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 June 30, 1996
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 June 30, 1996: 4,432,406.
<PAGE>
ALLIED RESEARCH CORPORATION
INDEX
- --------------------------------------------------------------------------------
PAGE
PART I. FINANCIAL INFORMATION - UNAUDITED NUMBER
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
December 31, 1995 and June 30, 1996......................2,3
Condensed Consolidated Statements of Earnings
Three months and six months ended
June 30, 1996 and 1995...................................4
Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 1996 and 1995..................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..................................................15
<PAGE>
Allied Research Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
ASSETS
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C>
CURRENT ASSETS
Cash and equivalents, including restricted cash $10,077 $15,744
Accounts receivable 13,860 21,091
Costs and accrued earnings on uncompleted contracts 13,959 6,311
Inventories 6,055 6,337
Prepaid expenses 1,208 1,113
------ ------
Total current assets 45,159 50,596
PROPERTY, PLANT AND EQUIPMENT - AT COST
Buildings 13,625 14,247
Machinery and equipment 32,660 35,189
------ ------
46,285 49,436
Less accumulated depreciation 32,337 33,330
------ ------
13,948 16,106
Land 1,425 1,545
------ ------
Total property, plant and equipment 15,373 17,651
OTHER ASSETS
Deposit - restricted cash 15,589 18,492
Intangibles 6,553 7,085
Other 310 429
------ ------
Total other assets 22,452 26,006
------ ------
$82,984 $94,253
====== ======
</TABLE>
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>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C>
CURRENT LIABILITIES
Notes payable $ 1,651 $ 485
Current maturities of long-term debt 1,923 2,786
Accounts and trade notes payable 9,130 17,787
Accrued liabilities 5,615 4,858
Accrued losses on contracts 1,122 431
Customer deposits 9,026 9,900
Income taxes 613 371
------ ------
Total current liabilities 29,080 36,618
LONG-TERM DEBT, less current maturities 24,927 28,435
DEFERRED INCOME TAXES 840 847
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 4,432,406
in 1996 and 4,422,056 in 1995 443 442
Capital in excess of par value 10,788 10,745
Retained earnings 13,964 12,676
Accumulated foreign currency translation adjustment 2,942 4,490
------ ------
Total stockholders' equity 28,137 28,353
------ ------
$82,984 $94,253
====== ======
</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 June 30, Six months ended June 30,
--------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- -----------
<S> <C>
Revenue $ 23,004 $ 13,275 $ 46,531 $ 22,428
Cost and expenses
Cost of sales 17,329 10,744 35,724 19,794
Selling and administrative 3,659 3,506 7,123 5,775
Research and development 363 298 774 493
--------- --------- --------- ----------
21,351 14,548 43,621 26,062
Operating income (loss) 1,653 (1,273) 2,910 (3,634)
Other income (deductions)
Interest expense (862) (784) (1,540) (1,578)
Interest income 334 251 731 1,071
Other - net (115) 471 (231) 212
--------- --------- --------- ----------
(643) (62) (1,040) (295)
Earnings (loss) before income taxes 1,010 (1,335) 1,870 (3,929)
Income taxes 359 423 583 553
--------- --------- --------- ----------
NET EARNINGS (LOSS) $ 651 $ (1,758) $ 1,287 $ (4,482)
========= ========= ========= ==========
Net income (loss) per common share $ .15 $ (.40) $ .29 $ (1.02)
========= ========= ========= ==========
Weighted average number of shares 4,430,257 4,404,228 4,426,445 4,409,528
</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>
Six months ended June 30
Increase (decrease) in cash and equivalents 1996 1995
-------- --------
<S> <C>
Cash flows from operating activities
Net earnings (loss) $ 1,287 $(4,482)
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities
Depreciation and amortization 598 413
Changes in assets and liabilities
(Increase) decrease in
Accounts receivable 6,119 3,772
Costs and accrued earnings on uncompleted
contracts (8,324) (69)
Inventories (194) 769
Prepaid expenses and other assets 498 1,462
Increase (decrease) in
Accounts payable, accrued liabilities and
customer deposits (5,871) (9,479)
Income taxes (238) 97
------- ------
Net cash (used in) operating activities (6,125) (7,517)
Cash flows (used in) investing activities
Capital expenditures (263) 24
Acquisitions (net of cash acquired) -- (2,600)
------- ------
Net cash (used in) investing activities (263) (2,576)
</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)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended June 30
1996 1995
<S> <C>
Cash flows from financing activities
Principal payments of long-term debt (2,057) (25,727)
Net increase (decrease) in short-term borrowings 1,190 (2,473)
Stock option/stock plan 44 40
Deposits - restricted cash 1,463 6,400
------ ------
Net cash provided by (used in)
financing activities 640 (21,760)
Effects of exchange rate changes on cash 81 (10)
------ ------
NET (DECREASE) IN CASH AND
CASH EQUIVALENTS (5,667) (31,863)
Cash and equivalents at beginning of year 15,744 43,606
------ ------
Cash and equivalents at end of period $10,077 $11,743
====== ======
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for
Interest $ 664 $ 620
Taxes 329 373
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(Thousands of Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheets as of June 30, 1996 and December
31, 1995, the condensed consolidated statements of earnings and the
condensed consolidated statements of cash flows for the six months ended
June 30, 1996 and 1995, 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 June 30, 1996 and 1995
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, 1995 Form 10-K filed with the Securities and Exchange Commission,
Washington, D.C. 20549. The results of operations for the period ended June
30, 1996 and 1995 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., Tele Technique Generale, Management Export Services,
N.V. (MES), I.D.C.S., N.V. (which was acquired May 9, 1995), VSK France, a
French Company formed in 1995 and VSK Electronics N.V. and its wholly-owned
subsidiaries, Classics, B.V.B.A. Detectia, N.V. and Belgian Automation
Units, N.V., (collectively "The VSK Group"). A minority interest owned by
VSK Electronics in Building Control Services, N.V. (BCS) was accounted for
under the equity method in 1994. BCS and MES were liquidated in 1995. In
addition, the Company effectively ceased operations of ARC Services, Inc. in
December, 1995. VSK France is also being liquidated effective December 31,
1995.
The VSK Group acquisitions were accounted for as purchases, and revenue and
results of operations from June 1, 1994 and May 9, 1995 (dates of
acquisition) have been consolidated.
Significant intercompany transactions have been eliminated in consolidation.
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 and on May 9, 1995 Mecar,
S.A. acquired I.D.C.S., N.V. a Belgian company and its minority interest in
Belgian Automation Units, N.V. for a total of $2,972.
7
<PAGE>
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1996
(Thousands of Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 3 - ACQUISITION - Continued
The companies manufacture, distribute and service an integrated line of
industrial security products, including devices such as building access
control, parking control, intrusion and fire detection and intrusion and
fire alarms.
The acquisitions have been accounted for as purchases and the purchase
prices in excess of the net assets acquired have been reflected in
intangibles. The financial statements include the result of operations since
the dates of acquisition. Pro forma financial data for these acquisitions
prior to the dates of acquisition would not have a material effect on
reported results.
I.D.C.S. VSK Group
May 9, 1995 May 31, 1994
Fair value of tangible assets acquired $2,587 $7,721
Liabilities assumed 855 6,285
------ -----
Net assets acquired 1,732 1,436
Cash paid 2,972 6,072
----- -----
Excess of cost over assets acquired $1,240 $4,636
===== =====
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 $22,263 and $29,051 ($15,589 of which is classified
as long-term at June 30, 1996 and $18,492 at December 31, 1995) as of June
30, 1996 and December 31, 1995, respectively, are restricted or pledged as
collateral for various bank agreements and are comprised as follows:
1996 1995
------- -------
Cash
Credit facility and related term loan agreements $ 2,937 $ 7,755
Other bank guarantees and letters of credit 2,770 1,769
Notes payable and line-of-credit 967 1,035
------ ------
6,674 10,559
Deposit - restricted cash - long term
Credit facility and related term loan agreements 15,589 18,492
------ ------
$22,263 $29,051
====== ======
8
<PAGE>
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1996
(Thousands of Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 5 - INVENTORIES
Inventories consist of the following:
June 30, 1996 December 31, 1995
Raw materials and supplies $6,055 $6,337
NOTE 6 - NOTES PAYABLE
At June 30, 1996 and December 31, 1995, secured short-term loans of $1,651
and $485, respectively, were outstanding. BRI has two $500 three year term
loan facilities at 2% over prime with an outstanding balance at June 30,
1996 of $818 for capital improvements and a $1,000 revolving line-of-credit
which had an outstanding balance of $650 at June 30, 1996. The line bears
interest at the rate of prime plus .5%. The credit facility is secured by
BRI's eligible receivables and Allied's guarantee. The former agreement
was a $750 revolving line-of-credit agreement which had an
outstanding balance of $445 as of December 31, 1995. Mecar has $967
outstanding under its line-of-credit at June 30, 1996 based on a variable
market rate of interest.
NOTE 7 - CREDIT FACILITY
Mecar is obligated under an amended 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, plus an annual fee of
approximately 2% of guarantees issued. As of June 30, 1996, guarantees of
$13,248 under the agreement remain outstanding.
Advances under the credit facility were secured by deposits of $18,526 of
which $15,589 is long-term at June 30, 1996 and deposits of $26,247 at
December 31, 1995, $18,492 of which is classified as long-term deposit at
December 31, 1995. Amounts outstanding were also collateralized by pledges
of approximately $27,600 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, income and loss levels and the payment of bank fees and charges as
defined in the Agreement.
The Company is also liable for guarantees and other instruments issued on
its behalf by other banks which approximate $5,464 at June 30, 1996, which
are collateralized by $1,975 of time deposits.
9
<PAGE>
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1996
(Thousands of Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 7 - CREDIT FACILITY - Continued
Mecar is obligated on a $5,000 20 year mortgage on its manufacturing and
administration facilities. As amended, the balance of the loan is payable in
annual principal installments of approximately $600 (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 for $1,400. The mortgage is payable in annual
installments of $50 plus interest. In addition, the Company is obligated on
an outstanding loan for the acquisition of I.D.C.S., N.V. in the amount of
$1,822 payable in annual installments of $91 plus interest.
NOTE 8 - LONG-TERM FINANCING
Scheduled annual maturities of long-term obligations as of June 30, 1996 are
as follows:
Year Amount
1997 $ 1,923
1998 17,419
1999 1,730
2000 1,408
2001 1,011
Thereafter 3,359
$26,850
NOTE 9 - INCOME TAXES
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109") in 1993.
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 $18,700 at June 30, 1996, which under Belgian law cannot be
carried back but may be carried forward indefinitely, and are subject to an
annual limitation for 1996.
As of June 30, 1996, the Company had unused foreign tax credit carryforwards
of approximately $700 which expire through 2000.
10
<PAGE>
Allied Research Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
June 30, 1996
(Thousands of Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 9 - INCOME TAXES - Continued
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
$16,500 at June 30, 1996 and December 31, 1995. Determination of the amount
of unrecognized deferred tax liabilities is not practicable.
NOTE 10 - 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.
11
<PAGE>
Allied Research Corporation
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULT OF OPERATIONS - CONTINUED
June 30, 1996
(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., Classics, B.V.B.A., Detectia, N.V., I.D.C.S., N.V., and
Belgian Automation Units, N.V. (collectively "The VSK Group"): Barnes &
Reinecke, Inc., ("Barnes") a Delaware corporation, headquartered 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.
Sales
Revenue for the first six months of 1996 was $46,531, a 107 % increase from
the comparable period in 1995, principally due to Mecar's increase in
revenue. Mecar revenue was $31,210, or up 242% compared to the period ended
June 30, 1995. Barnes' revenue was $6,398, up 60% compared to the same
period in 1995. The VSK Group's revenue for the first half of 1996 was
$8,922 compared to $7,611 in 1995 (provided, however, the prior year only
included I.D.C.S for the post-May, 1995 period). Limited and Services did
not have significant revenue this period or in last year's comparable
period.
Revenue for the quarter ended June 30, 1996 was $23,004, a 73% increase over
the quarter ended June 30, 1995. Mecar recognized revenue of $15,385 for the
quarter ended June 30, 1996, a 157% increase over the quarter ended June 30,
1995; Barnes' revenue of $2,981 for the quarter ended June 30, 1996
constituted a 51% increase over the quarter ended June 30, 1995; the revenue
of The VSK Group of $4,638 for the quarter ended June 30, 1996 constituted a
26 % increase over the quarter ended June 30, 1995.
The increase in Mecar and the VSK Group's revenue during the first six (6)
months of 1996 resulted principally from a higher backlog of orders at the
end of calendar year 1995 than at the end of calendar year 1994 and
continued new orders in 1996. Similarly, Barnes' improved performance
principally resulted from continued execution of the order it received
during calendar year 1995 for the benefit of a foreign-based customer.
Backlog
As of June 30, 1996, the Company's backlog was $98,906 compared with
$68,100 at December 31, 1995 and $60,333 at March 31, 1996.
Mecar's backlog at June 30, 1996 was $73,351 compared with $30,771 at March
31, 1996. The increase is primarily attributable to the receipt by Mecar in
the latter portion of the second quarter of 1996 of approximately $50,000 in
new orders from its principal customers.
Barnes' backlog as of June 30, 1996 was $7,763 compared with $10,190 at
March 31, 1996.
The backlog of The VSK Group as of June 30, 1996 was $17,792 compared with
$19,372 as of March 31, 1996.
12
<PAGE>
Allied Research Corporation
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULT OF OPERATIONS - CONTINUED
June 30, 1996
(Thousands of Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
Operating Costs and Expenses
Cost of sales for the first six months of 1996 was approximately $35,724 or
76% of sales as compared to $19,794 or 88% for the first six months of 1995.
Cost of sales for the quarter ended June 30, 1996 was $17,329 or 75% of
sales compared to 81% of sales for the same period the previous year. The
percentage decrease is primarily due to the increased amounts of revenue in
1996 and the product mix.
Selling and administrative expenses were approximately $7,123 or 15% of
revenues for the six months ended June 30, 1996 as compared to $5,775 or 26%
for the six months ended June 30, 1995. Selling and administrative expenses
for the quarter ended June 30, 1996 were $3,659 or 16% of revenue compared
to 26% of sales for the same period in the previous year. The decrease
reflects scheduled reductions in certain expenditures and increased
amounts of revenue.
Research and Development
Research and development expenses were 2% of sales for each of the six month
period and three month period ended June 30, 1996 as compared with 2% for
the corresponding periods in 1995.
Operating Results
There was operating income of $2,910 for the first six months of 1996 (or
6.3% of revenue). This compares with an operating loss of $3,634 for the six
months ended June 30, 1995. During the second quarter of 1996, the Company
had operating income of $1,653 (or 7.2% of revenue) compared with an
operating loss of $1,273 for the quarter ended June 30, 1995. The improved
results are primarily attributable to increased amounts of revenue at each
of the Company's operating units. In addition, the 1995 results were
adversely affected by the shutdown of Mecar's facilities due to the April,
1995 explosion.
Interest Expense
Interest expense for the six months ending June 30, 1996 was approximately
the same as for the six months ended June 30, 1995. Interest expense
increased by approximately 10% for the three month period ended June 30,
1996 over the same period in 1995 due to increased levels of borrowing.
Interest Income
Interest income decreased for the first six months of 1996 over the
comparable period in 1995 as a result of lower levels of cash. Interest
income increased for the three month period ended June 30, 1996 over the
same period in 1995 due to increased cash levels.
Other - Net
For the six months ended June 30, 1996, 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 CONDITION AND RESULT OF OPERATIONS - CONTINUED
June 30, 1996
(Thousands of Dollars)
(Unaudited)
- --------------------------------------------------------------------------------
Liquidity and Capital Resources
During the first six months of 1996 and throughout 1995, Allied funded its
operations principally with internally generated cash and back-up credit
facilities required for foreign government contracts. At June 30, 1996, the
Company had unrestricted cash (i.e., cash not required by the terms of the
bank agreement to collateralize contracts) of approximately $4,564, as
compared with approximately $3,403 as of March 31, 1996.
In July, 1996, Mecar extended its bank pool agreement to finance the orders
received from its principal customers. The financing continues to consist of
performance bonds, advance payment guarantees and import letters of credit
and a $1,000 cash line-of-credit. The financing has been provided on
substantially the same terms and conditions as historically provided by the
bank pool and as summarized in prior Company filings. The financing
documents continue to restrict the amount of payments Mecar may make to any
affiliated company, including the Company, absent bank pool approval.
In connection with the bank pool extension, the Company recapitalized Mecar
by causing Limited to convert a substantial portion of its inter-company
loan to Mecar capital.
During the second quarter of 1996, Barnes amended its bank facility to
increase its line of credit from $750 to $1,000. In addition, Barnes
continues to be indebteded to its bank for term loans payable through June
1999. As of June 30, 1996, the line of credit had an outstanding balance of
$650 and Barnes was indebted under its term loans in an aggregate amount of
$818.
Accounts receivable at June 30, 1996 decreased over December 31, 1995 by
$7,232 and cost and accrued earnings on uncompleted contracts increased by
$7,647 from 1995 as a result of an increase in production. Inventories and
prepaid expenses remained level. Current liabilities decreased by $7,538
from December 31, 1995 levels as a result of payments of accrued liabilities
and accounts payable.
Long-term debt (including current maturities thereof) as of June 30, 1996,
decreased by approximately $3,508 from December 31, 1995 as a result of
scheduled repayments of the term loan supporting Mecar's credit facility.
In summary, working capital was approximately $16,079 at June 30, 1996,
which is an increase of $2,101 from December 31, 1995.
14
<PAGE>
PART II. OTHER INFORMATION
None.
15
<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
/s/ J. R. Sculley
-----------------------------------
Date: August 12, 1996 J. R. Sculley
Chairman of the Board,
Chief Executive Officer and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<NAME> Allied Research Corporation
<CIK> 0000003952
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 10,076,909
<SECURITIES> 0
<RECEIVABLES> 13,859,406
<ALLOWANCES> 0
<INVENTORY> 6,054,958
<CURRENT-ASSETS> 45,158,856
<PP&E> 47,709,201
<DEPRECIATION> 32,336,438
<TOTAL-ASSETS> 82,984,171
<CURRENT-LIABILITIES> 29,079,534
<BONDS> 0
0
0
<COMMON> 443,241
<OTHER-SE> 27,693,692
<TOTAL-LIABILITY-AND-EQUITY> 82,984,171
<SALES> 46,531,000
<TOTAL-REVENUES> 46,531,000
<CGS> 35,724,000
<TOTAL-COSTS> 43,621,000
<OTHER-EXPENSES> 1,040,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,540,000
<INCOME-PRETAX> 1,870,000
<INCOME-TAX> 583,000
<INCOME-CONTINUING> 1,287,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,287,000
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
