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 JUNE 30, 2000
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 business issuer as specified in its charter)
DELAWARE 16-0338330
------------------------------ ------------------------------------
(State of other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
608 ALLEN STREET, JAMESTOWN, NY
--------------------------------------------------------------------------------
(Address of principal executive offices)
(716) 664-9600
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements.
Yes X No
---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No Not Applicable
---- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's class of common
stock equity as of the latest practicable date: August 3, 2000.
Common Stock $1.00 par value - 2,248,872
---------
Transitional Small Business Disclosure (check one) Yes No X
--- ---
- 1 -
<PAGE>
PART I - Financial Information
Item 1 - Financial Statements
<TABLE>
<CAPTION>
American Locker Group Incorporated and Subsidiaries
Consolidated Balance Sheets
<S> <C> <C>
JUNE 30, December 31,
2000 1999
---------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 4,045,502 $ 3,285,983
Accounts and notes receivable,
less allowance for doubtful
accounts (2000 $223,346; 1999
$221,723) 4,893,262 3,814,185
Inventories 5,041,618 4,973,269
Prepaid expenses 59,364 125,581
Deferred income taxes 481,163 481,163
---------------------------------------
Total current assets 14,520,909 12,680,181
Property, plant and equipment:
Land 500 500
Buildings 390,347 390,953
Machinery and equipment 10,445,423 10,309,324
---------------------------------------
10,836,270 10,700,777
Less allowances for depreciation
an amortization 8,668,109 8,290,534
---------------------------------------
2,168,161 2,410,243
Deferred Income taxes 88,645 88,645
---------------------------------------
Total assets $16,777,715 $15,179,069
=======================================
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
<S> <C> <C>
JUNE 30, December 31,
2000 1999
---------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,556,036 $ 1,410,948
Commissions, salaries, wages and
taxes thereon 190,517 311,172
Other accrued expenses 656,710 610,947
Federal, state and foreign income
taxes 276,811 49,432
Current portion of long-term debt 325,000 325,000
---------------------------------------
Total current liabilities 3,005,074 2,707,499
Long-term oblications:
Long-term debt 1,608,322 1,708,324
Pension and other benefits 928,746 656,036
---------------------------------------
2,537,068 2,364,360
Stockholders' equity:
Common stock, $1 par value:
Authorized shares --- 4,000,000
Issued shares --- 2,511,582
(2,250,872 outstanding) in 2000
and 2,498,768 (2,287,468) outstanding)
in 1999 2,511,582 2,498,768
Other capital 565,235 538,455
Retained earnings 11,007,709 9,600,788
Treasury stock at cost (260,710
shares in 2000 and 221,300 shares
in 1999) (2,672,203) (2,367,966)
Accumulated other comprehensive income (176,750) (162,835)
---------------------------------------
Total stockholders' equity 11,235,573 10,107,210
---------------------------------------
Total liabilities and stockholders'
Equity $16,777,715 $15,179,069
=======================================
See accompanying notes.
</TABLE>
- 3 -
<PAGE>
<TABLE>
<CAPTION>
American Locker Group Incorporated and Subsidiaries
Consolidated Statements of Income
<S> <C> <C>
SIX MONTHS ENDED JUNE 30,
2000 1999
---------------------------------------
Net sales $18,495,063 $17,886,811
Cost of products sold 13,066,026 12,672,550
---------------------------------------
5,429,037 5,214,261
Selling, administrative and general
expenses 3,226,199 2,825,737
---------------------------------------
2,202,838 2,388,524
Interest income 96,021 29,341
Other income--net 124,673 128,452
Internet expense (107,251) (36,632)
---------------------------------------
Income before income taxes 2,316,281 2,509,685
Income taxes 909,360 1,006,332
---------------------------------------
Net Income $ 1,406,921 $1,503,353
=======================================
Earnings per share of common stock:
Basic $0.62 $0.61
=======================================
Diluted $0.62 $0.60
=======================================
Dividends per share of common stock: $0.00 $0.00
=======================================
See accompanying notes.
</TABLE>
- 4 -
<PAGE>
<TABLE>
<CAPTION>
American Locker Group Incorporated and Subsidiaries
Consolidated Statements of Income
<S> <C> <C>
THREE MONTHS ENDED JUNE 30,
2000 1999
---------------------------------------
Net sales $10,635,913 $10,029,123
Cost of products sold 7,522,484 7,138,575
---------------------------------------
3,113,429 2,890,548
Selling, administrative and general
expenses 1,711,290 1,444,211
---------------------------------------
1,402,139 1,446,337
Interest income 50,766 16,288
Other income--net 65,562 61,652
Internet expense (56,464) (10,510)
---------------------------------------
Income before income taxes 1,462,003 1,513,767
Income taxes 577,973 602,221
---------------------------------------
Net Income $ 884,030 $ 911,546
========================================
Earnings per share of common stock:
Basic $0.39 $0.37
=======================================
Diluted $0.39 $0.37
=======================================
Dividends per share of common stock: $0.00 $0.00
=======================================
See accompanying notes.
</TABLE>
- 5 -
<PAGE>
<TABLE>
<CAPTION>
American Locker Group Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
<S> <C> <C>
SIX MONTHS ENDED JUNE 30,
2000 1999
---------------------------------------
OPERATING ACTIVITIES
Net income $ 1,406,921 $ 1,503,353
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 377,575 253,666
Change in assets and liabilities:
Accounts and notes receivable (1,079,077) (985,495)
Inventories (68,349) 602,040
Prepaid expenses 66,217 1,749
Pension and other benefits 272,710 38,556
Accounts payable and accrued
expenses 70,196 431,866
Prepaid income taxes 254,379 261,893
---------------------------------------
Net cash provided by operating
activities 1,300,572 2,107,628
INVESTING ACTIVITIES
Purchase of property, plant and equipment (135,493) (892,164)
---------------------------------------
Net cash used in investing activities (135,493) (892,164)
FINANCING ACTIVITIES
Debt repayment (100,002) (100,007)
Additional long term borrowings 0 1,500,000
Common stock purchased for treasury (304,237) (2,288,531)
Common stock purchased and retired (1,218) (41)
Proceeds from common stock issued 13,812 54,625
---------------------------------------
New cash used in financing activities (391,645) (833,954)
Effect of exchange rate changes on cash (13,915) 36,145
---------------------------------------
Net increase (decrease) in cash 759,519 417,655
Cash and cash equivalents at beginning
of period 3,285,983 1,188,007
---------------------------------------
Cash and cash equivalents at end of
period $ 4,045,502 $ 1,605,662
=======================================
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 107,251 $ 36,632
=======================================
Income Taxes $ 624,250 $ 801,424
=======================================
See accompanying notes.
</TABLE>
- 6 -
<PAGE>
Notes to Consolidated Financial Statements
American Locker Group Incorporated and Subsidiaries
1. The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with 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 six
month period ended June 30, 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 2,269,624 (2,449,184 in 1999) and 2,288,695 (2,503,856 in
1999) respectively for the six month period ending June 30, 2000.
Additionally, the company purchased and retired 186 shares of common stock
for $1,218.00 during the second quarter of 2000.
During the quarter ended June 30, 2000, the Company paid $298,500 to
purchase 38,160 shares of common stock. These shares are recorded as
treasury stock at June 30, 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.
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, December 31,
2000 1999
-------- ------------
Raw materials $2,386,137 $2,373,527
Work-in-process 1,869,468 1,856,704
Finished goods 1,406,864 1,363,889
---------- ----------
$5,662,469 $5,594,120
Less allowance to
reduce carrying
value to LIFO
basis (620,851) (620,851)
---------- -----------
$5,041,618 $4,973,269
========== ===========
5. Total comprehensive income consisting of net income and foreign currency
translation adjustment was $1,420,836 and $1,539,498 for the six months
ended June 30, 2000 and June 30, 1999 respectively.
</TABLE>
- 7 -
<PAGE>
Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations
American Locker Group Incorporated and Subsidiaries
FIRST SIX MONTHS 2000 VS FIRST SIX MONTHS 1999
Sales for the first six months of 2000 of $18,495,000 were up $608,000 or 3%
compared to sales of $17,887,000 during the same period in 1999. Plastic locker
sales to the United States Postal Service (USPS) totaled $12,963,000 in 2000
compared to $12,671,000 during the first half of 1999. Cluster Box Units (CBUs)
sales were $12,286,000 in 2000 compared to $12,015,000 during the first half of
1999. The increase in sales of CBUs relates to more units in total purchased by
the USPS compared to last year's first six months and also to the Company's
continued dominant market share. Sales of Outdoor Parcel Lockers (OPLs) were
$677,000 in 2000 compared to $656,000 in 1999. Sales of metal, mechanical and
electronic lockers, which includes the Company's luggage cart business, were
$5,532,000 for the first six months of 2000 compared to $5,216,000 for the first
six months of 1999. This increase of $316,000 or 6% relates to price increases,
new product introductions, and increased penetration in the luggage cart market.
The Company's present contract with the USPS covers all three types of CBUs and
the 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 Type 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 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 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 introduced a plastic coin-operated locker which is designed for high
corrosion environments and commenced shipments in April, 2000. Shipments of this
locker were significant in the second quarter. Revenues for the Company's
luggage cart business continued to grow during the second quarter of 2000 and
the Company continues its direct marketing effort.
Cost of products sold as a percentage of sales was 70.6% during the first six
months of 2000 compared to 70.8% in the first six months of 1999. Increased
gross margins are directly related to increased sales volumes, resulting in
certain fixed costs being allocated to increased sales and to favorable product
mix.
Selling, general and administrative costs for the first six months of 2000
increased $400,000 over the same period in 1999. The increase relates to
additional administrative and depreciation expense to support the Company's
luggage cart operation and Detroit Metro Airport and to increased pension
- 8 -
<PAGE>
expense. Selling, general and administrative expense as a percent of sales was
17.4% compared to 15.8% during the first six months of 1999.
Interest expense in the first half of 2000 was $107,000 compared to $37,000 in
the same period in 1999. This increase is due to higher average outstanding debt
and interest rates during 2000 versus 1999.
SECOND QUARTER 2000 VS SECOND QUARTER 1999
Second quarter sales were $10,636,000 up $607,000 or 6% from the same period in
1999. Plastic locker sales of $7,386,000 were up $117,000 or 2% over 1999's
second quarter. Sales of metal, mechanical and electronic lockers were
$3,250,000 during the second quarter of 2000, $490,000 or 18% higher than 1999.
Cost of products sold as a percentage of sales was 70.7% during the second
quarter of 2000, down from 71.2% during the second quarter of 1999.
Selling, administrative and general expenses as a percent of net sales was 16.1%
during the second quarter of 2000 compared to 14.4% in the second quarter of
1999.
Interest expense in the second quarter of $56,000 increased from $11,000 in the
second quarter of 1999 due to higher average outstanding debt and higher
interest rates in 2000 versus 1999.
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 was
4.83 to 1 at June 30, 2000 and 4.68 to 1 at December 31, 1999, respectively.
Working capital, the excess of current assets over current liabilities, was
$11,516,000 at June 30, 2000, an increase of $1,543,000 over $9,973,000 at
December 31, 1999. Cash provided by operating activities was $1,301,000 during
the first six months of 2000, compared to $2,108,000 provided by operating
activities for the same period in 1999. 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. 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,
- 9 -
<PAGE>
and (iii) other risks and uncertainties indicated from time to time in the
Company's filings with the Securities and Exchange Commission.
Part II
Item 1. Legal Matters
In September 1998 and subsequent months, the Company was named as an additional
defendant in 83 cases pending in state court in Massachusetts. The plaintiffs in
each such case assert that the Company manufactured and furnished to various
shipyards components containing asbestos during the period from 1948 to 1972 and
that injuries resulted from exposure to such products. The assets of this
division were sold by the Company in 1973. Based upon investigations conducted
by the Company to date, the Company has discovered no evidence that the former
division manufactured or supplied any products containing asbestos. Therefore,
barring the discovery of contrary evidence, the Company does not anticipate that
these actions will have any substantial impact on the Company's operations or
financial condition. Defense of these cases has been assumed by the Company's
insurance carrier, subject to a customary reservation of rights.
In December 1998, the Company was named as a defendant in a lawsuit titled
"ROBERTA RAIPORT, ET AL. V. GOWANDA ELECTRONICS CORP. AND AMERICAN LOCKER GROUP,
INC." pending in the State of New York Supreme Court, County of Cattaragus. The
suit involves property located in Gowanda, New York which was sold by the
Company to Gowanda Electronics Corp. prior to 1980. The plaintiffs, current or
former property owners in Gowanda, New York, assert that defendants each
operated machine shops at the site during their respective periods of ownership
and that as a result of such operation soil and groundwater contamination
occurred which has adversely affected the plaintiffs and the value of
plaintiffs' properties. The plaintiffs assert a number of causes of action and
seek compensatory damages of $5,000,000 related to alleged diminution of
property values, $3,000,000 for economic losses and "disruption to plaintiffs'
lives," $10,000,000 for "nuisance, inconveniences and disruption to plaintiffs'
lives," $25,000,000 in punitive damages, and $15,000,000 to establish a "trust
account" for monitoring indoor air quality and other remedies." The Company
believes that its potential liability with respect to this site, if any, is de
minimis. Therefore, based on the information currently available, management
does not believe the outcome of this suit will have a substantial impact on the
Company's operations or financial condition. Defense of this case has been
assumed by the Company's insurance carrier, subject to a customary reservation
of rights.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.1 Seventh Amendment dated July 24, 2000 to
Manufacturing Agreement dated December 29, 1989 between American
Locker Security Systems, Inc. and Signore, Inc.
(b) Exhibit 27.1 Financial Data Schedule dated June 30, 2000.
(c) The Company did not file any reports on Form 8-K during the three
months ended June 30, 2000.
- 10 -
<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/Edward F. Ruttenberg
------------------------------------
Edward F. Ruttenberg
Chairman and Chief Executive Officer
Date: August 7, 2000
---------------
- 11 -
<PAGE>
EXHIBIT INDEX
Prior Filing or
Sequential Page
EXHIBIT NO. EXHIBIT INDEX No. Herein
----------- ------------- --------------
10.1 Seventh Amendment dated as of July 24,2000
to Manufacturing Agreement as of December 29,
1989 between American Locker Security
Systems, Inc. and Signore, Inc.
27.1 Financial Data Schedule dated June 30, 2000
- 12 -
