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