-----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, JXa6caoaZWFyf5TyHLp8Gwdclp2HfIJbBWe3g7UL7TnY2xKYSnEv8l3Y++11yV1+ 2FAUCuNDKWrgzJbgfe8xbw== 0000944209-97-001215.txt : 19970918 0000944209-97-001215.hdr.sgml : 19970918 ACCESSION NUMBER: 0000944209-97-001215 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970731 FILED AS OF DATE: 19970915 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: SEC FILE NUMBER: 002-63481 FILM NUMBER: 97680325 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: 921 E CALIFORNIA AVE CITY: ONTARIO STATE: CA ZIP: 91761 FORMER COMPANY: FORMER CONFORMED NAME: ALGERAN INC DATE OF NAME CHANGE: 19861015 10QSB 1 FORM 10-QSB FOR PERIOD ENDED 07/31/1997 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 July 31, 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) Registrant's 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 issuer's classes of common stock, as of the close of the period covered by this report: 1,467,934 shares as of July 31, 1997. PART I - FINANCIAL INFORMATION Item 1. Financial Statements ATHANOR GROUP, INC. Consolidated Balance Sheets (Unaudited) July 31, 1997 and October 31, 1996 (Thousands) ASSETS ------
1997 1996 ---- ---- Current Assets: Cash $ 197 $ 115 Trade Receivables, Less Allowance for Doubtful Accounts of $13,000 and $12,000 2,932 2,471 Notes Receivable: Net of Allowance of $534,062 40 40 Inventories: Raw Materials 1,002 872 Work in Progress 632 506 Finished Goods 2,131 1,797 ------ ------ 3,765 3,175 Prepaid Expenses 27 35 Deferred Income Tax Asset 172 261 ------ ------ Total Current Assets 7,133 6,097 Property, Plant and Equipment, at Cost 5,863 4,815 Less Accumulated Depreciation and Amortization 3,873 3,637 ------ ------ Net Property, Plant and Equipment 1,990 1,178 Other Assets 153 90 ------ ------ $9,276 $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) July 31, 1997 and October 31, 1996 (Thousands) LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------
1997 1996 ---- ---- Current Liabilities: Notes Payable $1,431 $ 940 Current Portion of Long-Term Debt 595 420 Accounts Payable 1,862 1,444 Accrued Expenses 936 902 ------ Total Current Liabilities $4,824 $3,706 ------ Long-Term Debt, Less Current Portion 1,311 1,095 Noncurrent Deferred Income Tax Liability 67 67 Stockholders' Equity: Common Stock 15 15 Additional Paid-In Capital 1,447 1,447 Retained Earnings 1,612 1,035 ------ ------ Total Stockholders' Equity 3,074 2,482 ------ ------ $9,276 7,350 ====== ======
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) Nine Months Ended July 31, (Thousands)
1997 1996 ---- ---- Net Sales $ 18,575 $ 17,823 Cost of Sales 15,588 14,906 -------- -------- Gross Profit 2,987 2,917 Selling, General & Administrative 2,014 1,838 -------- -------- Operating Profit 973 1,079 Other Income (Expense) Interest Expense (231) (216) Equity in (Loss) Recovery of Unconsolidated Investee 225 (131) Miscellaneous - Net 19 52 -------- -------- Earnings Before Income Taxes 986 784 Income Tax Expense 401 322 -------- -------- NET EARNINGS $ 585 $ 462 ======== ======== Earnings Per Common Shares: Primary and Fully Diluted $ 0.40 $ 0.31 -------- -------- NET EARNINGS $ 0.40 $ 0.31 ======== ========
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) Three Months Ended July 31, (Thousands)
1997 1996 ---- ---- Net Sales $ 7,075 $ 5,940 Cost of Sales 5,832 4,977 ------- ------- Gross Profit 1,243 963 Selling, General & Administrative 710 631 ------- ------- Operating Profit 533 332 Other Income (Expense) Interest Expense (84) (72) Equity in (Loss) Recovery of Unconsolidated Investee 180 (47) Miscellaneous - Net 2 11 ------- ------- Earnings Before Income Taxes 631 224 Income Tax Expense 255 93 ------- ------- NET EARNINGS $ 376 $ 131 ======= ======= Earnings Per Common Shares: Primary and Fully Diluted $ 0.26 $ 0.09 ------- ------- NET EARNINGS $ 0.26 $ 0.09 ======= =======
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) Nine Months Ended July 31, 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 (3) (8) (8) Net Earnings for Nine Months Ended July 31, 1997 585 585 ------- ------- ------- ------- ------- 1,468 $ 15 $ 1,447 $ 1,612 $ 3,074 ======= ======= ======= ======= =======
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) Nine Months Ended July 31, (Thousands)
1997 1996 ---- ---- Cash Flows From Operating Activities Net Earnings $ 585 $ 462 Adjustments to Reconcile Net Earnings to Net Cash Provided (Used) by Operating Activities: Equity in Loss of Unconsolidated Investee (180) 131 Provision for Deferred Income Taxes 89 -- Depreciation and Amortization 236 227 Amortization of Deferred Gain on Sale and Leaseback 0 (31) (Increase) Decrease in Operating Assets: Accounts Receivable (461) (370) Inventories (590) (202) Prepaid Expenses 8 76 Other (63) 3 Increase (Decrease) in Operating Liabilities: Accounts Payable 418 141 Accrued Liabilities 34 126 ------- ------- Net Cash Provided (Used) by Operating Activities 76 563 ------- ------- Cash Flows from Investing Activities: Purchase of Property and Equipment (1,048) (330) Investment / Advances In Unconsolidated Investee 180 (131) Short Term Loan 0 0 Investment - Common Stock 0 0 ------- ------- Net Cash Used in Investing Activities (868) (461) ------- ------- Cash Flows from Financing Activities: Net Borrowings Under Line of Credit 491 (129) Repurchase of stock (8) -- Net Proceeds Long Term Debt 391 260 ------- ------- Net Cash Provided (Used) in Financing Activities 874 131 ------- ------- Net increase (Decrease) in Cash 82 233 Cash at Beginning of Year 115 62 ------- ------- Cash at End of Period $ 197 $ 295 ======= =======
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) Nine Months Ended July 31, (Thousands)
1997 1996 ---- ---- Supplemental Disclosures of Cash Flow Information: Interest Paid $231 $216 ==== ==== Income Taxes Paid $313 $ 25 ==== ====
Supplemental Schedule of Noncash Investing and Financing Activities: July 31, 1997 - ------------- The Company purchased $784,000 of machinery and equipment under capital lease obligations. July 31, 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 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 management's 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 rates 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. Notes to Consolidated Financial Statements, Continued - ----------------------------------------------------- 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 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 and third quarters of fiscal 1997 the Company recovered $258,000 of investment in Core which had previously been written off. At July 31, 1997 and 1996 the Company owned approximately 23.5% 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 July 31, 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 July 1997 of $2,309,000 has improved from earlier in the year and is now similar to the $2,391,000 at October 1996. The continued improvement in sales over the last six months and the completion of the new Arizona facility in the first quarter of 1997 were the main factors in the stabilization and improvement of the Company's working capital. In addition, the Company completed its planned capital expenditure program during the third quarter of 1997 and does not anticipate any additional significant cash outlays for equipment during the balance of fiscal 1997. 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 July 1997, the Company had approximately $769,000 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 $1,150,000 and $300,000, respectively, at July 1996. In August 1997 the Company completed an amendment to its credit agreement. The amended credit agreement provides for a total line of credit of $4,250,000, of which $2,600,000 is for working capital, $900,000 long term machinery and equipment, and $750,000 line for the acquisition of additional equipment. The amended agreement terminates in August 1998. The Company believes the amended lines of credit are adequate to fund the working capital requirements for the next year. The Company has expended $1,048,000 on new equipment and leasehold improvements during the first nine months of 1997. The Company financed $706,000 of the new equipment through five-year capital leases, with the balance coming from working capital. The Company does not anticipate any major equipment purchases or leasehold improvements during the balance of 1997. In the event there is a change in the Company's equipment requirements, the Company's current available equipment line of credit, under the amended credit agreement, of $750,000 is expected to be adequate to fund all of the additional equipment purchases. RESULTS OF OPERATIONS - --------------------- Sales for the nine months ended July 1997 show a slight increase of 4% over the same period last year. However, sales for the three months ended July 1997 continued to improve from earlier in the year and show an increase of 19% over 1996. While sales for the last six months have exceeded the Company's projections, the current business climate has shown signs of softening. This is highlighted by the current fluctuations in the Company's backlog. The Company's unproduced backlog at July 1997 was $6,590,000 and $5,923,000 as of August 1997. This is compared to $6,184,000 at October 1996 and $6,158,000 at July 1996. It is always difficult to determine whether this is a short-term blip or a sign of the economy slowing down. The Company's operating profits for the nine months and three months ended July 1997 of $973,000 and $533,000 respectively, reflect a decrease of 10% and an increase of 60% when compared to 1996. Slower sales in the first quarter, along with non-capital costs associated with the building-out of the new Arizona facility, are the major causes for the lower than expected earnings for the year. However, the last six months sales and operating profits have exceeded 1996. The additional overhead, associated with the new Arizona facility, that the Company absorbed early in fiscal 1997 is the cost of building an infrastructure capable of meeting the Company's growth plans and the increasing customer demands in today's business climate. While the Company's backlog has shown a recent decline, it is not expected to have an effect on the balance of fiscal 1997. PART II - OTHER INFORMATION 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 September 15, 1997 By /s/ Duane L. Femrite ------------------------- ------------------------ Duane L. Femrite President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and Director EX-27 2 FINANCIAL DATA SCHEDULE - ARTICLE 5
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. 1,000 9-MOS OCT-31-1997 NOV-01-1996 JUL-31-1997 197 0 2,945 13 3,765 7,133 5,863 3,873 9,276 4,824 0 0 0 15 3,059 9,276 18,575 18,575 15,588 17,602 0 0 231 986 401 0 0 0 0 585 .40 .40
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