SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from Not Applicable to
Commission file number 1-6016
THE ALLEN GROUP INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 38-0290950
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
25101 Chagrin Boulevard, Suite 350, Beachwood, Ohio 44122
(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code) 216-765-5818
NOT APPLICABLE
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, 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:
Outstanding at
Class of Common Stock October 31, 1994
Par value $1.00 per share 26,098,422
Exhibit Index is on page 16 of this report.
Page 1 of 22 Pages.
THE ALLEN GROUP INC.
TABLE OF CONTENTS
Page
No.
PART I. Financial Information:
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheets -
September 30, 1994 and December 31, 1993 3
Consolidated Statements of Income -
Three Months and Nine Months Ended
September 30, 1994 and 1993 4
Consolidated Condensed Statements of
Cash Flows - Nine Months Ended
September 30, 1994 and 1993 5
Notes to Consolidated Condensed
Financial Statements 6 - 9
Item 2 - Management's Discussion and
Analysis of Financial Condition and
Results of Operations 10 - 13
PART II. Other Information:
Item 5 - Other Information 14
Item 6 - Exhibits and Reports on Form 8-K 14
Signatures 15
Exhibit Index 16
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM I - FINANCIAL STATEMENTS
THE ALLEN GROUP INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in Thousands)
<CAPTION> September 30, December 31,
1994 1993
ASSETS: (Unaudited)
<S> <C> <C>
Current Assets:
Cash and equivalents $ 25,753 $ 11,173
Accounts receivable (Note 2) 62,159 54,721
Receivable from joint venture 517 242
Note receivable (Note 6) - 6,579
Inventories (Note 3) 53,893 56,828
Prepaid expenses 1,125 1,021
Other current asset (Note 8) 27,704 -
Total current assets 171,151 130,564
Property, plant and equipment, net 55,305 51,898
Net investments in and advances to
joint venture 23,841 23,042
Excess of cost over net assets of
businesses acquired 58,263 59,578
Long-term portion of note
receivable (Note 6) - 13,158
Other assets 34,274 46,398
TOTAL ASSETS $342,834 $324,638
LIABILITIES:
Current Liabilities:
Notes payable and current maturities
of long-term obligations $ 5,764 $ 839
Accounts payable 20,546 20,180
Accrued expenses 34,346 32,697
Income taxes payable 7,159 5,040
Total current liabilities 67,815 58,756
Long-term debt 44,853 51,758
Other liabilities and deferred credits 16,689 18,963
TOTAL LIABILITIES 129,357 129,477
STOCKHOLDERS' EQUITY
Common stock 29,140 29,058
Paid-in capital 161,303 159,989
Retained earnings 49,156 32,671
Translation adjustments 56 (90)
Less: Treasury stock (common, at cost) (17,608) (17,916)
Unearned compensation (6,211) (6,192)
Minimum pension liability adjustment (2,359) (2,359)
TOTAL STOCKHOLDERS' EQUITY 213,477 195,161
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $342,834 $324,638
See accompanying notes to the Consolidated Condensed Financial Statements.
</TABLE>
<TABLE>
THE ALLEN GROUP I
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
Pro Pro
Actual Forma Actual Forma
(Note 1) (Note 1)
<S> <C> <C> <C> <C> <C> <C>
SALES $84,480 $65,595 $65,595 $243,196 $201,032 $201,032
Cost and Expenses:
Cost of Sales (58,471) (45,305) (45,305) (170,159) (137,991) (137,991)
Selling, General and Administrative
Expenses (13,636) (11,817) (11,817) (39,065) (35,867) (35,867)
Equity in Earnings of Joint Venture 1,693 1,033 1,033 799 434 434
Interest and Financing Expenses (458) (497) (497) (1,731) (2,615) (2,615)
INCOME BEFORE TAXES 13,608 9,009 9,009 33,040 24,993 24,993
PROVISION FOR INCOME TAXES (Note 4) (5,040) (1,450) (3,333) (12,610) (3,720) (9,547)
INCOME FROM CONTINUING OPERATIONS 8,568 7,559 5,676 20,430 21,273 15,446
DISCONTINUED OPERATIONS (Note 6):
Loss from Discontinued operations - - - - (4,563) (2,820)
Loss on Sale of Discontinued Operations - - - - (2,936) (1,814)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR INCOME TAXES - - - - 2,102 2,102
NET INCOME $ 8,568 $ 7,559 $ 5,676 $ 20,430 $ 15,876 $ 12,914
NET INCOME APPLICABLE TO COMMON STOCK $ 8,568 $ 7,391 $ 5,508 $ 20,430 $ 13,696 $ 10,734
EARNINGS PER COMMON SHARE (Note 5):
Primary and fully diluted:
Income from Continuing Operations $.33 $.30 $.22 $.79 $.87 $.61
Discontinued Operations:
Loss from Discontinued Operations - - - - (.21) (.13)
Loss on Sale of Discontinued Operations - - - - (.13) (.08)
Cumulative Effect of Change in
Accounting for Income Taxes - - - - .09 .09
NET INCOME $.33 $.30 $.22 $.79 $.62 $.49
See accompanying notes to the Consolidated Condensed Financial Statements.
</TABLE>
<TABLE>
THE ALLEN GROUP INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Amounts In Thousands)
(Unaudited)
<CAPTION> Nine Months Ended
September 30,
1994 1993
<S> <C> <C>
Cash provided (used) by operating
activities $34,396 $(3,876)
Cash flows from investing activities:
Capital expenditures (10,666) (7,058)
Sales and retirements of fixed assets 922 554
Centralized emissions inspection
program assets to be sold (Note 8) (22,959) -
Capitalized software product costs (1,443) (1,764)
Proceeds from sale of automotive diagnostics
and lease financing business 19,737 21,000
Other (887) (1,613)
Cash (used) provided by investing activities (15,296) 11,119
Cash flows from financing activities:
Net repayments of long-term debt (1,980) (3,063)
Dividends paid (3,126) (2,982)
Dividends received from discontinued
lease financing operations - 3,234
Redemption of preferred stock - (265)
Exercise of stock options 69 1,965
Treasury stock sold to employee
benefit plans 517 468
Cash used by financing activities (4,520) (643)
Net cash provided 14,580 6,600
Net cash used by discontinued lease
financing operations (Note 6) - (34)
Total Company increase in cash 14,580 6,566
Cash at beginning of year 11,173 4,425
Cash at end of period $25,753 $10,991
See accompanying notes to the Consolidated Condensed Financial Statements.
</TABLE>
THE ALLEN GROUP INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. General:
In the opinion of management of The Allen Group Inc. (the
"Company"), the accompanying unaudited consolidated condensed
interim financial statements reflect all adjustments necessary to
present fairly the financial position of the Company as of September
30, 1994 and the results of its operations and cash flows for the
periods ended September 30, 1994 and 1993. The results of
operations for such interim periods are not necessarily indicative
of the results for the full year. The year-end 1993 consolidated
condensed balance sheet was derived from audited financial
statements, but does not include all disclosures required by
generally accepted accounting principles. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1993.
Pro forma results of operations for the three and nine months ended
September 30, 1993 reflect the results of operations as if the
Company had provided for income taxes at the comparable effective
tax rates recorded in 1994. The effective tax rates for the three
months and nine months ended September 30, 1993 (16.1% and 14.9%,
respectively) are lower than the 1994 rates due to the utilization
of U.S. net operating loss carryforwards to reduce income tax
expense in 1993. The Company fully utilized all available
carryforward losses in 1993, resulting in the higher effective tax
rate in 1994. (See Note 4 for additional information.) Such pro
forma information is presented for comparative information purposes
only.
2. Accounts Receivable:
Accounts receivable are net of the following allowances for doubtful
accounts (amounts in thousands):
September 30, December 31,
1994 1993
Allowance for doubtful
accounts $ 1,980 $ 1,270
3. Inventories:
Inventories consisted of the following (amounts in thousands):
September 30, December 31,
1994 1993
Raw Materials $28,792 $33,541
Work-In-Process 16,568 14,191
Finished Goods 8,533 9,096
$53,893 $56,828
4. Income Taxes:
A reconciliation of the provision for income taxes at the Federal
statutory rates to the reported tax provision is as follows (amounts
in thousands):
Three Months Nine Months
Ended Ended
September 30, September 30,
1994 1993 1994 1993
Provision computed at the
U.S. Federal statutory rate $4,763 $3,313 $11,564 $8,748
State and local income taxes,
net of Federal income tax
benefit 325 287 975 690
Net impact of tax rates on
foreign income (224) 1,177 (372) 1,689
Tax benefit from recognition
of U.S. net operating loss
carryforward to reduce
income tax expense - (3,327) - (7,407)
Other 176 - 443 -
$5,040 $1,450 $12,610 $3,720
5. Earnings Per Common Share:
The primary earnings per common share calculations are determined
after deducting dividends on outstanding preferred stock (prior to
redemption in July 1993) and are based upon the weighted average
number of common and common equivalent shares outstanding during
each period. The calculations also include, if dilutive, the
incremental number of common shares issuable on a pro forma basis
upon exercise of employee stock options, assuming the proceeds are
used to repurchase outstanding common shares at the average market
price during the period. The number of shares used in these
calculations approximated 26,092,000 and 25,996,000 for the three
months and nine months ended September 30, 1994, respectively, and
24,936,000 and 21,926,000 for the three months and nine months ended
September 30, 1993, respectively. The higher amount of average
primary shares in 1994, as compared with 1993, is a result of the
conversion of the Company's convertible preferred stock and a
portion of its convertible debentures into common shares during the
second half of 1993. Prior to conversion, such convertible
securities were and, to the extent convertible debentures remain
outstanding, are included only in the computation of fully diluted
earnings per common share.
The calculation of fully diluted earnings per common share begins
with the primary calculation but further reflects, if dilutive, the
conversion of the preferred stock and convertible debentures into
common shares at the beginning of the period. This calculation
resulted in no reportable dilution for the periods ended September
30, 1994 and 1993.
6. Note Receivable:
In connection with the sale of its automotive diagnostic and
emissions test equipment business and related lease finance
operation in 1993, the Company received an 8% Subordinated Note in
the amount of $19,737,000 dated June 11, 1993 (the "Note"). The
Note originally provided for the receipt of three equal annual
installments of $6,579,000, plus interest, on June 11 of 1994, 1995
and 1996. However, on May 4, 1994 the Company was paid in full
pursuant to an existing prepayment option. The results of
operations for the nine months ended September 30, 1993 reflect the
aforementioned disposed product lines as discontinued operations.
7. Supplemental Cash Flow Disclosures:
Depreciation expense from continuing operations, included in "Cash
provided by operating activities", amounted to $5,571,000 and
$4,732,000 for the periods ended September 30, 1994 and 1993,
respectively.
Information with respect to cash paid during the periods for
interest and income taxes is as follows:
Nine Months
Ended
September 30,
1994 1993
Interest paid $3,225 $3,520
Interest capitalized 509 -
Income taxes paid 177 2,500
8. Other Current Asset:
The other current asset consists of costs accumulated under the
construction phase of the Company's contract for the State of
Maryland centralized emissions testing program. Under the terms of
the contract, the State will purchase the capital assets, for cash,
on the start-up date of the Program which is scheduled for January
1, 1995. Accordingly, costs accumulated under the contract are set
forth in the Consolidated Condensed Balance Sheet as a current
asset.
9. Acquisition:
On October 3, 1994, the Company announced the signing of an
agreement to purchase 40% of FOR.E.M. S.p.A. located in Agrate
Brianza (Milan), Italy ("FOREM") as well as options to acquire the
remaining shares during the next five years. FOREM owns 62% of
MIKOM GmbH, located in Buchdorf, Germany, and also has sales and
service offices located in the United Kingdom and France. The
closing of this transaction is expected to occur prior to the end of
1994. The transaction is subject to completion of certain pre-
closing conditions and certain governmental approvals.
At the closing, the Company will pay $8,000,000 for its initial 40%
ownership interest in FOREM. Upon the exercise of its option to
purchase an additional 40% of FOREM's outstanding stock (the "First
Option"), the Company has agreed to pay $8,000,000 plus accrued
interest at the rate of 5% per annum from the date of the first
closing, for these shares. In addition, if the Company exercises
the First Option, the sellers may earn additional purchase price
based upon earnings. The final 20% of FOREM's outstanding stock is
subject to certain put/call arrangements between the Company and the
sellers. The purchase price for this final 20% ownership interest
also is based upon a formula relative to future earnings.
The FOREM group of companies is one of the leading suppliers of
wireless telecommunications products to the major European
telecommunication equipment manufacturers as well as the cellular
operating companies. The Company expects to account for its initial
40% investment in FOREM under the Equity Method of accounting. See
"Item 5 - Other Information" on page 14 of the Form 10-Q Report for
additional information.
THE ALLEN GROUP INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Summary:
For the nine months ended September 30, 1994, The Allen Group Inc.
("the Company") reported income from continuing operations of
$20,430,000 ($.79 per common share) compared to $21,273,000 ($.87 per
common share) during the comparable 1993 period. For the three months
ended September 30, 1994, the Company reported income from continuing
operations of $8,568,000 ($.33 per common share) compared to $7,559,000
($.30 per common share) in 1993.
The decline in income from continuing operations for the nine month
period ended September 30, 1994 is due solely to an increased provision
for income taxes as a result of the Company's recognition of its
remaining U.S. tax loss carryforwards in 1993 and its resultant accrual
of a full effective tax rate in 1994. In order to demonstrate the
impact upon operations of this increase in effective tax rate, the
Company has included a pro forma presentation of results of operations
in the Consolidated Statements of Income for the nine and three months
ended September 30, 1993, as if the Company had provided for income
taxes at the comparable effective tax rates recorded in 1994. For the
nine and three months ended September 30, 1993, the Company applied the
1994 effective tax rates of 38.2% and 37.0%, respectively. Under this
pro forma presentation, income from continuing operations for the nine
and three months ended September 30, 1993 would have been $15,446,000
($.61 per common share) and $5,676,000 ($.22 per common share),
respectively. For the three months ended September 30, 1994, income
from continuing operations (which also includes the impact of the full
effective tax rate) increased over the comparable 1993 period and
reflects the strong performance of the Mobile Communications segment and
improved earnings in the Truck Products segment.
Income before taxes for the nine and three months ended September
30, 1994 increased 32.2% and 51.0%, respectively, over the prior year
which also supports the positive performance by the Company's
operations.
Sales:
Consolidated sales from continuing operations by industry segment
were:
Three Months Nine Months
Ended Ended
September 30, September 30,
($ Millions) ($ Millions)
1994 1993 1994 1993
Mobile Communications $54.5 $44.5 $154.4 $131.0
Truck Products 29.3 20.4 86.7 67.9
Centralized Automotive
Emissions Testing .7 .7 2.1 2.1
$84.5 $65.6 $243.2 $201.0
Mobile Communications sales increased by $23.4 million (17.9%) and
$10.0 million (22.5%) during the nine and three months ended September
30, 1994, respectively, over comparable periods in 1993. Such increase
is due to strong demand for microcells and Extend-A-CellsR, where the
introduction of the Company's new EAC 2000TM with its modular flexibility
of covering three to ten channels has enhanced its popularity, as well
as to increased sales of base station antennas.
Truck Product sales increased by $18.8 million (27.7%) and $8.9
million (43.6%) for the nine and three months ended September 30, 1994,
respectively, compared to the comparable 1993 periods. Higher sales of
manufactured truck cabs and radiators, resulting from increased
production rates by original equipment manufacturers (which form the
major customer base of these businesses), are primarily responsible for
this increase.
Centralized Automotive Emissions Testing sales consist of revenues
from the Company's MARTA Technologies, Inc. ("MARTA") subsidiary. In
1993, MARTA was awarded the centralized emissions testing contracts for
the State of Maryland (a three-year program with two one-year options by
the State) and the El Paso region of Texas (a seven-year program).
Revenues from these programs, however, will not impact operating results
until 1995. The construction of these programs continues on schedule
for a January 1, 1995 start-up. In addition, MARTA was awarded a ten-
year contract during the quarter for the centralized emissions testing
program in the four counties comprising the Cincinnati region of
southern Ohio. This program is scheduled to commence operations in
January, 1996. In general, however, this industry is experiencing
delays in the awarding of contracts and in requests for new bids. These
delays have extended MARTA's expectations for sales and profits from
additional new programs to a period beyond 1995. Much of this delay has
been caused by states seeking permission from the Federal Environmental
Protection Agency ("EPA") for hybrid testing programs that may include
both centralized and decentralized elements, after the EPA earlier this
year allowed California to implement such a hybrid program for a trial
period. Although the EPA appears to be willing to consider some
deviation from its centralized testing only philosophy, it appears that
it will not allow totally decentralized emissions testing programs.
Thus, there continues to appear to be a strong role for the centralized
emissions testing operators in those states requiring such programs for
their clean air programs, and the Company continues to believe that it
is well positioned to participate in future awards.
Operating Income: Overall gross margins on product sales
approximated 30.0% and 31.4% of sales for the nine months ended
September 30, 1994 and 1993, respectively, and 30.8% and 30.9% for the
three months ended September 30, 1994 and 1993, respectively. The lower
gross margins for the 1994 nine month period reflect start-up costs
relating to the Crew Cab program in Louisville, Kentucky by the Truck
Products segment, and higher engineering costs incurred by the Mobile
Communications segment due to new product development. Selling, general
and administrative expenses were 16.1% and 17.8% of product sales for
the nine months ended September 30, 1994 and 1993, respectively, and
16.1% and 18.0% for the three months ended September 30, 1994 and 1993,
respectively. Improved results are attributable to the spreading of
fixed costs on higher sales. Such improvement, however, is offset, in
part, by spending increases related to international marketing
development costs in the Mobile Communications segment.
Joint Venture Operations: For the nine and three months ended
September 30, 1994, the Company reported equity earnings from its joint
venture of $799,000 and $1,693,000, respectively, compared to $434,000
and $1,033,000 for the nine and three months ended September 30, 1993.
Results for the periods presented are attributable to GO/DAN Industries
("GDI"), a 50/50 partnership accounted for under the equity method.
This industry experiences significant seasonality, and the third
quarter, which includes the hot summer months requiring more frequent
radiator replacement, is traditionally its best. Sales and operating
margins have improved in 1994 when compared with 1993 due to improved
efficiencies and cost containment efforts.
Interest and Financing Expense: Net interest and financing expense
for the nine months ended September 30, 1994 has declined significantly
over the comparable 1993 period due to the conversion of the Company's
convertible subordinated debentures into common stock of the Company
during the third quarter of 1993 and to the investment of cash generated
from operations. For the three months ended September 30, 1994
financing expense is down slightly from the comparable 1993 period as
lower interest costs related to cash generated by operations was offset,
in part, by lower interest income earned on the proceeds received upon
payment of a note receivable (See Note 6) which bore interest at a
higher rate than current investment yields.
Income Taxes: In 1994, the Company began accruing U.S. Federal
income taxes at the full statutory rate (35%) as a result of its
recognition of all remaining tax loss carryforwards in 1993. This
event, in combination with the impact of state taxes, results in an
estimated effective tax rate for the nine months and three months ended
September 30, 1994 of 38.2% and 37.0%, respectively, as compared with
14.9% and 16.1%, respectively, for the comparable 1993 periods. These
tax rates result in the significantly increased provision for income
taxes during 1994 (as well as that expected for the balance of 1994)
when compared with 1993. See Notes 1 and 4 of Notes to Consolidated
Condensed Financial Statements for additional information.
Discontinued Operations: On June 11, 1993, the Company completed
the sale of its Allen Testproducts division and related lease financing
operations to SPX Corporation; accordingly, the Consolidated Statement
of Income for the nine months ended September 30, 1993 reflect these
product lines as discontinued operations.
Liquidity and Capital Resources
As set forth in the Consolidated Condensed Statements of Cash Flows,
the Company generated $34.4 million in cash from operations in the first
nine months of 1994 as compared with a cash usage of $3.9 million for
the comparable period in 1993. The significant increase in cash flow is
due to higher income before taxes from continuing operations and the
impact of the elimination of the discontinued operations which resulted
in significant losses in 1993. Further impacting the comparison is the
fact that 1993 (in large measure the third quarter) cash flow included
significant cash utilization to fund start-up of a manufacturing
facility for the production of Crew Cabs for the Ford Motor Company. In
May 1994, the Company received $21.2 million (including accrued
interest) as a full prepayment of the subordinated note relating to the
divestiture of the Allen Testproducts division and related lease
financing operations as described in Note 6 to the Consolidated
Condensed Financial Statements. At September 30, 1994, the Company had
$25.8 million of cash and equivalents. The cash is invested in short-
term obligations, which are accorded one of the two highest ratings
available from one of the nationally recognized credit rating agencies.
On October 3, 1994 the Company announced the signing of an agreement
to purchase 40% of the outstanding capital stock of FOR.E.M. S.p.A., an
Italian telecommunications manufacturer, as well as options to acquire
the remaining shares over the next five years. See Note 9 of Notes to
Consolidated Condensed Financial Statements for additional information.
The Company presently intends to finance this investment through
internally generated funds.
Management believes that the continued strong profitability of the
Company, a cash and short-term investment balance of $25.8 million, the
generation of approximately $38.0 million from the sale of the Maryland
centralized emissions test program in January 1995 (See Note 8) and
available unused commitments under its long-term credit facilities of
$94 million and unused credit facilities and lines for MARTA of $93
million are sufficient to provide liquidity and fund growth.
PART II - OTHER INFORMATION
Item 5 - Other Information
On October 3, 1994, the Company announced the signing of an
agreement to purchase 40% of the outstanding capital stock of FOR.E.M.
S.p.A. as well as options to acquire the remaining shares during the
next five years. See Note 9 of Notes to Consolidated Condensed
Financial Statements and Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and Capital
Resources for further information.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Amendment To The Allen Group Inc. 1992 Stock Plan
(11) Statement re computation of earnings per common share.
(27) Financial Data Schedule
(99) Press release dated October 3, 1994 announcing an alliance
between The Allen Group Inc. and FOR.E.M. S.p.A.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter for
which this report is filed.
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.
The Allen Group Inc.
(Registrant)
Date: November 14, 1994 By: /s/ Robert A. Youdelman
Robert A. Youdelman
Senior Vice President-Finance
(Chief Financial Officer)
Date: November 14, 1994 By: /s/ James L. LePorte
James L. LePorte
Vice President and Controller
(Principal Accounting Officer)
THE ALLEN GROUP INC.
EXHIBIT INDEX
Page
(a) Exhibit Number:
(10) Amendment To The Allen Group Inc. 1992
Stock Plan............................................. 17
(11) Statement re computation of earnings per
common share........................................... 18
(27) Financial Data Schedule................................ 19
(99) Press release dated October 3, 1994 announcing
an alliance between The Allen Group Inc. and
FOR.E.M. S.p.A......................................... 20 - 22
EXHIBIT 10
AMENDMENT TO THE ALLEN GROUP INC.
1992 STOCK PLAN
This Amendment to The Allen Group Inc. 1992 Stock Plan is
hereby adopted this 13th day of September, 1994, to provide as
follows:
Section 2 of the Plan is hereby amended by deleting the
last sentence thereof and inserting in place thereof the
following sentence:
In the event that any Restricted Shares shall be
forfeited or any option granted under the Plan
shall terminate, expire or, with the consent of
the optionee, be canceled as to any shares of
Common Stock, without having been exercised in
full, new awards of Restricted Shares may be made
or new options may be granted with respect to such
shares without again being charged against the
maximum share limitation set forth above in this
Section 2; provided, however, that the number of
forfeited Restricted Shares awarded under the Plan
with respect to which dividends have been declared
and paid by the Company prior to such Shares being
forfeited in excess of 10 percent of the maximum
share limitation set forth above in this Section 2
shall be charged against the maximum share
limitation set forth above.
All other provisions of the Plan are hereby ratified, confirmed
and approved.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
duly executed in its name by its duly authorized officer this 13th
day of September, 1994.
THE ALLEN GROUP INC.
By: /s/ Philip Wm. Colburn
Philip Wm. Colburn, Chairman
ATTEST: /s/ McDara P. Folan, III
McDara P. Folan, III, Secretary
<TABLE>
EXHIBIT 11
THE ALLEN GROUP INC.
EARNINGS PER COMMON SHARE DATA
(Amounts in Thousands)
Net income and common shares used in the calculations of earnings per common
share were computed as follows:
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Income:
Net income $ 8,568 $ 7,559 $20,430 $15,876
Less: Preferred stock dividends - (168) - (2,180)
Net income applicable to
common stock - primary 8,568 7,391 20,430 13,696
Adjustments for Fully Diluted:
Preferred stock dividends - 168 - 2,180
Debenture interest 47 241 137 621
Net income applicable to
common stock - fully diluted $ 8,615 $ 7,800 $20,567 $16,497
Common Shares:
Weighted average outstanding
common shares 25,355 24,146 25,337 21,103
Common stock equivalents 737 790 659 823
Common shares - primary 26,092 24,936 25,996 21,926
Common shares issuable for:
Stock options 99 61 38 77
Conversion of preferred stock - 766 - 3,322
Conversion of debentures 359 719 359 1,078
Common shares - fully diluted 26,550 26,482 26,393 26,403
Notes:
This calculation is submitted in accordance with Regulation S-K Item
601(b)(11) although not required for income statement presentation because it
results in dilution of less than 3 percent.
The Company's preferred stock was called for redemption in July, 1993. Prior
to the redemption date, all but a small fraction of the preferred shares were
converted into common stock of the Company. In addition, during the second
half of 1993, the majority of the outstanding convertible subordinated
debentures were converted into shares of common stock.
EXHIBIT 27
FINANCIAL DATA SCHEDULE
FOLLOWING EXHIBIT 99
EXHIBIT 99
THE ALLEN GROUP INC. PRESS RELEASE
ALLEN GROUP AND FOREM S.p.A. ANNOUNCE ALLIANCE
BEACHWOOD, OHIO, October 3, 1994 -- The Allen Group Inc.
announced today the signing of an agreement to purchase 40% of
FOREM S.p.A. of Agrate Brianza (Milan), Italy as well as options to
acquire the remaining shares during the next five years. FOREM
owns 62% of MIKOM GmbH, located in Buchdorf, Germany, and also has
sales and service offices located in the U.K. and France. The
agreement also states that the current management and key employees
of FOREM and MIKOM will remain in their current positions.
The FOREM group of companies is one of the leading suppliers of
wireless telecommunications products to the major European
telecommunication equipment OEM's as well as the cellular
operators. FOREM's products are designed and manufactured in Italy
and consist primarily of transmitting combiners, receiving
multicouplers, filters, and tower top amplifiers used in cellular
base stations. MIKOM's products are designed and manufactured in
Germany and consist of repeaters, microcells and in-building
coverage products. The FOREM group's primary development focus has
been on GSM, DCS 1800, and PCS technologies, which are the most
prevalent technologies in Europe for wireless communications and
rapidly becoming the world standard for many new wireless systems,
and are expected to be the standard for the upcoming PCS systems in
the United States.
Robert G. Paul, President and CEO of The Allen Group stated:
"The alliance of FOREM and MIKOM with our Allen Telecom Group
enhances our ability to be a worldwide competitor with our
broadened range of wireless telecommunications products. The
addition of modern manufacturing facilities in both Italy and
Germany allows us to supply and support European Economic Community
customers with both FOREM-MIKOM and Allen Telecom Group products.
The strong customer relationships already developed between the
FOREM group and the major European OEM's will be utilized to
introduce more of the Allen Telecom Group products to Europe.
"The strong FOREM-MIKOM leadership position in GSM, DCS 1800
and PCS products will give Allen a major head start as a PCS
supplier in the U.S. The announced timing for the wide band PCS
auction in the U.S. makes this head start very valuable. The FOREM
and MIKOM products are expected to have a strong acceptance in
other parts of the world where Allen will introduce them."
Mr. Goffredo Modena, CEO and Managing Director of FOREM S.p.A.,
said: "The FOREM group's total sales were $30 million in the last
fiscal year, almost all within the European Common Market, in the
expanding GSM, DCS 1800 and PCS technologies. FOREM's rapid growth
is indicative of its well-designed, sophisticated products and its
strategic positioning in Europe. Allen has the ability to
introduce the FOREM-MIKOM products into the U.S. and Canada and
throughout the rest of the world since Allen has established strong
sales and service operations in Australia, Brazil, Singapore and
China."
Mr. Paul stated: "The closing of this transaction is expected
to be completed before year-end 1994, and all of The Allen Telecom
Group and FOREM group companies are expected to be operating on a
fully coordinated basis by January 1, 1995."
The Allen Group Inc. (NYSE symbol - ALN) manufactures and
markets electronic and other mobile communications products for the
wireless telecommunications industry, produces and sells truck
components and operates centralized automotive emissions inspection
programs.
-30-
For further information contact: Robert A. Youdelman
216-765-5820
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> QTR-4 QTR-3
<FISCAL-YEAR-END> DEC-31-1993 SEP-30-1994
<PERIOD-END> DEC-31-1993 SEP-30-1994
<CASH> 11,173 25,753
<SECURITIES> 0 0
<RECEIVABLES> 62,812 64,656
<ALLOWANCES> (1,270) (1,980)
<INVENTORY> 56,828 53,893
<CURRENT-ASSETS> 130,564 171,151
<PP&E> 87,227 92,078
<DEPRECIATION> (35,329) (36,773)
<TOTAL-ASSETS> 324,638 342,834
<CURRENT-LIABILITIES> 58,756 67,815
<BONDS> 51,758 44,853
<COMMON> 29,058 29,140
0 0
0 0
<OTHER-SE> 166,103 184,337
<TOTAL-LIABILITY-AND-EQUITY> 324,638 342,834
<SALES> 280,031 243,196
<TOTAL-REVENUES> 280,031 243,196
<CGS> 195,780 170,159
<TOTAL-COSTS> 195,780 170,159
<OTHER-EXPENSES> 48,161 38,839
<LOSS-PROVISION> 334 226
<INTEREST-EXPENSE> 3,156 1,731
<INCOME-PRETAX> 33,007 33,040
<INCOME-TAX> 3,483 12,610
<INCOME-CONTINUING> 29,524 20,430
<DISCONTINUED> (7,499) 0
<EXTRAORDINARY> 0 0
<CHANGES> 2,102 0
<NET-INCOME> 24,127 20,430
<EPS-PRIMARY> .96 .79
<EPS-DILUTED> 0<F1> 0<F1>
<FN>
<F1>There was no reportable dilution for the period ended December 31, 1993 and
September 30, 1994.
</FN>
</TABLE>
