-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JcFV1MiavGFnSEYly1DwoIoS3jn+lL5g2/5xaGQqzd2xkAuVI80VWGs8q6iLayB5 h5UZ1WUHVqBM3gxvVjoxxg== 0000950148-95-000344.txt : 19950620 0000950148-95-000344.hdr.sgml : 19950620 ACCESSION NUMBER: 0000950148-95-000344 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19950619 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: 95547876 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 1 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, 1995 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) 3452 East Foothill Boulevard, Suite 417, Pasadena, California 91107 (Address of principal executive offices) Registrant's telephone number, including area code (818) 440-1602 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: 1,471,434 shares as of April 30, 1995. 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements 3 ATHANOR GROUP, INC. Consolidated Balance Sheets (Unaudited) April 30, 1995 and October 31, 1994 (Thousands) ASSETS
1995 1994 ---- ---- Current Assets: Cash $ 55 $ 149 Trade Receivables, Less Allowance for Doubtful Accounts of $17,000 and $31,000 2,046 1,935 Notes Receivable: Net of Allowance of $534,062 71 20 Inventories: Raw Materials 857 861 Work in Progress 471 312 Finished Goods 1,549 1,669 ---------------- -------------- 2,877 2,842 Prepaid Expenses 50 29 Deferred Income Tax Asset 377 377 ---------------- -------------- Total Current Assets 5,476 5,352 Property, Plant and Equipment, at Cost 4,211 4,151 Less Accumulated Depreciation and Amortization 3,384 3,247 ---------------- -------------- Net Property, Plant and Equipment 827 904 Other Assets 129 86 ---------------- -------------- $ 6,432 $ 6,342 ================ ==============
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS 4 ATHANOR GROUP, INC. Consolidated Balance Sheets (Unaudited) April 30, 1995 and October 31, 1994 (Thousands) LIABILITIES AND STOCKHOLDERS' EQUITY
1995 1994 ---- ---- Current Liabilities: Notes Payable $ 1,056 $ 920 Current Portion of Long-Term Debt 298 246 Accounts Payable 1,518 1,521 Accrued Expenses 719 799 ---------------- -------------- Total Current Liabilities $ 3,591 $ 3,486 Long-Term Debt, Less Current Portion 839 851 Deferred Gain on Sale-Leaseback 60 80 Noncurrent Deferred Income Tax Liability 20 20 Stockholders' Equity: Common Stock 15 16 Additional Paid-In Capital 1,447 1,447 Retained Earnings 460 442 ---------------- -------------- Total Stockholders' Equity 1,922 1,905 ---------------- -------------- $ 6,432 $ 6,342 ================ ==============
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS 5 ATHANOR GROUP, INC. Consolidated Statements of Operations (Unaudited) Six Months Ended April 30, (Thousands)
1995 1994 ---- ---- Net Sales $ 9,624 $ 7,718 Cost of Sales 7,947 6,386 ---------------- -------------- Gross Profit 1,677 1,332 Selling, General & Administrative 1,208 1,024 ---------------- -------------- Operating Profit 469 308 Other Income (Expense) Interest Income 0 56 Interest Expense (128) (81) Miscellaneous - Net 28 36 ---------------- -------------- Earnings Before Income Taxes and Extraordinary Cr 369 319 Income Tax Expense 152 131 ---------------- -------------- Earnings (Loss) Before Extraordinary Credit 217 188 Extraordinary Credit - Tax Benefit of Net Operating Loss Carryforwards - 36 ---------------- -------------- NET EARNINGS $ 217 $ 224 ================ ==============
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS 6 ATHANOR GROUP, INC. Consolidated Statements of Operations - Continued (Unaudited) Six Months Ended April 30, (Thousands)
1995 1994 ---- ---- Earnings Per Common Shares: Primary Earnings Before Extraordinary Credit $ 0.14 $ 0.12 Extraordinary Credit 0.00 0.02 ---------------- -------------- NET EARNINGS $ 0.14 $ 0.14 ================ ==============
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS 7 ATHANOR GROUP, INC. Consolidated Statements of Operations (Unaudited) Three Months Ended April 30, (Thousands)
1995 1994 ---- ---- Net Sales $ 4,962 $ 4,150 Cost of Sales 4,111 3,438 ---------------- -------------- Gross Profit 851 712 Selling, General & Administrative 638 536 ---------------- -------------- Operating Profit 213 176 Other Income (Expense) Interest Income 0 56 Interest Expense (73) (43) Miscellaneous - Net 6 26 ---------------- -------------- Earnings Before Income Taxes and Extraordinary Credit 146 215 Income Tax Expense 60 88 ---------------- -------------- Earnings (Loss) Before Extraordinary Credit 86 127 Extraordinary Credit - Tax Benefit of Net Operating Loss Carryforwards - 18 ---------------- -------------- NET EARNINGS $ 86 $ 145 ================ ==============
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS 8 ATHANOR GROUP, INC. Consolidated Statements of Operations - Continued (Unaudited) Three Months Ended April 30, (Thousands)
1995 1994 ---- ---- Earnings Per Common Shares: Primary Earnings Before Extraordinary Credit $ 0.06 $ 0.08 Extraordinary Credit 0.00 0.01 ---------------- -------------- NET EARNINGS $ 0.06 $ 0.09 ================ ==============
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS 9 ATHANOR GROUP, INC. Consolidated Statement of Stockholders' Equity (Unaudited) Six Months Ended April 30, 1995 (Thousands)
Common Stock (25,000,000 Shares Additional Retained Authorized) Paid-In Earnings Shares Par Value Capital Total ------ --------- ---------- -------- ----- Balance at October 31, 1994 1,571 $ 16 $ 1,447 $ 442 $ 1,905 Repurchase of Common Stock (100) (1) (199) (200) Net Earnings for Six Months Ended April 30, 1995 217 217 ----- ---------- ----------- ----------- ---------- 1,471 $ 15 $ 1,447 $ 460 $ 1,922 ===== ========== =========== =========== ==========
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS 10 ATHANOR GROUP, INC. Consolidated Statements of Cash Flows (Unaudited) Six Months Ended April 30, (Thousands)
1995 1994 ---- ---- Cash Flows From Operating Activities Net Earnings $ 217 $ 224 Adjustments to Reconcile Net Earnings to Net Cash Provided (Used) by Operating Activities: Depreciation and Amortization 137 74 Amortization of Deferred Gain on Sale and Leaseback (20) (21) (Increase) Decrease in Operating Assets: Accounts Receivable (111) (588) Inventories (35) (418) Prepaid Expenses (21) (9) Other (94) (2) Increase (Decrease) in Operating Liabilities: Accounts Payable (3) 324 Accrued Liabilities (80) (24) ---------------- -------------- Net Cash Provided (Used) by Operating Activities (10) (440) ---------------- -------------- Cash Flows from Investing Activities: Purchase of Property and Equipment (60) (9) Short Term Loan 40 198 Investment - Common stock (200) (260) ---------------- -------------- Net Cash Used in Investing Activities (220) (71) ---------------- -------------- Cash Flows from Financing Activities: Net Borrowings Under Line of Credit 136 387 Issuance of Common Stock - 3 ---------------- -------------- Net Cash Provided (Used) in Financing Activities 136 390 ---------------- -------------- Net increase (Decrease) in Cash (94) (73) Cash at Beginning of Year 149 107 ---------------- -------------- Cash at End of Period $ 55 $ 34 ================ ==============
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS 11 ATHANOR GROUP, INC. Consolidated Statements of Cash Flows - Continued (Unaudited) Six Months Ended April 30, (Thousands)
1995 1994 ---- ---- Supplemental Disclosures of Cash Flow Information: Interest Paid $ 128 $ 81 ================ ============== Income Taxes Paid $ 125 $ 28 ================ ==============
Supplemental Schedule of Noncash Investing and Financing Activities: April 30, 1995 None April 30, 1994 None The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS 12 Notes to Consolidated Financial Statements (Unaudited) April 30, 1995 and 1994 Note 1 Primary earnings per common share are computed by using the weighted average number of common shares outstanding during the year - 1,560,937 shares in 1995 and 1,567,100 shares in 1994. 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. 13 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 1994, the Company invested an additional $360,458 into Core which was subsequently reduced to zero, as of October 1994, because of losses incurred by Core. At April 30, 1995 and 1994 the Company owned approximately 21.5% and 12.8% respectively. Note 6 In April 1995 the Company consummated a transaction, whereby it agreed to acquire 100,000 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 8.5%. Certain shares are held as security for the unpaid balance of the note. The Company retains voting rights to the shares held as security as long as the Company is not in default on the agreement. The Company has recorded this transaction as a purchase of its stock. The balance of the note of $160,000 has been recorded as a liability and the 100,000 shares of common stock have been deleted from the outstanding shares. 14 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 1995 of $1,885,000 continues to remain stable when compared to $1,866,00 at October 1994 and $1,250,000 at January 1994. The current business environment has continued to pressure the Company to maintain high inventory levels for on-time deliveries. In addition, the cost of raw materials has continued to rise at a rate substantially higher than the balance of the economy. During the first quarter of 1995, the Company endured four price increases in brass totaling 8%. During the second quarter the raw material prices have stabilized as prices have remained constant.The demand at the brass mills has pushed deliveries of raw material out many weeks, forcing the company to inventory more product and its customers to plan further in the future. The Company's credit agreement provides for a total line of credit of $3,100,000, of which $1,700,000 is for working capital, a $1,000,000 long term machinery and equipment loan, and a $400,000 line for the acquisition of additional equipment. At April 1995, the Company had approximately $644,000 available under the working capital line and $400,000 available under the equipment line as compared to $780,000 and $125,000 , respectively, at October 1994 and $321,000 and $125,000 respectively, at April 1994. The Company believes that the lines of credit are adequate to fund the working capital requirements during the balance of 1995. The Company's credit agreement terminates in August 1995 unless extended in writing by the lender. The company is currently in negotiations to extend the agreement for an additional year and has no reason to believe that the line of credit will not be extended by the lender. The Company has ordered $215,000 of new equipment which was delivered in May 1995. The equipment was financed through a five year equipment lease. The Company anticipates additional equipment purchases during 1995 of $200,000 to $300,000. The Company's current equipment line of credit of $400,000 will be adequate to fund any additional equipment purchases. In February 1995, the Company leased 17,000 square feet of additional manufacturing facilities in Ontario, Calif. The Company had originally anticipated expanding its Phoenix division, but the availability of additional space adjacent to its existing facility in Ontario caused the Company to rethink its options for 1995. The lease is effective March 1995 through September 1997. Improvements to the additional facilities of approximately $50,000 were expended in March and April of 1995. The Company plans on using the facilities for warehousing, assembling and secondary operations. In April 1995 the Company entered into an agreement whereby it agreed to acquire 100,000 shares of its common stock for $2 per share or $200,000. The agreement called for 20% down or $40,000 at closing and the balance to be paid in equal annual installments of $40,000 beginning in April 1996 through April 1999. Interest payments on the unpaid balance are to be paid quarterly at 8.5%. The note is secured by an equal number of shares of the Company's stock, in direct relationship to the unpaid 15 balance, at $2 per share. Each year as a payment is made the amount of stock held as security is reduced accordingly. The Company retains all voting rights to the stock held as security as long as the Company is not in default on the agreement. RESULTS OF OPERATIONS The operating results for the first six months of 1995 have continued to show steady improvement as the economy appears to remain healthy. Sales for the six months and three months ended April 1995 were 25% and 20% ahead of 1994. It should be noted that 1994 was the best year in sales in the history of the Company. The Company has anticipated a slow down in sales during the balance of 1995 as a major contract was completed in the first quarter of 1995. Sales increases can also be attributed to the substantial raw material increases which took place during 1994 and the first quarter of 1995. The increases of raw material added to the Company's expansion in larger diameter equipment, reflect a higher sales and cost of sales figures. Material costs as a percent of sales have increased from 42% in 1994 to 46% in 1995. The Company's operating profits for the six months and three months ended April 1995 of $469,000 and $213,000 respectively reflect the Company's current sales improvement. The Company's current backlog of approximately $5,163,000, as compared to $4,419,000 at October 1994 and $4,694,000 at April 1994 continues to demonstrate the ongoing strength of the current economy. The backlog also reflects the current requirement for longer term planning due to raw material lead times for delivery, for both the Company and its customers. The Company's carrying cost for inventories have increased substantially over the last couple of years. The rate increases of 1994 have increased our interest expense on the Company's operating lines of credit by approximately 58% during the first six months of 1995. The Company anticipates the balance of 1995 will show similar increases due to the increases in the cost of borrowed funds. 16 PART II - OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The annual meeting of registrant was held on May 4, 1995 (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 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. 17 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 6/15/95 By /s/ DUANE L. FEMRITE ------- --------------------------------------- Duane L. Femrite President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, and Director EX-27 2 EXHIBIT 27 / 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. 6-MOS OCT-31-1995 NOV-01-1994 APR-30-1995 55 0 71 2046 2877 5476 4211 3384 6432 3591 0 15 0 0 1907 6432 9624 9624 7947 9155 0 0 (128) 369 152 217 0 0 0 217 .14 0
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