SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(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, 2000
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT FOR
THE TRANSITION PERIOD FROM TO
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Commission file number 0-439
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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
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(Address of principal executive offices)
(716)664-9600
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(Registrant's telephone number, including area code)
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(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
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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 27, 2000
Common Stock $1.00 par value - 2,259,200
1
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Part I - Financial Information
Item 1 - Financial Statements
American Locker Group Incorporated and Subsidiaries
Consolidated Balance Sheets
<S> <C> <C>
MARCH 31, December 31,
2000 1999
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 3,053,395 $ 3,285,983
Accounts and notes receivable, less allowance for
doubtful accounts (2000 $225,275; 1999 $222,000) 3,987,774 3,814,185
Inventories 5,165,427 4,973,269
Prepaid expenses 112,943 125,581
Deferred income taxes 481,163 481,163
----------- -----------
Total current assets 12,800,702 12,680,181
Property, plant and equipment:
Land 500 500
Buildings 391,337 390,953
Machinery and equipment 10,393,932 10,309,324
----------- -----------
10,785,769 10,700,777
Less allowances for depreciation and
amortization 8,488,308 8,290,534
----------- -----------
2,297,461 2,410,243
Deferred income taxes 88,645 88,645
----------- -----------
Total assets $15,186,808 $15,179,069
============ ===========
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2
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<TABLE>
<CAPTION>
American Locker Group Incorporated and Subsidiaries
Consolidated Balance Sheets
<S> <C> <C>
MARCH 31, December 31,
2000 1999
---- ----
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable 979,380 1,410,948
Commissions, salaries, wages and taxes thereon 143,305 311,172
Other accrued expenses 643,424 610,947
Federal, state and foreign income taxes thereon 70,389 49,432
Current portion of long-term debt 325,000 325,000
---------- ----------
Total current liabilities 2,161,498 2,707,499
Long-term obligations:
Long-term debt 1,658,323 1,708,324
Pension and other benefits 691,824 656,036
---------- ----------
2,350,147 2,364,360
Stockholders' equity:
Common stock, $1 par value:
Authorized shares --- 4,000,000
Issued shares --- 2,511,768 (2,289,218
outstanding) in 2000 and 2,498,768
(2,277,118 outstanding) in 1999 2,511,768 2,498,768
Other capital 566,267 538,455
Retained earnings 10,123,679 9,600,788
Treasury stock at cost (222,550 shares
in 2000 and 221,650 shares in 1999) (2,373,703) (2,367,966)
Accumulated other comprehensive income ( 152,848) ( 162,835)
---------- -----------
Total stockholders' equity 10,675,163 10,107,210
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Total liabilities and stockholders' equity $15,186,808 $15,179,069
============ ===========
See accompanying notes.
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American Locker Group Incorporated and Subsidiaries
Consolidated Statements of Income
<S> <C> <C>
THREE MONTHS ENDED MARCH 31,
2000 1999
---- ----
Net sales $ 7,859,150 $ 7,857,688
Cost of products sold 5,543,542 5,533,975
----------- -----------
2,315,608 2,323,713
Selling, administrative and general expenses 1,514,909 1,381,526
----------- -----------
800,699 942,187
Interest income 45,255 13,053
Other (expense) income--net 59,111 66,795
Interest expense ( 50,787) (26,122)
----------- -----------
Income before income taxes 854,278 995,913
Income taxes 331,387 404,111
----------- -----------
Net Income $ 522,891 $ 591,802
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Earnings per share of common stock:
Basic $ 0.23 $ 0.24
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Diluted 0.23 0.23
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Dividends per share of common stock: $ 0.00 $ 0.00
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See accompanying notes.
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<CAPTION>
American Locker Group Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
<S> <C> <C>
THREE MONTHS ENDED MARCH 31,
2000 1999
---- ----
OPERATING ACTIVITIES
Net income $ 522,891 $ 591,807
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 200,731 112,228
Gain on disposition of property, plant and equipment 0 (202)
Pension and other benefits 85,788 51,057
Change in assets and liabilities:
Accounts and notes receivable (173,589) 168,506
Inventories (192,158) 81,163
Prepaid expenses 12,638 41,818
Accounts payable and accrued expenses (616,958) (674,227)
Income taxes 47,957 (288,941)
----------- ---------
Net cash provided by operating activities (112,700) 83,209
INVESTING ACTIVITIES
Purchase of property, plant and equipment (87,949) (100,361)
----------- ---------
Net cash used in investing activities (87,949) (100,361)
FINANCING ACTIVITIES
Debt repayment (50,001) (50,010)
Common stock purchased for treasury ( 5,737) 0
Proceeds from common stock issued 13,812 54,625
----------- -----------
New cash used in financing activities (41,926) 4,615
Effect of exchange rate changes on cash 9,987 20,014
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Net increase (decrease) in cash (232,588) 7,477
Cash and cash equivalents at beginning of period 3,285,983 1,188,007
----------- -----------
Cash and cash equivalents at end of period $ 3,053,395 $ 1,195,484
=========== ===========
Supplemental cash flow information: Cash paid during the period for:
Interest $ 50,789 $ 21,881
=========== ============
Income Taxes $ 281,250 $ 758,000
=========== ============
See accompanying notes.
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5
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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 generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q.
Accordingly, the condensed financial statements do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
Company's management, all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation of such condensed
financial statements have been included. Operating results for the three
month period ended March 31, 2000 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2000.
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. Basic and diluted weighted average shares
outstanding were 2,280,097 (2,463,216 in 1999) and 2,302,240 (2,545,823 in
1999) respectively at March 31, 2000.
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.
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<CAPTION>
<S> <C> <C>
MARCH 31, December 31,
2000 1999
--------- ------------
Raw materials $2,236,826 $2,373,527
Work-in-process 1,623,800 1,856,704
Finished goods 1,925,652 1,363,889
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$5,786,278 $5,594,120
Less allowance to
reduce carrying
value to LIFO
basis 620,851 620,851
---------- ----------
$5,165,427 $4,973,269
========== ==========
</TABLE>
5. Total comprehensive income consisting of net income and foreign currency
translation adjustment was $532,878 and $611,821 for the three months ended
March 31, 2000 and March 31, 1999 respectively.
6
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Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations
American Locker Group Incorporated and Subsidiaries
FIRST THREE MONTHS 2000 VS FIRST THREE MONTHS 1999
First quarter 2000 sales were $7,859,000 virtually identical to sales of
$7,858,000 in the first quarter of 1999. Plastic locker sales to the United
States Postal Service (USPS) in the first quarter were $5,577,000 compared to
$5,402,000 during the same period in 1999. Cluster Box Units (CBUs) accounted
for $5,339,000 of this year's first quarter plastic locker sales versus
$5,008,000 the same period in 1999, an increase of $331,000 or 7%. The increase
in sales of CBUs relates to more units in total purchased by the USPS compared
to last year's first quarter and also to the Company's continued dominant market
share. Sales of Outdoor Parcel Lockers (OPLs) were $238,000 compared to $394,000
in the first quarter of 1999, a decline of $156,000 or 40%. This decline was
anticipated and previously disclosed as all three model CBUs have built-in
parcel compartments. Sales of metal, mechanical and electronic lockers were
$2,282,000 in the first quarter this year, a decrease of $174,000 or 7% over
last year's $2,456,000. Sales of the Company's other locker products decreased
due to a general decrease in demand across all markets served by the Company as
well as increased competition.
The Company's present contract with the USPS covers all three types of CBUs and
the Outdoor Parcel Locker (OPL). The contract was originally awarded March 27,
1996 and the USPS has exercised four one-year options which have extended the
contract to mid-April 2001. Under the latest extension, the Company lowered its
price on Type II CBUs by 8% and maintained its prices on the Type I and III
CBUs. The contract minimum quantity is one and is solely a legal minimum, not
indicative of USPS requirements. As previously disclosed, total CBU demand is
influenced by a number of factors over which the Company has no control,
including but not limited to: Postal budgets, policies, financial performance,
domestic new housing starts and commericial construction, and the weather as
these units are installed outdoors. Effective September 15, 1999, the USPS
announced it had discontinued the purchase of Neighborhood Delivery and
Collection Box Units (NDCBUs). The CBU is a modernization of the NDCBU which the
USPS had purchased for over 20 years and is an integral part of the USPS
delivery cost reduction program identified as Centralized Delivery. Therefore, a
positive impact to long-term CBU volume is anticipated as a result of
replacement of older NDCBUs. The Company believes 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.
The Company is addressing the decline in volume in its other locker products
through several initiatives. The Company has introduced a new plastic coin
operated locker designed for high corrosion environments. Initial shipments
commenced April 2000. In addition, the Company is reviewing and redesigning its
international distribution methods, in an effort to increase international sales
activity. The Company has increased its efforts to further penetrate the airport
luggage cart market through direct contact with most United States airports. In
large airports we are being added to the bidders list in preparation for
expiration of current contracts. The Company is also offering small airports
flexible options to utilize our equipment.
7
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Consolidated costs of products sold as a percentage of sales was 70.5% during
the first quarter of 2000 compared to 70.4% in the first quarter of 1999.
Selling, general and administrative costs for the first quarter of 2000 compared
to the same period in 1999 ($1,542,000 - 2000; $1,382,000 - 1999), increased
9.5%. The increase is $160,000 of which $133,000 relates primarily to additional
administrative and depreciation expense to support the Company's luggage cart
operation at Detroit Metro Airport. Selling, general and administrative costs
represented 19.3% of sales in the first quarter of 2000, up from 17.6% of sales
for the same period in 1999.
Interest income was $45,000 in the first quarter of 2000 compared to $13,000 in
the first quarter of 1999. The increase relates primarily to higher cash
balances and higher interest rates.
Interest expense of $51,000 in the first quarter of 2000 increased from $26,000
in the first quarter of 1999 due to an increase in the balance outstanding under
the Company's term loan agreements.
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 5.92
to 1 at March 31, 2000 and 4.68 to 1 at December 31, 1999, respectively. Working
capital, the excess of current assets over current liabilities, was $10,639,000
at March 31, 2000, an increase of $666,000 over $9,973,000 at December 31, 1999.
Cash used in operating activities was $113,000 during the first three months of
2000, compared to $83,000 provided by operating activities for the same period
of 1999.
The Company expects that cash generated from operations in 2000 will be adequate
to fund the needs for working capital, capital expenditures and debt payments.
However, if necessary, the Company has a $3,000,000 revolving bank
line-of-credit available to assist in satisfying future operating cash needs.
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.
8
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Part II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10 Material Contracts U.S. Postal Service Contract
Modification #M013 to #072368-96-B-0741, dated April 11, 2000.
(b) Exhibit 27.1 Financial Data Schedule dated March 31, 2000
(c) The Company did not file any reports on Form 8-K during the three
months ended March 31, 2000
9
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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/Edward F. Ruttenberg
------------------------------------
Edward F. Ruttenberg
Chairman and Chief Executive Officer
Date: May 4, 2000
10
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Exhibit 10
Material Contracts
PAGE OF PAGES
U.S. POSTAL SERVICE: CONTRACT/ORDERD MODIFICATION 1 1
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1. MODIFICATION NO.: M 013 CONTRACT/ORDER/AGREEMENT: 072368-96-B-0741
2. a. DATE ISSUED: 04/11/2000 b. PR NO.: 00-02070
c. FINANCE NO.: d. TIN/SSN: 16-1068506
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3. SUPPLIER: 4. ISSUED BY:
AMERICAN LOCKER SECURITY US POSTAL SERVICE
PURCHASING & MATERIALS SERVICE CTR
P O BOX 489 3300 S PARKER RD STE 400
JAMESTOWN NY 14702-0489 AURORA CO 80014-3500
ATTENTION: FOR INFORMATION CALL:
ROY GLOSSER Patricia D. Kain
(800) 828-9118 (303) 369-1248
[email protected]
ACO CODE: 072368
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5. The above numbered contract/order/agreement is modified as set forth in
Block 6, by supplemental agreement entered into pursuant to authority of mutual
agreement between supplier and Postal Service.
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6. DESCRIPTION OF MODIFICATION:
NATIONAL CONTRACT FOR CENTRAL DELIVERY EQUIPMENT
1. THIS CONTRACT IS EXTENDED FOR A ONE-YEAR TERM FROM 04/15/2000 THROUGH
04/14/2001.
2. THE FOLLOWING PRICING IS EFFECTIVE 04/15/2000:
CBU TYPE I: $854.00 REPLACEMENT PEDESTAL: $110.00
CBU TYPE II: $884.00 REPLACEMENT PEDESTAL: $150.00
CBU TYPE III: $916.00 REPLACEMENT PEDESTAL: $110.00
OPL: $244.00 REPLACEMENT PEDESTAL: $ 75.00
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.
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7. ACCOUNTS PAYABLE DATE X is not, is changed, see
---
Previsous Grand Total:
Value of Modification:
New Grand Total:
- --------------------------------------------------------------------------------
The supplier X is not is required to sign copy(ies) of this
---
and return an original and modification to the
issuing office (See Block 4).
- --------------------------------------------------------------------------------
8. SIGNATURES: SUPPLIER U.S. POSAL SERVICE
[signature not required] /s/ Patricia D. Kain 04/11/2000
- ------------------------- --------------- -------------------- -------------
Signature Date Signature Date
- -----------------------------------------
Name of Person Authorized to Sign Patricia D. Kain
------------------------------------
Contracting Officer
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Title
11
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NEW PRICING
CBU/OPL NATIONAL CONTRACTS
EFFECTIVE APRIL 15, 2000 THROUGH APRIL 14, 2001
AMERICAN LOCKER FLORENCE
--------------- --------
CBU TYPE I $854.00 $850.00
CBU TYPE II 884.00 882.00
CBU TYPE III 916.00 912.00
OPL $224.00 Not Offered
REPLACEMENT PEDESTALS
OPL PEDESTAL $ 75.00 Not Offered
NDCBU PEDESTAL Not Offered $80.00
CBU PEDESTAL
TYPE I $110.00 $101.00
TYPE II 150.00 131.00
TYPE II 110.00 101.00
CENTRAL DELIVERY EQUIPMENT NATIONAL PROGRAM CONTRACTS
- -----------------------------------------------------
Annamarie Gildea (202) 268-3558
Policy
Robert C. Hall ([email protected]) (202) 268-5723
Quality Issues
Supplier Development & Diversity
Michael Spears ([email protected]) (703) 280-7095
Engineering - direct questions/comments on
centralized delivery equipement, i.e., lock problems
Patricia D. Kain ([email protected]) (303) 369-1248
Contractual Issues Revised 4/11/00
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27.1
American Locker Group Incorporated
Financial Data Schedule
March 31, 2000
</LEGEND>
<CIK> 0000008855
<NAME> AMERICAN LOCKER GROUP INCORPORATED
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> DEC-31-1999
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1.0000
<CASH> 3,053,395
<SECURITIES> 0
<RECEIVABLES> 3,987,774
<ALLOWANCES> 225,275
<INVENTORY> 5,165,427
<CURRENT-ASSETS> 12,800,702
<PP&E> 10,785,769
<DEPRECIATION> 8,488,308
<TOTAL-ASSETS> 15,186,808
<CURRENT-LIABILITIES> 2,161,498
<BONDS> 1,658,323
0
0
<COMMON> 2,511,768
<OTHER-SE> 8,163,395
<TOTAL-LIABILITY-AND-EQUITY> 15,186,808
<SALES> 7,859,150
<TOTAL-REVENUES> 7,963,511
<CGS> 5,543,542
<TOTAL-COSTS> 5,543,542
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,787
<INCOME-PRETAX> 854,278
<INCOME-TAX> 331,387
<INCOME-CONTINUING> 522,891
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 522,891
<EPS-BASIC> .23
<EPS-DILUTED> .23
</TABLE>
