AYDIN CORPORATION
Telephone 700 Dresher Road
(215) 657-7510 P.O. Box 349
FAX Horsham, PA 19044
(215) 657-3830 U.S.A.
May 14, 1996
(VIA EDGAR)
SECURITIES & EXCHANGE COMMISSION
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549-1004
Attn: Filing Desk, Stop 1-4
RE: Form 10-Q First Quarter 1996
File No. 1-7203
Gentlemen:
We are enclosing for filing Aydin Corporation's Form 10-Q for the
First Quarter ending March 30, 1996.
Sincerely,
/s/ Robert A. Clancy
Robert A. Clancy
Secretary and
Corporate Counsel
RAC:sbk
Enclosures
<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 March 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 1-7203
AYDIN CORPORATION
__________________________________________________________________
(Exact name of registrant as specified in its charter)
DELAWARE 23-1686808
__________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 DRESHER ROAD, HORSHAM, PA 19044
__________________________________________________________________
(Address of principle executive offices) (Zip Code)
(215) 657-7510
__________________________________________________________________
(Registrant's telephone number, including area code)
__________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (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 the latest practicable date.
Shares of common stock, $1.00 par value, outstanding as of May 10,
1996.
______5,132,800______
<PAGE>
AYDIN CORPORATION
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Incorporated herein by reference are the Condensed Consolidated
Financial Statements of Aydin Corporation and the related Notes to
Financial Statements as set forth on pages 2 through 5 of the "1996
First Quarter Report" to Stockholders. These condensed consolidated
financial statements for the three month period ended March 30, 1996
have been subjected to a limited review by Grant Thornton LLP, the
Registrant's independent accountants, whose report, set forth on page
6 of the "1996 First Quarter Report" to Stockholders, is incorporated
herein by reference.
Earnings per share are based on the weighted average number of common
shares outstanding plus shares issuable upon the assumed exercise of
dilutive common stock options. The number of shares used in the
computation of earnings per share for the three months ended March 30,
1996 and April 1, 1995 were 5,162,831 and 5,040,676, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(1) Material Changes in Financial Condition (3/30/96 versus 12/31/95)
Accounts receivable decreased by $15.5 million primarily because of
$14.5 million of collections during the quarter on the TMRC Contract
with the Government of Turkey. Most of these collections were for the
software on this contract, the acceptance for which had been delayed
in excess of one year.
Accounts payable decreased by $10.3 million primarily because of
payment of approximately $8 million to the TMRC software
subcontractor.
Current accrued and deferred income taxes decreased by $2.2 million
primarily because of payments made to the IRS.
Long-term debt (including current maturities) consisting of mortgages
of $1.1 million was paid off during the quarter, and the properties
involved were used as collateral against a $4.5 million line of credit
put in place during the quarter. During April $3.0 million of the
line of credit was used.
Of the $11.8 million of restricted cash at 3/30/96, approximately $9.2
million was being held as collateral by a bank against the TMRC
contract, and $2.5 million was held as collateral against the $5.2
million of short-term bank debt at 3/30/96. During April, $5.0
million of the short-term bank debt was paid off.
Although the Company's liquidity and financial flexibility have
improved since year-end with the TMRC collections during the quarter,
they continue to be adversely affected by amounts still due from the
Government of Turkey.
Based on the present backlog and projected cash flows, the Company
anticipates financing its capital needs from internal sources and from
some borrowings in the foreseeable future.
(2) Material Changes in Operations (1st Quarter 1996 vs. 1995)
Cost of sales as a percentage of sales decreased to 69.8% from 72.9%
primarily because estimated costs at completion on a major contract
substantially completed during the quarter exceeded actual costs
incurred.
Selling, general and administrative expenses increased by $ 576
thousand (9%) primarily because of increased provisions for doubtful
accounts receivable.
Research and development costs increased by $881 thousand (61%)
because of expanded continuing development efforts in
telecommunications products.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 3, "Legal Proceedings," in
Registrant's Annual Report on Form 10-K, Part I, for the year
ended December 31, 1995, regarding the arbitration
cross claims of Loral Defense Systems-Eagan and the
Registrant. There has been no change in the status of that
matter.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
(a) The Registrant held its Annual Meeting of Stockholders on
April 26, 1996.
(b) Proxies for the meeting were solicited pursuant to
Regulation 14A. There was no solicitation in opposition to
management's nominees for directors as listed in the Proxy
Statement. All such nominees were elected.
(c) The matters voted upon and the results of the voting were as
follows:
(1) Election of Directors
<TABLE>
<CAPTION>
For Withheld Broker
Non-Votes
<S> <C> <C> <C>
I. Gary Bard 4,004,585 28,232 None.
Nev A. Gokcen 4,004,585 28,232 None.
Ayhan Hakimoglu 4,004,585 28,232 None.
Donald S. Taylor 4,004,585 28,232 None.
Harry D. Train II 4,004,585 28,232 None.
John F. Vanderslice 4,004,585 28,232 None.
</TABLE>
(2) To approve Individual Non-Qualified Stock Options.
<TABLE>
<CAPTION>
For Against Abstain Broker Non-Votes
<S> <C> <C> <C> <C>
3,505,067 499,152 28,598 None
</TABLE>
ITEM 5. OTHER INFORMATION
(a) On May 6, 1996, Ayhan Hakimoglu, the Registrant's
Chairman of the Board and Chief Executive Officer,
announced that he completed the sale of his 11.7%
interest in the Registrant's Common Stock to EA
Industries, Inc., West Long Branch, New Jersey and
resigned as an officer and director of the Registrant
and its subsidiaries.
The Registrant's Board of Directors appointed Mr. I.
Gary Bard, currently a director of the Registrant, to
succeed Mr. Hakimoglu as Chairman of the Board and
Chief Executive Officer of the Registrant. The Board
also appointed Mr. Irwin L. Gross, Chairman of the
Board of EA Industries, Inc., as a Director of the
Registrant to fill the vacancy on the Board created by
Mr. Hakimoglu's resignation.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following is a list of Exhibits filed as part of this
report:
Exhibit 2 - None
Exhibit 3(i) - Restated Certificate of Incorporation
(filed as Exhibit 3(i) to Registrant's
Annual Report on Form 10-K for the year
ended December 31, 1994 and incorporated
herein by reference).
Exhibit 3(ii) - By-Laws (filed as Exhibit 3(ii) to
Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994 and
incorporated herein by reference).
Exhibit 4 - None
Exhibit 10 - None
Exhibit 11 - None
Exhibit 15 - Letter re unaudited interim financial
information
Exhibit 18 - None
Exhibit 19 - "1996 FIRST QUARTER REPORT" to
Stockholders
Exhibit 22 - None
Exhibit 23 - None
Exhibit 24 - None
Exhibit 27 - Financial Data Schedule (electronic
filing only)
Exhibit 99 - None
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the First Quarter
1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
AYDIN CORPORATION
DATE May 14, 1996 /s/ Herbert Welber
Herbert Welber, Controller
DATE May 14, 1996 /s/ Robert A. Clancy
Robert A. Clancy, Secretary
<PAGE>
AYDIN CORPORATION
FORM 10-Q QUARTERLY REPORT
EXHIBIT INDEX
N0. DESCRIPTION OF EXHIBIT
15 Letter re unaudited interim financial information
19 1996 First Quarter Report to Stockholders
27 Financial Data Schedule
<PAGE>
Exhibit 15
Securities and Exchange Commission
Washington, D.C. 20549
We have made a review of the condensed consolidated financial
statements of Aydin Corporation and subsidiaries as of March 30, 1996
and for the three-month periods ended March 30, 1996 and
April 1, 1995, in accordance with standards established by the
American Institute of Certified Public Accountants, and issued our
report thereon dated April 26, 1996. We are aware that such financial
statements and our above-mentioned report appearing in the Form 10-Q
of Aydin Corporation for the quarter ended March 30, 1996 are being
incorporated by reference in the Registration Statement Nos. 33-61537;
33-53549; 33-34863; 33-22016; 33-14284; 2-97645; 2-93603; 2-77623;
2-64093 and that such report pursuant to Rule 436(c) of the Securities
Act of 1933 is not considered a part of a registration prepared or
certified by an accountant or a report prepared or certified by an
accountant within the meaning of Paragraphs 7 and 11 of that Act.
/s/ Grant Thornton LLP
Philadelphia, Pennsylvania
May 13, 1996
<PAGE>
Exhibit 19
Dear Stockholder:
Aydin's sales for the first quarter of 1996 were $36,283,000,
representing a slight increase compared to $35,588,000 in the same
period last year. Net income for the first quarter of 1996 was
$963,000, a decrease as compared to $1,191,000 in last year's first
quarter. Earnings per share for the first quarter of 1996 were $.19,
a decrease as compared to $.24 per share in the first quarter of 1995.
Backlog at the end of the first quarter of 1996 was $95 Million,
a decrease from $106 Million at the end of 1995. There is an
additional $150 million of backlog which is subject to prototype
approval and the receipt of production quantity releases which are
estimated to be received over several years. The Company also has
additional production options not included in the above figures.
During the quarter, Aydin was awarded a contract valued at $3
Million from a Swedish Company, Forsvarets Materielverk (FMV), to
supply Digital Microwave Line-of-Sight (LOS) Radios. Aydin also
received several smaller orders and contracts as well.
In addition to the previously mentioned awards, management
remains optimistic regarding several large contracts which have been
mentioned in recent months. Many smaller contracts and opportunities
are also being pursued, all of which have significant potential for
Aydin.
The TMRC contract with the Turkish Government is in the final
phase. Due to preliminary acceptance of software and resulting recent
payments made to us on this contract, Aydin's cash flow has made some
improvements. There is approximately $37 Million of work left on this
program, most of which should be completed this year.
Restricted cash as shown on the Assets page was approximately
$11.8 Million on March 30, 1996. As of this date it has been reduced
to approximately $8 Million. The reduction has been used primarily to
reduce short-term loans.
/s/ Ayhan Hakimoglu
Ayhan Hakimoglu
Chairman of the Board
April 26, 1996
(page 1)
<PAGE>
AYDIN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands except for per share amounts)
<TABLE>
<CAPTION>
3 Months Ended
March 30, 1996 April 1, 1995
(Unaudited) (Unaudited)
<S> <C> <C>
NET SALES $ 36,283 $ 35,588
COST AND EXPENSES
Cost of Sales 25,308 25,937
Selling, general
and administrative 7,100 6,524
Research and development 2,230 1,449
Interest expense (income), net 204 (157)
_______ ______
Total 34,842 33,753
_______ ______
INCOME BEFORE INCOMES TAXES
AND MINORITY INTEREST 1,441 1,835
INCOME TAXES 472 636
_______ ______
INCOME BEFORE
MINORITY INTEREST 969 1,199
LESS MINORITY INTEREST 6 8
_______ ______
NET INCOME $ 963 $ 1,191
_______ ______
_______ ______
EARNINGS PER SHARE $ .19 .24
_______ ______
_______ ______
</TABLE>
(page 2)
<PAGE>
AYDIN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($000 Omitted)
ASSETS
<TABLE>
<CAPTION>
March 30, 1996 Dec. 31, 1995
_____________ _____________
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash, including cash equivalents-
1996, $7,700; 1995, $3,569 $ 3,439 $ 4,638
Short-term investments 11,793 11,672
Accounts receivable 37,675 53,216
Unbilled revenue, after
progress billings 49,400 46,927
Inventories:
Raw materials 11,551 11,581
Work-in-process 8,523 7,965
Finished product 3,283 3,234
Prepaid expenses 1,467 1,577
________ ________
Total current assets 127,131 140,810
PROPERTY, PLANT AND EQUIPMENT,
net of accumulated depreciation:
1996, $58,831; 1995, $59,055 24,697 25,624
OTHER ASSETS 425 426
________ ________
TOTAL ASSETS $152,253 $166,860
________ ________
________ ________
__________________________________________________________________
<FN>
NOTE TO FINANCIAL STATEMENTS:
Interim financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results
for the periods. The 1995 balance sheet has been derived from the
audited financial statements contained in the 1995 Annual Report to
Stockholders. These interim financial statements conform with the
requirements for interim financial statements and consequently do not
include all the disclosures normally required by generally accepted
accounting principles. Reporting developments have been updated where
appropriate. In this connection, there are no significant changes in
contingency disclosures and although the Company's liquidity and
financial flexibility have improved since year end, they continue to
be adversely affected by amounts due from the Government of Turkey.
Pretax income for the first quarter includes foreign currency
translation gains relating to the Turkish subsidiary of $219,000 for
1996 and $109,000 for 1995.
</TABLE>
(page 3)
<PAGE>
AYDIN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($000 Omitted)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 30, 1996 Dec. 31, 1995
_____________ _____________
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of
long-term debt $ -0- $ 342
Short-term bank debt 5,186 5,486
Accounts payable 18,873 29,222
Accrued liabilities 7,531 7,370
Advanced payments and
contract billings in
excess of recognized
revenue 1,402 2,843
Accrued and deferred
income taxes 7,737 9,932
________ _______
Total current liabilities 40,729 55,195
LONG-TERM DEBT,
less current maturities -0- 770
DEFERRED INCOME TAXES 5,906 6,232
MINORITY INTEREST 96 90
STOCKHOLDERS' EQUITY:
Common stock, par value $1-
authorized 7,500,000
shares: issued 1996,
5,115,625 shares;
1995, 5,112,127 shares 5,116 5,112
Additional paid-in capital 2,237 2,188
Retained earnings 98,846 97,883
Foreign currency
translation effects (667) (610)
________ _______
Stockholders' equity 105,522 104,573
________ _______
TOTAL LIABILITIES
AND EQUITY $152,253 $166,860
________ _______
________ _______
</TABLE>
(page 4)
<PAGE>
AYDIN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
($000 omitted)
<TABLE>
<CAPTION>
Three Months Ended
March 30, 1996 April 1, 1995
_____________ _____________
(Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 963 $ 1,191
Items not affecting cash:
Depreciation and
amortization 852 842
Deferred income taxes 150 142
Minority Interest 6 8
Gain on sale of facility (216) -0-
Other (66) 108
Changes in certain
working capital items:
Accounts receivable 15,541 1,364
Unbilled revenue (2,473) (8,942)
Advance payments and
contract billings in
excess of recognized
revenue (1,441) (1,991)
Inventories (577) (781)
Prepaid expenses 110 (314)
Accounts payable and
accrued liabilities (10,188) (690)
Accrued income taxes (2,671) 722
________ _________
CASH USED BY
OPERATING ACTIVITIES (10) (8,341)
INVESTING ACTIVITIES
Net property, plant and
equipment additions (868) (656)
Proceeds from sale
of facility 1,159 -0-
________ _________
CASH PROVIDED (USED) BY
INVESTING ACTIVITIES 291 (656)
FINANCING ACTIVITIES
Release of collateral on
restricted cash (121) 2,287
Principal payments on
long-term debt (1,112) (154)
Net repayments of
short-term borrowings (300) (1,000)
Purchase of Treasury Shares -0- (52)
Minority investment in
consolidated subsidiary -0- 103
Proceeds from exercise of
stock options 53 78
________ _________
CASH PROVIDED (USED) BY
FINANCING ACTIVITIES (1,480) 1,262
________ _________
DECREASE IN CASH AND CASH
EQUIVALENTS (1,199) (7,735)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 4,638 9,771
________ _________
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 3,439 $ 2,036
________ _________
________ _________
</TABLE>
(page 5)
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT ON REVIEW OF
INTERIM FINANCIAL INFORMATION
Board of Directors and Stockholders
Aydin Corporation
We have reviewed the condensed consolidated balance sheet of Aydin
Corporation and subsidiaries as of March 30, 1996 and the related
condensed consolidated statements of income and cash flows for the
three month periods ended March 30, 1996 and April 1, 1995. These
condensed consolidated financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the condensed consolidated financial statements
for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of December 31,
1995, and the related consolidated statements of operations and cash
flows for the year then ended (not presented herein) and in our report
dated February 26, 1996 except as to Note A for which the date is
March 22, 1996, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information
set forth in the accompanying condensed consolidated balance sheet as
of December 31, 1995 is fairly stated, in all material respects in
relation to the consolidated balance sheet from which it has been
derived.
/s/ Grant Thornton LLP
Philadelphia, Pennsylvania
April 26, 1996
_________________________________________________________________
A copy of Aydin Corporation's Form 10Q may be obtained without
charge, upon written request sent to Aydin Corporation
(page 6)
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from First Quarter Report to Stockholders and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-30-1996
<CASH> 3,439
<SECURITIES> 11,793
<RECEIVABLES> 37,675
<ALLOWANCES> 0
<INVENTORY> 23,357
<CURRENT-ASSETS> 127,131
<PP&E> 83,528
<DEPRECIATION> 58,831
<TOTAL-ASSETS> 152,253
<CURRENT-LIABILITIES> 40,729
<BONDS> 0
<COMMON> 5,116
0
0
<OTHER-SE> 100,406
<TOTAL-LIABILITY-AND-EQUITY> 152,253
<SALES> 36,283
<TOTAL-REVENUES> 36,283
<CGS> 25,308
<TOTAL-COSTS> 34,842
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 204
<INCOME-PRETAX> 1,441
<INCOME-TAX> 472
<INCOME-CONTINUING> 969
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 963
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
