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 Third Quarter 1994 File No. 1-7203 Gentlemen: We are enclosing for filing Aydin Corporation's Form 10-Q/A amending portions of the Third Quarter Period for the period ending October 1, 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 _______October 1, 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 November 11, 1994 _____4,988,900_____ 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)
3 Months Ended 9 Months Ended 10/1/94 10/1/94 Restated 10/2/93 Restated 10/2/93 (Unaudited) (Unaudited) NET SALES $ 35,053 $ 31,577 $ 107,663 $ 105,980 COST AND EXPENSES Cost of sales 24,931 22,896 78,669 76,744 Selling, general and administrative 6,671 5,922 19,339 19,260 Research and development 1,203 1,028 3,664 3,881 Interest expense, (income) net 90 (49) 280 126 ________ _________ ________ _________ Total 32,895 29,797 101,952 100,011 ________ _________ ________ _________ INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 2,158 1,780 5,711 5,969 INCOME TAXES 854 704 1,942 2,199 ________ _________ ________ _________ INCOME BEFORE MINORITY INTEREST 1,304 1,076 3,769 3,770 LESS MINORITY INTEREST -0- 9 -0- 115 ________ _________ ________ _________ NET INCOME $ 1,304 $ 1,067 $ 3,769 $ 3,655 ________ _________ ________ _________ ________ _________ ________ _________ EARNINGS PER SHARE $ .26 $ .21 $ .75 $ .73 ________ _________ ________ _________ ________ _________ ________ _________ WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 4,991 5,039 4,998 5,025 ________ _________ ________ _________ ________ _________ ________ _________
PART 1, ITEM 1, FINANCIAL INFORMATION page 2 of 5 AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($000 Omitted) ASSETS
Oct. 1, 1994 Restated Dec. 31, 1993 (Unaudited) CURRENT ASSETS: Cash, including cash equivalents- 1994, $13,737; 1993, $10,908 $ 18,088 $ 11,822 Short-term investments 8,428 13,058 Accounts receivable 36,518 33,525 Unbilled revenue, after progress billings 54,720 66,559 Inventories: Raw materials 9,519 8,549 Work-in-process 7,194 6,036 Finished product 3,456 3,012 Prepaid expenses 1,904 1,470 _________ _________ TOTAL CURRENT ASSETS 139,827 144,031 PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation: 1994, $56,665; 1993, $53,623 25,206 25,182 OTHER ASSETS 488 508 _________ _________ TOTAL ASSETS $ 165,521 $ 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 $72,000 for the third quarter and $874,000 for the nine 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
Oct. 1, 1994 Restated Dec. 31, 1993 (Unaudited) CURRENT LIABILITIES: Current maturities of long-term debt $ 399 $ 397 Short-term bank debt 7,806 21,525 Accounts payable 27,525 21,731 Accrued liabilities 10,896 15,295 Advanced payments and contract billings in excess of recognized revenue 2,342 1,563 Accrued and deferred income taxes 9,993 7,014 _________ __________ TOTAL CURRENT LIABILITIES 58,961 67,525 LONG-TERM DEBT, less current maturities 1,597 1,902 DEFERRED INCOME TAXES 6,972 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 92,675 88,906 Foreign currency translation effects (443) (625) _________ __________ STOCKHOLDERS' EQUITY 97,991 93,959 _________ __________ TOTAL LIABILITIES AND EQUITY $165,521 $169,721 _________ __________ _________ __________
PART 1, ITEM 1, FINANCIAL INFORMATION page 4 of 5 AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($000 Omitted)
Nine Months Ended Oct. 1, 1994 Restated Oct. 2, 1993 (Unaudited) (Unaudited) OPERATING ACTIVITIES Net Income $ 3,769 $ 3,655 Items not affecting cash: Depreciation and amortization 3,132 3,488 Deferred income taxes (19) (478) Minority Interest -0- 115 Other 180 81 Changes in certain working capital items: Accounts receivable (2,993) 4,740 Unbilled revenue 11,839 (19,402) Advance payments and contract billings in excess of recognized revenue 779 27 Inventories (2,572) 995 Prepaid expenses (434) 572 Accounts payable and accrued liabilities 1,395 (752) Accrued income taxes 3,740 597 __________ ___________ CASH PROVIDED (USED) BY OPERATING ACTIVITIES 18,816 (6,362) INVESTING ACTIVITIES Net property, plant and equipment additions (3,134) (2,034) Short-term investments 4,630 (546) __________ ___________ CASH PROVIDED (USED) BY INVESTING ACTIVITIES 1,496 (2,580) FINANCING ACTIVITIES Payments on long-term debt (303) (295) Proceeds from (repayment) of short-term borrowings (13,719) (1,000) Minority investment in consolidated subsidiary (105) (2,310) Proceeds from exercise of stock options 81 263 __________ ___________ CASH USED BY FINANCING ACTIVITIES (14,046) (3,342) __________ ___________ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,266 (12,284) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 11,822 17,086 __________ ___________ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 18,088 $ 4,802 __________ ___________ __________ ___________
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 October 1, 1994, and the related condensed consolidated statements of income and cash flows for the three and nine month periods ended October 1, 1994 as restated. See note to the Financial Statement regarding this restatement. The condensed consolidated statements of income and cash flows for the three and nine-month periods ended October 2, 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 (10/1/94 versus 12/31/93) Unbilled revenue decreased by $11.8 million primarily because of increased billings on a major contract. Net inventories increased by $2.6 million primarily because of a build-up of selected commercial standard product type inventories in order to provide a faster response and boost sales to customers in these product areas. Accrued liabilities decreased by $4.4 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 receivable, accounts payable and accrued and deferred income taxes increased by $3.0 million, $5.8 million and $3.0 million, respectively, primarily because of volume and tax liability increases of the Argentina subsidiary. Short-term bank debt was reduced by $13.7 million during the nine months owing to the favorable cash flow. Of the total of $26.5 million of cash and short-term investments at 10/1/94, approximately $18.1 million represents interest bearing collateral required to be maintained against letters of credit for foreign contracts. The Company at October 1, 1994 had short-term bank borrowings outstanding of $7.8 million. The banks are requesting partial or full reductions of these short-term borrowings. The Company anticipates making 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 (Third Quarter and Nine Months 1994 versus 1993) Net sales increased by 11% in the quarter and 2% in the nine months because of increased sales at the Argentina subsidiary. Partially offsetting this was a low level of bookings in the U.S. defense business. Cost of sales as a percentage of sales decreased in the quarter to 71.1% from 72.5% and increased in the nine months to 73.1% from 72.4%. Operating efficiencies were achieved in both the quarter and nine months but were partially offset by a higher percentage of cost of sales versus sales at the Argentina subsidiary. Selling, general and administrative expenses increased by $749,000 in the quarter because of a higher level of proposal activity and resulting proposal costs and increased costs at the Argentina subsidiary. 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 reports: Exhibit 27 - Financial Data Schedule (electronic filing only) 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 EX-27 2 ARTICLE 5 FDS FOR 3RD QUARTER 10-Q/A WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 This schedule contains summary financial information extracted from Third Quarter Report to Stockholders and is qualified in its entirety by reference to such financial statements. 1,000 QTR-3 DEC-31-1994 OCT-01-1994 18,088 8,428 36,518 0 20,169 139,827 81,871 56,665 165,521 58,961 1,597 4,989 0 0 93,002 165,521 107,663 107,663 78,669 101,952 0 0 280 5,711 1,942 3,769 0 0 0 3,769 .75 .75