SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT FOR
THE TRANSITION PERIOD FROM ____ TO _____
Commission file number 0-439
American Locker Group Incorporated
(Exact name of small business issuer as specified in its charter)
Delaware 16-0338330
(State of other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
608 Allen Street, Jamestown, NY 14701
(Address of principal executive offices)
(716)664-9600
(Registrant's telephone number, including area code)
- ------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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. Yes X No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes ___ No ___
Not Applicable
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's class of
common stock equity as of the latest practicable date: MAY 5, 1997
Common Stock $1.00 par value - 796,501
Transitional Small Business Disclosure (check one) Yes ___ No X
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $1,248,304 $1,229,222
Accounts and notes receivable, less
allowance for doubtful accounts
(1997 $423,733; 1996 $386,309) 2,599,670 3,363,277
Inventories 3,793,081 3,339,668
Prepaid expenses 67,843 97,917
Prepaid federal, state and foreign
income taxes 0 28,986
Deferred income taxes 619,096 619,096
---------- ----------
TOTAL CURRENT ASSETS 8,327,994 8,678,166
PROPERTY, PLANT AND EQUIPMENT
Land 500 500
Buildings 510,322 505,970
Machinery and equipment 7,617,422 7,617,871
---------- ----------
8,128,244 8,124,341
Less allowances for depreciation and
amortization 6,909,422 6,782,429
---------- ----------
1,218,822 1,341,912
---------- ----------
TOTAL NON-CURRENT ASSETS 1,218,822 1,341,912
---------- ----------
TOTAL ASSETS $9,546,816 $10,020,078
========== ===========
</TABLE>
2
<PAGE>
STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Demand note payable $850,000 $1,125,000
Accounts payable and accrued expenses:
Trade 1,004,455 660,202
Related party 0 381,196
------- -------
1,004,455 1,041,398
Commissions, salaries, wages and taxes
thereon 210,231 298,671
Other accrued expenses 356,377 447,962
Current portion of long-term obligations 600,000 600,000
------- -------
TOTAL CURRENT LIABILITIES 3,021,063 3,513,031
DEFERRED INCOME TAXES 44,580 44,580
LONG-TERM OBLIGATIONS
Long term debt, less current portion 550,000 700,000
Deferred pension income 271,690 271,690
Postretirement benefits 132,630 132,630
------- -------
954,320 1,104,320
------- ---------
TOTAL LIABILITIES 4,019,963 4,661,931
STOCKHOLDERS' EQUITY
Common stock, par value $1 per share--
authorized 4,000,000 shares, issued
796,501 shares in 1997 and 800,024 in
1996 796,501 800,024
Other capital 984,370 1,027,527
Retained earnings 3,868,989 3,645,183
Foreign currency translation adjustment (123,007) (114,587)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 5,526,853 5,358,147
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $9,546,816 $10,020,078
---------- -----------
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
STATEMENTS OF CONSOLIDATED OPERATIONS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
<S> <C> <C>
Net sales $5,283,597 $4,946,120
Cost of products sold 3,665,672 3,498,708
--------- ---------
1,617,925 1,447,412
Selling, administrative and
general expenses 1,200,640 1,150,043
--------- ---------
417,285 297,369
Interest and dividend income 7,209 7,360
Other income (expense)--net 30,768 64,513
Interest expense (30,533) (40,243)
-------- --------
INCOME BEFORE INCOME TAXES 424,729 328,999
Income taxes 200,923 136,387
------- -------
NET INCOME $223,806 $192,612
-------- --------
Per share of common stock:
NET INCOME $0.28 $0.24
----- -----
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
STATEMENTS OF CONSOLIDATED CASH FLOWS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $223,806 $192,612
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 148,596 156,054
Gain on disposition of property,
plant and equipment 998 288
Change in assets and liabilities:
Accounts and notes receivable 763,607 (224,403)
Income taxes 0 (751,961)
Inventories (453,413) (147,029)
Prepaid expenses 59,060 (11,009)
Accounts payable and accrued
expenses (216,968) (292,248)
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 525,686 (1,077,696)
Cash flows from investment activities:
Purchase of property, plant and
equipment (26,504) (76,418)
Proceeds from sale of property,
plant and equipment 0 367
- ---
NET CASH USED IN INVESTING ACTIVITIES (26,504) (76,051)
Cash flows from financing activities:
Treasury stock purchased/retired (46,680) 0
Additional long-term borrowing 0 1,000,000
Net payments under Line of Credit (275,000) (350,000)
Debt repayments (150,000) (150,000)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES (471,680) (500,000)
--------- ---------
Effect of exchange rate changes on cash (8,420) 6,006
------- -----
Net increase (decrease) in cash 19,082 (647,741)
Cash and cash equivalents at beginning
of year 1,229,222 1,080,487
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,248,304 $432,746
---------- --------
5
<PAGE>
Supplemental cash flow information: Cash paid during the period for:
Interest $30,533 $40,243
Income Taxes $56,605 $860,200
------- --------
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
1. The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with instructions to Form 10-QSB and, in the
opinion of the Company, include all adjustments, consisting of normal
recurring accruals, considered necessary for a fair presentation of such
condensed financial statements. The condensed financial statements do not
include all information and footnotes normally associated with statements of
results of operations, financial condition, and cash flows prepared in
conformity with generally accepted accounting principles.
2. Provision for income taxes is based upon the estimated annual effective tax
rate.
3. Net income per common share is computed by dividing net income by the
weighted average number of shares outstanding, plus, when dilutive, the
common stock equivalents which would arise from the exercise of stock
options, during the periods; 798,415 shares for the three months ended March
31, 1997 and 818,625 for the quarter ended March 31, 1996.
4. Inventories are valued at the lower of cost or market. Cost is
determined by using the last-in, first-out method for substantially all of
the inventories.
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
<S> <C> <C>
Raw materials $1,283,253 $ 982,888
Work-in-process 1,491,909 1,742,320
Finished goods 2,029,092 1,625,633
--------- ---------
$4,804,254 $4,350,841
Less allowance to
reduce carrying
value to LIFO
basis 1,011,173 1,011,173
--------- ---------
$3,793,081 $3,339,668
========== ==========
</TABLE>
7
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
LIQUIDITY AND SOURCES OF CAPITAL
The Company continues to have adequate resources and liquidity to maintain and
expand its operations. Working capital at March 31, 1997 was $5,306,931, up
$141,796 over working capital of $5,165,135 at December 31, 1996. The ratio of
current assets to current liabilities was 2.8 to 1 at March 31, 1997, as
compared to a ratio of 2.5 to 1 at December 1996. Cash provided by operations
was $525,686 during the first three months of 1997, compared to cash used in
operating activities of $1,077,696 for the same period in 1996. The Company's
$3,000,000 line of credit is available to assist in satisfying future working
capital needs, if required.
The Company anticipates that its requirements for funds for operations and
capital expenditures will be provided principally from cash generated from
future operations.
FIRST THREE MONTHS 1997 VS FIRST THREE MONTHS 1996
First quarter 1997 sales were $5,284,000 compared to $4,946,000 in the first
quarter of 1996. This was an increase of $338,000 or 6.8%. Plastic locker sales
in the first quarter were $3,006,000 compared to $2,560,000 during the same
period in 1996. $2,141,000 of such plastic sales this year were the Cluster Box
Units (CBUs) compared to $1,725,000 in the first quarter of last year, an
increase of $416,000 or 24.1%. The sales of plastic parcel units (NBU-P also
called Outdoor Parcel Units, OPL) were $865,000 in the first quarter of this
year compared to $836,000 in the like quarter of last year, an increase of
$29,000, or 3.5%. Sales of metal, mechanical and electronic lockers were
$2,278,000 in the first quarter of this year compared to $2,386,000 in the like
quarter of last year, a decline of $108,000 or 4.5%. However, shipments and
orders booked in April were at near record levels for our metal lockers.
Sales of plastic lockers in the first quarter of 1997 benefited from increased
acceptance of the Cluster Box Unit (CBU) by local procurement offices of the
United States Postal Service (USPS). As previously reported, the USPS has
extended our national contract for another year (April 15, 1997 - April 14,
1998). A pricing agreement was reached between the Company and the USPS that is
in effect from mid - April to mid - October, 1997. We extended slightly lower
prices on CBUs in return for guaranteed minimum shipments (5,000 CBUs, 4,000
OPLs)for the six months that, when coupled with shipments already made (January
1 - April 14, 1997), should result in increased CBU volumes for the calendar
year, 1997.
Although the Postal Service is obligated for the contract minimum units, it is
possible that shipments may exceed the contract minimum. If the current trend of
increased acceptance of the CBU continues, we anticipate shipping more than the
contract minimum quantity.
8
<PAGE>
There are now two CBU competitors, each with an aluminum CBU. One is fully
approved to ship, the other remains in the final stage of approval to ship. Our
CBU prices are competitive with the aluminum CBUs currently available. The
Postal Service continues to purchase the product (Neighborhood Delivery and
Collection Box Unit - NDCBU) that the CBU is designed to make obsolete. The
phasing out of the NDCBU may extend over a few years as both our plastic CBU,
and our competitors aluminum CBU require a larger initial investment than the
NDCBU. We believe that our units offer the best value (when compared to the
aluminum CBU or older NDCBU) based on total life cycle costs and features
delivered to the customer.
Consolidated costs of products sold as a percentage of sales was 69.4% during
the first quarter of 1997 compared to 70.7% in the first quarter of 1996.
Increased gross margins are directly related to increased sales volumes.
Selling, general and administrative costs for the first quarter of 1997 compared
to the same period in 1996 ($1,201,000 - 1997; $1,150,000 - 1996), increased
4.4%. Selling, general and administrative costs represented 22.7% of sales in
the first quarter of 1997, down from 23.3% of sales for the same period in 1996.
Other income net of $30,800 in the first quarter of 1997 was down $33,700 from
$64,500 recorded in the same quarter of 1996, principally due to lower income in
various concessions managed by our subsidiary, Canadian Locker Company, Ltd.
Interest expense in the first quarter of 1997 decreased $9,700 from 1996 due to
a decrease in the average balance outstanding under the Company's working
capital line of credit.
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10 Material Contracts - U.S. Postal Service Contract
Modification #M03 to #072368-96-B-0741, dated April 16, 1997.
Exhibit 27 Financial Data Schedule dated March 31, 1997.
(b) The Company did not file any reports on Form 8-K during the three
months ended March 31, 1997.
9
<PAGE>
S I G N A T U R E
In accordance with the requirements 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
(Registrant)
/s/Harold J. Ruttenberg
----------------------------------
Harold J. Ruttenberg
Chairman, Chief Executive Officer,
Treasurer and Principal Accounting
Officer
Date May 12, 1997
10
EXHIBIT 10
U.S. POSTAL SERVICE: CONTRACT/ORDER MODIFICATION
- -------------------------------------------------------------------------------
1. MODIFICATION NO.: MO3 TO CONTRACT/ORDER NO.: 072368-96-B-0741
2. a. DATE ISSUED: 04/16/97 b. REQUEST NO.: 97-02298
c. FINANCE NO.:
- -------------------------------------------------------------------------------
3. CONTRACTOR: 4. ISSUED BY:
AMERICAN LOCKER SECURITY U.S. POSTAL SERVICE
PO BOX 489 DENVER PURCHASING &
JAMESTOWN, NY MATERIALS SERVICE CENTER
14702-0489 3300 S PARKER RD SUITE 400
AURORA, CO 80014-3500
ATTENTION: ROY GLOSSER
(800)828-9118 FOR INFORMATION CALL:
Michele Schuemann
(303) 369-1228
ACO CODE: 072368
- -------------------------------------------------------------------------------
5. The above numbered contract/order is modified as set forth in Block 6, by
supplemental agreement entered into pursuant to authority of Contracting
Officer. The contractor is required to sign and return one copy/copies of this
modification to the Issuing Office (See Block 4).
- -------------------------------------------------------------------------------
6. DESCRIPTION MODIFICATION:
NATIONAL CONTRACTS: NDCBU, CBU, AND OPL
CONTRACTOR TIN: 16-1068506 PARENT TIN: 16-0338330
THIS CONTRACT IS MODIFIED AS FOLLOWS:
1. EXTEND CONTRACT FOR AN ADDITIONAL ONE-YEAR TERM BEGINNING 04/15/97
THROUGH 04/14/98.
2. DELETE CLAUSE 2-1, INSPECTION--FIXED PRICE AND REPLACE WITH THE
UPDATED VERSION CLAUSE 2-1, CLAUSE 2-2, AND
(SEE ATTACHMENT FOR A CONTINUATION OF THIS MODIFICATION)
Except as provided herein, all terms and conditions of the document referenced
in Block 1, as heretofore changed, remain unchanged and in full force and
effect.
- --------------------------------------------------------------------------------
7. ACCOUNTS PAYABLE DATA is unchanged.
- --------------------------------------------------------------------------------
8. SIGNATURES: CONTRACTOR U.S. POSTAL SERVICE
s/s R. J. Glosser 4/18/97 /s/Roy C. Sandusky
- ------------------- ------- -------------------- 04/16/97
Signature Date Signature Date
Roy J. Glosser President ROY C. SANDUSKY
- ------------------- ----------
Name of Person Title Name of Contracting Officer
Authorized to Sign
- --------------------------------------------------------------------------------
<PAGE>
ATTACHMENT A
(CONTINUATION SHEET)
CLAUSE 2-23. SEE COMPLETE VERBIAGE OF NEW CLAUSES ON ATTACHMENT B.
3. CHANGE CLAUSE OB-21, CONTRACTING OFFICER'S REPRESENTATIVE (COR),
ALTERNATE I (JUNE 1988) TO READ AS FOLLOWS:
DESIGNATED COR: MICHELE P. SCHUEMANN
COR LOCATION: 3300 S PARKER RD STE 400
AURORA CO 80014-3500
COR TELEPHONE #: (303) 369-1228
4. GBL TEST PROGRAM WILL BE EXPANDED NATIONWIDE. POSTAL ORDERING
OFFICIALS WILL HAVE THE OPTION OF USING A GBL OR CONTINUE WITH
THE PREPAY AND ADD ACTUAL FREIGHT ARRANGEMENT CURRENTLY IN PLACE.
5. INCORPORATE NEW PRICING AND QUANTITIES AS LISTED BELOW:
PRICING IS EFFECTIVE FOR A 6-MONTH PERIOD ONLY!!!
-------------------------------------------------
CBU TYPE I $912.00
CBU TYPE II 975.00
CBU III 962.00
OPL $239.00
OPL PEDESTAL $ 75.00
QUANTITIES FOR A 6-MONTH PERIOD ONLY!!!
---------------------------------------
CBU, TYPE I, II, AND II
COMBINATION OF ANY TYPE MINIMUM = 5,000
OPL MINIMUM = 4,000
OPL PEDESTALS MINIMUM = 100
<PAGE>
ATTACHMENT B - PAGE 1 0F 2
CLAUSE 2-1 INSPECTION AND ACCEPTANCE (JANUARY 1997) (2.2.1)
a. The supplier must ensure and be able to substantiate that all
supplies and services purchased by the Postal Service conform to the
requirements specified in the contract.
b. The Postal Service may reject defective supplies or services and:
(1) Require replacement or correction of the defects without cost
to the Postal Service;
(2) Acquire replacement products at the supplier's expense; or (3)
Accept the supplies or services at a reduced price.
c. The contracting officer may revoke acceptance if nonconforming
performance is accepted (1)because is has not been discovered before
acceptance, as a result of the difficulty of discovery or because of
the supplier's assurances, or (2)on the basis of a reasonable
assumption that it would be cured.
d. The Postal Service has the same rights and duties upon revocation as
upon rejection. Revocation of acceptance must occur within a
reasonable time after the contracting officer discovers the
deficiency.
e. The Postal Service reserves the right to inspect the supplies or
services provided under this contract at any stage of contract
performance. Inspection by the Postal Service does not relieve the
supplier of the responsibility to provide performance that conforms
to the requirements set forth in this contract.
<PAGE>
ATTACHMENT B - PAGE 2 OF 2
CLAUSE 2-2 QUALITY ASSURANCE I (JANUARY 1997) (2.2.1)
a. The supplier must use a documented quality system acceptable to the
Postal Service. As a minimum, the supplier's quality system must
include controls and record keeping in the following areas:
(1) Inspection and testing;
(2) Inspection, measuring, and test
equipment;
(3) Control of nonconforming products;
(4) Document control; and
(5) Corrective action.
b. A quality system in compliance with ISO 9002 meets this requirement.
c. The Postal Service has the right to evaluate the acceptability and
effectiveness of the supplier's quality system before award and
during contract performance.
d. All supplier records pertaining to this contract must be kept by the
supplier during contract performance and for three years after final
payment is made under this contract.
CLAUSE 2-23 REIMBURSEMENT--POSTAL SERVICE TESTING
(JANUARY 1996) (2.2.1)
a. The supplier will be charged at the rate of $60 per work-hour for:
(1) The total time, including round-trip travel time, lost by
Postal Service representatives when the supplier is not ready
for inspection at the time inspection and testing is requested
by the supplier; and
(2) The total time, including round-trip travel time, required by
Postal Service representatives for reinspection and retesting
resulting from rejection.
a. Other out-of-pocket expenses incurred by the Postal Service as a
consequence of the activities described in this clause will be
billed to the supplier.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10-QSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> $1,248,304
<SECURITIES> 0
<RECEIVABLES> 2,599,670
<ALLOWANCES> 423,733
<INVENTORY> 3,793,081
<CURRENT-ASSETS> 8,327,994
<PP&E> 8,128,224
<DEPRECIATION> 6,909,422
<TOTAL-ASSETS> 9,546,816
<CURRENT-LIABILITIES> 3,021,063
<BONDS> 0
0
0
<COMMON> 796,501
<OTHER-SE> 4,730,352
<TOTAL-LIABILITY-AND-EQUITY> 9,546,816
<SALES> 5,283,597
<TOTAL-REVENUES> 5,321,574
<CGS> 3,665,672
<TOTAL-COSTS> 3,665,772
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,533
<INCOME-PRETAX> 424,729
<INCOME-TAX> 200,923
<INCOME-CONTINUING> 223,806
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 223,806
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
