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 September 30, 1997
------------------
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 September 30, 1997: 4,589,689.
<PAGE>
ALLIED RESEARCH CORPORATION
INDEX
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION - UNAUDITED NUMBER
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
December 31, 1996 and September 30, 1997.........................................3,4
Condensed Consolidated Statements of Earnings
Three months and nine months ended September 30, 1997 and 1996.....................5
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 1997 and 1996......................................6
Notes to Condensed Consolidated Financial Statements........................................7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................................................11
PART II. OTHER INFORMATION...................................................................................12
</TABLE>
<PAGE>
ALLIED RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
ASSETS
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C>
CURRENT ASSETS
Cash and equivalents, including restricted cash $19,864 $32,860
Accounts receivable 17,429 11,889
Costs and accrued earnings on uncompleted contracts 8,220 14,694
Inventories 4,281 7,171
Prepaid expenses and deposits 2,704 3,880
------- -------
Total current assets 52,498 70,494
PROPERTY, PLANT AND EQUIPMENT - AT COST
Buildings and improvements 11,864 13,316
Machinery and equipment 28,935 33,030
------- -------
40,799 46,346
Less accumulated depreciation 29,985 33,106
------- -------
10,814 13,240
Land 1,236 1,412
------- -------
12,050 14,652
OTHER ASSETS
Intangibles, net of amortization 5,387 6,124
Restricted cash 4,050 -
Other 968 678
------- -------
10,405 6,802
------- -------
$74,953 $91,948
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
ALLIED RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
(THOUSANDS OF DOLLARS)
LIABILITIES
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C>
CURRENT LIABILITIES
Notes payable $ 3,145 $ 3,318
Current maturities of long-term debt 3,679 14,099
Accounts and trade notes payable 6,899 18,571
Accrued liabilities 5,463 4,702
Customer deposits 8,092 10,935
Income taxes 1,586 805
------- -------
Total current liabilities 28,864 52,430
LONG-TERM OBLIGATIONS
Long-term debt, less current maturities 6,175 7,443
Customer deposits 4,050 -
------- -------
10,225 7,443
DEFERRED INCOME TAXES 599 628
STOCKHOLDERS' EQUITY
Common stock, par value, $.10 per share; authorized
10,000,000 shares; issued and outstanding, 4,589,689
in 1997 and 4,443,092 in 1996 459 444
Capital in excess of par value 11,947 10,846
Retained earnings 23,668 17,482
Accumulated foreign currency translation adjustment (809) 2,675
------- -------
35,265 31,447
------- -------
$74,953 $91,948
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
ALLIED RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
--------------------------- ------------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C>
REVENUE $27,774 $17,547 $82,169 $64,078
COST AND EXPENSES
Cost of sales 22,290 13,206 64,577 48,930
Selling and administrative 3,286 2,672 9,715 9,795
Research and development 321 488 1,004 1,262
------- ------- ------- -------
25,897 16,366 75,296 59,987
------- ------- ------- -------
Operating income 1,877 1,181 6,873 4,091
OTHER INCOME (DEDUCTIONS)
Interest expense (438) (825) (1,558) (2,365)
Interest income 327 781 771 1,512
Other - net 323 (438) 830 (669)
------- ------- ------- -------
212 (482) 43 (1,522)
------- ------- ------- -------
Earnings before income taxes 2,089 699 6,916 2,569
INCOME TAXES 193 178 729 761
------- ------- ------- -------
NET EARNINGS $ 1,896 $ 521 $ 6,187 $ 1,808
======= ======= ======= =======
NET INCOME PER COMMON SHARE $ .42 $ .12 $ 1.37 $ .41
======= ======= ======= =======
WEIGHTED AVERAGE NUMBER OF SHARES 4,566,509 4,437,438 4,524,085 4,430,136
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
ALLIED RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine months ended
September 30
--------------------------
Increase (decrease) in cash and equivalents 1997 1996
-------- --------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 6,187 $ 1,808
Adjustments to reconcile net earnings to net cash (used in)
operating activities
Depreciation and amortization 1,474 1,337
Changes in assets and liabilities
Accounts receivable (5,784) (3,741)
Costs and accrued earnings on uncompleted contracts 4,709 (2,841)
Inventories 2,040 (1,225)
Prepaid expenses and other assets 458 (164)
Accounts payable, accrued liabilities and customer deposits (10,382) 3,289
Income taxes 609 475
-------- -------
Net cash (used in) operating activities (689) (1,062)
CASH FLOWS (USED IN) INVESTING ACTIVITIES
Capital expenditures (505) (267)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments of long-term debt (8,549) (5,879)
Net increase in long-term borrowings 4,050 -
Net increase (decrease) in short-term borrowings (299) 801
Stock option/stock plan 962 87
Deposits - restricted cash (4,050) 5,664
-------- -------
Net cash (used in) provided by financing activities (7,886) 673
EFFECTS OF EXCHANGE RATE CHANGES ON CASH (3,915) (2,459)
-------- -------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (12,995) (3,115)
CASH AND EQUIVALENTS AT BEGINNING OF YEAR 32,859 15,744
-------- -------
CASH AND EQUIVALENTS AT END OF PERIOD $ 19,864 $12,629
======== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
- -------------------------------------------------
Cash paid during the period for
Interest $ 700 $ 689
Taxes 500 455
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
ALLIED RESEARCH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(THOUSANDS OF DOLLARS)
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheets as of September 30, 1997 and
December 31, 1996, the condensed consolidated statements of earnings and the
condensed consolidated statements of cash flows for the nine months ended
September 30, 1997 and 1996, 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 September 30,
1997 and 1996 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, 1996 Form 10-K filed with the Securities and Exchange Commission,
Washington, D.C. 20549. The results of operations for the period ended
September 30, 1997 and 1996 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) and Barnes & Reinecke, Inc.
(a Delaware Corporation).
Mecar, S.A.'s wholly-owned Belgian subsidiaries include, Sedachim, S.I.,
Tele Technique Generale, I.D.C.S., N.V., 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").
Significant intercompany transactions have been eliminated in consolidation.
7
<PAGE>
ALLIED RESEARCH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
SEPTEMBER 30, 1997
(THOUSANDS OF DOLLARS)
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 3 - 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. In addition,
under the term of Barnes & Reinecke's letter of credit facility with its
bank, deposits of $4,050 are also restricted. Cash deposits totaling
approximately $19,844 as of September 30, 1997 and $20,166 at December 31,
1996, are restricted or pledged as collateral for various bank agreements as
shown below:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C>
Cash
Credit facility and related term loan agreements $15,794 $18,382
Other bank guarantees and letters of credit - 1,734
------- -------
15,794 20,116
Deposits - restricted cash - long-term
Letter of credit facility 4,050 -
------- -------
$19,844 $20,116
======= =======
</TABLE>
NOTE 4 - INVENTORIES
Inventories are composed of raw materials and supplies.
NOTE 5 - NOTES PAYABLE
Barnes & Reinecke has a $3,500 revolving line-of-credit agreement which has
an outstanding balance of $500 at September 30, 1997. The outstanding
borrowings under the former line were $250 at December 31, 1996. Barnes &
Reinecke was also obligated on a $438 term loan, with a balance due of $433
at September 30, 1997, which matures April 30, 2002 and bears interest at
prime plus 1 1/2. Formerly, there were two bank notes payable of $500 each
which had a total balance due of $661 at December 31, 1996. Borrowings are
secured by assets, as defined in the agreement, and are guaranteed by
Allied. The agreement contains covenants requiring the maintenance of
certain financial ratios and other matters.
Mecar has a line-of-credit agreement with a foreign bank which has a balance
of $2,234 at September 30, 1997 and there was no balance outstanding at
December 31, 1996. The line is secured by a cash deposit pledge of
approximately $1 million.
8
<PAGE>
ALLIED RESEARCH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
SEPTEMBER 30, 1997
(THOUSANDS OF DOLLARS)
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 6 - CREDIT FACILITIES
The Company is obligated under several agreements with its current and
former banking pools comprised of foreign banks that provide credit
facilities primarily for letters of credit, bank guarantees, performance
bonds and similar instruments required for specific sales contracts. The
agreements provide for certain bank charges and fees as the line is used,
plus a fee of approximately 2% of guarantees issued. As of September 30,
1997, guarantees of $11,418 and $6,638 remain outstanding under the current
and former agreements, respectively.
Guarantees under the prior agreement as at September 30, 1997 are secured by
deposits of $4,374, plus the proceeds from a term loan of $3,307 established
to collateralize the agreement. Guarantees under the current agreement are
collateralized by deposits of $5,060. Amounts outstanding are also
collateralized by pledges of approximately $27,000 on Mecar's assets,
letters of credit and certain funds received under the contracts financed.
Both Agreements provide 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.
Guarantees and other instruments issued on its behalf by other banks which
approximate $618 at September 30, 1997, are collateralized by $135 of time
deposits.
The Company is also obligated under a $6,300 letter of credit facility
agreement established by Barnes & Reinecke with its bank, against which it
has drawn $4,500 at September 30, 1997, that is collateralized by the
proceeds from customer deposits and other deposits.
NOTE 7 - LONG-TERM FINANCING
Mecar is obligated on a twenty year $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 and matures in 2004. The
Company is also obligated on several mortgages on The VSK Group's buildings
which has a balance of approximately $1,200 at September 30, 1997. The
mortgages are payable in annual installments of approximately $250 plus
interest.
Scheduled annual maturities of long-term obligations as of September 30,
1997 are approximately as follows:
Year Amount
---- ------
1998 $3,679
1999 1,300
2000 1,100
2001 1,100
2002 1,000
Thereafter 1,675
9
<PAGE>
ALLIED RESEARCH CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
SEPTEMBER 30, 1997
(THOUSANDS OF DOLLARS)
(UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 8 - INCOME TAXES
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
No. 109").
The Company's provision for income taxes differs from the anticipated
combined federal and state statutory rates due to foreign net operating loss
carryovers and earnings from foreign subsidiaries.
The Company's Belgian subsidiaries have unused net operating losses of
approximately $4,000 at September 30, 1997, which under Belgian law cannot
be carried back but may be carried forward indefinitely.
As of September 30, 1997, the Company had unused foreign tax credit
carryforwards of approximately $700 which expire through 2000.
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
$23,000 at September 30, 1997. Determination of the amount of unrecognized
deferred tax liabilities is not practicable.
NOTE 9 - EARNINGS PER SHARE
Stock options outstanding have not been included in the per share
computation because there would not be a material effect on earnings per
share.
10
<PAGE>
ALLIED RESEARCH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1997
(THOUSANDS OF DOLLARS)
(UNAUDITED)
- --------------------------------------------------------------------------------
The Company conducts its business through its wholly-owned subsidiaries:
Mecar, S.A., ("Mecar"), a Belgian corporation, and its subsidiaries,
Sedachim, S.I., as well as Tele Technique Generale, I.D.C.S., N.V., 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"); Barnes & Reinecke, Inc., ("Barnes") a Delaware corporation,
headquartered in Illinois; and Allied Research Corporation Limited,
("Limited") a U.K. Company; this discussion refers to the financial
condition and results of operations of the Company on a consolidated basis.
SALES
-----
Revenue for the first nine months of 1997 was $82,169, a 28% increase from
the comparable period in 1996, principally due to Mecar's increase in
revenue. Mecar revenue was $63,203, up 51% compared to the period ended
September 30, 1996. Barnes revenues was $6,827, down 33% compared to the
same period in 1996 principally due to delay in receipt of contracts from
the U.S. Government and its security business. Barnes received approximately
$21 million of funded and unfunded contracts through the beginning of
October. The VSK Group's revenue for the first nine months of 1997 was
$12,139 compared to $13,085 in 1996 . The decrease is principally due to the
strength of the U.S. dollar as sales increased by 7% over the same period
last year in Belgian francs. Limited did not have operating revenue this
period or in last year's comparable period.
Revenue for the quarter ended September 30, 1997 was $27,774, a 58% increase
from revenue for the quarter ended September 30, 1996. Mecar recognized
revenue of $25,744 for the quarter ended September 30, 1997, a 240% increase
over the quarter ended September 30, 1996. Barnes' revenue of $2,031 for the
quarter ended September 30, 1997 constituted a 31% decrease over the quarter
ended September 30, 1996; The VSK Group's revenue of $3,641 for the quarter
ended September 30, 1997 decreased 14% over the quarter ended September 30,
1996, primarily due to the currency rate fluctuations.
The increase in Mecar's revenue during the first nine months of 1997
resulted principally from the substantial order received by Mecar in the
first quarter of 1997. While Mecar continues to attempt to broaden its
revenue base, almost all of the orders received in calendar year 1997 have
been from or for the benefit of its principal customers (i.e., $115 million
of the $118 million orders received through September 30, 1997). Barnes'
principal source of revenue in the first nine months of 1997 was from a 1996
contract for the benefit of a foreign country. Barnes has entered into
several teaming agreements with large, original equipment manufacturers in
pursuit of U.S. Government and foreign-based business. These efforts
resulted in approximately $2.5 million of the new awards in late September,
1997 and direct orders of $18 million in early October.
RESULTS OF OPERATIONS
---------------------
The Company recognized a profit for the first nine months of 1997 of $6,187,
compared with a profit of $1,808 for the first nine months of 1996. The
improvement is principally attributable to increased revenue at Mecar and
increased profit margins achieved by The VSK Group. The $1,896 profit earned
by the Company for the three month period ended September 30, 1997 was
substantially in excess of the $521 profit earned by the Company in the
third quarter of 1996.
11
<PAGE>
ALLIED RESEARCH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
SEPTEMBER 30, 1997
(THOUSANDS OF DOLLARS)
(UNAUDITED)
- --------------------------------------------------------------------------------
BACKLOG
-------
As of September 30, 1997, the Company's backlog was $136 million compared
with $121 million at June 30, 1997 and $79 million at December 31, 1996. In
early October, 1997, Barnes' received $18 million of new orders.
Mecar's backlog at September 30, 1997 was $104 million, which includes a $29
million contract received at the end of September, 1997 from one of its
principal customers, compared with $95 million as of June 30, 1997.
Barnes' backlog as of September 30, 1997 was $17 million compared with $12
million as of June 30, 1997.
The backlog of The VSK Group as of September 30, 1997 was $15 million
compared with $14 million as of June 30, 1997.
OPERATING COSTS AND EXPENSES
----------------------------
Cost of sales for the first nine months of 1997 was $64,577 or 79% of sales
as compared to $48,930 or 76% for the first nine months of 1996. Cost of
sales for the quarter ended September 30, 1997 was $22,290 or 80% of sales
compared to 75% of sales for the same period the previous year. The
percentage increase is primarily due to the product mix.
Selling and administrative expenses were approximately $9,715 or 12% of
revenues for the nine months ended September 30, 1997 as compared to $9,795
or 15% for the nine months ended September 30, 1996. Selling and
administrative expenses for the quarter ended September 30, 1997 were $3,286
or 12% of sales compared to 15% of revenue for the same period in the
previous year. The increase in cost for the third quarter reflects increased
expenditures in business development and marketing activities.
RESEARCH AND DEVELOPMENT
------------------------
Research and development expenses were 1% of sales for the nine month period
and 1% of sales for the three month period ended September 30, 1997 as
compared with 2% for the nine month period in 1996 and 3% for the three
month period in 1996. This decrease is due to increased revenue and spending
reductions.
OPERATING RESULTS
-----------------
Operating income was $6,873 for the first nine months of 1997 (or 8.4% of
revenue). This compares with operating income of $4,091 for the nine months
ended September 30, 1996. During the third quarter of 1997, the Company had
operating income of $1,877 (or 6.7% of revenue) compared with operating
income of $1,181 for the quarter ended September 30, 1996. The improved
results are primarily attributable to increased amounts of revenue at Mecar.
12
<PAGE>
ALLIED RESEARCH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
SEPTEMBER 30, 1997
(THOUSANDS OF DOLLARS)
(UNAUDITED)
- --------------------------------------------------------------------------------
INTEREST EXPENSE
----------------
Interest expense for the nine months ending September 30, 1997 was $1,558,
compared with $2,365 for the nine months ended September 30, 1996.
Similarly, interest expense was $438 for the three month period ended
September 30, 1997 and $825 for the same period in 1996 due to decreased
levels of borrowing.
INTEREST INCOME
---------------
Interest income decreased for the three months period ending September 30,
1997 and for the first nine months of 1997 over the comparable periods in
1996 as a result of decreased levels of cash.
OTHER - NET
-----------
For the three and nine months ended September 30, 1997 and 1996, Other - Net
is primarily comprised of net currency gains and losses, resulting from
foreign currency transactions.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
During the first nine months of 1997 and throughout 1996, Allied funded its
operations principally with internally generated cash and credit facilities
required for foreign government contracts. At September 30, 1997, the
Company had unrestricted cash (i.e., cash not required by the terms of the
bank agreement to collateralize contracts) of approximately $2,290, as
compared with approximately $4,072 at June 30, 1997.
Mecar continues to provide credit facilities required for each substantial
new order by extensions of its credit facility with its bank pool.
As of September 30, 1997, Barnes was obligated pursuant to its bank facility
on a $438 term loan and for $4,500 of letters of credit issued by its bank.
Accounts receivable at September 30, 1997 increased over December 31, 1996
by $5,540 and cost and accrued earnings on uncompleted contracts decreased
by $6,474 from 1996 as a result of shipments of contracts in process.
Inventories also decreased by $2,890 due to increased levels of production.
Current liabilities decreased by $23,566 from December 31, 1996 levels as a
result of decreased customer deposits and payments on current maturities of
long-term debt and other current obligations.
Long-term debt (including current maturities thereof) as of September 30,
1997, increased by approximately $2,782 from December 31, 1996 as a result
of $4,050 of long-term customer advances supporting Barnes' line-of-credit
facility.
In summary, working capital was approximately $23,634 at September 30, 1997,
which is an increase of $5,570 from December 31, 1996.
13
<PAGE>
ALLIED RESEARCH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
SEPTEMBER 30, 1997
(THOUSANDS OF DOLLARS)
(UNAUDITED)
- --------------------------------------------------------------------------------
PART II. OTHER INFORMATION
None.
14
<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: October 27, 1997 J. R. Sculley
Chairman of the Board,
Chief Executive Officer and
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> $19,864
<SECURITIES> 0
<RECEIVABLES> 17,429
<ALLOWANCES> 0
<INVENTORY> 4,281
<CURRENT-ASSETS> 52,498
<PP&E> 42,033
<DEPRECIATION> 29,985
<TOTAL-ASSETS> 74,953
<CURRENT-LIABILITIES> 28,864
<BONDS> 0
0
0
<COMMON> 459
<OTHER-SE> 31,806
<TOTAL-LIABILITY-AND-EQUITY> 74,953
<SALES> 82,169
<TOTAL-REVENUES> 82,169
<CGS> 64,577
<TOTAL-COSTS> 75,296
<OTHER-EXPENSES> 1,601
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,558
<INCOME-PRETAX> 6,916
<INCOME-TAX> 729
<INCOME-CONTINUING> 6,187
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,187
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.37
</TABLE>
