SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: September 30, 1995
Commission File Number 0-4431
AUTO-GRAPHICS, INC.
(exact name of registrant as specified in its charter)
California 95-2105641
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3201 Temple Avenue, Pomona, California 91768
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code:
(909) 595-7204
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 [ ]
Total Shares Outstanding:
Common Stock: 1,130,478
<PAGE>
<TABLE>
AUTO-GRAPHICS, INC.
Form 10-Q
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
Unaudited Condensed Statement of Income
For Nine Months Ended September 30
<CAPTION>
1995 1994
<S> <C> <C>
Net sales $6,952,801 $6,516,403
Costs and expenses:
Cost of sales 4,401,095 4,490,065
Selling, general & administrative 2,264,250 1,774,733
Interest/other 120,481 111,891
Total costs and expenses 6,785,826 6,376,689
Income from operations 166,975 139,714
Provision for taxes based on income 78,000 59,000
Net income $ 88,975 $ 80,714
Net income per share $ 0.08 $ 0.06
Shares outstanding 1,130,478 1,280,078
<FN>
See Notes to Unaudited Condensed Financial Statements
</TABLE>
<PAGE>
<TABLE>
AUTO-GRAPHICS, INC.
Form 10-Q
Unaudited Condensed Statement of Income
For Three Months Ended September 30
<CAPTION>
1995 1994
<S> <C> <C>
Net sales $2,429,726 $2,173,959
Costs and expenses:
Cost of sales 1,527,812 1,501,336
Selling, general & administrative 805,266 583,075
Interest 38,667 39,843
Total costs and expenses 2,371,745 2,124,254
Income from operations 57,981 49,705
Provision for taxes based on income 28,000 21,000
Net income $ 29,981 $ 28,705
Net income per share $ 0.03 $ 0.02
Shares outstanding 1,130,478 1,280,078
<FN>
See Notes to Unaudited Condensed Financial Statements
</TABLE>
<PAGE>
<TABLE>
AUTO-GRAPHICS, INC.
Form 10-Q
Unaudited Balance Sheet
September 30, 1995 and December 31, 1994
<CAPTION>
<S> <C> <C>
ASSETS
1995 1994
(audited)
CURRENT ASSETS
Cash $ 46,417 $ 80,852
Accounts receivable, less allowance
for doubtful accounts of $38,000 in
1995 and 1994 1,816,594 2,051,764
Unbilled production costs 319,737 217,111
Finished goods 57,563 55,189
Prepaid expenses 209,600 198,040
Total current assets 2,449,911 2,602,956
EQUIPMENT & LEASEHOLD IMPROVEMENTS,
at cost, pledged 7,724,656 6,645,125
Less accumulated depreciation 3,988,383 3,338,152
Net equipment and leasehold
improvements 3,726,273 3,306,973
OTHER ASSETS 176,681 196,187
$6,362,865 $6,106,116
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 375,000 $ --
Accounts payable 302,353 291,166
Customers' advance payments 282,226 328,413
Accrued expenses 94,553 166,823
Accrued payroll & related liabilities 269,812 135,675
Current portion of long-term debt 505,000 450,000
Total current liabilities 1,828,944 1,372,077
LONG-TERM DEBT 1,718,381 1,695,881
DEFERRED TAXES BASED ON INCOME 478,932 487,432
STOCKHOLDERS' EQUITY
Common stock, $0.10 par value; 4,000,000
shares authorized, 1,130,478 shares issued
and outstanding in 1995, and 1,285,278
shares issued and outstanding in 1994 113,048 128,008
Capital in excess of par value 1,151,093 1,197,717
Retained earnings 1,072,467 1,225,001
Total stockholders' equity 2,336,608 2,550,726
$6,362,865 $6,106,116
<FN>
See Notes to Unaudited Condensed Financial Statements
</TABLE>
<PAGE>
<TABLE>
AUTO-GRAPHICS, INC.
Form 10-Q
Unaudited Statement of
Cash Flows
For Nine Months Ended September 30
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 88,975 $ 80,714
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 677,231 657,599
Provision for losses on
accounts receivable -- --
(Increase) decrease in accounts
receivable 235,170 (26,718)
(Increase) decrease in unbilled
production costs (102,626) (162,959)
(Increase) decrease in finished
goods inventory (2,374) 436
(Increase) decrease in other
current assets (11,560) (59,285)
(Increase) decrease in other assets (7,494) 59,714
Increase (decrease) in accounts
payable 11,188 (184,344)
Increase (decrease) in customer
advances (46,187) 100,750
Increase (decrease) in accrued
expenses (49,385) (6,322)
Increase (decrease) in accrued payroll
and related liabilities 134,137 (35,412)
Increase (decrease) in interest and
income taxes payable (22,885) (38,586)
Increase (decrease) in deferred taxes (8,500) --
Net cash provided by operating
activities $ 895,690 $ 385,587
Cash flows from investing activities:
Capital expenditures (1,079,531) (698,911)
Net cash used in investing activities (1,079,531) (698,911)
Cash flows from financing activities:
Borrowings under long-term debt 250,000 --
Principal payments under debt
agreements (337,500) (337,500)
Net borrowings under line-of-credit
agreement 375,000 700,000
Repurchase of capital stock (303,094) (48,327)
Stock repurchase debt (see Note 4) 165,000 --
Net cash provided by (used in)
financing activities 149,406 314,173
Net increase (decrease) in cash (34,435) 849
Cash at beginning of period 80,852 63,079
Cash at end of period $ 46,417 $ 63,928
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 164,350 $ 139,510
Income taxes 109,298 91,344
<FN>
See Notes to Unaudited Condensed Financial Statements
</TABLE>
<PAGE>
AUTO-GRAPHICS, INC.
Form 10-Q
Notes to
Unaudited Condensed Financial Statements
September 30, 1995
NOTE 1.The unaudited condensed financial statements included
herein have been prepared by Registrant and include all
normal and recurring adjustments which are, in the
opinion of Management, necessary for a fair presentation
of the financial position at September 30, 1995, the
results of operations and the statement of cash flows for
the nine months ended September 30, 1995 and 1994
pursuant to the rules and regulations of the Securities
and Exchange Commission.
The results of operations for the subject periods are not
necessarily indicative of the results for the entire
year.
This Quarterly Report on Form 10-Q is qualified in its
entirety by the information included in the Company's
Annual Report to the SEC on Form 10-K for the period
ending December 31, 1994 including, without limitation,
the financial statements included therein.
NOTE 2.In November 1992, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standard
No. 112, Employers Accounting for Postemployment
Benefits, which the Company adopted in 1994. The
Standard requires that the cost of certain post-
employment benefits programs be accrued as of the date of
termination. The adoption of the Standard has not had a
material effect on the Company's financial position or
results of operations.
In December 1993, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standard
No. 115, Accounting for Certain Investments in Debt and
Equity Securities, which the Company adopted in 1994.
The standard establishes principles of financial
accounting and reporting for investments in equity
securities that have readily determinable fair values and
for all investments in debt securities. The Company has
no current or planned investments in debt or equity
securities for which the Standard is applicable,
therefore the Standard has not had a material effect on
the Company's financial position or results of
operations.
NOTE 3.The Company entered into a stock repurchase agreement with a
former employee and officer of the Company, Douglas K. Bisch,
whereby the Company agreed to purchase and retire, over a
seven-year period, 156,000 of 171,000 shares of Company stock
owned by Mr. Bisch. The total transaction cost of $825,000
includes stock, non-competition and consulting fees. In January
1995, the Company purchased and retired the first block of
15,600 shares.
NOTE 4.In June, 1995, the Company entered into a stock
repurchase agreement with a former employee and officer
of the Company, Cary A. Marshall, whereby the Company
agreed to purchase and retire, in 1995, 115,000 of
141,000 shares of Company stock owned by Mr. Marshall.
The total transaction cost of $230,000 will be paid in
four annual installments beginning in 1995 plus interest
of 5.5% per annum ($65,000 paid in June 1995, and $55,000
to be paid in 1996,1997 and 1998).
<PAGE>
AUTO-GRAPHICS, INC.
Form 10-Q
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations.
FINANCIAL CONDITION
December 31, 1994 to September 30, 1995
Liquidity and capital resources. Working capital
decreased $610,000. Net long-term debt increased by $22,500.
Capital expenditures were $1,080,000. The average collection
period for accounts receivable improved from 70 days at December
31, 1994 to 69 days as of September 30, 1995.
The Company has negotiated a new revolving credit
agreement with a bank under which borrowings are secured by
accounts receivable, whereby the Company may borrow against its
eligible accounts receivable up to a maximum of $1,000,000
($625,000 available at September 30, 1995) with interest at 1/2%
above the bank's prime rate. Management believes that the
current line of credit, which is renewed annually in May, will
again be renewed in 1996, and is sufficient to handle cyclical
working capital needs. There are no compensating balance
requirements or commitment fees. This agreement contains the
same loan covenants as the equipment line of credit note payable.
The Company also has a line of credit agreement with the
bank providing for maximum borrowings of $2,250,000 ($192,000
available at September 30, 1995) for the purchase of capital and
financing of up to $500,000 in internal software development.
The capital line of credit is renewed annually in May and management
believes that the current line of credit will be renewed in 1996.
Management does not currently believe that increased credit will
be required to finance capital improvements in 1995 which are
currently estimated at $1,200,000, to be primarily used to
upgrade computers and production equipment and software
development. Among other requirements, the capital line of
credit note payable requires the Company to maintain minimum
ratios of current assets to current liabilities, debt to equity
and cash flow to debt service, minimum working capital and equity
amounts, limits capital expenditures and capital lease
obligations and prohibits the payment of cash dividends. There
are no commitment fees or compensatory balance requirements.
<PAGE>
AUTO-GRAPHICS, INC.
Form 10-Q
RESULTS OF OPERATIONS
First Nine Months 1995 as Compared to First Nine Months 1994
Net sales increased $436,000 or 7%.
Cost of sales decreased $89,000 or 2%. Significant factors
in cost of sales include changes is operating costs generally
attributable to variable costs fluctuating with product mix.
Selling, general and administrative expenses increased
$490,000 or 28% as a result of the company's focus on sales and
marketing. The primary increases are in additional sales and
marketing staff, and marketing expenses. As a percentage of
sales, these expenses increased from 27% to 33%.
Interest expense/other increased $9,000 or 27%. Net
interest expense increased $25,000 as a result of higher interest
rates on borrowings in 1995. Other income increased $16,000,
primarily as a result of expense reimbursement from affiliate
company Datacat.
Income from operations increased $27,000 to $167,000 in
1995, up from $140,000 in 1994.
Net income increased $8,000 to an $89,000 net profit in
1995, up from an $81,000 net profit in 1994.
Net Income per Share increased to $0.08, up from $0.06 in
1994.
Third Quarter 1995 as Compared to Third Quarter 1994
Net sales increased $256,000 or 12%.
Cost of sales increased $26,000 or 2%. Significant factors
in cost of sales include changes in operating costs generally
attributable to variable costs fluctuating with product mix.
Selling, general and administrative expenses increased
$222,000 or 38%. As a percentage of sales, these expenses
increased from 27% to 33%.
Interest expense/other increased $1,000. Net interest
expense increased $9,000. Other income in third quarter of 1995
primarily represents expense reimbursement from affiliate company
Datacat.
Income from operations increased $8,000 to $58,000 in
1995.
Net income increased to $30,000 in 1995.
<PAGE>
AUTO-GRAPHICS, INC.
Form 10-Q
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.
(a) Exhibits:
27 Financial Data Schedules for Nine Months
Ended September 30, 1995
(b) The Company filed Form 8-K on April 28, 1995
covering exhibits to the Form 10-K report for
the year ended December 31, 1994. These exhibits
were separated from the 10-K prior to the filing
thereof and were subsequently refiled separately.
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.
AUTO-GRAPHICS, INC.
Date 11/14/95 ss/ Robert S. Cope
Robert S. Cope, President
and Treasurer
Date 11/14/95 ss/ Daniel E. Luebben
Daniel E. Luebben, Controller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 46,417
<SECURITIES> 0
<RECEIVABLES> 1,854,594
<ALLOWANCES> 38,000
<INVENTORY> 377,300
<CURRENT-ASSETS> 2,449,911
<PP&E> 7,724,656
<DEPRECIATION> 3,988,383
<TOTAL-ASSETS> 6,362,865
<CURRENT-LIABILITIES> 1,828,944
<BONDS> 1,718,381
<COMMON> 113,048
0
0
<OTHER-SE> 2,223,560
<TOTAL-LIABILITY-AND-EQUITY> 6,362,865
<SALES> 6,952,801
<TOTAL-REVENUES> 6,996,670
<CGS> 4,401,095
<TOTAL-COSTS> 4,401,095
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 164,350
<INCOME-PRETAX> 166,975
<INCOME-TAX> 78,000
<INCOME-CONTINUING> 88,975
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 88,975
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
