10-Q/A 1 AYDIN CORPORATION Telephone 700 Dresher Road (215) 657-7510 P.O. Box 349 FAX Horsham, PA 19044 (215) 657-3830 U.S.A. Telex 685 1211 AYDIN UW March 29, 1995 (VIA EDGAR) SECURITIES & EXCHANGE COMMISSION Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 20549-1004 Attn: Filing Desk, Stop 1-4 RE: Form 10-Q/A First Quarter 1994 File No. 1-7203 Gentlemen: We are enclosing for filing Aydin Corporation's Form 10-Q/A amending portions of the First Quarter Report for the period ending April 2, 1994. Very truly yours, /s/ Robert A. Clancy Robert A. Clancy Secretary and Corporate Counsel RAC:sbk Enclosures SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 2, 1994 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to __________ Commission file number 1-7203 AYDIN CORPORATION ________________________________________________________________________ (Exact name of registrant as specified in its charter) DELAWARE 23-1686808 ________________________________________________________________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 700 DRESHER ROAD, HORSHAM, PA 19044 ________________________________________________________________________ (Address of principle executive offices) (Zip Code) (215) 657-7510 ________________________________________________________________________ (Registrant's telephone number, including area code) ________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) 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 latest practicable date. Shares of common stock, $1.00 par value, outstanding as of May 13, 1994. ______4,982,529______ PART 1, ITEM 1, FINANCIAL INFORMATION page 1 of 5 AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands except for per share amounts)
Three Months Ended April 2, 1994 Restated April 3, 1993 (Unaudited) (Unaudited) NET SALES $33,975 $37,434 COST AND EXPENSES Cost of sales 25,455 26,642 Selling, general and administrative 5,600 6,597 Research and development 1,072 1,630 Interest expense (income), net (19) 103 _______ ______ Total 32,108 34,972 _______ ______ INCOME BEFORE INCOMES TAXES AND MINORITY INTEREST 1,867 2,462 INCOME TAXES 674 923 _______ ______ INCOME BEFORE MINORITY INTEREST 1,193 1,539 LESS MINORITY INTEREST - 0 - 103 _______ ______ NET INCOME $ 1,193 $1,436 _______ ______ _______ ______ EARNINGS PER SHARE $ .24 $ .29 _______ ______ _______ ______ WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 5,007 5,023 _______ ______ _______ ______
PART 1, ITEM 1, FINANCIAL INFORMATION page 2 of 5 AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($000 Omitted) ASSETS
April 2, 1994 Restated Dec. 31, 1993 (Unaudited) CURRENT ASSETS: Cash, including cash equivalents- 1994, $9,924; 1993, $10,908 $ 11,699 $ 11,822 Short-term investments 12,345 13,058 Accounts receivable 28,583 33,525 Unbilled revenue, after progress billings 69,455 66,559 Inventories: Raw materials 7,964 8,549 Work-in-process 6,014 6,036 Finished product 2,984 3,012 Prepaid expenses 2,069 1,470 ________ ________ Total current assets 141,113 144,031 PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation: 1994, $54,853; 1993, $53,623 25,092 25,182 OTHER ASSETS 505 508 ________ ________ TOTAL ASSETS $166,710 $169,721 ________ ________ ________ ________ __________________________________________________________________ NOTE TO FINANCIAL STATEMENTS: Interim financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the periods. The 1993 balance sheet has been derived from the audited financial statements contained in the 1993 Annual Report to Stockholders. The current quarter has been restated as a result of previously not including the results of a foreign subsidiary. In previous periods the results of this subsidiary were not significant. These interim financial statements conform with the requirements for interim financial statements and consequently do not include all the disclosures normally required by generally accepted accounting principles. Disclosures are updated where appropriate. There are no changes in contingency disclosures. Pretax income for the first quarter of 1994 includes foreign currency translation gains of $495,000 relating to the Turkish subsidiary.
PART 1, ITEM 1, FINANCIAL INFORMATION page 3 of 5 AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($000 Omitted) LIABILITIES AND STOCKHOLDERS' EQUITY
April 2, 1994 Restated Dec. 31, 1993 (Unaudited) CURRENT LIABILITIES: Current maturities of long-term debt $ 398 $ 397 Short-term bank debt 15,025 21,525 Accounts payable 23,479 21,731 Accrued liabilities 13,186 15,295 Advanced payments and contract billings in excess of recognized revenue 2,557 1,563 Accrued and deferred income taxes 9,076 7,014 ________ _______ Total current liabilities 63,721 67,525 LONG-TERM DEBT, less current maturities 1,798 1,902 DEFERRED INCOME TAXES 6,078 6,230 MINORITY INTEREST 0 105 STOCKHOLDERS' EQUITY: Common stock, par value $1- authorized 7,500,000 shares: issued 1994, 4,982,304 shares; 1993, 4,981,273 shares 4,982 4,981 Additional paid-in capital 707 697 Retained earnings 90,099 88,906 Foreign currency translation effects (675) (625) ________ _______ Stockholders' equity 95,113 93,959 ________ _______ TOTAL LIABILITIES AND EQUITY $166,710 $169,721 ________ _______ ________ _______
PART 1, ITEM 1, FINANCIAL INFORMATION page 4 of 5 AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($000 omitted)
Three Months Ended April 2, 1994 Restated April 3, 1993 (Unaudited) (Unaudited) OPERATING ACTIVITIES Net Income $ 1,193 $ 1,436 Items not affecting cash: Depreciation and amortization 1,257 1,314 Deferred income taxes (100) 168 Minority Interest 0 103 Other (54) 35 Changes in certain working capital items: Accounts receivable 4,942 11,335 Unbilled revenue (2,896) (14,617) Advance payments and contract billings in excess of recognized revenue 994 660 Inventories 635 (108) Prepaid expenses (599) 244 Accounts payable and accrued liabilities (361) (321) Accrued income taxes 2,010 520 ________ _________ CASH PROVIDED BY OPERATING ACTIVITIES 7,021 769 INVESTING ACTIVITIES Net property, plant and equipment additions (1,160) (625) Short-term investments 713 (3,373) ________ _________ CASH USED BY INVESTING ACTIVITIES (447) (3,998) FINANCING ACTIVITIES Principal payments on long-term debt (103) (98) Net repayments of short-term borrowings (6,500) (2,300) Minority investment in consolidated subsidiary (105) (189) Proceeds from exercise of stock options 11 182 ________ _________ CASH USED BY FINANCING ACTIVITIES (6,697) (2,405) ________ _________ DECREASE IN CASH AND CASH EQUIVALENTS (123) (5,634) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 11,822 17,086 ________ _________ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 11,699 $ 11,452 ________ _________ ________ _________
PART 1, ITEM 1, FINANCIAL INFORMATION page 5 of 5 INDEPENDENT ACCOUNTANTS' REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION BOARD OF DIRECTORS AND STOCKHOLDERS AYDIN CORPORATION We have reviewed the condensed consolidated balance sheet of Aydin Corporation and subsidiaries as of April 2, 1994, and the related condensed consolidated statements of income and cash flows for the three month period ended April 2, 1994 as restated. See note Financial Statements regarding this restatement. The condensed consolidated statements of income and cash flows for the three-month period ended April 3, 1993 were reviewed by other accountants. These condensed consolidated financial statements are the responsibility of the Company's management. Our review and that of the prior accountants was conducted in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, and that of the prior accountants, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. The consolidated balance sheet of Aydin Corporation and subsidiaries as of December 31, 1993, and the related consolidated statements of operations and cash flows for the year then ended (not presented herein), were audited by other accountants in accordance with generally accepted auditing standards. In their report dated February 25, 1994, they expressed an unqualified opinion on those consolidated financial statements. In their opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1993 is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /s/ Grant Thornton LLP Philadelphia, Pennsylvania March 22, 1995 AYDIN CORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (1) Material Changes in Financial Condition (4/02/94 versus 12/31/93) Cash of $7.0 million was provided by operating activities and was used to pay off $6.5 million of short-term bank debt. The major components of the $7.0 million of cash provided by operations was: (a) $2.5 million from net income plus depreciation and (b) $4.9 million of cash provided from a decrease in accounts receivable because of cash collected on an unusually large shipment on a U.S. Government contract plus an excess of collections versus billings rendered a large contract with the Government of Turkey. Partially offsetting this positive cash flow was an increase in accounts receivable of the Argentina subsidiary because of increased volume. Other significant components of the changes in cash flow included a $2.1 decrease in accrued liabilities because of $2 million of payments made in connection with terms of a settlement with the Department of Justice on the AN/GRC-222 microwave radio contract with the U.S. Army (see Note K of the 12/31/93 Annual Report). Offsetting this was a $2.1 million increase in accrued and deferred income taxes because of tax liabilities of the Argentina subsidiary. Of the total of $24.0 million of cash and short-term investments at April 2, 1994, approximately $17.8 million represents interest bearing collateral required to be maintained against letters of credit for the Turkish contract. The Company at April 2, 1994 had short-term borrowing arrangements available of $19 million, of which $15 million was used. These borrowing arrangements may be reduced if the Company has to increase performance guarantees it issues in foreign countries. Based on the present backlog and projected cash flows, the Company anticipates financing its capital needs from internal sources and from short-term borrowings in the foreseeable future. (2) Material Changes in Operations (First Quarter 1994 versus 1993) Net sales declined by $3.5 million (9%) because of the increasingly competitive U.S. Government defense business and delays in booking new export business partially offset by increased sales at the Argentina subsidiary. Cost of sales as a percentage of sales increased to 74.9% from 71.2% primarily as a result of the more competitive U.S. Government defense business environment and a more favorable sales mix in 1993. Selling, general and administrative (SG&A) expenses declined by $1.0 million (15%) because of cost reductions necessitated by the decreases in sales and backlog and as a result of net foreign currency translation gains of $495 thousand related to the Turkish subsidiary, partially offset by increased SG&A at the Argentina subsidiary. Research and development expenses decreased by $558 thousand (34%) because of a slow down or completion during 1994 of several Company-funded new product development projects. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following is a list of amended Exhibits filed as part of this report: Exhibit 15 - Letter re unaudited interim financial information SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this to be signed on its behalf by the undersigned thereunto duly authorized. AYDIN CORPORATION DATE _____March 27, 1995_____ /s/ Herbert Welber Herbert Welber, Controller DATE _____March 27, 1995_____ /s/ Robert A. Clancy Robert A. Clancy, Secretary Exhibit 15 Two Commerce Square Suite 3100 2001 Market Street Philadelphia, PA 19103-7080 Grant Thornton Grant Thornton LLP Accountants and Management Consultants Aydin Corporation The U.S. Member Firm of Horsham, PA Grant Thornton International Gentlemen: We have made a review of the condensed financial statements as restated of Aydin Corporation as of April 2, 1994 and for the three-month period then ended, in accordance with standards established by the American Institute of Certified Public Accountants, and issued our report thereon dated March 22, 1995. We are aware that such financial statements and our above-mentioned report appearing in the Form 10-Q of Aydin Corporation for the quarter ended April 2, 1994 are being incorporated by reference in the Registration Statement Nos. 33-53549; 33-34863; 33-22016; 33-14284; 2-97645; 2-93603; 2-77623; 2-64093 and that such report pursuant to Rule 436(c) of the Securities Act of 1933 is not considered a part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Paragraphs 7 and 11 of that Act. /s/ Grant Thornton LLP Grant Thornton LLP Philadelphia, Pennsylvania March 22, 1995