EDO
CORPORATION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Amendment to application or report filed pursuant
to Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934
EDO CORPORATION
(Exact Name of Registrant as specified in Charter)
Amendment No. 1
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K dated
December 17, 1993 as set forth in the pages attached hereto:
Item 7. Financial Statements and Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
EDO Corporation
(Registrant)
By M. J. Hegarty
Vice President
Date: February 14, 1994
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EXPLANATION
As disclosed in its filing of its Current Report on Form 8-K dated
December 17, 1993, Registrant acquired Automotive Natural Gas, Inc.
by way of an Agreement (the "Agreement") dated December 2, 1993
between Automotive Natural Gas, Inc., a Wisconsin corporation
("ANGI") and EDO Automotive Natural Gas, Inc., a Delaware
corporation ("EDO"), EDO acquired substantially all the assets and
certain liabilities of ANGI. EDO is a wholly-owned subsidiary of
EDO Energy Corporation, a Delaware corporation, which is a wholly-
owned subsidiary of EDO Corporation, a New York corporation. This
amendment to such Current Report on Form 8-K includes the
audited financial statements of ANGI and pro forma financial
information required by Item 7 of Form 8-K.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The following financial statements of ANGI are filed
as part of this report:
Independent Auditors' Report dated August 26, 1993
Balance Sheets at June 30, 1993 and June 30, 1992
Statement of Income for the year ended June 30, 1993
Statements of Stockholders' Deficit at June 30, 1993
Statements of Cash Flows for the year end June 30,
1993
Notes to Financial Statements
(b) Pro Forma Financial Information
The following pro forma consolidated financial
statements of the Registrant are filed as part of this
report:
Introduction
Notes to Pro Forma Consolidated Financial Statements
Pro Forma Consolidated Balance Sheet at September 25,
1993 (unaudited)
Pro Forma Consolidated Statements of Earnings for the
year ended December 31, 1992 (unaudited) and the nine
months ended September 25, 1993 (unaudited).
<PAGE>
McGLADREY & PULLEN
Certified Public Accountants and Consultants
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Automotive Natural Gas, Inc.
Milton, Wisconsin
We have audited the accompanying balance sheets of Automotive Natural Gas, Inc.
as of June 30, 1993 and 1992, and the related statements of income,
stockholders' (deficit) and cash flows for the year ended June 30, 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements 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 financial statements referred to above present fairly, in
all material respects, the financial position of Automotive Natural Gas, Inc.
as of June 30, 1993 and 1992, and the results of its operations and its cash
flows for the year ended June 30, 1993 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes 5 and 13 to the
financial statements, the Company has suffered recurring losses from
operations, its total liabilities exceeds its total assets and the bank has
filed suit against the Company demanding payment of the notes payable to the
bank. This raises substantial doubt about the Company's ability to continue as
a going concern. Management's plans in regard to these matters are also
described in Note 13. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
McGladrey & Pullen
Janesville, Wisconsin
August 26, 1993, except Note 13
and for the last paragraph of
Note 5 which are October 28, 1993.
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CONTENTS
INDEPENDENT AUDlTOR'S REPORT ON THE FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Balance sheets 2
Statement of income 3
Statement of stockholders' (deficit) 4
Statement of cash flows 5
Notes to financial statements 6-10
INDEPENDENT AUDITOR'S REPORT ON THE SUPPLEMENTARY INFORMATION 11
SUPPLEMENTARY INFORMATION
Income statement information:
Cost of goods sold 12
Selling, general and administrative expenses 13
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AUTOMOTIVE NATURAL GAS, INC.
BALANCE SHEETS
June 30, 1993 1992
ASSETS (Note 5)
CURRENT ASSETS
Cash $ 6,897 $ 48,344
Receivables:
Trade, less allowance for doubtful
accounts 1993 $50,000; 1992 $25,000 (Note 2) 1,731,947 2,191,532
Income tax refund claim 37,466 221,000
Employees 12,107 3,993
Inventories (Note 3) 2,072,695 2,713,525
Prepaid expenses 31,616 9,509
Other 10,710 48,264
Total current assets $ 3,903,438 $ 5,236,167
RECEIVABLE, officer-stockholder (Note 14) $ - - $ 204,775
PROPERTY AND EQUIPMENT (Note 6)
Property under capital lease $ 558,531 $ 558,531
Leasehold improvements 118,206 54,294
Equipment and fixtures, including
equipment acquired under capital
leases 1993 $153,803; 1992 $94,486 413,505 347,017
Computer equipment, including equipment acquired
under capital leases 1993 $78,959; 1992 $76,421 353,861 271,809
Vehicles 95,668 95,668
$ 1,539,771 $ 1,327,319
Less accumulated depreciation, including
amortization on property and equipment acquired
under capital leases 1993 $204,176; 1992 $46,315 522,289 409,897
$ 1,017,482 $ 917,422
INTANGIBLE ASSET, licensing agreement,
less accumulated amortization
1993 $31,250; 1992 $6,250 (Note 4) $ 218,750 $ $ 243,750
$ 5,139,670 $ 6,602,114
See Notes to Financial Statements.
June 30, 1993 1992
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Notes payable (Note 5) $ 1,174,262 $ 696,318
Current maturities of long-term debt (Note 5) 1,485 5,443
Current obligation under capital leases (Note 6) 97,276 64,642
Current obligation under license
agreement (Note 4) 50,000 175,000
Trade payables 3,543,033 2,590,062
Payable, officer-stockholder 12,947 - -
Excess of outstanding checks over bank balance 24,629 - -
Accrued expenses 217,733 215,847
Advance billings on sales orders (Note 2) 1,237,668 2,948,245
Total current liabilities $ 6,359,033 $ 6,695,557
LONG-TERM DEBT, less current maturities
Note payable (Note 5) $ - - $ 1,479
Obligation under capital leases (Note 6) 530,560 576,551
$ 530,560 $ 578,030
COMMITMENTS AND CONTINGENCY (Notes 4, 7 and 8)
STOCKHOLDERS' (DEFICIT)
Common stock, no par value; authorized 2,800
shares, issued and outstanding 1993 2,210
shares; 1992 2,420 shares $ 25,998 $ 27,337
Accumulated deficit (1,573,151) (698,810)
Receivable, officer-stockholder (Note 14) (202,770) - -
$(1,749,923) $ (671,473)
$ 5,139,670 $ 6,602,114
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AUTOMOTIVE NATURAL GAS, INC.
STATEMENT OF INCOME
Year Ended June 30,1993
Net sales (Note 11) $18,588,819
Cost of goods sold 16,152,035
Gross profit $ 2,436,784
Selling, general and administrative expenses:
Selling $ 1,329,022
General and administrative 1,853,405
$ 3,182,427
Operating (loss) $ (745,643)
Non-operating income (expense):
Interest income $ 13,670
Rental income (Note 6) 25,200
Interest expense (141,305)
$ (102,435)
(Loss) before cumulative effect of
change in accounting principle $ (848,078)
Cumulative effect on prior years of changing to
a different depreciation method (Note 12) 72,398
Net (loss) $ (775,680)
See Notes to Financial Statements.
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AUTOMOTIVE NATURAL GAS, INC.
STATEMENT OF STOCKHOLDER'S (DEFICIT)
Receivable
Common Accumulated Officer-
Year Ended June 30,1993 Stock Deficit stockholder
Balance, beginning $ 27,337 $ (698,810) $ - -
Net (loss) - - (775,680) - -
Purchase and retirement of 210
shares of common stock (1,339) (98,661) - -
Reclassification of receivable,
officer-stockholder to a contra-
equity account (Note 14) - - - - (202,770)
Balance, ending $ 25,998 $(1,573,151) $ (202,770)
See Notes to Financial Statements.
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AUTOMOTIVE NATURAL GAS, INC.
STATEMENT OF CASH FLOWS
Year Ended June 30,1993
CASH FLOWS FROM OPERATING ACTIVlTIES
Net (loss) $ (775,680)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Depreciation and amortization 184,790
Amortization on intangible 25,000
Cumulative effect on prior years of changing
to a different depreciation method (72,398)
Change in assets and liabilities:
Decrease in receivables 451,471
Decrease in income tax refund claim 183,534
Decrease in inventories 640,830
(Increase) in prepaid expenses (22,107)
Decrease in other assets 37,554
Increase in accounts payable and
accrued expenses 967,804
(Decrease) in advance billings on sales orders (1,710,577)
Net cash (used in) operating activities $ (89,779)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment $ (150,597)
Principal payments received on note receivable
officer-stockholder 2,005
Net cash (used in) investing activities $ (148,592)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on revolving credit agreements $ 477,944
Payments on obligation under license agreement (125,000)
Principal payments on long-term borrowings, including
capital lease obligations (80,649)
Increase in outstanding checks over bank balance 24,629
Purchase of 210 shares of common stock for retirement (100,000)
Net cash provided by financing activities $ 196,924
Net (decrease) in cash $ (41,447)
Cash:
Beginning 48,344
Ending $ 6,897
Year Ended June 30,1993
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 141,305
Income tax refund $ 183,534
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Capital lease obligations incurred for the use
of equipment $ 61,855
See Notes to Financial Statements.
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AUTOMOTIVE NATURAL GAS, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Nature of Business and Significant Accounting Policies
Nature of business: Automotive Natural Gas, Inc. ("The Company") manufactures
and installs pumping stations for the refueling of vehicles directly from
natural gas pipelines and storage facilities. The Company also manufactures and
installs conversion kits in vehicles to allow the use of natural gas as an
alternative fuel source.
The Company's customers consist primarily of private companies and public
utilities located throughout the United States. Receivables on pumping stations
are due as work is completed on the station with the final 10% due upon
delivery. Receivables on conversion kits are due within 10 days of
installation.
A summary of the Company's significant accounting policies follows:
Inventories: Inventories are stated at the lower of cost (first-in, first-out
method) or market. Work in process and finished goods include materials, labor
and overhead.
Property and equipment: Property and equipment is carried at cost less
accumulated depreciation and amortization. It is the Company's policy to
include amortization on assets acquired under capital leases with depreciation
on owned assets. Depreciation and amortization is computed using the
straight-line method. Leasehold improvements are depreciated over the shorter
of the term of the lease or their estimated useful lives.
Intangible: The licensing agreement is being amortized by the straight-line
method over a 10 year period.
Estimated warranty claims: The Company sells its products with a warranty that
provides for repairs or replacements of any defective parts
Note 1. Nature of Business and Significant Accounting Policies (continued)
for a one year period after the sale. At the time of the sale, the Company
accrues an estimate of the cost of providing the warranty based on prior
experience. The estimated warranty liability totaled $18,000 at June 30, 1993
and 1992, and is included in accrued expenses.
Note 2. Advance Billings on Sales Orders
The Company's policy is to bill customers varying percentages of the total
contract price to manufacture pumping stations at various stages of completion
of the contract. The accounts receivable balance includes $383,778 and $633,420
of these billings as of June 30, 1993 and 1992, respectively.
Note 3. Composition of Inventories
The composition of inventories is as follows as of June 30,1993 and 1992:
1993 1992
Finished goods $ 448,562 $ 1,165,812
Work-in-process 395,241 591,570
Production materials and purchases held for resale 1,228,892 956,143
$ 2,072,695 $ 2,713,525
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AUTOMOTIVE NATURAL GAS, INC.
NOTES TO FINANCIAL STATEMENTS
Note 4. Licensing Agreement, Obligation Under Licensing Agreement and
Subsequent Event
In April, 1992 the Company entered into an agreement which granted the Company
exclusive rights to use technology in the manufacturing of conversion kits used
in motor vehicles allowing the use of compressed natural gas as an alternative
fuel source. The cost of this licensing agreement was $250,000. The Company
owed $50,000 and $175,000 under this agreement at June 30, 1993 and 1992,
respectively.
On July 1, 1993, the Company purchased this technology under an agreement
requiring periodic payments of varying amounts totalling $250,000. The present
value of these payments using a discount rate of 10% is $213,600.
Note 5. Pledged Assets, Current Notes Payable and Long-term Debt
Current notes payable:
Note payable, Bank One, $500,000 line-of-credit, due on demand $ 500,000
Note payable, Bank One, $700,000 line-of-credit, due on demand 674,262
$ 1,174,262
Long-term debt:
Note payable, Bank One, final payment due September 1993 $ 1,485
Interest on the current notes payable is at a stated percentage over the bank's
reference rate adjusted daily. Reference rate was 6% at June 30, 1993.
Collateral on these notes includes a general business security agreement
covering substantially all assets of the Company, the guarantee of an
officer-stockholder and a life insurance policy on an officer-stockholder
assigned to the bank.
Note 5. Pledged Assets, Current Notes Payable and Long-term Debt (continued)
As of June 30, 1993, the Company was in violation of the bank loan agreements.
The bank demanded full payment on the notes in October 1993. On October 28,
1993, the bank served legal notice on the Company that it has filed suit for a
money judgment and replevin of personal property and equipment. If the Company
does not provide a proper answer within 20 days, the court may grant judgment
against the Company for the amounts outstanding under the notes payable to the
bank. A judgment awarding money may be enforced by garnishment or seizure of
property.
Note 6. Obligation Under Capital Leases
Property: This obligation includes the present value of the balance due in
future years for lease rentals for the use of land and building facilities
leased from a stockholder of the Company. The lease is payable in monthly
installments of principal and interest of approximately $6,200 until expiration
of the lease in June, 2002. Since the present value of the future minimum lease
payments at the beginning of the lease approximated the fair value of the
leased asset at that date, the lease is considered to be a capital lease and
has been so recorded with recognition of a leasehold interest in land and
building at a cost of $558,531 on which accumulated amortization totalled
$139,845 and $63,230 at June 30, 1993 and 1992, respectively.
The Company sublet a portion of these facilities to an affiliated company under
a month-to-month agreement. Rental income under this agreement for the year
ended June 30, 1993 was $25,200. This agreement expires on October 31, 1993.
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AUTOMOTIVE NATURAL GAS, INC.
NOTES TO FINANCIAL STATEMENTS
Note 6. Obligation Under Capital Leases (continued)
The future minimum lease payments under this capital lease are as follows.
Year Ending June 30, Amount
1994 $ 80,600
1995 74,400
1996 74,400
1997 74,400
1998 74,400
Thereafter 297,600
Total minimum lease payments $ 675,800
Less amounts representing interest 206,037
$ 469,763
Less current maturities 38 971
$ 430,792
Equipment: The obligation under capital leases also includes the present value
of the balance due for future lease rentals for the use of computer, telephone,
and office equipment. Since the present value of the future minimum lease
payments at the beginning of these leases approximated the fair value of the
leased assets at that date, these leases are considered to be capital leases
and have been so recorded. The equipment and related liabilities under the
capital leases were recorded at the present value of the future lease payments
due under the leases, as determined with various discount rates. The related
liabilities are payable in monthly installments of principal and interest until
the expiration of the leases.
The future minimum lease payments under these capital leases are as follows:
Note 6. Obligation Under Capital Leases (continued)
Year Ending June 30, Amount
1994 $ 71,388
1995 64,420
1996 41,327
1997 5,212
Total minimum lease payments $ 182,347
Less amount representing interest 24,274
$ 158,073
Less current maturities 58,305
$ 99,768
Note 7. Contingency
The Company had an open letter-of-credit with Bank One for $50,000.
Note 8. Lease Commitments
The Company has entered into agreements to lease automobiles, office equipment
and temporary office space.
The total minimum rental commitments under these operating leases are as
follows:
Year Ending June 30, Amount
1994 $ 18,268
1995 850
$ 19,118
The total rent expense for the year ended June 30,1993 was approximately
$141,809.
Note 9. Employee Fringe Benefits
The Company has a profit sharing plan with a 401(k) provision covering all
employees who meet the eligibility requirements set forth in the plan. The
amount the Company contributes to the plan is at the discretion of the
Company's Board of Directors. The total expense related to the plan for the
year ended June 30, 1993 was $16,431.
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AUTOMOTIVE NATURAL GAS, INC.
NOTES TO FINANCIAL STATEMENTS
Note 10. Income Taxes and Unused Net Operating Loss
At June 30, 1993, the Company has net operating loss carryforwards of
approximately $1,142,000 available under provisions of the Internal Revenue
Code to be applied against future federal taxable income. These carryforwards
expire during 2007 and 2008. These carryforwards have been used to eliminate
the deferred income tax credits.
The resulting reduction in deferred income tax credits will be reversed when
the applicable net operating loss carryforwards are actually applied against
taxable income on the Company's income tax returns or when the loss
carryforwards expire.
The Company also has a net operating loss carryforward of approximately
$1,596,000 available under provisions of the Wisconsin Department of Revenue
Code to be applied against future Wisconsin taxable income. These carryforwards
expire during 2007 and 2008.
In February 1992, the Financial Accounting Standards Board issued Statement No.
109, Accounting for Income Taxes, which significantly changes the recognition
and measurement of deferred tax assets and liabilities. Statement No. 109
requires that deferred taxes be recorded on a liability method and adjusted
when new tax rates are enacted. Deferred tax balances are presently recorded
using the rates in effect when the transactions giving rise to the deferred tax
occur, and deferred tax balances are not adjusted when tax rates change. The
Company is required to adopt Statement No. 109 beginning with the year ended
June 30, 1994, although earlier adoption is permitted. The Statement provides
that the effect of its adoption may be recorded entirely in the year of
adoption or retroactively by restating one or more prior years.
Note 10. Income Taxes and Unused Net Operating Loss (continued)
The Company has not yet completed its assessment of the effect Statement No.
109 may have on the accompanying financial statements, or whether to restate
any of the prior years. However, based on its current assessment, the Company
does not believe the adoption of Statement No. 109 will materially affect the
accompanying financial statements.
Note 11. Major Customers
Net sales for the year ended June 30, 1993 include sales to the following major
customers (each of which accounted for 10% or more of the total net sales of
the Company).
Customer A $ 3,975,447
Customer B $ 3,407,800
Note 12. Accounting Change
In 1993, the Company changed its depreciation method for equipment, fixtures
and vehicles from an accelerated method to the straight-line method.
The effect of this change in accounting method was to increase net income by
$72,398 in 1993. The change had no income tax effect due to net operating loss
carryforwards.
The Company believes the straight-line method of depreciation will more
accurately reflect the economic depreciation of the equipment.
Note 13. Management's Plans for Future Operations
As shown in the accompanying financial statements, the Company has incurred
losses from operations resulting in cash flow problems and its total
liabilities exceed its total assets by approximately $1,750,000 as of June
30,1993.
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AUTOMOTIVE NATURAL GAS, INC.
NOTES TO FINANCIAL STATEMENTS
Note 13. Management's Plans for Future Operations (continued)
Much of its cash flow and working capital problems are also due to the
significant growth in sales over the past few years.
Management instituted a cost reduction program during August 1993. The backlog
of sales as of June 30,1993 was approximately $1,970,000 and the Company has
received additional orders for refueling stations from July 1, 1993 through
October 28, 1993 of approximately $1,530,000. In 1993, the Company estimates it
spent approximately $500,000 (unaudited) to reengineer its refueling stations
which management believes will improve margins on this product. Management
believes these factors will contribute towards achieving profitability.
However, as discussed in Note 5, the Company is in violation of its bank loan
agreements and has not been able to work out arrangements with its bank
regarding a continuing lending relationship. The bank has sued the Company
demanding payment of these loans. To date, management has not been able to find
another lender to replace its current lender and to provide financing under a
plan which will provide for the Company's needs. As a result of this situation,
the Company is seeking alternatives and has entered into negotiations regarding
selling the Company or its operations.
Note 14. Receivable, Officer-stockholder
The receivable from an officer who is the majority stockholder substantially
arose in 1990 when a major addition was made to a building which the Company
leases from this individual. The receivable arose because the total cost of the
addition exceeded the amount borrowed to finance the addition.
The original intent of this stockholder was to repay this advance over 15
years; however, Note 14. Receivable, Officer-stockholder (continued)
during the year ended June 30,1993, his ability to repay was diminished due to
the deteriorated financial condition of the Company which raises concerns about
the Company's ability to make the monthly rent payments to the stockholder.
Additionally, there are the potential ramifications of the stockholder's
personal guarantee on the Company's notes payable to the bank, which is also
the mortgage holder on this property. Also, this receivable is not evidenced by
a signed note. Accordingly, this receivable has been presented on the
accompanying balance sheet as a reduction of stockholders' equity.
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<PAGE>
McGLADREY & PULLEN
Certified Public Accountants and Consultants
INDEPENDENT AUDITOR'S REPORT ON THE SUPPLEMENTARY INFORMATION
To the Board of Directors
Automotive Natural Gas, Inc.
Milton, Wisconsin
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplementary information is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
McGLADREY & PULLEN
Janesville, Wisconsin
August 26, 1993
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AUTOMOTIVE NATURAL GAS, INC.
COST OF GOODS SOLD
Year Ended June 30,1993
.
Percent of
Amount Net Sales
Material $12,171,563 65.5
Subcontract costs $ 450,947 2.4
Direct labor $ 755,803 4.1
Manufacturing expenses:
Indirect labor $ 671,227 3.6
Payroll taxes 221,495 1.2
Employee benefits 218,689 1.2
Depreciation 120,114 0.6
Rent 40,553 0.2
Telephone 7,476 - -
Utilities 27,670 0.1
Property taxes 16,515 0.1
Maintenance 38,653 0.2
Warranty expense 26,416 0.1
Insurance 223,959 1.2
Operating supplies 120,567 0.6
Travel, meals and entertainment 123,353 0.7
Miscellaneous 3,456 --
Total manufacturing expenses $ 1,860,143 9.8
Total manufacturing costs $15,238,456 81.8
Decrease in work-in-process inventory 196,329 1.1
Total cost of goods manufactured $15,434,785 82.9
Decrease in finished goods inventory 717,250 3.9
Total cost of goods sold $16,152,035 86.8
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AUTOMOTIVE NATURAL GAS, INC.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Year Ended June 30,1993
Selling expenses:
Wages and commissions $ 805,460
Payroll taxes 61,297
Employee benefits 21,430
Depreciation 36,958
Rent 17,322
Repairs and maintenance 5,915
Insurance 1,728
Property taxes 1,300
Utilities and telephone 8,841
Travel, meals and entertainment 121,266
Advertising 127,406
Provision for doubtful accounts 40,577
Freight 57,944
Postage 1,556
Supplies 12,208
Miscellaneous 7,814
Total selling expenses $ 1,329,022
General and administrative expenses:
Officer salaries $ 216,616
Wages 493,979
Payroll taxes 51,322
Employee benefits 51,246
Depreciation and amortization 52,718
Rent 83,934
Repairs and maintenance 34,635
Insurance 66,580
Property taxes 15,849
Utilities 8,565
Telephone 101,049
Professional fees 367,820
Supplies 124,232
Research and development 11,912
Dues and subscriptions 28,058
Postage 26,532
Travel, meals and entertainment 101,961
Miscellaneous 16,397
Total general and administrative expenses $ 1,853,405
$ 3,182,427
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<PAGE>
EDO Corporation
Pro Forma Consolidated Financial Statements
Introduction
Pursuant to an Agreement (the "Agreement") dated December 2, 1993 between
Automotive Natural Gas, Inc., a Wisconsin corporation ("ANGI") and EDO
Automotive Natural Gas, Inc., a Delaware corporation ("EDO"), EDO acquired
substantially all the assets and certain liabilities of ANGI. EDO is a
wholly-owned subsidiary of EDO Energy Corporation, a Delaware corporation,
which is a wholly-owned subsidiary of EDO Corporation, a New York corporation.
The assets acquired include the inventory, machinery, intellectual property and
other assets associated with the design and manufacture of compressed natural
gas filling stations, dispensers and automotive conversion kits. The negotiated
consideration, using available cash, was $68,000 plus the assumption of certain
liabilities which liabilities are in excess of the value of the acquired assets
by approximately $2.6 million. Additional costs incurred as a result of this
transaction were approximately $422,000. In addition, certain additional
payments, subject to possible conditions, and contingent payments based on
future earnings may be made. It is expected that EDO will continue the use of
the acquired assets.
The following unaudited pro forma consolidated balance sheet as of September
25, 1993 and the unaudited pro forma consolidated statements of earnings for
the year ended December 31, 1992 and the nine months ended September 25, 1993
give effect to the above acquisition by EDO Corporation.
The pro forma consolidated financial statements assume that the acquisition for
which pro forma effects are shown were completed as of September 25, 1993 for
the pro forma consolidated balance sheet, and as of January 1, 1992 for the pro
forma consolidated statements of earnings. The acquisition has been accounted
for as a purchase.
The pro forma results of operations are not necessarily indicative of the
actual results of operations that would have occurred had the purchase been
made at the beginning of the periods presented. The pro forma financial
statements should be read in conjunction with the notes thereto included
elsewhere herein and the Registrant's periodic reports filed pursuant to the
Securities Exchange Act of 1934.
<PAGE>
EDO Corporation
Notes to Pro Forma Consolidated
Financial Statements (Unaudited)
Pro forma adjustments to record the acquisition are summarized below:
(a) To record the purchase of substantially all the assets and
certain liabilities of ANGI.
(b) To record the reduction of interest income as a result of the
Registrant's use of cash to effect the acquisition.
(c) To record amortization of goodwill. Goodwill will be
amortized over 15 years using the straight line method.
(d) To record the estimated income tax effect of the pro forma
adjustments.
<PAGE>
EDO Corporation
Pro Forma Consolidated Balance Sheet
September 25, 1993
(In Thousands)
EDO ANGI Pro Pro
Historical Historical Forma Forma
ASSETS (Unaudited) (Unaudited) Adjust. Total
Cash $ 11,166 (72) (1,540)(a) 9,554
Accounts Receivable 37,064 1,185 (200)(a) 38,049
Inventory 18,695 1,732 (400)(a) 20,027
Prepayments and Other 3,225 164 3,389
Total Current Assets 70,150 3,009 (2,140) 71,019
Net Plant and Equipment 39,519 965 40,484
Goodwill 8,359 3,173(a) 11,532
Deferred Charges and 7,592 659 8,251
Other Assets
$ 125,620 4,633 1,033 131,286
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable and Accrued
Expenses 15,186 3,495 475(a) 19,156
Advances from Customers 4,070 856 4,926
Notes Payable 1,472 (1,472)(a) 0
Federal Income Taxes
Total Current Liabilities 19,256 5,823 (997) 24,082
Deferred Income Taxes 2,182 2,182
Long Term Debt:
7% Convertible Subordinated
Debentures 29,317 29,317
Other 598 598
Total Long Term Debt 29,317 598 0 29,915
ESOT Loan Obligation 15,285 15,285
Postretirement Obligation 13,741 13,741
Minority Interest 4,976 4,976
Shareholders' Equity:
Preferred Shares, par value
$1 per share, authorized 500,000
shares, issued 80,842 shares 81 81
Common shares, par value
$1 per share, authorized
25,000,000 shares, 8,454 26 (26)(a) 8,454
issued 8,453,902 shares
Additional paid-in capital 42,347 42,347
Retained Earnings 48,922 (1,814) 2,056(a) 49,164
Less:
Treasury shares at cost, (42,694) (42,694)
3,004,060 at 9/25/93
Translation Adjustment (722) (722)
ESOT Loan Obligation (15,285) (15,285)
Deferral under Long-Term (240) (240)
Incentive Plans
Total Shareholders' Equity 40,863 (1,788) 2,030 41,105
Total Liabilities $ 125,620 4,633 1,033 131,286
and Shareholders' Equity
<PAGE>
EDO Corporation
Pro Forma Consolidated Statements of Earnings
For the Year Ended December 31,1992
(In Thousands except per share amounts)
EDO ANGI Pro Pro
Historical Historical Forma Forma
(Audited) (Unaudited) Adjust. Total
Net Sales $ 126,166 14,459 140,625
Costs and Expenses:
Cost of Sales 92,045 12,050 104,095
Selling, general and
administrative 18,477 2,874 212(c) 21,563
Research and Development 5,286 5,286
115,808 14,924 212 130,944
Operating Earnings 10,358 (465) (212) 9,681
Non-Operating Income (Expense)
Interest Income 176 19 (54)(b) 141
Interest Expense (2,680) (119) (2,799)
Litigation Settlement - 0
Other, net (443) 35 (408)
(2,947) (65) (54) (3,066)
Earnings (Loss) before Federal
and foreign income taxes
and minority interest 7,411 (530) (266) 6,615
Provision (benefit) for Federal
and foreign income taxes 1,684 (1) (271)(d) 1,412
Net Earnings (Loss) before
minority interest 5,727 (529) 5 5,203
Minority Interest (50) (50)
Net Earnings (loss) 5,677 (529) 5 5,153
Dividends on preferred shares 1,455 1,455
Net Earnings (loss) available
for common shares $ 4,222 (529) 5 3,698
Net Earnings (loss)
per common share: $ 0.78 0.69
Average shares outstanding 5,389 5,389
<PAGE>
EDO Corporation
Pro Forma Consolidated Statements of Earnings
For the Nine Months Ended September 25,1993
(In Thousands except per share amounts)
EDO ANGI Pro Pro
Historical Historical Forma Forma
(Unaudited) (Unaudited) Adjust. Total
Net Sales $ 77,020 10,770 87,790
Costs and Expenses:
Cost of Sales 60,174 10,297 70,471
Selling, general and
administrative 11,602 1,882 159(c) 13,643
Research and Development 4,610 4,610
76,386 12,179 159 88,724
Operating Earnings 634 (1,409) (159) (934)
Non-Operating Income (Expense)
Interest Income 215 8 (40)(b) 183
Interest Expense (1,859) (139) (1,998)
Litigation Settlement (1,212) (1,212)
Other, net (265) 94 (171)
(3,121) (37) (40) (3,198)
Earnings (Loss) before
Federal and foreign income
taxes and minority interest (2,487) (1,446) (199) (4,132)
Provision (benefit) for Federal
and foreign income taxes (1,235) (559)(d) (1,794)
Net Earnings (Loss) before
cumulative effect of
accounting change and
minority interest (1,252) (1,446) 360 (2,338)
Cumulative effect of change in
accounting for postretirement
health benefits (net of taxes
of $4,000) (9,400) (9,400)
Net Earnings (loss) before
minority interest (10,652) (1,446) 360 (11,738)
Minority Interest 495 495
Net Earnings (loss) (10,157) (1,446) 360 (11,243)
Dividends on preferred shares 1,064 1,064
Net Earnings (loss) available
for common shares $ (11,221) (1,446) 360 (12,307)
Earnings (loss) per common share:
Net Earnings (loss) available
for common shares before
accounting change $ (0.34) (0.54)
Cumulative effect of change in
accounting for postretirement
health benefits (1.74) (1.74)
Net Earnings (loss) $ (2.08) (2.28)
Average shares outstanding 5,395 5,395
