-----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, RuQXoED6x2ojZeohfWsYxpYKZR0YKbnwNEVI/rwHVpfh1hqGU6UXeE3QdfmO8YnF DdF+lNbrGxv9SsKr6Gf4dA== 0000944209-98-001638.txt : 19980915 0000944209-98-001638.hdr.sgml : 19980915 ACCESSION NUMBER: 0000944209-98-001638 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980731 FILED AS OF DATE: 19980914 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: 98708786 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: 91016 FORMER COMPANY: FORMER CONFORMED NAME: ALGERAN INC DATE OF NAME CHANGE: 19861015 10QSB 1 FOR QUARTER ENDED JULY 31, 1998 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, 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: 1,462,854 shares as of July 31, 1998. PART I - FINANCIAL INFORMATION Item 1. Financial Statements ATHANOR GROUP, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) JULY 31, 1998 AND OCTOBER 31, 1997 (THOUSANDS) ASSETS ------
1998 1997 ---- ---- Current Assets: Cash $ 254 $ 138 Trade Receivables, Less Allowance for Doubtful Accounts of $13,000 and $12,000 2,493 2,799 Notes Receivable: Net of Allowance of $534,062 102 40 Inventories: Raw Materials 704 637 Work in Progress 655 597 Finished Goods 1,953 2,237 ---------- ------------- 3,312 3,471 Prepaid Expenses 41 18 Deferred Income Tax Asset 174 174 ---------- ------------- Total Current Assets 6,376 6,640 Property, Plant and Equipment, at Cost 5,706 5,625 Less Accumulated Depreciation and Amortization 4,117 3,785 ---------- ------------- Net Property, Plant and Equipment 1,589 1,840 Other Assets 290 139 ---------- ------------- $ 8,255 $ 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) JULY 31, 1998 AND OCTOBER 31, 1997 (THOUSANDS) LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------
1998 1997 ---- ---- Current Liabilities: Notes Payable $ 1,027 $ 1,365 Current Portion of Long-Term Debt 583 595 Accounts Payable 1,571 1,718 Accrued Expenses 829 695 ---------- ------------- Total Current Liabilities $ 4,010 $ 4,373 Long-Term Debt, Less Current Portion 794 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 1,909 1,510 ---------- ------------- Total Stockholders' Equity 3,371 2,972 ---------- ------------- $ 8,255 $ 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) NINE MONTHS ENDED JULY 31, (THOUSANDS)
1998 1997 ---- ---- Net Sales $ 18,287 $ 18,575 Cost of Sales 15,356 15,588 ---------- ------------- Gross Profit 2,931 2,987 Selling, General & Administrative 2,008 2,014 ---------- ------------- Operating Profit 923 973 Other Income (Expense) Interest Expense (241) (231) Equity in (Loss) Recovery of Unconsolidated Investee 0 225 Miscellaneous - Net 15 19 ---------- ------------- Earnings Before Income Taxes 697 986 Income Tax Expense 285 401 ---------- ------------- NET EARNINGS $ 412 $ 585 ========== ============= Earnings Per Common Shares: Basic and Diluted $ 0.28 $ 0.40 ========== =============
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)
1998 1997 ---- ---- Net Sales $ 5,578 $ 7,075 Cost of Sales 4,673 5,832 ---------- ------------- Gross Profit 905 1,243 Selling, General & Administrative 663 710 ---------- ------------- Operating Profit 242 533 Other Income (Expense) Interest Expense (77) (84) Equity in (Loss) Recovery of Unconsolidated Investee 0 180 Miscellaneous - Net (1) 2 ---------- ------------- Earnings Before Income Taxes 164 631 Income Tax Expense 66 255 ---------- ------------- NET EARNINGS $ 98 $ 376 ========== ============= Earnings Per Common Shares: Basic and Diluted $ 0.07 $ 0.26 ---------- ------------- NET EARNINGS $ 0.07 $ 0.26 ========== =============
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, 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 Retirement Common Stock (5) (13) (13) Net Earnings for Nine Months Ended July 31, 1998 412 412 ---------- ------------- ----------- ------------ -------- 0 $ 15 $ 1,447 $ 1,909 $ 3,371 ========== ============= =========== ============ ========
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)
1998 1997 ---- ---- Cash Flows From Operating Activities Net Earnings $ 412 $ 585 Adjustments to Reconcile Net Earnings to Net Cash Provided (Used) by Operating Activities: Equity in Loss of Unconsolidated Investee 0 (225) Provision for Deferred Income Taxes 0 89 Depreciation and Amortization 333 236 Amortization of Def. Gain on Sale & Leaseback 0 0 (Increase) Decrease in Operating Assets: Accounts Receivable 190 (461) Inventories 159 (590) Prepaid Expenses (6) 8 Other (80) (63) Increase (Decrease) in Operating Liabilities: Accounts Payable (147) 418 Accrued Liabilities 134 34 ------------ ----------- Net Cash Provided (Used) by Operating Activities 995 31 ------------ ----------- Cash Flows from Investing Activities: Purchase of Property and Equipment (81) (1,048) Investment / Advances In Unconsolidated Investee (35) 225 Short Term Loan 0 0 Investment - Common Stock 0 ------------ ----------- Net Cash Used in Investing Activities (116) (823) ------------ ----------- Cash Flows from Financing Activities: Net Borrowings (Repayment) Under Line of Credit (338) 491 Repurchase of stock (13) (8) Net Payments Long Term Debt (412) 391 ------------ ----------- Net Cash Provided (Used) in Financing Activities (763) 874 ------------ ----------- Net increase (Decrease) in Cash 116 82 Cash at Beginning of Year 138 115 ------------ ----------- Cash at End of Period $ 254 $ 197 ============ ===========
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)
1998 1997 ---- ---- Supplemental Disclosures of Cash Flow Information: Interest Paid $ 241 $ 231 ========== ========== Income Taxes Paid $ 114 $ 313 ========== ==========
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS - -------------------------------------------------------------------------------- Notes to Consolidated Financial Statements (Unaudited) July 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: 1,462,854 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. Notes to Consolidated Financial Statements, Continued - ----------------------------------------------------- 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) 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 - ------ In prior years, the Company has accounted 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. The investment in Core has been reduced to zero due to Core's accumulated losses. During the first nine months of fiscal 1997, the Company had recovered $225,000 ($180,000 in the third quarter) of investment in Core which had previously been written off. During the first nine months of fiscal 1998, the Company has invested $35,000 of additional funds in Core. For years beginning in fiscal 1998, the Company is carrying its investment in Core at cost, due to its percentage reduction in ownership interest and its continuation as the senior secured lender. At July 1998 Notes to Consolidated Financial Statements, Continued - ----------------------------------------------------- and 1997 the Company owned approximately 18.3% 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 July 31, 1998, the Company's unpaid balance is $40,000. 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 has continued to show a slight improvement during fiscal 1998. During 1997 the company had an aggressive capital expenditure and facility expansion program. The combination of these two items consumed a substantial amount of cash. The Company completed those programs during 1997 and currently has no plans for major outlays of cash during 1998, other than planned equipment purchases. In addition, the current slowdown in sales for the last six months of 1998 has left the Company tentative about the economic climate and the near term impact. The Company has decided to proceed cautiously, invest in new equipment diligently and wait for a clearer picture of the economy. The Company expended $81,000 on new equipment during the first six months of 1998. In addition, the Company has ordered $100,000 of the new equipment for delivery in September 1998. The Company anticipates ordering additional equipment during 1998 of $200,000 to $300,000, with some deliveries in early fiscal 1999. 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 July 1998, the Company had approximately $1,558,000 available under the working capital line and $650,000 available under the equipment line as compared to $1,250,000 and $650,000, respectively, at October 1997 and $769,000 and $300,000, respectively, at July 1997. The Company believes the lines of credit are adequate to fund the working capital requirements and anticipated equipment purchases in fiscal 1998. In August 1998 the Company completed an amendment to its credit agreement which extends the agreement to August 1999. RESULTS OF OPERATIONS - --------------------- Sales for the first nine months of fiscal 1998 have decreased less than 2% from 1997. However, sales for the three months ended July 1998 are 9% lower than the second quarter of 1998 and show a 21% decrease over the same period in 1997. While the first quarter sales for 1998 were higher than anticipated, the second and third quarters have been more reflective of the current business climate and demand for the Company's services. The Company has seen a gradual slow-down in its business the last six months, as customers have delayed shipment on existing orders and the Company's backlog has slipped. The Company's total backlog of $7,310,000 remains fairly strong, as compared to $8,075,000 at October 1997, but has declined from $9,014,000 at the end of the first quarter of 1998. In addition, the backlog reflects delayed shipments as sales for the third quarter of 1998 have declined. In the normal course of business, some backlog orders are inevitably cancelled or the time of delivery changes. There is no assurance that the total backlog will result in completed sales. However, the Company has not experienced significant cancellations in its recent past. It is difficult at this juncture to determine the state of the economy and the Company's market. At the end of April 1998 we were wondering if the slowdown was a short-term blip or was the economy finally slowing down? We are still looking for the answer and proceeding cautiously until we see signs of a stronger economy. The Company's operating profits for the nine months and three months ended April 1998 of $923,000 and $242,000 respectively, reflect decreases of 5% and 55% when compared to 1997. While sales and profits for the nine months ended 1998 and 1997 are very similar, the decline in sales the last quarter is directly related to the reduction in profits for the quarter ended July 1998. During the first and second quarters of 1997, the Company absorbed non-capital costs associated with the building-out of the new Arizona facility and also added substantial overhead as needed to deal with the ever-increasing customer demands for quality and delivery. During 1998 the Company has continually evaluated the overhead additions of 1997 and is streamlining operations where appropriate, especially in light of the current economic climate. Forward-looking statements represent the Company's current analysis of trends and information. Actual results could be affected by a variety of factors. 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 10, 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 9-MOS OCT-31-1998 NOV-01-1997 JUL-31-1998 254 0 2,591 13 3,312 6,376 5,706 4,117 8,255 4,010 0 0 0 15 3,356 8,255 18,287 18,287 15,356 17,364 0 0 241 697 285 412 0 0 0 412 .28 .28
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