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, 1996
[ ] 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.)
608 Allen Street, Jamestown, New York 14702-1000
- ------------------------------------------------------------------------------
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
<PAGE>
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.
[X]
State issuer's revenues for its most recent fiscal year. $22,517,589.
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 24, 1997: $5,524,853.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 796,501 shares common stock
($1.00 par value) as of March 24, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Stockholders'
Meeting to be held May 20, 1997, are incorporated by reference into Part III.
Transitional Small Business Disclosure Form (check one):
Yes X No
2
<PAGE>
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, 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
3
<PAGE>
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 129,000 of the units from
March 1989 through March 24, 1997. A Cluster Box Unit, i.e. (combination letter
box), is a plastic parcel 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 24, 1997, Cluster Box Units with aggregate invoice prices
in excess of $22,000,000 have been shipped pursuant to this contract and
subsequent contracts. 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.
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
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.
4
<PAGE>
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 134 individuals as of December 31, 1996, in
its businesses of whom 40 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 $44,634, $148,527, and
$75,473, in 1996, 1995 and 1994, 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 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.
5
<PAGE>
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.
During 1996, 1995 and 1994, one customer, the USPS, accounted for 61.8%,
61.2%, and 45.8% 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 82 Chairman of the Board, 1973
Chief Executive Officer,
and Treasurer
Roy J. Glosser 36 President and Chief 1996
Operating Officer
Messrs. H. J. Ruttenberg, has been employed in his positions for more
than five years, and Mr. Glosser assumed his position in May 1996. Prior to
that date, Mr. Glosser served as Vice President - Operations of the Company
since 1992 and 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.
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 Roy J. Glosser. Except as provided in such employment contract, 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.
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.
6
<PAGE>
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 37,000* Office space/
American Locker Company, Inc. Assembly and
and American Locker Security Warehouse
Systems, Inc.
Pittsburgh, PA Executive Office 1,000* Office space
Ellicottville, NY American Locker Security 12,800 Locks
Systems, Inc. - Lock Shop
Toronto, Canadian Locker Company, Ltd. 4,000* Coin-
Ontario operated
lockers and
locks
Toronto,
Ontario Canadian Locker Company, Ltd. 3,000* Warehouse
Elk Grove American Locker Security 9,900* Customer
Village, IL Systems, Inc. service and
lock repair
----------
TOTAL 67,700
==========
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 1997 through 2001.
7
<PAGE>
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
1996.
8
<PAGE>
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
1995 High Low Declared
---- ---- ---- --------
First Quarter $ 6 $5 $0.00
Second Quarter 9 8.25 0.00
Third Quarter 9.25 7.75 0.00
Fourth Quarter 13 8.50 0.00
--------
Total $0.00
Dividend
1996 High Low Declared
---- ---- ---- --------
First Quarter $13.50 $ 9.75 $0.00
Second Quarter 13.75 12.00 0.00
Third Quarter 15.75 10.75 0.00
Fourth Quarter 15.75 13.00 0.00
---------
Total $0.00
As of March 24, 1997, the Company had 1,527 security holders of record.
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.
9
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations - 1996 Compared to 1995
1996 was an excellent year for the Company both in terms of sales and net
income. Of the five most recent calendar years , 1996 was the second best in
terms of sales and income, with the 1995 year being the best year. In 1996,
consolidated sales of $22,517,589 decreased approximately 5% as compared to 1995
sales of $23,677,940 and the Company's net income decreased by 36%. Sales of the
Company's plastic lockers decreased from $13,362,573 in 1995 to $12,658,767 in
1996. Revenues from the Company's other, non-plastic locker products decreased
4.4% from $10,315,367 in 1995 to $9,858,822 in 1996.
Consolidated cost of sales as percentage of sales increased to 70.1% compared to
68.4% in 1995, providing a 1.7% decrease in gross margin. The slight decrease
relates to the lower volumes and increased depreciation expense resulting from
the Type One and Type Two CBU tooling.
The Company's present contract with the United States Postal Service ("USPS")
covering Outdoor Parcel Lockers ("OPL's") and all three types of Cluster Box
Units ("CBU's") (Type One, Type Two and Type Three) was awarded on March 27,
1996 for a period of one year expiring on April 14, 1997. Under the terms of
this contract the Company delivered approximately 6,800 CBU's and 12,400 OPL's
through December 31, 1996. The USPS has notified the Company of its intent to
renew this contract for a one year period expiring April 15, 1998. The Company
is authorized and prepared to ship all three types of CBU's. Pricing and
quantities under the contract renewal have not yet been finalized and are still
subject to negotiation.
Selling, administrative and general expenses of $4,989,497 during 1996 increased
2.6% from the $4,861,477 in 1995. The slight increase in selling, administrative
and general expenses is the result of increased bad debt expense, group health
insurance and was partially offset by lower compensation expense.
Interest income in 1996 decreased from 1995 due to a decrease on the balance of
notes receivable during 1996.
Other income of $248,605 in 1996 increased slightly from the $244,769
recorded in 1995.
Interest expense increased 25.6% in 1996 from the $166,289 recorded in 1995 due
to increases in the average borrowings outstanding during the year, resulting
from the $1,000,000 borrowing in March 1996 of long-term debt, and the average
borrowing rate experienced during 1996.
1995 Compared to 1994
In 1995, consolidated sales of $23,677,940 increased 50% over 1994 sales of
$15,766,423 and
10
<PAGE>
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 were sold to the 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 contract with the USPS regarding Type Three CBU's terminated 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 result 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 and OPL'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 and OPL's
during 1996 to reach the level where such price 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,
administrative 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.
11
<PAGE>
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.
12
<PAGE>
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 2.47
to 1 and 1.71 to 1 at the end of 1996 and 1995, respectively. Working capital,
or the excess of current assets over current liabilities, was $5,165,135 at
December 31, 1996 and $3,459,221 at December 31, 1995. The increase in working
capital resulted primarily from the business activity with the USPS in 1995 and
1996. The USPS accelerated payments to the Company during 1996 causing accounts
receivable to decrease $461,028 during 1996. In 1996, the Company's operations
generated $472,535 in cash from operating activities. Principally, operating
cash was utilized to fund the increase in inventory $564,015, to pay income
taxes, 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 1997.
In 1996, the Company continued to make principal payments on the term loan at
the rate of $50,000 per month and the outstanding balance of this loan is
$1,300,000 as of December 31, 1996. Also at December 31, 1996, the Company has
an outstanding balance of $1,125,000 under a $3,000,000 line-of-credit with its
principal bank.
The Company's policy is to maintain modern equipment and adequate capacity.
During 1996, 1995 and 1994, the Company expended $234,000, $1,232,600 an
$197,000, respectively, for capital additions. Capital expenditures in 1996 and
1995 were financed principally from operations. In addition, 1997 capital
expenditures are also expected to be financed from operations.
At December 31, 1995, a valuation reserve of $74,900 existed 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. During
1996, this reserve was no longer needed.
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. The Company will continue to
find ways to control the administrative overhead necessary to successfully run
the business. By controlling 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.
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
13
<PAGE>
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.
14
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
15
<PAGE>
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, 1996
and 1995, and the related statements of consolidated income, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 1996. These financial statements are the responsibility of the management of
the Company. 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, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Erie, Pennsylvania
February 26, 1997
16
<PAGE>
American Locker Group Incorporated and Subsidiaries
Statements of Consolidated Financial Position
December 31
1996 1995
---------------------------
Assets
Current assets:
Cash and cash equivalents $ 1,229,222 $ 1,080,487
Accounts and notes receivable, less allowance
for doubtful 3,363,277 3,823,118
accounts of $386,309 in 1996 and $275,712 in
1995
Inventories 3,339,668 2,775,615
Prepaid expenses 97,917 143,978
Prepaid federal, state and foreign income taxes 28,986 -
Deferred income taxes 619,096 536,319
---------------------------
Total current assets 8,678,166 8,359,517
Property, plant and equipment:
Land
500 500
Buildings 505,970 496,196
Machinery and equipment 7,617,871 7,581,513
---------------------------
8,124,341 8,078,209
Less allowances for depreciation and amortization 6,782,429 6,331,541
---------------------------
1,341,912 1,746,668
=============================
Total assets $10,020,078 $10,106,185
=============================
17
<PAGE>
American Locker Group Incorporated and Subsidiaries
Statements of Consolidated Financial Position (continued)
December 31
1996 1995
--------------------------
Liabilities and stockholders' equity
Current liabilities:
Demand note payable $ 1,125,000 $ 1,400,000
Accounts payable:
Trade 660,202 965,432
Related party 381,196 377,214
--------------------------
1,041,398 1,342,646
Commissions, salaries, wages and taxes thereon 298,671 348,549
Other accrued expenses 447,962 376,643
Federal, state and foreign income taxes payable - 832,458
Current portion of long-term debt 600,000 600,000
---------------------------
Total current liabilities 3,513,031 4,900,296
Deferred income taxes 44,580 83,609
Long-term obligations:
Long-term debt 700,000 300,000
Retirement benefits 271,690 232,584
Postretirement benefits 132,630 125,630
---------------------------
1,104,320 658,214
Stockholders' equity:
Common stock, $1 par value:
Authorized shares -- 4,000,000
Issued and outstanding shares -- 800,024
in 1996 and 818,625 in 1995 800,024 818,625
Other capital 1,027,527 1,258,805
Retained earnings 3,645,183 2,500,351
Foreign currency translation adjustment
(114,587) (113,715)
-----------------------------
Total stockholders' equity 5,358,147 4,464,066
=============================
Total liabilities and stockholders' equity $10,020,078 $10,106,185
=============================
See accompanying notes.
18
<PAGE>
American Locker Group Incorporated and Subsidiaries
Statements of Consolidated Income
Year ended December 31
1996 1995 1994
----------------------------------------
Net sales $22,517,589 $23,677,940 $15,766,423
Cost of products sold 15,791,95 16,207,181 10,971,085
----------------------------------------
6,725,633 7,470,759 4,795,338
Selling, administrative and general
expenses 4,989,497 4,861,477 4,594,679
----------------------------------------
1,736,136 2,609,282 200,659
Interest income 43,270 59,716 17,997
Other income - net 248,605 244,769 164,814
Interest expense (208,827) (166,289) (164,631)
----------------------------------------
Income before income taxes 1,819,184 2,747,478 218,839
Income taxes 674,352 956,909 74,600
----------------------------------------
Net income $ 1,144,832 $ 1,790,569 $ 144,239
========================================
Per share of common stock:
Net income $ 1.41 $ 2.12 $ 0.17
========================================
Dividends $ 0.00 $ 0.00 $ 0.00
========================================
See accompanying notes.
19
<PAGE>
American Locker Group Incorporated and Subsidiaries
Statements of Consolidated Stockholders' Equity
<TABLE>
<CAPTION>
Foreign
Currency Total
Common Other Retained Translation Stockholders'
Stock Capital Earnings Adjustment Equity
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1994 . $ 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 retired ............ (23,047) (83,110) -- -- (106,157)
---------------------------------------------------------------------------
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 retired ............ (40,251) (353,416) -- -- (313,165)
----------------------------------------------------------------------------
Balance at December 31, 1995 818,625 1,258,805 2,500,351 (113,715) 4,464,066
Net income ............... -- -- 1,144,832 -- 1,144,832
Foreign currency
translation ............ -- -- -- (872) (872)
Common stock purchased
and retired ........... (18,601) (231,278) -- -- (249,879)
----------------------------------------------------------------------------
Balance at December 31, 1996 $ 800,024 $ 1,027,527 $ 3,645,183 $ (114,587) $ 5,358,147
============================================================================
See accompanying notes.
</TABLE>
20
<PAGE>
American Locker Group Incorporated and Subsidiaries
Statements of Consolidated Cash Flows
Year ended December 31
1996 1995 1994
-------------------------- ----------
Operating activities
Net income $1,144,832 $1,790,569 $ 144,239
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 622,392 404,006 556,027
Gain on disposition of property,
plant and equipment (20,224) (27,346) (31,214)
Deferred income taxes (credits)
(124,245) 46,000 (36,100)
Retirement benefits
39,106 58,042 40,688
Postretirement benefits
7,000 9,120 6,065
Change in assets and liabilities:
Accounts and notes receivable 461,028 384,683 (1,697,432)
Inventories (564,015) (670,019) (346,440)
Prepaid expenses 46,090 43,541 (55,058)
Accounts payable and
accrued expenses (280,424) (138,984) 659,425
Income taxes (859,005) 811,101 126,568
-----------
Net cash provided by (used in)
operating activities 472,535 2,710,713 (633,232)
Investing activities
Purchase of property,
plant and equipment (234,621) (1,232,604) (197,028)
Proceeds from sale of property,
plant andequipment 43,104 32,675 41,317
-----------
Net cash (used in) provided
by investing activities (191,517) (1,199,929) (155,711)
Financing activities
Net (repayment) borrowings
under line of credit (275,000) 200,000 400,000
Additional borrowings 1,000,000 -- 1,850,000
Debt repayments (600,000) (600,000) (1,350,000)
Common stock purchased and (249,879) (353,416) (106,157)
retired
Stock options exercised -- -- 25,537
-----------
Net cash (used in) provided by
financing activities (124,879) (753,416) 819,380
Effect of exchange rate changes
on cash (7,404) 7,434 (32,377)
-----------
Net increase (decrease) in cash 148,735 764,802 (1,940)
Cash and cash equivalents at
beginning of year 1,080,487 315,685 317,625
-----------
Cash and cash equivalents at
end of year $ 1,229,222 $ 1,080,487 $ 315,685
===========
21
<PAGE>
Supplemental cash flow information:
Cash paid during the year for:
Interest $ 208,827 $ 160,60 $ 168,318
========================================
Income taxes paid $1,650,823 $ 59,684 53,968
========================================
See accompanying notes.
22
<PAGE>
American Locker Group Incorporated and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1996
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 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. Total shares
used in the calculations amount to 808,102 in 1996, 845,356 in 1995 and 862,017
in 1994.
23
<PAGE>
American Locker Group Incorporated and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1996
American Locker Group Incorporated and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1996
1. Summary of Significant Accounting Policies (continued)
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 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.
2. Inventories
December 31
1996 1995
---------------------------
---------------------------
Finished products $ 982,888 $ 1,240,253
Work-in-process 1,742,320 1,414,994
Raw materials 1,625,633 1,395,058
---------------------------
---------------------------
4,350,841 4,050,305
Less allowance to reduce carrying value to LIFO (1,011,173) (1,274,690)
basis
===========================
Net inventories $3,339,668 $2,775,615
===========================
In 1996, inventory quantities were reduced resulting in liquidations of LIFO
inventory quantities carried at lower costs in prior years. The effect of this
liquidation was to decrease cost of
24
<PAGE>
products sold and increase net income by approximately $69,000 and $43,700 ($.05
per share).
25
<PAGE>
3. Demand Note Payable and Long-Term Debt
December 31
1996 1995
---------------------------
---------------------------
Note payable to bank, unsecured, due
February 28, 1999, payable $50,000 per
month with interest at prime plus 1/4%
(8.50% at December 31, 1996) $1,300,000 $ 900,000
Less current portion 600,000 600,000
===========================
Long-term portion $ 700,000 $ 300,000
===========================
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.
Required principal payments on long-term obligations in each of the years
through final maturity are as follows: 1997 - $600,000, 1998 - $600,000, 1999 -
$100,000.
At December 31, 1996, the Company had outstanding $1,125,000 under a $3,000,000
unsecured line of credit agreement with a 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 8.3%, 8.8% and 6.7% in 1996, 1995
and 1994, respectively. On January 2, 1997, the Company made an $825,000 payment
on the line of credit.
Rent expense amounted to $351,222, $410,763 and $239,904 in 1996, 1995 and 1994,
respectively.
The Company leases several operating facilities and vehicles under noncancelable
operating leases. Future minimum lease payments consist of the following at
December 31, 1996:
1997 $ 277,062
1998 238,985
1999 240,518
2000 200,902
2001 168,096
==============
$ 1,125,563
==============
26
<PAGE>
4. Income Taxes
Differences between accounting rules and tax laws cause differences between the
bases of certain assets and liabilities for financial reporting purposes and tax
purposes. The tax effects of these differences, to the extent they are
temporary, are recorded as deferred tax assets and liabilities. At December 31,
1995, a valuation reserve existed 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. During 1996, the valuation reserve
was reversed. Significant components of the Company's deferred tax assets and
liabilities at December 31 are as follows:
1996 1995
------------------------
Deferred tax liabilities:
Property, plant and equipment $178,461 $127,952
Prepaid expenses 17,209 25,761
------------------------
Total deferred tax liabilities 195,670 153,713
Deferred tax assets:
Postretirement benefits 60,252 61,052
Pension costs 108,676 93,033
Allowance for doubtful accounts 152,190 109,168
Accrued expenses 52,658 10,253
Other employee benefits 39,951 39,670
Inventory costs 341,599 353,284
Other 14,860 14,863
------------------------
Total deferred tax assets 770,186 681,323
Valuation allowance for deferred tax assets - (74,900)
========================
Net deferred tax assets $ 574,516 $ 452,710
========================
Current deferred tax asset $ 619,096 $ 536,319
Long-term deferred tax (liability) (44,580) (83,609)
========================
$ 574,516 $ 452,710
========================
For financial reporting purposes, income before income taxes includes the
following components:
1996 1995 1994
------------------------------------
United States $1,802,858 $2,714,028 $195,836
Foreign 16,326 33,450 23,003
27
<PAGE>
====================================
$1,819,184 $2,747,478 $218,839
====================================
28
<PAGE>
4. Income Taxes (continued)
Significant components of the provision for income taxes are as follows:
1996 1995 1994
------------------------------------
Current:
Federal $670,960 $834,400 $ 79,000
State 118,437 117,900 19,700
Foreign 9,200 33,700 12,000
Prior year taxes - (75,091) -
------------------------------------
Total current 798,597 910,909 110,700
Deferred:
Federal (105,608) 55,900 (48,100)
State (18,637) (9,900) 12,000
------------------------------------
(124,245) 46,000 (36,100)
====================================
$674,352 $956,909 $ 74,600
====================================
The differences between the federal statutory rate and the effective tax rate as
a percentage of income before taxes are as follows:
1996 1995 1994
------------------------------------
Statutory income tax rate 35% 35% 35%
State and foreign income taxes 3 1 (1)
Tax credits - - (1)
Permanent differences principally
nontaxable income in 1996 and
in 1995, and nondeductible
expenditures in 1994 (1) (1) 3
Other - - (1)
--- --- ----
37% 35% 35%
=== === ===
29
<PAGE>
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. Effective January 1, 1995, the plans have been merged and are combined
for reporting purposes. 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 are as follows:
1996 1995 1994
------------------------------------
------------------------------------
Service cost-benefits earned during the $161,276 $193,514 $192,700
period
Interest cost on projected benefit 120,169 113,188 99,287
obligation
Return on plan assets (127,945) (155,711) (133,729)
Net amortization and deferral (114,394) (92,949) (117,570)
====================================
Net pension expense $ 39,106 $ 58,042 40,688
====================================
The average discount rate used in determining the actuarial value of the
projected benefit obligations was 7.25% in 1996 and 7.5% in 1995. The rates of
future years' compensation levels was 5.25% in 1996 and 5.5% in 1995. The
expected long-term rate of return on plan assets was 7.25% in 1996 and 7.5% in
1995.
30
<PAGE>
5. Pension Plans (continued)
The following table sets forth the funded status and amounts recognized in the
statements of consolidated financial position at December 1996 and 1995.
1996 1995
------------------------
Actuarial present value of benefit obligations:
Vested benefit obligation $1,544,146 $1,684,386
Non-vested benefit obligation 28,541 35,544
========================
Accumulated benefit obligation $1,572,687 $1,719,930
========================
Projected benefit obligation for service
rendered to date $1,764,414 $1,848,946
Plan assets at fair value 1,876,393 2,106,280
------------------------
Plan assets in excess of projected benefit
obligations 111,979 257,334
Unrecognized net loss 250,095 471,847
Unrecognized prior service cost 1,330 1,597
Unrecognized net transition asset (635,094) (963,362)
========================
Net liability recognized in the statement of
consolidated financial position $ (271,690) $ (232,584)
========================
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. The following table presents the plan's status reconciled with
amounts recognized in the Company's statement of financial position:
December 31
1996 1995
------------------------
Accumulated postretirement benefit obligation:
Retirees $ (59,941) $ (56,778)
Fully eligible active plan participants
(49,375) (46,770)
Other active plan participants
(17,114) (16,211)
------------------------
Accumulated postretirement benefit obligation (126,430) (119,759)
Unrecognized net gain (6,200) (5,871)
========================
Accrued postretirement benefit cost $(132,630) $(125,630)
========================
Net periodic postretirement benefit cost includes the following components:
December 31
1996 1995 1994
------------------------------------
Service cost $ 1,474 $ 1,882 $ 1,882
Interest cost 6,971 8,238 8,238
Net gain (1,445) - -
------------------------------------
Net periodic postretirement benefit cost $ 7,000 $10,120 $10,120
====================================
The weighted average discount rate used in determining the accumulated
postretirement benefit obligations was 7.25% at December 31, 1996 and 8% at
December 31, 1995.
32
<PAGE>
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, 1996, 1995 and 1994,
there were no stock appreciation rights outstanding under this plan. The Company
follows APB Opinion No. 25, "Accounting for Stock Issued to Employees" and
related Interpretations in accounting for its Stock Option Plan.
Statement of Financial Accounting Standard No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123") requires the use of option
valuation models to determine the fair value of employee stock options. The
Company's net income and earnings per share amounts as reported would not
have been significantly different if the provisions of SFAS No. 123 were used.
33
<PAGE>
7. Capital Stock and Stock Options (continued)
A summary of the Stock Incentive Plan stock options for the years ended December
31, 1996, 1995 and 1994 is as follows:
Number
of Shares
Under Option Price
------------------------------
Option Per Share Aggregate
------------------------------------------
Outstanding - January 1, 1994 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
Granted during the year - 0.00 -
Exercised during the year - 0.00 -
Cancellations - 0.00 -
----------- -----------
Outstanding - December 31, 1996 25,500 $2.875-$4.25 $ 82,249
============ ============
8. Related Party
One of the Company's subsidiaries has entered into a manufacturing agreement
with Signore, Inc. a former wholly-owned subsidiary of the Company, under which
Signore will furnish fabricating, assembly and shipping services. The Agreement,
which expires on 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 $3,489,499, $3,470,582 and $2,793,880
for the years ended December 31, 1996, 1995 and 1994, respectively.
Two Directors of the Company are stockholders and directors of Rollform of
Jamestown Inc., a rollforming company. One of the Company's subsidiaries
purchased $90,084, $98,571 and $5,833 of fabricated parts from Rollform of
Jamestown, Inc. in 1996, 1995 and 1994, respectively, at prices that the Company
believes are at arms length.
34
<PAGE>
9. Business Segment Data
The Company has operations in the United States and Canada. The geographic
distribution of sales, operating income and identifiable assets for 1996, 1995
and 1994 are as follows:
United
States Canada Eliminations Total
--------------------------------------------------
1996
- --------------------------
Revenues from unaffiliated
customers $20,830,473 $ 1,687,116 $ - $22,517,589
Transfers between
geographic areas 665,165 - 665,165 -
--------------------------------------------------
Total revenues $21,495,638 $ 1,687,116 $ 665,165 $22,517,589
==================================================
Operating income $ 1,698,760$ $ 37,376 - $ 1,736,136
==================================================
Identifiable assets $ 9,978,585 $ 931,258 $ 889,765 $10,020,078
==================================================
1995
- --------------------------
Revenues from unaffiliated
customers $22,112,011 $1,565,929 $ 485,377 $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 $ 934,20 $ 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
==================================================
35
<PAGE>
Identifiable assets $ 8,264,864$ 848,768$ 888,765 $ 8,224,867
==================================================
36
<PAGE>
9. Business Segment Data (continued)
In 1996, 1995 and 1994, the Company had export sales of $1,123,434, $1,730,087
and $2,009,086, respectively. In 1996, 1995 and 1994, export sales represented
approximately 5.0%, 7.3% and 12.7%, respectively of the Company's consolidated
net sales.
Sales to the U.S. Postal Service represented 61.8%, 61.2% and 45.8% of net sales
in 1996, 1995 and 1994, respectively.
At December 31, 1996 and 1995, the Company had secured receivables from
customers under time payment arrangements totaling $306,532 and $331,087,
respectively. At December 31, 1996, the Company had unsecured trade receivables
from customers considered to be distributors of $312,709 (including a United
Kingdom distributor of $129,932) and from governmental agencies of $1,610,504.
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.
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, 1996 and 1995:
1996
--------------------------------------------------
Three Months Ended
March 31 June 30 September 30 December 31
---------------------------------------------------
Net sales $4,946,120 $5,961,890 $5,955,670 $5,653,909
===================================================
Gross profit $1,447,412 $1,922,588 $1,781,680 $1,573,953
===================================================
Net income $ 192,612 $ 335,955 $ 364,735 $ 251,530
===================================================
Net income per share $ .24 $ .41 $ .45 $ .31
===================================================
37
<PAGE>
10. Quarterly Results of Operations (Unaudited) - (continued)
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 $2,377,764 $1,699,121 $1,910,998 $1,482,876
===================================================
Net (loss) income $ 666,765 $ 242,766 $ 406,332 $ 474,706
===================================================
Net (loss) income per share $ .78 $ .28 $ .48 $ .58
===================================================
The Company's accounting practice for interim periods provides for possible
inventory, insurance, pension and income tax adjustments. Such adjustments
resulted in increasing the 1996 fourth quarter pretax income by $103,791 for
inventory costs and $158,682 for income tax expense. A decrease in fourth
quarter pretax income in the amount of $48,141 was due to adjustments in pension
costs and receivable reserves. In 1995 fourth quarter adjustments relating to
insurance, pensions costs and income tax expense increased income by $229,000
while inventory costs decreased fourth quarter pretax income by $209,000.
11. Contingencies
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 diminimus, however, it is too early to
predict the ultimate outcome of these matters.
38
<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 1996 or 1995.
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.
39
<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 27, 1997
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 27, 1997
- ------------------------
Harold J. Ruttenberg Executive Officer,
Treasurer, Principal
Accounting Officer
and Director
/s/ Roy J. Glosser President, Chief March 27, 1997
- ------------------
Roy J. Glosser Operating Officer
and Director
/s/ Thomas Phillips Johnson Director March 27, 1997
- ---------------------------
Thomas Phillips Johnson
/s/ Alan H. Finegold Director March 27, 1997
- --------------------
Alan H. Finegold
/s/ Thomas Lynch, IV Director March 27, 1997
- --------------------
Thomas Lynch, IV
/s/ James E. Ruttenberg Director March 27, 1997
- -----------------------
James E. Ruttenberg
/s/ Edward F. Ruttenberg Director March 27, 1997
- ------------------------
Edward F. Ruttenberg
40
<PAGE>
EXHIBIT INDEX
Prior Filing or
Sequential Page
Exhibit No. No. Herein
- ----------- ---------------------
3.1 Certificate of Incorporation of Exhibits to Form 10-K
American Locker Group Incorporated for Year ended
December 31, 1980
3.2 Amendment to Certificate of Form 10-C filed May 6,
Incorporation changing name of 1985
company
3.3 Amendment to Certificate of Exhibit to Form 10-K for
Incorporation limiting liability year ended December 31,
of Directors and Officers 1987
3.4 By-laws of American Locker Group Exhibit to Form 10-K for
Incorporated as amended and year ended December 31,
restated 1985
3.5 Amendment to By-laws of American Exhibit to Form 10-K for
Locker Group Incorporated dated year ended December 31,
January 15, 1992 1991
10.1 American Locker Group Exhibit to Form 10-K for
Incorporated 1988 Stock Incentive year ended December 31,
Plan 1988
10.2 First Amendment dated March 28, Exhibit to Form 10-K for
1990 to American Locker Group year ended December 31,
Incorporated 1988 Stock 1989
Incentive Plan
10.3 Form of Indemnification Agreement Exhibit to Form 10-K for
between American Locker Group year ended December 31,
Incorporated and its directors 1987
and officers
10.4 Corporate Term Loan Agreement Exhibit to Form 10-K for
between American Locker Group year ended December 31,
Incorporated and Manufacturers 1991
and Traders Trust Company
covering $2,400,000 loan
10.5 Approved Line of Credit from Exhibit to Form 10-K for
Manufacturers and Traders Trust year ended December 31,
Company to American Locker Group 1990
Incorporated in the amount of
$1,000,000
10.6 Amendment Agreement dated May 1, Exhibit to Form 10-KSB
1994 between Manufacturing and for year ended
Traders Trust Company and December 31, 1994
American Locker Group
Incorporated [Increase in Term
Loan to $1,850,000]
10.7 Amendment Agreement dated Exhibit to Form 10-KSB
March 12, 1996 between for year ended
Manufacturing and Traders Trust December 31, 1995
Company and American Locker Group
Incorporated [Increase in Term
Loan to $1,800,000]
10.8 Employment Agreement between Exhibit to Form 10-GSB
American Locker Group for quarter ended June
Incorporated and Roy J. Glosser 30, 1996
10.9 Manufacturing Agreement dated as Exhibit to Form 8-K
of December 29, 1989 between dated January 11, 1990
American Locker Security Systems
Inc. and Signore, Inc.
10.10 First Amendment dated May 3, 1995 Exhibit to Form 10-KSB
to Manufacturing Agreement dated for year ended December
as of December 29, 1989 between 31, 1995
American Locker Security Systems
Inc. and Signore Inc.
10.11 Second Amendment dated March 15, Exhibit to Form 10-KSB
1996 to Manufacturing Agreement for the year ended
dated as of December 29, 1989 December 31, 1995
between American Locker Security
Systems Inc. and Signore Inc.
10.12 Third Amendment dated May 21, Exhibit to Form 10-QSB
1996 to Manufacturing Agreement for the quarter ended
dated as of December 29, 1989 June 30, 1996
between American Locker Security
Systems Inc. and Signore Inc.
10.13 Agreement dated as of May 21, Exhibit to Form 10-QSB
1996 between American Locker for the quarter ended
Group Incorporated and Edward F. June 30, 1996
Ruttenberg
10.14 Contract dated March 27, 1996 Exhibit to Form 10-QSB
between the U.S. Postal Service for the quarter ended
and American Locker Security March 31, 1996
Systems, Inc.
22.1 List of Subsidiaries Page ________
27.1 Financial Data Schedule Page ________
<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
NAME Jurisdiction of Voting Securities
Organization Owned
American Locker Security Systems, Delaware 100%
Inc.
American Locker Company, Inc. Delaware 100%
American Locker Company of Canada, Dominion of Canada 100% (1)
0Ltd.
Canadian Locker Company, Ltd. Dominion of Canada 100% (2)
American Locker Security Systems Virgin Islands 100% (1)
International
(1) Owned by American Locker Security Systems, Inc.
(2) Owned by American Locker Company of Canada, Ltd.
<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>
<CIK> 0000008855
<NAME> AMERICAN LOCKER GROUP INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1.000
<CASH> $1,229,222
<SECURITIES> 0
<RECEIVABLES> 3,363,277
<ALLOWANCES> 386,309
<INVENTORY> 3,339,668
<CURRENT-ASSETS> 8,678,166
<PP&E> 8,124,341
<DEPRECIATION> 6,782,429
<TOTAL-ASSETS> 10,020,078
<CURRENT-LIABILITIES> 3,513,031
<BONDS> 700,000
0
0
<COMMON> 800,024
<OTHER-SE> 4,558,123
<TOTAL-LIABILITY-AND-EQUITY> 10,020,078
<SALES> 22,517,589
<TOTAL-REVENUES> 22,809,464
<CGS> 15,791,956
<TOTAL-COSTS> 15,791,956
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 208,827
<INCOME-PRETAX> 1,819,184
<INCOME-TAX> 674,352
<INCOME-CONTINUING> 1,144,832
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,144,832
<EPS-PRIMARY> 1.41
<EPS-DILUTED> 1.41
</TABLE>
