201 EVANS LANE
ST. LOUIS, MO 63121
ANNUAL MEETING
MARCH 4, 2003
ENGINEERED SUPPORT SYSTEMS, INC.
201 EVANS LANE
ST. LOUIS, MO 63121
INVESTOR INFORMATION
YOU MAY CONTACT THE COMPANY AT:
INVESTOR RELATIONS
ENGINEERED SUPPORT SYSTEMS, INC.
201 EVANS LANE
ST. LOUIS, MO 63121
YOU MAY VIEW ONLINE AND REQUEST ADDITIONAL COPIES OF THE COMPANY'S ANNUAL
REPORT AND FORM 10-K ON THE COMPANY'S WEB SITE AT WWW.ENGINEEREDSUPPORT.COM.