-----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, OfV5Tsi7s2kyplwL38NtqYdTNeL/nMxNycTAJhTxIrtdKos51uRHZh3LFxjQSISK +T1FnniG5EiNY0PkfVkIsA== 0000950148-96-002031.txt : 19960917 0000950148-96-002031.hdr.sgml : 19960917 ACCESSION NUMBER: 0000950148-96-002031 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960916 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: 96630733 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 FOR QUARTER ENDED JULY 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 July 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. 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: 1,471,354 shares as of July 31, 1996. 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements 3 ATHANOR GROUP, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) JULY 31, 1996 AND OCTOBER 31, 1995 (THOUSANDS) ASSETS
1996 1995 ------ ------ Current Assets: Cash $ 295 $ 62 Trade Receivables, Less Allowance for Doubtful Accounts of $12,000 and $12,000 2,515 2,145 Notes Receivable: Net of Allowance of $534,062 45 25 Inventories: Raw Materials 1,039 835 Work in Progress 545 519 Finished Goods 1,590 1,618 ------ ------ 3,174 2,972 Prepaid Expenses 60 136 Deferred Income Tax Asset 191 191 ------ ------ Total Current Assets 6,280 5,531 Property, Plant and Equipment, at Cost 4,786 4,456 Less Accumulated Depreciation and Amortization 3,574 3,347 ------ ------ Net Property, Plant and Equipment 1,212 1,109 Other Assets 60 83 ------ ------ $7,552 $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) JULY 31, 1996 AND OCTOBER 31, 1995 (THOUSANDS) LIABILITIES AND STOCKHOLDERS' EQUITY
1996 1995 ------ ------ Current Liabilities: Notes Payable $1,048 $1,177 Current Portion of Long-Term Debt 420 366 Accounts Payable 1,679 1,538 Accrued Expenses 732 606 ------ ------ Total Current Liabilities $3,879 $3,687 Long-Term Debt, Less Current Portion 1,180 974 Deferred Gain on Sale-Leaseback 8 39 Noncurrent Deferred Income Tax Liability 55 55 Stockholders' Equity: Common Stock 15 15 Additional Paid-In Capital 1,447 1,447 Retained Earnings 968 506 ------ ------ Total Stockholders' Equity 2,430 1,968 ------ ------ $7,552 $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) NINE MONTHS ENDED JULY 31, (THOUSANDS)
1996 1995 ------- ------- Net Sales $17,823 $14,335 Cost of Sales 14,906 11,812 ------- ------- Gross Profit 2,917 2,523 Selling, General & Administrative 1,838 1,804 ------- ------- Operating Profit 1,079 719 Other Income (Expense) Interest Expense (216) (202) Equity in Loss of Unconsolidated Investee (131) (69) Miscellaneous - Net 52 38 ------- ------- Earnings Before Income Taxes 784 486 Income Tax Expense 322 200 ------- ------- NET EARNINGS $ 462 $ 286 ======= =======
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) NINE MONTHS ENDED JULY 31, (THOUSANDS)
1996 1995 ----- ----- Earnings Per Common Shares: Primary and Fully Diluted $0.31 $0.18 ----- ----- NET EARNINGS $0.31 $0.18 ===== =====
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 JULY 31, (THOUSANDS)
1996 1995 ------ ------ Net Sales $5,940 $4,711 Cost of Sales 4,977 3,865 ------ ------ Gross Profit 963 846 Selling, General & Administrative 631 596 ------ ------ Operating Profit 332 250 Other Income (Expense) Interest Expense (72) (74) Equity in Loss of Unconsolidated Investee (47) (69) Miscellaneous - Net 11 10 ------ ------ Earnings Before Income Taxes 224 117 Income Tax Expense 93 48 ------ ------ NET EARNINGS $ 131 $ 69 ====== ======
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 JULY 31, (THOUSANDS)
1996 1995 ----- ----- Earnings Per Common Shares: Primary and Fully Diluted $0.09 $0.04 ----- ----- NET EARNINGS $0.09 $0.04 ===== =====
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) NINE MONTHS ENDED JULY 31, 1996 (THOUSANDS)
Common Stock (25,000,000 Shares Additional Authorized) Paid-In Retained Shares Par Value Capital Earnings Total ------ --------- ------- -------- ----- Balance at October 31, 1995 1,571 $ 15 $1,447 $506 $1,968 Net Earnings for Nine Months Ended July 31, 1996 462 462 ----- ---- ------ ---- ------ 1,571 $ 15 $1,447 $968 $2,430 ===== ==== ====== ==== ======
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) NINE MONTHS ENDED JULY 31, (THOUSANDS)
1996 1995 ----- ----- Cash Flows From Operating Activities Net Earnings $ 462 $ 286 Adjustments to Reconcile Net Earnings to Net Cash Provided (Used) by Operating Activities: Equity in Loss of Unconsolidated Investee 131 -- Provision for Deferred Income Taxes -- -- Depreciation and Amortization 227 206 Amortization of Deferred Gain on Sale and Leaseback (31) (31) (Increase) Decrease in Operating Assets: Accounts Receivable (370) (27) Inventories (202) (140) Prepaid Expenses 76 (36) Other 3 (2) Increase (Decrease) in Operating Liabilities: Accounts Payable 141 193 Accrued Liabilities 126 (102) ----- ----- Net Cash Provided (Used) by Operating Activities 563 347 ----- ----- Cash Flows from Investing Activities: Purchase of Property and Equipment (330) (498) Investment / Advances In Unconsolidate Investee (131) -- Short Term Loan 0 -- Investment - Common Stock 0 (200) ----- ----- Net Cash Used in Investing Activities (461) (698) ----- ----- Cash Flows from Financing Activities: Net Borrowings Under Line of Credit (129) (2) Payment of Loans Payable, Net -- -- Net Proceeds Long Term Debt 260 316 ----- ----- Net Cash Provided (Used) in Financing Activities 131 314 ----- ----- Net increase (Decrease) in Cash 233 (37) Cash at Beginning of Year 62 149 ----- ----- Cash at End of Period $ 295 $ 112 ===== =====
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 JULY 31, (THOUSANDS)
1996 1995 ---- ---- Supplemental Disclosures of Cash Flow Information: Interest Paid $216 $202 ==== ==== Income Taxes Paid $ 25 $214 ==== ====
Supplemental Schedule of Noncash Investing and Financing Activities: July 31, 1996 The Company purchased $238,000 of machinery and equipment under a capital lease obligation. July 31, 1995 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 12 Note 1 Primary earnings per common share are computed by using the weighted average number of common shares outstanding during the year: 1,471,354 shares in 1996 and 1,471,434 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 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 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 $131,000 into Core, which has been written off, due to expected losses at Core during the same period. In April 1996 the Company agreed to an extension of its forbearance under the Loan and Security Agreement with Core to August 15, 1996. Under the extension agreement, the Company will be granted additional common stock in Core, based on a formula using the unpaid balance of the loans, as a percent of the total loans, calculated at certain intervals. As of July 31, 1996 the Company has received 744,000 shares of Core common stock. At July 31, 1996 and 1995, the Company owned approximately 26.4% and 21.5% respectively of the issued and outstanding common stock of Core. Summarized unaudited financial statements for Core, for the seven months ended July 31, 1996 are as follows: Assets $ 800,000 Liabilities $ 4,362,000 Deficit Equity $(3,562,000) Sales $ 820,000 Expenses $ 1.340,000 Loss $ (520,000)
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, 1996, the Company's unpaid balance is $120,000. The unpaid balance is secured by an equal amount of the company's common stock as defined in the agreement. 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 July 1996 of $2,401,000 continues to improve when compared to $1,844,000 at October 1995 and $1,822,000 at July 1995. The improvement in working capital is a combination of improved sales along with a refinancing of the Company's credit agreement. The amended credit agreement, discussed below, increased working capital by approximately $250,000. Current sales growth has placed additional demands on working capital as the Company maintains higher accounts receivable and inventory levels to service customers needs as well as for on-time deliveries. While this is considered a necessary requirement of growth, as well as a customer requirement, the Company is striving for ways to implement inventory controls yet service its customers on a timely basis. The Company's credit agreement was amended during July 1996, and extended until August 1997. The amended credit agreement provides for a total line of credit of $3,500,000, of which $2,200,000 is for working capital, a $900,000 long term machinery and equipment loan, and a $400,000 line for the acquisition of additional equipment. At July 1996, the Company had approximately $1,150,000 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 $782,000 and $400,000 respectively at April 1995. The Company believes that the lines of credit are adequate to fund working capital requirements during the balance of 1996. The Company has acquired $330,000 of new equipment during 1996. $238,000 of the equipment was financed through five year equipment leases. The Company anticipates additional equipment purchases during 1996 of $100,000 to $200,000. The Company's current equipment line of credit of $300,000 is expected to be adequate to fund any additional equipment purchases, including those associated with the new Phoenix facility. The Company has plans to expand its Phoenix division during 1996 and has recently completed negotiations on the leasing of a 15,000 square foot facility for five years. The new lease runs from November 1996 through October 2001. The Company's current lease on its Phoenix facility has been extended through December 1996. 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 1996 have continued to be very strong with increases over 1995, in the nine months and three months ended July 1996 of 24% and 17 %. The sales increases are an indication of a strong business climate as well as the results of the Company's growth program. The leasing of additional facilities in 1995 has allowed for the continued expansion into larger 15 diameter machines as well as expanding our secondary operations department. These expansions, as well as the planned expansion in Phoenix, are the basis for the Company's current and future growth plans. The company's operating profits for the nine months and three months ended July 1996 of $1,079,000 and $332,000 respectively, reflect increases of 50% and 33% when compared to 1995. The increase in operating profits is a direct result of the increased sales. The Company's current backlog at July 1996 of $6,158,000, as compared to $6,134,000 at October 1995 and $5,452,0000 at July 1995, continues to demonstrate the strength in the current business climate. While the Company has experienced slight downturns in sales and backlog during 1996, the effect has always been short-term. Based on the current strength on our backlog, the Company does not anticipate a major change in the business for the balance of the current fiscal year. 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. 16 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. 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 September 13, 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. 9-MOS OCT-31-1996 NOV-01-1995 JUL-31-1996 295 0 2,527 12 3,174 6,280 4,786 3,574 7,552 3,879 0 0 0 15 2,415 7,752 17,823 17,823 14,906 16,744 79 0 216 784 322 0 0 0 0 462 .31 .31
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