-----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, D1M0FLkyo+7jnIpRSi6SrFUnH5x2sj2GkXGTKyWEJVqhzfVy9mwFvSaA/9agnrts ecfq15FAUPkGW2j6/6MVjA== 0000008919-98-000008.txt : 19980519 0000008919-98-000008.hdr.sgml : 19980519 ACCESSION NUMBER: 0000008919-98-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980404 FILED AS OF DATE: 19980518 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: SEC FILE NUMBER: 001-07203 FILM NUMBER: 98626928 BUSINESS ADDRESS: STREET 1: 700 DRESHER RD STREET 2: P O BOX 349 CITY: HORSHAM STATE: PA ZIP: 19044 BUSINESS PHONE: 2156577510 MAIL ADDRESS: STREET 1: 700 DRESHER RD STREET 2: P O BOX 349 CITY: HORSHAM STATE: PA ZIP: 19044 10-Q 1 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 April 4, 1998 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 18, 1997. ______5,216,300______ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME ($000 omitted except per share amounts)
3 Months Ended April 4, 1998 March 29, 1997 (Unaudited) NET SALES $ 26,124 $ 26,914 COST AND EXPENSES Cost of Sales TMRC contract arbitration and other 20,343 0 Other cost of sales 21,917 20,247 Selling, general and administrative 6,981 6,212 Research and development 503 1,395 Restructuring costs 1,548 0 Environmental remediation 0 2,612 Interest expense (income), net (242) (34) __________ ___________ Total 51,050 30,432 __________ ___________ INCOME (LOSS) BEFORE INCOME TAXES (24,926) (3,518) INCOME TAX PROVISION (RECOVERY) (780) 751 __________ ___________ NET INCOME (LOSS) $ (24,146) $ (4,269) __________ ___________ __________ ___________ LOSS PER SHARE $ (4.64) $ (0.83) __________ ___________ __________ ___________ Number of shares used for per share amounts 5,208,970 5,141,582 __________ ___________ __________ ___________ COMPREHENSIVE NET INCOME (LOSS) Net income (loss) as above $ (24,146) $ (4,269) Foreign currency translation income (loss) 2 (107) __________ ___________ Comprehensive net income (loss) $ (24,144) $ (4,376) __________ ___________ __________ ___________
AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($000 omitted) ASSETS
April 4, 1998 Dec. 31, 1997 (Unaudited) CURRENT ASSETS: Cash, including cash equivalents: 1998, $6,145; 1997, $4,059 $ 6,145 $ 4,059 Restricted cash 4,814 6,102 Accounts receivable 22,825 24,137 Unbilled revenue, after progress billings 35,026 39,682 Inventories: Raw materials 9,731 9,807 Work-in-process 5,900 6,217 Finished product 2,071 1,889 Prepaid expenses and other 4,321 5,593 ___________ _________ Total current assets 90,833 97,486 PROPERTY, PLANT AND EQUIPMENT net of accumulated depreciation: 1998, $35,760; 1997, $53,199 14,117 14,479 OTHER ASSETS 54 90 ___________ _________ TOTAL ASSETS $ 105,004 $ 112,055 ___________ _________ ___________ _________
LIABILITIES AND STOCKHOLDERS' EQUITY
April 4, 1998 Dec. 31, 1997 (Unaudited) CURRENT LIABILITIES: Notes payable $ 1,834 $ - Short-term bank debt 0 200 Accounts payable 7,468 8,668 Accrued contract arbitration and related 18,417 0 Accrued liabilities, other 6,510 6,060 Contract billings in excess of recognized revenue 2,193 2,507 Accrued and deferred income taxes 1,989 3,869 ___________ _________ Total current liabilities 38,411 21,304 DEFERRED INCOME TAXES 461 461 OTHER LIABILITIES 924 948 STOCKHOLDERS' EQUITY: Common stock, par value $1- authorized 7,500,000 shares; issued: 1998 - 5,209,800 shares; 1997 - 5,208,800 shares 5,210 5,209 Additional paid-in capital 3,150 3,141 Retained earnings 57,265 81,411 Accumulated other comprehensive income (417) (419) ___________ _________ Stockholders' equity 65,208 89,342 ___________ _________ TOTAL LIABILITIES AND EQUITY $ 105,004 $ 112,055 ___________ _________ ___________ _________
AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($000 omitted)
Three Months Ended April 4, 1998 March 29, 1997 (Unaudited) (Unaudited) OPERATING ACTIVITIES Net income (loss) $ (24,146) $ (4,269) Items not affecting cash: Environmental remediation 0 2,612 Depreciation and amortization 551 744 Other 14 (97) Changes in certain working capital items: Accounts Receivable 1,312 4,433 Unbilled Revenue 4,656 (1,745) Contract billings in excess of recognized revenue (315) 1,586 Inventories 211 49 Prepaid expenses and other 1,272 553 Accrued contract arbitration and related 18,417 0 Accounts payable and other accrued liabilities (749) (4,989) Accrued income taxes (1,880) 406 __________ ___________ Cash (Used) By Operating Activities (657) (717) INVESTING ACTIVITIES Net property, plant and equipment additions (189) (1,008) __________ ___________ Cash (Used) By Investing Activities (189) (1,008) FINANCING ACTIVITIES Proceeds (repayments) on long-term debt 1,834 0 Net short-term borrowings (repayments) (200) (600) Proceeds from issuance of stock 10 223 __________ ___________ Cash Provided (Used) By Financing Activities 1,644 (377) __________ ___________ INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 798 (2,102) CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR 10,161 13,066 __________ ___________ CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 10,959 $ 10,964 __________ ___________ __________ ___________
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 1998 balance sheet has been derived from the audited financial statements contained in the 1997 Annual Report to Stockholders. 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. Reporting developments have been updated where appropriate. In this connection, there were two significant changes in contingency disclosures. First, on April 10, 1998 an arbitration panel ruled in favor of a subcontractor's claim on the TMRC contract with the Government of Turkey. The impact of this ruling, together with related interest and an increase in other estimated completion costs on the TMRC contract (a $20.3 million charge) is included in the 1998 First Quarter Statement of Operations. Second, the Company re-evaluated its position regarding contingencies on certain US Government contracts resulting in a $2.4 million charge against income in the first quarter. Pretax results for the first quarter include foreign currency translation gains relating to the Turkish subsidiary of $300,000 for 1998 and $147,000 for 1997. INDEPENDENT ACCOUNTANTS' REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION Board of Directors and Stockholders Aydin Corporation We have reviewed the accompanying condensed consolidated balance sheets of Aydin Corporation and subsidiaries as of April 4, 1998 and March 29, 1997, and the related condensed consolidated statements of operations and comprehensive income and cash flows for the three month periods ended April 4, 1998 and March 29, 1997. These financial statements are the responsibility of the management of Aydin Corporation and subsidiaries. We conducted the 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 conducted 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 reviews, 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, 1997, and the related consolidated statements of operations and cash flows for the year then ended (not presented herein) and in our report dated February 2, 1998, 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, 1997 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 May 5, 1998 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The Company incurred a loss of $24.1 million, or $4.64 per share, in the first quarter of 1998, compared to a loss of $4.3 million, or $.83 per share, in the first quarter of 1997. As previously reported in the Company's Annual Report on Form 10-K for the year ended December 31, 1997, the Company had submitted to arbitration its dispute with a subcontractor (Lockheed Martin Tactical Systems, Inc.) on the TMRC contract with the Government of Turkey. As reported in the Company's Report on Form 8-K dated April 10, 1998, on that date the arbitration panel awarded Lockheed Martin $17,161,897, which amount is to be paid within 45 days of the arbitrators' decision, after which time interest accrues thereon. First quarter 1998 results reflect a $20.3 million increase in cost of sales related to the TMRC contract, consisting of the arbitration award, related interest, and an increase in other estimated completion costs on the TMRC contract. The Company has filed an appeal of the arbitration decision in federal court in the Eastern District of Pennsylvania. At the same time, the Company has been in discussions with Lockheed Martin regarding the arbitration award. The Company anticipates generating the funds for any payment on the award primarily from the sale of assets, as described below. The Company has determined to concentrate its focus on its core businesses of Telemetry and Communications (which latter business includes, in addition to its core products and systems, the Company's operations in Turkey as well as AYDIN Electro Fab, which supplies key components to the Communications Division). Accordingly, first quarter results reflect a restructuring charge of $1.5 million related to the planned shut-down of the Raytor Division ($1.0 million) and a reduction in corporate expenses ($.6 million), and plans are underway to sell the Displays, West Coast Microwave Components and Molded Devices Divisions. The Company has signed a letter of intent with the prospective purchaser of the Displays Division and is negotiating the terms of a definitive purchase agreement with the prospective purchaser of the West Coast Microwave Components Division. The restructuring is expected to be completed by year end 1998. In addition to the charges described above, first quarter 1998 operating results were impacted by the following items: a $1.6 million reduction in net sales, reflecting the Company's decision to relinquish its position regarding collectible revenues under a contract with the U.S. Government; the write- off of certain West Coast assets which will not be included with the planned sale of the West Coast Microwave Components Division but which will have negligible value following such sale ($.8 million); and a $.9 million increase in litigation contingency reserves related to several outstanding claims against the Company. Net sales of $26.1 million for the first quarter of 1998 declined by $.8 million, or 3%, from the year ago period due to the items described above. Cost of sales for the first quarter includes a charge of $20.3 million related to the TMRC contract and a $.9 million litigation provision, as described above. Excluding these items, as well as the $1.6 million reduction of net sales described above, the cost of sales as a percentage of net sales in the first quarter of 1998 was 76%, compared to 75% in the year ago period. Environmental remediation expense of $2.6 million in last year's first quarter resulted from the write-off of an anticipated insurance recovery of money previously spent ($1.5 million) and to be spent ($1.1 million) over a 30 year period on an environmental clean-up at a site leased by the Company prior to 1984. The write-off resulted from an unfavorable court ruling in April 1997 involving the future collection of the insurance recovery. The Company has appealed this ruling to the California Supreme Court and has been informed that oral arguments have been scheduled for June 1998. The income tax recovery for 1998 reflects the available U.S. carryback of a portion of the 1998 net operating loss. The income tax provision for 1997 represents foreign taxes on the income of foreign operations. Financial Condition The TMRC contract arbitration award described above and related interest are recorded as a liability of $18.4 million at 1998 first quarter end. As a result of this arbitration award, the Company is not in compliance with certain of the financial covenants in its credit agreement with AT&T Commercial Finance Corporation ("AT&T"), and AT&T has notified the Company that, as the result of such non-compliance, as of the quarter end the Company is in default under the credit agreement. In light of such notification, the full remaining portion ($1.8 million) of a $2 million two-year term loan obtained during the quarter under the AT&T agreement has been classified as a current liability at quarter end. AT&T has indicated, however, that notwithstanding such default it does not intend to seek immediate repayment of amounts outstanding under the credit agreement, pending resolution of how the Company plans to satisfy the arbitration award. Unbilled revenue (after progress billings) declined $4.6 million from December 31, 1997 to April 4, 1998. Of this amount, $1.9 million relates to the impact on unbilled revenue of an increase in estimated costs to complete the TMRC contract, and $1.6 million relates to the Company's decision to relinquish its position regarding collectible revenues under a contract with the U.S. Government, both as described above. Prepaid expenses and other declined by $1.3 million during the 1998 first quarter. Approximately $.9 million of this decline was from the refund of U.S. income taxes during the quarter. The remaining refundable U.S. income tax payment of approximately $3 million reflected in this line item was received by the Company after the close of the quarter. Accrued and deferred income taxes decreased by $1.8 million in the quarter due to a $.8 million carryback of U.S. taxes resulting from the first quarter loss, $.6 million of translation gains and foreign tax payments, and $.4 million of U.S. tax payments. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Reference is made to Part I, Item 3 - "Legal Proceedings" in Registrant's Annual Report on Form 10- K for the year ended December 31, 1997, describing the arbitration claims and counterclaims involving the Registrant and a subcontractor (Loral Defense Systems - - Eagan, now Lockheed Martin Tactical Systems, Inc.) on the TMRC program with the Government of Turkey. On April 10, 1998, the arbitration panel in the binding arbitration proceeding awarded Lockheed Martin $17,161,897. The award is to be paid by the Registrant within 45 days, after which time interest will accrue on any unpaid balance. The award is reflected in the Registrant's results of operations for the first quarter of 1998, as described in Part I of this Report. On May 11, 1998, the Registrant filed a Motion to Vacate and/or Modify the Arbitration Award in the United States District Court for the Eastern District of Pennsylvania, Civil Action No. 98-MC-0080. ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS (a) The Registrant held its Annual Meeting of Stockholders on May 1, 1998. (b) Proxies for the meeting were solicited pursuant to Regulation 14A. There was no solicitation in opposition to management's nominees for directors as listed in the Proxy Statement. All such nominees were elected. (c) The matters voted upon and the results of the voting were as follows: (1) Election of Directors
For Withheld I. Gary Bard 3,134,893 1,437,577 Ira Brind 3,136,443 1,436,027 Nev A. Gokcen 3,441,993 1,130,477 Gary Mozenter 3,136,083 1,436,387 Harry D. Train II 3,442,043 1,130,427 John F. Vanderslice 3,134,820 1,437,650
(2) To approve an amendment to the 1996 Equity Incentive Plan. For Against Abstain 2,975,405 1,581,647 15,418 (3) To approve the Director Retirement Plan. For Against Abstain 2,823,773 1,730,316 18,381 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, 1996 and incorporated herein by reference). Exhibit 4 - None Exhibit 10 - The Employees' Stock Purchase Plan, as amended. Exhibit 11 - None Exhibit 15 - Letter re unaudited interim financial information Exhibit 18 - None Exhibit 19 - None 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 First Quarter 1998. 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 May 18, 1998 /s/ James R. Henderson James R. Henderson Vice President, Treasurer and Chief Financial Officer DATE May 18, 1998 /s/ Gene S. Schneyer Gene S. Schneyer, Vice President, Secretary and General Counsel EXHIBIT 10 AYDIN CORPORATION EMPLOYEES' STOCK PURCHASE PLAN (Last Amended May 1, 1998) 1. Purpose of the Plan. The purpose of the Plan is to grant employees of Aydin Corporation (the "Company") an opportunity to acquire a proprietary interest in the Company and thereby provide those employees with an added incentive to increase the earnings of the Company. 2. Administration of the Plan. The Board of Directors of the Company shall administer the Plan and may make rules and regulations for carrying out this Plan and may make such changes in and additions to this Plan as it may deem advisable and in the best interests of the Company. The interpretation and construction of any provision of the Plan by the Board of Directors shall be final and conclusive. 3. Eligible Employees. All full-time employees who shall have been in the continuous employ of the Company for at least six months and who have reached the age of 18 years shall be eligible to participate in the Plan. 4. Procedure for Participating. Any Eligible Employee may become a participant under this Plan by submitting to the Company, not later than 10 days prior to any month during which he is eligible to participate, a request in form satisfactory to the Company for the withholding of a portion of his salary for each biweekly pay period, and the payment thereof to the Trustee described in paragraph 7. Deductions thus authorized shall be stated in whole dollar amounts and may not exceed $80.00 of the employee's earnings for each biweekly pay period, and may not in any event be less than $8.00 per biweekly pay period. All moneys deducted from employees' earnings may be co- mingled with the funds of the Company until payment to the Trustee pursuant to paragraph 5. After an employee has become a participant in the Plan, his participation will continue so long as the Plan continues in effect or until his death, termination of employment, or withdrawal. His participation shall be on the basis of the payroll deduction request submitted by him as aforesaid and then currently in effect. An employee may increase or decrease the amount of his payroll deductions by request submitted to the Company not less than 15 days prior to the commencement of the biweekly pay period for which such change is to be effective. 5. Payments to Trustee; Contributions by the Company. The Company will pay to the Trustee not later than 15 days after the end of each month on behalf of each participant in the Plan, (a) the total of all amounts withheld from such employee's salary for the preceding month under paragraph 4 above and (b) in addition, as a contribution of the Company, a sum equal to 20% of the amount paid under the foregoing clause (a). The Board of Directors may change the percentage of the Company's contribution upon 30 days notice to all participants as long as the percentage fixed is not more than 20% or less than 10%. 6. Deductions for Company's contributions. The Company's contributions shall be subject to all federal, state and local taxes and charges as required by law to be withheld by the Company for such payments to each employee. The amount of the Company's contribution shall be added to each employee's biweekly gross pay for the purpose of calculating such deductions, and to such extent shall reduce the weekly net pay to each employee. The amount paid to the Trustee, as provided in paragraph 5, shall therefore be the amount authorized to be withheld from the employees' pay plus the Company's contribution. 7. Trustee. The Board of Directors will designate a stock brokerage firm to act as Trustee under the Plan (said stock brokerage firm being herein called the Trustee), with the right in said Board to change the designation in its discretion. The Trustee will hold as custodian all funds received by it under the Plan and, until delivery thereof to the participants, all shares of the Company's stock acquired by the Trustee under the Plan. No interest will be paid by the Trustee on any funds held by it hereunder. The Trustee may rely on all orders, requests, and instructions with respect to the Plan given in writing and signed by any person authorized by the Board of Directors, and the Trustee shall not be liable to any person for any action taken in accordance therewith. Such trustee shall serve without compensation except brokerage commissions. 8. Purchase of Stock. As soon as practicable after the Trustee has received from the Company payment of the payroll deductions and Company contributions for the preceding month, under paragraph 5, above, the Trustee will apply the funds then in its custody hereunder to the purchase at prevailing market prices of the number of shares of the Company's common stock which can be purchased with such funds. Any moneys remaining after the purchase of such stock shall be retained by the Trustee and added to the fund available during the following month. All purchases of stock as herein provided will be made in the name of the Trustee or its nominee. The stock purchased with the funds received by the Trustee under the Plan shall be credited pro rata (to the nearest one one-hundredth of a share) to the accounts of the participants in the Plan according to their respective interests in such funds. 9. Dividends. Cash dividends and other cash distributions, if any, received by the Trustee on stock held in its custody hereunder will be credited to the accounts of the participants in proportion to their interests in the stock held by the Trustee, and will be applied, as soon as practicable after receipt thereof by the Trustee, to the purchase of additional shares of the Company's common stock, and such shares will be credited to the accounts of the respective participants, in the manner provided in paragraph 8. Dividends paid in shares of the Company's common stock, if any, which are received by the Trustee with respect to stock held in its custody hereunder will be allocable to the participants (to the nearest one one- hundredth of a share) in accordance with their interest in the stock with respect to which the dividends, if any, are paid. 10. Custody of Shares. Accumulation of shares purchased under paragraph 8 shall be held by the Trustee for the account of the participants and a quarterly statement will be sent to each participant showing the current status of his account. A participant may request delivery of all or a portion of the number of whole shares credited to his account by written request to the Trustee. If such a request is made, the Trustee will deliver to such participant such number of whole shares as soon as practicable after the end of the month such request is received by the Trustee. The amount of any fractional share credited to the account of a participant shall be carried over and added to the number of shares credited the participant from purchases by the Trustee the next month. 11. Brokerage commissions, stock transfer taxes, and administration expenses. Brokerage commissions payable in connection with the purchase of stock hereunder and transfer taxes payable in connection with the delivery to the participants of stock acquired hereunder shall be borne by the Company. All brokerage commissions and transfer taxes payable in connection with the sale of such shares shall be the responsibility of each individual participant. The costs of postage and handling expenses for mailing the proxies, quarterlies and Annual Reports, will be borne by the Company. 12. Stockholder rights. Until delivery to the participants of the shares of the Company's stock hereunder, the Trustee will exercise all voting rights pertaining to each participant's pro rata share of such stock in accordance with written directions, if any, given to the Trustee by such participant; in the absence of such directions the Trustee, in its discretion, may exercise all such voting rights on behalf of such participant in such manner as the Trustee may determine. 13. Withdrawal from the Plan. A participant may withdraw from the Plan, effective as of the end of any calendar month, by giving written notice to the Company and the Trustee not later than the 15th day of such month. Upon any such withdrawal, the participant shall be entitled to receive from the Trustee, as soon as practicable after the Trustee shall have completed its purchases of stock hereunder for the month ending on the effective date of such withdrawal, (a) the number of whole shares of stock credited to the account of such participant to the effective date of withdrawal, and (b) the cash value of any fractional share credited to such participant's account to the effective date of withdrawal (or any cash credited to the participant's account which, in view of his withdrawal, has not been invested by the Trustee). A participant who withdraws from the Plan may reenter the Plan at any time pursuant to the procedure set forth in paragraph 4 hereof. A participant whose contributions under the Plan shall have been discontinued by reason of an absence or leave approved by an authorized representative of the Company shall not be considered to have withdrawn from the Plan, and payroll deductions and Company contributions pursuant to paragraphs 4 and 5 hereof shall be resumed as soon as such employee shall return to work following such absence or leave. 14. Death; Termination of Employment. In the event of the death of a participant or of the termination of his employment for any other reason, he or his personal representatives shall be entitled to receive an amount of stock and cash determined in the same manner and payable at the same time as if he had withdrawn from the Plan by giving notice of his withdrawal effective as of the end of the month in which such death or termination occurs. 15. Termination of the Plan. The Board of Directors may at any time terminate the Plan, effective as of the first day of any calendar month subsequent to the Board's action. In the event of termination of the Plan, each participant shall be entitled to receive from the Trustee the number of whole shares of the Company's common stock credited to his account and his allocable portion of the proceeds of stock sold by the Trustee in order to pay the cash value of fractional shares held for the accounts of the participants (or any cash credited to his account which, in view of the termination, has not been invested by the Trustee). 16. Notices. Any notice hereunder to the Company shall be in writing and such notice shall be deemed given or made only upon receipt thereof at the Company's office at 700 Dresher Road, Horsham, PA 19044 or at such other address as the Company may designate by notice to the participants and to the Trustee. Any notice hereunder to the Trustee shall be given in writing and such notice shall be deemed duly given or made only upon receipt thereof at the Trustee's principal office or at such other address as the Trustee may designate by notice to the Company. Any notice to a participant hereunder shall be in writing and shall be deemed received if mailed or delivered to the participant at such address as the participant shall have on file with the Company. Copies of all reports, proxy statements and other communications distributed to shareholders of the Company will be transmitted to all employees participating in the Plan who do not otherwise receive such material as shareholders. 17. Effective Date. This amended Plan shall become effective on May 1, 1998. 18. Maximum Number of Shares. The maximum number of shares of the Company's common stock which can be purchased by the Trustee under this plan is 100,000 shares. EXHIBIT 15 Securities and Exchange Commission Washington, D.C. 20549 We have made a review of the condensed consolidated financial statements of Aydin Corporation and subsidiaries as of April 4, 1998 and for the three-month periods ended April 4, 1998 and March 29, 1997 in accordance with standards established by the American Institute of Certified Public Accountants and issued our report thereon dated May 5, 1998. 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 4, 1998 are being incorporated by reference in the Registration Statement Nos. 333-31263; 33-61537; 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 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 May 14, 1998 EX-27 2 ARTICLE 5 FDS FOR 1ST QUARTER 10-Q
5 This schedule contains summary financial information extracted from the financial statements in the Quarterly Report on Form 10-Q for the period ended April 4, 1998 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1998 APR-04-1998 6,145 4,814 22,825 0 17,702 90,833 49,877 35,760 105,004 38,411 0 5,210 0 0 59,998 105,004 26,124 26,124 42,260 51,292 0 0 (242) (24,926) (780) (24,146) 0 0 0 (24,146) (4.64) (4.64)
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