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U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from ________ to __________
Commission file number 0-439
American Locker Group Incorporated
(Name of small business issuer in its charter)
Delaware 16-0338330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15 West Second Street, Jamestown, New York 14701
(Address of principal executive offices) (Zip Code)
Issuer's telephone number 1-716-664-9600
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock Par Value $1.00 Per Share
(Title of class)
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 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.
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B is not contained in this
form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-
KSB or any amendment to this Form 10-KSB. [ ]
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State issuer's revenues for its most recent fiscal year.
$23,677,940.
Issuers aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the
stock was sold, or the average bid and asked prices of such
stock, as of March 27, 1996: $5,513,925.
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date: 818,625 shares common stock ($1.00 par value).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual
Stockholders' Meeting to be held May 21, 1996, are incorporated
by reference into Part III.
Transitional Small Business Disclosure Form (check one):
___ Yes x No
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
American Locker Group Incorporated (the "Company") is engaged
primarily in the sale and rental of coin, key and electronically
controlled checking lockers and related locks and the sale of
plastic centralized mail and parcel distribution lockers. The
key controlled checking lockers are sold to the recreational and
transportation industries, bookstores, military posts, law
enforcement agencies, libraries and for export. The
electronically controlled lockers are sold for use as secure
storage in the business environment and the electronically
controlled, coin operated lockers are sold for use in
transportation industry and other uses. The plastic mail and
parcel distribution lockers are sold to the United States Postal
Service ("USPS") for use in centralized mail and parcel delivery
in new housing and industrial developments.
The Company is an engineering, assembling and marketing
enterprise which also manufactures its own mechanical locks for
use in its products.
The Company was incorporated on December 15, 1958, as a
subsidiary of its former publicly-owned parent. In April 1964,
the Company's shares were distributed to the stockholders of its
former parent, and it became a publicly-held corporation. From
1965 to 1989, the Company acquired and disposed of a number of
businesses including the disposition of its original voting
machine business.
In October 1988, the Company sold the checking locker business at
its then remaining major airport locations and in November 1993
sold its last locker concession in the United States.
One of the Company's subsidiaries is a party to a Manufacturing
Agreement with Signore, Inc., formerly a wholly owned subsidiary
of the Company, to furnish fabricating, assembly and shipping
services. The Agreement, which became effective January 1, 1990,
has been extended and now is for a term expiring June 30, 2000.
The Agreement provides that the cost to the Company for these
services be equal to Signore's standard cost divided by 80%.
Business Segment Information
The Company, including its foreign subsidiary, is engaged in one
business: sale and rental of coin and key or electronically
controlled checking lockers and locks and the sale of plastic
centralized mail and parcel distribution lockers.
The checking lockers are fabricated by Signore and are marketed
in the United States by the Company's wholly-owned subsidiary,
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American Locker Security Systems, Inc. ("ALSSI"). Lockers for
the Canadian market are manufactured by Signore with locks
supplied from ALSSI. Lockers are marketed in Canada by the
Canadian Locker Company, Ltd. ("Canadian Locker"), a wholly-owned
subsidiary. These sales are made outright, through salaried
employees and distributors, to customers who need storage
facilities requiring a key controlled lock system in the
recreational, governmental and institutional type industries.
Canadian Locker also owns and operates coin operated lockers in
air, bus and rail terminals and retail locations in Canada.
ALSSI manufactures the lock system, which is coin or key
controlled and operated, for use in lockers previously sold by
ALSSI. ALSSI also provides nationwide and Canadian maintenance
and repair services with respect to coin operated lockers
previously sold by ALSSI. The Company has developed a coin
operated baggage cart system and is operating the system at one
major Canadian airport, and has sold several cart systems for use
in American airports.
The Company has developed a polycarbonate all-weather parcel
locker for the United States Postal Service, and has shipped over
112,000 of the units from March 1989 through March 15, 1996. A
Cluster Box Unit, i.e. (combination letter box), is a parcel
plastic unit for the United States Postal Service which has been
approved and field tested. In November, 1994 the Company
negotiated a contract to sell Type Three CBUs in quantity to the
United States Postal Service. As of March 15, 1996, Cluster Box
Units with aggregate invoice prices in excess of $13,000,000 have
been shipped pursuant to this contract. Components of these units
are made by outside vendors and the units are assembled by ALSSI.
The units are sold directly by ALSSI to the United States Postal
Service. The Company is completing the tooling to manufacture
two additional types of CBU, the Type One and Type Two, and as
described below in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the Company has
negotiated a contract to sell these units to the USPS.
Additional information with respect to business segment data,
including significant customers, is disclosed in Note 9 of the
financial statements included in Item 7 of this Form 10-KSB.
Competition
While the Company is not aware of any reliable trade statistics,
it believes that its subsidiaries, ALSSI and Canadian Locker are
the dominant suppliers of key controlled checking lockers in the
United States and Canada. However, the Company faces more active
competition from several other manufacturers of locker products
sold to the United States Postal Service and other purchasers.
Raw Materials
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Present sources of supplies and raw materials incorporated into
the Company's metal and plastic lockers and locks are generally
considered to be adequate and are currently available in the
market place. The Company's supplier of polycarbonate plastic
which is used in the parcel lockers and CBU's entered this market
in March 1992 and is presently supplying this raw material which
meets strict specifications imposed by the United States Postal
Service. In the event the present supplier declines to continue
to supply this material, the Company would be required to seek an
alternate source of supply.
The Company's metal lockers are manufactured by Signore pursuant
to the Manufacturing Agreement, except for the locks which are
manufactured by ALSSI.
Patents
The Company owns a number of patents, none of which it considers
material to the conduct of its business.
Employees
The Company actively employed 137 individuals as of December 31,
1995, in its businesses of whom 48 are in Canada. The Company
considers its relations with its employees to be satisfactory,
none of whom are represented by a union.
Research and Development
The Company engages in research and development activities
relating to new and improved products as an incident of its
normal manufacturing operations in conjunction with the
continuing operations. It expended $148,527, $75,473, and, and
$290,000 in 1995, 1994 and 1993, respectively, for such activity
in its continuing businesses, which does not include new product
development costs.
Compliance with Environmental Laws and Regulations
Based on the information available to it, except as noted below,
the Company believes that it is in compliance with present
federal, state and local environmental laws and regulations.
By letter dated June 29, 1994, counsel for Gowanda Electronics
("Gowanda") informed the Company that Gowanda intended to pursue
claims against the Company for costs and damages allegedly
incurred by Gowanda as a result of environmental contamination at
Gowanda's property in Gowanda, New York (the "Property"). The
Property was sold by a predecessor of the Company, the AVM
Corporation, to Gowanda in 1978. According to Gowanda,
groundwater and soil at the Property exhibit contamination with
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petroleum products, solvents, and metals. Gowanda stated that
the Company was responsible for this contamination and,
therefore, is liable to Gowanda for past and future remediation
costs under the Comprehensive Environmental Response,
Compensation and Liability Act, the New York Navigation Law, and
various common law theories. Gowanda also stated that it will
seek additional damages from the Company if the environmental
conditions at the Property prevent Gowanda's potential sale of
the Property.
In July 1994, the Company was notified by the Department of Law
of the State of New York that the State of New York believes that
the Company, Bristol-Myers Squibb Company, Inc., General
Electric, Inc., Pass & Seymour, Inc. and R. E. Dietz are liable
for past and future investigation and remediation costs related
to the site in Pompey, New York, previously operated by Solvent
Savers, Inc.
as a spent solvent recovery facility. The defense of this suit
has been assumed by the Company's insurance carrier, with a
reservation of rights.
General
Backlog of orders is not significant in the Company's business as
shipments usually are made shortly after orders are received.
The Company's sales do not have marked seasonal variations,
although third quarter shipments usually are lower than other
quarters due to plant vacation shutdowns by the Company, its
suppliers and some of its customers.
During 1995, 1994 and 1993, one customer, the USPS, accounted for
61.2%, 45.8% and 28.6% of net sales, respectively. The loss of
this customer could adversely affect the Company's operations.
Executive Officers of the Company
Year First
Assumed
Name Age Office Held with Company Position
Harold J. Ruttenberg 81 Chairman of the Board,
Chief Executive Officer,
and Treasurer 1973
Alexander N. Ditonto 64 President, Secretary and
Chief Operating Officer 1983
Roy J. Glosser 35 Vice President -
Operations 1995
Michael A. Ditonto 31 Vice President -
Business Development 1995
Messrs. H. J. Ruttenberg, and A. N. Ditonto have been employed in
their respective positions for more than five years, except that
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Mr. A. N. Ditonto became Secretary in 1992. Roy J. Glosser has
been employed by the Company since 1992 in operations and product
development. Prior to that time, Mr. Glosser served as product
manager of Acu-Rite Inc., an electronic manufacturing firm.
Mr. M. A. Ditonto has been employed by the Company since April
1993. Mr. M. A. Ditonto also serves as Vice President and as a
director of Signore Inc. where he has been employed since March
1991.
There are no arrangements or understandings pursuant to which any
of the officers were elected as officers, except for an
employment contract between the Company and Alexander N. Ditonto.
Except as provided in such employment contract and the Employment
Agreement expected to be entered into between the Company and Roy
J. Glosser described below, all officers hold office for one year
and until their successors are elected and qualified; provided,
however, that any officer is subject to removal with or without
cause, at any time, by a vote of the majority of the Board of
Directors.
Mr. Alexander N. Ditonto has announced that he will not seek
re-election as a director of the Company at its Annual Meeting to
be held on May 21, 1996 and that he will retire as President,
Chief Operating Officer and Secretary of the Company on May 21,
1996. The Company is expected to enter into an employment
contract with Roy J. Glosser whereby Mr. Glosser would assume
duties of the office of President and Chief Operating Officer of
the Company effective May 21, 1996. Mr. Michael A. Ditonto has
also advised the Company that he will resign as Vice President -
Business Development effective May 21, 1996. He is expected to
provide consulting services to the Company in the future.
There have been no events under any bankruptcy act, no criminal
proceedings and no judgments or injunctions material to the
evaluation of the ability and integrity of any executive officer
during the past five years.
ITEM 2. DESCRIPTION OF PROPERTY
The location and approximate floor space of the Company's
principal plants, warehouses and office facilities are as follows
( * indicates leased facility):
Approximate
Floor Space
Location Subsidiary In Sq. Ft. Products
________ _________ ___________ ________
Jamestown, NY Principal Executive Office 15,000 * Office space
American Locker Company, Inc. and
American Locker Security Electronics
Systems, Inc. Lab
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Jamestown, NY American Locker Security 57,000 * Warehouse
Systems, Inc.
Pittsburgh, PA Executive Office 1,000 * Office space
Ellicottville, American Locker Security 12,800 Locks
NY Systems, Inc. - Lock Shop
Toronto, Canadian Locker Company, Ltd. 4,000 * Coin-
Ontario operated
lockers and
locks
Elk Grove American Locker Security 9,900 * Customer
Village, IL Systems, Inc. service and
lock repair
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TOTAL 99,700
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The Company believes that its facilities which are of varying ages and
types of construction and the machinery and equipment utilized in
such plants are in good condition and are adequate for its presently
contemplated needs. All facilities are leased except for the
Ellicottville facility. The leases on these properties terminate at
various times from 1996 through 1999.
ITEM 3. LEGAL PROCEEDINGS
Four female former employees of the Company have alleged in suits
entitled Derr et al. v. American Locker Group, Inc., 94-CV-0515S(M),
(US District Court for Western District of New York)
that they were the victims of sex discrimination in their terminations
and/or compensation and seeking unspecified damages. The Company has
filed an answer denying all charges. Discovery is completed and the
Company has filed a Motion for Summary Judgment on all counts. The
Motion is under consideration by the Court. The Company intends to
vigorously defend this matter.
See "Item 1. Business - Compliance with Environmental Laws and
Regulations."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the security holders, by
means of solicitation of proxies or otherwise, during the fourth
quarter of 1995.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's shares of Common Stock (Par Value $1.00 per share) are
not listed on any exchange, but are traded on the over-the- counter
market and quotations are reported by the National Association of
Security Dealers, Inc. through their Automated Quotation System
(NASDAQ) on the National Market System. The trading symbol is ALGI.
The following table shows the range of the low and high sale prices
for each of the calendar quarters indicated.
Per Common Share
Market Price
Dividend
1994 High Low Declared
____ ____ ____ ________
First Quarter $ 5 1/2 $ 5 $0.00
Second Quarter 6 5 0.00
Third Quarter 6 5 0.00
Fourth Quarter 6 5 0.00
_________
Total $0.00
=========
Dividend
1995 High Low Declared
____ ____ ____ ________
First Quarter $ 6 $ 5 $0.00
Second Quarter 9 8 1/4 0.00
Third Quarter 9 1/4 7 3/4 0.00
Fourth Quarter 13 8 1/2 0.00
________
Total $0.00
========
As of March 21, 1996, the Company had 1,607 security holders of
record.
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By agreement with its principal lender, the Company's ability to
declare future dividends is restricted. See Note 3 to the financial
statements included in Item 7 of this Form 10-KSB.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
In 1995, consolidated sales of $23,677,940 increased 50% over 1994
sales of $15,766,423 and the Company substantially increased its
profitability. Sales of the Company's plastic lockers increased 103%
from $6,573,247 in 1994 to $13,362,573 in 1995. Plastic lockers are
sold to the United States Postal Service ("USPS") under a contract
received in November 1994 pursuant to which the Company provides
plastic parcel lockers ("CBU's") to the USPS. Revenues from the
Company's other, non-plastic locker products increased 12%, from
$9,193,176 in 1994 to $10,315,367 in 1995.
Consolidated cost of sales as a percentage of sales dropped to 68.4%
in 1995 compared to 69.5% in 1994, providing a 1% increase in gross
margin. The slight increase in gross margin relates to the sales mix
which included higher sales on plastic lockers and lower sales on
metal lockers.
The Company's present contract with the USPS regarding Type Three
CBU's will terminate on April 14, 1996. Under the terms of this
contract the Company sold approximately 2,800 and 9,200 Type Three
CBU's in 1994 and 1995, respectively. As noted below, the Company and
the USPS have entered into a new one year contract, effective
April 15, 1996 covering Outdoor Parcel Lockers (OPL) and Cluster Box
Units (CBU) Type Three as well as Type One and Type Two. The new
contract gives the Company a minimum order of 1,424 units of the OPL's
and 6,000 units of the CBU's. Earnings for 1996 may decrease over
1995 results due to the uncertainty concerning the number of units the
USPS may take under the new contract, the slightly lower margins
anticipated on the Type Three CBU's and the increased depreciation
expense resulting from the Type One and Type Two tools.
On March 27, 1996, the Company was awarded a contract by the USPS to
deliver Outdoor Parcel Lockers (OPL's) and all three types of Cluster
Box Units (Type One, Type Two and Type Three) for a period of one year
commencing on April 15, 1996. Terms of the contract specify that the
Company will provide 60% of the USPS requirements for all four
products on a nationwide basis, with guaranteed minimum quantities of
1,424 OPL's and 6,000 in the aggregate of Type One, Type Two and Type
Three CBU's during the contract period. The contract also contains
standard provisions allowing the USPS to extend the term of the
contract for up to four option years as well as provisions allowing
early termination for convenience by the USPS. Under this contract,
margins on the OPL are expected to increase over 1995 levels and
margins on the Type Three CBU's are expected to decrease compared to
1995 margins. The contracted prices are pending USPS audit. The
contract further provides that once a specified number of CBU's
are shipped, the purchase price for additional units will be
reduced by a specified amount. The Company does not expect sales of
the CBU's during 1996 to reach the level where such price
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reductions would come into effect, although it is possible that such
levels could be reached during 1997 or, if the USPS elects to exercise
its renewal options under the contract, in later years.
Selling, administrative and general expenses of $4,861,477 during 1995
increased 6% from the $4,594,679 recorded in 1994. The slight
increase in selling, administration and general expenses is the result
of the Company's continued growth in sales, offset in part by the
Company's continuing efforts to downsize its administrative overhead
costs by effectively consolidating administrative job responsibilities
and reducing the level of corporate staff.
Interest income in 1995 increased from 1994 due to an increase in the
balance of notes receivable during 1995.
Other income of $244,769 in 1995 increased from the $164,814 recorded
in 1994. Other income in 1995 included an increase in cash discounts
earned.
Interest expense increased slightly, $1,658 in 1995 from $164,631 in
1994 due to an increase in the average borrowing rate experienced in
1995 compared to 1994.
In 1994, consolidated sales of $15,766,423 increased 22% over 1993
sales of $12,957,393 and the Company returned to profitability. Sales
of the Company's plastic lockers increased 106% from $3,194,609 in
1993 to $6,573,247 in 1994. A majority of the increase in plastic
locker sales occurred during the fourth quarter of 1994, as the
Company was awarded a significant contract in November 1994 to provide
plastic Type Three CBU's to the USPS. Sales of the Company's plastic
locker units were $3,490,354 in the forth quarter of 1994 compared to
$965,318 in the fourth quarter of 1993. Revenue from the Company's
other, non-plastic locker products declined 6%, from $9,762,784 in
1993 to $9,193,176 in 1994.
Consolidated cost of sales sold as a percentage of sales rose to 69.5%
in 1994 compared to 68.5% in 1993, a 1% decline in gross margin. The
slight decrease in gross margin relates principally to the slightly
lower sales and margins realized on metal locker units. Through
December 31, 1994, 2,802 CBU Type Three have been shipped to the USPS.
Selling, administrative and general expenses of $4,594,679 during 1994
decreased 9% from the $4,996,846 recorded in 1993. The decline in
selling, administration and general expenses is the result of the
Company's continued effort to downsize its administrative overhead
costs by effectively consolidating administrative job responsibilities
and reducing the level of corporate staff.
Interest income in 1994 declined slightly from 1993 due to the
reduction in invested funds.
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Other income of $164,814 in 1994 was substantially less than the
$525,044 recorded in 1993. Other income in 1993 included a gain of
$379,483 related to the sale of the Company's locker assets previously
on concession in various Greyhound bus stations.
Interest expense increased $37,742 in 1994 from $126,689 in 1993 due
to additional term debt borrowings and an increase in the average
outstanding borrowings under the Company's line of credit facility in
1994 coupled with the increase in the average borrowing rate
experienced in 1994 compared to 1993.
LIQUIDITY AND SOURCES OF CAPITAL
The Company's liquidity is reflected in the ratio of current assets
to current liabilities or current ratio and its working capital. The
current ratio was 1.71 to 1 and 1.82 to 1 at the end of 1995 and 1994,
respectively. Working capital, or the excess of current assets over
current liabilities, was $3,459,221 at December 31, 1995 and
$3,284,945 at December 31, 1994. The increase in working capital
resulted primarily from the increased business activity with the USPS
in 1995. In 1995, the Company's operations generated $2,710,713 in
cash from operating activities. Principally, operating cash was
utilized to fund the increase in inventory ($670,019) related to the
increased business activity in 1995 with the USPS, to meet scheduled
debt payments, to purchase equipment and to repurchase stock. The
Company also has a $3,000,000 line of credit available to assist in
satisfying future operating cash needs, if required. However, the
Company anticipates that it will generate positive cash flow from
operations in 1996, as shipments and billings which occurred
throughout 1995 under the USPS contract are anticipated to continue
throughout 1996.
The Company continues to purchase tooling required to manufacture Type
One and Type Two CBU's and anticipates funding such expenses from
operations.
In 1995, the Company continued to make principal payments on the term
loan at the rate of $50,000 per month and has reduced the outstanding
balance of this loan to $900,000 as of December 31, 1995. On March
12, 1996, the Company increased its term loan facility by $1,000,000
which will provide liquidity to fund payment of federal, state and
local taxes from 1995. Also at December 31, 1995, the Company had an
outstanding balance of $1,400,000 under a $3,000,000 line-of-credit
with its principal bank. The increased borrowings under the line of
credit were utilized to fund increased inventory and receivables
related to the increased sales volumes in late 1995 from the USPS.
The Company's policy is to maintain modern equipment and adequate
capacity. During 1995, 1994 and 1993, the Company expended
$1,232,600, $197,000, and $238,000, respectively, for capital
additions. Capital expenditures in 1995 and 1993 were financed
principally from operations.
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IMPACT OF ACCOUNTING CHANGES
In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes. The Company adopted the new method of accounting for
income taxes in the first quarter of 1993 by recording a cumulative
effect adjustment which resulted in a charge to net earnings of
$76,466.
At both December 31, 1995 and 1994, a valuation reserve of $74,000 has
been established on the deferred tax benefit of future tax deductions
due to limitations on the carryforward and carryback provisions of the
various states in which the Company operates.
In December 1990, the Financial Accounting Standards Board issued a
new statement that requires the projected future cost of providing
postretirement benefits such as health care and life insurance, be
recognized as an expense as employees render service instead of when
benefits are paid. The Company provides a certain level of life
insurance benefits to its retirees, which are considered
postretirement benefits under the guidelines of the new statement.
The Company adopted the new method of accounting in the first quarter
of 1993 by recording the impact of the accounting change (net of
applicable taxes of $42,000) as a charge of $63,062 to 1993 earnings.
In March 1995, the Financial Accounting Standards Board issued
Statement No.121 "Accounting For Impairment of long Lived Assets to be
Disposed Of". The Company will adopt this Statement in the first
quarter of 1996 and does not believe that the effect of such adoption
will be material.
IMPACT OF INFLATION AND CHANGING PRICES
Although inflation has slowed in recent years, it is still a factor in
the economy and the Company continues to seek ways to mitigate its
impact. To the extent permitted by competition, the Company passes
increased costs on to its customers by increasing sales prices over
time. As successfully demonstrated in 1995, the Company will continue
to find ways to reduce the administrative overhead necessary to
successfully run the business. By reducing these costs, the Company
can continue to be competitively priced with other top quality locker
manufacturers and distributors.
The Company has used the LIFO method of accounting for its inventories
since 1974. This method matches current costs with current revenues
and during an inflationary period, reduces reported income but
improves cash flow due to a reduction of taxes based on income.
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ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Auditors
Board of Directors and Stockholders
American Locker Group Incorporated
We have audited the accompanying statements of consolidated financial
position of American Locker Group Incorporated and subsidiaries as of
December 31, 1995 and 1994, and the related statements of consolidated
operations, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of American Locker Group Incorporated and subsidiaries at December 31,
1995 and 1994, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting
principles.
As discussed in Notes 1 and 6, the Company changed its method of
accounting for postretirement benefits other than pensions and income
taxes in the year ended December 31, 1993.
/s/ Ernst & Young LLP
Erie, Pennsylvania
February 16, 1996
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American Locker Group Incorporated and Subsidiaries
Statements of Consolidated Financial Position
December 31
1995 1994
-------------------------
Assets
Current assets:
Cash and cash equivalents $1,080,487 $ 315,685
Accounts receivable, less allowance
for doubtful accounts of $136,509
in 1995 and $72,900 in 1994 3,631,234 4,070,723
Notes receivable, less allowance for
doubtful notes of $139,203 in 1995 191,884 128,779
Inventories 2,775,615 2,105,537
Prepaid expenses 143,978 187,001
Deferred income taxes 536,319 502,047
-------------------------
Total current assets 8,359,517 7,309,772
Property, plant and equipment:
Land 500 500
Buildings 496,196 489,986
Machinery and equipment 7,581,513 6,365,812
-------------------------
8,078,209 6,856,298
Less allowances for depreciation
and amortization 6,331,541 5,941,203
-------------------------
1,746,668 915,095
-------------------------
Total assets $10,106,185 $8,224,867
=========================
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December 31
1995 1994
-------------------------
Liabilities and stockholders' equity
Current liabilities:
Demand note payable $1,400,000 $1,200,000
Accounts payable:
Trade 965,432 865,244
Related party 377,214 610,922
-------------------------
1,342,646 1,476,166
Commissions, salaries, wages and
taxes thereon 348,549 246,547
Other accrued expenses 376,643 480,868
Federal, state and foreign income
taxes payable 832,458 21,246
Current portion of long-term
debt 600,000 600,000
-------------------------
Total current liabilities 4,900,296 4,024,827
Deferred income taxes 83,609 3,337
Long-term obligations:
Long-term debt 300,000 900,000
Deferred pension income 232,584 174,542
Postretirement benefits 125,630 116,510
-------------------------
658,214 1,191,052
Stockholders' equity:
Common stock, $1 par value:
Authorized shares -- 4,000,000
Issued and outstanding shares
818,625 in 1995 and 858,876
shares in 1994 818,625 858,876
Other capital 1,258,805 1,571,970
Retained earnings 2,500,351 709,782
Foreign currency translation
adjustment (113,715) (134,977)
--------------------------
Total stockholders' equity 4,464,066 3,005,651
--------------------------
Total liabilities and stockholders'
equity $10,106,185 $8,224,867
==========================
See accompanying notes.
- 18 -
<PAGE>
American Locker Group Incorporated and Subsidiaries
Statements of Consolidated Operations
Year ended December 31
1995 1994 1993
-----------------------------------
Net sales $23,677,940 $15,766,423 $12,957,393
Cost of products sold 16,207,181 10,971,085 8,873,261
-----------------------------------
7,470,759 4,795,338 4,084,132
Selling, administrative 4,861,477 4,594,679 4,996,846
and general expenses -----------------------------------
2,609,282 200,659 (912,714)
Interest income 59,716 17,997 19,277
Other income - net 244,769 164,814 525,044
Interest expense (166,289) (164,631) (126,689)
-----------------------------------
Income (loss) before
income taxes and
accounting changes 2,747,478 218,839 (495,082)
Income taxes (credit) 956,909 74,600 (100,000)
-----------------------------------
Income (loss) before 1,790,569 144,239 (395,082)
accounting changes
Accounting changes:
Income taxes -- -- 76,466
Postretirement benefits,
net of applicable taxes
of ($42,000) -- -- 63,062
-----------------------------------
-- -- 139,528
-----------------------------------
Net income (loss) $1,790,569 $ 144,239 $ (534,610)
===================================
Per share of common stock:
Income (loss) before
accounting changes $2.12 $0.17 $(0.44)
Accounting changes -- -- (0.16)
-----------------------------------
Net income (loss) $2.12 $0.17 $(0.60)
-----------------------------------
Dividends $0.00 $0.00 $0.00
===================================
See accompanying notes.
- 19 -
<PAGE>
<TABLE> American Locker Group Incorporated
Statements of Consolidated Stockholders' Equity
<CAPTION>
Foreign
Currency Total
Common Other Retained Translation Stockholders'
Stock Capital Earnings Adjustment Equity
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993 $884,202 $1,708,397 $1,100,153 -- $3,692,752
Net (loss) -- -- (534,610) -- (534,610)
Foreign currency translation -- -- -- $(46,987) (46,987)
Common stock purchased and (12,779) (68,354) -- -- (81,133)
retired ------------------------------------------------------
Balance at December 31, 1993 871,423 1,640,043 565,543 (46,987) 3,030,022
Net income -- -- 144,239 -- 144,239
Foreign currency translation -- -- -- (87,990) (87,990)
Stock options exercised 10,500 15,037 -- -- 25,537
Common stock purchased and (23,047) (83,110) -- -- (106,157)
retired ------------------------------------------------------
Balance at December 31, 1994 858,876 1,571,970 709,782 (134,977) 3,005,651
Net Income -- -- 1,790,569 -- 1,790,569
Foreign currency translation -- -- -- 21,262 21,262
Common stock purchased and (40,251) (313,165) -- -- (353,416)
retired -------------------------------------------------------
Balance at December 31, 1995 $818,625 $1,258,805 $2,500,351 $(113,715)$4,464,066
=======================================================
See accompanying notes.
</TABLE>
- 20 -
<PAGE>
American Locker Group Incorporated
Statements of Consolidated Cash Flows
Year ended December 31
1995 1994 1993
-----------------------------
Operating activities
Net Income (loss) $1,790,569 $ 144,239 $(534,610)
Adjustments to reconcile net
income (loss)
to net cash provided by (used in)
operating activities:
Cumulative effect of accounting
changes -- -- 139,528
Depreciation and amortization 404,006 556,027 837,303
Gain on disposition of property,
plant and equipment (27,346) (31,214)(387,143)
Deferred income taxes (credits) 46,000 (36,100)(142,100)
Deferred pension 58,042 40,688 (11,119)
Postretirement benefits 9,120 6,065 5,391
Change in assets and liabilities:
Accounts and notes receivable 384,683 (1,697,432)(246,772)
Income taxes 811,101 126,568 253,289
Inventories (670,019) (346,440) 255,130
Prepaid expenses 43,541 (55,058) (14,257)
Accounts payable and accrued (138,984) 659,425 63,350
expenses
Other noncurrent assets -- -- 24,082
------------------------------
Net cash provided by (used in)
operating activities 2,710,713 (633,232) 242,072
Investing activities
Purchase of property, plant and
equipment (1,232,604) (197,028)(238,659)
Proceeds from sale of property,
plant and equipment 32,675 41,317 421,776
------------------------------
Net cash (used in) provided by
investing activities (1,199,929) (155,711) 183,117
Financing activities
Net borrowings under line of credit 200,000 400,000 300,000
Additional borrowings -- 1,850,000 --
Debt repayments (600,000)(1,350,000)(600,000)
Common stock purchased and retired (353,416) (106,157) (81,133)
Stock options exercised -- 25,537 --
------------------------------
Net cash (used in) provided by
financing activities (753,416) 819,380 (381,133)
- 21 -
<PAGE>
Effect of exchange rate changes
on cash 7,434 (32,377) (15,286)
------------------------------
Net increase (decrease) in cash 764,802 (1,940) 28,770
Cash and cash equivalents at
beginning of year 315,685 317,625 288,855
------------------------------
Cash and cash equivalents at end
of year $1,080,487 $315,685 $317,625
==============================
Supplemental cash flow information:
Cash paid during the year for:
Interest $ 160,607 $168,318 $123,006
==============================
Income taxes paid (refunded) $59,684 $ 53,968 $(204,897)
==============================
See accompanying notes.
- 22 -
<PAGE>
1. Summary of Significant Accounting Policies
Consolidation and Business Description
The consolidated financial statements include the accounts of American
Locker Group Incorporated and its subsidiaries (the Company), all of
which are wholly-owned. Intercompany accounts and transactions have
been eliminated in consolidation. The Company is engaged in one
business: coin and key or electronically controlled metal and plastic
checking lockers and locks. The Company sells to customers throughout
North America.
Cash and Cash Equivalents
Cash includes currency on hand and demand deposits with financial
institutions. Cash equivalents are short-term, highly liquid
investments both readily convertible to known amounts of cash and have
original purchase maturities of three months or less.
Inventories
Inventories are valued principally at the lower of cost or market,
cost determined by the last-in, first-out method.
Properties and Depreciation
Property, plant and equipment are stated at cost. Provisions for
depreciation have been computed for accounting purposes by the
straight-line and declining-balance methods based on estimated useful
lives. Provisions for depreciation have been computed for tax
purposes under accelerated tax methods.
Net Income Per Share
Net income (loss) per common share is computed by dividing net income
(loss) by the weighted average number of shares outstanding, plus,
when dilative, the common stock equivalents which would arise from the
exercise of stock options. Total shares used in the calculations
amount to 845,356 in 1995, 862,017 in 1994 and 899,785 in 1993.
- 23 -
<PAGE>
1. Summary of Significant Accounting Policies (continued)
Income Taxes
Effective January 1, 1993, the Company changed its method of
accounting for income taxes from the deferred method to the liability
method required by FASB Statement No. 109, "Accounting for Income
Taxes." The cumulative effect of adopting Statement 109 as of January
1, 1993, was to decrease net income by $76,466. For the years ended
December 31, 1995, 1994 and 1993, application of the new rules did not
have a material impact on tax expense.
Foreign Currency
The assets and liabilities of the Company's foreign subsidiary are
translated to U.S. dollars at current exchange rates. Revenue and
expense accounts are translated at weighted average exchange rates
prevailing during the year. Foreign currency gains and losses are
included in determining net income (loss) for the period in which the
exchange rate changes.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts and notes
receivable, accounts payable, and accrued liabilities approximate fair
value due to the short-term maturities of these assets and
liabilities. The interest rates on substantially all of the Company's
bank borrowings are adjusted regularly to reflect current market
rates. Accordingly, the carrying amounts of the Company's short-term
and long-term borrowings also approximate fair value.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and the accompanying notes. Actual results could differ
from those estimates.
Impact of Recently Issued Accounting Standard
In March 1995, the FASB issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of," which requires impairment losses to be recorded on long-
lived assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated by
those assets are less than the assets' carrying value. The Company
will adopt Statement No. 121 in the first quarter of 1996, and based
on current circumstances, does not believe the effect of adoption will
be material.
- 24 -
<PAGE>
2. Inventories
December 31
1995 1994
-----------------------
Finished products $1,240,253 $ 677,187
Work-in-process 1,414,994 1,266,263
Raw materials 1,395,058 1,104,489
----------------------
4,050,305 3,047,939
Less allowance to reduce carrying value
to LIFO basis 1,274,690 942,402
----------------------
Net inventories $2,775,615 $2,105,537
======================
3. Demand Note Payable and Long-Term Debt
December 31
1995 1994
-------------------
Note payable to bank, unsecured, due
May 1997, payable $50,000 per month
with interest at prime plus 1/4%
(8.75% at December 31, 1995) $900,000 $1,500,000
Less current portion 600,000 600,000
---------------------
Long-term portion $300,000 $ 900,000
=====================
The credit agreement underlying the note payable to bank requires the
maintenance of certain levels of net worth and working capital and
requires the maintenance of a certain current ratio and ratio of
liabilities to net worth. In addition, the note has restrictions on
the payment of dividends. The Company was in compliance with these
covenants at year end.
At December 31, 1995, the Company had outstanding $1,400,000 under a
$3,000,000 unsecured line of credit agreement with the bank. Such
borrowings are repayable on demand with interest at the prime rate.
The weighted average interest rate on outstanding short-term
borrowings amounted to 8.8%, 6.7% and 6.0% in 1995, 1994 and 1993,
respectively.
Required principal payments on long-term obligations in each of the
years through final maturity are as follows: 1996 - $600,000, 1997 -
$300,000.
Rent expense amounted to $410,763, $239,904 and $384,000 in 1995, 1994
and 1993, respectively.
- 25 -
<PAGE>
3. Demand Note Payable and Long-Term Debt (continued)
The Company leases several operating facilities and vehicles under
noncancelable operating leases. Future minimum lease payments by year
and in the aggregate consists of the following at December 31, 1995.
1996 $162,678
1997 61,265
1998 20,634
--------
$244,577
========
- 26 -
<PAGE>
4. Income Taxes
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. At December 31, 1995, 1994 and 1993, a valuation reserve
has been established on the deferred state tax benefit of future
deductions due to limitations on carryforward and carryback provisions
of the various states in which the Company operates. Significant
components of the Company's deferred tax liabilities and assets at
December 31 are as follows:
1995 1994
--------------------
Deferred tax liabilities:
Property, plant and equipment $127,952 $ 23,493
Prepaid expenses 25,761 41,639
--------------------
Total deferred tax liabilities 153,713 65,132
Deferred tax assets:
Postretirement benefits 61,052 57,804
Pension costs 93,033 69,816
Allowance for doubtful accounts 109,168 28,098
Accrued expenses 10,253 62,910
Other employee benefits 39,670 47,269
Inventory costs 353,284 356,059
Other 14,863 16,786
-------------------
Total deferred tax assets 681,323 638,742
Valuation allowance for deferred
tax assets (74,900) (74,900)
--------------------
Net deferred tax assets $452,710 $498,710
====================
Current deferred tax asset $536,319 $502,047
Long-term deferred tax
(liability) (83,609) (3,337)
--------------------
$452,710 $498,710
=====================
- 27 -
<PAGE>
4. Income Taxes (continued)
For financial reporting purposes, income (loss) before income taxes
and change in accounting includes the following components:
1995 1994 1993
-------------------------
United States $2,714,028 $195,836 $(465,307)
Foreign 33,450 23,003 (29,775)
------------------------------
$2,747,478 $218,839 $(495,082)
==============================
Significant components of the provision for income taxes are as
follows:
1995 1994 1993
------------------------------
Current:
Federal $834,400 $79,000 $ 42,100
State 117,900 19,700 --
Foreign 33,700 12,000 --
Prior year taxes (75,091) -- --
------------------------------
Total current 910,901 110,700 42,100
Deferred:
Federal 55,900 (48,100) (178,100)
State (9,900) 12,000 36,000
------------------------------
46,000 (36,100) (142,100)
------------------------------
$956,909 $74,600 $(100,000)
==============================
- 28 -
<PAGE>
4. Income Taxes (continued)
The differences between the federal statutory rate and the effective
tax rate as a percentage of income (loss) before taxes are as follows:
1995 1994 1993
------------------------------
Statutory income tax rate 35% 35% 35%
State and foreign income taxes 1 (1) (10)
Tax credits -- (1) --
Permanent differences principally
nontaxable income in 1995 and in
1993, and nondeductible
expenditures in 1994 (1) 3 (5)
Other -- (1) --
------------------------------
35% 35% 20%
==============================
5. Pension Plans
The Company and its subsidiaries have several defined benefit pension
plans covering substantially all employees. Benefits for the salaried
employees are based on specified percentages of the employees annual
compensation. The plans for hourly employees provide benefits of
stated amounts for each year of service. The plans' assets are
invested in fixed interest rate group annuity contracts with an
insurance company. Due to the funding status of the plans, the
Company has not had to fund the plan since 1981.
The summary of the components of net periodic pension expense (income)
and the total pension expense (income) are as follows:
1995 1994 1993
------------------------------
Service cost-benefits earned
during the period $193,514 $192,700 $170,283
Interest cost on projected benefit
obligation 113,188 99,287 85,882
Return on plan assets (155,711) (133,729) (160,303)
Net amortization and deferral (92,949) (117,570) (105,774)
------------------------------
Net pension expense (income) $ 58,042 $ 40,688 $ (9,912)
------------------------------
The average discount rate used in determining the actuarial value of
the projected benefit obligations was 7.5% in 1995 and 1994. The
rates of future years' compensation levels was 5.5% in 1995 and 1994.
The expected long-term rate of return on plan assets was 7.5% in 1995
and 1994.
- 29 -
<PAGE>
5. Pension Plans (continued)
The following table sets forth the funded status and amounts
recognized in the statements of consolidated financial condition for
the hourly plan at December 1995 and 1994.
1995 1994
--------------------
Actuarial present value of benefit
obligations:
Vested benefit obligation $839,141 $716,538
Non-vested benefit obligation 3,746 6,744
--------------------
Accumulated benefit obligation $842,887 $723,282
====================
Projected benefit obligation for service
rendered to date $ 842,887 $ 723,282
Plan assets at fair value 1,252,097 1,177,134
---------------------
Plan assets in excess of projected benefit
obligations 409,210 453,852
Unrecognized net loss 243,271 197,885
Unrecognized prior service cost 1,597 1,864
Unrecognized net transition asset (202,216) (235,918)
-------------------
Net hourly plan pension asset recognized in
the statement of consolidated financial
condition $451,862 $ 417,683
====================
The funded status and amounts recognized in the statement of
consolidated financial condition for the salary plan at December 31,
1995 and 1994 are presented in the following table.
1995 1994
--------------------
Actuarial present value of benefit
obligations:
Vested benefit obligation $845,245 $623,354
Non-vested benefit obligation 31,798 61,459
--------------------
Accumulated benefit obligation $877,043 $684,813
====================
Projected benefit obligation for service
rendered to date $1,006,059 $ 789,127
Plan assets at fair value 854,183 846,040
---------------------
- 30 -
<PAGE>
Plan assets (deficiency) in excess of projected
benefit obligations (151,876) 56,913
Unrecognized net loss 228,576 213,494
Asset deferred gain (761,146) (862,632)
-------------------
Net salary plan pension liability recognized
in the statement of consolidated
financial condition $(684,446) $(592,225)
====================
The Company also contributes to a foreign pension plan, which amounts
are not material.
- 31 -
<PAGE>
6. Postretirement Benefit Plans Other Than Pensions
In addition to the Company's defined benefit plans, the Company
provides a life insurance benefit to substantially all employees upon
retirement. Retirees eligible to participate in this plan have their
life insurance premiums paid on their behalf by the Company. The
insurance premiums related to this plan are paid annually.
In 1993, the Company adopted FASB Statement No. 106, "Employees'
Accounting for Postretirement Benefits Other Than Pensions." The
cumulative impact of the accounting change ($105,054, less applicable
deferred income taxes of $42,000) reduced earnings by $.07 per share.
The effect of adopting the new rules increased 1993 net periodic
postretirement benefit cost by approximately $5,200 and decreased 1993
net income by $4,200.
The following table presents the plan's status reconciled with amounts
recognized in the Company's statement of financial position:
December 31
1995 1994
------------------------
Accumulated postretirement benefit
obligation:
Retirees $(56,778) $(52,656)
Fully eligible active plan
participants (46,770) (43,375)
Other active plan participants (16,211) (15,034)
-------------------------
Accumulated postretirement
benefit obligation (119,759) (111,065)
Unrecognized net gain (5,871) (5,445)
-------------------------
Accrued postretirement benefit
cost $(125,630) $(116,510)
=========================
Net periodic postretirement benefit cost includes the following
components:
December 31
1995 1994 1993
-------------------------
Service cost $1,882 $1,882 $1,664
Interest cost 8,238 8,238 8,227
-------------------------
Net periodic postretirement
benefit cost $10,120 $10,120 $9,891
=========================
- 32 -
<PAGE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligations was 8% at December 31, 1995 and
1994.
7. Capital Stock and Stock Options
The Certificate of Incorporation authorizes 4,000,000 shares of common
stock and 1,000,000 shares of convertible preferred stock.
In 1988, the Company adopted the American Locker Group Incorporated
1988 Stock Incentive Plan, permitting the Company to provide incentive
compensation of the types commonly known as incentive stock options,
stock options and stock appreciation rights. The price of option
shares or appreciation rights granted under the plan shall be not less
than the fair market value of common stock on the date of grant, and
the term of the stock option or appreciation right shall not exceed
ten years from date of grant. Upon exercise of a stock option, the
option price shall be payable to the Company in cash, or at the
discretion of the committee, in shares of common stock valued at the
fair market value on the date of payment, or a combination thereof.
Upon exercise of a stock appreciation right granted in connection with
a stock option, the optionee shall surrender the option and receive
payment from the Company of an amount equal to the difference between
the option price and the fair market value of the shares applicable to
the options surrendered on the date of surrender. Such payment may be
in shares, cash or both at the discretion of the Company's Stock
Option-Executive Compensation Committee. At December 31, 1995, 1994
and 1993, there were no stock appreciation rights outstanding under
this plan.
A summary of the Stock Incentive Plan stock options for the years
ended December 31, 1995, 1994 and 1993 is as follows:
- 33 -
<PAGE>
<TABLE>
<CAPTION> Number
of Shares Option Price
Under
--------------------------------------
- -------
Option Per Share Aggregate
------------------------------------------------------
<S> <C> <C> <C>
Outstanding - January 1, 1993 36,000 $2.875-$4.25 $112,437
Granted during the year -- 0.00 --
Exercised during the year -- 0.00 --
Cancellations -- 0.00 --
--------------- ----------
Outstanding - December 31, 1993 36,000 $2.875-$4.25 112,437
Granted during the year -- 0.00 --
Exercised during the year (10,500) 2.875 (30,188)
Cancellations -- 0.00 --
--------------- ----------
Outstanding - December 31, 1994 25,500 $2.875-$4.25 82,249
Granted during the year -- 0.00 --
Exercised during the year -- 0.00 --
Cancellations -- 0.00 --
--------------- ----------
Outstanding - December 31, 1995 25,500 $2.875-$4.25 $82,249
=============== ==========
</TABLE>
- 34 -
<PAGE>
8. Related Party
The President of the Company is also the President of Signore Inc., a
former wholly-owned subsidiary of the Company. In addition, some
Officers and Directors of the Company are Directors of Signore Inc.
One of the Company's subsidiaries has entered into a manufacturing
agreement with Signore, under which Signore will furnish fabricating,
assembly and shipping services. The Agreement, which expires in April
30, 2000, provides that the cost to the Company for these services
will be equal to Signore's standard cost divided by 80%. Purchases
from Signore under the Agreement amounted to $3,470,582, $2,793,880
and $2,487,759 for the years ended December 31, 1995, 1994 and 1993,
respectively.
- 35 -
<PAGE>
9. Business Segment Data
The Company has operations in the United States and Canada. The
geographic distribution of sales, operating profit (loss) and
identifiable assets for 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION> United
States Canada Eliminations Total
-------------------------------------------------------
1995
----------------------------------
<S> <C> <C> <C> <C>
Revenues from unaffiliated customers $22,112,011 $1,565,929 $ -- $23,677,940
Transfers between geographic areas 485,377 -- 485,377 --
-------------------------------------------------------
Total revenues $22,597,388 $1,565,929 $ 485,377 $23,677,940
=======================================================
Operating income $ 2,579,420 $ 29,862 $ -- $ 2,609,282
=======================================================
Identifiable assets $10,060,749 $ 934,201 $ 888,765 $10,106,185
=======================================================
1994
-----------------------------------
Revenues from unaffiliated customers $13,899,533 $1,866,890 $ -- $15,766,423
Transfers between geographic areas 617,762 -- 617,762 --
-------------------------------------------------------
Total revenues $14,517,295 $1,866,890 $ 617,762 $15,766,423
=======================================================
Operating income $ 128,037 $ 72,622 $ -- $ 200,659
=======================================================
Identifiable assets $ 8,264,864 $ 848,768 $ 888,765 $ 8,224,867
=======================================================
- 36 -
<PAGE>
1993
------------------------------------
Revenues from unaffiliated customers $10,998,499 $1,958,894 $ -- $12,957,393
Transfers between geographic areas 410,356 39,317 449,673 --
-------------------------------------------------------
Total revenues $11,408,855 $1,998,211 $ 449,673 $12,957,393
=======================================================
Operating loss $ (850,479) $ (62,235) $ -- $ (912,714)
=======================================================
Identifiable assets $ 6,586,992 $ 925,924 $ 888,765 $ 6,624,151
=======================================================
</TABLE>
In 1995, 1994 and 1993, the Company had export sales of $1,244,711,
$2,009,086 and $2,016,610, respectively. In 1995, 1994 and 1993,
export sales represented approximately 5.3%, 12.7% and 15.6%,
respectively of the Company's consolidated net sales.
Sales to the U.S. Postal Service represented 61.2%, 45.8% and
28.6% of net sales in 1995, 1994 and 1993, respectively.
- 37 -
<PAGE>
9. Business Segment Data (continued)
At December 31, 1995 and 1994, the Company had secured receivables
from customers under time payment arrangements totaling $331,087 and
$128,779, respectively. At December 31, 1995, the Company had
unsecured trade receivables from customers considered to be
distributors of $351,122 (including a United Kingdom distributor of
$119,249) and from governmental agencies of $1,858,497. At December
31, 1994, the Company had unsecured trade receivables from customers
considered to be distributors of $519,200 (including a United Kingdom
distributor of $78,100) and from governmental agencies of $2,386,500.
The Company has not incurred any losses with respect to the
aforementioned customers.
Other concentrations of credit risk with respect to trade accounts
receivable are limited due to the large number of entities comprising
the Company's customer base and their dispersion across many different
industries.
10. Quarterly Results of Operations (Unaudited)
The following is a tabulation of the unaudited quarterly results of
operations for the years ended December 31, 1995 and 1994:
1995
Three Months Ended
March 31 June 30 September 30 December 31
---------------------------------------------
Net sales $7,080,084 $5,273,245 $5,633,832 $5,690,779
=============================================
Gross profit $2,277,764 $1,699,121 $1,910,998 $1,582,876
=============================================
Net income $ 666,765 $ 242,766 $ 406,332 $ 474,706
=============================================
Net income $ .78 $ .28 $ .48 $ .58
per share =============================================
- 38 -
<PAGE>
10. Quarterly Results of Operations (Unaudited) (continued)
1994
Three Months Ended
March 31 June 30 September 30 December 31
---------------------------------------------
Net sales $3,473,596 $3,385,251 $3,107,603 $5,799,973
=============================================
Gross profit $1,023,929 $1,088,079 $ 948,976 $1,734,354
=============================================
Net (loss) income $(60,613) $(29,905) $(141,639) $376,396
=============================================
Net (loss) income $(.07) $(.03) $(.16) $.43
per share =============================================
The Company's accounting practice for interim periods provides for
possible inventory, insurance, pension and income tax adjustments.
Such adjustments resulted in increasing the 1995 fourth quarter pretax
income by $51,000 for insurance and pension costs and $178,000 for
income tax expense and decreasing fourth quarter pretax income by
$208,900 for inventory costs. In 1994, fourth quarter adjustments
relating to inventories and pensions decreased fourth quarter pretax
income by $19,000.
11. Contingency
The Company has been named as a defendant by four former employees
alleging discrimination and seeking unspecified damages. The Company
has denied all charges and it intends to vigorously defend this
matter. It is management's opinion that the ultimate outcome of this
matter will not have a material impact on the Company's financial
position or operating results.
Although no formal legal proceedings have been directed towards the
Company, it has been alleged that the Company and/or one of its
previously owned subsidiaries is a potentially responsible party at
two sites suspected to have some form of environmental contamination.
The Company believes that its contributions to these sites, if any, is
deminimus, however, it is too early to predict the ultimate outcome of
these matters.
- 39 -
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants on
accounting and financial disclosures during 1995 or 1994.
PART III
Item 9, 10, 11, and 12 will be contained in American Locker Group
Incorporated's Annual proxy Statement, incorporated herein by
reference, which will be filed within 120 days after year end.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-KSB
(a) Exhibits - Exhibits required by
Item 601 of Regulation S-B
are submitted as a separate section herein
immediately following the "Exhibit Index".
(b) Reports on Form 8-KSB filed in the fourth quarter
of 1995 - None.
- 40 -
<PAGE>
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
AMERICAN LOCKER GROUP INCORPORATED
/s/Harold J. Ruttenberg
_______________________
Harold J. Ruttenberg
Chairman, Chief Executive
Officer, Treasurer and
Principal Accounting Officer
March 29, 1996
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature Title Date
_________ _____ ____
/s/Harold J. Ruttenberg Chairman, Chief March 29, 1996
----------------------- Executive Officer,
Harold J. Ruttenberg Treasurer, Principal
Accounting Officer
and Director
/s/Alexander N. Ditonto President, Secretary March 29, 1996
----------------------- and Director
Alexander N. Ditonto
/s/Thomas Phillips Johnson Director March 29, 1996
--------------------------
Thomas Phillips Johnson
/s/Alan H. Finegold Director March 29, 1996
-----------------------
Alan H. Finegold
----------------------- Director March 29, 1996
Thomas Lynch, IV
/s/James E. Ruttenberg Director March 29, 1996
-----------------------
James E. Ruttenberg
- 41 -
<PAGE>
EXHIBIT INDEX
Prior Filing or
Sequential Page
Exhibit No. No. Herein
3.1 Certificate of Incorporation Exhibits to Form 10-
of American Locker Group K for Year ended
Incorporated December 31, 1980
3.2 Amendment to Certificate of Form 10-C filed
Incorporation changing name May 6, 1985
of company
3.3 Amendment to Certificate of Exhibit to Form 10-K
Incorporation limiting for year ended
liability of Directors and December 31, 1987
Officers
3.4 By-laws of American Locker Exhibit to Form 10-K
Group Incorporated as for year ended
amended and restated December 31, 1985
3.5 Amendment to By-laws of Exhibit to Form 10-K
American Locker Group for year ended
Incorporated dated December 31, 1991
January 15, 1992
10.1 American Locker Group Exhibit to Form 10-K
Incorporated 1988 Stock for year ended
Incentive Plan December 31, 1988
10.2 First Amendment dated Exhibit to Form 10-K
March 28, 1990 to American for year ended
Locker Group Incorporated December 31, 1989
1988 Stock Incentive Plan
10.3 Form of Indemnification Exhibit to Form 10-K
Agreement between American for year ended
Locker Group Incorporated December 31, 1987
and its directors and
officers
10.4 Corporate Term Loan Exhibit to Form 10-K
Agreement between American for year ended
Locker Group Incorporated December 31, 1991
and Manufacturers and
Traders Trust Company
covering $2,400,000 loan
10.6 Approved Line of Credit from Exhibit to Form 10-K
Manufacturers and Traders for year ended
Trust Company to American December 31, 1990
Locker Group Incorporated in
the amount of $1,000,000
<PAGE>
10.7 Amendment Agreement dated Exhibit to Form 10-
May 1, 1994 between KSB for year ended
Manufacturing and Traders December 31, 1994
Trust Company and American
Locker Group Incorporated
[Increase in Term Loan to
$1,850,000]
10.8 Amendment Agreement dated Page ___
March 12, 1996 between
Manufacturing and Traders
Trust Company and American
Locker Group Incorporated
[Increase in Term Loan to
$1,800,000]
10.9 Employment Agreement between Exhibit to Form 10-K
American Locker Group for year ended
Incorporated and December 31, 1988
Alexander N. Ditonto
10.10 Amendment dated January 16, Exhibit to Form 10-K
1990 to Employment Agreement for year ended
between American Locker December 31, 1989
Group Incorporated and
Alexander N. Ditonto
10.11 Amendment to Employment Exhibit to From 10-
Agreement between American KSB for year ended
Locker Group Incorporated December 31, 1994
and Alexander N. Ditonto
dated August 20, 1993
10.12 Stock Acquisition Agreement Exhibit to Form 8-K
dated December 29, 1989 dated January 11,
between American Locker 1990
Group Incorporated and
Signore, Inc. Employee Stock
Ownership Trust
10.13 Manufacturing Agreement Exhibit to Form 8-K
dated as of December 29, dated January 11,
1989 between American Locker 1990
Security Systems Inc. and
Signore, Inc.
10.14 First Amendment dated May 3, Page ________
1995 to Manufacturing
Agreement dated as of
December 29, 1989 between
American Locker Security
Systems Inc. and Signore
Inc.
<PAGE>
10.15 Second Amendment dated Page ________
March 15, 1996 to
Manufacturing Agreement
dated as of December 29,
1989 between American Locker
Security Systems Inc. and
Signore Inc.
22.1 List of Subsidiaries Page ________
27.1 Financial Data Schedule Page ________
Exhibit 10.8
AMENDMENT AGREEMENT
This Amendment Agreement is made this 12th day of
March, 1996, between Manufacturers and Traders Trust Company, a
New York banking organization having its chief executive office
at One M&T Plaza, Buffalo, New York 14240, (the "Bank") and
American Locker roup Incorporated, a Delaware business
corporation having its chief executive office at 15 West Second
Street, Jamestown, New York 14701, (the "Borrower").
WHEREAS, the Bank and the Borrower previously entered
into a Corporate Term Loan Agreement dated August 30, 1991, which
was amended by an Amendment Agreement dated as of May 1, 1994 (as
so amended, the "Loan Agreement"); and
WHEREAS, the Bank and the Borrower now desire to amend
certain provisions of the Loan Agreement;
NOW, THEREFORE, effective as of the date of this
Amendment Agreement, the Bank and the Borrower agree that:
1. Sections 2 and 3 of the Loan Agreement are amended
in their entirety to read as follows:
2. LOAN.
<PAGE>
- 2 -
a. Making and Obtaining Loan. Upon and subject to
each term and condition of this Agreement, the
Bank shall make the Loan to the Borrower, and the
Borrower shall obtain the Loan from the Bank. The
principal amount of the Loan shall be $1,800,000.
b. Termination of Obligation. Any obligation of the
Bank to make the Loan shall terminate no later
than March 30, 1996.
c. Repayment. The Borrower shall repay the principal
amount of the Loan to the Bank in 36 monthly
installments of $50,000 each, with the first of
such installments to become due on March 31, 1996
and one of such installments to become due on the
last day of each succeeding calendar month through
February 28, 1999, when the Borrower shall repay
the outstanding principal amount of the Loan to
the Bank and pay to the Bank all interest owing
pursuant to this Agreement and remaining unpaid
and all other amounts owing by the Borrower to the
Bank pursuant to this Agreement and remaining
unpaid.
d. Optional Repayment in Advance. The Borrower shall
have the option of repaying the principal amount
of the Loan to the Bank in advance in full or in
part at any time and from time to time; provided,
however, that (i) the amount of any such repayment
in part shall be an integral multiple of $50,000
and (i) upon making any such repayment in full the
Borrower shall pay to the Bank all interest owing
pursuant to this Agreement and remaining unpaid
and all other amounts owing by the Borrower to the
Bank pursuant to this Agreement and remaining
unpaid. Each such repayment in part shall be
applied to the installments of the principal
amount of the Loan in the inverse order of such
installments becoming due.
e. Interest. From and including the date the Loan is
made to but not including the date the outstanding
principal amount of the Loan is repaid in full,
the Borrower shall pay to the Bank interest,
calculated on the basis of a 360-day year for the
actual number of days of each year (365 or 366, as
applicable), on such outstanding principal amount
at a rate per year that shall (i) on each day
beginning before the maturity, whether by
acceleration or otherwise, of such outstanding
principal amount be 1/4% above the rate in effect
such day as the Bank's Prime Rate and (ii) on each
<PAGE>
- 3 -
day subsequent to the last day described in clause
(i) of this sentence be 3% above the rate in
effect such subsequent day as the Bank's Prime
Rate; provided, however, that (A) in no event
shall such interest be payable at a rate in excess
of the maximum rate permitted by applicable law
and (B) solely to the extent necessary to result
in such interest not being payable at a rate in
excess of such maximum rate, any amount that would
be treated as part of such interest under a final
judicial interpretation of applicable law shall be
deemed to have been a mistake and automatically
cancelled, and, if received by the Bank, shall be
refunded to the Borrower, it being the intention
of the Bank and of the Borrower that such interest
not be payable at a rate in excess of such maximum
rate. Except as otherwise provided in Section 2c
of this Agreement, payments of such interest shall
become due on the last day of each calendar month,
beginning on March 31, 1996.
f. General Provisions as to Repayment and Payment.
Repayment of the principal amount of the Loan,
payment of all interest owing pursuant to this
Agreement and payment of all other amounts owing
by the Borrower to the Bank pursuant to this
Agreement shall be made in lawful money of the
United States and in immediately available funds
at the banking office of the Bank located at One
M&T Plaza, Buffalo, New York, or at such other
office of the Bank as may at any time and from
time to time be specified in any notice delivered,
given or sent to the Borrower by the Bank. No
such repayment or payment shall be deemed to have
been received by the Bank until received by the
Bank at the office of the Bank determined in
accordance with the preceding sentence, and any
such repayment or payment received by the Bank at
such office after 2:00 P.M. on any day shall be
deemed to have been received by the Bank at the
time such office opens for business on the next
business day of the Bank. If the time by which
any of the principal amount of the Loan is to be
repaid is extended by operation of law or
otherwise, the Borrower shall pay interest on the
outstanding portion thereof during such period of
extension as provided in Section 2e of this
Agreement.
3. PREREQUISITES TO LOAN. The obligation of the Bank
to make the Loan shall be conditioned upon the
following:
<PAGE>
- 4 -
a. No Default. (i) There not having occurred or
existed at any time during the period beginning on
the date of this Agreement and ending at the time
the Loan is to be made, and there not existing at
the time the Loan is to be made, any Event of
Default or Potential Event of Default and (ii) the
Bank not believing in good faith that any Event of
Default or Potential Event of Default has so
occurred or existed or so exists;
b. Representations and Warranties. (i) Each
representation and warranty made in this Agreement
being true and correct as of all times during the
period beginning on the date of this Agreement and
ending at the time the Loan is to be made and as
of the time the Loan is to be made, except to the
extent updated in (A) a certificate executed by
the Chief Executive Officer or the President or a
Vice President of the Borrower and by the chief
financial officer of the Borrower and received by
the Bank before the time the Loan is to be made or
(B) Exhibit A attached to and made a part of this
Agreement, (ii) each other representation and
warranty made to the Bank by or on behalf of the
Borrower or by or on behalf of any Subsidiary or
Other Obligor before the time the Loan is to be
made being true and correct as of the date
thereof, except to the extent updated in (A) a
certificate executed by the Chief Executive
Officer or the President or a Vice President of
the Borrower and by the chief financial officer of
the Borrower and received by the Bank before the
time the Loan is to be made or (B) Exhibit A
attached to and made a part of this Agreement,
(iii) each financial statement provided to the
Bank by or on behalf of the Borrower or by or on
behalf of any Subsidiary or Other Obligor before
the time the Loan is to be made being true and
correct as of the date thereof and (iv) the Bank
not believing in good faith that (A) any such
representation or warranty, except as so updated,
was or is other than true and correct as of any
such time, or as of such date, of determination of
the truth and correctness thereof or (B) any such
financial statement was other than true and
correct as of the date thereof;
c. Proceedings. The Bank being satisfied as to each
corporate or other proceeding in connection with
any transaction contemplated by this Agreement;
and
<PAGE>
- 5 -
d. Receipt by Bank. The receipt by the Bank at or
before the time the Loan is to be made of the
following, in form and substance satisfactory to
the Bank:
i. A Promissory Note, appropriately
completed and duly executed by the
Borrower;
ii. A Ratification of General Guaranty
Agreement, appropriately completed and
duly executed by American Locker
Security Systems, Inc.;
iii. A Ratification of General Guaranty
Agreement, appropriately completed and
duly executed by American Locker
Company, Inc.;
iv. A certificate executed by the Chief
Executive Officer or the President or a
Vice President of the Borrower and by
the chief financial officer of the
Borrower and stating that (A) there did
not occur or exist at any time during
the period beginning on the date of this
Agreement and ending at the time the
Loan is to be made, and there does not
exist at the time the Loan is to be
made, any Event of Default or Potential
Event of Default and (B) each
representation and warranty made in this
Agreement was true and correct as of all
times during the period beginning on the
date of this Agreement and ending at the
time the Loan is to be made and is true
and correct as of the time the Loan is
to be made, except to the extent updated
in a certificate executed by the Chief
Executive Officer or the President or a
Vice President of the Borrower and by
the chief financial officer of the
Borrower and received by the Bank before
the time the Loan is to be made.
v. Evidence that each of the Borrower and
all Subsidiaries is at the time the Loan
is to be made in good standing under the
law of the jurisdiction in which it is
incorporated;
<PAGE>
- 6 -
vi. A copy of the certificate or articles of
incorporation or other charter document
of each of the Borrower and all
Subsidiaries certified by its Secretary
to be complete and accurate at the time
the Loan is to be made;
vii. A copy of the by-laws or other
organizational document of each of the
Borrower and all Subsidiaries certified
by its Secretary to be complete and
accurate at the time the Loan is to be
made;
viii. Evidence of the taking, and of the
continuation in full force and effect at
the time the Loan is to be made, of each
corporate or other action of the
Borrower or of any other Person
necessary to authorize the obtaining of
the Loan by the Borrower, the execution,
delivery to the Bank and performance of
each Loan Document and the imposition or
creation of any security interest,
mortgage and other lien and encumbrance
imposed or created pursuant to any Loan
Document;
ix. Evidence that each requirement contained
in any Loan Document with respect to
insurance is being met at the time the
Loan is to be made;
x. Each additional writing required by any
Loan Document or deemed necessary or
desirable by the Bank at the sole option
of the Bank; and
xi. Payment of all costs and expenses
payable pursuant to the first sentence
of Section 8 of this Agreement at or
before the time the Loan is to be made.
2. Section 4a of the Loan Agreement is amended in its
entirety to read as follows:
a. Use of Proceeds. The proceeds of the Loan
will be used only (i) to refinance existing
indebtedness of the Borrower to the Bank in
the approximate outstanding principal amount
<PAGE>
- 7 -
of $800,000 and (ii) to pay the 1995 tax
obligations of the Borrower.
3. The reference in Section 5c of the Loan Agreement
to "1,800,000" is changed to "2,500,000."
4. The reference in Section 5d of the Loan Agreement
to "$2,200,000" is changed to "$2,500,000."
5. The Loan Agreement is changed by this Amendment
Agreement only to the extent that it is specifically amended by
this Amendment Agreement, and, as so amended, the Loan Agreement
shall remain in full force and effect. Effective as of the date
of this Amendment Agreement, references in the Loan Agreement to
"this Agreement" shall be deemed to be references to the Loan
Agreement as amended by this Amendment Agreement.
IN WITNESS WHEREOF, the Bank and the Borrower have
caused this Amendment Agreement to be duly executed on the date
shown at the beginning of this Amendment Agreement.
MANUFACTURERS AND TRADERS TRUST COMPANY
By /s/ Richard D. Bagosy
---------------------------------
Title Banking Officer
AMERICAN LOCKER GROUP INCORPORATED
By /s/ Harold J. Ruttenberg
---------------------------------
Harold J. Ruttenberg
Chief Executive Officer
<PAGE>
EXHIBIT A TO
AMENDMENT AGREEMENT
DATED
MARCH 12, 1996
BETWEEN
MANUFACTURERS AND TRADERS TRUST COMPANY
AND
AMERICAN LOCKER GROUP INCORPORATED
[Section numbers refer to section of the Corporate Loan
Agreement, as amended]
Section 4(b). The following sets forth the name and
jurisdiction of the present Subsidiaries of the Borrower and the
percentage of voting stock owned, directly or indirectly, by
Borrower:
Percentage
of Voting
Jurisdiction Securities
of Owned by
Name Organization Borrower
---- ------------ ----------
American Locker Company, Inc. Delaware 100%
American Locker Company of Dominion of 100% (1)
Canada, Ltd. Canada
Canadian Locker Company, Ltd. Dominion of 100% (2)
Canada
American Locker Security Delaware 100%
Systems, Inc.
American Locker Security Virgin Islands 100% (1)
Systems International
(1) Owned by American Locker Security Systems, Inc.
(2) Owned by American Locker Company of Canada, Ltd.
<PAGE>
Section 4(d). The disclosure on this Schedule A,
Section 4(b), sets forth the corporate structure of the Borrower
and its Subsidiaries.
Section 4(e). The disclosure in this Schedule A,
Section 4(q), sets forth certain matters regarding environmental
compliance by the Borrower and its Subsidiaries.
Section 4(m) Leases.
Obligor Monthly Rent Expiration
------- ------------ ----------
1. Borrower - Pittsburgh, PA $ 1,200.00 12/31/96
Executive Office
2. Borrower - Jamestown, NY $ 4,862.50 5/31/96
Corporate Office
3. Canadian Locker Company, CA$ 1,491.83 3/31/98
Ltd. ("CLCL") Toronto,
Ont. Office - Nuggett St.
4. CLCL Toronto-Progress Court CA$ 2,616.07 2/28/99
5. CLCL - Calgary CA$ 850.01 1/1/97
6. American Locker $ 5,447.08 4/30/97
Security Systems, Inc.
("ALSSI")- National Service
Center, Elk Grove Village IL
7. ALSSI - Hartford, CN $ 400.00 10/31/96
Sales Office
8. ALSSI - Snellville, GA $ 210.00 12/31/96
Sales Office
9. ALSSI - Mesquite, Texas $ 575.00 11/30/96
Sales Office
10. ALSSI - Jamestown, NY $ 8,416.00 11/15/96
Warehouse-Assembly
11. ALSSI - Huntington Beach, CA $ 582.00 6/30/96
- 2 -
<PAGE>
12. Vehicle Leases
United States (11 autos) $ 5,016.18 Various through
2/97
Canada (3 autos) CA$ 1,453.86 Various through
5/98
Fork Lifts (2) $ 882.84 Various through
9/98
- 3 -
<PAGE>
Section 4(q) Judgments and Litigation.
1. Four female former employees of the Borrower have
alleged in suits entitled Derr et al. v. American
Locker Group, Inc., 94-CV-0515S(M), (US District Court
for Western District of New York) that they were the
victims of sex discrimination in their terminations
and/or compensation and seeking unspecified damages.
The Borrower has filed an answer denying all charges.
Discovery is completed and the Borrower has filed a
Motion for Summary Judgment on all counts. The Motion
is under consideration by the Court.
Additional Information
1. By letter dated June 29, 1994, counsel for Gowanda
Electronics ("Gowanda") informed the Borrower that
Gowanda intended to pursue claims against the Borrower
for costs and damages allegedly incurred by Gowanda as
a result of environmental contamination at Gowanda's
property in Gowanda, New York (the "Property"). The
Property was sold by a predecessor of the Borrower, the
AVM Corporation, to Gowanda in 1978. According to
Gowanda, groundwater and soil at the Property exhibit
contamination with petroleum products, solvents, and
metals. Gowanda stated that the Borrower was
responsible for this contamination and, therefore, is
liable to Gowanda for past and future remediation costs
- 4 -
<PAGE>
under the Comprehensive Environmental Response,
Compensation and Liability Act, the New York Navigation
Law, and various common law theories. Gowanda also
stated that it will seek additional damages from the
Borrower if the environmental conditions at the
Property prevent Gowanda's potential sale of the
Property.
2. In July 1994, the Borrower was notified by the
Department of Law of the State of New York that the
State of New York believes that the Borrower, Bristol-
Myers Squibb Company, Inc., General Electric, Inc.,
Pass & Seymour, Inc. and R. E. Dietz are liable for
past and future investigation and remediation costs
related to the site in Pompey, New York, previously
operated by Solvent Savers, Inc. as a spent solvent
recovery facility. The defense of this suit has been
assumed by the Borrower's insurance carrier, with a
reservation of rights.
- 5 -
<PAGE>
Exhibit 10.4
FIRST AMENDMENT TO MANUFACTURING AGREEMENT
This First Amendment made as of May 3, 1995, to
Manufacturing Agreement dated December 29, 1989 between SIGNORE,
INC., a Delaware corporation ("Seller") and AMERICAN LOCKER
SECURITY SYSTEMS, INC., a Delaware corporation ("Buyer").
WHEREAS, Seller and Buyer are parties to a
Manufacturing Agreement dated December 29, 1989, (the "Original
Agreement"); and
WHEREAS, Seller and Buyer wish to extend the term of
the Original Agreement and make certain amendments thereto.
NOW, THEREFORE, for good and valuable consideration and
intending to be legally bound hereby, Seller and Buyer agree as
follows:
1. All defined terms used herein shall have the
definitions set forth in the Original Agreement.
2. Section 2 of the Original Agreement is amended and
restated as follows:
2. Term.
The term of the Agreement shall expire
on April 30, 2000, provided, however, that it
may be terminated by Buyer or Seller on one
- 6 -
<PAGE>
hundred eighty-five (185) days written notice
to the other party.
3. Buyer and Seller acknowledge that as of December 31,
1994, the Remaining Inventory Value of Locker Inventory
(as defined in Section 3(f) of the Original Agreement)
was $1,177,220.85 (prior to recognition of obsolete
inventory described in Section 4(i) below). In
accordance with the provisions of Section 3(f) of the
Original Agreement, Buyer shall pay to Seller the sum
of $212,015.64 in accordance with the following
schedule:
Payment Date Amount
------------ ------
April 20, 1995 $42,415.64
May 20, 1995 42,400.00
June 20, 1995 42,400.00
July 20, 1995 42,400.00
August 20, 1995 42,400.00
-----------
TOTAL $212,015.64
============
4. Buyer and Seller agree (i) that as of December 31,
1994, Locker Inventory contained $17,636.00 in obsolete
inventory which was scrapped and deducted from the
calculation of Remaining Inventory Value (as defined in
- 7 -
<PAGE>
Section 3(f) of the Original Agreement; (ii) that
Remaining Inventory Value was reduced by the withdrawal
by ALSSI in 1991 of Locker Inventory with a value of
$72,701.35; and (iii) that Locker Inventory determined
on a proforma basis as of December 31, 1994 as if all
payments required under Section 3 hereof had been made
as of that date was $1,159,584.85 (i.e. Initial Locker
Inventory of $1,037,906.56 less $72,701.35 less $17,636
plus $212,015.64).
5. Except as expressly provided herein, the Original
Agreement shall remain unamended and in full force and
effect.
WITNESS the due execution hereof.
SIGNORE, INC.
By /s/Alexander N. Ditonto
------------------------
Title President
AMERICAN LOCKER SECURITY
SYSTEMS, INC.
By /s/Harold J. Ruttenberg
-------------------------
Title Chairman
- 8 -
<PAGE>
Exhibit 10.15
SECOND AMENDMENT TO MANUFACTURING AGREEMENT
This Second Amendment made as of March 15, 1996, to
Manufacturing Agreement dated December 29, 1989 between SIGNORE,
INC., a Delaware corporation ("Seller") and AMERICAN LOCKER
SECURITY SYSTEMS, INC., a Delaware corporation ("Buyer").
WHEREAS, Seller and Buyer are parties to a
Manufacturing Agreement dated December 29, 1989, which Agreement
was amended pursuant to the First Amendment to Manufacturing
Agreement dated as of May 3, 1995 (such Manufacturing Agreement,
as amended by such First Amendment to Manufacturing Agreement, is
referred to herein as the "Amended Agreement"); and
WHEREAS, Seller and Buyer wish to make certain
amendments to the Amended Agreement.
NOW, THEREFORE, for good and valuable consideration and
intending to be legally bound hereby, Seller and Buyer agree as
follows:
1. All defined terms used herein shall have the
definitions set forth in the Amended Agreement.
2. Section 2 of the Original Agreement is amended and
restated as follows:
The term of this Agreement shall expire on
April 30, 2000.
3. Except as expressly provided herein, the Amended
Agreement shall remain unamended and in full force
and effect.
WITNESS the due execution hereof.
SIGNORE, INC.
By /s/ Alexander N. Ditonto
---------------------------
Title President
AMERICAN LOCKER SECURITY
SYSTEMS, INC.
By /s/ Harold J. Ruttenberg
---------------------------
Title Chairman
- 9 -
<PAGE>
Exhibit 22.1 List of Subsidiaries
The following companies are subsidiaries of the Company and are
included in the consolidated financial statements of the Company:
Percentage
of Voting
Jurisdiction of Securities
NAME Organization Owned
---- ---------------- ----------
American Locker Security
Systems, Inc. Delaware 100%
American Locker Company,
Inc. Delaware 100%
American Locker Company of
Canada, Ltd. Dominion of Canada 100% (1)
Canadian Locker Company, Ltd. Dominion of Canada 100% (2)
American Locker Security
Systems International Virgin Islands 100% (1)
(1) Owned by American Locker Security Systems, Inc.
(2) Owned by American Locker Company of Canada, Ltd.
- 10 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-KSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,080,487
<SECURITIES> 0
<RECEIVABLES> 3,823,118
<ALLOWANCES> 275,712
<INVENTORY> 2,775,615
<CURRENT-ASSETS> 8,359,517
<PP&E> 8,078,209
<DEPRECIATION> 6,331,541
<TOTAL-ASSETS> 10,106,185
<CURRENT-LIABILITIES> 4,900,296
<BONDS> 300,000
0
0
<COMMON> 818,625
<OTHER-SE> 3,645,441
<TOTAL-LIABILITY-AND-EQUITY> 10,106,185
<SALES> 23,677,940
<TOTAL-REVENUES> 23,677,940
<CGS> 16,207,181
<TOTAL-COSTS> 26,079,489
<OTHER-EXPENSES> 166,289
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,747,478
<INCOME-TAX> 956,909
<INCOME-CONTINUING> 1,790,569
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,790,569
<EPS-PRIMARY> 2.12
<EPS-DILUTED> 2.12
</TABLE>
