FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 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 1-3879
DynCorp
(Exact name of registrant as specified in its charter)
Delaware 36-2408747
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2000 Edmund Halley Drive, Reston, VA 22091-3436
(Address of principal executive offices) (Zip Code)
(703) 264-0330
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
securities Exchange Act of 1934 during the preceding 12 months (or
for for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date.
8,690,206 shares of common stock having a par value of
$0.10 per share were outstanding at June 29, 1995.
DYNCORP
INDEX
PART I. FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
June 29, 1995 and December 31, 1994
Consolidated Condensed Statements of Operations -
Three and Six Months Ended June 29, 1995 and June 30, 1994
Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 29, 1995 and June 30, 1994
Notes to Consolidated Condensed Financial Statements
Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit 11 - Computations of Earnings Per Common Share
PART I. FINANCIAL INFORMATION
DYNCORP AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
JUNE 29, 1995 AND DECEMBER 31, 1994
(Dollars in Thousands)
UNAUDITED
ASSETS
June 29, December 31,
1995 1994 (a)
Current Assets:
Cash and short-term investments (b) $ 23,591 $ 7,738
Notes and current portion of long-term receivables
(Note 3) 9,924 87
Accounts receivable and contracts in process
(net of allowance for doubtful accounts
of $9 in 1995 and 1994) (Note 5) 158,929 172,731
Inventories of purchased products and supplies,
at lower of cost (first-in, first-out) or market 612 793
Other current assets 7,955 6,733
Net current assets of discontinued operations (Note 2) 21,788 18,301
Total current assets 222,799 206,383
Long-Term Receivables 305 433
Property and Equipment (net of accumulated
depreciation and amortization of $30,740
in 1995 and $26,937 in 1994) (Note 6) 18,688 37,849
Intangible Assets (net of accumulated amortization
of $38,415 in 1995 and $37,290 in 1994) 50,712 51,837
Other Assets (Note 5) (b) 16,752 15,441
Net Noncurrent Assets of Discontinued Operations(Note 2) 47,595 67,042
$356,851 $378,985
(a) Restated for discontinued operations. See Note 2.
(b) Restricted cash has been reclassified at December 31, 1994 to conform
with current period presentation. See Note 5.
See accompanying notes to consolidated condensed financial statements.
DYNCORP AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
JUNE 29, 1995 AND DECEMBER 31, 1994
(Dollars in Thousands)
UNAUDITED
LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY
June 29, December 31,
1995 1994 (a)
Current Liabilities:
Notes payable and current portion of
long-term debt (Note 7) $ 17,874 $ 3,004
Accounts payable 19,275 18,879
Advances on contracts in process 2,775 3,863
Accrued liabilities 86,304 95,495
Total current liabilities 126,228 121,241
Long-Term Debt (Notes 6 and 7) 192,757 230,445
Other Liabilities and Deferred Credits 13,278 17,761
Total liabilities 332,263 369,447
Commitments, Contingencies and Litigation (Note 10) - -
Redeemable Common Stock, $18.20 per share redemption value,
125,714 shares issued and outstanding 2,288 2,288
Stockholders' Equity:
Capital stock, $0.10 par value:
Preferred stock, Class C (Note 4) 3,000 3,000
Common stock 923 789
Common stock warrants 11,486 11,486
Unissued common stock under restricted stock plan 7,565 9,923
Paid-in surplus 138,273 118,068
Deficit (119,131) (118,256)
Common stock held in treasury (10,316) (8,817)
Cummings Point Industries, Inc. note receivable (Note 3) - (8,943)
Unearned ESOP shares (Note 8) (9,500) -
Total stockholders' equity 22,300 7,250
Total Liabilities, Redeemable Common Stock
and Stockholders' Equity $356,851 $378,985
(a) Restated for discontinued operations. See Note 2.
See accompanying notes to consolidated condensed financial statements.
DYNCORP AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Amounts)
UNAUDITED
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
1995 1994(a) 1995 1994(a)
Revenues $209,940 $198,573 $421,576 $391,161
Costs and expenses:
Cost of services 200,124 189,091 403,945 374,328
Selling and corporate administrative 4,968 4,401 9,308 8,558
Interest income (1,077) (567) (1,913) (1,102)
Interest expense 4,041 4,041 8,518 8,096
Other 362 981 997 2,026
208,418 197,947 420,855 391,906
Earnings (loss) from continuing
operations before income taxes,minority
interest and extraordinary item 1,522 626 721 (745)
Provision for income taxes (Note 9) 573 535 545 520
Earnings (loss) from continuing
operations before minority interest
and extraordinary item 949 91 176 (1,265)
Minority Interest 355 311 657 560
Earnings (loss) from continuing
operations before extraordinary item $ 594 $ (220) $ (481) $ (1,825)
Earnings (loss) from discontinued
operations net of income taxes (Note 2) 80 (710) (267) (694)
Earnings (loss) before extraordinary item 674 (930) (748) (2,519)
Extraordinary loss from early
extinguishment of debt, net of tax
benefit of $89 (Note 7) - - (127) -
Net Earnings (Loss) $ 674 $ (930) $ (875) $ (2,519)
Weighted average number of common shares
outstanding and dilutive common stock
equivalents:
Primary and fully diluted 12,704,956 6,251,341 8,246,421 5,862,005
Earnings (loss) per common share -
primary and fully diluted:
Continuing operations for
common stockholders $ 0.01 $ (0.10) $ (0.17) $ (0.44)
Discontinued operations 0.01 (0.11) (0.03) (0.12)
Extraordinary item - - (0.02) -
Net earnings (loss) for common
stockholders $ 0.02 $ (0.21) $ (0.22) $ (0.56)
(a) Restated for discontinued operations. See Note 2.
See accompanying notes to consolidated condensed financial statements.
DYNCORP AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
UNAUDITED
Six Months Ended
June 29, June 30,
1995 1994(a)
Cash Flows from Operating Activities:
Net loss $ (875) $ (2,519)
Adjustments to reconcile net loss from operations
to net cash provided (used) by operating activities:
Depreciation and amortization 5,427 6,404
Pay-in-kind interest on Junior Subordinated Debentures - 7,370
Restricted Stock Plan - 862
Loss on repurchase of Junior Subordinated
Debentures (Note 7) 216 -
Noncash interest income (767) (657)
Other (2,279) (1,262)
Changes in current assets and liabilities,
net of acquisitions:
Decrease in current assets except cash,
short-term investments and notes receivable 12,761 7,146
Decrease in current liabilities except notes
payable and current portion of long-term debt (9,883) (8,508)
Cash provided by continuing operations 4,600 8,836
Cash used by discontinued operations (761) (77)
Cash provided by operating activities 3,839 8,759
Cash Flows from Investing Activities:
Sale of property and equipment (Note 6) 16,003 90
Purchase of property and equipment (1,889) (1,415)
Assets and liabilities of acquired businesses
excluding cash acquired - (6,812)
Investment activities of discontinued
operations (Note 2) 17,726 (1,775)
Deposits for letters of credit (Note 5) (2,353) (191)
Other (324) (705)
Net cash provided (used) by investing activities 29,163 (10,808)
Cash Flows from Financing Activities:
Treasury stock purchased (1,499) (1,541)
Payment on indebtedness (Note 6) (19,780) (2,371)
Repurchase of Junior Subordinated Debentures (Note 7) (3,422) -
Sale of stock to Employee Stock Ownership Plan (Note 8) 8,500 8,200
Treasury stock sold - 159
Financing activities of discontinued operations (919) (287)
Other (29) 44
Net cash provided (used) from financing activities (17,149) 4,204
Net Increase in Cash and Short-term Investments 15,853 2,155
Cash and Short-term Investments at Beginning of the Period 7,738 11,772
Cash and Short-term Investments at End of the Period $ 23,591 $ 13,927
Supplemental Cash Flow Information:
Cash paid for income taxes $ 1,497 $ 35
Cash paid for interest $ 12,911 $ 5,542
(a) Restated for discontinued operations. See Note 2.
See accompanying notes to consolidated condensed financial statements.
DYNCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
UNAUDITED
1. The unaudited consolidated condensed financial statements
included herein have been prepared by the Company pursuant to
the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures
are adequate to make the information presented not misleading.
It is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes
thereto included in the Company's latest annual report on Form
10-K. In the opinion of the Company, the unaudited
consolidated condensed financial statements included herein
reflect all adjustments necessary to present fairly the
financial position, the results of operations and the cash
flows for such interim periods. The results of operations for
such interim periods are not necessarily indicative of the
results for the full year.
2. In June, 1995, the Company decided to divest itself (through
sale) of its Commercial Aviation Sector businesses. (Form 8-K
was filed July 13, 1995). Accordingly, the consolidated
condensed balance sheets and statements of operations and cash
flows have been restated to reflect the discontinuance of the
Commercial Aviation business (i.e. the aircraft maintenance and
ground handling units).
On June 30, 1995, the Company sold the stock of all its
subsidiaries engaged in the business of commercial aircraft
heavy maintenance and modification to Sabreliner Corporation.
The sale price was $12,500,000 in cash, subject to adjustment for
final financial conditions as of the closing date balance sheet
and subject to additional payments based on future business
revenues of the sold companies.
On August 8, 1995 the Company entered into an agreement with
Alpha Airports Group PLC ("Alpha") to sell all of its
subsidiaries engaged in commercial airline ground handling,
passenger services, aircraft fueling, aircraft line maintenance
and cargo handling (DynAir Ground Services Group). Alpha has
deposited $5 million in escrow as security for completion of
the transaction.
It is anticipated that the net proceeds from these transactions
will be in excess of the book value of the net assets of the
discontinued businesses. The net proceeds will be used primarily
to retire debt and satisfy equipment financing obligations.
The components of discontinued operations on the consolidated
condensed balance sheets and statements of operations are as
follows (in thousands):
June 29, December 31,
1995 1994
Notes and current portion of
long term receivables $ 276 $ 306
Accounts receivable 42,360 35,788
Inventories of purchased products 5,161 5,561
Other current assets 1,662 1,059
Accounts payable (10,235) (7,921)
Other current liabilities (17,436) (16,492)
Net current assets of discontinued
operations $ 21,788 $ 18,301
Property and equipment (net) (a) $ 18,362 $ 22,513
Goodwill 42,212 42,955
Other assets 2,486 1,777
Deferred gain on equipment refinancing(a) (15,294) -
Other liabilities (171) (203)
Net noncurrent assets
of discontinued operations $ 47,595 $ 67,042
(a) In separate transactions on January 20, and February 7,
1995, the Company secured $24,000,000 from the
refinancing of some of Commercial Aviation's equipment.
The book value of the equipment totalling $8,063,000
was removed from the balance sheet and a $15,937,000
gain was deferred.
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
1995 1994 1995 1994
Revenues $55,317 $49,978 $103,883 $116,928
Costs of services 52,466 47,702 98,209 111,187
Interest expense and other 2,560 3,161 5,611 6,411
Income tax provision (benefit) 211 (175) 330 24
Earnings (loss) from
discontinued operations $ 80 $ (710) $ (267) $ (694)
3. In February, 1992, the Company loaned $5,500,000 to Cummings
Point Industries, Inc. ("CPI"), of which Capricorn Investors,
L.P. ("Capricorn") owns more than 10%. The indebtedness was
represented by a promissory note (the "Note"), bearing interest
at the annual rate of 17%, which provides that interest was
payable quarterly but that interest payments may not be payable
in cash but may be added to the principal of the Note. The
Note was due three months after issuance; however, the Company,
at its option, extended the maturity date in three month
increments to no later than August 12, 1995. By separate
agreement and as security to the Company, Capricorn agreed to
purchase the Note from the Company upon three months notice,
for the amount of outstanding principal plus accrued interest.
As additional security, Capricorn's purchase obligation was
collateralized by certain common stock and warrants issued by
the Company and owned by Capricorn. The note had been
reflected as a reduction in stockholders' equity. On August
10, 1995, the note was paid in full; therefore, the note has
been reclassified to current notes receivable as of June 29, 1995.
4. At June 29, 1995, $7,864,000 of Class C Preferred Stock
cumulative dividends have not been accrued or paid. These
dividends are payable only to the extent that dividends are
paid on the Company's common stock and they will not be paid
in the event the Class C Preferred stock is converted into
common stock.
5. At June 29, 1995, $101,665,000 of accounts receivable are
restricted as collateral for the Contract Receivable
Collateralized Notes, Series 1992-1 ("Notes"). Additionally,
$3,000,000 of cash is restricted as collateral for
the Notes and $5,290,000 of cash is restricted as collateral
for letters of credit required for certain contracts, most with
terms of from three to five years. This restricted cash has
been included in Other Assets on the balance sheet at June 29,
1995.
To conform with the current period presentation, restricted cash
of $3,000,000 and $2,937,000 representing collateral for the
Notes and letters of credit, respectively, has been reclassified
to Other Assets at December 31, 1994.
6. On February 7, 1995, the Company sold its Corporate
headquarters to RREEF America Reit Corp. C and entered into a
12-year lease with RREEF as the landlord. The facility was
sold for $13,780,000 and the proceeds applied to the
mortgage on the building which was due to mature on March 27,
1995. A net gain of $2,573,000 was realized on the transaction
and is being amortized over the life of the lease.
7. During the first half of 1995, the Company repurchased
$3,500,000 face value of its 16% Junior Subordinated
Debentures. The the gain on the repurchase, net of the write-off of
the related unamortized discount and deferred debt expense and
associated transaction fees, has been reported as an
extraordinary loss, net of income tax.
On July 19, 1995, the Board of Directors authorized the
redemption of $15,000,000 of the Company's 16% Junior
Subordinated Debentures in accordance with the terms of the
indenture. As a result, the amount subject to the call has
been reclassified to current portion of long term debt.
8. In March, 1995, the Employee Stock Ownership Plan issued a
promissory note to the Company in the amount of $18,000,000 and
the Company issued 1,208,059 shares of common stock to the
ESOP. The unpaid balance of the note has been reflected as a
reduction in stockholders' equity. As payments are made on the
note, the shares will be allocated to the participants'
accounts. ESOP expense for continuing operations was $3,544,000
and $7,470,000 for the quarter and first half of 1995,
respectively.
9. The provision for income taxes for the quarter and first half
of 1995 is based on an estimated annual effective tax rate
excluding expenses not deductible for income tax purposes and,
in addition, includes the tax provision of a majority owned
subsidiary required to file a separate return. The 1994 tax
provision reflects only that of the majority owned subsidiary
referred to previously.
The income tax provision or benefit for the items shown net of
tax (i.e. discontinued operations and extraordinary item), is
calculated in the same manner as that of continuing operations.
10. The Company is involved in various claims and lawsuits,
including contract disputes and claims based on allegations
of negligence and other tortious conduct. The Company is
also potentially liable for certain environmental, personal
injury, tax and contract dispute issues related to the prior
operations of divested businesses. In most cases, the
Company has denied, or believes it has a basis to deny,
liability, and in some cases has offsetting claims against
the plaintiffs or third parties. Damages currently claimed
by the various plaintiffs for these items, some of which may not be
covered by insurance and which have not been fully reserved for in
the financial statements, aggregate approximately
$32,000,000 (including compensatory and possible punitive
damages and penalties).
A former subsidiary, which discontinued its business activities
in 1986, has been named as one of many defendants in civil
lawsuits which have been filed in various state courts against
manufacturers, distributors and installers of asbestos
products. (The subsidiary had discontinued the use of asbestos
products prior to being acquired by the Company.) The Company
has also been named as a defendant in several of these actions.
At the beginning of 1993, 2,115 claims had been filed and
during the year 709 additional claims were filed with 1,273
claims being settled. In 1994, 1,135 additional claims were
filed and 353 were settled. In the first half of 1995, 1,774
new claims were filed with 86 claims being settled. Defense
has been tendered to and accepted by the Company's insurance
carriers. The former subsidiary was a nonmanufacturer that
installed or distributed industrial insulation products.
Accordingly, the Company strongly believes that the subsidiary
has substantial defenses against alleged secondary and indirect
liability. The Company has provided a reserve for the
estimated uninsured legal costs to defend the suits and the
estimated cost of reaching reasonable no-fault liability
settlements. The amount of the reserve has been estimated
based on the number of claims filed and settled to date, number
of claims outstanding, current estimates of future filings,
trends in costs and settlements, and the advice of the
insurance carriers and counsel.
The Company has retained certain liability in connection with
its 1989 divestiture of its major electrical contracting
business, Dynalectric Company ("Dynalectric"). The Company and
Dynalectric were sued in 1989 by a former Dynalectric
subcontractor. The subcontractor has alleged that its
subcontract to furnish certain software and services in
connection with a major municipal traffic signalization project
was improperly terminated by Dynalectric and that
Dynalectric is liable to the former subcontractor for a variety
of additional claims, the aggregate dollar amount of which have
not been formally recited in the subcontractor's complaint.
Dynalectric has also filed certain counterclaims against the
former subcontractor. The Company and Dynalectric believe that
they have valid defenses, and/or that any liability would be
more than offset by recoveries under the counterclaims. The
Company has established reserves for the contemplated defense
costs and for the cost of obtaining enforcement of arbitration
provisions contained in the contract.
The Company is a party to other civil lawsuits which have
arisen in the normal course of business for which potential
liability, including costs of defense, are covered by insurance
policies.
The Company has recorded its best estimate of the liability
that will result from these matters. While it is not possible
to predict with certainty the outcome of the litigation and
other matters discussed above, it is the opinion of the
Company's management, based in part upon opinions of counsel,
insurance in force and the facts presently known, that
liabilities in excess of those recorded, if any, arising from
such matters would not have a material adverse effect on the
results of operations, the consolidated financial position or
the liquidity of the Company.
A majority of the Company's business involves contracting with
departments and agencies of, and prime contractors to, the U.S.
government and as such are subject to possible termination for
the convenience of the government and to audit and possible
adjustment to give effect to unallowable costs under cost-type
contracts or to other regulatory requirements affecting both
cost-type and fixed-price contracts. In management's opinion,
there are no outstanding issues of this nature at June 29, 1995
that will have a material adverse effect on the Company's
consolidated financial position or results of operations.
11. The Company filed a Form S-1 with the SEC on May 12, 1995 to
register shares of common stock, a majority of which had
been previously issued. Of the 11,969,000 shares
registered, 2,450,000 are intended to be used for employee
benefit, bonus and stock purchase plans and 9,519,000 may be
traded by current shareholders and/or the Company in an
Internal Market which the Company intends to establish
during 1995. The Company is unable to predict when this
Form S-1 registration statement will become effective.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion of financial condition and results of
operations should be read in conjunction with the 1994 Form 10-K.
Working capital at June 29, 1995 was $96.6 million compared to
$85.1 million at December, 1994, an increase of $11.5 million.
The increase in cash and short term investments and the
reclassification of the Cummings Point Industries, Inc. note
receivable to current assets increased working capital $25.7
million. Offsetting these increases is the reclassification of
$15 million of the 16% Subordinated Debentures to current liabilities.
At June 29, 1995, $101.7 of accounts receivable are restricted as
collateral for the Contract Receivable Collateralized Notes.
Additionally, $3.0 million of cash is restricted as collateral
for the notes and $5.2 million of cash is restricted as
collateral for letters of credit. This restricted cash has been
classified as other assets on the balance sheet.
Operations produced cash flow of $3.8 million for the first half
of 1995 compared to $8.8 million for the comparable period in
1994. Excluding the effects of the normal changes in current
assets and liabilities, continuing operations produced $1.0
million in 1995, down from $10.1 million in 1994. This is
primarily attributable to the $8.2 million cash payment of accrued
interest on the 16% Subordinated Debentures as opposed to payment
in kind in 1994.
Investing activities provided funds of $29.2 million, principally
due to the sale/lease back of the Corporate headquarters building
and the refinancing of equipment associated with discontinued
operations.
Financing activities used funds of $17.1 million, principally for
the payment of debt and repurchase of the Company's 16% Junior
Subordinated Debentures.
At June 29, 1995, backlog (included option years on government
contracts) was $3.000 billion compared to $2.011 billion at
December 31, 1994.
Results of Operations
Revenues for the second quarter and first half of 1995 were $209.9
million and $421.6 million, up $11.4 million and $30.4 million
over comparative periods in 1994. Increases in revenue
attributable to an acquisition in the fourth quarter of 1994
($16.3 million and $32.7 million for the second quarter and first
half, respectively) and new contract awards (approximately $20.3
million and $36.8 million for the second quarter and first half,
respectively) were partially offset by declines from contracts
lost in recompetition and reduced levels of effort on continuing
contracts.
Cost of services for the second quarter of 1995 was 95.3% of
revenue compared to 95.9% for the same period in 1994, and for the
first half of 1995, cost of services was 95.8% compared to 95.7%
in 1994. This resulted in gross margins of $9.8 million (4.7%)
for the second quarter of 1995 compared to $9.5 million (4.1%) for
the second quarter of 1994 and $17.6 million (4.2%) and $16.8
million (4.3%) for the first half of 1995 and 1994, respectively.
The same factors which contributed to the increase in revenue
similarly affected the gross margin, although to a lesser degree.
Selling and corporate administrative expense was up slightly to
2.4% of revenue compared to 2.2% for the second quarter of 1994.
For the first half, selling and corporate administrative expense
remained unchanged at 2.2% of revenue for both 1995 and 1994.
Interest income for both the quarter and first half of 1995 was
greater than comparable periods in 1994 due to higher cash and
short term investment balances which yielded greater interest
income and also to the compounding of interest at 17% on the
Cummings Point Industries, Inc. note receivable.
Interest expense for the second quarter of 1995 was $4.0 million,
the same as the second quarter of 1994 and for the first half of
1995, interest expense was $8.5 million compared to $8.1 million
in the first half of 1994. The increase due to the compounding of
interest on the 16% Junior Subordinated Debentures was offset
in the second quarter by the effect of the repurchase of $3.5
million of debentures (see Note 7) and the elimination of interest
expense on the Corporate headquarters building (see Note 6).
Other consists of the following items (in thousands):
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
1995 1994 1995 1994
Amortization of costs in excess
of net assets acquired $ 456 $ 469 $ 912 $ 916
Amortization of deferred ESOP costs - 192 - 384
ESOP repurchase premium - 302 - 620
Miscellaneous (94) 18 85 106
$ 362 $ 981 $ 997 $2,026
The provision for income taxes for the quarter and first half of
1995 is based on an estimated annual effective tax rate excluding
expenses not deductible for income tax purposes, and, in addition,
includes the tax provision of a majority owned subsidiary required
to file a separate return. The 1994 tax provision reflects only
that of the majority owned subsidiary referenced previously.
The operating income of the discontinued businesses was
substantially offset by the allocation of interest that is
expected to be eliminated from the proceeds of the divestitures.
Although the Company continues to be highly leveraged, it has made
progress towards reducing its debt. Proceeds from the
sale/leaseback of the Corporate headquarters building and the
equipment refinancing have enabled the Company to pay off the
$18.2 million Chase mortgage on the building, pay, in cash, the
June 29, 1995 interest on the 16% Junior Subordinated Debentures,
repurchase $3.5 million of debentures and issue a call on another
$15 million of debentures. Additionally, the Company intends to
utilize the net proceeds from the divestiture of the Commercial
Aviation business and the collection of the Cummings Point, Inc.
note receivable to satisfy equipment financing obligations and
retire additional debentures.
The Company has also expanded its accounts receivable financing
facilities by $20 million, effective July 25, 1995, which will
further improve liquidity.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
This item is incorporated herein by reference to Note 10 to the
Consolidated Condensed Financial Statements included elsewhere in
this quarterly Report on Form 10-Q.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11 - Computations of Earnings Per Common Share
(b) Reports on Form 8-K
On July 13, 1995, the Company filed a report on Form 8-K reporting
Item 2, "Acquisition or Disposition of Assets," relating to the
sale of the stock of all of its subsidiaries engaged in the
business of commercial aircraft heavy maintenance and
modification. Also, under Item 5, "Other Events," the Company
announced the discontinuance of the Commercial Aviation Sector.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
DYNCORP
Date: August 14, 1995 T. E. Blanchard
T. E. Blanchard
Senior Vice President
and Chief Financial Officer
Date: August 14, 1995 G. A. Dunn
G. A. Dunn
Vice President and Controller
Exhibit 11
DYNCORP AND SUBSIDIARIES
COMPUTATIONS OF EARNINGS PER COMMON SHARE
(Dollars in Thousands Except Per Share Amounts)
Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
1995 1994 1995 1994
PRIMARY AND FULLY DILUTED
Earnings:
Net loss from continuing operations $ 594 $ (220) $ (481) $(1,825)
Preferred stock Class C dividends not
accrued or paid (468) (392) (915) (768)
Net loss from continuing operations
for common stockholder 126 (612) (1,396) (2,593)
Earnings (loss) from discontinued operations 80 (710) (267) (694)
Extraordinary item - - (127) -
Net loss for common stockholder $ 206 $(1,322) $(1,790) $(3,287)
Earnings per common share:
Net loss from continuing operations
for common stockholder $ 0.01 $ (0.10) $ (0.17) $ (0.44)
Earnings (loss) from discontinued
operations 0.01 (0.11) (0.03) (0.12)
Extraordinary item - - (0.02) -
$ 0.02 $ (0.21) $ (0.22) $ (0.56)
Shares:
Weighted average common shares
outstanding 12,704,956 6,251,341 8,246,421 5,862,005
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FRON THE
SECOND QUARTER 10Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
10Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-29-1995
<CASH> 23,591
<SECURITIES> 0
<RECEIVABLES> 169,167
<ALLOWANCES> 9
<INVENTORY> 612
<CURRENT-ASSETS> 222,799
<PP&E> 49,428
<DEPRECIATION> 30,740
<TOTAL-ASSETS> 356,851
<CURRENT-LIABILITIES> 126,228
<BONDS> 192,757
<COMMON> 923
0
3,000
<OTHER-SE> 18,377
<TOTAL-LIABILITY-AND-EQUITY> 356,851
<SALES> 421,576
<TOTAL-REVENUES> 421,576
<CGS> 0
<TOTAL-COSTS> 403,945
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,518
<INCOME-PRETAX> 721
<INCOME-TAX> 545
<INCOME-CONTINUING> (481)
<DISCONTINUED> (267)
<EXTRAORDINARY> (127)
<CHANGES> 0
<NET-INCOME> (875)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> (.22)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS UNAUDITED RESTATED FINANCIAL INFORMATION TO
REFLECT THE DISCONTINUANCE OF THE COMMERCIAL AVIATION BUSINESSES
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-START> JAN-01-1995 JAN-01-1994
<PERIOD-END> MAR-30-1995 DEC-31-1994
<CASH> 4,699 7,738
<SECURITIES> 0 0
<RECEIVABLES> 165,812 173,260
<ALLOWANCES> 9 9
<INVENTORY> 676 793
<CURRENT-ASSETS> 217,432 206,383
<PP&E> 47,240 64,786
<DEPRECIATION> 29,301 26,937
<TOTAL-ASSETS> 346,780 378,985
<CURRENT-LIABILITIES> 129,900 121,241
<BONDS> 192,431 230,445
<COMMON> 923 789
0 0
3,000 3,000
<OTHER-SE> 4,517 3,461
<TOTAL-LIABILITY-AND-EQUITY> 346,780 378,985
<SALES> 211,637 818,683
<TOTAL-REVENUES> 211,637 818,683
<CGS> 0 0
<TOTAL-COSTS> 203,822 783,095
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4,478 14,903
<INCOME-PRETAX> (802) (1,458)
<INCOME-TAX> (29) (2,236)
<INCOME-CONTINUING> (1,075) (352)
<DISCONTINUED> (347) (12,479)
<EXTRAORDINARY> (127) 0
<CHANGES> 0 0
<NET-INCOME> (1,549) (12,831)
<EPS-PRIMARY> (.25) (2.12)
<EPS-DILUTED> (.25) (2.12)
</TABLE>
