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 Second Quarter 1994 File No. 1-7203 Gentlemen: We are enclosing for filing Aydin Corporation's Form 10-Q/A amending portions of the Second Quarter Report for the period ending July 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 _______July 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 August 15, 1994 _____4,998,900_____ 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 Six Months Ended 7/02/94 7/02/94 Restated 7/03/93 Restated 7/03/93 (Unaudited) (Unaudited) NET SALES $38,635 $36,969 $72,610 $74,403 COST AND EXPENSES Cost of sales 28,283 27,206 53,738 53,848 Selling, general and administrative 7,068 6,741 12,668 13,338 Research and development 1,389 1,223 2,461 2,853 Interest expense, net 209 72 190 175 _______ _______ _______ _______ Total 36,949 35,242 69,057 70,214 _______ _______ _______ _______ INCOME BEFORE INCOMES TAXES AND MINORITY INTEREST 1,686 1,727 3,553 4,189 INCOME TAXES 414 572 1,088 1,495 _______ _______ _______ _______ INCOME BEFORE MINORITY INTEREST 1,272 1,155 2,465 2,694 LESS MINORITY INTEREST - 0 - 3 - 0 - 106 _______ _______ _______ _______ NET INCOME $ 1,272 $ 1,152 $ 2,465 $ 2,588 _______ _______ _______ _______ _______ _______ _______ _______ EARNINGS PER SHARE $ .25 $ .23 $ .49 $ .52 _______ _______ _______ _______ _______ _______ _______ _______ WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARE OUTSTANDING 4,996 5,013 5,002 5,018 _______ _______ _______ _______ _______ _______ _______ _______
PART 1, ITEM 1, FINANCIAL INFORMATION page 2 of 5 AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($000 Omitted) ASSETS
July 2, 1994 Restated Dec. 31, 1993 (Unaudited) CURRENT ASSETS: Cash, including cash equivalents- 1994, $7,799; 1993, $10,908 $ 9,188 $ 11,822 Short-term investments 11,655 13,058 Accounts receivable 51,865 33,525 Unbilled revenue, after progress billings 50,645 66,559 Inventories: Raw materials 8,542 8,549 Work-in-process 6,806 6,036 Finished product 3,489 3,012 Prepaid expenses 2,187 1,470 ________ ________ Total current assets 144,377 144,031 PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation: 1994, $55,799; 1993, $53,623 25,423 25,182 OTHER ASSETS 496 508 ________ ________ TOTAL ASSETS $170,296 $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 1994 periods have 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 1994 includes foreign currency translation gains relating to the Turkish subsidiary of $307,000 for the second quarter and $802,000 for the six months.
PART 1, ITEM 1, FINANCIAL INFORMATION page 3 of 5 AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($000 Omitted) LIABILITIES AND STOCKHOLDERS' EQUITY
July 2, 1994 Restated Dec. 31, 1993 (Unaudited) CURRENT LIABILITIES: Current maturities of long-term debt $ 399 $ 397 Short-term bank debt 15,025 21,525 Accounts payable 26,055 21,731 Accrued liabilities 12,135 15,295 Advanced payments and contract billings in excess of recognized revenue 1,572 1,563 Accrued and deferred income taxes 10,789 7,014 ________ _______ Total current liabilities 65,975 67,525 LONG-TERM DEBT, less current maturities 1,698 1,902 DEFERRED INCOME TAXES 6,087 6,230 MINORITY INTEREST - 0 - 105 STOCKHOLDERS' EQUITY: Common stock, par value $1- authorized 7,500,000 shares: issued 1994, 4,988,900 shares; 1993, 4,981,273 shares 4,989 4,981 Additional paid-in capital 770 697 Retained earnings 91,371 88,906 Foreign currency translation effects (594) (625) ________ _______ Stockholders' equity 96,536 93,959 ________ _______ TOTAL LIABILITIES AND EQUITY $170,296 $169,721 ________ _______ ________ _______
PART 1, ITEM 1, FINANCIAL INFORMATION page 4 of 5 AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($000 omitted)
Six Months Ended July 2, 1994 Restated July 3, 1993 (Unaudited) (Unaudited) OPERATING ACTIVITIES Net Income $ 2,465 $ 2,588 Items not affecting cash: Depreciation and amortization 2,244 2,411 Deferred income taxes (100) 41 Minority Interest 0 106 Other 30 59 Changes in certain Working capital items: Accounts receivable (18,340) 8,612 Unbilled revenue 15,914 (18,197) Advance payments and contract billings in excess of recognized revenue 9 727 Inventories (1,240) 519 Prepaid expenses (717) 468 Accounts payable and accrued liabilities 1,164 607 Accrued income taxes 3,732 (440) ________ _________ Cash Provided (Used) By Operating Activities 5,161 (2,499) INVESTING ACTIVITIES Net property, plant and equipment additions (2,472) (1,134) Short-term investments 1,403 (3,469) ________ _________ Cash Used By Investing Activities (1,069) (4,603) FINANCING ACTIVITIES Principal payments on long-term debt (202) (197) Net repayments of short-term borrowings (6,500) (4,200) Minority investment in consolidated subsidiary (105) (2,316) Proceeds from exercise of stock options 81 186 ________ _________ Cash Used By Financing Activities (6,726) (6,527) ________ _________ DECREASE IN CASH AND CASH EQUIVALENTS (2,634) (13,629) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 11,822 17,086 ________ _________ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,188 $ 3,457 ________ _________ ________ _________
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 July 2, 1994, and the related condensed consolidated statements of income and cash flows for the three and six month periods ended July 2, 1994 as restated. See note to Financial statements regarding this restatement. The condensed consolidated statements of income and cash flows for the three and six-month periods ended July 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 (7/02/94 versus 12/31//93) Accounts receivable increased by $18.3 million because of higher billings this quarter compared to the fourth quarter of 1993 particularly on large contracts with the Government of Turkey and an Argentina customer. Unbilled revenue decreased by $15.9 million because of the higher Government of Turkey billings and also because of the lower level of percentage completion sales this quarter compared to the fourth quarter of 1993. Accrued liabilities decreased by $3.2 million primarily because of $2 million of payments made and other costs incurred in connection with the terms of a settlement made 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). Accounts payable and accrued and deferred income taxes increased by $4.3 million and $3.8 million, respectively, because of volume and tax liability increases at the Argentina subsidiary. Short-term bank debt was reduced by $6.5 million owing to the favorable cash flow for the six months of 1994. Of the total of $20.8 million of cash and short-term investments at July 2, 1994, approximately $14.9 million represents interest bearing collateral required to be maintained against letters of credit for the Turkish Contract. The Company at July 2, 1994 had short-term bank borrowings outstanding of $15 million. The banks are requesting partial or full reductions of these short-term borrowings. The Company anticipates full payment of these bank loans in 1995 from internal cash flow. The Company is seeking new banking arrangements to cover its future potential needs. Based on the present backlog and projected cash flows, the company anticipates financing its capital needs from internal sources and from some short-term borrowings in the foreseeable future. (2) Material Changes in Operations (Second Quarter and Six Months 1994 versus 1993) Net sales increased by 5% in the quarter and decreased by 2% in the six months. Sales were favorably impacted, particularly in the 2nd quarter, by increased volume at the Argentina subsidiary. Offsetting this were delays in booking new export business and the continuing increasingly competitive U.S. Government defense business environment. Cost of sales as a percentage of sales decreased in the quarter to 73.2% from 73.6% and increased in the six months to 74.0% from 72.4%. The decreases were primarily a result of operating efficiencies achieved particularly on a large contract. These were offset, particularly in the quarter, by a higher percentage of cost of sales versus sales at the Argentina subsidiary. The income tax provision as a percentage of pre-tax income decreased to 24.6% from 33.1% for the quarter and to 30.6% from 35.7% for the six months, primarily because of foreign currency translation gains not subject to tax. 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