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
May 16, 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 First Quarter, 1994
File No. 1-7203
Gentlemen:
We are enclosing for filing Aydin Corporation's Form 10-Q for the First
Quarter ending April 2, 1994.
Very truly yours,
/s/ Robert A. Clancy
Robert A. Clancy
Secretary and
Corporate Counsel
RAC:cak
Enclosures
cc: John W. Kauffman, Esq.
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 April 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 May 13,
1994.
______4,982,529______
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
First Quarter Report" to Stockholders. These condensed consolidated
financial statements for the three month period ended April 2, 1994 have
been subjected to a limited review by KPMG Peat Marwick, the
Registrant's independent accountants, whose report, set forth on page 6
of the "1994 First 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 April 2,
1994 and April 3, 1993 were 5,007,342 and 5,022,912, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(1) Material Changes in Financial Condition (4/02/94 versus 12/31/93)
Accounts receivable decreased by $10.4 million mainly because of cash
collected on an unusually large shipment on a U.S. Government contract
and an excess of collections versus billings rendered on a large
contract with the Government of Turkey. Accrued liabilities declined by
$2.5 million primarily because of $2 million of payments made 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
decreased by $6.5 million because of the above mentioned receivable
collections partially offset by the decline in accrued liabilities. Of
the total of $23.9 million of cash and short-term investments at April
2, 1994, approximately $17.8 million represents interest bearing
collateral required to be maintained against letters of credit for the
Turkish contract.
The Company at April 2, 1994 had short-term borrowing arrangements
available of $19 million, of which $15 million was used. These
borrowing arrangements may be reduced if the Company has to increase
performance guarantees it issues in foreign countries.
Based on the present backlog and projected cash flows, the Company
anticipates financing its capital needs from internal sources and from
short-term borrowings in the foreseeable future.
(2) Material Changes in Operations (First Quarter 1994 versus 1993)
Net sales declined by $8.0 million (21%) because of the increasingly
competitive U.S. Government defense business and delays in booking new
foreign business.
Cost of sales as a percentage of sales increased to 74.1% from 71.2% as
a result of the more competitive U.S. Government defense business
environment and a more favorable sales mix in 1993.
Selling, general and administrative expenses declined by $1.4 million
(21%) because of cost reductions necessitated by the decreases in sales
and backlog and as a result of net foreign currency translation gains of
$495 thousand related to the Turkish subsidiary.
Research and development expenses decreased by $558 thousand (34%)
because of a slow down or completion during 1994 of several Company-
funded new product development projects.
The income tax provision as a percentage of pretax income decreased to
25.1% from 37.5% because the 1994 foreign currency translation gains
referred to above are not subject to tax.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
(a) The Registrant held its Annual Meeting of Stockholders on
April 29, 1994.
(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 Broker
Non-Votes
F.G. Allen 3,714,669 24,693 None
N.A. Gokcen 3,714,119 25,243 None
A. Hakimoglu 3,715,804 23,558 None
H.D. Train II 3,711,492 27,870 None
(2) Approval of the 1994 Incentive Stock Option Plan
For Against Abstain Broker Non-Votes
3,527,675 190,070 21,617 None
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 FIRST QUARTER REPORT" to
Stockholders
Exhibit 22 - None
Exhibit 23 - None
Exhibit 24 - None
Exhibit 27 - None
(b) Reports on Form 8-K
A report on Form 8-K, dated January 5, 1994, was filed by the
Registrant on January 13, 1994, covering Item 5 (Other
Events).
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 16, 1994
/s/ Herbert Welber
HERBERT WELBER, CONTROLLER
DATE May 16, 1994
/s/ Robert A. Clancy
ROBERT A. CLANCY, SECRETARY
AYDIN CORPORATION
FORM 10-Q QUARTERLY REPORT
EXHIBIT INDEX
N0. DESCRIPTION OF EXHIBIT
15 Letter re unaudited interim financial information
19 1994 First Quarter Report to Stockholders
Exhibit 15
KPMG Peat Marwick
Certified Public Accountants
1600 Market Street Telephone 215 299 3100 Telefax 215 299 3150
Philadelphia, PA 19103-7279 Telex 4973852
Aydin Corporation
Horsham, Pennsylvania
Gentlemen:
RE: Registration Statements No's 33-53549; 33-34863; 33-22016;
33-14284; 2-97645; 2-93603; 2-77623; 2-64093
With respect to the subject Registration Statements, we acknowledge
awareness of the incorporation by reference therein of our report dated
April 29, 1994 related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report 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 Sections 7 and 11 of the act.
Very truly yours,
/s/ KPMG Peat Marwick
Philadelphia, Pennsylvania
May 13, 1994
Exhibit 19
Dear Stockholder:
Aydin's sales for the 1994 first quarter were $29,445,000,
representing a decline of 21% from the first quarter sales of
$37,434,000 last year. Net income was $1,027,000, a 28% decrease from
the $1,436,000 in net income from the 1993 first quarter. Earnings per
share were $.21, as compared to $.29 per share earned in the same period
last year.
During the quarter, the backlog decreased to $149,000,000 as
compared to $155,000,000 as of the end of 1993.
Management is pursuing the strategy of aggressively bidding U.S.
Government and export programs, as in the past. A major effort is
underway also to develop products to augment the industrial business,
particularly in the digital wireless communications and computer
equipment areas, for telecommunications applications.
The Company plans to utilize its experience in microwave and TDMA
(Time Division Multiple Access), which increases channel capacity in a
given frequency band, to develop digital cellular products and systems.
Also, the Company is developing a microcell, which provides cost
effective communications to inaccessible areas. To accelerate this
activity, Aydin has added to its staff a number of experienced wireless
engineers.
Expansion of its network access products for voice, data and video
applications in public networks is also the Company's plan.
The Company is working to strengthen its sales and marketing force
and has hired Mr. Manfred Hirt for Corporate Marketing and Dr. Robert
Hoe as Sales and Marketing Manager for the Company's West Coast
Division. In addition, several international Sales Engineers have been
appointed, including one of Russian origin. These should enable and/or
enhance contacts in China, Russia, and the Far East and significantly
improve international sales.
/s/ Ayhan Hakimoglu
Ayhan Hakimoglu
President
April 29, 1994
(page 1)
AYDIN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
($000 omitted except for per share amounts)
Three Months Ended
April 2, 1994 April 3, 1993
(Unaudited) (Unaudited)
NET SALES $29,445 $37,434
COST AND EXPENSES
Cost of sales 21,812 26,642
Selling, general
and administrative 5,209 6,597
Research and development 1,072 1,630
Interest expense (income), net (19) 103
_______ ______
Total 28,074 34,972
_______ ______
INCOME BEFORE INCOMES TAXES
AND MINORITY INTEREST 1,371 2,462
INCOME TAXES 344 923
_______ ______
INCOME BEFORE
MINORITY INTEREST 1,027 1,539
LESS MINORITY INTEREST - 0 - 103
_______ ______
NET INCOME $ 1,027 $1,436
_______ ______
_______ ______
EARNINGS PER SHARE $ .21 $ .29
_______ ______
_______ ______
(page 2)
AYDIN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($000 Omitted)
ASSETS
April 2, 1994 Dec. 31, 1993
(Unaudited)
CURRENT ASSETS:
Cash, including cash equivalents-
1994, $9,869; 1993, $10,908 $ 11,536 $ 11,822
Short-term investments 12,345 13,058
Accounts receivable 23,120 33,525
Unbilled revenue, after
progress billings 69,760 66,559
Inventories:
Raw materials 7,903 8,549
Work-in-process 6,014 6,036
Finished product 2,984 3,012
Prepaid expenses 2,069 1,470
________ ________
Total current assets 135,731 144,031
PROPERTY, PLANT AND EQUIPMENT,
net of accumulated depreciation:
1994, $54,441; 1993, $53,623 24,693 25,182
OTHER ASSETS 501 508
________ ________
TOTAL ASSETS $160,925 $169,721
________ ________
________ ________
__________________________________________________________________
<FN>
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 the
first quarter of 1994 includes foreign currency translation gains of
$495,000 relating to the Turkish subsidiary.
(page 3)
AYDIN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($000 Omitted)
LIABILITIES AND STOCKHOLDERS' EQUITY
April 2, 1994 Dec. 31, 1993
(Unaudited)
CURRENT LIABILITIES:
Current maturities of
long-term debt $ 398 $ 397
Short-term bank debt 15,025 21,525
Accounts payable 20,559 21,731
Accrued liabilities 12,774 15,295
Advanced payments and
contract billings in
excess of recognized
revenue 2,557 1,563
Accrued and deferred
income taxes 6,789 7,014
________ _______
Total current liabilities 58,102 67,525
LONG-TERM DEBT,
less current maturities 1,798 1,902
DEFERRED INCOME TAXES 6,078 6,230
MINORITY INTEREST 0 105
STOCKHOLDERS' EQUITY:
Common stock, par value $1-
authorized 7,500,000
shares: issued 1994,
4,982,304 shares;
1993, 4,981,273 shares 4,982 4,981
Additional paid-in capital 707 697
Retained earnings 89,933 88,906
Foreign currency
translation effects (675) (625)
________ _______
Stockholders' equity 94,947 93,959
________ _______
TOTAL LIABILITIES
AND EQUITY $160,925 $169,721
________ _______
________ _______
(page 4)
AYDIN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
($000 omitted)
Three Months Ended
April 2, 1994 April 3, 1993
(Unaudited) (Unaudited)
OPERATING ACTIVITIES
Net Income $ 1,027 $ 1,436
Items not affecting cash:
Depreciation and
amortization 845 1,314
Deferred income taxes (100) 168
Minority Interest 0 103
Other (50) 35
Changes in certain
working capital items:
Accounts receivable 10,405 11,335
Unbilled revenue (3,201) (14,617)
Advance payments and
contract billings in
excess of recognized
revenue 994 660
Inventories 696 (108)
Prepaid expenses (599) 244
Accounts payable and
accrued liabilities (3,693) (321)
Accrued income taxes (277) 520
________ _________
Cash Provided By
Operating Activities 6,047 769
INVESTING ACTIVITIES
Net property, plant and
equipment additions (349) (625)
Short-term investments 713 (3,373)
________ _________
Cash Provided (Used) By
Investing Activities 364 (3,998)
FINANCING ACTIVITIES
Principal payments on
long-term debt (103) (98)
Net repayments of
short-term borrowings (6,500) (2,300)
Minority investment in
consolidated subsidiary (105) (189)
Proceeds from exercise of
stock options 11 182
________ _________
Cash Used By
Financing Activities (6,697) (2,405)
________ _________
DECREASE IN CASH AND CASH
EQUIVALENTS (286) (5,634)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 11,822 17,086
________ _________
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 11,536 $ 11,452
________ _________
________ _________
(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 April 2, 1994, and the related
condensed consolidated statements of income and cash flows for the
three-month periods ended April 2, 1994 and April 3, 1993. 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
referred to above for them to be in conformity with generally accepted
accounting principles.
We previously audited, in accordance with generally accepted auditing
standards, 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); and in our report dated February 25, 1994 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,
1993 is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.
/s/ KPMG Peat Marwick
Philadelphia, Pennsylvania
April 29, 1994
________________________________________________________________
A copy of Aydin Corporation's Form 10-Q may be obtained without
charge, upon written request sent to Aydin Corporation
(page 6)