-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, hSUWDolk8gkztkfN7DtqzE7kCliJ2rQt3/CZPVla/jCvMOYvUvKmXHG3DuQRkGpW 2FjQwONXJult4Jwvqc17Yg== 0000008919-94-000010.txt : 19941117 0000008919-94-000010.hdr.sgml : 19941117 ACCESSION NUMBER: 0000008919-94-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AYDIN CORP CENTRAL INDEX KEY: 0000008919 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94559258 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. Telex 685 1211 AYDIN UW November 14, 1994 (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, 1994 File No. 1-7203 Gentlemen: We are enclosing for filing Aydin Corporation's Form 10-Q for the Third Quarter ending October 1, 1994. Very truly yours, /s/ Robert A. Clancy Robert A. Clancy Secretary and Corporate Counsel RAC:cak Enclosures cc: John W. Kauffman, Esq. Kenneth W. Banet, Grant Thornton James W. Kay, Peat Marwick 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 _______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_____ 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 "1994 Third Quarter Report" to Stockholders. These condensed consolidated financial statements for the nine month period ended October 1, 1994 have been subjected to a limited review by Grant Thornton, the Registrant's independent accountants, whose report, set forth on page 6 of the "1994 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 common stock options, if dilutive. The number of shares used in the computation of earnings per share for the three months ended October 1, 1994 and October 2, 1993 were 4,990,762 and 5,038,605, respectively, and for the nine-month periods then ended 4,997,963 and 5,024,822, respectively. 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 $11.5 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 $4.9 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). Short-term bank debt was reduced by $13.7 million during the nine months owing to billings on a major contract and resulting favorable cash flow. Of the total of $24.6 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 within a few months from internal cash flow. The Company is working to make 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 declined by 16% in the nine months primarily because of low level of booking in defense business. Cost of sales as a percentage of sales decreased in the quarter to 70.9% from 72.5% and in the nine months to 70.6% from 72.4% primarily as a result of operating efficiencies achieved. Selling, general and administrative expenses increased by $391,000 in the quarter because of the higher level of proposal activity and resulting proposal costs. Selling, general and administrative expenses decreased by $1,565,000 in the nine months because of net foreign currency translation gains of $874,000 in addition to cost reductions necessitated by the decrease in sales. The income tax provision as a percentage of pre-tax income decreased to 27.1% from 36.8% for the nine months, primarily because the foreign currency translation gains referred to above are not subject to tax, and also because of lower foreign income tax rates. 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 4 None Exhibit 10 None Exhibit 11 None Exhibit 15 Letter re unaudited interim financial information Exhibit 18 None Exhibit 19 "1994 THIRD QUARTER REPORT" to Stockholders Exhibit 22 None Exhibit 23 None Exhibit 24 None Exhibit 27 Financial Data Schedule Exhibit 99 None (b) Reports on Form 8-K No reports on Form 8-K were filed during the Third Quarter of 1994. 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 4, 1994 /s/ Herbert Welber Herbert Welber, Controller DATE November 11, 1994 /s/ Robert A. Clancy Robert A. Clancy, Secretary EXHIBIT 15 Grant Thornton 2000 Market Street Philadelphia, PA 19103-3290 215 561-4200 FAX 215 561-1066 Securities and Exchange Commission Washington, D.C. 20549 We have made a review of the condensed financial statements of Aydin Corporation as of October 1, 1994 and for the three-month and six-month periods ended October 1, 1994, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants, and issued our report thereon dated October 28, 1994. 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 October 1, 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 1993 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 Philadelphia, Pennsylvania October 28, 1994 EXHIBIT 19 Dear Stockholder: The third quarter 1994 sales of $31,918,000, were essentially flat compared to the $31,577,000 in sales in the same period last year. Net income for the three month period was $1,096,000, as compared to $1,067,000 earned in last year's third quarter. Earnings per share were $.22, versus $.21 in the 1993 third quarter. Sales for the first nine months were $88,669,000, representing a 16% decrease from last year's nine month sales of $105,980,000. Net income earned through the third quarter of 1994 was $3,253,000, as compared to $3,655,000, for the same period in 1993. Earnings for the first nine months of 1994 were $.65 per share versus $.73 reported during the same period last year. Backlog at the end of the third quarter was approximately $148 million, versus $156 million at this time last year, and $158 million at the end of the 1994 second quarter. The backlog numbers do not include probable production options. The Company is continuing to bid on large and small programs. During the last quarter, the Company submitted approximately $300 million worth of proposals. The Company has formed a new division, "Aydin Telecom". Mr. Thomas LoCasale is appointed Corporate Vice President and President of this division and will report to Chief Executive Officer of the company, Mr. Ayhan Hakimoglu. This division will manufacture, market, and sell Digital Wireless Telephony Equipment & Systems, Digital Telephony Networks for Video Cable Systems, Network Access Equipment, Satellite Modems, Satellite TDMA Next Generation Equipment, Transcoders and certain types of Multiplexers. In the telecommunications field, Aydin West will continue as a separate division to market and sell Microwave Radios, Microcell, High Power Amplifiers and other Satellite Earth Station Equipment, Troposcatter Equipment, and Turnkey Telecom Systems. Aydin plans to be a major factor in Digital Wireless Telephony and Cable Video Systems Telephony Products and Network Access Equipment. The Company expects long distance carriers as well as cable TV companies to enter into competition with the Baby Bells in local telephony business. Similarly, local telephone companies will enter into long distance telephony. All of these will be the result of deregulation which is at the proposal stage at this time. Digital wireless systems are competitive in providing telephony networks for developing countries such as Russia, China, etc., who wish to expand their telephone networks. At this stage, it is not practical to hang or bury wires to bring a connection to every house, especially in low population density areas. Aydin expects that there will be a large market in equipment business of the type Aydin Telecom and Aydin (West) will sell in the USA and world-wide. /s/ Ayhan Hakimoglu Ayhan Hakimoglu October 28, 1994 President (page 1) AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME ($000 OMITTED EXCEPT FOR PER SHARE AMOUNTS)
3 MONTHS ENDED 9 MONTHS ENDED 10/1/94 10/2/93 10/1/94 10/2/93 (UNAUDITED) (UNAUDITED) NET SALES $ 31,918 $ 31,577 $ 88,669 $ 105,980 COST AND EXPENSES Cost of sales 22,621 22,896 62,570 76,744 Selling, general and administrative 6,313 5,922 17,695 19,260 Research and development 1,203 1,028 3,664 3,881 ________ _________ ________ _________ Interest expense, (income) net 90 (49) 280 126 ________ _________ ________ _________ Total 30,227 29,797 84,209 100,011 INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 1,691 1,780 4,460 5,969 INCOME TAXES 595 704 1,207 2,199 ________ _________ ________ _________ INCOME BEFORE MINORITY INTEREST 1,096 1,076 3,253 3,770 LESS MINORITY INTEREST -0- 9 -0- 115 ________ _________ ________ _________ NET INCOME $ 1,096 $ 1,067 $ 3,253 $ 3,655 ________ _________ ________ _________ ________ _________ ________ _________ EARNINGS PER SHARE $ .22 $ .21 $ .65 $ .73 ________ _________ ________ _________ ________ _________ ________ _________
(page 2) AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($000 Omitted) ASSETS
OCT. 1, 1994 Dec. 31, 1993 (UNAUDITED) CURRENT ASSETS: Cash, including cash equivalents- 1994, $11,951; 1993, $10,908 $ 16,188 $ 11,822 Short-term investments 8,428 13,058 Accounts receivable 31,694 33,525 Unbilled revenue, after progress billings 55,025 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 133,408 144,031 PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation: 1994, $56,181; 1993, $53,623 24,737 25,182 OTHER ASSETS 483 508 _________ _________ TOTAL ASSETS $ 158,628 $ 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. 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. (page 3) AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($000 Omitted) LIABILITIES AND STOCKHOLDERS' EQUITY
Oct. 1, 1994 Dec. 31, 1993 (Unaudited) CURRENT LIABILITIES: Current maturities of long-term debt $ 399 $ 397 Short-term bank debt 7,806 21,525 Accounts payable 23,622 21,731 Accrued liabilities 10,413 15,295 Advanced payments and contract billings in excess of recognized revenue 2,342 1,563 Accrued and deferred income taxes 8,002 7,014 _________ __________ TOTAL CURRENT LIABILITIES 52,584 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 92,159 88,906 Foreign currency translation effects (443) (625) _________ __________ STOCKHOLDERS' EQUITY 97,475 93,959 _________ __________ TOTAL LIABILITIES AND EQUITY $158,628 $169,721 _________ __________ _________ __________
(page 4) AYDIN CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($000 OMITTED)
NINE MONTHS ENDED OCT. 1, 1994 Oct. 2, 1993 (Unaudited) (Unaudited) OPERATING ACTIVITIES Net Income $ 3,253 $ 3,655 Items not affecting cash: Depreciation and amortization 2,647 3,488 Deferred income taxes (19) (478) Minority Interest -0- 115 Other 185 81 Changes in certain working capital items: Accounts receivable 1,831 4,740 Unbilled revenue 11,534 (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 (2,991) (752) Accrued income taxes 1,749 597 __________ ___________ CASH PROVIDED (USED) BY OPERATING ACTIVITIES 15,962 (6,362) INVESTING ACTIVITIES Net property, plant and equipment additions (2,180) (2,034) Short-term investments 4,630 (546) __________ ___________ CASH PROVIDED (USED) BY INVESTING ACTIVITIES 2,450 (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 4,366 (12,284) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 11,822 17,086 __________ ___________ CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 16,188 $ 4,802 __________ ___________ __________ ___________
(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 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. 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. Philadelphia, Pennsylvania /s/ Grant Thornton October 28, 1994 _______________________________________________________________ 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
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 16,188 8,428 31,694 0 20,169 133,408 80,918 56,181 158,628 52,584 1,597 4,989 0 0 92,486 158,628 88,669 88,669 62,570 84,209 0 0 280 4,460 1,207 3,253 0 0 0 3,253 .65 .65
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