SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A1
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended
December 31, 1994
Commission File Number 0-3704
NAI TECHNOLOGIES, INC.
A New York Corporation IRS Employer I.D. No. 11-1798773
1000 Woodbury Road, Woodbury, New York 11797-2530
Telephone No. (516) 364-4433
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.10 Per Share
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, and (2) has been subject to such
filing requirements for the past 90 days. YES X NO __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. (X)
As of March 19, 1995, 7,195,567 common shares were outstanding and the
aggregate market value of the common shares (based on the average bid and
asked price of these shares on the NASDAQ Stock Market as of March 29,
1995) of NAI Technologies, Inc. held by non-affiliates was approximately
$15 million.
Documents Incorporated by Reference: Proxy Statement for 1995 Annual
Meeting of Shareholders to be held on April 26, 1995 is incorporated by
reference in Part III of this Annual Report on Form 10-K.
EXPLANATORY NOTE
This Form 10-K/A1 is being filed by NAI Technologies, Inc., a
New York corporation (the "Company"), as an amendment to its Form 10-K for
the fiscal year ended December 31, 1994 (the "Form 10-K") to include Items
6 (Selected Financial Data), 7 (Management's Discussion and Analysis of
Financial Condition and Results of Operations), 8 (Financial Statements and
Supplementary Data) and 14(a) and Exhibits 10 (Amended and Restated Credit
Agreement and Registration Rights Agreement), 23 (Consent of KPMG Peat
Marwick) and 27 (Financial Data Schedule) which were not included in such
Form 10-K pending the finalization by the Company of negotiations with its
lending banks for the restructuring of its credit facilities as set forth
in the Company's Form 12b-25 filed with the Securities and Exchange
Commission electronically on April 3, 1995.
-2-
Item 6.
Selected Financial Data
- ----------------------
(in thousands except per share data)
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Net Sales $ 54,520 $81,024 $67,315 $59,412 $42,057
Operating earnings (loss) (1) $(14,589) $ 8,960 $ 8,407 $ 6,308 $ 4,471
Net earnings (loss) (1) $(11,591) $ 5,455 $ 5,051 $ 3,900 $ 3,089
Per share data:
Net earnings (loss) (3) $( 1.69) $ 0.80 $ 0.80 $ 0.63 $ 0.51
Cash dividends (2) $ - $ - $ - $ - $ -
Total assets at year end $ 53,720 $60,715 $43,704 $33,817 $32,964
Long-term debt $ 13,990 $10,797 $ 7,158 $ 5,017 $ 1,817
Working capital $ 16,665 $19,105 $17,094 $14,134 $ 7,364
Shareholders' equity $ 20,296 $30,593 $23,911 $18,897 $14,946
Average market price per
common share at year end (3) $ 2 11/16 $ 6 1/4 $8 3/16 $4 9/16 $2 15/16
Average common shares (3) 6,580 6,843 6,309 6,222 6,020
==============================================================================
(1) Includes $7,321 in restructuring costs in 1994.
(2) There have been no cash dividends in the above five fiscal years.
(3) Prior year share data has been restated to reflect 4% stock dividends
declared in February 1992, 1993 and 1994 and a three-for-two stock split
paid in August 1993.
Item 7.
Management's Discussion and Analysis of Financial Condition and Results
of Operations
- -----------------------------------------------------------------------
Results of Operations
--------------------
1994 Compared with 1993
- -----------------------
On April 8, 1994 the Company announced the restructuring of its Military
Systems Group. The major component of the restructuring plan was the
consolidation of operations into one location (Codar Technology, Inc.) located
in Longmont, Colorado. The goal of the restructuring was and continues to be
to reduce costs and increase operating efficiencies. In conjunction with this
decision, the Company announced that it was closing its Hauppauge-based
Military Products division by September 30, 1994, and that most of the work
force reductions would be completed in early July. The work force reductions
and the closing of the facility were completed on schedule, but at year-end
the combined operation was performing at lower than anticipated revenue
levels.
The Hauppauge facility consisted of two buildings totalling approximately
86,000 square feet. On October 5, 1994 the smaller facility totalling 20,000
square feet was sold for approximately net book value. The larger facility
totalling 66,000 square feet is currently under contract to be sold. Most of
the Company's components business, particularly the USH and the NST products,
were manufactured at this location. The decision to close the Hauppauge
facility was brought about by the Navy's decision to significantly reduce
future purchases of NST and USH units. Without a guarantee of future
business, the Company decided it was not cost efficient to maintain multiple
manufacturing sites and work forces. Therefore, the Company approached the
Navy in April to give it the opportunity to make one final purchase prior to
the shut-down of the production capability. The Company subsequently received
a small order for additional USH and NST-I units.
At the beginning of 1994 the Military Products division employed approximately
190 people. The implementation of the restructuring plan began in April 1994.
It is anticipated that Codar will add approximately 70 jobs after the business
transition is completed, thus creating a net reduction of approximately 120
employees. Through December 31, 1994 Codar had added 54 employees.
During the first quarter of 1994 the Company recorded a $7.3 million
restructuring charge of which $3.1 million related to a non-cash write-off of
inventory and anticipated losses on the disposal of assets. The remaining
$4.2 million primarily consists of employee severance costs, lease termination
costs, and idle facility costs. $3.3 million out of the $4.2 million was
disbursed during 1994. The Company anticipates that it will receive
approximately $2.3 million over the next two years from the sale of the
Hauppauge real estate. The proceeds will be used to reduce the Company's term
debt.
The following table lists the major elements of the restructuring charge which
has been budgeted and the amount remaining as of December 31, 1994:
Budget
Description Amount Balance
----------- ------- -------
Employee severance expense $2,731,000 $ 448,000
Idle facility costs subsequent to plant closing 590,000 248,000
Lease termination costs 370,000 205,000
Contractual obligations 110,000 -
Other 400,000 -
---------- ----------
Total charges requiring cash outlays 4,201,000 901,000
Loss on disposition of assets 2,000,000 80,000
Inventory writedown 1,120,000 -
---------- ----------
Total non-cash charges 3,120,000 80,000
---------- ----------
Total restructuring expense $7,321,000 $ 981,000
========== ==========
The transition of the Military Systems Group to Colorado placed strains on the
existing management information systems at Codar. During the second half of 1994
the Codar subsidiary reported sales at a level substantially below earlier
expectations. The sales shortfall was principally attributable to parts
shortages and increased product complexity, the adverse impact of which will
continue for at least the first half of 1995.
The nature of the Company's business is such that year to year changes in sales
levels are predominantly due to changes in shipping volume or product mix rather
than changing sales prices. Net sales in 1994 were $54.5 million, a 33% decrease
when compared with $81.0 million for the same period in 1993. The decrease
occurred in both segments, with the largest decrease in the components business
which was attributable to the decline in NST business.
The following chart provides the sales breakdown by product line:
In thousands of dollars 1994 1993 % Change
- ---------------------------------------------------------------------------
Electronic Systems Segment
Systems $16,587 $15,870 5%
Component 19,006 50,662 (62%)
Service 10,737 4,670 130%
-----------------------------------
Total Electronic Systems Segment 46,330 71,202 (35%)
Telecommunications Segment
Line treatment 5,391 5,895 (9%)
Test equipment 2,799 3,927 (29%)
-----------------------------------
Total Telecommunications Segment 8,190 9,822 (17%)
-----------------------------------
TOTAL $54,520 $81,024 (33%)
==========================================================================
Sales in the Electronic Systems segment (net of intercompany eliminations)
decreased 35% to $46.3 million from $71.2 million in 1993. The sales decrease
was primarily attributable to lower component revenue, partially offset by
higher service revenue. The decrease in component revenue was principally due
to the substantial completion in 1993 of the NST contract and a decrease in
TEMPEST printer product shipments. The increase in systems and service revenue
is primarily attributable to the inclusion of revenue from the Codar Division
which was acquired in October 1993.
In recent years the Company has reduced its dependency on the United States
defense budget by expanding its non-military business operations. However, the
Company still expects a substantial portion of 1995 sales to be directly to the
military or through prime contractors to the military. The Company is not aware
of any programs in which it participates that are specifically targeted for
termination or curtailment other than the previously discussed NST program. The
Company's products are utilized on many different U.S. Government programs which
reduces the adverse impact of cancelling a single specific program. However,
changes in future U.S. defense spending levels could impact the Company's future
sales volume.
Sales in the Telecommunications segment decreased 17% to $8.2 million as
compared to $9.8 million for the same period in 1993. The decrease in sales was
attributable to lower test equipment and line treatment revenues which were
adversely affected by lower orders due to cost cutting initiatives from the
regional Bell operating companies and foreign telecommunications companies. The
Company believes this decline is temporary and that order activity will increase
in 1995 as several new products nearing their completion of the development and
test phases become available. The Company has received favorable reviews on
several new line treatment products and in February 1995 it received its first
order in the amount of $2.0 million for a new line treatment product.
The gross margin percentage for 1994 was 18.8% as compared with 33.9% in 1993.
The gross margin percentage was adversely affected by an unfavorable mix of high
and low margin product deliveries, reduced shipping volume, continuing
inefficiencies as the Company transitions its military products manufacturing
operations from Hauppauge, New York to Longmont, Colorado and a $2.2 million
first quarter charge associated with cost overruns on two new printer products.
Lower margins are expected to continue at least during the first half of 1995 as
the Company continues its consolidation and repositioning efforts.
Selling expense for 1994 was $7.5 million as compared with $7.4 million in 1993.
This slight increase is attributable to the inclusion of the selling expenses
associated with Codar Technology which was acquired in October 1993 partially
offset by savings associated with the previously mentioned restructuring and
lower selling expenses due to lower sales volume.
General and administrative expenses for 1994 were $6.3 million as compared with
$5.8 million in 1993. This increase is primarily attributable to increased one-
time charges associated with the Company's previously mentioned restructuring
and the cost of running the Hauppauge facility for the first ten months of 1994
substantially below capacity. In 1995 the general administrative expenses should
be lower, as the full annual impact of the consolidation cost savings will be
realized.
Company-sponsored research and development expenditures in 1994 were $3.2
million as compared with $5.0 million in 1993. This decrease is attributable to
savings associated with the previously mentioned restructuring and the change in
mix between Company-sponsored research and development and customer-funded
research and development. A key component to the Electronic Systems' segment
strategy is to focus on system integration business. Although systems
integration work by its nature will require significant engineering content,
such costs must be classified as contract costs and charged to cost of sales
as opposed to Company-sponsored research and development (IR&D). It is
anticipated that discretionary R&D expenditures will be curtailed in 1995 as the
Company attempts to conserve cash.
The Company had an operating loss of $14.6 million in 1994 as compared with
operating earnings of $9.0 million in 1993. The operating loss is primarily
attributable to lower sales volume and margins, the previously mentioned
restructuring and continuing inefficiencies as the Company transitions its
military products manufacturing operations from Hauppauge, New York to Longmont,
Colorado.
Interest expense, net of interest income, increased by $0.7 million to $1.4
million in 1994. This increase is attributable to increased long-term debt,
short-term bank borrowings and an increase in the prime rate. In October 1993
the Company increased its long-term debt by $7.5 million in conjunction with the
acquisition of Codar Technology.
The effective income tax recovery rate is below the combined statutory federal
and state rates for 1994. The Company was unable to recognize a tax benefit to
its losses greater than the amount it could carry back due to uncertainties as
to whether or not a future benefit will be realized. Any earnings realized in
1995 will not be taxed at the statutory rate.
The Company had a net loss of $11.6 million in 1994 as compared with net
earnings of $5.5 million in 1993. Earnings (loss) per share were ($1.69) as
compared with $0.80 in 1993, based on a weighted average of 6.9 million and 6.8
million shares outstanding, respectively. The 1993 earnings per share and shares
outstanding figures have been adjusted to reflect the distribution of a 4% stock
dividend on March 14, 1994 to shareholders of record on February 25, 1994.
1993 Compared with 1992
- -----------------------
Sales for 1993 were $81.0 million, a 20% increase when compared with sales of
$67.3 million in 1992. The nature of the Company's business is such that year
to year changes in sales levels are predominantly due to changes in shipping
volume or product mix rather than changing sales prices.
Sales in the Electronic Systems segment (net of intercompany eliminations)
increased 15% to $71.2 million from $61.8 million in 1992. The increase in sales
was primarily attributable to the inclusion of revenue from the Company's recent
acquisitions, Lynwood Scientific Developments, Ltd. and Codar Technology, Inc.
Sales from these two new companies along with a modest increase in systems
integration sales more than offset the impact of the sale of the Electronics
Instrument product line in September 1992 and lower component sales. The
decrease in component revenue was principally due to a decline in shipments of
the Company's two traditional products, the USH and the NST. Both products have
been a significant portion of the Company's sales over the past four years but
the contracts for both are near completion. In 1993, NST and USH sales accounted
for 37% of total revenue compared to 58% in 1992.
Although the Company's acquisitions have allowed it to reduce its dependency on
the United States defense budget, the Company still expects approximately 50% of
1994 sales to be directly to the military or through prime contractors to the
military. The Company is not aware of any programs in which it participates that
are specifically targeted for termination or curtailment other than the
previously discussed USH and NST programs. The Company's products are utilized
on many different U.S. Government programs. However, changed U.S. defense
spending levels could impact the Company's future sales volume.
Sales in the Telecommunications segment were $9.8 million in 1993 vs. $5.5
million in 1992. This increase is due to the inclusion of a full twelve months
of operations of Wilcom in 1993 as compared with five months in 1992. Sales in
the Telecommunications segment were adversely affected by lower orders in the
fourth quarter of 1993, due to cost cutting measures announced by several of the
regional Bell operating companies.
The gross margin percentage in 1993 increased to 33.9% from 32.4% in 1992. The
increase in gross margin was primarily attributable to a favorable mix of high
and low margin product deliveries as well as continued improvements in operating
efficiencies. The Company continually strives to reduce its costs and increase
its operating efficiencies. It is probable that the Company will not be able to
sustain this gross margin percentage in 1994 due to the completion of the NST
and USH contracts which historically had a higher gross margin percentage than
the other products the Company manufactures.
Selling expenses for 1993 were $7.4 million as compared with $5.8 million for
1992. This increase is attributable to the recent acquisitions and the opening
of an international sales office in late 1992, partially offset by the selling
expenses eliminated as a result of the sale of the Electronics Instrument
product line in September 1992.
General and administrative expenses for 1993 were $5.8 million as compared with
$3.8 million in 1992. This increase is primarily attributable to the recent
acquisitions and increased personnel and related costs associated with the
strengthening of the internal management organization.
Company sponsored research and development expenditures for 1993 were $5.0
million as compared with $3.7 million in 1992. This increase is primarily
attributable to the recent acquisitions and reflects the Company's intention to
continue to expand its business base internally as well as through acquisitions.
Operating earnings for 1993 increased 7% to $9.0 million as compared with $8.4
million in 1992. The increase in operating earnings was a result of increased
sales volume and improved margins offset by increases in selling, general and
administrative expense, research and development expense and amortization of
excess of cost over fair value of net assets acquired.
Interest expense, net of interest income, increased by $0.3 million to $0.7
million in 1993. The increase in net interest expense is attributable to
increased debt and reduced short term investments due to the recent
acquisitions.
The effective income tax rate for 1993 was slightly lower than the statutory
rate due to a favorable income tax settlement. The 1992 effective rate
approximated the combined statutory federal and state rates.
Net earnings for the year 1993 were $5.5 million, an 8% increase compared with
$5.1 million in 1992. Included in net earnings was approximately $0.4 million
and $0.1 million for amortization of the excess of cost over the fair value of
net assets acquired for 1993 and 1992, respectively. Earnings per share in 1993
were $0.80, the same as in 1992, based on a weighted average of 6.8 million and
6.3 million shares outstanding, respectively. The 1992 and 1993 earnings per
share and shares outstanding figures have been adjusted to reflect the
distribution of a 4% stock dividend on March 26, 1993 to shareholders of record
on February 26, 1993, three for two stock split effected on September 17, 1993
for shareholders of record on August 16, 1993 and a 4% stock dividend on March
24, 1994 to shareholders of record on February 25, 1994.
Liquidity and Capital Resources
- -------------------------------
The Company reported a net loss of $11.6 million in 1994, and incurred a
negative cash flow of $0.03 million from operations. Company operations have
historically provided a positive cash flow. However, the Company is currently
experiencing financial difficulties. At December 31, 1994, the Company was in
violation of certain covenants of its term loan agreements. Such violations were
subsequently waived by the applicable lending institutions.
At December 1, 1994 the Company's long-term secured debt totaled $16.3 million
of which current installments were $2.2 million. This compares to $14.9 million
at December 31, 1993 of which current installments were $4.2 million. The
Company's long-term borrowings, secured by plant and equipment, bear interest at
rates ranging from 70% of prime (8.5% at December 31, 1994) to 12.43%. With the
acquisition of Lynwood, the Company assumed a 5 year business term loan in the
amount of $0.3 million, with interest at 2% above the U.K. base rate (6.25% at
December 31, 1994).
On April 7, 1995 the Company entered into a revolving credit agreement with its
two existing primary lending institutions. Under the terms of the new agreement,
the existing term debt and lines of credit were converted into a revolving
credit arrangement in exchange for a cash payment of $100,000 and the issuance
of 250,000 shares of the Company's common stock. The new agreement requires
quarterly payments, commencing in September 1995, of $875,000. The agreement,
unless extended, expires on January 15, 1996 at which time the remaining
principal balance of $13,425,000 is due. The agreement allows for an extended
maturity date to April 15, 1996 under certain conditions.
The repayment of the amount due will be dependent upon the Company's ability to
either obtain alternate financing or to restructure the remaining balance due.
The Company is considering several alternatives to achieve this, including the
sale of common or preferred stock, issuance of convertible debt, a business
combination, the sale of all or a portion of the Company and establishment of a
borrowing relationship with other lending institutions. The Company has engaged
Needham & Company, Inc. as its investment advisor to assist in this process. The
ability of the Company to accomplish this at favorable terms will be somewhat
dependent upon the Company's operating results in 1995. The restructuring
actions taken in 1994 have significantly reduced the expense structure of the
Company. However, it is not certain that the Company will be able to achieve the
revenue level necessary to return to profitability.
At the present time, the Company is a net user of cash. The Company is taking
action to minimize its cash outlays by deferring or eliminating discretionary
expenses and capital asset purchases. In addition, the Company is working with
several consultants who are assisting in the correction of shipment problems
that currently exist at the Military Systems Group. The Company must increase
its shipment rate to an acceptable level within the near future, or obtain
additional financing, in order to meet its cash flow requirements during 1995.
Cash and cash equivalents totaled $1.7 million at December 31, 1994 and 1993.
Cash used in operating activities amounted to $0.03 million as compared to $1.1
million in 1994 and 1993, respectively. In January 1995, the Company received
an initial tax refund of $4.0 million.
Cash of $0.07 million was used in investing activities during 1994. The major
components were comprised of $0.09 million for the purchase of property, plant
and equipment and $1.1 million in proceeds from the sale of assets. Management
expects total 1995 capital expenditures to be slightly higher than the 1994
expenditures. However, as previously indicated, the Company expects to receive
approximately $2.3 million from the sale of real estate over the next two years,
which will be applied against existing debt under the revolving credit
agreement.
During 1994, the Company made debt payments of $4.8 million and payments of
notes payable of $5.3 million and received proceeds from issuances of notes
payable of $8.6 million.
Inflation
- ---------
The Company's financial statements are prepared in accordance with traditional
historical accounting systems, and therefore do not reflect the effect of
inflation. The impact of changing prices on the financial statements is not
considered to be significant.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Page
----
Independent Auditors' Report F-2
Consolidated Balance Sheets at December 31, 1994 and F-3
1993
Consolidated Statements of Operations - Years ended F-4
December 31, 1994, 1993 and 1992
Consolidated Statements of Shareholders' Equity - F-5
Years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows - Years ended F-6
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements F-7
Consolidated Financial Statement Schedules:
II - Valuation and Qualifying Accounts F-30
Schedules not listed above have been omitted either because they are not
applicable or the required information is shown in the consolidated financial
statements or notes thereto.
F-1
KPMG Peat Marwick LLP
Certified Public Accountants
One Jericho Plaza
Jericho, NY 11753
Independent Auditors' Report
----------------------------
The Stockholders and
Board of Directors
NAI Technologies, Inc.:
We have audited the accompanying consolidated financial statements of NAI
Technologies, Inc. (formerly North Atlantic Industries, Inc.) and subsidiaries
as listed in the accompanying index. In connection with our audit of the
consolidated financial statements, we have also audited the financial statement
schedule as listed in the accompanying index. These consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of NAI Technologies,
Inc. and subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1994 in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
As discussed in Note 10 to the accompanying consolidated financial statements,
the Company was not in compliance with its bank debt covenants at December 31,
1994. Accordingly, on April 12, 1995, the Company entered into a new secured
revolving credit agreement with its lenders. The new secured revolving credit
agreement expires in early 1996 at which time the Company will be required to
repay all outstanding amounts due. The Company is considering several
alternatives to meet this requirement, including the sale of common or preferred
stock, issuance of convertible debt, a business combination, the sale of all or
a portion of the Company or borrowing from other institutions.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1993 to adopt the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."
KPMG PEAT MARWICK LLP
April 13, 1995
Jericho, New York
F-2
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31,
(in thousands) 1994 1993
- -------------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 1,658 $ 1,717
Accounts receivable, net 12,508 15,042
Income taxes receivable 4,732 862
Inventories, net 14,052 16,962
Deferred tax asset 378 962
Other current assets 871 945
- -------------------------------------------------------------------------------
Total current assets 34,199 36,490
- -------------------------------------------------------------------------------
Property, plant and equipment, net 7,657 11,864
Excess of cost over fair value of net assets acquired, net 10,865 11,295
Other assets 999 1,066
- -------------------------------------------------------------------------------
Total assets $53,720 $60,715
===============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 127 $ 2,774
Current installments of long-term debt 2,179 4,149
Accounts payable 7,484 4,684
Accrued payroll and commissions 535 1,056
Other accrued expenses 6,435 4,703
Income taxes payable 774 19
- -------------------------------------------------------------------------------
Total current liabilities 17,534 17,385
- -------------------------------------------------------------------------------
Notes payable 6,000 -
Long-term debt 7,990 10,797
Other accrued expenses 1,522 1,318
Deferred income taxes 378 622
- -------------------------------------------------------------------------------
Total liabilities 33,424 30,122
- -------------------------------------------------------------------------------
Commitments and contingent liabilities
- -------------------------------------------------------------------------------
Shareholders' Equity:
Capital Stock:
Preferred stock, no par value, 2,000,000
shares authorized and unissued - -
Common stock, $.10 par value, 10,000,000
shares authorized; shares issued: 7,174,592
in 1994 and 6,770,654 (as adjusted) in 1993 717 651
Capital in excess of par value 14,718 12,084
Foreign currency translation adjustment 107 (54)
Retained earnings 4,754 17,912
- -------------------------------------------------------------------------------
Total shareholders' equity 20,296 30,593
- -------------------------------------------------------------------------------
Total liabilities and shareholders' equity $53,720 $60,715
===============================================================================
The accompanying notes to consolidated financial statements are
an integral part of these statements.
F-3
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31,
(in thousands except per share amounts) 1994 1993 1992
- -------------------------------------------------------------------------------
Net sales $54,520 $81,024 $67,315
- -------------------------------------------------------------------------------
Cost of sales 44,254 53,526 45,492
- -------------------------------------------------------------------------------
Gross margin 10,266 27,498 21,823
- -------------------------------------------------------------------------------
Selling expense 7,490 7,351 5,820
General and administrative expense 6,313 5,794 3,834
Research and development 3,214 5,020 3,661
Restructuring expense 7,321 - -
Other 517 373 101
- -------------------------------------------------------------------------------
Total expenses 24,855 18,538 13,416
- -------------------------------------------------------------------------------
Operating earnings (loss) (14,589) 8,960 8,407
- -------------------------------------------------------------------------------
Non-operating income (expense)
Interest income 83 121 183
Interest expense (1,477) (786) (619)
- -------------------------------------------------------------------------------
(1,394) (665) (436)
- -------------------------------------------------------------------------------
Earnings (loss) before income taxes (15,983) 8,295 7,971
(Recovery of) provision for income taxes (4,392) 2,840 2,920
- -------------------------------------------------------------------------------
Net earnings (loss) ($11,591) $5,455 $ 5,051
- -------------------------------------------------------------------------------
===============================================================================
Earnings (loss) per common share ($1.69) $0.80 $ 0.80
===============================================================================
The accompanying notes to consolidated financial statements are
an integral part of these statements.
F-4
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
For the three years ended December 31, 1994
Capital Total
Common in excess Deferred Note Translation Retained shareholders'
(in thousands) stock of par compensation receivable adjustment earnings equity
- -----------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1991 $354 $7,724 ($27) - - $10,846 $18,897
Net earnings - - - - - 5,051 5,051
Common stock acquired and retired (3) (300) - - - - (303)
Forfeiture of non-qualified stock options - (37) 37 - - - -
4% common stock dividend 14 1,158 - - - (1,172) -
Amortization of deferred compensation
for grants of stock options - - (10) - - - (10)
Exercise of employee stock options,
net of shares tendered 19 283 - (26) - - 276
-------------------------------------------------------------------------------
Balance December 31, 1992 384 8,828 - (26) - 14,725 23,911
Net earnings - - - - - 5,455 5,455
Common stock acquired and retired (2) (336) - - - - (338)
4% common stock dividend 16 2,252 - - - (2,268) -
Three for two common stock split 214 (214) - - - - -
Exercise of common stock warrants 8 (8) - - - - -
Foreign currency translation adjustment - - - - (54) - (54)
Common stock issued in connection
with the acquisition of Lynwood 20 1,100 - - - - 1,120
Tax benefit from exercise of employee
stock options - 220 - - - - 220
Exercise of employee stock options and
stock purchase plan, net of shares tendered 11 254 - 14 - - 279
-------------------------------------------------------------------------------
Balance December 31, 1993 651 12,096 - (12) (54) 17,912 30,593
Net earnings (loss) - - - - - (11,591) (11,591)
4% common stock dividend 26 1,541 - - - (1,567) -
Foreign currency translation adjustment - - - - 161 - 161
Sale of common stock 36 964 - - - - 1,000
Tax benefit from exercise of employee
stock options - 23 - - - - 23
Exercise of employee stock options and
stock purchase plan 4 106 - - - - 110
-------------------------------------------------------------------------------
Balance December 31, 1994 $717 $14,730 $- ($12) $107 $4,754 $20,296
===============================================================================
The accompanying notes to consolidated financial statements are
an integral part of these statements.
F-5
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31,
(in thousands) 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities:
Net earnings (loss) ($11,591) $ 5,455 $5,051
Adjustments to reconcile net earnings (loss) to cash (used in) provided
by operating activities:
Depreciation and amortization 2,435 2,508 1,667
Loss on disposal of property, plant, & equipment 2,298 - -
Tax benefit from exercise of employee stock options 23 220 -
Changes in assets and liabilities, excluding effects from acquisitions
and foreign currency adjustments:
Accounts receivable 2,534 (1,374) 1,883
Inventories 2,910 (2,125) 2,005
Accounts payable and other accrued expenses 4,215 (4,885) 331
Income taxes payable (2,775) (1,199) (373)
Other, net (82) 336 (61)
- -----------------------------------------------------------------------------------------------------------
Net cash flow (used in) provided by operating activities (33) (1,064) 10,503
- -----------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Payment for purchase of KMS Advanced Products - - (1,709)
Contingent payment on purchase of KMS Advanced Products (189) (227) (115)
Payment for purchase of Lynwood, net of cash acquired - (3,986) -
Payment for purchase of Codar, net of cash acquired - (4,592) -
Payment for purchase of Wilcom - - (6,210)
Purchase of property, plant and equipment (935) (1,484) (1,928)
Proceeds from sale of property, plant and equipment 1,053 70 26
- -----------------------------------------------------------------------------------------------------------
Net cash used in investing activities (71) (10,219) (9,936)
- -----------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Issuances of notes payable 8,636 250 -
Payments of notes payable (5,283) - -
Proceeds from long-term borrowings - 7,500 5,000
Payments of long-term debt (4,777) (2,748) (2,228)
Receipts on notes receivable 223 433 44
Proceeds from exercise of stock options and stock purchase plan 110 265 276
Proceeds from sale of common stock 1,000 - -
Purchase and retirement of common stock - (338) (303)
- -----------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (91) 5,362 2,789
- -----------------------------------------------------------------------------------------------------------
Effect of foreign currency exchange rates on cash 136 (35) -
- -----------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (59) (5,956) 3,356
Cash and cash equivalents at beginning of year 1,717 7,673 4,317
- -----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 1,658 $ 1,717 $7,673
===========================================================================================================
Supplemental disclosure of cash flow information:
Cash paid for (refunded):
Interest $ 1,462 $ 771 $ 622
Income taxes $ (773) $ 3,859 $3,292
Non-cash investing and financing activities:
Note receivable from sale of inventory and machinery and equipment - - $ 686
Common stock issued in Lynwood acquisition - $ 1,120 -
Notes payable issued in Codar acquisition - $ 2,524 -
===========================================================================================================
The accompanying notes to consolidated financial statements are
an integral part of these statements.
F-6
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
1. SUMMARY OF ACCOUNTING POLICIES
Principles of Consolidation: The accompanying consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany transactions and balances have
been eliminated in consolidation.
Foreign Currency Translation: The financial statements and transactions
of the Company's foreign subsidiary are maintained in its functional
currency. For consolidation purposes, assets and liabilities of the
Company's U.K. subsidiary have been translated at rates of exchange at the
end of the period. Revenues and expenses have been translated at the
weighted average rates of exchange in effect during each period.
Translation gains and losses are accumulated as a separate component of
shareholders' equity. Gains and losses resulting from transactions
denominated in a currency other than the entity's functional currency are
included in other operating expense in the consolidated statements of
operations. There were no significant gains or losses from foreign
currency transactions in the years presented.
Financial Statement Reclassification: Certain reclassifications have been
made to prior years' financial statements to conform them to the 1994
presentation.
Cash equivalents: The Company classifies investments that are readily
convertible into cash, and have original maturities of three months or
less, as cash equivalents.
Inventories: Inventories are valued at the lower of cost or market on a
first-in, first-out (FIFO) basis. Work in process is stated at total cost
incurred, reduced by estimated costs of units delivered, but not in excess
of net realizable value.
Property, Plant and Equipment: Property, plant and equipment are recorded
at historical cost. Depreciation and amortization have been computed
using the straight-line method over the estimated useful lives of the
assets: equipment and furniture and fixtures, generally -- 3 to 10 years,
and buildings -- 33 years. Leasehold improvements are amortized over the
shorter of the estimated useful life of the improvements or the lease
term.
F-7
Excess of Cost over Fair Value of Net Assets Acquired: The excess of cost
over fair value of net assets acquired (goodwill) is being amortized on a
straight-line basis over a period of twenty years. The Company reviews
the significant assumptions which underlie the twenty year amortization
period on a quarterly basis and will shorten the amortization period if
considered necessary. The Company assesses the recoverability of this
intangible asset by determining whether the amortization of the goodwill
balance over its remaining life can be recovered through projected
undiscounted future results. Accumulated amortization was approximately
$1,100,000 and $480,000 at December 31, 1994 and 1993, respectively. The
amortization expense associated with these amounts is included in other
operating expense in the consolidated statements of earnings and amounted
to $620,000, $359,000 and $91,000 in 1994, 1993 and 1992, respectively.
Revenue Recognition: Sales are recorded when title passes (either at
shipment or customer acceptance). In some limited cases, a sale may be
recorded upon the completion of a specific contractual task such as the
issuance of a test report. Cost of goods sold is based upon average
estimated cost per unit. Sales and profits on cost reimbursable contracts
are recognized as costs are incurred. Sales and estimated profits under
long-term contracts are recorded under the percentage of completion method
of accounting using the cost to cost method. Costs include direct
engineering and manufacturing costs, applicable overhead costs and special
tooling and test equipment. All selling, general and administrative
expenses are charged to operations as incurred. Warranty expense is
accrued based upon the historical relationship between sales and warranty
claims. Estimated losses are provided for in full when identified.
Income Taxes: Effective January 1, 1993 the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes". This statement requires the use of the asset and liability
approach for financial accounting and reporting of income taxes. Under
this method, deferred tax assets and liabilities are recognized based on
the temporary differences between the carrying amounts of assets and
liabilities for financial statement purposes and income tax purposes using
enacted rates expected to be in effect when such amounts are realized or
settled. The Company previously accounted for income taxes in conformity
with SFAS No. 96. The adoption of this statement did not have a material
effect on the Company's 1993 financial statements and prior years'
financial statements were not restated.
Stock Dividends: On March 14, 1994 the Company issued 261,139 shares of
common stock in connection with a 4% stock dividend to shareholders of
record on February 25, 1994. On March 26, 1993 the Company issued 252,784
shares (as adjusted for stock dividend and stock split) of common stock in
connection with a 4% stock dividend to shareholders of record on February
26, 1993. On March 27, 1992 the Company issued 234,067 shares (as
adjusted for stock dividends and stock split) of common stock in
connection with a 4% stock dividend to shareholders of record on February
28, 1992. All references to earnings per share, stock option plan data
and common shares have been adjusted to give effect to the stock
dividends. The stock dividends were accounted for by transferring
F-8
approximately $1,567,000, $2,268,000 and $1,172,000, respectively, from
retained earnings to common stock and capital in excess of par value.
Stock Split: On September 17, 1993 the Company issued 2,219,621 shares
(as adjusted for stock dividend) of common stock in connection with a
three for two stock split payable in the form of a 50% stock dividend to
shareholders of record on August 16, 1993. The stock split was accounted
for by transferring approximately $214,000 from additional paid in capital
to common stock. All references to earnings per share, stock option plan
data and common shares have been adjusted to give effect to the stock
split.
Earnings (loss) Per Share: Earnings (loss) per share is computed based
upon the weighted average number of common shares and common share
equivalents outstanding. Common share equivalents consist of dilutive
common stock options, common stock subscribed to under the Employee Stock
Purchase Plan and common stock warrants, net of assumed buy-back. The
computation of fully diluted earnings (loss) per share does not materially
differ from that presented in the consolidated statements of operations.
Earnings (loss) per share amounts are based on 6,850,000, 6,843,000 and
6,309,000 average shares outstanding (including common stock equivalents)
for 1994, 1993 and 1992, respectively.
2. ACQUISITIONS
On October 14, 1993, the Company acquired Codar Technology, Inc. via a
merger of a wholly-owned subsidiary with and into Codar for approximately
$6.5 million consisting of cash and notes payable. Additional costs
incurred pursuant to the transaction resulted in a final total acquisition
cost of approximately $7.6 million. The Company increased its term loan
borrowings by $7.5 million in conjunction with the acquisition. The
excess of the total acquisition cost over the fair value of net assets
acquired, amounting to approximately $5.4 million, is being amortized on
a straight-line basis over 20 years.
On January 13, 1993, the Company acquired all of the outstanding common
stock of Lynwood Scientific Developments Limited (Lynwood), a U.K.
company, for approximately $4 million in cash, 330,497 shares (adjusted
for stock dividends and stock split) of common stock and warrants to
purchase 39,000 shares of common stock at a price of $8.89 per share. The
common stock was valued at approximately $1.1 million based on an
appraisal by an investment company. The cash portion of the purchase
price was paid from existing cash balances. The excess of the total
acquisition cost over the fair value of net assets acquired, amounting to
approximately $3.7 million, is being amortized on a straight-line basis
over 20 years.
F-9
On August 7, 1992, the Company acquired certain assets and assumed certain
liabilities and obligations of the Wilcom Division of Superior TeleTec
Transmission Products, Inc. for approximately $6.0 million in cash and
assumed liabilities of approximately $1.0 million. Additional costs
incurred pursuant to the transaction resulted in a total acquisition cost
of approximately $8.0 million. The acquisition cost was funded by
existing cash balances and $5.0 million of additional borrowings under the
Company's long-term credit agreement with its two principal banks. The
excess of cost over fair value of net assets acquired, amounting to
approximately $1.3 million, is being amortized on a straight-line basis
over 20 years.
On May 6, 1992, the Company acquired certain assets of KMS Advanced
Products, Inc., a wholly owned subsidiary of KMS Industries, Inc., for
approximately $1.7 million in cash and assumed liabilities of
approximately $0.4 million. Additional costs pursuant to the transaction
resulted in a total acquisition cost of approximately $2.5 million. The
Company may also be required to pay an additional $1 million based on the
cumulative net sales of the purchased business through May 1995. Through
December 1994 the Company has paid approximately $0.5 million, based on
sales through September 1994. The purchase price was paid from the
Company's cash balances. The excess of cost over fair value of net assets
acquired, amounting to approximately $0.8 million, is being amortized on
a straight-line basis over 20 years.
Each of the acquisitions was accounted for as a purchase and the operating
results of each are included in the consolidated statements of operations
from the date of acquisition.
The following unaudited pro-forma consolidated results of operations
assume that these four acquisitions occurred on January 1, 1992 and
reflect the historical operations of the purchased businesses adjusted for
increased interest expense as a result of borrowings, reduced interest
income as a result of cash utilization and increased depreciation and
amortization net of applicable income taxes resulting from the
acquisitions.
(in thousands, except per share data) 1993 1992
- --------------------------------------------------------------------
Net sales $92,870 $110,661
Net earnings $ 3,894 $ 4,922
Earnings per share $ 0.57 $ 0.74
====================================================================
The pro-forma results of operations are not necessarily indicative of the
actual results of operations that would have occurred had the purchases
been made at the beginning of the period, or of results which may occur in
the future.
F-10
3. NATURE OF ORGANIZATION
NAI Technologies is a diversified international electronics company with
strengths in both advanced computer system design and telecommunications.
It is a leading provider of rugged computers, peripherals and integrated
systems for military, government and commercial applications. In
addition, NAI Technologies holds a strong market position in transmission
enhancement products and rugged, hand-held test equipment for analog,
digital and fiber-optic communications and data-interchange networks. The
Company's diverse customer base includes commercial markets requiring
rugged, mobile computer and communications systems, U.S. and foreign armed
services, intelligence agencies, the regional Bell operating companies and
major worldwide independent telephone companies. Net sales to the U.S.
Government for the years ended December 31, 1994, 1993 and 1992 were
$21,819,000, $41,559,000 and $44,615,000, respectively. With the
exception of the U.S. Government, no single customer accounted for more
than 10% of annual sales in any of the years presented.
4. ACCOUNTS RECEIVABLE
Accounts receivable at December 31 consisted of the following:
(in thousands) 1994 1993
- -----------------------------------------------------------------------
Amounts receivable from United States Government
Amounts billed $ 4,008 $ 4,700
Unbilled contract receivables 1,629 971
- -----------------------------------------------------------------------
5,637 5,671
Amounts receivable from others
Amounts billed 6,728 8,959
Unbilled contract receivables 276 584
- -----------------------------------------------------------------------
7,004 9,543
- -----------------------------------------------------------------------
12,641 15,214
Allowance for doubtful accounts (133) (172)
- -----------------------------------------------------------------------
$12,508 $15,042
=======================================================================
Unbilled contract receivables represent revenue earned but not yet billed
to customers at year end. The Company expects that substantially all such
amounts will be billed and collected within one year. The Company has one
contract which, under its terms, will result in a maximum unbilled
receivable of approximately $1,400,000 in late 1996 or early 1997. This
amount is expected to be fully collected in 1997 as the Company begins to
make deliveries under this contract.
F-11
5. INVENTORIES
Inventories at December 31, summarized by major classification, were as
follows:
(in thousands) 1994 1993
- ----------------------------------------------------------------------
Raw materials and components $ 9,698 $ 9,206
Work-in-process 3,849 5,691
Finished goods 662 2,065
Unliquidated Progress Payments (157) -
- ----------------------------------------------------------------------
$14,052 $16,962
======================================================================
6. OTHER CURRENT ASSETS
Other current assets at December 31 consisted of the following:
(in thousands) 1994 1993
- ----------------------------------------------------------------------
Prepaid insurance $ 482 $ 351
Notes receivable - 178
Other prepaid expenses 389 416
- ----------------------------------------------------------------------
$ 871 $ 945
======================================================================
7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31 consisted of the following:
(in thousands) 1994 1993
- ----------------------------------------------------------------------
Land $ 1,612 $ 1,813
Buildings 3,302 6,209
Machinery and equipment 8,185 10,431
Furniture and fixtures 635 1,693
Leasehold improvements 279 390
- ----------------------------------------------------------------------
14,013 20,536
Less accumulated depreciation and
amortization (6,356) ( 8,672)
- ----------------------------------------------------------------------
$ 7,657 $11,864
======================================================================
F-12
8. RESTRUCTURING
On April 8, 1994 the Company announced that as part of its transition from
the design and manufacture of computer peripherals toward both producing
and integrating computer systems, it would close its Hauppauge, New York
based Military Products Division and transfer the division's operations to
its Codar facility in Longmont, Colorado. As a direct result of the
above, during the first quarter of 1994 the Company recorded a $9,500,000
charge, of which $7,300,000 was classified as a restructuring charge and
$2,200,000 was charged to cost of sales. The major components of the
restructuring charge relate to employee expense ($2,731,000), disposition
of assets ($2,000,000), inventory write downs on discontinued products
($1,120,000), idle facility costs ($590,000) and lease termination costs
($370,000). The major components of the $2.2 million charge pertain to
inventory write-offs related mostly to excess start-up costs associated
with the NST-II production. The transfer of operations to Colorado was
substantially completed by the fourth quarter of 1994.
At December 31, 1994 there was a remaining liability of $981,000,
comprised principally of remaining employee severance ($448,000) which is
being paid weekly, idle facility expense ($248,000) and lease termination
costs ($205,000).
9. OTHER ACCRUED EXPENSES - CURRENT
Other accrued expenses - current at December 31, 1994 consisted of the
following:
(in thousands) 1994 1993
- ------------------------------------------------------------------------
Employee benefits $1,599 $1,664
Restructuring 981 -
Insurance payable 305 197
Purchase liabilities 682 942
Warranty 348 520
Deferred revenue 763 288
Other $1,757 1,092
- ------------------------------------------------------------------------
$6,435 $4,703
========================================================================
F-13
10. DEBT
Long term debt at December 31 consisted of the following:
(in thousands) 1994 1993
- ------------------------------------------------------------------------
Industrial Development Bond, payable in
monthly principal installments of
$4,775 through February 1999
with interest at 70% of prime (8.5% at
December 31, 1994) $ 234 $ 291
Secured term loan, payable in
quarterly installments of $875
with interest at prime plus 1/2%. 9,175 13,375
Midland Bank PLC, secured 5 year
business term loan, monthly principal
installments of 'L'7,257 (approximately
$11,000) through July 1995 with
interest at 2% above the U.K. base rate
(6.25% at December 31, 1994) 80 204
Notes payable (generally secured by
specified machinery and equipment)
with interest at rates ranging from
8.875% to 12.43% 680 1,076
- ------------------------------------------------------------------------
10,169 14,946
Less current installments 2,179 4,149
- ------------------------------------------------------------------------
$ 7,990 $10,797
========================================================================
Aggregate principal payments for the five years subsequent to December 31,
1994 are as follows:
1995 $ 2,179,000
1996 13,662,000
1997 215,000
1998 107,000
1999 6,000
-----------
$16,169,000
===========
F-14
At December 31, 1994, the Company was not in compliance with certain
covenants under its secured term loan agreement. Such violations were
subsequently waived by the Company's lenders.
During 1994, the Company had secured lines of credit with its two
principal lending institutions amounting to $6,000,000 which bear interest
at the prime rate (8.5% at December 31, 1994). At December 31, 1994
borrowing under these lines amounted to $6,000,000 and are classified as
long-term notes payable in the accompanying balance sheet. There were no
borrowings under these lines in 1993 and 1992. The maximum month-end
amount outstanding under these lines during the year ended December 31,
1994 was $6,000,000. The average short-term borrowings for 1994 was
$4,275,000 at a weighted average interest rate of 7.59%. The amounts due
on the lines of credit were made part of the revolving loan agreement
mentioned above.
On April 12, 1995 the Company entered into a secured revolving credit
agreement with its lenders which replaced its then existing agreements.
Under the terms of the new agreement, the existing term debt and lines of
credit which totaled $15,175,000 were converted into a revolving credit
line in exchange for a cash payment of $100,000 and the issuance of
250,000 shares of common stock (valued at approximately $478,000). The
agreement expires on January 15, 1996 at which time the Company can extend
the maturity to April 15, 1996, if certain conditions are met, or repay
all outstanding amounts due. Such payment is expected to approximate
$13,425,000 ($12,500,000 at April 15, 1996) at that time. The repayment
of the amount due will be dependent upon the Company's ability to either
obtain alternate financing or to restructure the remaining balance due.
The Company is considering several alternates to achieve this, including
the sale of common or preferred stock, issuance of convertible debt, a
business combination, the sale of all or a portion of the Company and
establishment of a borrowing arrangement with new lending institutions.
The ability of the Company to accomplish this at favorable terms will be
somewhat dependent upon the Company's results of operations in 1995. The
term loan agreement requires that the Company maintain certain minimum
levels of tangible net worth, current ratio and quick ratio. It also
limits capital expenditures and prohibits the payment of cash dividends.
The Company's U.K. subsidiary has a credit facility (sterling overdraft)
with a U.K. bank. The credit facility amounts to 'L'600,000 (approximately
$938,000) and bears interest at 2 1/4% above the U.K. base rate (6 1/4% at
December 31, 1994). This facility is renewable in April 1995. The
maximum month end borrowings under the credit facility during the years
ended December 31, 1994 and 1993 were 'L'355,000 and 'L'653,000 (approximately
$555,000 and $966,000, respectively). The average short term borrowings
for the years ended December 31, 1994 and 1993 were 'L'89,000 and 'L'254,000
(approximately $139,000 and $376,000, respectively). The weighted average
interest rate during the years ended December 31, 1994 and 1993 was 7.23%
and 8.52%, respectively.
F-15
11. OTHER ACCRUED EXPENSES - NON-CURRENT
Other Accrued Expenses - non-current at December 31 consisted of the
following:
(in thousands)
1994 1993
- ------------------------------------------------------------------------
Supplemental retirement plan $ 899 $ 706
Deferred compensation 623 612
- ------------------------------------------------------------------------
$1,522 $1,318
========================================================================
The supplemental retirement plan is described in Note 14.
In 1981, the Company entered into agreements with two former officers
which provide for the payments to each of $25,000 per year, adjusted for
the cumulative effects of inflation from inception of the agreement, over
a period of 15 years. Such deferred compensation payments commenced on
January 1, 1990. The 1995 payment to each of the former officers will be
approximately $40,000.
12. INCOME TAXES
The Company and its domestic subsidiaries file a consolidated Federal
income tax return. The provision for income taxes consisted of the
following items:
(in thousands)
1994 1993 1992
- --------------------------------------------------------------------------
Current:
Federal $(4,286) $2,407 $2,486
State - 362 510
Foreign (446) 181 -
- ---------------------------------------------------------------------------
(4,732) 2,950 2,996
- ---------------------------------------------------------------------------
Deferred:
Federal 360 (110) (76)
State - - -
Foreign (20) - -
- ----------------------------------------------------------------------------
340 (110) (76)
- ----------------------------------------------------------------------------
Total income tax
expense $(4,392) $2,840 $2,920
============================================================================
F-16
The tax effects of temporary differences that gave rise to significant
portions of the net deferred tax asset and (liability) at December 31,
1994 and 1993 are as follows:
(in thousands) 1994 1993
- ----------------------------------------------------------------------------
Deferred tax assets:
AMT credit carry forward $ 545 $ -
Restructure 333 -
Inventories 356 591
Supplemental retirement 268 172
Accrued vacation 127 275
Deferred compensation 236 232
Other 114 (308)
Valuation allowance (1,601) -
- ----------------------------------------------------------------------------
378 962
============================================================================
Deferred tax liabilities:
Plant and equipment (372) (514)
Other (6) (108)
- ----------------------------------------------------------------------------
(378) (622)
- ----------------------------------------------------------------------------
$ - $ 340
============================================================================
The Company has recorded a valuation allowance to reflect the estimated
amount of deferred tax assets which will not be realized unless the
Company is profitable in the future.
F-17
The sources of the deferred tax provision and the related tax effect
for the years ended December 31, 1994, 1993 and 1992 are as follows:
(in thousands) 1994 1993 1992
- ----------------------------------------------------------------------------
AMT credit carry forward $(545) $ - $ -
Accelerated depreciation for
tax purposes (142) (77) (68)
DISC income recognized for
tax purposes - - (49)
Decrease (increase) in inventory
reserves 235 (8) 168
Deferred compensation (4) 2 84
Supplemental retirement (96) (79) (54)
Accrued restructure costs (333) - -
Accrued vacation 148 (11) (96)
Other (524) 63 (61)
Valuation allowance 1,601 - -
- ----------------------------------------------------------------------------
$ 340 $(110) $ (76)
============================================================================
A reconciliation of the provision for income taxes computed at the Federal
statutory rate to the reported provision for income taxes is as follows:
(in thousands) 1994 1993 1992
- ----------------------------------------------------------------------------
Expected provision $(5,434) $2,820 $2,710
Increases (decreases) resulting from:
Adjustment to prior years' income
taxes (665) (264) -
State income taxes, net of
Federal benefit - 239 337
Tax benefit from exercise
of stock options - - (487)
Non-deductible expenses 167 143 93
Other (61) (98) 267
Valuation allowance 1,601 - -
- ----------------------------------------------------------------------------
Total income taxes $(4,392) $2,840 $2,920
============================================================================
At December 31, 1994 the retained earnings of the Company's foreign
subsidiary were negative. No United States income tax impact pertaining
to the foreign subsidiary has been reflected in the Company's financial
statements.
F-18
13. SHAREHOLDERS' EQUITY
The Company has two stock option plans -- the 1991 Stock Option Plan and
the 1993 Stock Option Plan for Directors -- which together cover 773,448
shares of common stock which may be issued pursuant to the plans to key
employees and directors. In addition there are 111,768 outstanding
options under the Company's 1982 Non-Qualified Stock Option Plan which
terminated in July 1992. Subsequent to July 1992, no further grants could
be made under such plan.
The 1991 Stock Option Plan covers 617,448 shares. Options under the 1991
Stock Option Plan are non-qualified stock options and are granted at the
option price fixed by the Compensation Committee of the Board of Directors
but in no event may the option price be less than the fair market value of
a share of common stock on the date of grant. Options under the 1991
Stock Option Plan have such term as is fixed by the Compensation Committee
but no option may be exercised during the first year after its date of
grant or after the expiration of ten years from its date of grant.
The 1993 Stock Option Plan for Directors covers 156,000 shares. Options
under the Directors' Plan are non-qualified stock options and are granted
in increments of 1,560 shares upon each non-employee director's election
or re-election to the Board of Directors. The option price is equal to
the fair market value of a share of common stock on the date of grant.
Options are granted for a term of ten years and become exercisable eleven
months after their date of grant. In no event may an option be exercised
after the expiration of the term of such option.
Full payment of the exercise price under all stock option plans may be
made in cash or in shares of common stock valued at the fair market value
thereof on the date of exercise. The Company's policy is that such shares
must have been acquired by the optionee at least six months prior to the
exercise date. In 1994, all payments were made in cash. In 1993 and 1992,
38,345 and 65,978 shares, respectively, were received as payment for the
exercise price of options. In 1993 and 1992, 36,288 and 53,497 shares,
respectively, were withheld from employee stock option exercises to cover
required income tax withholdings. Such shares, with a fair market value
of $338,000 and $303,000, respectively, were retired by the Company.
F-19
The following is a summary of activity related to all stock
option plans:
Number Weighted average
of option price
shares per share
------ ----------------
Outstanding at December 31, 1991 708,856 $2.09
Granted 313,978 5.40
Exercised (400,643) 1.88
Expired/cancelled (38,850) 2.29
- ----------------------------------------------------------------------------
Outstanding at December 31, 1992 583,341 4.01
Granted 237,130 8.63
Exercised (168,227) 3.02
Expired/cancelled (34,293) 4.63
- ----------------------------------------------------------------------------
Outstanding at December 31, 1993 617,951 6.20
Granted 498,998 5.28
Exercised (30,472) 2.62
Expired/cancelled (424,126) 7.60
- ----------------------------------------------------------------------------
Outstanding at December 31, 1994 662,351 $4.77
============================================================================
At December 31, 1994, 179,358 options were exercisable and 885,216 shares
were reserved for issuance under all stock option plans.
At December 31, 1994, there were 40,560 warrants outstanding which
are exercisable at $8.55 per share. The warrants expire January 13, 1996.
F-20
Under the 1992 Employee Stock Purchase Plan, which commenced July 1, 1992,
employees may subscribe to purchase shares of common stock at the lesser
of 85% of the market price on the first day of the purchase period or the
date purchased one year later. Payment for the shares is made through
payroll deductions of up to 5% of annual base pay over a one year period.
A total of 127,047 shares has been reserved for issuance under the
Employee Stock Purchase Plan and as of December 31, 1994, 35,193 shares
have been issued pursuant to the plan. A summary of employee stock
purchase transactions follows:
Number of Price
Shares Range
--------- -----
December 31, 1991 - -
Subscriptions 35,263 $4.45
Purchases - -
Cancellations (4,640) 4.45
- ----------------------------------------------------------------------------
December 31, 1992 30,623 $4.45
Subscriptions 27,253 7.02
Purchases (25,365) 4.45
Cancellations (8,971) 4.45-7.02
- ----------------------------------------------------------------------------
December 31, 1993 23,540 $7.02
Subscriptions 31,410 3.13
Purchases (9,828) 3.13
Cancellations (22,202) 3.13-7.02
- ----------------------------------------------------------------------------
December 31, 1994 22,920 $3.13
============================================================================
In 1993, warrants to purchase 148,481 (as adjusted) shares of common stock
at an exercise price of $4.14 per share were exercised. The Company and
the warrant holder agreed to issue 83,165 shares which represented 95% of
the appreciation on the warrants as measured by the fair market value of
the common stock at the date of exercise ($10.12 per share).
At December 31, 1994 there was an outstanding loan which an employee
received from the Company in the amount of approximately $12,000 for the
exercise of previously granted stock options. The note bears interest at
approximately 7% and is collateralized by the stock issued and is due in
1997. The note is presented as a reduction to shareholders' equity.
F-21
14. EMPLOYEE BENEFIT PLANS
Pension Plan
The Company has a noncontributory defined benefit pension plan covering
all eligible employees. The plan provides for normal retirement at age
65, or at least age 62 with 30 years of service, and optional early
retirement.
In December 1993, the Board of Directors approved an amendment to the
pension plan which resulted in the freezing of all future benefits under
the plan as of January 3, 1994. As a result, in 1993 the Company
recognized a gain of $362,000 which substantially offset the pension
expense for 1993. Beginning in 1994, future pension expense is expected
to be minimal.
The Company's funding policy is to make annual contributions to the extent
such contributions are actuarially determined and tax deductible. Pension
expense (income) for 1994, 1993 and 1992 was $(5,000), $367,000 and
$382,000, respectively.
The following table sets forth the funded status of the Company's defined
benefit pension plan at December 31, 1994, 1993 and 1992:
(in thousands) 1994 1993 1992
- ----------------------------------------------------------------------------
Accumulated benefit obligation,
including vested benefits of
$2,473, $3,493 and $2,143 $(2,473) $(3,715) $(2,267)
============================================================================
Projected benefit obligation (2,473) (3,715) (4,054)
Plan assets at fair value 2,515 3,727 3,614
- ----------------------------------------------------------------------------
Plan assets greater (less) than
projected benefit obligation 42 12 (440)
Unrecognized transition asset - - 255
Unrecognized net (gain) loss (24) - 203
- ----------------------------------------------------------------------------
Prepaid pension asset $ 18 $ 12 $ 18
============================================================================
Net pension expense is comprised
of the following:
Service cost $ 9 $ 373 $ 363
Interest cost 208 270 291
Return on assets 35 (175) (136)
Net amortization and deferral (257) (101) (136)
- ----------------------------------------------------------------------------
Net pension expense $ ( 5) $ 367 $ 382
============================================================================
Prepaid pension costs are included in other non-current assets. The
actuarial computations assume a discount rate on benefit obligations of
F-22
7.25% in 1994, 6% in 1993 and 8% in 1992. The expected long-term rate of
return on plan assets was 6% in 1994 and 9% in 1993 and 1992. Pension
Plan assets are primarily invested in short and intermediate term cash
investments, corporate bonds and common and preferred stock. The assumed
rate of compensation increase was 6% for 1992 and is not applicable
thereafter.
In 1991 the Company adopted the NAI Technologies Supplemental Retirement
Plan which is a non-qualified, unfunded pension plan under which the
Company will pay supplemental pension benefits to certain officers. The
expense related to this plan amounted to $281,000, $232,000 and $159,000
in 1994, 1993 and 1992, respectively. The pension cost for this plan is
based on substantially the same actuarial methods and economic assumptions
as those used for the defined benefit pension plan. Such benefits will be
paid from the Company's assets and not from retirement plan assets.
The following table sets forth the funded status and cost components of
the Company's supplemental retirement plan at December 31, 1994, 1993 and
1992:
(In thousands) 1994 1993 1992
- ----------------------------------------------------------------------------
Accumulated benefit obligation (no
benefits are vested at December 31,
1994, 1993 or 1992) $ (899) $ (706) $(376)
============================================================================
Projected benefit obligation for service
rendered to date (1,224) (1,047) (669)
Plan assets at fair value - - -
- ----------------------------------------------------------------------------
Projected benefit obligation in excess
of plan assets (1,224) (1,047) (669)
Unrecognized prior service cost 360 388 269
Unrecognized net loss 77 153 125
Adjustment required to recognize
minimum liability (112) (200) (101)
- ----------------------------------------------------------------------------
Unfunded accrued supplementary costs $ ( 899) $ (706) $(376)
============================================================================
Net pension expense is comprised
of the following:
Service cost $ 156 $ 134 $ 94
Interest cost 84 63 43
Net amortization and deferral 41 35 22
- ----------------------------------------------------------------------------
Net pension expense $ 281 $ 232 $ 159
============================================================================
The unfunded accrued supplementary costs are included in other long-term
accrued expenses.
F-23
Retirement Savings Plan
The Company has a voluntary Retirement Savings Plan for all eligible
employees which provides for basic (up to 15% of compensation) employee
contributions. In 1992 and 1993, it was the Company's policy to provide
a matching provision equal to 100% of the first 3% of the employee's basic
contribution. In December 1993, the Board of Directors approved an
amendment to the Retirement Savings Plan which increased the matching
provision to 100% of the first 3% and 50% of the second 3% of the
employee's basic contribution effective January 3, 1994. Effective August
20, 1994, the Board of Directors suspended the matching provisions. Plan
participants may invest in a combination of equity, fixed income and money
market funds. The Company's 1994, 1993 and 1992 contributions under the
plan amounted to $365,143, $386,000 and $341,000, respectively.
The plan also provides for a discretionary profit sharing contribution as
determined by the Board of Directors, which is contributed to each of the
participant's individual accounts. There was no contribution for 1994.
For the years 1993 and 1992, the Company provided $128,000 and $240,000,
respectively, for a profit sharing contribution.
15. INFORMATION BY GEOGRAPHIC AREA
Information about the Company's foreign operations and export sales is
provided in the following table. Export revenue is foreign revenue
produced by identifiable assets located in the United States while foreign
revenue is generated by identifiable assets located in foreign countries.
In order to achieve an appropriate sharing of operating results between
the Company's subsidiaries, transfers between geographic areas are
accounted for on the basis of a mark-up of manufacturing costs. Operating
earnings are total sales less operating expenses. In computing operating
earnings, none of the following items has been added or deducted: general
corporate expenses, interest income, interest expense and income taxes.
Identifiable assets are those assets of the Company that are identified
with the operations in each geographic area. Corporate assets consisted
primarily of cash and cash equivalents, property, plant and equipment and
notes receivable.
F-24
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
INFORMATION BY GEOGRAPHIC AREA
Years ended December 31,
(in thousands) 1994 1993 1992
- ------------------------------------------------------------------------------
SALES TO UNAFFILIATED CUSTOMERS:
United States $40,692 $63,661 $60,915
Export 2,723 4,637 6,400
Europe 11,105 12,726 -
-------------------------------
Total 54,520 81,024 67,315
TRANSFERS BETWEEN GEOGRAPHIC AREAS:
United States 787 1,011 2,802
Europe 11 9 -
-------------------------------
Total 798 1,020 2,802
TOTAL SALES:
United States 41,479 64,672 63,717
Export 2,723 4,637 6,400
Europe 11,116 12,735 -
Eliminations (798) (1,020) (2,802)
-------------------------------
Total $54,520 $81,024 $67,315
- ------------------------------------------------------------------------------
OPERATING EARNINGS (LOSS):
United States ($11,068) $10,617 $10,482
Europe (1,232) 798 -
-------------------------------
Subtotal (12,300) 11,415 10,482
Corporate expenses & other (2,289) (2,455) (2,075)
-------------------------------
Total operating earnings (loss) (14,589) 8,960 8,407
Net interest expense (1,394) (665) (436)
-------------------------------
Earnings (loss) before income taxes ($15,983) $8,295 $7,971
- ------------------------------------------------------------------------------
IDENTIFIABLE ASSETS:
United States $33,795 $48,226 $35,855
Europe 8,761 8,038 -
-------------------------------
Subtotal 42,556 56,264 35,855
Corporate & other * 11,164 4,451 7,849
-------------------------------
Total $53,720 $60,715 $43,704
- ------------------------------------------------------------------------------
* The increase in corporate assets is attributable to land and facility
from a closed division which is currently listed for sale and a tax
refund receivable.
F-25
16. INFORMATION BY BUSINESS SEGMENT
The Company's operations are classified into two business segments:
Electronic Systems and Telecommunications. The Electronic Systems segment
includes Codar Technology, Inc. based in Longmont, Colorado, NAI Systems
Division, Inc. in Columbia, Maryland, and Lynwood Scientific Developments
Limited in Farnham, England.
Codar Technology designs and manufactures rugged computers, computer
peripherals and memory systems for military and commercial use. NAI
Systems Division specializes in the integration of various manufacturers'
computer software and hardware to address specific customer needs.
Lynwood designs and manufactures intelligent terminals, terminal
emulators, TEMPEST computer products and high performance work stations
for commercial and government markets, primarily in the United Kingdom.
The Telecommunications Segment currently consists of Wilcom, Inc. in
Laconia, New Hampshire. Wilcom designs and manufactures a full range of
analog, digital and fiber optic test and transmission enhancement
equipment for the worldwide telecommunications market.
In order to achieve an appropriate sharing of profits between the
segments, inter-segment sales between segments are accounted for on the
basis of a mark-up of manufacturing costs. Operating earnings are total
sales less operating expenses. In computing operating earnings, none of
the following items has been added or deducted: general corporate
expenses, interest income, interest expense and income taxes.
Identifiable assets by segment are those assets of the Company that are
used in the Company's operations in each segment. Corporate assets
consist primarily of cash and cash equivalents, property, plant and
equipment and notes receivable.
F-26
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
INFORMATION BY INDUSTRY SEGMENT
Years ended December 31,
(in thousands) 1994 1993 1992
- ----------------------------------------------------------------------------
SALES TO UNAFFILIATED CUSTOMERS:
Electronic Systems $46,330 $71,202 $61,829
Telecommunications 8,190 9,822 5,486
------- ------- -------
Total 54,520 81,024 67,315
INTERSEGMENT SALES:
Electronic Systems 798 1,020 2,802
------- ------- -------
Total 798 1,020 2,802
TOTAL SALES:
Electronic Systems 47,128 72,222 64,631
Telecommunications 8,190 9,822 5,486
Eliminations (798) (1,020) (2,802)
------- ------- -------
Total $54,520 $81,024 $67,315
- ----------------------------------------------------------------------------
OPERATING EARNINGS (LOSS):
Electronic Systems ($11,788) $10,655 $9,352
Telecommunications (512) 760 1,130
------- ------- -------
Subtotal (12,300) 11,415 10,482
Corporate expenses & other (2,289) (2,455) (2,075)
------- ------- -------
Total operating earnings (loss) (14,589) 8,960 8,407
Net interest expense (1,394) (665) (436)
------- ------- -------
Earnings (loss) before income taxes ($15,983) $ 8,295 $ 7,971
- ----------------------------------------------------------------------------
IDENTIFIABLE ASSETS:
Electronic Systems $35,529 $48,198 $26,658
Telecommunications 7,027 8,066 9,197
------- ------- -------
Subtotal 42,556 56,264 35,855
Corporate & other * 11,164 4,451 7,849
------- ------- -------
Total $53,720 $60,715 $43,704
- ----------------------------------------------------------------------------
CAPITAL EXPENDITURES:
Electronic Systems $ 716 $ 1,326 $ 1,861
Telecommunications 114 146 27
------- ------- -------
Subtotal 830 1,472 1,888
Corporate & other 105 12 40
------- ------- -------
Total $ 935 $ 1,484 $ 1,928
- ----------------------------------------------------------------------------
DEPRECIATION & AMORTIZATION:
Electronic Systems $ 2,078 $ 2,202 $ 1,575
Telecommunications 320 288 86
------- ------- -------
Subtotal $ 2,398 $ 2,490 $ 1,661
Corporate & other 37 18 6
------- ------- -------
Total $ 2,435 $ 2,508 $ 1,667
- ----------------------------------------------------------------------------
* The increase in corporate assets is attributable to land and facility from a
closed division which is currently listed for sale and a tax refund receivable.
F-27
17. COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are subject to certain legal actions
which arise in the normal course of business. It is management's belief
that these actions will not have a material effect on the Company's
consolidated financial position.
The Company and its subsidiaries lease office and manufacturing
facilities, automobiles, computers and other equipment under various
non-cancellable operating leases.
Future minimum rental commitments for leases with non-cancellable terms in
excess of one year are as follows:
(in thousands) Amount
- ----------------------------------------------------------------------------
1995 $ 1,763,000
1996 1,515,000
1997 1,134,000
1998 1,065,000
1999 941,000
2000 and thereafter 4,837,000
----------
Total minimum lease payments $11,255,000
===========
With the acquisition of Lynwood, the Company assumed a 25 year operating
lease for office and manufacturing facilities. Annual future minimum
lease payments through the year 2014, which are included in the above
table, amount to approximately $316,000 per year.
Rental expense amounted to $1,170,000, $1,132,000 and $385,000 in 1994,
1993 and 1992, respectively. There was no sublease income in these
periods.
Most leases provide for additional payments of real estate taxes,
insurance and other operating expenses applicable to the property,
generally over a base period level. Total rental expense includes such
base period expenses and the additional expense payments as part of the
minimum lease payments.
In June 1994, a class action lawsuit was filed in the United States
District Court for the Eastern District of New York against the Company
and certain of its officers and directors, alleging violations of the
Federal securities laws as a result of certain misrepresentations and
omissions of fact in public statements issued by the Company during the
second half of 1993, which allegedly had the effect of artificially
inflating the trading price of the Company's shares of stock. At the
present time the plaintiff is seeking unspecified damages. Management
F-28
believes this litigation is without merit and intends to defend such
action vigorously. Management also believes that a finding of ultimate
liability against the Company, if any, whether directly or as a result of
the indemnification of officers who are also defendants would not have a
materially adverse effect on its financial position.
18. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table sets forth quarterly financial information for 1994
and 1993:
Earnings
(in thousands, Net Gross Net per
except per share data) sales margin earnings share
- ----------------------------------------------------------------------------
1994
First Quarter $15,516 $ 1,555 $ (7,340) $(1.08)
Second Quarter 14,909 4,258 (374) (0.06)
Third Quarter 12,093 2,666 (831) (0.12)
Fourth Quarter 12,002 1,787 (3,046) (0.43)
- ----------------------------------------------------------------------------
Total $54,520 $10,266 $(11,591) $(1.69)
============================================================================
1993
First Quarter $21,703 $ 7,078 $ 1,570 $ 0.23
Second Quarter 21,275 7,612 1,743 0.26
Third Quarter 19,670 6,986 1,450 0.21
Fourth Quarter 18,376 5,822 692 0.10
- ----------------------------------------------------------------------------
Total $81,024 $27,498 $ 5,455 $ 0.80
============================================================================
F-29
(in thousands of dollars) SCHEDULE II
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
- --------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- --------------------------------------------------------------------------------------------------------------
Additions
----------------------------
(1) (2)
Balance at Charged Charged to Balance
Beginning to Costs Other Accounts Deductions at End
Description of Period and Expenses Describe Describe of Period
- --------------------------------------------------------------------------------------------------------------
Allowance deducted from
asset to which it applies
Allowance for doubtful
accounts
Year ended December 31, 1994 $172 $11 $0 $50 (A) $133
Year ended December 31, 1993 130 42 99 99 (A) 172
Year ended December 31, 1992 128 61 0 59 (A) 130
Allowance for inventory
obsolescence reserve:
Year ended December 31, 1994 4,018 2,031 7 3,806 (B) 2,250
Year ended December 31, 1993 3,322 387 1,429 (C) 1,120 (B) 4,018
Year ended December 31, 1992 1,375 934 2,506 (D) 1,493 (B) 3,322
Note A - Uncollected receivables written off, net of recoveries.
Note B - Obsolete inventory scrapped, net of recoveries.
Note C - Included in the purchase of the Codar Technology Inc. - $563.
Included in the purchase price of the Lynwood Scientific Dev. Ltd.-$810.
Included in the purchase of the Tollgrade assets - $56.
Note D - Other - $3.
Included in the purchase price of the KMS division - $519.
Included in the purchase price of the Wilcom Inc. - $1,984.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- -------------------------------------------------------------------------
(a) The following documents are filed as part of this report:
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Page
----
Independent Auditors' Report F-2
Consolidated Balance Sheets at December 31, 1994 and F-3
1993
Consolidated Statements of Operations - Years ended F-4
December 31, 1994, 1993 and 1992
Consolidated Statements of Shareholders' Equity - F-5
Years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows - Years ended F-6
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements F-7
Consolidated Financial Statement Schedules:
II - Valuation and Qualifying Accounts F-30
Schedules not listed above have been omitted either because they are not
applicable or the required information is shown in the consolidated financial
statements or notes thereto.
INDEX TO EXHIBITS
Page
----
Exhibit (10)
Amended and Restated Credit Agreement
Exhibit (23)
Consent of KPMG Peat Marwick
Exhibit (27)
Financial Data Schedule
(EDGAR filing only)
F-30
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1
to Annual Report on Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized.
NAI TECHNOLOGIES, INC.
BY:/s/ Richard A. Schneider
------------------------------------
Richard A. Schneider
DATE: April 14, 1995 Executive Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to Annual Report on Form 10-K has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Robert A. Carlson President, Chief Executive April 14, 1995
- ------------------------ Officer and Director
(Robert A. Carlson) (Chief Executive Officer)
/s/ Stephen Barre Director April 14, 1995
- ------------------------
(Stephen Barre)
/s/ C. Shelton James Director April 14, 1995
- ------------------------
(C. Shelton James)
/s/ Walter Lipkin Director April 14, 1995
- ------------------------
(Walter Lipkin)
/s/ John M. May Director April 14, 1995
- ------------------------
(John M. May)
Director April 14, 1995
- ------------------------
(Robert Rosenthal)
/s/ Richard A. Schneider Executive Vice President, April 14, 1995
- ------------------------ CFO, Treasurer, Secretary
(Richard A. Schneider) and Director (Chief Financial
and Accounting Officer)
STATEMENT OF DIFFERENCES
The pound sign shall be expressed as................. 'L'
INDEX TO EXHIBITS
Page
----
Exhibit (10)
Amended and Restated Credit Agreement
Exhibit (23)
Consent of KPMG Peat Marwick
Exhibit (27)
Financial Data Schedule
(EDGAR filing only)