UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1995
Commission File Number 1-2723
ATHEY PRODUCTS CORPORATION
(Exact name of registrant as specified in charter)
Delaware 36-0753480
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Route 1-A North, P. O. Box 669, Raleigh, North Carolina 27602
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 919-556-5171
Not Applicable
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 and 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 ___.
Number of Common Shares Outstanding as of March 31, 1995: 3,973,459
<PAGE>
ATHEY PRODUCTS CORPORATION
I N D E X
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of March 31, 1995
(unaudited) and December 31, 1994. 3 & 4
Statements of Operations for the three
months ended March 31, 1995 (unaudited)
and March 31, 1994 (unaudited). 5
Statements of Cash Flows for the
three months ended March 31, 1995
(unaudited) and March 31, 1994 (unaudited). 6
Notes to Financial Statements. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8 & 9
PART II. OTHER INFORMATION 10
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ATHEY PRODUCTS CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,270,176 $ 2,645,641
Accounts receivable (less allowances for doubtful receivables 4,276,183 6,478,847
of $250,000 in 1995 and 1994, respectively)
Inventories 14,371,783 14,755,922
Prepaid expenses 122,133 205,915
Deferred income taxes 871,000 902,000
Total current assets 24,911,275 24,988,325
OTHER ASSETS:
Marketable securities (including unrealized holding gain of
$201,203 and $47,284 in 1995 and 1994, respectively) 1,146,954 993,035
Goodwill 200,000 200,000
Other 25,792 26,653
Total other assets 1,372,746 1,219,688
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements 319,769 319,769
Buildings 3,956,850 3,921,111
Machinery and equipment 6,169,131 6,163,978
10,445,750 10,404,858
Less accumulated depreciation (6,292,240) (6,190,104)
Total property, plant and equipment, net 4,153,510 4,214,754
$ 30,437,531 $ 30,422,767
</TABLE>
See notes to financial statements.
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<PAGE>
ATHEY PRODUCTS CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 99,595 99,595
Current portion of obligations under capital lease 27,517 41,130
Accounts payable 1,692,484 2,412,884
Employee compensation and amounts withheld 636,964 635,655
Accrued pension and other expenses 716,390 631,999
Warranty reserve 749,555 780,000
Income taxes payable 203,721 113,500
Total current liabilities 4,126,226 4,714,763
NONCURRENT LIABILITIES:
Obligations under capital lease 99,431 99,431
Deferred income taxes 387,332 336,000
Total noncurrent liabilities 486,763 435,431
SHAREHOLDERS' EQUITY:
Common stock, par value $2 per share:
Authorized 10,000,000 shares;
Issued 4,020,459 shares 8,040,918 8,040,918
Additional paid-in capital 16,218,394 16,218,394
Retained earnings 1,636,998 1,186,616
Unrealized gain on marketable securities
available-for-sale, net of related tax affect 132,794 31,207
Less cost of 47,000 common shares in treasury (204,562) (204,562)
Total shareholders' equity 25,824,542 25,272,573
$ 30,437,531 $ 30,422,767
</TABLE>
See notes to financial statements.
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<PAGE>
ATHEY PRODUCTS CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1995 March 31, 1994
(Unaudited) (Unaudited)
<S> <C> <C>
NET SALES $ 10,494,108 $ 9,427,364
COST OF SALES 8,223,505 7,572,417
Gross profit 2,270,603 1,854,947
Selling, administrative and
engineering expenses 1,645,472 1,641,601
Earnings from operations 625,131 213,346
Other income 68,353 57,945
Other expenses 11,103 94,393
Earnings before income taxes 682,381 176,898
Income tax expense 232,000 60,100
NET EARNINGS $ 450,381 $ 116,798
NET EARNINGS PER SHARE $ 0.11 $ 0.03
WEIGHTED AVERAGE SHARES
OUTSTANDING 3,973,459 3,973,459
</TABLE>
See notes to financial statements.
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<PAGE>
ATHEY PRODUCTS CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1995 March 31, 1994
(Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 450,381 $ 116,798
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Depreciation and amortization 102,136 176,667
Provision for doubtful accounts - 20,070
Provision for deferred income taxes 30,000 -
Loss on sale of equipment 960 -
Changes in operating assets and liabilities:
Accounts receivable 2,202,664 (4,818,408)
Notes receivable - (56,718)
Inventories 384,139 (214,772)
Prepaid expenses and other assets 84,643 (104,580)
Refundable income taxes - 1,537,661
Accounts payable (720,400) (42,809)
Employee compensation and amounts withheld 1,309 (28,160)
Accrued pension and other expenses 84,391 98,679
Warranty reserve (30,445) 154,246
Income taxes payable 90,221 60,100
Net cash provided by (used in) operating activities 2,679,999 (3,101,226)
INVESTING ACTIVITIES:
Purchase of plant and equipment (89,494) (36,244)
Proceeds from sale of equipment 47,643 -
Net cash used in investing activities (41,851) (36,244)
FINANCING ACTIVITIES:
Proceeds from line of credit - 1,500,000
Repayment of line of credit - (200,000)
Principal paid on obligations under capital lease (13,613) (8,252)
Net cash provided by (used in) financing activities (13,613) 1,291,748
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 2,624,535 (1,845,722)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 2,645,641 2,112,408
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 5,270,176 $ 266,686
SUPPLEMENTAL CASH FLOW DISCLOSURES
Income taxes paid (recoveries) $ 111,779 $ -
Interest paid $ 2,750 $ 14,129
SUPPLEMENTAL SCHEDULE OF
NONCASH INVESTING ACTIVITIES:
Capital lease obligations incurred
for use of equipment $ - $ 34,238
</TABLE>
See notes to financial statements.
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<PAGE>
ATHEY PRODUCTS CORPORATION
NOTES TO FINANCIAL STATEMENTS
I. The condensed financial statements included herein
have been prepared by Athey Products Corporation (the
"Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally
included in financial statements prepared in accor-
dance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules
and regulations; however, the Company believes that
the disclosures are adequate to make the information
presented not misleading. It is suggested that these
financial statements be read in conjunction with the
financial statements and the notes thereto included in
the Company's latest annual report on Form 10-K for
the year ended December 31, 1994.
II. The financial information reflects all adjustments
which are, in the opinion of Management, necessary to
a fair presentation of the results for the interim
period presented.
III. Earnings per share are computed on the basis of the
weighted average number of shares outstanding during
the period, which were 3,973,459. All earnings per
share data have been adjusted to give effect to a 5%
stock dividend paid on July 22, 1994. Certain 1994
financial statement amounts have been reclassified to
conform with the 1995 presentation with no effect on
net income.
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<PAGE>
ATHEY PRODUCTS CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Three Months Ended March 31, 1995 ("First Quarter 1995")
as compared to
Three Months Ended March 31, 1994 ("First Quarter 1994")
The Company's net sales for the First Quarter 1995 were $10,494,108, an
11.3% increase over the $9,427,364 recorded in the First Quarter 1994.
The sales growth was attributable to an increase in the number of units
shipped, slightly higher average unit prices and a significant rise in re-
placement part sales.
Gross profit expressed as a percentage of net sales was 21.6% in the First
Quarter 1995 as compared to 19.7% experienced during the same period last
year. Gross profit dollars increased 22.4% to $2,270,603 in the First
Quarter 1995 from $1,854,947 in the First Quarter 1994. The improvement
in gross margins was due to continuing sales volume gains and the associ-
ated improvement in manufacturing efficiencies.
The Company's selling, administrative and engineering expenses during the
First Quarter 1995 were $1,645,472, or 15.7% of sales, compared to
$1,641,601, or 17.4% of sales in the same period a year ago. Higher pay-
roll and related employee benefit expenses and moderately higher legal and
professional fees were partially offset by lower warranty costs.
Other income was $68,353 in the First Quarter 1995, up 18.0% from $57,945
reported for the First Quarter 1994. The increase in other income was
mainly due to slightly higher rates of return on invested cash and a
higher average investment portfolio of cash and cash equivalents.
Other expenses in the First Quarter 1995 were $11,103 compared to $94,393
recorded in the First Quarter 1994. Other expenses in 1994 included the
effect of the early termination, and associated write-down, of the
unamortized portion of a licensing and distributor agreement.
Net earnings after tax for the First Quarter 1995 were $450,381 or $.11
per share, as compared to $116,798 or $.03 per share recorded for the same
period in 1994.
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<PAGE>
Effects of Inflation
The Company attempts to minimize the impact of inflation on production and
operating costs through cost control programs and productivity improve-
ments. Over the past three years, the rate of inflation has not had sig-
nificant impact on the Company's operations. Prices paid for raw materi-
als and other manufacturing inputs have remained fairly stable throughout
this period. On a longer-term basis, the Company has demonstrated an
ability to adjust the selling prices of its products in reaction to chang-
ing costs.
Liquidity and Capital Resources
At March 31, 1995 the Company had working capital of $20,785,049; the ra-
tio of current assets to current liabilities was 6.0 to 1; and the debt to
equity ratio was .18 to 1.
This compares to working capital of $20,273,562; a ratio of current assets
to current liabilities of 5.3 to 1; and a debt to equity ratio of .20 to 1
at December 31, 1994.
At March 31, 1995, cash and cash equivalents were $5,270,176, up
$2,624,535 from $2,645,641 at December 31, 1994.
The Company generally relies upon internally generated funds to satisfy
working capital requirements and to fund capital expenditures. The Com-
pany utilized $1,500,000 and repaid $200,000 of its short-term credit line
during the three months ended March 31, 1994 to assist in financing the
production of units associated with the executed orders received from New
York in 1993. Other than utilizing the available line of credit as
needed, the Company does not presently plan to borrow long-term funds or
sell securities.
The Company believes that existing working capital, cash flow from future
operations, and the available bank line of credit provide adequate re-
source to finance the cash requirements of future capital expenditures.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None
Item 3. Defaults upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K. None.
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<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.
ATHEY PRODUCTS CORPORATION
5-3-95 James D. Cloonan
_______________________________ ______________________________
Date James D. Cloonan, President
5-3-95 Franz M. Ahting
_______________________________ ______________________________
Date Franz M. Ahting, Treasurer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 5,270,176
<SECURITIES> 1,146,954
<RECEIVABLES> 4,276,183
<ALLOWANCES> 0
<INVENTORY> 14,371,783
<CURRENT-ASSETS> 0
<PP&E> 10,445,750
<DEPRECIATION> (6,292,240)
<TOTAL-ASSETS> 29,218,606
<CURRENT-LIABILITIES> 4,126,226
<BONDS> 0
<COMMON> 8,040,918
0
0
<OTHER-SE> 17,783,624
<TOTAL-LIABILITY-AND-EQUITY> 29,950,768
<SALES> 10,562,461
<TOTAL-REVENUES> 0
<CGS> 8,223,505
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,656,575
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 232,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 450,381
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
