SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 JUNE 30, 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 or other jurisdiction (IRS Employer Identification Number)
of 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: August 5, 1997
Common Stock $1.00 par value - 789,142
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>
June 30, December 31,
1997 1996
----- -----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $291,726 $1,229,222
Accounts and notes receivable, less
allowance for doubtful accounts
(1997 $425,058; 1996 $386,309) 4,206,506 3,363,277
Inventories 3,254,729 3,339,668
Prepaid expenses 68,661 97,917
Prepaid federal, state and foreign
income taxes 0 28,986
Deferred income taxes 619,096 619,096
----------- ------------
TOTAL CURRENT ASSETS 8,440,718 8,678,166
PROPERTY, PLANT AND EQUIPMENT
Land 500 500
Buildings 510,425 505,970
Machinery and equipment 7,683,740 7,617,871
------------ -----------
8,194,665 8,124,341
Less allowances for depreciation and
amortization 7,054,308 6,782,429
------------ ------------
TOTAL NON-CURRENT ASSETS 1,140,357 1,341,912
------------ ------------
TOTAL ASSETS $9,581,075 $10,020,078
========= ==========
</TABLE>
2
<PAGE>
STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----- -----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Demand note payable $ 0 $1,125,000
Accounts payable and accrued
expenses:
Trade 1,347,758 660,202
Related party 0 381,196
---------- -----------
1,347,758 1,041,398
Commissions, salaries, wages and
taxes thereon 168,492 298,671
Other accrued expenses 546,107 447,962
Current portion of long-term
obligations 600,000 600,000
---------- -----------
TOTAL CURRENT LIABILITIES 2,662,357 3,513,031
DEFERRED INCOME TAXES 44,580 44,580
LONG-TERM OBLIGATIONS
Long-term debt, less current 400,000 700,000
portion
Deferred pension income 271,690 271,690
Postretirement benefits 132,630 132,630
---------- -----------
804,320 1,104,320
---------- -----------
TOTAL LIABILITIES 3,511,257 4,661,931
STOCKHOLDERS' EQUITY
Common stock, par value $1 per
share- authorized 4,000,000 shares,
issued 795,392 shares in 1997 and
800,024 in 1996 795,392 800,024
Other capital 972,448 1,027,527
Retained earnings 4,422,962 3,645,183
Foreign currency translation
adjustment (120,984) (114,587)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 6,069,818 5,358,147
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $9,581,075 $10,020,078
========= ==========
See notes to consolidated financial statements.
</TABLE>
3
<PAGE>
STATEMENTS OF CONSOLIDATED OPERATIONS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Six Months Ended June 30,
1997 1996
------ ------
<S> <C> <C>
Net sales $ 13,006,573 $10,908,010
Cost of products sold 9,054 907 7 538,010
---------- ----------
3,951,666 3,370,000
Selling, administrative and
general expenses 2,620,542 2,507,368
---------- ----------
1,331,124 862,632
Interest and dividend income 15,346 18,551
Other income (expense)--net 74,397 105,743
Interest expense (60,787) (104,967)
--------- ---------
INCOME BEFORE INCOME TAXES 1,360,080 881,959
Income taxes 582,301 353,392
--------- ----------
NET INCOME $777,779 $528,567
======= =======
Per share of common stock:
NET INCOME $0.98 $0.65
==== =====
See notes to consolidated financial statements.
</TABLE>
4
<PAGE>
STATEMENTS OF CONSOLIDATED OPERATIONS
AMERICAN LOCKER GROUP INCORPORATED
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended June 30,
1997 1996
---- ----
<S> <C> <C>
Net sales $7,722,976 $5,961,890
Cost of products sold 5,389,235 4,039,302
----------- -----------
2,333,741 1,922,588
Selling, administrative and
general expenses 1,419,902 1,357,325
----------- -----------
913,839 565,263
Interest and dividend income 8,137 11,191
Other income (expense)--net 43,629 41,230
Interest expense (30,254) (64,724)
---------- -----------
INCOME BEFORE INCOME TAXES 935,351 552,960
Income taxes 381,378 217,005
----------- -----------
NET INCOME $553,973 $335,955
======= =======
Per share of common stock:
NET INCOME $0.70 $0.41
==== ====
See notes to consolidated financial statements.
</TABLE>
5
<PAGE>
STATEMENTS OF CONSOLIDATED CASH FLOWS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Six Months Ended June 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $777,779 $528,567
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 296,317 315,363
Gain on disposition of property, plant and
equipment 992 (5,558)
Change in assets and liabilities:
Accounts and notes receivable (843,229) (123,119)
Income taxes 0 (832,458)
Inventories 84,939 (140,471)
Prepaid expenses 58,242 (70,690)
Accounts payable and accrued expenses 274,326 (577,445)
--------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 649,366 (914,811)
Cash flows from investment activities:
Purchase of property, plant and equipment (95,962) (117,995)
Proceeds from sale of property,
plant and equipment 208 9,848
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (95,754) (108,147)
Cash flows from financing activities:
(Payments) under long-term debt
agreement (300,000) (300,000)
Additional long-term borrowing 0 1,000,000
Net (payments) borrowings under line of
credit agreement (1,125,000) 600,000
Treasury stock purchased/retired (59,711) (193,144)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES (1,484,711) 1,106,856
--------- ---------
Effect of exchange rate of changes on cash (6,397) 3,543
--------- ---------
Net increase (decrease) in cash (937,496) 87,441
Cash and cash equivalents at beginning of year 1,229,222 1,080,487
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $291,726 $1,167,928
======= =========
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 60,787 $ 104,967
======= =========
Income Taxes $453,556 $1,208,296
======= =========
See notes to consolidated financial statements.
</TABLE>
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, 797,122 for the six months ended June 30, 1997 and 795,843 for the
quarter ended June 30, 1997; 812,043 shares for the six months ended June 30,
1996 and 805,461 for the quarter ended June 30, 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.
June 30, December 31,
1997 1996
---- ----
Raw materials $ 1,251,557 $ 982,888
Work-in-process 1,462,748 1,742,320
Finished goods 1,551,597 1,625,633
--------- ---------
$4,265,902 $4,350,841
Less allowance to
reduce carrying
value to LIFO basis 1,011,173 1,011,713
--------- ---------
$3,254,729 $3,339,668
========= =========
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 June 30, 1997 was $5,778,000, up
$613,000 over working capital of $5,165,000 at December 31, 1996. The increased
working capital resulted primarily from profitable operations during the first
six months of 1997. The ratio of current assets to current liabilities was 3.2
to 1 at June 30, 1997, as compared to a ratio of 2.5 to 1 at December 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 SIX MONTHS 1997 VS FIRST SIX MONTHS 1996
- ----------------------------------------------
Sales for the first six months of 1997 of $13,007,000 were up $2,099,000 or
19.2% compared to sales of $10,908,000 during the same period in 1996. Plastic
locker sales to the United States Postal Service (USPS) accounted for $1,931,000
of increased sales and totaled $7,473,000 compared to $5,542,000 during the
first half of 1996. Cluster Box Unit (CBU) sales were $5,489,000 compared to
$3,693,000 during the first half of 1996. The CBU continues to gain acceptance
by local procurement offices of the USPS.
All other sales, metal and electronic were $5,534,000 for the first six months
of 1997 compared to $5,366,000 for the first six months of 1996. This increase
relates to a general increase in demand across all markets served by the
Company.
Consolidated cost of products sold as a percentage of sales was 70% during the
first six months of 1997 compared to 69% during the first six months of 1996.
This slight increase is due to product mix swinging more in favor of plastic
lockers which are sold at lower margins than the Company's other products.
Selling, general and administrative costs for the first six months of 1997
increased $113,000 over the same period in 1996. Selling, administrative and
general expense as a percent of sales was 20.1% down from 23% during the first
six months of 1996. The decrease as a percentage of sales relates primarily to
increased sales volume.
Other income net of $74,000 in the first half of 1997 was down $32,000 from the
same period in 1996.
Interest expense in the first half of 1997 decreased $44,000 from the same
period in 1996 as a result of lower outstanding debt.
8
<PAGE>
SECOND QUARTER 1997 VS SECOND QUARTER 1996
- ------------------------------------------
Second quarter sales were $7,723,000 up $1,761,000 from the same period in 1996.
Plastic locker sales of $4,467,000 were up 49.8% or $1,485,000 over 1996's
second quarter. The CBU continues to gain acceptance by local procurement
offices of the USPS. Sales of other products metal and electronic lockers were
$3,256,000 during the second quarter of 1997 up 9.3% or $276,000 over 1996
second quarter due to a general increase in demand across all markets served by
the Company.
Consolidated cost of products sold as a percentage of sales was 69.8% during the
second quarter of 1997 up from 67.8% during the second quarter of 1996.
Selling, administrative and general expenses as a percent of net sales was 18%
during the second quarter of 1997 compared to 23% in the second quarter of 1996.
Other income net of $44,000 in the second quarter of 1997 was up slightly from
$41,000 in the second quarter of 1996.
Interest expense in the second quarter of $30,000 declined $35,000 from $65,000
in the second quarter.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
- --------------------------------------------------------------------------------
Forward-looking statements in this report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including without limitation the following: (i) the Company's
plans, strategies, objectives, expectations, and intentions are subject to
change at any time at the discretion of the Company, (ii) the Company's plans
and results of operations will be affected by the Company's ability to manage
its growth and inventory, and (iii) other risks and uncertainties indicated from
time to time in the Company's filings with the Securities and Exchange
Commission.
PART II
Item 1. Legal Proceedings
The Company, together with certain other corporations, has been named as a
defendant in a law suit entitled "State of New York vs. American Locker Group,
Inc., Bristol-Myers Squibb Company, General Electric Company, Pass and Seymour,
Inc., The R. E. Dietz Company and Unisys Corporation" Docket No. 97-CV-0976
filed in the United States District Court, Northern District of New York on July
9, 1997. The suit alleges that the Company, together with the other named
defendants, sold spent solvents to Solvent Savers, Inc., the operator of a
solvent distillation business located in Pompey, New York. The suit further
alleges that Solvent Savers' operations resulted in soil and groundwater
contamination which will require remediation and monitoring. In August 1995,
General Electric and Bristol Myers Squibb entered into an Administrative Order
of Consent whereby they undertook to prepare a remedial design, assume
responsibility for continued maintenance of remedial drinking water systems and
reimburse the state for costs incurred in overseeing the performance of the
remedial design. In March 1997, the New York State Department of Environmental
Conservation approved the proposed remedial design. The Company has advised its
insurance carrier of the commencement of this action and the insurance carrier
has assumed the defense of this claim, subject to a reservation of rights.
9
<PAGE>
Item 5. Other Information
Stock Option
On May 20, 1997, the Stock Option - Executive Compensation Committee of
the Board of Directors, pursuant to the Company's 1988 Stock Incentive Plan,
awarded a stock option to Roy J. Glosser, President and Chief Operating Officer
of the Company. The stock option has an exercise price of $11.25 per share,
covers 15,000 shares of Company stock and expires on May 20, 2007.
Purchase of Shares
The Company has entered into an Agreement in principle to purchase 187,385
shares of Company common stock held by Thomas P. Johnson and certain of his
relatives for $12 5/8 per share, or $2,635,735 in the aggregate. This Agreement
is contingent upon the Company obtaining approximately $2,315,000 in additional
bank financing with terms and conditions acceptable to the Company. Primary
approval of such financing has been obtained. The remainder of the purchase
price would be funded with cash on hand. Mr.
Johnson has served as a director of the Company since 1973.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10 Material Contracts
Exhibit 27 Financial Data Schedule dated June 30, 1997.
(b) The Company did not file any reports on Form 8-K during the three
months ended June 30, 1997.
10
<PAGE>
SIGNATURE
----------------
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, hereunto duly
authorized.
AMERICAN LOCKER GROUP
INCORPORATED
(Registrant)
/s/ Harold J. Ruttenberg
-----------------------------
Harold J. Ruttenberg
Chairman, Chief Executive Officer,
Treasurer and Principal Accounting
Officer
Date August 8, 1997
<PAGE>
EXHIBIT INDEX
Prior Filing Or
Sequential Page
Exhibit No. No. Herein
- ----------- ---------------
10.1 First Amendment dated May 20, 1997 to Agreement
dated as of May 21, 1996 between American Locker
Group Incorporated and Edward F. Ruttenberg
10.2 Fourth Amendment to Manufacturing Agreement
dated as of May 20, 1997 between American Locker
Security Systems, Inc. and Signore, Inc.
27.1 Financial Data Schedule
<PAGE>
EXHIBIT 10-1
FIRST AMENDMENT TO AGREEMENT
----------------------------------
This First Amendment made as of May 20, 1997, to Agreement dated May 21,
1996 between AMERICAN LOCKER GROUP INCORPORATED (the "Company") and EDWARD F.
RUTTENBERG ("Mr.
Ruttenberg")
WHEREAS, the Company and Mr. Ruttenberg are parties to an Agreement dated
May 21, 1996 (the "Agreement"); and
WHEREAS, the Company and Mr. Ruttenberg wish to make certain amendments to
the Agreement.
NOW, THEREFORE, for good and valuable consideration and intending to be
legally bound hereby, the Company and Mr. Ruttenberg agree as follows:
1. All defined terms used herein shall have the same definitions set
forth in the Agreement.
2. Section 1.5 is hereby amended and restated as follows:
"Term" shall mean the period from the date hereof through June30,
1998.
3. Except as expressly provided herein, the Agreement shall remain
unamended and in full force and effect.
WITNESS the due execution hereof.
AMERICAN LOCKER GROUP INCORPORATED
By /s/ HAROLD J. RUTTENBERG
-----------------------------
Title: Chairman, Chief Executive
Officer and Treasurer
/s/ Edward F. Ruttenberg
-----------------------------
Edward F. Ruttenberg
13
<PAGE>
EXHIBIT 10.2
FOURTH AMENDMENT TO MANUFACTURING AGREEMENT
-------------------------------------------------------
This Fourth Amendment made as of May 20, 1997, 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, as amended by the First Amendment to Manufacturing Agreement
dated as of May 3, 1995, as further amended by the Second Amendment to
Manufacturing Agreement dated as of March 15, 1996, and as further amended by
the Third Amendment to Manufacturing Agreement dated as of May 21, 1996 (such
Manufacturing Agreement, as so amended, 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. Buyer and Seller acknowledge that as of December 31, 1996, the
Remaining Inventory Value of Locker Inventory (as defined in Section
3(f) of the Amended Agreement) was $1,259,586. In accordance with
the provisions of Section 3(f) of the Amended Agreement, Buyer has
paid to Seller the sum of $18,984.31, receipt of which is
acknowledged by Seller.
Such $18,984.31 payment is calculated as follows:
Actual Inventory 12/31/96 $1,259,586.00
Remaining Inventory Value 1/1/96 1,240,601.69
-----------
Payment Due from Buyer to Seller $ 18,984.31
===========
3. Buyer and Seller agree that Locker Inventory determined on a
proforma basis as of December 31, 1996 as if all payments required
under Section 2 hereof had been made as of that date was $1,259,586.
(i.e. Remaining Locker Inventory as of January 1, 1996 of
$1,240,601.69 plus the $18,984.31 payment made by Buyer under
Section 2 hereof).
4. 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/ Alex N. Ditonto
------------------------
Title: Chairman and Chief Executive
Officer
AMERICAN LOCKER SECURITY SYSTEMS, INC.
By /s/ Harold J. Ruttenberg
-------------------------
Title: Chairman, Chief Executive
Officer and Treasurer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
American Locker Group Incorporated
Financial Data Schedule
June 30, 1997
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>
<CIK> 0000008855
<NAME> AMERICAN LOCKER GROUP INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<CASH> $ 291,726
<SECURITIES> 0
<RECEIVABLES> 4,206,506
<ALLOWANCES> 425,058
<INVENTORY> 3,254,729
<CURRENT-ASSETS> 8,440,718
<PP&E> 8,194,665
<DEPRECIATION> 7,054,308
<TOTAL-ASSETS> 9,581,075
<CURRENT-LIABILITIES> 2,662,357
<BONDS> 400,000
0
0
<COMMON> 795,392
<OTHER-SE> 5,274,426
<TOTAL-LIABILITY-AND-EQUITY> 9,581,075
<SALES> 13,006,573
<TOTAL-REVENUES> 13,096,316
<CGS> 9,054,907
<TOTAL-COSTS> 9,054,907
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,000
<INTEREST-EXPENSE> 60,787
<INCOME-PRETAX> 1,360,080
<INCOME-TAX> 582,301
<INCOME-CONTINUING> 777,779
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 777,779
<EPS-PRIMARY> .98
<EPS-DILUTED> .98
</TABLE>
