-----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, O24jHWyfTM+vAHSsI2Gj4Hc+mruEFXoOnnu8nnpfuUnXfDMoYffSEUGg3gtewSA0 Hlp2NGcadJEnlpf7AzoYmg== 0000950148-96-000403.txt : 19960321 0000950148-96-000403.hdr.sgml : 19960321 ACCESSION NUMBER: 0000950148-96-000403 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960320 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: 96536539 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 ENDING JANUARY 31, 1996 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 January 31, 1996 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. 3452 East Foothill Boulevard, Suite 417, Pasadena, California 91107 - ------------------------------------------------------------------------------- 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: 1,571,354 shares as of March 31, 1996. 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements 3 ATHANOR GROUP, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) JANUARY 31, 1996 AND OCTOBER 31, 1995 (THOUSANDS) ASSETS
1996 1995 ------- ------- Current Assets: Cash $ 105 $ 62 Trade Receivables, Less Allowance for Doubtful Accounts of $12,000 and $12,000 2,719 2,145 Notes Receivable: Net of Allowance of $534,062 25 25 Inventories: Raw Materials 1,070 835 Work in Progress 397 519 Finished Goods 1,649 1,618 ------- ------- 3,116 2,972 Prepaid Expenses 90 136 Deferred Income Tax Asset 191 191 ------- ------- Total Current Assets 6,246 5,531 Property, Plant and Equipment, at Cost 4,640 4,456 Less Accumulated Depreciation and Amortization 3,428 3,347 ------- ------- Net Property, Plant and Equipment 1,212 1,109 Other Assets 46 83 ------- ------- $ 7,504 $ 6,723 ======= =======
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) JANUARY 31, 1996 AND OCTOBER 31, 1995 (THOUSANDS) LIABILITIES AND STOCKHOLDERS' EQUITY
1996 1995 ------- ------- Current Liabilities: Notes Payable $ 1,307 $ 1,177 Current Portion of Long-Term Debt 399 366 Accounts Payable 1,957 1,538 Accrued Expenses 605 606 ------- ------- Total Current Liabilities $ 4,268 $ 3,687 Long-Term Debt, Less Current Portion 995 974 Deferred Gain on Sale-Leaseback 29 39 Noncurrent Deferred Income Tax Liability 55 55 Stockholders' Equity: Common Stock 15 15 Additional Paid-In Capital 1,447 1,447 Retained Earnings 695 506 ------- ------- Total Stockholders' Equity 2,157 1,968 ------- ------- $ 7,504 $ 6,723 ======= =======
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) THREE MONTHS ENDED JANUARY 31, (THOUSANDS)
1996 1995 ------- ------- Net Sales $ 6,075 $ 4,662 Cost of Sales 5,053 3,836 ------- ------- Gross Profit 1,022 826 Selling, General & Administrative 599 570 ------- ------- Operating Profit 423 256 Other Income (Expense) Interest Expense (74) (55) Equity in Loss of Unconsolidated Investee (50) - Miscellaneous - Net 21 22 ------- ------- Earnings Before Income Taxes 320 223 Income Tax Expense 131 92 ------- ------- NET EARNINGS $ 189 $ 131 ======= =======
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) THREE MONTHS ENDED JANUARY 31, (THOUSANDS)
1996 1995 ------- ------- Earnings Per Common Shares: $ 0.12 $ 0.08 ======= ======= Primary and Fully Diluted $ 0.12 $ 0.08 ======= ======= NET EARNINGS
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS 7 ATHANOR GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED JANUARY 31, (THOUSANDS)
1996 1995 ------- ------- Cash Flows From Operating Activities Net Earnings $ 189 $ 131 Adjustments to Reconcile Net Earnings to Net Cash Provided (Used) by Operating Activities: Equity in Loss of Unconsolidated Investee 50 - Provision for Deferred Income Taxes - - Depreciation and Amortization 81 69 Amortization of Deferred Gain on Sale and Leaseback (10) (10) (Increase) Decrease in Operating Assets: Accounts Receivable (574) (45) Inventories (144) (64) Prepaid Expenses 46 (57) Other 37 (30) Increase (Decrease) in Operating Liabilities: Accounts Payable 419 (30) Accrued Liabilities (1) (115) ------- ------- Net Cash Provided (Used) by Operating Activities 93 (151) ------- ------- Cash Flows from Investing Activities: Purchase of Property and Equipment (184) (15) Investment / Advances In Unconsolidated Investee (50) - Short Term Loan - - ------- ------- Net Cash Used in Investing Activities (234) (15) ------- ------- Cash Flows from Financing Activities: Net Borrowings Under Line of Credit 130 222 Payment of Loans Payable, Net - (58) Net Proceeds Long Term Debt 54 - ------- ------- Net Cash Provided (Used) in Financing Activities 184 164 ------- ------- Net increase (Decrease) in Cash 43 (2) Cash at Beginning of Year 62 149 ------- ------- Cash at End of Period $ 105 $ 147 ======= =======
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS 8 ATHANOR GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED (UNAUDITED) THREE MONTHS ENDED JANUARY 31, (THOUSANDS)
1996 1995 ------- ------- Supplemental Disclosures of Cash Flow Information: Interest Paid $ 74 $ 55 ======= ======= Income Taxes Paid $ 0 $ 95 ======= ======= Supplemental Schedule of Noncash Investing and Financing Activities: January 31, 1996 - ---------------- None January 31, 1995 - ---------------- None
The accompanying notes are an integral part of these statements SUBJECT TO AUDITOR'S YEAR END ADJUSTMENTS 9 Notes to Consolidated Financial Statements (Unaudited) January 31, 1996 and 1995 Note 1 Primary earnings per common share are computed by using the weighted average number of common shares outstanding during the year 1,571,354 shares in 1996 and 1,571,434 shares in 1995. 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 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. 10 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 1995, the Company invested an additional $123,500 into Core which was subsequently reduced to zero, as of October 1995, because of losses incurred by Core. During 1996, the Company has invested an additional $50,000 into Core, which has been written off, due to expected losses at Core during the same period. At January 31, 1996 and 1995 the Company owned approximately 21.5% of the issued and outstanding common stock of Core. Summarized unaudited financial statements for Core for the year ended December 31, 1996 are as follows: Assets $ 1,317,000 Liabilities $ 2,729,000 Deficit Equity $(1,410,000) Sales $ 1,070,000 Expenses $ 2,297,000 Loss $(1,344,000) 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%. The unpaid balance is secured by an equal amount of the company's common stock as defined in the agreement. 11 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 1996 of $1,978,000 remained healthy when compared to $1,844,00 at October 1995 and $1,940,000 at January 1995. The Company's current sales growth continues to require the Company to maintain high inventory levels to service customers needs as well as for on-time deliveries. 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 January 1996, the Company had approximately $693,000 available under the working capital line and $300,000 available under the equipment line as compared to $823,000 and $300,000 , respectively, at October 1995 and $558,000 and $400,000 respectively, at January 1995. The Company believes that the lines of credit are adequate to fund the working capital requirements during the balance of 1996. The Company's credit agreement terminates in August 1996 unless extended in writing by the lender. The company has no reason to believe that the line of credit will not be extended by the lender. The Company acquired $184,000 of new equipment during the first quarter of 1996. $132,000 of the equipment was financed through a five year equipment lease. The Company anticipates additional equipment purchases during 1996 of $200,000 to $300,000. The Company's current equipment line of credit of $300,000 is expected be adequate to fund any additional equipment purchases. The Company has plans to expand its Phoenix division during 1996. Even though a specific new location has not yet been designated, it is anticipated that a minimum of 12,000 to 15,000 square feet will be required. The larger facility will allow for planned expansion over the next few years as well as provide the division with a better equipped, autonomous working environment. The expansion is expected to cost between $150,000 and $200,000, including equipment and leasehold improvements, over a period of six to twelve months. The Company believes it will be able to fund these costs from working capital and its equipment line of credit. RESULTS OF OPERATIONS Sales for the first quarter of 1996 showed a 30% growth over the same period in 1995. The growth was a continuation of the sales increases the company had experienced during all of 1995. The Company anticipates a slight downturn in sales for the balance of 1996, as the economy appears to be slowing. Even though the Company's backlog 12 of $5,931,000 at January 1996 continues to show a strong demand for our services, as compared to $6,134,000 at October 1995 and $5,503,000 at January 1995, there are indications of a slow down in recent orders and delivery schedules. Operating profits of $423,000 for the quarter ended January 1996 as compared to $256,000 for January 1995 directly reflect the Company's higher sales activity. The increase in sales has also caused an increase in borrowings under the Company's working capital line of credit. The combination of the increased borrowings under the line and the equipment purchases in 1995, are the factors in a 35% increase in interest expense during 1996. In February 1995, the Company leased 17,000 square feet of additional manufacturing facilities in Ontario, California. The lease is effective March 1995 through September 1997. Improvements to the additional facilities cost approximately $50,000, in addition to the labor and overhead associated with setting up the facility, before the facility became functional. 13 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. 14 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 20, 1996 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 3-MOS OCT-31-1996 NOV-01-1995 JAN-31-1996 105 0 2,731 12 3,116 6,246 4,640 3,428 7,504 4,268 0 15 0 0 2,142 7,504 6,075 6,075 5,053 5,652 29 0 74 320 131 0 0 0 0 189 .12 .12
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