-----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, LfFgQ/hgN1KK1y8wSLdAl9sKF+as4958sM4oqkjsABoNR8iyYUZ66ulYrzq7T0ya wewhzB2zcCEQ0NTKT8OIaQ== 0000944209-98-000523.txt : 19980313 0000944209-98-000523.hdr.sgml : 19980313 ACCESSION NUMBER: 0000944209-98-000523 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980131 FILED AS OF DATE: 19980312 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: 98564265 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 10QSB 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 January 31, 1998 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: 1,467,854 shares as of January 31, 1998. PART I - FINANCIAL INFORMATION Item 1. Financial Statements ATHANOR GROUP, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) JANUARY 31, 1998 AND OCTOBER 31, 1997 (THOUSANDS)
ASSETS ------ 1998 1997 ---- ---- Current Assets: Cash $ 268 $ 138 Trade Receivables, Less Allowance for Doubtful Accounts of $14,000 and $12,000 2,836 2,799 Notes Receivable: Net of Allowance of $534,062 199 40 Inventories: Raw Materials 823 637 Work in Progress 543 597 Finished Goods 1,804 2,237 ------ ------ 3,170 3,471 Prepaid Expenses 64 18 Deferred Income Tax Asset 174 174 ------ ------ Total Current Assets 6,711 6,640 Property, Plant and Equipment, at Cost 5,654 5,625 Less Accumulated Depreciation and Amortization 3,895 3,785 ------ ------ Net Property, Plant and Equipment 1,759 1,840 Other Assets 165 139 ------ ------ $8,635 $8,619 ====== ======
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS ATHANOR GROUP, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) JANUARY 31, 1998 AND OCTOBER 31, 1997 (THOUSANDS) LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------
1998 1997 ------ ------ Current Liabilities: Notes Payable $1,330 $1,365 Current Portion of Long-Term Debt 595 595 Accounts Payable 1,783 1,718 Accrued Expenses 660 695 ------ ------ Total Current Liabilities $4,368 $4,373 Long-Term Debt, Less Current Portion 1,075 1,194 Noncurrent Deferred Income Tax Liability 80 80 Stockholders' Equity: Common Stock 15 15 Additional Paid-In Capital 1,447 1,447 Retained Earnings 1,650 1,510 ------ ------ Total Stockholders' Equity 3,112 2,972 ------ ------ $8,635 $8,619 ====== ======
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 JANUARY 31, (THOUSANDS)
1998 1997 ------ ------ Net Sales $6,565 $5,125 Cost of Sales 5,606 4,293 ------ ------ Gross Profit 959 832 Selling, General & Administrative 644 624 ------ ------ Operating Profit 315 208 Other Income (Expense) Interest Expense (93) (68) Equity in Loss of Unconsolidated Investee 0 (33) Miscellaneous - Net 15 12 ------ ------ Earnings Before Income Taxes 237 119 Income Tax Expense 97 49 ------ ------ NET EARNINGS $ 140 $ 70 ====== ======
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS ATHANOR GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED (UNAUDITED) THREE MONTHS ENDED JANUARY 31, (THOUSANDS)
1998 1997 ---- ---- Earnings Per Common Shares: Basic and Diluted $ 0.09 $ 0.05 ========== ========== Weighted Average Shares Outstanding Basic and Diluted 1,467,854 1,468,934 ========== ==========
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) THREE MONTHS ENDED JANUARY 31, 1998 (THOUSANDS)
Common Stock (25,000,000 Shares Additional Authorized) Paid-In Retained Shares Par Value Capital Earnings Total ------ --------- ------- -------- ----- Balance at October 31, 1997 1,468 $ 15 $1,447 $1,510 $2,972 Net Earnings for Three Months Ended January 31, 1998 140 140 ------ ------ ------ ------ ------ 1,468 $ 15 $1,447 $1,650 3,112 ====== ====== ====== ====== ======
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) THREE MONTHS ENDED JANUARY 31, (THOUSANDS)
1998 1997 ----- ----- Cash Flows From Operating Activities Net Earnings $ 140 $ 70 Adjustments to Reconcile Net Earnings to Net Cash Provided (Used) by Operating Activities: Equity in Loss of Unconsolidated Investee 0 33 Depreciation and Amortization 111 73 (Increase) Decrease in Operating Assets: Trade Receivables (153) 283 Inventories 301 (224) Prepaid Expenses (29) (45) Other (7) (74) Increase (Decrease) in Operating Liabilities: Accounts Payable 65 50 Accrued Liabilities (35) (291) ----- ----- Net Cash Provided (Used) by Operating Activities 393 (125) ----- ----- Cash Flows from Investing Activities: Purchase of Property and Equipment (29) (134) Investment / Advances In Unconsolidate Investee 0 (33) Short Term Loan (80) 0 ----- ----- Net Cash Used in Investing Activities (109) (167) ----- ----- Cash Flows from Financing Activities: Net Borrowings (Repayments) Under Line of Credit (35) 207 Repurchase of stock 0 (6) Net Payments Long Term Debt (119) 0 ----- ----- Net Cash Provided (Used) in Financing Activities (154) 201 ----- ----- Net increase (Decrease) in Cash 130 (91) Cash at Beginning of Year 138 115 ----- ----- Cash at End of Period $ 268 $ 24 ===== =====
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) THREE MONTHS ENDED JANUARY 31, (THOUSANDS)
1998 1997 ---- ---- Supplemental Disclosures of Cash Flow Information: Interest Paid $ 93 $ 68 ==== ==== Income Taxes Paid $ 53 $101 ==== ====
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS Notes to Consolidated Financial Statements (Unaudited) January 31, 1998 and 1997 Note 1 - ------ Basic and diluted earnings per common share are computed by using the weighted average number of common shares outstanding during each period: 1,467,854 shares in 1998 and 1,468,934 shares in 1997. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (FAS) No. 128. "Earnings per Share." FAS 128 specifies the computation, presentation and disclosure requirements for earnings per share (EPS) and became effective for both interim and annual periods ending after December 15, 1997. All prior period EPS have been restated to conform with the provisions of FAS 128. The adoption of FAS 128 did not have a material impact on the Company'' earnings per share calculations. 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 - ------ The Company accounts for income taxes under the asset and liability method. 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 - ------ In 1997, the FASB issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130 establishes standards for the reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) Notes to Consolidated Financial Statements, Continued - ----------------------------------------------------- in a full set of general purpose financial statements. SFAS 130 is effective for fiscal years beginning after December 15, 1997. In 1997, the FASB issued Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SAFS 131). SFAS 131 establishes standards for public business enterprises to report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas and major customers. SFAS 131 also requires that the enterprise report descriptive information about the way that the operating segments were determined and the products and services provided by the operating segments. SFAS 131 is effective for financial statements for periods beginning after December 15, 1997. In the initial year of application, comparative information for earlier years is to be restated. SFAS 131 need not be applied to interim financial statements in the initial year of its application, but comparative information for interim periods in the initial year of application is to be reported in financial statements for interim periods in the second year of application. The Company has not determined the impact of the above statements. Note 6 - ------ The Company accounts for its investment in Core Software Technology (Core) on the equity method of accounting that requires the Company to record its shares of Core's earnings or losses. The investment in Core has been reduced to zero due to Core's accumulated losses. During fiscal 1997, the Company had invested an additional $33,326 in Core which had been written off due to expected losses at Core during the same period. During the first quarter of fiscal 1998, the Company has not invested any additional funds in Core and therefore has no losses associated with its investment. At January 31, 1998 and 1997 the Company owned approximately 19.8% and 23.5% respectively of the issued and outstanding common stock of Core. Note 7 - ------ 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 January 31, 1998, 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 January 1998 of $2,343,000 has increased slightly when compared to $2,267,000 at October 1997 and $2,235,000 at January 1997. The increase is primarily associated with the increased sales and profits shown in the first quarter of fiscal 1998. While the Company expended substantial funds in 1997 on capital expenditures and the new Arizona facility, there are no plans in 1998 for major outlays of cash. The Company's 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 loan, and $750,000 line for the acquisition of additional equipment. At January 1998, the Company had approximately $1,270,000 available under the working capital line and $650,000 available under the equipment line as compared to $1,235,000 and $650,000, respectively, at October 1997 and $893,000 and $300,000, respectively, at January 1997. The Company believes the lines of credit are adequate to fund the working capital requirements during fiscal 1998 and anticipated equipment purchases in fiscal 1998. The Company's credit agreement terminates in August 1998 unless extended in writing by the lender. The company has no reason to believe that the lender will not extend the line of credit. However, there can be no assurance the Company will be able to extend the agreement The Company expended $29,000 on new equipment during the first quarter of 1998. The Company anticipates additional equipment purchases during 1998, however it currently does not have plans for any major equipment purchases or facility expansion. The Company's current equipment line of credit of $650,000 is expected to be adequate to fund all of the additional equipment purchases. RESULTS OF OPERATIONS - --------------------- Sales for the first quarter of 1998 showed a 28% increase over the same period in 1997. While the increase in sales for the quarter is considered an indication of the continuation of demand for the Company's services and a strong economy, sales for the first quarter of 1997 were also lower due to a longer than normal shutdown during the holidays and timing of shipments to customers during the period. The Company's total backlog of $9,014,000 at January 1998 shows a slight improvement as compared to $8,075,000 at October 1997. While the backlog at January 1998 is more reflective of the Company's backlog during the last few years, it is difficult at this juncture to determine the state of the economy and the Company's market. With the current backlog, the Company does anticipate the second quarter's sales to continue to be strong. Operating profits of $315,000 for the quarter ended January 1998, as compared to $208,000 for January 1997 directly reflect the Company's increased sales activity for the first quarter. In addition the Company, during the first quarter of 1997, absorbed some of the non-capital costs associated with the building-out and move into the new Arizona facility in 1997. The combination of the increased borrowings under the Company's working capital line and the equipment purchases in 1997, are the factors in a 37% increase in interest expense during 1998. Forward-looking statements represent the Company's current analysis of trends and information. Actual results could be affected by a variety of factors. 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 March 5, 1998 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
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 3-MOS OCT-31-1998 NOV-01-1997 JAN-31-1998 268 0 2,850 14 3,170 6,711 5,654 3,895 8,635 4,368 0 0 0 15 3,097 8,635 6,565 6,565 5,606 6,250 0 0 93 237 97 0 0 0 0 140 .09 .09
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