-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U+mcCzUpZz69OQf4a4zZxA/lllZdybYVLFeKQ/vHvUNp2OoBa20m+zSiTlbYJVkw PMqlkDzU/nYaDg9pug4aog== 0000944209-97-000781.txt : 19970620 0000944209-97-000781.hdr.sgml : 19970620 ACCESSION NUMBER: 0000944209-97-000781 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970619 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATHANOR GROUP INC CENTRAL INDEX KEY: 0000278314 STANDARD INDUSTRIAL CLASSIFICATION: SCREW MACHINE PRODUCTS [3451] IRS NUMBER: 952026100 STATE OF INCORPORATION: CA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 002-63481 FILM NUMBER: 97626029 BUSINESS ADDRESS: STREET 1: 3452 E FOOTHILL BLVD STE 417 CITY: PASADENA STATE: CA ZIP: 91107 BUSINESS PHONE: 818-440-1602 MAIL ADDRESS: STREET 2: 3452 E. FOOTHILL BLVD SUITE 417 CITY: PASADENA STATE: CA ZIP: 91107 FORMER COMPANY: FORMER CONFORMED NAME: ALGERAN INC DATE OF NAME CHANGE: 19861015 10QSB 1 FORM 10-QSB FOR PERIOD ENDED 04/30/97 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED April 30, 1997 Commission File Number 2-63481 ------------------------------------------------------------ Athanor Group, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its chapter) California 95-2026100 - ------------------------------- --------------------------------- (State or other jurisdiction (IRS Employer Identification No.) incorporation of organization) 921 East California Avenue, Ontario, California 91761 - -------------------------------------------------------------------------------- (Address of principal executive offices) Registrants telephone number, including area code (909) 467-1205 ----------------------------- Former name, former address and former fiscal year, if changed since last report. - -------------------------------------------------------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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 ------- ------- Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the close of the period covered by this report: 1,468,934 shares as of April 30, 1997. PART I - FINANCIAL INFORMATION Item 1. Financial Statements ATHANOR GROUP, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) APRIL 30, 1997 AND OCTOBER 31, 1996 (THOUSANDS) ASSETS ------
1997 1996 ------ ------ Current Assets: Cash $ 151 $ 115 Trade Receivables, Less Allowance for Doubtful Accounts of $13,000 and $12,000 2,916 2,471 Notes Receivable: Net of Allowance of $534,062 40 40 Inventories: Raw Materials 902 872 Work in Progress 603 506 Finished Goods 2,308 1,797 ------ ------ 3,813 3,175 Prepaid Expenses 17 35 Deferred Income Tax Asset 261 261 ------ ------ Total Current Assets 7,198 6,097 Property, Plant and Equipment, at Cost 5,414 4,815 Less Accumulated Depreciation and Amortization 3,769 3,637 ------ ------ Net Property, Plant and Equipment 1,645 1,178 Other Assets 188 90 ------ ------ $9,031 $7,365 ====== ======
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS ATHANOR GROUP, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) APRIL 30, 1997 AND OCTOBER 31, 1996 (THOUSANDS) LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------
1997 1996 ------ ------ Current Liabilities: Notes Payable $1,217 $ 940 Current Portion of Long-Term Debt 510 420 Accounts Payable 2,304 1,444 Accrued Expenses 1,080 902 ------ ------ Total Current Liabilities $5,111 $3,706 Long-Term Debt, Less Current Portion 1,153 1,095 Deferred Gain on Sale-Leaseback 0 - Noncurrent Deferred Income Tax Liability 67 67 Stockholders' Equity: Common Stock 15 15 Additional Paid-In Capital 1,447 1,447 Retained Earnings 1,238 1,035 ------ ------ Total Stockholders' Equity 2,700 2,497 ------ ------ $9,031 $7,365 ====== ======
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS ATHANOR GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED APRIL 30, (THOUSANDS)
1997 1996 ------- ------- Net Sales $11,500 $11,883 Cost of Sales 9,756 9,929 ------- ------- Gross Profit 1,744 1,954 Selling, General & Administrative 1,304 1,207 ------- ------- Operating Profit 440 747 Other Income (Expense) Interest Expense (147) (144) Equity in Loss of Unconsolidated Investee 45 (84) Miscellaneous - Net 17 41 ------- ------- Earnings Before Income Taxes 355 560 Income Tax Expense 146 229 ------- ------- NET EARNINGS $ 209 $ 331 ======= ======= Earnings Per Common Shares: Primary and Fully Diluted $ 0.14 $ 0.22 ------- ------- NET EARNINGS $ 0.14 $ 0.22 ======= =======
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED APRIL 30, (THOUSANDS)
1997 1996 ------ ------ Net Sales $6,375 $5,808 Cost of Sales 5,463 4,876 ------ ------ Gross Profit 912 932 Selling, General & Administrative 680 608 ------ ------ Operating Profit 232 324 Other Income (Expense) Interest Expense (79) (70) Equity in Loss of Unconsolidated Investee 78 (34) Miscellaneous - Net 5 20 ------ ------ Earnings Before Income Taxes 236 240 Income Tax Expense 97 98 ------ ------ NET EARNINGS $ 139 $ 142 ====== ====== Earnings Per Common Shares: Primary and Fully Diluted $ 0.09 $ 0.10 ------ ------ NET EARNINGS $ 0.09 $ 0.10 ====== ======
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS ATHANOR GROUP, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) SIX MONTHS ENDED APRIL 30, 1997 (THOUSANDS)
Common Stock (25,000,000 Shares Additional Authorized) Paid-In Retained Shares Par Value Capital Earnings Total ------------------ --------- ---------- -------- ------ Balance at October 31, 1996 1,471 $ 15 $1,447 $1,035 $2,497 Retirement Common Stock (2) (6) (6) Net Earnings for Six Months Ended April 30, 1997 209 209 ----- ---- ------ ------ ------ 1,469 $ 15 $1,447 $1,238 $2,700 ===== ==== ====== ====== ======
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS ATHANOR GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) SIX MONTHS ENDED APRIL 30, (THOUSANDS)
1997 1996 ----- ------ Cash Flows From Operating Activities Net Earnings $ 209 $ 331 Adjustments to Reconcile Net Earnings to Net Cash Provided (Used) by Operating Activities: Equity in Loss of Unconsolidated Investee (45) 84 Provision for Deferred Income Taxes - - Depreciation and Amortization 132 154 Amortization of Deferred Gain on Sale and Leaseback 0 (20) (Increase) Decrease in Operating Assets: Accounts Receivable (445) (215) Inventories (638) (168) Prepaid Expenses 18 72 Other (98) (16) Increase (Decrease) in Operating Liabilities: Accounts Payable 860 203 Accrued Liabilities 178 73 ----- ----- Net Cash Provided (Used) by Operating Activities 171 498 ----- ----- Cash Flows from Investing Activities: Purchase of Property and Equipment (599) (195) Investment / Advances In Unconsolidated Investee 45 (84) Short Term Loan 0 0 Investment - Common Stock 0 0 ----- ----- Net Cash Used in Investing Activities (554) (279) ----- ----- Cash Flows from Financing Activities: Net Borrowings Under Line of Credit 277 (171) Repurchase of stock (6) - Net Proceeds Long Term Debt 148 (63) ----- ----- Net Cash Provided (Used) in Financing Activities 419 (234) ----- ----- Net increase (Decrease) in Cash 36 (15) Cash at Beginning of Year 115 62 ----- ----- Cash at End of Period $ 151 $ 47 ===== =====
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS ATHANOR GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED (UNAUDITED) SIX MONTHS ENDED APRIL 30, (THOUSANDS)
1997 1996 ---- ---- Supplemental Disclosures of Cash Flow Information: Interest Paid $147 $144 ==== ==== Income Taxes Paid $161 $ 0 ==== ==== Supplemental Schedule of Noncash Investing and Financing Activities: April 30, 1997 - -------------- The Company purchased $400,000 of machinery and equipment under a capital lease obligations. April 30, 1996 - -------------- The Company purchased $207,000 of machinery and equipment under a capital lease obligation.
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS Notes to Consolidated Financial Statements (Unaudited) April 30, 1997 and 1996 Note 1 - ------ Primary earnings per common share are computed by using the weighted average number of common shares outstanding during the year: 1,468,934 shares in 1997 and 1,471,354 shares in 1996. Note 2 - ------ In managements opinion, all adjustments necessary to a fair settlement of the results of operations for the interim periods, have been reflected. Note 3 - ------ The consolidated financial statements include the accounts of Athanor Group, Inc., and its subsidiary, Alger Manufacturing Co., Inc. Significant intercompany accounts and transactions have been eliminated. Note 4 - ------ During 1994, the company changed its method of accounting for deferred taxes from the deferred method under APB No. 11 to the asset and liability method now required under SFAS No. 109. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, net operating loss carryforwards and credit carryforwards are included as deferred tax assets. A valuation allowance against deferred tax assets is recorded if necessary. All deferred tax amounts are measured using enacted tax rated expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Changes in tax rates are recognized in income in the period that includes the enactment date. Note 5 - ------ The Company accounts for its investment in Core Software Technology (Core) on the equity method of accounting which requires the Company to record its shares of Core's earnings or Notes to Consolidated Financial Statements, Continued - ----------------------------------------------------- losses. During 1996, the Company invested an additional $149,739 in Core, which was subsequently reduced to zero as of October 1996 because of losses incurred by Core. During the first quarter of fiscal 1997, the Company invested an additional $34,000 in Core which was written off due to expected losses at Core during the same period. During the second quarter of fiscal 1997 the Company recovered $78,000 of investment in Core which had previously been written off. At April 30, 1997 and 1996 the Company owned approximately 27.8% and 21.5% respectively of the issued and outstanding common stock of Core. Summarized unaudited financial statements for Core for the three months ended March 31, 1997 are as follows: Assets $ 1,807,000 Liabilities $ 7,812,000 Deficit Equity $(6,005,000) Sales $ 76,000 Expenses $ 1,260,000 Loss $(1,184,000)
Note 6 - ------ In April 1995, the Company consummated a transaction, whereby it agreed to acquire 100,000 shares of its common stock at $2 per share. The agreement called for 20% down, or $40,000, at the closing and the balance of $160,000 to be paid in equal annual installments of $40,000 beginning on April 1, 1996, through April 1, 1999. Interest payments on the unpaid balance are to be paid quarterly at 8%. As of April 30, 1997, the Company's unpaid balance is $80,000. The unpaid balance is secured by an equal amount of the company's common stock as defined in the agreement. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company's working capital at April 1997 of $2,087,000 has declined slightly when compared to $2,391,00 at October 1996. The reduction is primarily associated with a decline in sales for the first quarter combined with the cost associated with building out the Company's new Arizona facility and the funds expended for new equipment. As sales for the second quarter have improved, the Arizona facility is completed, and the majority of equipment has been either purchased or ordered, working capital should stabilize the balance of the fiscal year. The Company expended $599,000 on new equipment and leasehold improvements during the first six months of 1997 and has made deposits of $40,000 for the purchase of $384,000 of additional equipment for delivery in mid-1997. The Company financed $400,000 of the new equipment through five-year capital leases and has obtained financing for the additional equipment purchase, which will be financed through a five-year equipment lease. The Company anticipates additional equipment purchases and leasehold improvements during 1997 of $200,000 to $300,000. The Company's current equipment line of credit of $300,000 is expected to be adequate to fund all of the additional equipment purchases The Company's credit agreement provides for a total line of credit of $3,500,000, of which $2,200,000 is for working capital, $900,000 long term machinery and equipment loan, and $400,000 line for the acquisition of additional equipment. At April 1997, the Company had approximately $983,000 available under the working capital line and $300,000 available under the equipment line as compared to $1,260,000 and $300,000, respectively, at October 1996 and $994,000 and $300,000, respectively, at April 1996. The Company believes the lines of credit are adequate to fund the working capital requirements, other than the Company's major capital expenditures noted above, during the balance of 1997. The Company has projected a large capital expenditure program for 1997 that requires certain amendments to its credit agreement. The Company has recently obtained approval from its lender for the required amendments to the Company's credit agreement. These amendments will allow the Company to implement its capital expenditure program, including obtaining the necessary additional equipment financing from other sources as required. The Company's credit agreement terminates in August 1997 unless extended in writing by the lender. The company has no reason to believe that the lender will not extend the line of credit. RESULTS OF OPERATIONS - --------------------- Sales for the first six months of fiscal 1997 are 3% lower than 1996. However, sales for the three months ended April 1997 improved over the first quarter and show a 10% increase over the same period in 1996. While the first quarter sales for 1997 were lower than anticipated, the second quarter is more reflective of the current business climate and demand for the Company's services. The Company's backlog of $6,397,000 remains very strong, as compared to $6,184,000 at October 1996 and $5,823,000 at April 1996. As demand remains strong, the Company anticipates sales for the balance of 1997 to be similar to the second quarter. The Company's operating profits for the six months and three months ended April 1997 of $440,000 and $232,000 respectively, reflect decreases of 41% and 28% when compared to 1996. Slower sales activity in the first quarter, along with non-capital costs associated with the building-out of the new Arizona facility, were a major cause of the lower than expected earnings. Also, as the Company has staged itself for continued growth, with the addition of manufacturing facilities, it has added engineering, quality, and administrative personnel. The added overhead is the cost of building an infrastructure capable of meeting the Company's planned growth requirements as well as the ever-increasing demands of todays customers. The Company does not anticipate that the additional overhead will have a long-term effect on earnings, assuming the planned growth continues. PART II - OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS --------------------------------------------------- (a) The annual meeting of registrant was held April 11, 1997 (b) At the annual meeting, the following individuals were elected to the Board of Directors: Gregory J. Edwards Duane L. Femrite William H. Harris, Jr. Richard A. Krause Robert W. Miller (c) Approval of 1997 Stock Option Plan: For 850,585 Against 92,732 Abstain 4,966 Brk. Non-votes 98,635
Item 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- (a) None (b) No reports on Form 8-K have been filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ATHANOR GROUP, INC. Date June 17, 1997 By /s/ Duane L. Femrite ------------- -------------------- Duane L. Femrite President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and Director EX-27 2 ARTICLE 5 OF REGULATION S-X
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED STATEMENTS OF EARNINGS AND CONSOLIDATED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS OCT-31-1997 NOV-01-1996 APR-30-1997 151 0 2,929 13 3,813 7,198 5,414 3,769 9,031 5,111 0 0 0 15 2,685 9,031 11,500 11,500 9,756 11,060 0 0 147 355 146 0 0 0 0 209 .14 .14
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