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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 September 25, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 1-3985
EDO CORPORATION
(Exact name of registrant as specified in its charter)
New York No. 11-0707740
(State or other jurisdiction (I.R.S. Employee
of incorporation or organization) Identification No.)
60 East 42nd Street, Suite 5010, New York, NY 10165
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 716-2000
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 requirement 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 close of the period covered by this report.
Class Outstanding at Nov. 8, 1999
- ------------------------------------- ----------------------------
Common shares, par value $1 per share 6,746,557
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EDO CORPORATION
INDEX
Page No.
Face Sheet 1
Index 2
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -
September 25, 1999 and
December 31, 1998 3
Consolidated Statements of Operations -
Three Months Ended
September 25, 1999 and
September 26, 1998 4
Consolidated Statements of Operations -
Nine Months Ended
September 25, 1999 and
September 26, 1998 5
Consolidated Statements of Cash Flows -
Nine Months Ended
September 25, 1999 and
September 26, 1998 6
Notes to Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis
of Results of Operations and
Financial Condition 9-14
Part II Other Information 14
Signature 15
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
EDO Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
Sept. 25, 1999 Dec. 31, 1998
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 13,120 $ 21,991
Marketable securities 15,880 11,519
Accounts receivable, net 32,999 30,182
Inventories 12,009 9,250
Deferred tax asset, net 3,170 1,280
Prepayments and other current assets 1,988 2,071
--------- ---------
Total current assets 79,166 76,293
Property, plant and equipment, net 9,243 8,694
Notes receivable 1,663 2,300
Cost in excess of fair value of net
assets acquired, net 4,795 5,308
Other assets 14,395 12,215
Net assets of discontinued operations 9,920 19,820
--------- ---------
$ 119,182 $ 124,630
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 22,938 $ 23,253
Contract advances and deposits 15,980 13,589
Note payable - 5,460
Current portion of long-term debt - 1,317
--------- ----------
Total current liabilities 38,918 43,619
Long-term debt 27,765 28,000
ESOT loan obligation 7,811 8,955
Postretirement obligation 3,443 3,443
Environmental obligation 2,174 2,562
Shareholders' equity:
Preferred shares, par value $1 per share
(liquidation preference $213.71 per share
or $12,312 in the aggregate in 1999),
authorized 500,000 shares, 57,609 issued
in 1999 and 60,641 in 1998) 58 61
Common shares, par value $1 per share,
authorized 25,000,000 shares, issued
8,453,902 in both periods 8,454 8,454
Additional paid-in capital 28,682 30,142
Retained earnings 35,057 35,294
Accumulated other comprehensive loss (279) -
--------- ---------
71,972 73,951
Less: Treasury shares at cost
(1,711,798 shares in 1999 and
1,821,634 shares in 1998) (24,221) (25,775)
ESOT loan obligation ( 7,811) ( 8,955)
Deferred compensation under
Long-Term Incentive Plan (869) ( 1,170)
--------- ---------
Total shareholders' equity 39,071 38,051
--------- ---------
$119,182 $124,630
========= =========
See accompanying Notes to Consolidated Financial Statements.
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EDO Corporation and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
For the three months ended
Sept. 25, 1999 Sept. 26, 1998
(unaudited)
Continuing Operations:
Net sales $ 23,812 $ 20,035
Costs and expenses
Cost of sales 17,323 14,044
Selling, general and administrative 3,342 2,876
Research and development 691 428
-------- -------
21,356 17,348
Operating earnings 2,456 2,687
Non-operating income (expense)
Interest income 431 435
Interest expense (648) (569)
Other, net 153 ( 25)
--------- ---------
(64) (159)
--------- ---------
Earnings before Federal income taxes 2,392 2,528
Federal income tax expense 715 -
--------- ---------
Earnings from continuing operations 1,677 2,528
Discontinued Operations:
Earnings (loss) from discontinued
satellite systems business, net of
income taxes 167 (256)
Estimated loss on disposal, net of
income tax benefit (3,675) -
--------- ---------
Loss from discontinued operations (3,508) (256)
Net earnings (loss) (1,831) 2,272
Dividends on preferred shares 246 264
--------- ---------
Net earnings(loss)available for common shares $ (2,077) $ 2,008
========= =========
Earnings (loss) per common share:
Basic:
Continuing operations $ 0.21 $ 0.34
Discontinued operations (0.52) (0.04)
--------- ---------
Net $ (0.31) $ 0.30
========= =========
Diluted:
Continuing operations $ 0.18 $ 0.29
Discontinued operations (0.43) (0.03)
--------- ---------
Net $ (0.25) $ 0.26
========== =========
Weighted average shares outstanding:
Basic 6,728 6,590
========= =========
Diluted 8,168 7,833
========= =========
See accompanying Notes to Consolidated Financial Statements.
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EDO Corporation and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
For the nine months ended
Sept. 25, 1999 Sept. 26, 1998
(unaudited)
Continuing Operations:
Net sales $ 70,495 $ 57,870
Costs and expenses
Cost of sales 52,195 41,300
Selling, general and administrative 9,911 8,290
Research and development 1,953 1,257
-------- --------
64,059 50,847
Operating earnings 6,436 7,023
Non-operating income (expense)
Interest income 1,219 1,462
Interest expense (1,833) (1,675)
Other, net 153 ( 75)
--------- ---------
(461) (288)
--------- ---------
Earnings before Federal income taxes 5,975 6,735
Federal income tax expense 1,790 -
--------- ---------
Earnings from continuing operations 4,185 6,735
Discontinued Operations:
Earnings (loss) from discontinued
satellite systems business, net of
income taxes 609 (280)
Estimated loss on disposal, net of income
tax benefit (3,675) -
--------- ---------
Loss from discontinued operations (3,066) (280)
Net earnings 1,119 6,455
Dividends on preferred shares 755 804
--------- ---------
Net earnings available for common shares $ 364 $ 5,651
========= =========
Earnings (loss) per common share:
Basic:
Continuing operations $ 0.51 $ 0.91
Discontinued operations (0.46) (0.04)
--------- ---------
Net $ 0.05 $ 0.87
========= =========
Diluted:
Continuing operations $ 0.44 $ 0.78
Discontinued operations (0.38) (0.04)
--------- ---------
Net $ 0.06 $ 0.74
========= =========
Weighted average shares outstanding:
Basic 6,683 6,523
========= =========
Diluted 8,022 7,701
========= =========
See accompanying Notes to Consolidated Financial Statements.
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EDO Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
For the nine months ended
Sept. 25, 1999 Sept. 26, 1998
(unaudited)
Operating activities:
Earnings from continuing operations $ 4,185 $ 6,735
Adjustments to earnings from continuing
operations to arrive at cash provided
by continuing operations:
Depreciation and amortization 2,753 1,626
Gain on repurchase of convertible debentures (147) -
Deferred compensation expense 301 301
Common shares issued for directors' fees 57 45
Changes in:
Accounts receivable (2,817) (2,978)
Inventories (2,759) (3,430)
Prepayments, other current assets
and other (2,380) (1,302)
Accounts payable, accrued liabilities
and other (703) 533
Contract advances and deposits 2,391 3,966
-------- --------
Cash provided by continuing operations 881 5,496
Net cash provided by discontinued operations 4,964 2,036
Investing activities:
Purchase of property, plant and equipment (2,462) (2,381)
Acquisition of assets of TSA - (4,308)
Purchase of marketable securities (8,176) (13,044)
Sale or redemption of marketable securities 3,536 17,377
------- --------
Cash used by investing activities (7,102) (2,356)
Financing activities:
Proceeds from exercise of stock options 34 338
Payments received on notes receivable 575 450
Payment made on note payable (5,460) -
Repurchase of convertible debentures (1,405) -
Payment of common share cash dividends (603) (557)
Payment of preferred share cash dividends (755) (804)
-------- --------
Cash used by financing activities (7,614) (573)
Net (decrease) increase in cash and cash (8,871) 4,603
equivalents
Cash and cash equivalents at beginning
of year 21,991 20,616
-------- --------
Cash and cash equivalents at end of period $13,120 $25,219
======== ========
Supplemental disclosures:
Cash paid for: Interest $ 1,026 $ 1,087
Income taxes
(Federal, state and local) 1,969 1,281
See accompanying Notes to Consolidated Financial Statements.
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Notes to Consolidated Financial Statements
Unaudited Consolidated Financial Statements
The accompanying unaudited, consolidated financial statements have been
prepared in accordance with instructions to Form 10-Q and, therefore, do not
include all information and footnotes normally included in consolidated
financial statements prepared in conformity with generally accepted accounting
principles. They should be read in conjunction with the consolidated financial
statements of EDO Corporation and subsidiaries (the "Company") for the fiscal
year ended December 31, 1998, filed by the Company on Form 10-K with the
Securities and Exchange Commission on March 17, 1999.
The accompanying consolidated financial statements are unaudited and include
all adjustments (consisting of normal recurring adjustments and accruals) that
management considers necessary for a fair presentation of its consolidated
financial position and results of operations for the interim periods presented.
The results of operations for the interim periods are not necessarily
indicative of the results that may be expected for the entire year.
Discontinued Operations
In November 1999, the Board of Directors of the Company approved the decision
to sell its Satellite Products business. Pursuant to EITF 95-18, "Accounting
and Reporting for a Discontinued Business Segment When the Measurement Date
Occurs after the Balance Sheet Date but before the Issuance of Financial
Statements," as of September 25, 1999, the Company recorded an estimated loss
on the sale of this business of $3.7 million (net of a $1.8 million income tax
benefit) based on an estimated sales price of $10.0 million. The estimated
sales price is based on negotiations the Company has had with a potential
buyer.
The Company anticipates that the sale of the Satellite Products business will
be completed within the next three months and that the business will operate at
approximately break-even during the disposal period. Accordingly, pursuant to
the aforementioned EITF, the consolidated financial statements of the Company
have been restated to reflect the Satellite Products business as discontinued
operations. Revenues, costs and expenses, assets and liabilities, cash flows
and backlog associated with the Satellite Products business have been excluded
from the respective captions.
Summarized financial information for the discontinued operations is as follows:
Three months ended Nine months ended
Sept. 25, Sept. 26, Sept. 25, Sept. 26,
1999 1998 1999 1998
(in thousands) (in thousands)
Net sales $3,650 $3,142 $11,962 $12,005
Net earnings (loss) $167 $(256) $609 $(280)
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Sept. 25, Dec. 31,
1999 1998
(in thousands)
Accounts receivable $6,257 $ 9,671
Inventory 212 580
Property, plant and equipment 4,275 5,270
Goodwill 6,155 6,428
Other assets 104 -
Reserve for loss on disposal (4,636) -
Liabilities (2,447) (2,129)
-------- --------
Net assets of discontinued
operations $9,920 $19,820
======== ========
Backlog Data
The dollar amount of backlog of firm orders, excluding that of the discontinued
operations, at September 25, 1999 was $132,595,000 compared to $124,493,000 at
September 26, 1998.
Inventories
Inventories are summarized by major classification as follows:
Sept. 25, 1999 Dec. 31, 1998
(in thousands)
Raw materials and supplies $ 4,278 $ 3,960
Work-in-process 7,306 5,038
Finished goods 425 252
------- -------
$ 12,009 $ 9,250
======= =======
Earnings Per Share
The following table sets forth the computation of basic and diluted earnings
per share:
Three months ended Nine months ended
Sept. 25, Sept. 26, Sept. 25, Sept. 26,
1999 1998 1999 1998
(in thousands) (in thousands)
Numerator:
Earnings from continuing
operations available for
common shares $ 1,431 $ 2,264 $ 3,430 $ 5,931
Impact of assumed conversion
of preferred shares 41 32 115 85
------- ------- ------- -------
Numerator for diluted
calculation $ 1,472 $ 2,296 $ 3,545 $ 6,016
======== ======= ======= =======
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Denominator:
Weighted average common
shares outstanding 6,728 6,590 6,683 6,523
Dilutive effect of stock
options 65 163 62 181
Dilutive effect of conversion
of preferred shares 1,375 1,080 1,277 997
------ ------ ------ ------
Denominator for diluted
calculation 8,168 7,833 8,022 7,701
======= ======= ======= ======
Comprehensive Income
As of September 25, 1999, accumulated other comprehensive loss included in the
accompanying consolidated balance sheet represents unrealized holding losses on
available for sale securities. Comprehensive income (loss) for the three month
and nine month periods ended September 25, 1999 was $(2,110,000) and $840,000,
respectively. Comprehensive income equaled net income for the comparable 1998
periods.
Acquisition
On November 2, 1999, the Company acquired the stock of M. Technologies, Inc.,
an integrator of aircraft weapons and avionics systems, for $4.5 million.
Three million dollars was paid at closing and the remaining $1.5 million will
be paid over three years. Contingent consideration may also be paid if certain
performance criteria are met. The transaction will be accounted for as a
purchase. M. Technologies' sales for 1998 were $4.4 million. On a pro forma
basis, had the M. Technologies acquisition taken place as of the beginning of
the periods presented, results of operations for those periods would not have
been materially affected.
Item 2.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
As discussed in the Notes to Consolidated Financial Statements, the Company has
made a decision to sell its Satellite Products segment. Accordingly, the
Company's continuing operations consist solely of its Defense and Aerospace
Systems segment.
Three Months Ended September 25, 1999 compared with Three Months Ended
September 26, 1998
Net sales for the third quarter of 1999 were $23.8 million compared with $20.0
million reported in the same period in 1998. Sales increases were recorded in
airborne mine countermeasures systems, command, control and communications
systems, technology services and analysis, and fiber composite products. These
increases were offset by a decrease in sales of electro-ceramic products
resulting from delays in the receipt of orders. The increase in technology
services and analysis sales is attributable to the acquisition in July 1998 of
the assets of the Technology Services Group of Global Associates, Ltd., now
operating as EDO Technology Services and Analysis (EDO TSA). The increase in
sales of fiber composite products resulted from the acquisition in December
1998 of Specialty Plastics, Inc., a manufacturer of lightweight fiber composite
pipe, now operating as EDO Specialty Plastics. This
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increase in sales was partially offset by lower sales of fiber composite waste
tanks due to a reduction in orders.
Operating earnings from continuing operations in the third quarter of 1999 were
$2.5 million compared with $2.7 million reported in the same period in 1998.
Operating earnings and operating margin were lower than the prior year quarter
primarily due to: the decrease in sales of electro-ceramic products, as
mentioned above, which resulted in lower margins on such sales; lower relative
margins of the aforementioned acquisitions; and increased research and
development expenditures, discussed below. The recent declining trend of the
operating earnings and operating margin of electro-ceramic products is not
expected to continue.
Selling, general and administrative expenses in the third quarter of 1999 were
$0.5 million higher than the third quarter of 1998. At approximately 14
percent of sales, the level of expenses is consistent with the prior year
quarter.
Company-sponsored research and development expenditures of $0.7 million were
$0.3 million higher than the corresponding period in 1998, primarily as a
result of increased efforts related to sonar and aircraft armament systems.
Non-operating expense, net, was $0.1 million in the third quarter of 1999,
compared with $0.2 million in the corresponding period of 1998. This reduction
was primarily due to a gain of $0.1 million relating to the purchase on the
open market of the Company's outstanding debentures in order to meet short-term
sinking fund requirements.
The Company provided for Federal income taxes for the third quarter of 1999 at
an effective rate of approximately 30%, which is the expected effective rate
for the full year 1999. The Company recorded a tax provision in the third
quarter of 1999 as it had previously fully recognized the benefit associated
with its tax net operating loss carryforward.
First Nine Months of 1999 compared with First Nine Months of 1998
Net sales for the first nine months of 1999 were $70.5 million compared with
$57.9 million reported in the same period in 1998. Sales increases were
recorded in aircraft stores suspension and release equipment, command, control
and communications systems, technology services and analysis, and fiber
composite products. These increases were offset by a decrease in sales of
electro-ceramic products resulting from delays in the receipt of orders. The
increase in technology services and analysis sales is attributable to the
acquisition of EDO TSA. The net increase in sales of fiber composite products
resulted from the acquisition of EDO Specialty Plastics. This increase in
sales was partially offset by lower sales of fiber composite waste tanks due to
a reduction in orders.
Operating earnings from continuing operations in the first nine months of 1999
were $6.4 million compared to $7.0 million in the first nine months of 1998.
Operating earnings were lower than the prior year period primarily due to: the
decrease in sales of electro-ceramic products, as mentioned above, which
resulted in lower margins on such sales; lower relative margins of the
aforementioned acquisitions; and increased research and development
expenditures, discussed below. The recent declining trend of the operating
earnings and operating margin of electro-ceramic products is not expected to
continue.
Selling, general and administrative expenses in the first nine months of 1999
were $1.6 million higher than the first nine months of 1998. At approximately
14 percent of sales, the level of expenses is consistent with the prior year
period.
Company-sponsored research and development expenditures of $2.0 million were
$0.7 million higher than the $1.3 million spent in the corresponding period in
1998. This increase resulted from increased expenditures related to sonar and
aircraft armament systems.
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Non-operating expense, net, was $0.5 million in the first nine months of 1999,
compared with $0.3 million in the corresponding period of 1998. This increase
was principally due to lower interest income as a result of lower levels of
average invested cash and increased interest expense associated with letter of
credit fees, partially offset by a gain of $0.1 million relating to the
purchase on the open market of the Company's outstanding debentures in order to
meet short-term sinking fund requirements.
The Company provided for Federal income taxes for the first nine months of 1999
at an effective rate of approximately 30%, which is the expected effective rate
for the full year 1999. The Company recorded a tax provision in the first nine
months of 1999 as it had previously fully recognized the benefit associated
with its tax net operating loss carryforward.
Financial Condition
In November 1999, the Board of Directors of the Company approved the decision
to sell its Satellite Products business. As of September 25, 1999, the Company
recorded an estimated loss on the sale of this business of $3.7 million (net of
a $1.8 million income tax benefit) based on an estimated sales price of $10.0
million. The estimated sales price is based on negotiations the Company has
had with a potential buyer.
The Company's cash, cash equivalents and marketable securities decreased by
$4.5 million from December 31, 1998 to $29.0 million at September 25, 1999.
This decrease was primarily due to the $5.5 million payment in January 1999 of
the note related to the acquisition of EDO Specialty Plastics, $2.5 million for
purchases of capital equipment, repurchase of convertible debentures of $1.4
million and $1.4 million for payment of common and preferred dividends, offset
by cash from continuing operations of $0.9 million and cash from the
discontinued operations of $5.0 million.
Inventories increased by $2.8 million from December 31, 1998, to $12.0 million
at September 25, 1999. The increase in inventories is the result of advance
purchases of aircraft armament materials and work in process related to
electro-ceramic orders that were previously delayed. The level of inventories
is expected to decline by year-end.
The notes receivable of $2.7 million at September 25, 1999, of which $1.0
million is included in current assets, relate to the sale of the Company's
College Point facility in January 1996. The notes are due in varying annual
amounts through 2004 and bear interest at 7%. The notes are fully secured by
the related facility.
The Company has outstanding $27.8 million of 7% Convertible Subordinated
Debentures Due 2011. Commencing in 1996 and until retirement of these
debentures, the Company is making annual sinking fund payments of $1.8 million
which are due each December 15th. In July 1999, the Company purchased $1.6
million face value of these debentures for $1.4 million. As of September 25,
1999, the Company had $2.0 million of these debentures in treasury to be used
for these annual requirements.
The Company also has an ESOT loan obligation with a balance at September 25,
1999 of $7.8 million at an interest rate of 82% of the prime lending rate. The
repayment of this obligation is funded through dividends on the Company's
preferred shares and cash contributions from the Company.
Capital expenditures in the first nine months of 1999 totaled $2.5 million
compared with $2.4 million in the same period in 1998. The total expenditures
for 1999 are expected to be approximately the same level as the total $3.1
million in 1998.
The Company believes that it has adequate liquidity and sufficient capital to
fund its current operating plans.
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The backlog of unfilled orders, excluding that of the discontinued operations,
at September 25, 1999 was $132.6 million compared with $124.5 million a year
ago and $130.2 million at December 31, 1998.
New Accounting Standard
Statement of Financial Accounting Standards No. 133, as amended, establishes
standards for the accounting and reporting of derivative instruments and
hedging activities. This Statement, as amended, which is effective for all
quarters of fiscal years beginning after June 15, 2000, requires companies to
record derivatives on the balance sheet as assets or liabilities at their fair
values. In certain circumstances, changes in the values of such derivatives
may be required to be recorded as gains or losses. The Company believes that
the adoption of this Statement will not have a material impact on its
consolidated financial statements.
Year 2000
The year 2000 issue ("Y2K") affects computer systems having date-sensitive
programs that may not properly recognize the year 2000. Y2K is reputed to be
able to cause computers and computer controlled equipment to cease functioning.
The Company has been addressing the Y2K issue for some time and established a
formal Y2K program in 1998.
The Company has conducted several informal and formal Y2K reviews over the last
two years of its products and internal systems. Based on these reviews, the
only area where the Company has noted that Y2K could materially affect the
Company's operations or products is that failures or miscalculations could be
caused in the computerized accounting programs provided by outside vendors and
used at the Company. The applicable vendors have provided modifications to
their programs to deal with Y2K and these modifications have been installed and
tested. This testing has shown these modifications to be effective.
The Company's formal Y2K program was established to ensure that the Company's
initial conclusions were correct. The program is conducted under the direction
of its Vice President & General Counsel and oversight of the Audit Committee of
the Board of Directors. The Y2K "Committee" consists of a Y2K coordinator from
each operating location and has met five times.
The Company's Y2K program addresses Y2K from four perspectives:
* the Company looks at the products and services it sells to determine whether
Y2K will impact their performance;
* the Company looks at the materials, products and services it buys to
determine whether the suppliers of such materials, products and services or the
materials, products or services themselves will be impacted by Y2K in such a
way as to adversely impact the Company's operations;
* the Company looks at its interfaces with its customers and suppliers to
determine whether Y2K will adversely affect such interfaces; and
* the Company reviews its internal operations, including engineering,
manufacturing, finance and administrative (office and facilities equipment,
general purpose computers and related systems) to determine whether Y2K will
adversely affect any of these functions.
The formalized Y2K program encompasses three phases:
* Phase 1 established a baseline of Y2K compliance by a thorough review and
audit of each of the above four perspectives and determined readiness by
analysis and/or actual testing as necessary. This phase has been completed.
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* Phase 2 determined a budget and actions necessary to bring into compliance
any areas determined to be either deficient, potentially deficient or in an
indeterminable state and a schedule for implementation completion. This phase
is complete. A budget of $250,000 was established for costs of those areas and
actions identified. These costs were being expensed as incurred and were
within budget.
* Phase 3 verified by analysis and actual testing that any material Y2K issues
have been corrected and that all systems are Y2K compliant. This phase is
complete. Contingency plans have been established and include pre- and
post-changeover checklists and backup arrangements. Testing is complete, and
no material issues have been identified.
Based upon the Company's review over the last two years and its testing and
findings to date, the Company does not believe that any costs associated with
Y2K will be material. However, if the modifications to accounting programs
provided by outside vendors, which to date have proven successful, do not
eventually prove entirely successful, the cost of replacing these programs
could have a material adverse effect. The Company presently expects that any
necessary remedial costs will be expensed. As part of the Company's Y2K
program, the Company sought information regarding Y2K compliance from vendors,
customers, manufacturers and financial institutions associated with the
Company. However, given the reliance on third party information as it relates
to their compliance programs, no assurance can be given that the Company's
information systems or operations will not be affected by third party failures
to complete their Y2K projects on a timely basis.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995
The statements in this Quarterly Report on Form 10-Q and in oral statements
that may be made by representatives of the Company relating to plans,
strategies, economic performance and trends and other statements that are not
descriptions of historical facts may be forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, Section 27(a)
of the Securities Act of 1933 and Section 21(e) of the Securities Exchange Act
of 1934. Forward-looking statements are inherently subject to risks and
uncertainties, and actual results could differ materially from those currently
anticipated due to a number of factors, which include, but are not limited to
the following for each of the types of information noted.
U.S. and international military program sales, follow-on procurement, contract
continuance, and future program awards, upgrades and spares support are subject
to:
U.S. and international military budget constraints and determinations;
U.S. congressional and international legislative body discretion;
U.S. and international government administration policies and priorities;
changing world military threats, strategies and missions;
competition from foreign manufacturers of platforms and equipment;
NATO country determinations regarding participation in common programs;
changes in U.S. and international government procurement timing,
strategies and practices; and
the general state of world military readiness and deployment.
Commercial satellite programs and equipment sales, follow-on procurement,
contract continuance and future program awards are subject to:
establishment and continuance of various consortiums for satellite
constellation programs;
delay in launch dates due to equipment, weather or other factors
beyond the control of the Company; and
development of sufficient customer base to support a particular
satellite constellation program.
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Other commercial product sales are subject to:
success of product development programs currently underway or planned;
competitiveness of current and future product production costs and
prices; and
market and customer base development for new product programs.
Achievement of margins on sales, earnings and cash flow can be affected by:
unanticipated technical problems; government termination of contracts for
convenience; decline in expected levels of revenues; underestimation of
anticipated costs on specific programs; risks inherent in integrating recent
acquisitions into the Company's overall structure; and risks associated with
year 2000 compliance by the Company, its customers, suppliers and other third
parties. Expectations of future Federal income tax rates can be affected by a
variety of factors, including amounts of profits relating to foreign sales.
The Company has no obligation to update any forward-looking statements.
PART II - OTHER INFORMATION
Item 5. Submissions of Matters to a Vote of Security Holders.
None.
Item 6. (a) Exhibits
27 - Financial Data Schedule
<PAGE>
Page 15
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.
EDO Corporation
-----------------------------------------
(Registrant)
by: K. A. Paladino
-----------------------------------------
K. A. Paladino - Vice President Finance
and Treasurer
(Principal Financial Officer)
Date: November 9, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-25-1999
<CASH> 13,120
<SECURITIES> 15,880
<RECEIVABLES> 32,999
<ALLOWANCES> 0
<INVENTORY> 12,009
<CURRENT-ASSETS> 79,166
<PP&E> 35,713
<DEPRECIATION> 26,470
<TOTAL-ASSETS> 119,182
<CURRENT-LIABILITIES> 38,918
<BONDS> 35,576
<COMMON> 8,454
0
58
<OTHER-SE> 30,559
<TOTAL-LIABILITY-AND-EQUITY> 119,182
<SALES> 70,495
<TOTAL-REVENUES> 70,495
<CGS> 52,195
<TOTAL-COSTS> 64,059
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,833
<INCOME-PRETAX> 5,975
<INCOME-TAX> 1,790
<INCOME-CONTINUING> 4,185
<DISCONTINUED> (3,066)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,119
<EPS-BASIC> .05
<EPS-DILUTED> .06
</TABLE>
