UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Mark one
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) of the
Securities Exchange Act of 1934
For the period ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from ______________________________ to
___________________________________
Commission File Number 0-2545
____________________
Allied Research Corporation
__________________________________________________
(Exact name of Registrant as specified in its charter)
Delaware 04-2281015
(State or other jurisdiction of (I.R.S. Employer Number)
incorporation or organization)
8000 Towers Crescent Drive, Suite 750
Vienna, Virginia 22182
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(703) 847-5268
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of September 30, 1995: 4,414,062.
ALLIED RESEARCH CORPORATION
INDEX
PAGE
PART I. FINANCIAL INFORMATION - UNAUDITED NUMBER
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
December 31, 1994 and September 30, 1995 2,3
Condensed Consolidated Statements of Earnings
Three months and nine months ended September 30, 1995 and 1994 4
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 1995 and 1994 5,6
Notes to Condensed Consolidated Financial Statements 7
Item 2.Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
PART II. OTHER INFORMATION 15
Allied Research Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
ASSETS
(Unaudited)
September 30, 1995 December 31, 1994
CURRENT ASSETS
Cash and equivalents, including restricted cash $35,295 $ 43,606
Accounts receivable 10,676 21,805
Costs and accrued earnings on uncompleted contracts 12,527 8,391
Inventories 4,703 4,333
Prepaid expenses 1,742 1,004
Total current assets 64,943 79,139
PROPERTY, PLANT AND EQUIPMENT - AT COST
Buildings 11,585 11,411
Machinery and equipment 31,845 31,118
43,430 42,529
Less accumulated depreciation 28,605 28,155
14,825 14,374
Land 1,334 1,323
Total property, plant and equipment 16,159 15,697
OTHER ASSETS
Deposit - restricted cash - 6,400
Intangibles 6,955 5,919
Other 245 231
Total other assets 7,200 12,550
$88,302 $107,386
The accompanying notes are an integral part of these statements.
2
Allied Research Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
(Thousands of Dollars)
LIABILITIES
(Unaudited)
September 30, 1995 December 31, 1994
CURRENT LIABILITIES
Notes payable $ 1,030 $ 594
Current maturities of long-term debt 18,552 25,802
Accounts and trade notes payable 10,437 21,452
Accrued liabilities 7,895 12,427
Customer deposits 13,085 1,534
Income taxes 856 883
Total current liabilities 51,855 62,692
LONG-TERM DEBT, less current maturities 10,722 14,108
DEFERRED INCOME TAXES 662 765
MINORITY INTEREST - 123
STOCKHOLDERS' EQUITY
Preferred stock, no par value; authorized,
10,000 shares none issued - -
Common stock, $.10 per share; authorized
par value, 10,000,000 shares; issued
and outstanding 4,414,062 in 1995 and
4,398,448 in 1994 441 440
Capital in excess of par value 10,715 10,658
Retained earnings 10,422 14,689
Accumulated foreign currency
translation adjustment 3,485 3,911
Total stockholders' equity 25,063 29,698
$88,302 $107,386
The accompanying notes are an integral part of these statements.
3
Allied Research Corporation
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Thousands of Dollars)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
Revenue $16,530 $ 8,694 $38,958 $53,085
Cost and expenses
Cost of sales 13,947 9,128 33,741 47,762
Selling and administrative 2,128 3,020 7,903 9,175
Research and development 181 448 674 1,623
16,256 12,596 42,318 58,560
Operating income (loss) 274 (3,902) (3,360) (5,475)
Other income (deductions)
Interest expense (695) (245) (2,273) (1,740)
Interest income 546 1,254 1,617 2,483
Other - net 160 330 372 318
11 1,339 (284) 1,061
Earnings (loss) before income taxes 285 (2,563) (3,644) (4,414)
Income taxes 70 70 623 250
NET EARNINGS (LOSS) $ 215 $(2,633) $(4,267) $(4,664)
Net income (loss) per common share $ .05 $ (.60) $ (.97) $ (1.06)
Weighted average number of shares 4,409,577 4,359,091 4,404,146 4,394,197
The accompanying notes are an integral part of these statements.
4
Allied Research Corporation
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
Nine months ended
September 30
Increase (decrease) in cash and equivalents 1995 1994
Cash flows from operating activities
Net earnings (loss) $(4,267) $(4,664)
Adjustments to reconcile net earnings to
net cash provided by (used in)
operating activities
Depreciation and amortization 1,734 920
Common stock award - 202
Changes in assets and liabilities
(Increase) decrease in
Accounts receivable 11,187 40,917
Costs and accrued earnings
on uncompleted contracts (3,039) 7,201
Inventories (130) 1,348
Prepaid expenses and other assets (453) (2,880)
Increase (decrease) in
Accounts payable, accrued
liabilities and customer
deposits (4,129) (34,536)
Income taxes (125) (3,406)
Net cash provided by
operating activities 778 5,102
Cash flows (used in) investing activities
Capital expenditures (925) (3,206)
Acquisitions (net of cash acquired) (2,600) (3,800)
Net cash (used in) (3,525) (7,006)
investing activities
The accompanying notes are an integral part of these statements.
5
Allied Research Corporation
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Thousands of Dollars)
(Unaudited)
Nine months ended
September 30
1995 1994
Cash flows from financing activities
Principal payments of long-term debt (4,309) (227)
Net increase in long-term borrowings 1,281 433
Net increase (decrease) in short-term borrowings (9,180) (6,088)
Stock option/stock plan 58 40
Common shares purchased and retired - (3,513)
Deposits - restricted cash 6,400 7,647
Net cash (used in) financing activities (5,750) (708)
Effects of exchange rate changes on cash 186 3,311
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (8,311) 699
Cash and equivalents at beginning of year 43,606 44,641
Cash and equivalents at end of period $35,295 $45,340
Supplemental Disclosures of Cash
Flow Information
Cash paid during the period for
Interest $ 1,002 $ 1,924
Taxes 373 5,508
The accompanying notes are an integral part of these statements.
6
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
(Thousands of Dollars)
(Unaudited)
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheets as of September 30,
1995 and December 31, 1994, the condensed consolidated
statements of earnings and the condensed consolidated
statements of cash flows for the nine months ended September
30, 1995 and 1994, have been prepared by the Company without
audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and
changes in cash flow at September 30, 1995 and 1994 have been
made.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial
statements and notes thereto included in the Company's
December 31, 1994 Form 10-K filed with the Securities and
Exchange Commission, Washington, D.C. 20549. The results of
operations for the period ended September 30, 1995 and 1994
are not necessarily indicative of the operating results for
the full year.
NOTE 2 - PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the
accounts of Allied Research Corporation (a Delaware
Corporation) and the Company's wholly-owned subsidiaries,
Mecar, S.A. (a Belgian Company), Allied Research Corporation
Limited (a United Kingdom Company), Barnes & Reinecke, Inc. (a
Delaware Corporation), and ARC Services, Inc. (a Delaware
Corporation).
Mecar, S.A.'s wholly-owned Belgian subsidiaries include, Mecar
Immobliere S.A., Sedachim, S.I., Tele Technique Generale,
Management Export Services, N.V., I.D.C.S., N.V. (which was
acquired May 9, 1995), VSK France (which was recently formed)
and VSK Electronics N.V. and its wholly-owned subsidiaries,
Classics, B.V.B.A. Detectia, N.V. and Belgian Automation
Units, N.V., (collectively "The VSK Group"). A minority
interest owned by VSK Electronics in Building Control
Services, N.V. (BCS) was accounted for under the equity method
in 1994. BCS was liquidated in 1995.
The VSK Group acquisitions were accounted for as purchases,
and revenue and results of operations from June 1, 1994 and
May 9, 1995 (dates of acquisition), have been consolidated.
Significant intercompany transactions have been eliminated in
consolidation.
NOTE 3 - ACQUISITION
On May 31, 1994, the Company's wholly-owned subsidiary, Mecar
S.A., acquired The VSK Group, a group of Belgian companies, as
well as a minority interest in a Belgian company, for
approximately $6,072 and on May 9, 1995, Mecar, S.A. acquired
I.D.C.S., N.V. a Belgian company and its minority interest in
Belgian Automation Unites, N.V. for a total of $2,972.
7
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1995
(Thousands of Dollars)
(Unaudited)
NOTE 3 - ACQUISITION - Continued
The companies manufacture, distribute and service an
integrated line of industrial security products, including
devices such as building access control, parking control,
intrusion and fire detection and intrusion and fire alarms.
The acquisitions have been accounted for as purchases and the
purchase prices in excess of the net assets acquired have been
reflected in intangibles. The financial statements include
the result of operations since the dates of acquisition. Pro
forma financial data for these acquisitions prior to the dates
of acquisition would not have a material effect on reported
results.
May 9, 1995 May 31, 1994
Fair value of tangible $2,587 $7,720
assets acquired
Liabilities assumed 855 6,285
Net assets acquired 1,732 1,435
Cash paid 2,972 6,072
Excess of cost over assets $1,240 $4,637
acquired
NOTE 4 - RESTRICTED CASH
Mecar is generally required under the terms of its contracts
with foreign governments to provide performance bonds, advance
payment guarantees and letters of credit. The credit facility
agreements used to provide these financial guarantees
generally place restrictions on cash deposits and other liens
on Mecar's assets, until the customer accepts delivery. Cash
deposits totaling approximately $32,413 and $35,848 ($6,400 of
which is classified as long-term) at September 30, 1995 and
December 31, 1994, respectively, are restricted or pledged as
collateral for various bank agreements and are comprised as
follows:
1995 1994
Credit facility and related $32,047 $34,542
term loan agreements
Other bank guarantees and 366 1,222
letters of credit
Notes payable - 84
$32,413 $35,848
8
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1995
(Thousands of Dollars)
(Unaudited)
NOTE 5 - INVENTORIES
Inventories consist of the following:
September 30, 1995 December 31, 1994
Raw materials and supplies $4,703 $4,333
NOTE 6 - NOTES PAYABLE
At September 30, 1995 and December 31, 1994, secured short-
term loans of $1,030 and $594, respectively, were outstanding.
In June 1995, BRI amended its credit facility to two $500 term
loan facilities for capital improvements and a $750 revolving
line-of-credit which had an outstanding balance of $345 at
September 30, 1995. The current portion of term note
outstanding at September 30, 1995 is $148. The line bears
interest at the rate of prime plus 1.75% and is secured by
BRI's eligible accounts receivable and Allied's guarantee.
The former agreement was a $1,000 revolving line-of-credit
agreement which had an outstanding balance of $500 as of
December 31, 1994.
NOTE 7 - CREDIT FACILITY
Mecar is obligated under an amended credit agreement (the
Agreement) with a banking pool comprised of four foreign banks
that provided credit facilities primarily for letters of
credit, bank guarantees, performance bonds and similar
instruments required for specific sales contracts. The
Agreement provides for certain bank charges and fees as the
line is used, plus an annual fee of approximately 1.1% of
guarantees issued. In July, 1995, the credit facility was
amended to cover certain new orders received. As of September
30, 1995, guarantees of $3,441 under the former agreement
remain outstanding.
Advances under the credit facility were secured by deposits of
$27,064 at September 30, 1995 and deposits of $31,360 at
December 31, 1994, $6,400 of which is classified as long-term
deposit at December 31, 1994. Amounts outstanding were also
collateralized by pledges of approximately $25,000 on Mecar's
assets, letters of credit and certain funds received under the
contracts financed. The Agreement provides for restrictions
on payments or transfers to Allied and ARCL for management
fees, intercompany loans, loan payments, the maintenance of
certain net worth, income and loss levels and the payment of
bank fees and charges as defined in the Agreement.
The term deposits were borrowed to secure approximately
$17,474 and $34,500 of financing for the period ended
September 30, 1995 and December 31, 1994, respectively.
The Company is also liable for guarantees and other
instruments issued on its behalf by other banks which
approximate $366 at September 30, 1995, which are
collateralized by $469 of time deposits.
9
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1995
(Thousands of Dollars)
(Unaudited)
NOTE 7 - CREDIT FACILITY - Continued
Mecar is obligated on a $5,000 mortgage on its manufacturing
and administration facilities. As amended, the balance of the
loan is payable in annual principal installments of
approximately $600 commencing in January 1996 (except for the
annual principal installment in the year 2000 which is
approximately $800) and the entire balance matures in 2004.
The Company is also obligated on a mortgage on The VSK Group's
building which has a balance due of $400 due in 20 years. The
mortgage is payable in annual installments of $20 plus
interest. In addition, the Company is obligated on an
outstanding loan for the acquisition of I.D.C.S., N.V. in the
amount of $1,822 payable in annual installments of $91 plus
interest.
NOTE 8 - LONG-TERM FINANCING
Scheduled annual maturities of long-term obligations as of
September 30, 1995 are as follows:
Year Amount
1996 $18,552
1997 650
1988 650
1999 650
Thereafter 8,772
$29,274
NOTE 9 - INCOME TAXES
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes"
("SFAS No. 109") in 1993.
The provision for income taxes differs from the anticipated
combined federal and state statutory rates due to operating
losses and earnings from foreign subsidiaries.
The Company's Belgian subsidiaries have unused net operating
losses of approximately $20,000 at September 30, 1995, which
under Belgian law cannot be carried back but may be carried
forward indefinitely, and are subject to annual limitations.
As of December 31, 1995, the Company had unused foreign tax
credit carryforwards of approximately $1,003 which expire
through 2009.
Deferred tax liabilities have not been recognized for bases
differences related to investments in the Company's Belgian
and United Kingdom subsidiaries. These differences, which
consist primarily of unremitted earnings intended to be
indefinitely reinvested, aggregated approximately $30,000 at
December 31, 1994. Determination of the amount of
unrecognized deferred tax liabilities is not practicable.
10
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
September 30, 1995
(Thousands of Dollars)
(Unaudited)
NOTE 10 - EARNINGS (LOSS) PER SHARE
Stock options outstanding have not been included in the per
share computation because there would not be a material effect
on earnings (loss) per share.
NOTE 11 - RESTRUCTURING CHARGE
In the fourth quarter of 1993, the Company recorded an accrual
for restructuring costs totaling $2,883 ($.44 per share after
taxes) related to its Belgian manufacturing operations. The
charge provided for estimated employee severance, retraining,
early retirements and related costs attributable to a planned
workforce reduction initiated in late 1993. The company
anticipated that it would eliminate over the next years
approximately 32 permanent and 120 temporary factory and
administrative positions. The reductions were the result of
efficiencies implemented over the past several years, current
backlog levels and anticipated future workforce requirements
for Mecar's core defense operations, as well as those expected
to be redeployed as part of prospective diversification
ventures. During 1994, the Company increased the provision by
$326 to cover additional terminations. As of December 31,
1994, the restructuring has been substantially completed, and
the provision has been fully utilized, except for
approximately $64 which was disbursed in early 1995.
11
Allied Research Corporation
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULT OF OPERATIONS
September 30, 1995
(Thousands of Dollars)
(Unaudited)
The Company conducts its business through its wholly-owned
subsidiaries: Mecar, S.A., ("Mecar"), a Belgian corporation,
and its subsidiaries, Mecar Immobliere, S.A., Sedachim, S.I.,
as well as Tele Technique Generale, VSK Electronics, N.V.,
Management Export Services, N.V., Classics, B.V.B.A.,
Detectia, N.V., I.D.C.S., N.V., VSK France and Belgian
Automation Units, N.V. ("The VSK Group"); Barnes & Reinecke,
Inc., ("Barnes") a Delaware corporation, headquartered in
Illinois; Allied Research Corporation Limited, ("Limited") a
U.K. Company; and ARC Services, Inc., ("Services") a Delaware
corporation, headquartered in Vienna, Virginia. This
discussion refers to the financial condition and results of
operations of the Company on a consolidated basis.
Sales
Revenue for the first nine months of 1995 was $38,958, a 27%
decrease from the comparable period in 1994, due to Mecar's
decrease in revenue. Mecar revenue was $18,687, or down 40%
compared to the period ended September 30, 1994. Barnes
revenues was $7,236, up 24% compared to the same period in
1995. Limited did not have revenues this period or in last
year's comparable period. Services had revenues of $35 in the
1995 period but did not have revenues in the comparable 1994
period. VSK had revenues of $13,000 for the period and did
not have comparable revenues in last year's period since it
was acquired May, 1994.
Revenue for the quarter ended September 30, 1995 was $16,530,
a 90% increase from revenue for the quarter ended September
30, 1994 of $8,694. Mecar recognized revenue of $10,938 for
the quarter ended September 30, 1995, a 63% increase from the
quarter ended September 30, 1994. Barnes' revenue of $3,231
for the quarter ended September 30, 1995 constituted a 64%
increase over the quarter ended September 30, 1994. VSK's
revenue for the quarter ended September 30, 1995 and 1994 was
$2,361 and $3,400, respectively.
Mecar's increase in revenue for the current quarter is due to
the receipt of contracts that were scheduled to be received
earlier in the year. In the third quarter that Mecar was in a
position to perform revenue generating services on such
contracts. Barnes' revenue increased in the first half of
1995 over the first half of 1994 principally due to a contract
to provide systems technical services to an international
customer.
Backlog
As of September 30, 1995, the Company's backlog was $81,144
compared with $23,100 at December 31, 1994 and $94,041 at June
30, 1995.
Mecar's backlog as of September 30, 1995 was $50,507 compared
with $65,272 at June 30, 1995. The decrease is primarily
attributable to the shipment of orders during the quarter and
the elimination of several small contracts with a new customer
due to licensing problems.
Barnes' backlog as of September 30, 1995 was $10,943 compared
with $5,658 at June 30, 1995. The increase is primarily due
to the receipt by Barnes of a contract to provide services to
an international customer.
The backlog of The VSK Group as of September 30, 1995 was
$19,694 compared with $23,111 as of June 30, 1995. The
decrease is attributable to the cyclical nature of customer
orders.
12
Allied Research Corporation
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULT OF OPERATIONS-CONTINUED
September 30, 1995
(Thousands of Dollars)
(Unaudited)
Operating Costs and Expenses
Cost of sales for the first nine months of 1995 were
approximately $33,741 or 87% of sales as compared to $47,762
or 90% for the first nine months of 1994. The percentage
decrease is primarily due to product mix. Cost of sales for
the quarter ended September 30, 1995 were approximately
$13,947, or 84% of sales as compared to a loss in 1994
principally due to increased revenue.
Selling and administrative expenses were approximately $7,903
or 20% of revenues for the nine months ended September 30,
1995 as compared to $9,175 or 17% for the nine months ended
September 30, 1994. Such expenses were $2,128 for the third
quarter of 1995 as compared to $3,020 for the third quarter of
1994. These decreases reflect Company wide reductions in
expenditures.
Research and Development
Research and development expenses were 2% of sales for the
nine month period and 1% for three month period ended
September 30, 1995 as compared with 3% and 5% for the
corresponding periods in 1994. The decreases are the result
of expense reduction efforts throughout the Company.
Operating Results
There was an operating loss of $3,360 for the first nine
months of 1995 (or 9% of revenue). This compares with an
operating loss of $5,475 (or 10% of revenue) for the nine
months ended September 30, 1994. During the third quarter of
1995, the Company experienced an operating profit of $274 (or
2% of revenues) compared with an operating loss of $3,902 (or
45% of revenues) for the quarter ended September 30, 1994.
The 1995 third quarter operating profit is primarily
attributable to increased levels of revenue at Mecar and BRI.
Interest Expense
Interest expense for the first nine months of 1995 increased,
compared to the same period in 1994, as a result of increased
borrowing. Interest expense for the third quarter of 1995
increased compared to the third quarter of 1994 as a result of
increased borrowing under the Term Loan (as hereinafter
defined).
Interest Income
Interest income decreased for the first nine months of 1995
over the comparable period in 1994 as a result of lower levels
of cash.
Other - Net
For the nine months ended September 30, 1995, Other - Net
represents the net gain resulting from foreign currency
transactions plus other miscellaneous income.
13
Allied Research Corporation
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULT OF OPERATIONS-CONTINUED
September 30, 1995
(Thousands of Dollars)
(Unaudited)
Liquidity and Capital Resources
During the first nine months of 1995 and throughout 1994,
Allied funded its operations principally with internally
generated cash and back-up credit facilities required for
foreign government contracts. At September 30, 1995, the
Company had unrestricted cash (i.e., cash not required by the
terms of the bank agreement to collateralize contracts) of
approximately $2,882, as compared with approximately $3,976 as
of June 30, 1995.
Mecar's bank agreement requires substantial amounts of cash
collateral to secure the performance bonds, advance payment
guarantees and import letters of credit required by Mecar's
contracts.
Accounts receivable at September 30, 1995 decreased over
December 31, 1994 by $11,129, due to lower shipments at the
end of the quarter. Costs and accrued earnings on uncompleted
contracts increased by $4,136 from December 31, 1994 levels as
a result of increases in work-in-process. Inventories
remained relatively level. Prepaid expenses and deposits
increased $738 primarily due to advance payments. Current
liabilities decreased by $10,837 from December 31, 1994 levels
as a result of lower accounts payable and accrued liabilities.
Long-term debt (including current maturities thereof) as of
September 30, 1995, decreased by $10,636 from December 31,
1994 as a result of payments made during the first six months
of 1995 under the term loan provided by Mecar's bank pool (the
"Term Loan"). The principal amount of the Term Loan increased
in the third quarter of 1995 to finance the contracts received
by Mecar in the second quarter of 1995. As has been the past
practice, the proceeds of the Term Loan are deposited with the
banks as collateral and the Term Loan is supported, in part,
by a guarantee of the Walloon Region in Belgium.
In summary, working capital was approximately $13,088 at
September 30, 1995, which is a decrease of $3,359 from
December 31, 1994. The decrease is primarily attributable to
cash used for operating activities.
The liquidity of the Company continues to remain principally
dependent upon Mecar's ability to generate cash from
operations. While Mecar has broadened its customer base, it
remains chiefly reliant on orders from its principal
customers.
14
Allied Research Corporation
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULT OF OPERATIONS-CONTINUED
September 30, 1995
(Thousands of Dollars)
(Unaudited)
PART II. OTHER INFORMATION
None.
15
Allied Research Corporation
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
ALLIED RESEARCH CORPORATION
_________________________________
Date: November 9, 1995 J. R. Sculley
Chairman of the Board,
Chief Executive Officer and
Chief Financial Officer
16