UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Mark one
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) of the Securities
Exchange Act of 1934
For the period ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____________________ to _________________
Commission File Number
0-2545
____________________
Allied Research Corporation
__________________________________________________
(Exact name of Registrant as specified in its charter)
Delaware 04-2281015
______________________________ ___________________________
(State or other jurisdiction of (I.R.S. Employer Number)
incorporation or organization)
8000 Towers Crescent Drive, Suite 750
Vienna, Virginia 22182
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 847-5268
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of March 31, 1995: 4,404,170.
<PAGE>
ALLIED RESEARCH CORPORATION
INDEX
PAGE
PART I. FINANCIAL INFORMATION - UNAUDITED NUMBER
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
December 31, 1994 and March 31, 1995 2,3
Condensed Consolidated Statements of Earnings
Three months ended March 31, 1995 and 1994 4
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1995 and 1994 5,6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II. OTHER INFORMATION 16
<PAGE>
Allied Research Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
ASSETS
(Unaudited)
March 31, 1995 December 31, 1994
CURRENT ASSETS
Cash and equivalents, including
restricted cash $ 38,639 $ 43,606
Accounts receivable 16,933 21,805
Costs and accrued earnings on uncompleted
contracts 9,878 8,391
Inventories 4,322 4,333
Prepaid expenses 1,584 1,004
Total current assets 71,356 79,139
PROPERTY, PLANT AND EQUIPMENT - AT COST
Buildings 12,199 11,411
Machinery and equipment 31,160 31,118
43,359 42,529
Less accumulated depreciation 28,088 28,155
15,271 14,374
Land 1,439 1,323
Total property, plant and equipment 16,710 15,697
OTHER ASSETS
Deposit - restricted cash 7,160 6,400
Intangibles 6,938 5,919
Other 109 231
Total other assets 14,207 12,550
$102,273 $107,386
The accompanying notes are an integral part of these statements.
2
<PAGE>
Allied Research Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
(Thousands of Dollars)
LIABILITIES
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
<S> <C> <C>
CURRENT LIABILITIES
Notes payable $ 323 $ 594
Current maturities of long-term debt 28,702 25,802
Accounts and trade notes payable 10,779 21,452
Accrued liabilities 13,620 12,427
Customer deposits 2,711 1,534
Income taxes 1,433 883
Total current liabilities 57,568 62,692
LONG-TERM DEBT, less current maturities 15,873 14,108
DEFERRED INCOME TAXES 744 765
MINORITY INTEREST 197 123
STOCKHOLDERS' EQUITY
Preferred stock, no par value; authorized, 10,000 shares
none issued - -
Common stock, par value, $.10 per share; authorized
10,000,000 shares; issued and outstanding 4,404,170
in 1995 and 4,398,448 in 1994 440 440
Capital in excess of par value 10,678 10,658
Retained earnings 11,965 14,689
Accumulated foreign currency translation adjustment 4,808 3,911
Total stockholders' equity 27,891 29,698
$102,273 $107,386
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
Allied Research Corporation
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31
1995 1994
<S> <C> <C>
Revenue $ 9,153 $ 25,910
Cost and expenses
Cost of sales 9,050 22,181
Selling and administrative 2,269 2,660
Research and development 195 521
11,514 25,362
Operating income (loss) (2,361) 548
Other income (deductions)
Interest expense (794) (688)
Interest income 820 731
Other - net (259) 36
(233) 79
Earnings (loss) before income taxes (2,594) 627
Income taxes 130 249
NET EARNINGS (LOSS) $ (2,724) $ 378
Net income (loss) per common share $ (.62) $ .09
Weighted average number of shares 4,398,512 4,464,588
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
Allied Research Corporation
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31
Increase (decrease) in cash and equivalents 1995 1994
<S> <C> <C>
Cash flows from operating activities
Net earnings (loss) $ (2,724) $ 378
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities
Depreciation and amortization 472 399
Changes in assets and liabilities
(Increase) decrease in
Accounts receivable 4,302 579
Costs and accrued earnings on uncompleted contracts (1,325) 2,201
Inventories (43) 435
Prepaid expenses and other assets (433) (1,207)
Increase (decrease) in
Accounts payable, accrued liabilities and
customer deposits (9,201) 1,062
Income taxes 500 268
Net cash (used in ) provided by
operating activities (8,452) 4,115
Cash flows (used in) investing activities
Capital expenditures (322) (1,340)
Net cash (used in ) investing activities (322) (1,340)
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
Allied Research Corporation
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Thousands of Dollars)
(Unaudited)
Three months ended March 31
1995 1994
Cash flows from financing activities
Principal payments of long-term debt - (255)
Net increase in long-term borrowings 435 -
Net increase (decrease) in short-term borrowings 1,285 (6,380)
Stock option/stock plan 20 12
Common shares purchased and retired - (2,346)
Deposits - restricted cash (760) -
Net cash provided by (used in)
financing activities 980 (8,969)
Effects of exchange rate changes on cash 2,827 1,194
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (4,967) (5,000)
Cash and equivalents at beginning of year 43,606 44,641
Cash and equivalents at end of period $38,639 $39,641
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Interest $ 1,841 $ 930
Taxes 410 11
The accompanying notes are an integral part of these statements.
6
<PAGE>
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
(Thousands of Dollars)
(Unaudited)
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheets as of March
31, 1995 and December 31, 1994, the condensed
consolidated statements of earnings and the condensed
consolidated statements of cash flows for the three
months ended March 31, 1995 and 1994, have been prepared
by the Company without audit. In the opinion of
management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the
financial position, results of operations and changes in
cash flow at March 31, 1995 and 1994 have been made.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in
conjunction with the financial statements and notes
thereto included in the Company's December 31, 1994 Form
10-K filed with the Securities and Exchange Commission,
Washington, D.C. 20549. The results of operations for
the period ended March 31, 1995 and 1994 are not
necessarily indicative of the operating results for the
full year.
NOTE 2 - PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include
the accounts of Allied Research Corporation (a Delaware
Corporation) and the Company's wholly-owned
subsidiaries, Mecar, S.A. (a Belgian Company), Allied
Research Corporation Limited (a United Kingdom Company),
Barnes & Reinecke, Inc. (a Delaware Corporation), and
ARC Services, Inc. (a Delaware Corporation).
Mecar, S.A.'s wholly-owned Belgian subsidiaries include,
Mecar Immobliere S.A., Sedachim, S.I., as well as its
recently acquired Belgian subsidiaries, Tele Technique
Generale, Management Export Services, N.V. and VSK
Electronics N.V. and its wholly-owned subsidiaries,
Classics, B.V.B.A. Dectectia, N.V. and its majority
owned subsidiary Belgian Automation Units, N.V.
(collectively "The VSK Group"). A minority interest
owned by VSK Electronics in Building Control Services,
N.V. is accounted for under the equity method.
The VSK Group acquisition was accounted for as a
purchase, and revenue and results of operations from
June 1, 1994 (date of acquisition), have been
consolidated.
Significant intercompany transactions have been
eliminated in consolidated.
NOTE 3 - ACQUISITION
On May 31, 1994, the Company's wholly-owned subsidiary,
Mecar S.A., acquired The VSK Group, a group of Belgian
companies, as well as a minority interest in a Belgian
company, for approximately $6,072.
The companies manufacture, distribute and service an
integrated line of industrial security products,
including devices such as buildings access control,
parking control, intrusion and fire detection and
intrusion and fire alarms.
7
<PAGE>
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1995
(Thousands of Dollars)
(Unaudited)
NOTE 3 - ACQUISITION - Continued
The acquisition has been accounted for as a purchase and
the purchase price in excess of the net assets acquired
has been reflected in intangibles. The financial
statements include the result of operations since the
date of acquisition. Pro forma financial data for these
acquisitions prior to the date of acquisition would not
have a material affect on reported results.
Fair value of tangible assets acquired $7,720
Liabilities assumed 6,285
Net assets acquired 1,435
Cash paid 6,072
Excess of cost over assets acquired $4,637
NOTE 4 - RESTRICTED CASH
Mecar is generally required under the terms of its
contracts with foreign governments to provide
performance bonds, advance payment guarantees and
letters of credit. The credit facility agreements used
to provide these financial guarantees generally place
restrictions on cash deposits and other liens on Mecar's
assets, until the customer accepts delivery. Cash
deposits totaling approximately $38,655 ($7,160 of which
is classified as a long-term deposit) at March 31, 1995
($35,848 at December 31, 1994) are restricted or pledged
as collateral for various bank agreements and are
comprised as follows:
1995 1994
Credit facility and related term loan agreements $35,084 $34,542
Other bank guarantees and letters of credit 3,591 1,222
Notes payable - 84
$38,655 $35,848
NOTE 5 - INVENTORIES
Inventories consist of the following:
March 31, 1995 December 31, 1994
Raw materials and supplies $4,322 $4,333
8
<PAGE>
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1995
(Thousands of Dollars)
(Unaudited)
NOTE 6 - NOTES PAYABLE
At March 31, 1995 and December 31, 1994, secured
short-term loans of $23 and of $94 were outstanding with
certain banks.
BRI has a $1,000 revolving line-of-credit agreement
which had an outstanding balance of $300 at March 31,
1995 and $500 as of December 31, 1994. The line bears
interest at prime, plus 2% and is secured by BRI's
eligible accounts receivable and Allied's guarantee.
NOTE 7 - CREDIT FACILITY
The Company is obligated under a credit agreement (the
Agreement) with a banking pool comprised of four foreign
banks that provided credit facilities primarily for
letters of credit, bank guarantees, performance bonds
and similar instruments required for specific sales
contracts. The Agreement provides for certain bank
charges and fees as the line is used, plus an annual fee
of approximately 1.1% of guarantees issued. As of March
31, 1995, the credit facility had been fully utilized
and guarantees of $5,549 remain outstanding.
Advances under the credit facility are secured by
deposits of $3,592, plus term deposits of $31,492 at
March 31 1995 and $31,360 at December 31, 1994, $7,160
of which is classified as long-term deposit at March 31,
1995 and $6,400 at December 31, 1994. Amounts
outstanding are also collateralized by pledges of
approximately $25,600 on Mecar's assets, letters of
credit and certain funds received under the contracts
financed. The Agreement provides for restrictions on
payments or transfers to Allied and ARCL for management
fees, intercompany loans, loan payments, the maintenance
of certain net worth levels and the payment of bank fees
and charges as defined in the Agreement.
The term deposits were borrowed to secure approximately
$34,500 of financing at the inception of the Agreement.
The Company is also liable for guarantees and other
instruments issued on its behalf by other banks which
approximate $4,274 at March 31, 1995, which are
collateralized by $3,591 of time deposits.
Mecar is obligated on a $5,000 mortgage on its
manufacturing and administration facilities. As
amended, the balance of the loan is payable in annual
principal installments of approximately $600 commencing
in January 1996 (except for the annual principal
installment in the year 2000 which is approximately
$800) and the entire balance matures in 2004. The
Company is also obligated on a mortgage on The VSK
Group's building which has a balance due of $273 at
March 31, 1995. The mortgage is payable in annual
installments of $36 plus interest.
9
<PAGE>
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1995
(Thousands of Dollars)
(Unaudited)
NOTE 7 - LONG-TERM FINANCING - Continued
Scheduled annual maturities of long-term obligations as
of March 31, 1995 are as follows:
Year Amount
1995 $28,702
1996 8,709
1997 650
1988 634
1999 634
Thereafter 5,246
$15,873
NOTE 8 - INCOME TAXES
Effective January 1, 1993, the Company adopted the
provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS
No. 109").
The provision for income taxes differs from the
anticipated combined federal and state statutory rates
due to operating losses and earnings from foreign
subsidiaries.
The Company's Belgian subsidiaries have unused net
operating losses of approximately $20,000 at March 31,
1995, which under Belgian law cannot be carried back but
may be carried forward indefinitely, and are subject to
annual limitations.
As of March 31, 1995, the Company had unused foreign tax
credit carryforwards of approximately $1,000 which
expire through 2009.
Deferred tax liabilities have not been recognized for
bases differences related to investments in the
Company's Belgian and United Kingdom subsidiaries.
These differences, which consist primarily of unremitted
earnings intended to be indefinitely reinvested,
aggregated approximately $30,000 at March 31, 1995 and
December 31, 1994. Determination of the amount of
unrecognized deferred tax liabilities is not
practicable.
NOTE 9 - EARNINGS (LOSS) PER SHARE
Stock options outstanding have not been included in the
per share computation because there would not be a
material effect on earnings (loss) per share.
10
<PAGE>
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
March 31, 1995
(Thousands of Dollars)
(Unaudited)
NOTE 10 - RESTRUCTURING CHARGE
In the fourth quarter of 1993, the Company recorded an
accrual for restructuring costs totaling $2,883 ($.44
per share after taxes) related to its Belgian
manufacturing operations. The charge provides for
estimated employee severance, retraining, early
retirements and related costs attributable to a planned
workforce reduction initiated in late 1993. The company
anticipated that it would eliminate over the next years
approximately 32 permanent and 120 temporary factory and
administrative positions. The reductions were the
result of efficiencies implemented over the past several
years, current backlog levels and anticipated future
workforce requirements for Mecar's core defense
operations, as well as those expected to be redeployed
as part of prospective diversification ventures. During
1994, the Company increased the provision by $326 to
cover additional terminations. As of December 31, 1994,
the restructuring has been substantially completed, and
the provision has been fully utilized, except for
approximately $64 which was disbursed in early 1995.
11
<PAGE>
Allied Research Corporation
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
March 31, 1995
(Thousands of Dollars)
(Unaudited)
The Company conducts its business through its
wholly-owned subsidiaries: Mecar, S.A., ("Mecar"), a
Belgian corporation, and its subsidiaries, Mecar
Immobliere, S.A., Sedachim, S.I., as well as Tele Technique
Generale, VSK Electronics, N.V., Management Export
Services, N.V., Classics, B.V.B.A., Detectia, N.V. and
its majority-owned subsidiary Belgian Automation Units,
N.V. ("The VSK Group"): Barnes & Reinecke, Inc.,
("Barnes") a Delaware corporation, headquarterd in
Illinois; Allied Research Corporation Limited,
("Limited") a U.K. Company; and ARC Services, Inc.,
("Services") a Delaware corporation, headquartered in
Vienna, Virginia. This discussion refers to the
financial condition and results of operations of the
Company on a consolidated basis.
A minority interest owned by Mecar in Building Control
Services, N.V. is accounted for under the equity method.
Sales
Revenue for the first three months of 1995 was $9,153, a
65% decrease from the comparable period in 1994,
principally due to Mecar's decrease in revenue. Mecar
sales were $3,119, or down 87% compared to the period
ended March 31, 1994. Barnes revenues were $2,033, up
10% compared to the same period in 1994. Limited and
Services did not have revenues this period or in last
year's comparable period.
The decrease in Mecar's sales resulted from the
continuing delay in receipt of substantial orders from
its principal customers. Barnes' revenues increased in
the first quarter of 1995 over the first quarter of 1994
due to an increase in orders, principally from the U.S.
Government. The VSK Group contributed $3,944 to
Company's revenues for the period ended March 31, 1995;
since it was not acquired until the second quarter of
1994, The VSK Group did not contribute to Company's
revenues during the first quarter of 1994.
Backlog
As of March 31, 1995, the Company's backlog was $40,730
compared with $23,100 at December 31, 1994. The
principal reason for the increase in Company backlog is
the increase in backlog of The VSK Group from $2,300 to
$21,500. The largest components of The VSK Group
backlog are 3-5 year contracts to provide security
services for various banks in Belgium and France.
Mecar's backlog at March 31, 1995 was $13,100. While
Mecar received miscellaneous contracts aggregating
$6,000 during the first quarter of 1995, it received no
new orders from its principal customers.
One of the contracts constituting a major portion of
Mecar's backlog is a contract with one of its principal
customers. This contract is not yet supported by a
fully opened letter of credit. While there has been a
good deal of activity in the last few weeks concerning
this matter, the letter of credit has not yet been fully
opened. Management continues to expect that it will be
fully opened in the next few weeks.
12
<PAGE>
Allied Research Corporation
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
March 31, 1995
(Thousands of Dollars)
(Unaudited)
Operating Costs and Expenses
Cost of sales for the first three months of 1995 were
approximately $9,050 or 99% of sales as compared to
$22,181 or 86% for the first three months of 1994. The
increase is primarily due to the reduced amounts of
revenue realized in 1995.
Selling and administrative expenses were approximately
$2,269 or 25% of revenues for the three months ended
March 31, 1995 as compared to $2,660 or 10% for the
three months ended March 31, 1994. This increase
reflects the increased costs incurred for the foreign
and domestic diversification plans, long-term business
development programs and reduced amounts of revenue.
Research and Development
Research and development expenses were 2% as a ratio of
sales for the three month period ended March 31, 1995
and 1994. The actual cost decrease is due to lower
expenditures by Mecar and Services for development of
its demilitarization process.
Operating Results
There was an operating loss of $2,361 for the first
three months or 26% of revenues for the quarter ended
March 31, 1995. This compares with an operating income
of $548 or 2.1% of revenue for the three months ended
March 31, 1994. This decline is primarily because of
lower revenue at Mecar.
Interest Expense
Interest expense for the first three months of 1995
increased, compared to the same period in 1994, as a
result of increased rates, borrowing levels and the
impact of exchange rates.
Interest Income
Interest income increased as a result of rate changes,
funds available for investment and the impact of
exchange rates.
Other - Net
For the three months ended March 31, 1995, Other - Net
represents primarily currency losses, net of currency
gains, resulting from foreign currency transactions.
13
<PAGE>
Allied Research Corporation
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
March 31, 1995
(Thousands of Dollars)
(Unaudited)
Subsequent Event
In April 1995, a storage bunker exploded at Mecar,
damaging inventory and storage facilities as well as the
primary loading facility. Property damage is currently
estimated at less than $4,000. The damage precluded
Mecar from shipping completed products and caused Mecar
to temporarily lay-off in excess of 200 employees.
Mecar has submitted claims under its casualty and
business interruption insurance policies. One of the
insurers has provided notice to Mecar of its intent to
deny coverage for the accident; the other insurers have
neither admitted nor denied coverage. At the request of
the insurers, a Belgian court has appointed a
technical expert to investigate the cause of the
explosion and ordered him to report his preliminary findings
by mid-June 1995. As a result, insurance benefits have not
yet been provided to Mecar and there can be no
assurance that any such benefits will be provided in the
near-term future. Products completed at the time of the
explosion are currently scheduled to be shipped in the
next two weeks. Some laid-off workers have returned to
work; it is currently anticipated that Mecar will resume
manufacturing operations June 1, 1995; and the primary
loading facility should be usable on or about July 1,
1995. The employees have agreed to forego the annual
July vacation period; accordingly, operations should
continue throughout the summer months. The cessation of
business operations has had and will continue to have an
adverse effect on Mecar's cash flow.
Liquidity and Capital Resources
During the first three months of 1995 and throughout
1994, Allied funded its operations principally with
internally generated cash and back-up credit facilities
required for foreign government contracts. At March 31,
1995, the Company had unrestricted cash (i.e., cash not
required by the terms of the bank agreement to
collateralize contracts) of approximately $7,000. Due
to the reduced amount of unrestricted cash, Mecar is
limited by its bank pool agreement in the amounts it may
transfer to Allied or other affiliates. The Company's
ability to satisfy its operating and capital
requirements continues to be dependent upon its ability
to generate positive cash flow from operations, which is
largely dependent upon Mecar's operations. Substantial
orders from its principal customer base are actively
being pursued by Mecar. If such orders are not received
during the first half of 1995, Mecar and the Company
will experience liquidity deficiencies which will cause
the Company to further accelerate and implement certain
cost reductions.
Accounts receivable at March 31, 1995 decreased over
December 31, 1994 by $4,873 and costs and accrued
earnings on uncompleted contracts increased by $1,487
from 1994 as a result of shipments during the quarter.
Inventories remained level. Prepaid expenses and
deposits increased $580 primarily due to the increase in
advance payments on certain contracts. Current
liabilities decreased by $5,124 from December 31, 1994
levels as a result of decreases in accounts payable,
notes payables, accrued liabilities and customer
deposits, net of increases in current maturities on
long-term debt.
In summary, working capital was approximately $13,733 at
March 31, 1995, which is a decrease of $2,714 from
December 31, 1994. The decrease is primarily
attributable to cash used for operating activities.
14
<PAGE>
Allied Research Corporation
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
March 31, 1995
(Thousands of Dollars)
(Unaudited)
Liquidity and Capital Resources - continued
On May 9, 1995, The VSK Group acquired all of the
outstanding stock of I.D.C.S., S.A ("IDCS"), a Belgian
corporation engaged in the business of manufacturing
security systems. IDCS manufactures a more
sophisticated form of system than is manufactured by The
VSK Group. Since the acquisition of The VSK Group on
June 1, 1994, it has marketed the IDCS product line
under a license arrangement. The IDCS purchase price of
$2,300 was funded by a combination of bank and seller
financings and thus did not adversely affect the
Company's cash flow.
Principally as a result of the explosion at Mecar and
the continued delay in receipt of substantial orders,
Mecar has secured short-term credit relief from its bank
pool. To date, such relief has taken the form of an
advance of approximately $1,000. Further relief, in an
aggregate amount of approximately $2,500 has been
requested by Mecar to cover operating expenses during the
next few month period. There can be no assurance that
such relief will be provided.
Management currently anticipates that it will defer
certain capital expenditures initially scheduled for
completion in 1995 in order to preserve cash.
In May, 1995, the Company terminated the preliminary
agreement for the acquisition of a domestic entity
reported earlier in 1995.
15
<PAGE>
Allied Research Corporation
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
March 31, 1995
(Thousands of Dollars)
(Unaudited)
PART II. OTHER INFORMATION
None.
16
<PAGE>
Allied Research Corporation
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ALLIED RESEARCH CORPORATION
_________________________________
Date: May 15, 1995 J. R. Sculley
Chairman of the Board,
Chief Executive Officer and
Chief Financial Officer
17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 38,639,000
<SECURITIES> 0
<RECEIVABLES> 16,933,000
<ALLOWANCES> 0
<INVENTORY> 14,200,000
<CURRENT-ASSETS> 1,584,000
<PP&E> 44,798,000
<DEPRECIATION> 28,088,000
<TOTAL-ASSETS> 102,273,000
<CURRENT-LIABILITIES> 57,568,000
<BONDS> 0
<COMMON> 440,000
0
0
<OTHER-SE> 27,451,000
<TOTAL-LIABILITY-AND-EQUITY> 102,273,000
<SALES> 9,153,000
<TOTAL-REVENUES> 9,153,000
<CGS> 9,050,000
<TOTAL-COSTS> 11,514,000
<OTHER-EXPENSES> 259,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 794,000
<INCOME-PRETAX> (2,594,000)
<INCOME-TAX> 130,000
<INCOME-CONTINUING> (2,724,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,724,000)
<EPS-PRIMARY> (.62)
<EPS-DILUTED> (.62)
</TABLE>
