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Articles 

Allied Defense Group Inc Reports Operating Results (10-Q)

November 14, 2012 | About:

Allied Defense Group Inc (ADG) filed Quarterly Report for the period ended 2012-09-30.

Allied Defense Group Inc has a market cap of $50.16 million; its shares were traded at around $0 with a P/E ratio of 0.6.

Highlight of Business Operations:

Net assets in liquidation at September 30, 2012 are $43.328 million compared to $44.333 million at December 31, 2011. The change in net assets in liquidation is due to: (i) adjustments of assets to fair value, (ii) adjustment to estimated income to be earned on investments, and (iii) adjustments to estimated costs to be incurred during liquidation. The net assets in liquidation per share as of September 30, 2012 has been adjusted to $5.26 as compared to $5.32 as of June 30, 2012, $5.35 as of March 31, 2012, $5.38 as of December 31, 2011, $5.37 as of September 30, 2011, $5.40 as of June 30, 2011 and $5.54 as of March 31, 2011 and December 31, 2010.

During the three months ended September 30, 2012, $0.886 million of costs were incurred. The estimate of costs to be incurred during liquidation was increased by $0.489 million. This is the net effect of a $0.009 million decrease in compensation for remaining employees and directors; $0.044 million increase in compliance and other office costs; $0.010 million increase in insurance fees, and $0.444 million increase in professional fees primarily due to increased legal fees associated with the DOJ matter. The Company also incurred substantial legal fees in the third quarter in its efforts to resolve the DOJ/SEC inquiry, as well as in resolving a threatened lawsuit by a former employee of MECAR USA. As of September 30, 2012, the estimate of remaining costs to be incurred through 2013 is $1.983 million. Future investment income is estimated to be $0.113 million resulting in estimated total net costs to be incurred during liquidation of $1.870 million as of September 30, 2012.

The Company recorded a net loss of $0.193 million on short-term investments (comprised of interest income of $0.176 million and a realized loss of $0.369 million) during the three-month period ended September 30, 2012. The realized loss is attributable to the early redemption of approximately $8.100 million of municipal bonds during the quarter as compared to a cumulative net redemption of approximately $3.500 million for the six-month period ended June 30, 2012. The recorded loss of $0.193 million in investment income is offset by an unrealized gain of $0.214 million, resulting in a net gain of $0.021 on investments during the quarter.

2012, $1.885 million of costs were incurred. The estimate of costs to be incurred during liquidation was increased by $0.980 million. This is the net effect of a $0.092 million increase in compensation for remaining employees and directors principally due to a final 401 (k) plan contribution and a potential final pay-out to Mecar employees; $0.050 million increase in compliance and other office costs; $0.354 million increase in insurance fees, primarily due to the amortization of prepaid insurance and write-off of the prepaid balance and an increase in the estimate for D&O insurance; and $0.484 million increase in professional fees primarily due to increased legal fees associated with the DOJ matter and resolution of a threatened lawsuit by a former employee of MECAR USA. As of September 30, 2012, the estimate of remaining costs to be incurred through 2013 is $1.983 million. Future investment income is estimated to be $0.113 million resulting in estimated total net costs to be incurred during liquidation of $1.870 million as of September 30, 2012.

The Company recorded a net loss of $0.150 million on short-term investments (comprised of interest income of $0.642 million and a realized loss of $0.792 million) during the nine-month period ended September 30, 2012. The realized loss is attributable to the early redemption of approximately $11.600 million of municipal bonds. The recorded loss of $0.150 million in investment income is offset by an unrealized gain of $0.212 million, resulting in a net gain on investments of $0.062 million during the nine-month period ending on September 30, 2012.

Read the The complete Report

About the author:

10qk
Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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