-----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, Ckup0VSGN9xHTaDHmodccHH9gbaKNvLu87iVK39cHf8rVgZPYKs0Z1xaIIEa/qol jABfDA103ukm12UORLcs/A== 0000008919-95-000009.txt : 19951119 0000008919-95-000009.hdr.sgml : 19951119 ACCESSION NUMBER: 0000008919-95-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AYDIN CORP CENTRAL INDEX KEY: 0000008919 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 231686808 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07203 FILM NUMBER: 95590688 BUSINESS ADDRESS: STREET 1: 700 DRESHER RD CITY: HORSHAM STATE: PA ZIP: 19044 BUSINESS PHONE: 2156577510 10-Q 1 AYDIN CORPORATION Telephone 700 Dresher Road (215) 657-7510 P.O. Box 349 FAX Horsham, PA 19044 (215) 657-3830 U.S.A. November 13, 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 Third Quarter, 1995 File No. 1-7203 Gentlemen: We are enclosing for filing Aydin Corporation's Form 10-Q for the Third Quarter ending September 30, 1995. Sincerely, /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 (Mark One) _X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended _______September 30, 1995____________ 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 principal 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 10, 1995 5,122,075 AYDIN CORPORATION PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Incorporated herein by reference are the Condensed Consolidated Financial Statements of Aydin Corporation and the related Notes to Financial Statements as set forth on pages 2 through 5 of the "1995 Third Quarter Report" to Stockholders. These condensed consolidated financial statements for the three and nine month periods ended September 30, 1995 have been subjected to a limited review by Grant Thornton LLP, the Registrant's independent accountants, whose report, set forth on page 6 of the "1995 Third Quarter Report" to Stockholders, is incorporated herein by reference. Earnings per share are based on the weighted average number of common shares outstanding plus shares issuable upon the assumed exercise of dilutive common stock options. The number of shares used in the computation of earnings per share for the three months ended September 30, 1995 and October 1, 1994 were 5,152,238 and 4,990,762, respectively, and for the nine-month period then ended 5,094,763 and 4,997,963, respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (1) Material Changes in Financial Condition (9/30/95 versus 12/31//94) Unbilled revenue (net of advance payments and contract billings in excess of recognized revenue) increased by $16.6 million because of revenue recognized in excess of billings rendered primarily on the TMRC-C3 contract with the Turkish Government. Primarily because of this, cash and short-term investments decreased by $12.0 million. Of the total of $15.9 million of cash and short-term investments at 9/30/95, approximately $11.7 million represents interest bearing collateral required to be maintained against letters of credit for foreign contracts. During the second quarter, a $18.9 million bank line of credit was obtained of which $16.6 million has been used for letters of credit as of 9/30/95. This line of credit is secured by mortgages against the Company's real estate. The Company at 9/30/95 had short-term bank borrowings outstanding of $6.3 million. The banks are requesting reductions of these short-term borrowings. The Company anticipates full payment of these bank loans in and a significant reduction in unbilled revenue during the balance of 1995 and early 1996 from internal cash flow on the TMRC-C3 contract. Net unbilled revenue and accounts receivable at 9/30/95 on the TMRC C3 contract amounted to $36.1 million and $10.4 million, respectively. Realization of these amounts has been delayed pending acceptance from the customer of the software component of the contract which is expected during the fourth quarter. 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 1995 versus 1994) Net sales decreased by 6.1% during the quarter as a result of a decrease in sales at the Argentine subsidiary from an unusually high level in 1994 and a decrease in TMRC C3 sales. Net sales for the nine-month period were essentially flat. Backlog at 9/30/95 was approximately $116 million compared to $148 million at 10/1/94 and $134 million at 12/31/94. The backlog has decreased because no major new orders have been booked over the past year to replace the TMRC-C3 backlog which is being worked off and amounted to $43 million at 9/30/95. The trend in lower sales and earnings will probably continue for a short while as a result of the significance of this contract until new orders improve and benefits of R&D in telecommunications start bearing fruit. The Company has recently signed several large memorandums of understanding and letters of intent approximating $370 million which will probably add to the backlog in the near term. Cost of sales as a percentage of sales increased to 72.9% from 71.1% for the quarter as a result of a less favorable sales mix. Cost of sales as a percentage of sales remained essentially the same for the nine months. Selling, general and administrative expenses decreased by $700 thousand for both the quarter and nine months primarily because of lower expenses at the Argentine subsidiary and a $435,000 reduction of the estimated liability for environmental clean-up costs. Research and development costs increased by $574 thousand (48%) in the quarter and $1,334 thousand (36%) in the nine months because of expanded development efforts in telecommunication systems. The income tax provision as a percentage of pre-tax income decreased to 28.9% from 39.6% for the quarter because of lower foreign and state income taxes. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following is a list of Exhibits filed as part of this report: Exhibit 2 - None Exhibit 3(i) - Restated Certificate of Incorporation (filed as Exhibit 3(i) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference). Exhibit 3(ii) - By-Laws (filed as Exhibit 3(ii) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference). Exhibit 4 - None Exhibit 10 - None Exhibit 11 - None Exhibit 15 - Letter re unaudited interim financial information Exhibit 18 - None Exhibit 19 - "1995 THIRD QUARTER REPORT" to Stockholders Exhibit 22 - None Exhibit 23 - None Exhibit 24 - None Exhibit 27 - Financial Data Schedule (electronic filing only) Exhibit 99 - None (b) Reports on Form 8-K No reports on Form 8-K were filed during the Third Quarter 1995. SIGNATURES 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. AYDIN CORPORATION DATE __November 13, 1995____ /s/ Herbert Welber Herbert Welber, Controller DATE __November 13, 1995____ /s/ Robert A. Clancy Robert A. Clancy, Secretary PAGE EXHIBIT 15 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have made a review of the condensed financial statements of Aydin Corporation as of September 30, 1995 and for the three-month and nine-month periods ended September 30, 1995, in accordance with standards established by the American Institute of Certified Public Accountants, and issued our report thereon dated October 26, 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 September 30, 1995 are being incorporated by reference in the Registration Statement Nos. 33-61537; 33-53549; 33-34863; 33-22016; 33-14284; 2-97645; 2-93603; 2-77623; and 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 Philadelphia, Pennsylvania November 6, 1995 Exhibit 19 Dear Stockholder: The third quarter 1995 sales of $32,932,000, were a 6% decrease compared to the $35,053,000 in sales in the same period last year. Net income for the three month period was $774,000 as compared to $1,304,000 earned in last year's third quarter. Earnings per share were $.15, versus $.26 in the 1994 third quarter. Sales for the first nine months were $105,014,000, representing a slight decrease from last year's nine month sales of $107,663,000. Net income earned through the third quarter of 1995 was $3,038,000, as compared to $3,769,000, for the same period in 1994. Earnings for the first nine months of 1995 were $.60 per share versus $.75 reported during the same period last year. Backlog at the end of the third quarter was approximately $116 million, versus $148 million at this time last year, and $123 million at the end of the 1995 second quarter. The backlog numbers do not include probable production options. After the close of the quarter, Aydin received an award from a company organized in the People's Republic of China for a flight test system for civilian aviation. This order is valued at $20 million, and the system is to be delivered in approximately two years. This order is subject to Aydin's receipt of an appropriate U.S. export license as well as an import permit from the Chinese Government. Due to the many opportunities currently being pursued, management remains optimistic that this downward trend will subside soon. For example, during the third quarter, a Memorandum of Agreement was signed to provide wireless communication devices for a far eastern country, pending approval of the prototype. This contract would provide one million units over several years amounting to approximately $150 million. Aydin Telecom has signed a "Letter of Intent" with a major city in the Ukraine and its Public Telephone Network to provide system engineering design, equipment and technical support necessary to expand telephone exchanges of the city and its vicinity and replace antiquated analog transmission facilities with modern digital equipment as well as add new wired and fixed wireless lines and replace existing analog lines. This contract has potential of being $200 million over the next six years. Financing alternatives are currently being investigated; depending on the financing, the initial contract could be much smaller. The Turkish Government has renewed its interest in the Turkish Armed Forces Integrated Communications System (known as the TAFICS program). Aydin is in the process of working on its proposal to be submitted to the Turkish Government in the middle of next month. This contract is valued at about $300 million. Another Turkish proposal Aydin will participate in is a Frequency Management System valued at about $80 million. (page 1) All of the above are in addition to many proposals to U.S. Government and foreign customers, each under $20 million. TMRC systems software testing is in the final phase. Successful completion of this testing will result in a substantial cash flow to Aydin Corporation. Oppenheimer & Co. and Aydin Management have been meeting with parties who have expressed interest in a possible merger or acquisition. Oppenheimer & Co. will continue the process of exploring ways to maximize shareholder value. /s/ Ayhan Hakimoglu October 30, 1995 Chairman of the Board AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME ($000 omitted except for per share amounts)
3 Months Ended 9 Months Ended 9/30/95 10/1/94 9/30/95 10/1/94 Restated Restated (Unaudited) (Unaudited) NET SALES $ 32,932 $ 35,053 $ 105,014 $ 107,663 COST AND EXPENSES Cost of sales 24,014 24,931 76,612 78,669 Selling, general and administrative 5,954 6,671 18,699 19,339 Research and development 1,777 1,203 4,998 3,664 Interest expense, net 110 90 128 280 ________ _________ ________ _________ Total 31,855 32,895 100,437 101,952 ________ _________ ________ _________ INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 1,077 2,158 4,577 5,711 INCOME TAXES 311 854 1,528 1,942 ________ _________ ________ _________ INCOME BEFORE MINORITY INTEREST 766 1,304 3,049 3,769 LESS MINORITY INTEREST (8) -0- 11 -0- ________ _________ ________ _________ NET INCOME $ 774 $ 1,304 $ 3,038 $ 3,769 ________ _________ _________ _________ ________ _________ _________ _________ EARNINGS PER SHARE $ .15 $ .26 $ .60 $ .75 ________ _________ _________ _________ ________ _________ _________ _________
(page 2) AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($000 Omitted) ASSETS
Sept. 30, 1995 Dec. 31, 1994 (Unaudited) CURRENT ASSETS: Cash, including cash equivalents- 1995, $9,989; 1994, $18,220 $ 10,328 $ 20,961 Short-term investments 5,590 6,980 Accounts receivable 31,429 35,351 Unbilled revenue, after progress billings 70,522 54,909 Inventories: Raw materials 9,630 9,440 Work-in-process 8,348 7,419 Finished product 3,798 3,705 Prepaid expenses 1,644 1,350 ________ ________ Total current assets 141,289 140,115 PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation: 1995, $58,393; 1994, $56,103 25,364 25,486 OTHER ASSETS 476 477 ________ ________ TOTAL ASSETS $167,129 $166,078 ________ ________ ________ ________ __________________________________________________________________ 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 1994 balance sheet has been derived from the audited financial statements contained in the 1994 Annual Report to Stockholders. The first nine months of 1994 reflects amounts which were previously restated as a result of originally not including the results of a foreign subsidiary. In periods prior to 1994, 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 Note J of the 1994 Annual Report on contingency disclosures except that settlement has been reached on previously disallowed research and development tax credits with no material impact on results of operations. Pretax income for the third quarter and first nine months of 1995 include foreign currency translation gains of $154,000 and $323,000, respectively, relating to the Turkish subsidiary. The third quarter 1995 also includes pretax income of $435,000 from the reduction of the estimated liability for environmental clean-up costs.
(page 3) AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($000 Omitted) LIABILITIES AND STOCKHOLDERS' EQUITY
Sept. 30, 1995 Dec. 31, 1994 (Unaudited) CURRENT LIABILITIES: Current maturities of long-term debt $ 342 $ 402 Short-term bank debt 6,286 6,486 Accounts payable 27,823 27,055 Accrued liabilities 8,717 10,600 Advanced payments and contract billings in excess of recognized revenue 3,167 4,169 Accrued and deferred income taxes 10,748 9,617 ________ _______ Total current liabilities 57,083 58,329 LONG-TERM DEBT, less current maturities 801 1,549 DEFERRED INCOME TAXES 6,003 6,983 MINORITY INTEREST 114 - 0 - STOCKHOLDERS' EQUITY: Common stock, par value $1- authorized 7,500,000 shares: issued 1995, 5,078,290 shares; 1994, 4,990,400 shares 5,078 4,990 Additional paid-in capital 1,701 787 Retained earnings 96,991 93,953 Less Treasury Stock at cost: 1995, 5,128 shares; 1994, none. (78) - 0 - Foreign currency translation effects (564) (513) ________ _______ Stockholders' equity 103,128 99,217 ________ _______ TOTAL LIABILITIES AND EQUITY $167,129 $166,078 ________ _______ ________ _______
(page 4) AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($000 omitted)
Nine Months Ended Sept. 30, 1995 Oct. 1, 1994 Restated (Unaudited) (Unaudited) OPERATING ACTIVITIES Net Income $ 3,038 $ 3,769 Items not affecting cash: Depreciation and amortization 2,325 3,132 Deferred income taxes 300 (19) Minority Interest 11 -0- Other (50) 180 Changes in certain working capital items: Accounts receivable 3,922 (2,993) Unbilled revenue (15,613) 11,839 Advance payments and contract billings in excess of recognized revenue (1,022) 779 Inventories (1,212) (2,572) Prepaid expenses (294) (434) Accounts payable and accrued liabilities (1,115) 1,395 Accrued income taxes (149) 3,740 __________ ___________ CASH PROVIDED (USED) BY OPERATING ACTIVITIES (9,839) 18,816 INVESTING ACTIVITIES Net property, plant and equipment additions (2,203) (3,134) Short-term investments 1,390 4,630 __________ ___________ CASH PROVIDED (USED) BY INVESTING ACTIVITIES (813) 1,496 FINANCING ACTIVITIES Principal payments on long-term debt (808) (303) Net repayments of short-term borrowings (200) (13,719) Purchase of treasury shares (78) -0- Minority investment in consolidated subsidiary 103 (105) Proceeds from exercise of stock options 1,002 81 __________ ___________ CASH PROVIDED (USED) BY FINANCING ACTIVITIES 19 (14,046) __________ ___________ DECREASE IN CASH AND CASH EQUIVALENTS (10,663) 6,266 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 20,961 11,822 __________ ___________ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,328 $ 18,088 __________ ___________ __________ ___________
(page 5) INDEPENDENT ACCOUNTANTS' REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION Board of Directors and Stockholders Aydin Corporation We have reviewed the condensed consolidated balance sheets of Aydin Corporation and subsidiaries as of September 30, 1995 and October 1, 1994, and the related condensed consolidated statements of income and cash flows for the three and nine month periods then ended. These condensed consolidated financial statements are the responsibility of the Company's management. We conducted our review 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 as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1994, and the related consolidated statements of operations and cash flows for the year then ended (not presented herein) and in our report dated February 20, 1995 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1994 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 October 26, 1995 __________________________________________________________________________ A copy of Aydin Corporation's Form 10Q may be obtained without charge, upon written request sent to Aydin Corporation. (page 6) EX-27 2 ARTICLE 5 FDS FOR 3RD QUARTER 10-Q 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-31-1995 SEP-30-1995 10,328 5,590 31,429 0 21,776 141,289 83,757 58,393 167,129 57,083 801 5,078 0 0 98,050 167,129 32,932 32,932 24,014 31,855 0 0 110 1,077 311 766 0 0 0 774 .15 .15
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