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 SEPTEMBER 30, 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
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(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 14701
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(Address of principal executive offices)
(716) 664-9600
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(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
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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: October 31, 2000.
Common Stock $1.00 par value - 2,072,860
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Transitional Small Business Disclosure (check one) Yes No X
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1
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Part I - Financial Information
Item 1 - Financial Statements
American Locker Group Incorporated and Subsidiaries
Consolidated Balance Sheets
Part I - Financial Information
Item 1 - Financial Statements
American Locker Group Incorporated and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 30, December 31,
2000 1999
------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,368,437 $ 3,285,983
Accounts and notes receivable, less allowance for
doubtful accounts (2000 $219,604;
1999 $221,723) 4,601,089 3,814,185
Inventories 5,151,648 4,973,269
Prepaid expenses 53,177 125,581
Deferred income taxes 481,163 481,163
-----------------------------
Total current assets 12,655,514 12,680,181
Property, plant and equipment:
Land 500 500
Buildings 389,908 390,953
Machinery and equipment 10,496,208 10,309,324
-----------------------------
10,886,616 10,700,777
Less allowances for depreciation and
amortization 8,851,073 8,290,534
-----------------------------
2,035,543 2,410,243
Deferred income taxes 88,645 88,645
-----------------------------
Total assets $14,779,702 $15,179,069
=============================
</TABLE>
2
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
<S> <C> <C>
September 30, December 31,
2000 1999
------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,070,023 $ 1,410,948
Commissions, salaries, wages and taxes thereon 135,710 311,172
Other accrued expenses 739,776 610,947
Federal, state and foreign income taxes thereon 18,124 49,432
Current portion of long-term debt 325,000 325,000
-----------------------------
Total current liabilities 2,288,633 2,707,499
Long-term obligations:
Long-term debt 58,321 1,708,324
Pension and other benefits 720,863 656,036
-----------------------------
779,184 2,364,360
Stockholders' equity:
Common stock, $1 par value:
Authorized shares --- 4,000,000
Issued shares --- 2,511,870 (2,243,160
outstanding) in 2000 and 2,498,768
(2,277,118 outstanding) in 1999 2,511,870 2,498,768
Other capital 566,931 538,455
Retained earnings 11,541,357 9,600,788
Treasury stock at cost (268,710 shares
in 2000 and 221,650 shares in 1999) (2,720,953) (2,367,966)
Accumulated other comprehensive income (187,320) (162,835)
-----------------------------
Total stockholders' equity 11,711,885 10,107,210
-----------------------------
Total liabilities and stockholders' equity $14,779,702 $15,179,069
=============================
</TABLE>
SEE ACCOMPANYING NOTES.
3
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American Locker Group Incorporated and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
<S> <C>
Nine Months Ended September 30,
2000 1999
-------------------------------
Net sales $26,908,239 $25,648,174
Cost of products sold 19,027,225 18,106,204
-------------------------------
7,881,014 7,541,970
Selling, administrative and general expenses 4,869,352 4,273,570
-------------------------------
3,011,662 3,268,400
Interest income 142,442 57,290
Other income--net 174,097 195,374
Interest expense (126,112) (89,590)
--------------------------------
Income before income taxes 3,202,089 3,431,474
Income taxes 1,261,520 1,425,962
---------------------------------
Net Income $ 1,940,569 $2,005,512
=================================
Earnings per share of common stock:
Basic $0.86 $0.84
=================================
Diluted $0.85 $0.82
=================================
Dividends per share of common stock: $0.00 $0.00
=================================
</TABLE>
SEE ACCOMPNAYING NOTES.
4
<PAGE>
American Locker Group Incorporated and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
<S> <C>
Three Months Ended September 30,
2000 1999
---------------------------------
Net sales $8,413,176 $7,761,363
Cost of products sold 5,961,199 5,433,654
---------------------------------
2,451,977 2,327,709
Selling, administrative and general expenses 1,643,153 1,447,833
---------------------------------
808,824 879,876
Interest income 46,421 27,949
Other income--net 49,424 66,917
Interest expense (18,861) (52,958)
---------------------------------
Income before income taxes 885,808 921,784
Income taxes 352,160 419,625
---------------------------------
Net Income $533,648 $502,159
=================================
Earnings per share of common stock:
Basic $0.24 $0.22
==================================
Diluted $0.24 $0.22
==================================
Dividends per share of common stock: $0.00 $0.00
==================================
</TABLE>
SEE ACCOMPANYING NOTES.
5
<PAGE>
American Locker Group Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
<S> <C>
Nine Months Ended September 30,
2000 1999
--------------------------------
OPERATING ACTVITIES
Net income $1,940,569 $2,005,512
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 560,539 426,065
Change in assets and liabilities:
Accounts and notes receivable (786,904) 978,218
Inventories (178,379) 236,183
Prepaid expenses 72,404 (29,336)
Pension and other benefits 64,827 21,048
Accounts payable and accrued expenses (387,558) (969,582)
Prepaid income taxes (4,308) 289,134
------------------------------------
Net cash provided by operating activities 1,281,190 2,957,242
Investing activities
Purchase of property, plant and equipment (185,839) (921,178)
-------------------------------------
Net cash used in investing activities (185,839) (921,178)
FINANCING ACTIVITIES
Debt repayment (1,650,003) (150,012)
Additional long term borrowings 0 1,500,000
Other capital 0 (41)
Common stock purchased and retired (1,834) 0
Common stock purchased for treasury (352,987) (2,367,966)
Proceeds from common stock issued 16,412 54,625
-------------------------------------
New cash used in financing activities (1,988,412) (963,394)
Effect of exchange rate changes on cash (24,485) 42,436
-------------------------------------
Net increase (decrease) in cash (917,546) 1,115,106
Cash and cash equivalents at beginning of period 3,285,983 1,188,007
-------------------------------------
Cash and cash equivalents at end of period $2,368,437 $2,303,113
=====================================
Supplemental cash flow information:
Cash paid during the period for:
Interest $124,957 $89,590
=====================================
Income Taxes $1,253,089 $1,195,233
=====================================
</TABLE>
SEE ACCOMPANYING NOTES.
6
<PAGE>
Notes to Consolidated Financial Statements
American Locker Group Incorporated and Subsidiaries
1. The accompanying unaudited consolidated condensed financial statements have
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 nine
month period ended September 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 2,261,867 (2,393,062 in 1999) and 2,279,358 (2,437,573 in
1999) respectively for the nine month period ending September 30, 2000.
During the quarter ended September 30, 2000, the Company paid $49,366 to
purchase 6,112 shares of common stock. During the first nine months ended
September 30, 2000, the Company paid $354,821 to purchase 47,358 shares of
common stock. Of the shares purchased by the Company, 47,060 shares are
included as treasury stock at September 30, 2000 and 298 shares were
retired.
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.
SEPTEMBER 30, December 31,
2000 1999
------------- ------------
Raw materials $2,610,153 $2,373,527
Work-in-process 2,057,570 1,856,704
Finished goods 1,104,776 1,363,889
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$5,772,499 $5,594,120
Less allowance to
reduce carrying
value to LIFO
basis (620,851) (620,851)
---------- ----------
$5,151,648 $4,973,269
========== ==========
5. Total comprehensive income consisting of net income and foreign currency
translation adjustment was $1,916,084 and $2,047,948 for the nine months
ended September 30, 2000 and September 30, 1999, respectively.
7
<PAGE>
Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations
American Locker Group Incorporated and Subsidiaries
FIRST NINE MONTHS 2000 VS FIRST NINE MONTHS 1999
Sales for the first nine months of 2000 of $26,908,000 increased $1,260,000 or
5% compared to sales of $25,648,000 during the same period in 1999. Plastic
locker sales to the United States Postal Service (USPS) totaled $18,801,000 in
2000 compared to $18,359,000 during the first nine months of 1999. Cluster Box
Units (CBUs) sales were $17,832,000 in 2000 compared to $17,427,000 during the
first nine months of 1999. The increase in sales of CBUs relates to more units
in total purchased by the USPS compared to last year's first nine months and
also to the Company's ability to maintain its market share. Sales of metal,
mechanical and electronic lockers, which includes the Company's luggage cart
business, were $8,107,000 for the first nine months of 2000 compared to
$7,289,000 for the first nine months of 1999. This increase of $818,000 or 11%
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 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 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 and third quarters. Revenues for the
Company's luggage cart business continued to grow during the first nine months
of 2000 and the Company continues its direct marketing effort.
Cost of products sold as a percentage of sales was 70.7% during the first nine
months of 2000 compared to 70.6% in the first nine months of 1999.
Selling, general and administrative costs for the first nine months of 2000
increased $596,000 over the same period in 1999. The increase relates to
additional administrative and depreciation expense to support the Company's
luggage cart operation at Detroit Metro Airport and to increased pension
expense. Selling, general and administrative expense as a percent of sales was
18.1% in 2000 compared to 16.7% during the first nine months of 1999.
8
<PAGE>
Interest expense in the first nine months of 2000 was $126,000 compared to
$90,000 for the same period in 1999. This increase is due to higher average
outstanding debt and interest rates during 2000 versus 1999.
THIRD QUARTER 2000 VS THIRD QUARTER 1990
Third quarter sales were $8,413,000 an increase of $652,000 or 8% from the same
period in 1999. Plastic locker sales of $5,838,000 were up 3% or $150,000 over
1999's third quarter. Sales of metal, mechanical and electronic lockers also
includes luggage cart revenue were $2,575,000 during the third quarter of 2000,
$490,000 or 24% higher than 1999.
Cost of products sold as a percentage of sales was 70.8% during the third
quarter of 2000, an increase from 70.0% during the third quarter of 1999.
Selling, administrative and general expenses as a percent of net sales was 19.5%
during the third quarter of 2000 compared to 18.7% in the third quarter of 1999.
Interest expense in the third quarter of $19,000 decreased from $53,000 in the
third quarter of 1999 due to lower average outstanding debt during the third
quarter 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 5.53
to 1 at September 30, 2000 and 4.68 to 1 at December 31, 1999, respectively.
Working capital, the excess of current assets over current liabilities, was
$10,367,000 at September 30, 2000, an increase of $394,000 over $9,973,000 at
December 31, 1999. Cash provided by operating activities was $1,281,000 during
the first nine months of 2000, compared to $2,957,000 provided by operating
activities for the same period in 1999.
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, and (iii) other risks and uncertainties indicated from
time to time in the Company's filings with the Securities and Exchange
Commission.
9
<PAGE>
Part II
Item 1. Legal Matters
In September 1998 and subsequent months, the Company was named as an additional
defendant in 89 cases pending in state court in Massachusetts. The plaintiffs in
each case assert that a division of the Company manufactured and furnished to a
shipyard in Massachusetts 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. During the process of
discovery in certain of these actions, documents from sources outside the
Company have been produced which indicate the Company appears to have been
included in the chain of title for certain wall panels which contained asbestos
and which were delivered to the Massachusetts shipyard. Defense of these cases
has been assumed by the Company's insurance carrier, subject to a customary
reservation of rights. As of October, 25, 2000, settlement agreements have been
entered in 4 cases with funds authorized and provided by the Company's insurance
carrier. Further, 20 cases originally filed in 1995 and 1996 against other
defendants to which the Company was joined as an additional defendant have been
terminated as to the Company without liability to the Company under
Massachusetts procedural rules. Dismissal of the Company has been stipulated in
7 cases originally filed against other defendants in 1997 due to lack of product
identification evidence against the Company. Therefore, the balance of
unresolved cases against the Company as of October 25, 2000, is 58 cases
originally filed against other defendants in 1997 through 2000.
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 27.1 Financial Data Schedule dated September 30, 2000.
(b) The Company did not file any reports on Form 8-K during the three
months ended September 30, 2000.
10
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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: November 1, 2000
11
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EXHIBIT INDEX
.
Prior Filing or
Sequential Page
Ehibit No. Exhibit Index No. Herein
---------- ------------- ---------------
27.1 Financial Data Schedule
dated September 30, 2000
12
