-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EdXOl5DJ9eBIY+ygiiBA1rPvKUnNonERphPo807qZl4KKqbleEGEJbuhvycCiar1 WsP5Mw0WTa59pQmrplu9sw== 0000031617-95-000018.txt : 19951119 0000031617-95-000018.hdr.sgml : 19951119 ACCESSION NUMBER: 0000031617-95-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDO CORP CENTRAL INDEX KEY: 0000031617 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 110707740 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03985 FILM NUMBER: 95591868 BUSINESS ADDRESS: STREET 1: 14 04 111TH ST CITY: COLLEGE POINT STATE: NY ZIP: 113561434 BUSINESS PHONE: 7183214000 MAIL ADDRESS: STREET 1: 14 04 111TH ST CITY: COLLEGE POINT STATE: NY ZIP: 11356-1434 10-Q 1 FORM 10-Q FOR QUARTER ENDED SEP 30 1995 Page 1 of 12 Pages FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended September 30, 1995 Commission File Number 1-3985 EDO CORPORATION (Exact name of registrant as specified in its charter) New York No. 11-0707740 (State or other jurisdiction (I.R.S Employer of incorporation or organization) Identification No.) 14-04 111th Street, College Point, New York 11356-1434 (Address of principal executive offices) (Zip Code) Telephone Number (718) 321-4000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Class Outstanding at Sept. 30, 1995 Common shares, par value $1 per share 5,805,263 Page 2 EDO CORPORATION INDEX Page No. Face Sheet 1 Index 2 Part I Financial Information Item 1. Financial Statements Consolidated Balance Sheets - Sept. 30, 1995 and December 31, 1994 3 Consolidated Statements of Operations - Three Months Ended Sept. 30, 1995 and Sept. 24, 1994 4 Consolidated Statements of Operations - Nine Months Ended Sept. 30, 1995 and Sept. 24, 1994 5 Consolidated Statements of Cash Flows - Nine Months Ended Sept. 30, 1995 and Sept. 24, 1994 6 Other Financial Information 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 Part II Other Information 11 Signature 12 Page 3 PART I - FINANCIAL INFORMATION Item I. Financial Statements EDO Corporation and Subsidiaries Consolidated Balance Sheets (in thousands) Assets Sept.30, 1995 Dec. 31, 1994 (unaudited) Current assets: Cash and cash equivalents $ 19,291 $ 18,076 Recoverable Federal income taxes 264 3,649 Accounts receivable 29,314 24,175 Inventory 9,693 11,607 Prepayments 1,460 1,623 ---------- ---------- Total current assets 60,022 59,130 Property, plant and equipment, at cost 87,694 87,467 Less accumulated depreciation and amortization 64,122 61,622 ---------- ---------- Net property, plant and equipment 23,572 25,845 Cost in excess of fair value of net assets acquired 10,403 10,837 Other assets 6,029 6,265 ---------- ---------- Total assets $ 100,026 $ 102,077 ========== ========== Liabilities and Shareholders' Equity Current liabilities: Accounts payable & accrued liabilities $ 19,639 $ 23,502 Contract advances and deposits 6,522 4,478 ---------- ---------- Total current liabilities 26,161 27,980 Long-term debt 29,317 29,317 ESOT loan obligation 13,167 14,007 Postretirement obligation 13,000 13,465 Environmental Obligation 3,895 4,405 Minority interest 1,978 2,153 Shareholders' Equity Preferred shares, par value $1 per share, authorized 500,000 shares, issued 71,008 shares at 9/30/95 and 75,292 shares at 12/31/94 71 75 Common shares, par value $1 per share, authorized 25,000,000 shares, issued 8,453,902 shares (both periods) 8,454 8,454 Additional paid-in capital 37,080 39,330 Retained earnings 18,564 17,695 ---------- ---------- 64,169 65,554 Less: Treasury shares at cost (2,648,639 shares at 9/30/95 and 2,809,965 shares at 12/31/94) <37,644> <39,937> Translation adjustment <850> <860> ESOT loan obligation <13,167> <14,007> ---------- ---------- Total shareholders' equity 12,508 10,750 ---------- ---------- Total liabilities & shareholders' equity $ 100,026 $ 102,077 ========== ========== Page 4 EDO Corporation and Subsidiaries Consolidated Statements of Earnings (in thousands except per share amounts) For the three months ended Sept.30, 1995 Sept.24, 1994 (unaudited) Income Net sales $ 21,899 $ 22,677 Other 168 179 ---------- ---------- 22,067 22,856 Costs and Expenses Cost of sales 17,120 26,714 Selling, general and administrative 3,598 3,583 Research and development 292 795 ---------- ---------- 21,010 31,092 ---------- ---------- Operating Earnings (loss) 1,057 <8,236> ---------- ---------- Non-Operating Income (Expense) Interest income 250 41 Interest expense <562> <588> Other, net <25> <42> ---------- ---------- <337> <589> ---------- ---------- Earnings (loss) before Federal income taxes 720 <8,825> Provision for (Recovery of) Federal income taxes - <2,322> ---------- ---------- Net earnings (loss) before minority interest 720 <6,503> Minority interest 64 <241> ---------- ---------- Net earnings (loss) 784 <6,744> Dividends on preferred shares 307 327 ---------- ---------- Net earnings (loss) available for Common Shares $ 477 $ <7,071> ========== ========== Earnings (loss) per Common Share: Primary $ 0.08 $ <1.26> Fully diluted $ 0.07 $ (*) Average shares outstanding 5,845 5,600 ========== ========== Cash dividends per Common Share $ -0- $ -0- ========== ========== (*) Anti-Dilutive in 1994. Page 5 EDO Corporation and Subsidiaries Consolidated Statements of Earnings (in thousands except per share amounts) For the nine months ended Sept.30, 1995 Sept.24, 1994 (unaudited) Income Net sales $ 67,696 $ 68,132 Other 461 278 ---------- ---------- 68,157 68,410 Costs and Expenses Cost of sales 52,526 63,723 Selling, general and administrative 12,038 12,071 Research and development 950 3,155 ---------- ---------- 65,514 78,949 Operating Earnings (loss) 2,643 <10,539> ---------- ---------- Non-Operating Income (Expense) Interest income 760 147 Interest expense <1,698> <1,774> Other, net <75> 301 ---------- ---------- <1,013> <1,326> ---------- ---------- Earnings (loss) before Federal income taxes 1,630 <11,865> Provision for (Recovery of) Federal income taxes - <3,200> ---------- ---------- Net earnings (loss) before minority interest 1,630 <8,665> Minority interest 175 - ---------- ---------- Net earnings (loss) 1,805 <8,665> Dividends on preferred shares 936 1,011 ---------- ---------- Net earnings (loss) available for Common Shares $ 869 $ <9,676> ========== ========== Earnings (loss) per Common Share: Primary: $ 0.15 $ <1.75> Fully diluted $ 0.13 $ (*) Average shares outstanding 5,733 5,522 ========== ========== Cash dividends per Common Share $ -0- $ 0.14 ========== ========== (*) Anti-Dilutive in 1994. Page 6 EDO Corporation and Subsidiaries Consolidated Statements of Cash Flows (in thousands) For the nine months ended Sept.30, 1995 Sept.24, 1994 (unaudited) Operating Activities: Net earnings (loss) $ 1,805 $ <8,665> Adjustments to net earnings (loss) to arrive at cash from operations: Gain on sale of building - <427> Depreciation and amortization 4,326 5,470 decrease in recoverable and deferred income taxes 3,385 <1,917> Common shares issued for employee benefits - 152 Changes in: Accounts receivable <5,139> 3,404 Inventories 1,914 5,019 Prepayments, other assets and other <702> 31 Accounts payable and accrued liabilities <3,863> 294 Contract advances and deposits 2,044 <4,233> ---------- ---------- Cash provided (used) by operations 3,770 <872> Investing Activities: Purchase of property, plant and equipment <1,619> <1,838> Proceeds from sale of building - 3,084 ---------- ---------- Cash provided (used) by investing activities <1,619> 1,246 Financing Activities: Payment of Common Share cash dividends - <766> Payment of preferred share cash dividends <936> <1,011> ---------- ---------- Cash used by financing activities <936> <1,777> Net increase (decrease)in cash and cash equivalents 1,215 <1,403> Cash and cash equivalents at beginning of period 18,076 9,284 ---------- ---------- Cash and cash equivalents at end of period $ 19,291 $ 7,881 ========== ========== Supplemental disclosures: Cash paid for: Interest $ 1,117 $ 1,131 Income taxes $ 275 $ 290 Page 7 Other Financial Information Unaudited Financial Statements The accompanying unaudited financial statements and other related financial information furnished reflect all adjustments which are, in the opinion of management, necessary to present a fair statement of the operating results for the nine months ended September 30, 1995 and September 24, 1994. Backlog Data The dollar amount of backlog of firm orders at September 30, 1995 was $92,085,000 compared to $77,738,000 at September 24, 1994. Inventories Inventories are summarized by major classification as follows. Sept. 30, 1995 Dec. 31, 1994 (in thousands) Raw material and supplies $ 5,042 $ 5,671 Work in process 3,619 4,762 Finished goods 1,032 1,174 --------- --------- $ 9,693 $ 11,607 ========= ========= Reclassifications Certain reclassifications of 1994 amounts have been made to conform with the 1995 presentation. Page 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion relates to the operations of EDO Corporation in its two business segments: Defense and Space Systems; and Industrial Products. Results of Operations First Nine Months of 1995 Compared with First Nine Months of 1994 Sales in the first nine months of 1995 were $67.7 million compared with $68.1 million in 1994. Sales in the Defense and Space Systems segment decreased by 8% to $39.1 million as a result of a decrease in airborne mine countermeasure systems sales which was partially offset by higher command and control systems, sonar sales, and higher sales of space flight systems. The Industrial Products segment sales increased 12% to $28.6 million primarily as a result of increased sales of natural gas refueling stations, fiber composite and acoustic products. Earnings from operations (before general corporate expense allocations) in the first 9 months of 1995 were $5.5 million, compared with a loss of $7.4 million in the first nine months of 1994. Included in the 1994 nine month results were charges, net of a pension plan gain of $1.4 million, of approximately $6.8 million related to the Company's restructuring and consolidation plan, as well as other items. Included in the 1995 nine month results was a similar pension gain, mentioned above, of $0.6 million. Operating earnings in the Defense and Space systems segment were $3.2 million in the first nine months of 1995, as compared to a loss of $2.7 million for the same period in 1994 which included approximately $3.0 million of the net charges mentioned above. The improvement in earnings, exclusive of the net charges, results primarily from an improvement in the Electro-Optics business unit as well as higher margins in the segment in general. The Industrial Products segment recorded operating earnings of $2.3 million in the first nine months of 1995, compared with a loss of $4.7 million for the same period in 1994 which included approximately $3.8 million of the net charges mentioned above. The improvement in earnings, exclusive of the net charges, results primarily from improved margins on increased sales of fiber composite and acoustic products. Selling, general and administrative expenses in the first nine months of 1995 were $12.0 million, essentially the same as the $12.1 million for the same period in 1994. Company sponsored research and development expenditures decreased 70% from the like 1994 period to $1.0 million. This reduction was approximately the same in each segment and resulted from the termination in 1994 of research and development at EDO Sports, a shift from Company sponsored to customer sponsored research and development at the Marine and Aircraft Systems unit, and a more selective approach to development efforts at all business units. Page 9 Interest expense, net of interest income, declined to $0.9 million in the first nine months of 1995 compared with $1.6 million in the like period of 1994 due to an increase in interest income in 1995 as a result of higher investible funds. The Company reported net earnings available to common shares of $869,000, or $0.15 per share in the first nine months of 1995, compared to a net loss of $9,676,000 or $(1.75) per share a year ago. Earnings per share calculations were based on weighted average of 5.7 million shares outstanding for the first nine months of 1995, and 5.5 million shares for the like period in 1994. Liquidity and Capital Resources The Company's cash and cash equivalents increased $1.2 million from December 31, 1994 to $19.3 million at September 30, 1995 The Company has an ESOT loan obligation that is currently $13.2 million. The repayment of this obligation is funded principally through dividends on the Company's preferred shares. The Company also has outstanding $29.3 million of 7% Convertible Subordinated Debentures Due 2011. In accordance with authorization from the Board of Directors, the Company has acquired $5.7 million of such debentures through September 30, 1995 at prevailing market prices. These debentures will be used to satisfy approximately three years of sinking fund requirements that commence in 1996. In February 1995, the Company renegotiated its ESOT obligation agreement with a bank to waive and or amend the covenants with which the Company was non-compliant at December 31, 1994, extend the effective date of the option to cancel or refinance the obligation to April 1, 1996, and secure the debt with its accounts receivable, inventory, machinery and equipment. In addition, the bank provided the Company a $5 million secured line of credit. In June 1995, the Company further renegotiated the effective date of the option mentioned above to April 1, 1997. In November 1995, the Company negotiated an increase in its $5 million secured line of credit to $15 million for short-term borrowings and letters of credit. Capital expenditures in the first nine months of 1995 amounted to $1.6 million. The total expenditure for 1995 is expected to be approximately $2.0 million. In August 1994, the Board of Directors of the Company suspended payment of cash dividends on its common shares to preserve cash and to facilitate funding of the Company's strategic business plan. As explained in the Company's 1994 Annual Report, the Company is involved in an environmental matter for which management believes it is covered by liability insurance for all of the unreimbursed costs it incurs. The liability of the Company at September 30, 1995 associated with this matter is $6.3 million. The majority of such costs will be expended over the next two years. Page 10 The Company modified its post retirement health care benefit plan in 1995, has an unrecognized net gain from 1994, and has adjusted the discount rate used to calculate the obligation. The net effect of these changes will be to reduce its post retirement liability in the future by approximately $8.0 million. The Company believes it has adequate liquidity and sufficient capital resources to fund its current operating plans. Backlog The backlog of unfilled orders at September 30, 1995 stood at $92.1 million compared with $77.7 million a year ago and $79.6 million at December 31, 1994. The increased backlog occurred primarily in the Company's Defense and Space Systems segment. Page 11 PART II - OTHER INFORMATION Item 5. Other Information None Item 6(a). Exhibits 27 - Financial Data Schedule. Page 12 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 thereunto duly authorized. EDO Corporation (Registrant) by: K. A. Paladino ----------------------------- Vice President-Finance and Treasurer (Principal Financial Officer) Dated: November 14, 1995 EX-27 2 ART. 5 DFS FOR 1995 9 MOS. 10-Q
5 1,000 9-MOS DEC-31-1995 SEP-30-1995 19,291 0 29,578 658 9,693 60,022 87,694 64,122 100,026 26,161 42,484 8,454 0 71 3,983 100,026 67,696 68,157 52,526 65,514 75 102 1,698 1,630 0 869 0 0 0 869 .15 .13
-----END PRIVACY-ENHANCED MESSAGE-----