<PAGE>
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 July 1, 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 0-3704
NAI TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
New York 11-1798773
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1000 Woodbury Road, Woodbury, New York 11797-2530
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 364-4433
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
---- ----
As of August 8, 1995, 7,459,437 shares of NAI Technologies, Inc.'s $.10 par
value Common Stock were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
July 1, Dec. 31,
1995 1994
(Unaudited)
<S> <C> <C>
--------------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 1,572 $ 1,658
Accounts receivables, net 12,696 12,508
Income taxes receivable 643 4,732
Inventories, net 11,134 14,052
Deferred tax asset 379 378
Other current assets 1,299 871
--------------------------------------------------------------------------------
Total current assets 27,723 34,199
--------------------------------------------------------------------------------
Property, plant and equipment, net 5,574 7,657
Excess of cost over fair value of assets acquired, net 10,578 10,865
Long-term notes receivable 1,190 --
Other assets 1,038 999
--------------------------------------------------------------------------------
Total assets $ 46,103 $ 53,720
================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ -- $ 127
Current installments of long-term debt 15,421 2,179
Accounts payable 8,016 7,484
Accrued payroll and commissions 568 535
Other accrued expenses 5,048 6,435
Income taxes payable 120 774
--------------------------------------------------------------------------------
Total current liabilities 29,173 17,534
--------------------------------------------------------------------------------
Notes payable -- 6,000
Long-term debt 287 7,990
Other accrued expenses 2,298 1,522
Deferred income taxes 378 378
--------------------------------------------------------------------------------
Total liabilities 32,136 33,424
--------------------------------------------------------------------------------
Shareholders' Equity:
Capital Stock:
Preferred stock, no par value, 2,000,000
shares authorized and unissued -- --
Common stock, $.10 par value, 10,000,000
shares authorized; shares issued: 7,459,437
in 1995 and 7,174,592 in 1994 745 717
Capital in excess of par value 15,215 14,718
Foreign currency translation adjustment 152 107
Retained earnings (2,145) 4,754
--------------------------------------------------------------------------------
Total shareholders' equity 13,967 20,296
--------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 46,103 $ 53,720
================================================================================
</TABLE>
<PAGE>
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
For the Three Months Ended
July 1, July 2,
1995 1994
<S> <C> <C>
--------------------------------------------------------------------------------
Net sales $ 14,084 $ 14,909
--------------------------------------------------------------------------------
Cost of sales 15,911 10,651
--------------------------------------------------------------------------------
Gross margin (1,827) 4,258
--------------------------------------------------------------------------------
Selling expense 1,242 2,056
General and administrative expense 1,408 1,169
Research and development 485 1,005
Other 196 131
--------------------------------------------------------------------------------
Total expenses 3,331 4,361
--------------------------------------------------------------------------------
Operating loss (5,158) (103)
--------------------------------------------------------------------------------
Non-operating income (expense)
Deferred debt expense (300) --
Interest income 34 11
Interest expense (357) (361)
--------------------------------------------------------------------------------
(623) (350)
--------------------------------------------------------------------------------
Loss before income taxes (5,781) (453)
Provision for (recovery of) income taxes 24 (79)
--------------------------------------------------------------------------------
Net loss $ (5,805) $ (374)
================================================================================
Loss per common share $ (0.78) $ (0.06)
================================================================================
Average shares outstanding 7,418 6,793
================================================================================
</TABLE>
<PAGE>
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
July 1, July 2,
1995 1994
<S> <C> <C>
Net sales $ 26,771 $ 30,425
--------------------------------------------------------------------------------
Cost of sales 26,080 24,612
--------------------------------------------------------------------------------
Gross margin 691 5,813
--------------------------------------------------------------------------------
Selling expense 2,506 4,322
General and administrative expense 2,759 3,093
Research and development 1,026 2,016
Restructuring Expense -- 7,321
Other 226 281
--------------------------------------------------------------------------------
Total expenses 6,517 17,033
--------------------------------------------------------------------------------
Operating loss (5,826) (11,220)
--------------------------------------------------------------------------------
Non-operating income (expense)
Deferred debt expense (300) --
Interest income 88 23
Interest expense (751) (675)
--------------------------------------------------------------------------------
(963) (652)
--------------------------------------------------------------------------------
Loss before income taxes (6,789) (11,872)
Provision for (recovery of) income taxes 110 (4,158)
--------------------------------------------------------------------------------
Net loss $ (6,899) $ (7,714)
================================================================================
Loss per common share $ (0.94) $ (1.14)
================================================================================
Average shares outstanding 7,304 6,787
================================================================================
</TABLE>
<PAGE>
NAI TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
For the Six Months Ended
July 1, July 2,
1995 1994
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $(6,899) $(7,714)
Adjustments to reconcile net loss
to cash provided by operating activities:
Depreciation and amortization 1,377 1,289
Gain on disposal of property, plant & equipment (4) --
Change in assets and liabilities, excluding effects
from acquisitions and foreign currency adjustments:
Accounts receivable (188) 3,115
Inventories 2,918 2,357
Accounts payable and other accrued expenses (697) 5,079
Income taxes 4,184 (3,915)
Other, net 73 812
----------------------------------------------------------------------------------------------------
Net cash flow provided by operating activities 764 1,023
----------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Contingent payment on purchase of KMS Advanced Products (26) (104)
Purchase of property, plant and equipment (378) (708)
Proceeds from sale of property, plant and equipment 417 26
----------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 13 (786)
----------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Issuances of notes payable 6 7,779
Payments of notes payable (133) (5,053)
Payments of long-term debt (461) (2,108)
Receipts of notes receivable -- 158
Payments for debt restructuring (340) --
Proceeds from exercise of stock options
and stock purchase plan 25 104
----------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (903) 880
----------------------------------------------------------------------------------------------------
Effect of foreign currency exchange rates on cash 40 102
----------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (86) 1,219
Cash and cash equivalents at beginning of year 1,658 1,717
----------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 1,572 $ 2,936
====================================================================================================
Supplemental disclosure of cash flow information:
Cash paid (refunded) for:
Interest $ 743 $ 652
Income taxes $(3,949) $ (241)
Non-cash investing and financing activities
Notes receivable from sale of property $ 1,190 --
Common stock issued in debt restructuring $ 500 --
====================================================================================================
</TABLE>
<PAGE>
OTHER FINANCIAL INFORMATION
UNAUDITED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission ('SEC') and, in the opinion of management, include all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of financial position, results of operations and cash flows for the
interim periods. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the SEC. The Company believes that the disclosures contained
herein are adequate to make the information presented not misleading. The
consolidated statements of operations for the six months ended July 1, 1995 are
not necessarily indicative of the results to be expected for the full year.
These unaudited financial statements should be read in conjunction with the
audited financial statements and accompanying notes included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.
INVENTORIES
Inventories are summarized by major classification as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
July 1, Dec. 31,
1995 1994
(Unaudited)
<S> <C> <C>
--------------------------------------------------------------------------------
(In thousands of dollars)
Raw materials and components $ 7,042 $ 9,698
Work-in-process 3,715 3,849
Finished goods 553 662
Unliquidated progress payments (176) (157)
--------------------------------------------------------------------------------
Inventories, net $ 11,134 $ 14,052
================================================================================
</TABLE>
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Second Quarter 1995 Compared with Second Quarter 1994
The nature of the Company's business is such that year to year changes in sales
levels are predominantly due to changes in shipping volume or product mix rather
than changing sales prices. Net sales for the second quarter of 1995 were $14.1
million, a 6% decrease when compared with $14.9 million for the same period in
1994.
The following chart provides the sales breakdown by product line for the second
quarter:
<TABLE>
<CAPTION>
In thousands of dollars 1995 1994 % Change
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Electronic Systems Segment
Systems $ 4,640 $ 5,762 (19%)
Component 5,791 4,082 42%
Service 1,863 2,984 (38%)
-----------------------------------
Total Electronic Systems Segment 12,294 12,828 (4%)
Telecommunications Segment
Line treatment 1,024 1,354 (24%)
Test equipment 763 727 5%
Data comm 3 -- 100%
------------------------------------
Total Telecommunications Segment 1,790 2,081 (14%)
------------------------------------
TOTAL $14,084 $14,909 (6%)
====================================
</TABLE>
Sales in the Electronic Systems segment (net of intercompany eliminations)
decreased 4% to $12.3 million from $12.8 million for the same period in 1994.
The sales decrease was primarily attributable to lower systems revenue and
service revenue, partially offset by higher component revenue. The decrease in
systems revenue was principally attributable to the completion of the NST-II
contract in the second quarter of 1994 offset by higher systems revenue from
NAI's Systems Division. The decrease in service revenue is primarily
attributable to the lower revenue from Codar Technology, Inc. The increase in
component revenue is attributable to higher shipments of rugged computers from
Codar Technology, Inc.
The 1994 second quarter had approximately $5.0 million of revenue produced at
the Hauppauge facility which was subsequently closed in September 1994 when the
Military Products Division was consolidated into one location at Codar. The
merging of the two businesses placed significant strain on Codar which resulted
in delayed shipments and significant cost overruns on long-term contracts, large
losses and significant cash issues.
In 1995 the Company reorganized the Codar management. During the second quarter
of 1995, which was the first full quarter under the new management team, the
Company recorded mixed results. Revenue was $7.5 million, the highest in Codar's
history. Operating losses during the quarter were $3.0 million primarily due to
cost overruns on long-term contracts which were recognized during the quarter
and inventory write-downs on slow moving or obsolete inventory.
Sales in the Telecommunications segment decreased 14% to $1.8 million as
<PAGE>
compared to $2.1 million for the same period in 1994. The decrease in sales was
attributable to lower line treatment revenue which was adversely affected by
lower orders from the regional Bell operating companies and foreign
telecommunications companies. The Company believes this decline is temporary and
that revenue will increase now that the Company has begun delivery of its new
Enhanced Line Powered Amplifier products.
The consolidated gross margin percentage for the second quarter of 1995 was
(13.0%) as compared with 28.6% for the same period in 1994. The gross margin
percentage was adversely affected by a $4.7 million charge to operations and an
unfavorable mix of high and low margin product deliveries. The $4.7 million
charge to operations was attributable to cost growth on certain long-term
contracts due to engineering design changes and greater than anticipated labor
and material costs and increased provisions for slow moving, excess and obsolete
inventory at Codar. Low margins are expected to continue at least during the
third quarter of 1995 principally at Codar due to a disproportionate level of
low margin revenue as a result of past cost overruns on certain long-term
contracts for which the Company continues to provide products.
Selling expense for the second quarter of 1995 was $1.2 million as compared with
$2.1 million for the same period in 1994. This decrease is attributable to
savings associated with the consolidation of the military products division in
the third quarter of 1994.
General and administrative expenses for the second quarter of 1995 were $1.4
million as compared with $1.2 million for the same period in 1994. This increase
is primarily attributable to higher general and administrative expenses at the
Codar subsidiary as a result of increased management resources, partially offset
by the savings associated with the previously mentioned consolidation in 1994.
The 1994 second quarter was favorably impacted by the reversal of certain
over-accruals.
Company-sponsored research and development expenditures for the second quarter
of 1995 were $0.5 million as compared with $1.0 million for the same period in
1994. This decrease is attributable to savings associated with the previously
mentioned consolidation and the change in mix between Company-sponsored research
and development and customer-funded research and development. A key component to
the Electronic Systems segment's strategy is to focus on its systems integration
business. Although systems integration work by its nature will require
significant engineering content, such costs must be classified as contract costs
and charged to cost of sales as opposed to Company-sponsored research and
development (IR&D).
For the second quarter of 1995 the Company had an operating loss of $5.2 million
as compared with a loss of $0.1 million for the same period in 1994. The
operating loss was primarily attributable to the $4.7 million charge previously
noted and lower sales volume.
Interest expense, net of interest income, was $0.3 million in the second quarter
of 1995, approximately the same as the comparable quarter of 1994. The second
quarter of 1995 also included a $0.3 million charge for debt restructuring
expense related to the April 7, 1995 agreement reached with the Company's two
lending institutions.
The Company was unable to recognize a tax benefit for its loss in the second
quarter of 1995 due to uncertainties as to whether or not a future benefit will
be realized. Any earnings in 1995 will not be taxed at the statutory rate. The
small tax provision is associated with Lynwood Scientific Development Ltd., the
Company's U.K. subsidiary.
For the second quarter of 1995 the Company had a net loss of $5.8 million as
<PAGE>
compared with a net loss of $0.4 million in the second quarter of 1994. Loss per
share was $(0.78) as compared with $(0.06) for the same period in 1994, based on
a weighted average of 7.4 million and 6.8 million shares outstanding,
respectively. The 1994 loss per share includes a pre-tax restructuring charge of
$7.3 million.
<PAGE>
First Six Months 1995 Compared with First Six Months 1994
The nature of the Company's business is such that year to year changes in sales
levels are predominantly due to changes in shipping volume or product mix rather
than changing sales prices. Net sales for the first six months of 1995 were
$26.8 million, a 12% decrease when compared with $30.4 million for the same
period in 1994.
The following chart provides the sales breakdown by product line for the first
six months:
<TABLE>
<CAPTION>
In thousands of dollars 1995 1994 % Change
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Electronic Systems Segment
Systems $ 9,117 $ 9,863 (8%)
Component 10,422 9,631 8%
Service 3,712 6,627 (44%)
--------------------------------------
Total Electronic Systems Segment 23,251 26,121 (11%)
Telecommunications Segment
Line treatment 2,223 2,732 (19%)
Test equipment 1,276 1,572 (19%)
Data comm 21 -- 100%
---------------------------------------
Total Telecommunications Segment 3,520 4,304 (18%)
--------------------------------------
TOTAL $26,771 $30,425 (12%)
========================================
</TABLE>
Sales in the Electronic Systems segment (net of intercompany eliminations)
decreased 11% to $23.3 million from $26.1 million for the same period in 1994.
The sales decrease was primarily attributable to lower systems revenue and
service revenue, partially offset by higher component revenue. The decrease in
systems revenue was principally attributable to the completion of the NST-II
contract in the second quarter of 1994 offset by higher systems revenue from
NAI's Systems Division. The decrease in service revenue is primarily
attributable to the lower revenue from Codar Technology, Inc. The increase in
component revenue is attributable to higher shipments of rugged computers by
Codar Technology, Inc.
The Company expects a significant amount of 1995 sales to be directly to the
military or through prime contractors to the military. The Company is not aware
of any programs in which it participates that are specifically targeted for
termination or curtailment. The Company's products are utilized on many
different U.S. Government programs which reduces the adverse impact of
cancelling a single specific program. However, changes in future U.S. defense
spending levels could impact the Company's future sales volume.
Sales in the Telecommunications segment decreased 18% to $3.5 million as
compared to $4.3 million for the same period in 1994. The decrease in sales was
attributable to lower line treatment and test equipment revenue which was
adversely affected by lower orders from the regional Bell operating companies
and foreign telecommunications companies primarily due to their cost cutting
measures. The Company believes this decline is temporary and that revenue will
increase now that the Company has begun delivery of its new Enhanced Line
Powered Amplifier products.
The consolidated gross margin percentage for the first six months of 1995 was
2.6% as compared with 19.1% for the same period in 1994. The gross margin
percentage was adversely affected by a $4.7 million charge to operations and an
unfavorable mix of high and low margin product deliveries. The $4.7
<PAGE>
million charge to operations was attributable to cost growth on certain
long-term contracts due to engineering design changes and greater than
anticipated labor and material costs and increased provisions for slow moving,
excess and obsolete inventory. Low margins are expected to continue at least
during the third quarter of 1995 principally at Codar due to a disproportionate
level of low margin revenue as a result of past cost overruns on certain
long-term contracts for which the Company continues to provide products.
Selling expense for the first six months of 1995 was $2.5 million as compared
with $4.3 million for the same period in 1994. This decrease is attributable to
savings associated with the consolidation of the military products division in
the third quarter of 1994.
General and administrative expenses for the first six months of 1995 were $2.8
million as compared with $3.1 million for the same period in 1994. This decrease
is primarily attributable to savings associated with the previously mentioned
consolidation in 1994, partially offset by higher general and administrative
expenses at the Codar subsidiary as a result of increased management resources.
Company-sponsored research and development expenditures for the first half of
1995 were $1.0 million as compared with $2.0 million for the same period in
1994. This decrease is attributable to savings associated with the previously
mentioned consolidation and the change in mix between Company-sponsored research
and development and customer-funded research and development. A key component to
the Electronic Systems segment's strategy is to focus on its systems integration
business. Although systems integration work by its nature will require
significant engineering content, such costs must be classified as contract costs
and charged to cost of sales as opposed to Company-sponsored research and
development (IR&D).
For the first six months of 1995 the Company had an operating loss of $5.8
million as compared with a loss of $11.2 million for the same period in 1994.
The operating loss was primarily due to the $4.7 million charge previously
noted and lower sales volume. The 1994 operating loss included a $7.3 million
restructuring expense.
Interest expense, net of interest income, was $0.7 million in the first half of
1995, the same as the first half of 1994. The second quarter of 1995 also
included a $0.3 million charge for debt restructuring expense related to the
April 7, 1995 agreement reached with the Company's two lending institutions.
The effective income tax expense rate is below the combined statutory federal
and state rates for the first six months of 1995. The Company was unable to
recognize a tax benefit for its loss in the first six months of 1995 due to
uncertainties as to whether or not a future benefit will be realized. Any
earnings in 1995 will not be taxed at the statutory rate.
For the first six months of 1995 the Company had a net loss of $6.9 million as
compared with a net loss of $7.7 million in the first six months of 1994. Loss
per share was $(0.94) as compared with $(1.14) for the same period in 1994,
based on a weighted average of 7.3 million and 6.8 million shares outstanding,
respectively. The 1994 loss per share includes a pre-tax restructuring charge of
$7.3 million.
Liquidity and Capital Resources
Although the Company reported a net loss of $6.9 million in the first six months
of 1995, it still generated a positive cash flow of $0.8 million from operations
due to the receipt in January of a Federal tax refund of $4.0 million
attributable to the 1994 tax loss carryback. Company operations have
historically provided a positive cash flow. However, the Company is currently
<PAGE>
experiencing financial difficulties due to lower shipping volumes and cost
overruns on certain long-term contracts.
Although the second quarter revenue level was up approximately 11% over the
first quarter revenue level, the Company is still shipping at a revenue rate
below breakeven. The Company must continue to increase its shipment rate.
However, its ability to do so is constrained by a shortage of working capital.
On April 7, 1995 the Company entered into an amended and restated credit
agreement with its two primary lending institutions. Under the terms of the new
agreement, the existing term debt and lines of credit were converted into a
revolving credit line in exchange for a cash payment of $100,000 and the
issuance of 250,000 shares of the Company's common stock. The new agreement
required quarterly principal payments, commencing in September 1995, of $875,000
with a balloon payment of $13,425,000 due on January 15, 1996. At July 1, 1995
the Company was in violation of certain debt covenants of this new agreement.
The defaults have been waived and the agreement has been amended to establish
new covenants. In addition, the payment of a fee of $50,000 and quarterly
principal payments which were scheduled to begin in September 1995 were deferred
and added to the balloon payment due on January 15, 1996.
The payment of the $15,175,000 principal obligation in January 1996, will be
dependent upon the Company's ability either to obtain alternate financing or to
restructure the remaining balance due. The Company is considering several
alternatives to achieve this, including the sale of common or preferred stock,
the issuance of convertible debt, a business combination, the sale of all or a
portion of the Company and the establishment of a borrowing relationship with
new lending institutions. The Company continues to work with Needham & Company,
Inc. as its investment advisor to assist in this process. The ability of the
Company to accomplish this will be dependent upon the Company's business
prospects and operating results in 1995. The restructuring actions taken in 1994
have significantly reduced the expense structure of the Company. However, it is
not certain that the Company will be able to achieve the revenue level necessary
to return to profitability. The Company is taking action to minimize its cash
outlays by deferring or eliminating discretionary expenses and capital asset
purchases. The Company must increase its shipment rate to an acceptable level
within the near future, or obtain additional financing, in order to meet its
cash flow requirements during 1995.
At July 1, 1995 the Company's long-term secured debt totaled $15.7 million of
which current installments were $15.4 million. This compares to $16.2 million at
December 31, 1994 of which current installments were $2.2 million. The Company's
long-term borrowings, secured by plant and equipment, bear interest at rates
ranging from 70% of prime (8.75% at July 1, 1995) to 12.43%.
Cash and cash equivalents totaled $1.6 million at July 1, 1995 as compared to
$1.7 million at December 31, 1994. Cash provided by operating activities
amounted to $0.8 million in the first six months of 1995 as compared to $1.0
million in the first six months of 1994. In January 1995, the Company received a
Federal tax refund of $4.0 million.
For the first six months of 1995 the Company used cash of $0.4 million for the
purchase of property, plant and equipment. In May 1995, the Company sold its
vacated manufacturing facility located in Hauppauge, NY, and received cash of
$0.4 million with a note for the balance payable in two years in the amount of
$1.2 million.
For the first six months of 1995, the Company made debt principal payments of
$0.5 million and payments against notes payable of $0.1 million.
<PAGE>
Inflation
The Company's financial statements are prepared in accordance with historical
accounting systems, and therefore do not reflect the effect of inflation. The
impact of changing prices on the financial statements is not considered to be
significant.
Backlog
The backlog of unfilled orders at July 1, 1995 stood at $48.2 million compared
to $36.0 million at July 2, 1994. Approximately 80% of the backlog is scheduled
for delivery over the next twelve months.
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
On July 13, 1995 the Company announced that Diagnostic/Retrieval
Systems, Inc. ('DRS') informed NAI that DRS will not proceed with the
proposed merger of NAI into DRS on the terms previously announced.
Under the prior proposal, NAI shareholders would have received .6 share
of DRS Class B common stock for each outstanding share of NAI common
stock. NAI and DRS may continue to discuss whether another transaction
with revised terms can be structured, but there can be no assurance
that any transaction will take place.
NAI stated that it was disappointed that the merger could not be
accomplished on the prior terms. NAI stated that it will continue to
seek strategic and financing alternatives, including new financing,
a business combination, or the sale of all or a portion of the Company.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit 27--Financial Data Schedule (EDGAR filing only).
b) Reports on Form 8-K
None.
<PAGE>
S I G N A T U R E S
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.
NAI TECHNOLOGIES, INC.
(Registrant)
DATE August 15, 1995 By:\s\Richard A. Schneider
--------------------------
Richard A. Schneider
Executive Vice President
(On behalf of the registrant and as
Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUL-01-1995
<CASH> 1,572
<SECURITIES> 0
<RECEIVABLES> 12,696
<ALLOWANCES> 0
<INVENTORY> 11,134
<CURRENT-ASSETS> 27,723
<PP&E> 12,666
<DEPRECIATION> (7,092)
<TOTAL-ASSETS> 46,103
<CURRENT-LIABILITIES> 29,173
<BONDS> 287
<COMMON> 745
0
0
<OTHER-SE> 13,222
<TOTAL-LIABILITY-AND-EQUITY> 46,103
<SALES> 26,771
<TOTAL-REVENUES> 26,771
<CGS> 26,080
<TOTAL-COSTS> 32,597
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 663
<INCOME-PRETAX> (6,789)
<INCOME-TAX> 110
<INCOME-CONTINUING> (6,899)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,899)
<EPS-PRIMARY> (0.94)
<EPS-DILUTED> 0
</TABLE>
