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 MARCH 31, 1998 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 of (IRS 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: April 20, 1998
Common Stock $1.00 par value - 604,693
Transitional Small Business Disclosure (check one) Yes / / No / X /
<PAGE>
Part I - Financial Information
Item 1 - Financial Statements
American Locker Group Incorporated and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
---- ----
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 964,693 $ 1,154,045
Accounts and notes receivable,
less allowance for doubtful accounts
(1998 $427,187; 1997 $423,733) 4,990,343 4,519,710
Inventories 4,324,754 3,636,528
Prepaid expenses 123,174 89,656
Prepaid federal, state and foreign
income taxes 32,515 32,515
Deferred income taxes 576,861 576,861
-------- ----------
Total current assets 11,012,340 10,009,315
Property, plant and equipment:
Land 500 500
Buildings 511,935 511,649
Machinery and equipment 8,031,669 8,004,338
---------- ---------
8,544,104 8,516,487
Less allowances for depreciation and
amortization 7,445,982 7,267,199
---------- ---------
1,098,122 1,249,288
Deferred income taxes 5,122 5,122
-------- ---------
Total assets $ 12,115,584 $ 11,263,725
=========== ==========
</TABLE>
<PAGE>
American Locker Group Incorporated and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
---- ----
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Demand note payable $ 0 $ 850,000
Accounts payable:
Trade 2,152,636 737,467
Related party 318,864 434,565
-------- -------
2,471,500 1,172,032
Commissions, salaries, wages
and taxes thereon 213,394 330,956
Other accrued expenses 171,301 435,232
Current portion of long-term debt 663,000 663,000
-------- ---------
Total current liabilities 3,519,195 3,451,220
Long-term obligations:
Long-term debt 2,265,250 2,431,000
Pension benefits 322,521 322,521
Postretirement benefits 139,839 139,839
-------- --------
2,727,610 2,893,360
Stockholders' equity:
Common stock, $1 par value:
Authorized shares -- 4,000,000
Issued and outstanding shares -- 604,695
in 1998 and 601,445 in 1997 604,695 601,445
Other capital 10,563 0
Retained earnings 5,396,676 4,466,780
Foreign currency translation adjustment (143,155) (149,080)
--------- ---------
Total stockholders' equity 5,868,779 4,919,145
---------- ---------
Total liabilities and stockholders' equity $ 12,115,584 $ 11,263,725
=========== ==========
</TABLE>
See accompanying notes.
<PAGE>
American Locker Group Incorporated and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1998 1997
---- ----
<S> <C> <C>
Net sales $ 9,789,657 $ 5,283,597
Cost of products sold 6,743,057 3,665,672
--------- ---------
3,046,600 1,617,925
Selling, administrative and
general expenses 1,492,741 1,200,640
1,553,859 417,285
Interest income 16,838 7,209
Other (expense) income--net 64,863 30,768
Interest expense (66,668) (30,533)
-------- --------
Income before income taxes 1,568,892 424,729
Income taxes 638,996 200,923
-------- -------
Net Income $ 929,896 $ 223,806
======== =======
Earnings per share of common stock:
Basic $ 1.54 $ .28
======== =======
Diluted 1.47 .27
======== =======
Dividends per share of common stock: $ 0.00 $ 0.00
======== =======
</TABLE>
See accompanying notes.
<PAGE>
American Locker Group Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 929,896 $ 223,806
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 170,560 148,596
Loss (gain) on disposition of property,
plant and equipment 0 998
Change in assets and liabilities:
Accounts and notes receivable (470,633) 763,607
Inventories (688,226) (453,413)
Prepaid expenses (33,518) 59,060
Accounts payable and accrued expenses 917,975 (216,968)
------- --------
Net cash provided by operating activities 826,054 525,686
INVESTING ACTIVITIES
Purchase of property, plant and equipment (19,394) (26,504)
Net cash used in investing activities (19,394) (26,504)
FINANCING ACTIVITIES
Net (repayment) borrowings under line of credit (850,000) (275,000)
Debt repayment (165,750) (150,000)
Common stock purchased and retired 0 (46,680)
Stock options exercised 13,813 0
New cash used in financing activities (1,001,937) (471,680)
Effect of exchange rate changes on cash 5,925 (8,420)
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Net increase (decrease) in cash (189,352) 19,082
Cash and cash equivalents at beginning of year 1,154,045 1,229,222
--------- ---------
Cash and cash equivalents at end of year $ 964,693 $ 1,248,304
========= =========
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 66,668 $ 30,533
====== ======
Income Taxes $ 325,092 $ 56,605
======= ======
</TABLE>
See accompanying notes.
<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 on a basic and diluted basis.
Diluted earnings per share includes the impact of the common stock
equivalents which would arise from the exercise of stock options during the
periods. Basic and diluted weighted average shares outstanding were 603,937
(798,415 in 1997) and 633,691 (817,778 in 1997) respectively at March 31,
1998.
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,
1998 1997
---- ----
<S> <C> <C>
Raw materials $1,716,984 $1,041,732
Work-in-process 1,488,297 1,559,037
Finished goods 1,953,290 1,869,576
--------- ---------
$5,158,571 $4,470,345
Less allowance to
reduce carrying
value to LIFO
basis 833,817 833,817
$4,324,754 $3,636,528
========== ==========
</TABLE>
<PAGE>
Item 2. Management 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, 1998 was $7,493,145, up
$935,050 over working capital of $6,558,095 at December 31, 1997. The ratio of
current assets to current liabilities was 3.13 to 1 at March 31, 1998, as
compared to a ratio of 2.90 to 1 at December 31, 1997. Cash provided by
operations was $826,054 during the first three months of 1998, compared to
$525,686 provided by operating activities for the same period in 1997. 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 1998 VS FIRST THREE MONTHS 1997
First quarter 1998 sales were $9,789,657 compared to $5,283,597 in the first
quarter of 1997. This was an increase of $4,506,060 or 85.3%. Plastic locker
sales to the United States Postal Service (USPS) in the first quarter were
$6,705,999 compared to $3,006,417 during the same period in 1997. Cluster Box
Units (CBU's) accounted for $6,133,693 of this year's first quarter plastic
locker sales versus $2,141,458 the same period in 1997. Sales of Outdoor Parcel
Lockers (OPL's) were $572,306 compared to $864,959 in the first quarter of 1997,
a decline of $292,653 or 33.8%. This decline was anticipated and previously
disclosed as all three model CBU's have parcel compartments built in. Sales of
metal, mechanical and electronic lockers were $3,083,658 in the first quarter
this year, an increase of $806,478 or 35.4% over last year's $2,277,180.
The growth in sales of CBU's, $3,992,235 or 186.4% over last year's first
quarter, is directly related to the implementation of USPS procurement policy
that limits purchase of NDCBU's (the steel predecessor to plastic or aluminum
CBU's) in relation to the new CBU's and the Company's ability to maintain its
dominant market share position. As previously reported, the USPS has extended
the Company's national contract through April 14, 1999. Terms of the contract
extension were finalized on April 14, 1998 and established prices and minimum
quantities for the period April 15, 1998 through October 15, 1998.
Under this contract extension, the Company extended lower prices on CBUs in
return for guaranteed minimum shipments of 15,000 CBU's. However, the USPS
stipulated that the minimum quantity, 15,000 CBU's, must be shipped by August 1,
1998. Therefore, second quarter CBU shipments will increase significantly
compared to first quarter shipments. After August 1, the USPS may purchase
additional CBU's at the prices established in the contract extension, however it
is not obligated beyond the 15,000 unit minimum scheduled for delivery prior to
August 1, 1998. The price concessions granted to the USPS will be partially
offset by price concessions obtained from our vendor base as well as gains in
efficiency due to the increased volume.
<PAGE>
The Company has been advised that the two CBU competitors, each with an aluminum
CBU, also received one-year contract extensions. The Company believes that its
CBU pricing is competitive and that its CBU product line continues to represent
the best value when all factors, including price, quality of design and
construction, long term durability and service are considered.
Consolidated costs of products sold as a percentage of sales was 68.9% during
the first quarter of 1998 compared to 69.4% in the first quarter of 1997.
Increased gross margins are directly related to increased sales volumes although
tempered by previous price concessions.
Selling, general and administrative costs for the first quarter of 1998 compared
to the same period in 1997 ($1,492,741 - 1998; $1,200,640 - 1997), increased
24.3%. Selling, general and administrative costs represented 15.2% of sales in
the first quarter of 1998, down from 22.7% of sales for the same period in 1997.
Interest income increased to $16,838 in the first quarter of 1998 compared to
$7,209 in the same period of 1997 due to higher balances available for overnight
investment and improvements in daily cash management procedures.
Interest expense of $66,668 in the first quarter of 1998 increased $36,135 from
1997 due to an increase in the average balance outstanding under the Company's
term loan agreements.
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.
<PAGE>
Part II
Item 1. Legal Proceedings
As previously reported, four female 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. On
March 25, 1998, the Court granted summary judgment in favor of the Company and
dismissed the claims of three of the four plaintiffs. The appeal period with
respect to the dismissals has not expired. The Company intends to vigorously
defend against the claims of the remaining plaintiff.
Item 5. Other Information
As previously reported, the Company has been advised that it no longer meets the
continued listing requirements of NASDAQ because the number of shares of common
stock of the Company held by non-affiliates is less than the required minimum
and because, at the time of notification by NASDAQ, fewer than two market makers
made a market in common stock of the Company. The Company has filed an appeal
with NASDAQ and has advised NASDAQ that it would consider undertaking a stock
dividend or stock split to cause the Company to meet NASDAQ' s requirements
regarding public float if NASDAQ provided a waiver period to accomplish such
split or dividend and a waiver period to locate one or more additional market
makers. Subsequent to the filing of this appeal, the Company has been advised
that an additional market maker is at this time making a market in the Company's
stock. The Company is awaiting notification from NASDAQ regarding this appeal
and it is expected that, assuming a favorable ruling is received from NASDAQ and
the Company obtains confirmation that the additional market maker intends to
continue to serve as a market maker, the Board of Directors of the Company will
consider the stock split or stock dividend at its next scheduled meeting on May
19, 1998.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10 Material Contracts U. S. Postal Service Contract
Modification #M07 to #072368-96-B-0741, dated April 14, 1998.
Exhibit 27 Financial Data Schedule dated March 31, 1998.
(b) The Company did not file any reports on Form 8-K during the
three months ended March 31, 1998.
<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: APRIL 22, 1998
<PAGE>
EXHIBIT INDEX
PRIOR FILING OR
SEQUENTIAL PAGE
EXHIBIT NO. NO. HEREIN
- ----------- ----------------
10 U. S. Postal Service Contract
Modification #M07 to #072368-9B-0741, dated
April 14, 1998
27 Financial Data Schedule
EXHIBIT 10
U. S. POSTAL SERVICE: CONTRACT/ORDER MODIFICATION
1. MODIFICATION NO.: M007 TO CONTRACT/ORDER NO.: 072368-96-
B-0741
2 a. DATE ISSUED: 04/13/98 b. REQUEST NO.: 98-02453
c. FINANCE NO: Varies SSN/TIN: 16-1068506 PARENT TIN: 16-0338330
3. CONTRACTOR: 4. ISSUED BY:
ROY GLOSSER U S POSTAL SERVICE
AMERICAN LOCKER SECURITY PURCHASING & MATERIALS SERVICE CENTER
PO BOX 489 3300 S PARKER RD SUITE 400
JAMESTOWN NY 14702-0489 AURORA CO 80014-3500
(800) 828-9118 FOR INFORMATION CALL:
Michele P. Schuemann
303/369-1228 Fax 303/369-1207
[email protected]
ACO CODE: 072368
The above number contract/order is modified as set forth in Block 6, by
supplement agreement entered into pursuant to authority of the Contracting
Officer. The contractor is required to sign and return one copy of this
modification to the Issuing Office.
6. DESCRIPTION OF MODIFICATION:
REFERENCE: NATIONAL CONTRACTS - CENTRAL DELIVERY EQUIPMENT
1. Extend contract for an additional 1-year term beginning 04/15/98 through
04/14/99.
2. Incorporate new pricing and minimum quantities as listed below:
PRICING IS EFFECTIVE FOR A 6-MONTH PERIOD ONLY:
CBU TYPE I $868.00
CBU TYPE II 899.00
CBU TYPE III 930.00
OPL $245.00
OPL REPLACEMENT PEDESTAL $ 75.00
BEGINNING WITH ORDERS RECEIVED ON APRIL 15, 1998, A MINIMUM QUANTITY OF
15,000 CBUs (COMBINATION OF ANY TYPE) WILL BE PURCHASED AND SHIPPED NO LATER
THAN AUGUST 1, 1998.
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 X is not, is changed, see
The supplier is not X is required to sign and return an original and 6
copy(ies) of this modification to the issuing Office (See Block 4).
8. SIGNATURES: SUPPLIER U.S. POSTAL SERVICE
/S/ ROY J. GLOSSER 4/14/98 /S/ ROY C. SANDUSKY 4/14/98
------------------------------- ---------------------------------
Signature Date Signature Date
ROY J. GLOSSER ROY C. SANDUSKY
------------------------------- ---------------------------------
Name of Person Authorized to Sign Title Contracting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
American Locker Group Incorporated
Financial Data Schedule
March 31, 1998
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 INCORPORATED
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> DEC-31-1997
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1.000
<CASH> 964,693
<SECURITIES> 0
<RECEIVABLES> 4,990,343
<ALLOWANCES> 427,187
<INVENTORY> 4,324,754
<CURRENT-ASSETS> 11,012,340
<PP&E> 8,544,104
<DEPRECIATION> 7,445,982
<TOTAL-ASSETS> 12,115,584
<CURRENT-LIABILITIES> 3,519,195
<BONDS> 2,265,250
0
0
<COMMON> 604,695
<OTHER-SE> 5,264,084
<TOTAL-LIABILITY-AND-EQUITY> 12,115,584
<SALES> 9,789,657
<TOTAL-REVENUES> 9,871,358
<CGS> 6,743,057
<TOTAL-COSTS> 6,743,057
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66,668
<INCOME-PRETAX> 1,568,892
<INCOME-TAX> 638,996
<INCOME-CONTINUING> 929,896
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 929,896
<EPS-PRIMARY> 1.54
<EPS-DILUTED> 1.47
</TABLE>
