-----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, IcLaVeZmtf9wpkLMS87l1NyWWPvX6EPFFttrXHfDedH3JfIu/CVT4Ex9Cx3E5AcR n+m0CbQpJY/5N9Wrt1B4jg== 0000950168-96-002169.txt : 19961210 0000950168-96-002169.hdr.sgml : 19961210 ACCESSION NUMBER: 0000950168-96-002169 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATHEY PRODUCTS CORP CENTRAL INDEX KEY: 0000008109 STANDARD INDUSTRIAL CLASSIFICATION: 3711 IRS NUMBER: 360753480 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12649 FILM NUMBER: 96663821 BUSINESS ADDRESS: STREET 1: RTE 1A NORTH STREET 2: P O BOX 669 CITY: RALEIGH STATE: NC ZIP: 27602 BUSINESS PHONE: 9195565171 MAIL ADDRESS: STREET 1: ROUTE 1A NORTH STREET 2: P O BOX 669 CITY: RALEIGH STATE: NC ZIP: 27602 10-Q 1 10-Q - ATHEY PRODUCTS CORPORATION UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the Quarter Ended September 30, 1996 Commission File Number 1-2723 ATHEY PRODUCTS CORPORATION (Exact name of registrant as specified in charter) Delaware 36-0753480 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Route 1-A North, P. O. Box 669, Raleigh, North Carolina 27602 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: 919-556-5171 Not Applicable 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 and 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 ___. Number of Common Shares Outstanding as of September 30, 1996: 3,969,459 ATHEY PRODUCTS CORPORATION I N D E X Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets as of September 30, 1996 (unaudited) and December 31, 1995. 3 & 4 Statements of Operations for the nine months ended September 30, 1996 (unaudited) and September 30, 1995 (unaudited). 5 Statements of Operations for the three months ended September 30, 1996 (unaudited) and September 30, 1995 (unaudited). 6 Statements of Cash Flows for the nine months ended September 30, 1996 (unaudited) and September 30, 1995 (unaudited). 7 Notes to Financial Statements. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9,10 & 11 PART II. OTHER INFORMATION 12 & 13 -2- ATHEY PRODUCTS CORPORATION BALANCE SHEETS
September 30, 1996 December 31, 1995 ------------------ ----------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,098,574 $ 3,072,088 Accounts receivable (less allowances for doubtful receivables of $325,070 and $300,000 in 1996 and 1995, respectively) 4,371,169 2,369,107 Inventories 17,190,457 17,022,201 Prepaid expenses 150,454 179,054 Refundable income taxes 153,631 531,517 Deferred income taxes 818,505 834,100 ------------------ ---------------- Total current assets 24,782,790 24,008,067 ------------------ ---------------- OTHER ASSETS: Marketable securities (including unrealized holding gain of $545,944 and $5,699 in 1996 and 1995, respectively) 1,491,695 951,450 Goodwill 200,000 200,000 Other 26,587 24,358 ------------------ ---------------- Total other assets 1,718,282 1,175,808 ------------------ ---------------- PROPERTY, PLANT AND EQUIPMENT: Land and land improvements 47,785 319,769 Buildings 3,542,386 4,017,505 Machinery and equipment 5,196,800 6,359,255 ------------------ ---------------- 8,786,971 10,696,529 Less accumulated depreciation (5,368,495) (6,554,487) ------------------ ---------------- Total property, plant and equipment, net 3,418,476 4,142,042 ------------------ ---------------- $ 29,919,548 $ 29,325,917 ================== ================
See notes to financial statements -3- ATHEY PRODUCTS CORPORATION BALANCE SHEETS
September 30, 1996 December 31, 1995 ------------------ ----------------- (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of obligations under capital lease $ 10,586 $ 42,012 Accounts payable 2,008,257 1,890,865 Employee compensation and amounts withheld 451,767 444,116 Accrued pension and other expenses 704,317 543,635 Warranty reserve 645,857 635,500 ----------------- ------------------ Total current liabilities 3,820,784 3,556,128 ----------------- ------------------ NONCURRENT LIABILITIES: Obligations under capital lease 57,419 57,419 Deferred income taxes 397,850 464,500 ----------------- ------------------ Total noncurrent liabilities 455,269 521,919 ----------------- ------------------ SHAREHOLDERS' EQUITY: Common stock, par value $2 per share: Authorized 10,000,000 shares; Issued 4,020,459 shares 8,040,918 8,040,918 Additional paid-in capital 16,218,394 16,218,394 Retained earnings 1,244,358 1,189,359 Unrealized gain on marketable securities available-for-sale, net of related tax effect 360,387 3,761 Less cost of 51,000 and 47,000 common shares in treasury in 1996 and 1995, respectively (220,562) (204,562) ----------------- ------------------ Total shareholders' equity 25,643,495 25,247,870 ----------------- ------------------ $ 29,919,548 $ 29,325,917 ================= ==================
See notes to financial statements. -4- ATHEY PRODUCTS CORPORATION STATEMENTS OF OPERATIONS
Nine Months Ended Nine Months Ended September 30, 1996 September 30, 1995 (Unaudited) (Unaudited) NET SALES $ 24,486,078 $ 25,307,860 Cost of Goods Sold 20,292,613 20,599,028 -------------------- ------------------- Gross profit 4,193,465 4,708,832 Selling, administrative and engineering expenses 4,621,396 4,758,456 -------------------- ------------------- Loss from operations (427,931) (49,624) Other income 407,327 256,196 Other expenses (12,210) (12,896) -------------------- ------------------- Earnings (loss) before income taxes (32,814) 193,676 Income tax expense (benefit) (87,813) 123,400 -------------------- ------------------- NET EARNINGS $ 54,999 $ 70,276 ==================== =================== NET EARNINGS PER SHARE $ 0.01 $ 0.02 ==================== =================== WEIGHTED AVERAGE SHARES OUTSTANDING 3,973,224 3,973,459 ==================== ===================
See notes to financial statements. -5- ATHEY PRODUCTS CORPORATION STATEMENTS OF OPERATIONS
Three Months Ended Three Months Ended September 30, 1996 September 30, 1995 (Unaudited) (Unaudited) NET SALES $ 7,410,849 $ 6,077,772 Cost of Goods Sold 5,998,775 5,158,227 ------------------ ---------------- Gross profit 1,412,074 919,545 Selling, administrative and engineering expenses 1,474,847 1,444,697 ------------------ ---------------- Loss from operations (62,773) (525,152) Other income 26,297 83,471 Other expenses (4,060) (4,186) ------------------ ---------------- Loss before income taxes (40,536) (445,867) Income tax benefit (13,782) (94,100) ------------------ ---------------- NET LOSS $ (26,754) $ (351,767) ================== ================ NET LOSS PER SHARE $ (0.01) $ (0.09) ================== ================ WEIGHTED AVERAGE SHARES OUTSTANDING 3,972,763 3,973,459 ================== ================
See notes to financial statements. -6- ATHEY PRODUCTS CORPORATION STATEMENTS OF CASH FLOWS
Nine Months Ended Nine Months Ended September 30, 1996 September 30, 1995 (Unaudited) (Unaudited) OPERATING ACTIVITIES: Net earnings $ 54,999 $ 70,276 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 324,714 355,064 Provision for doubtful accounts 25,070 40,751 Provision for deferred income taxes (234,674) 200,693 (Gain) loss on sale of property and equipment (237,141) 961 Changes in operating assets and liabilities: Accounts receivable (2,027,132) 3,819,851 Inventories (168,256) (192,177) Prepaid expenses and other assets 26,371 (61,447) Refundable income taxes 377,886 (296,132) Accounts payable 117,392 (1,685,971) Employee compensation and amounts withheld 7,651 (147,487) Accrued pension and other expenses 160,682 70,232 Warranty reserve 10,357 (112,000) Income taxes payable - (113,500) ----------------- ---------------- Net cash provided by (used in) operating activities (1,562,081) 1,949,114 ----------------- ---------------- INVESTING ACTIVITIES: Purchase of plant and equipment (292,238) (368,351) Proceeds from sale of property and equipment 928,231 47,643 ----------------- ---------------- Net cash provided by (used in) investing activities 635,993 (320,708) ----------------- ---------------- FINANCING ACTIVITIES: Principal paid on obligations under capital lease (31,426) (34,214) Principal paid on debt - (99,595) Purchase of common stock for treasury (16,000) - ----------------- ---------------- Net cash used in financing activities (47,426) (133,809) ----------------- ---------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (973,514) 1,494,597 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,072,088 2,645,641 ----------------- ---------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,098,574 $ 4,140,238 ================= ================ SUPPLEMENTAL CASH FLOW DISCLOSURES: Income taxes paid (recoveries) $ (231,000) $ 354,410 ================= ================ Interest paid $ 10,851 $ 7,404 ================= ================
See notes to financial statements. -7- ATHEY PRODUCTS CORPORATION NOTES TO FINANCIAL STATEMENTS I. The condensed financial statements included herein have been prepared by Athey Products Corporation (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K for the year ended December 31, 1995. II. The financial information reflects all adjustments which are, in the opinion of Management, necessary to a fair presentation of the results for the interim period presented. III. Earnings per share are computed on the basis of the weighted average number of shares outstanding during the period, which were 3,973,224 for the nine month period and 3,972,763 for the three month period ended September 30, 1996. Certain 1995 financial statement amounts have been reclassified to conform with the 1996 presentation with no effect on net income. -8- ATHEY PRODUCTS CORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS During 1995, a restructuring program was developed to significantly reduce the Company's cost structure and improve productivity. This restructuring program involved reductions in the number of employees, consolidation of manufacturing facilities, and disposition of assets that were no longer productive. In February, 1996, as part of this restructuring program, the Company sold its South Dakota land, building and certain inventory and manufacturing equipment. The remaining inventory and equipment were transferred to the Company's Raleigh, North Carolina manufacturing plant. Nine Months Ended September 30, 1996 as compared to Nine Months Ended September 30, 1995 The Company's net sales for the nine months ended September 30, 1996 were $24,486,078, a 3.2% or $821,782 decrease from the $25,307,860 recorded for the same period in 1995. The Company experienced a $1,901,000 reduction in sales volume attributable to the Company's phasing out the manufacture of certain product lines and the transfer of product lines from the Company's South Dakota facility to its Raleigh, North Carolina plant. The Company also incurred a decline in replacement parts sales during this period. These sales declines were partially offset by a 13.2% increase in the number of sweepers shipped and slightly higher average unit selling prices. Cost of sales as a percentage of net sales was 82.9% in the nine months ended September 30, 1996 as compared to 81.4% during the same period in 1995. The increase in the cost of sales was primarily due to manufacturing inefficiencies resulting from the introduction of a new regenerative air sweeper product line and commencement of the production of certain products in the Company's Raleigh, North Carolina facility transferred from the Company's former South Dakota facility. In addition, cost of sales in 1996 reflected expenditures associated with the disposal and write-down to net realizable values of certain assets. The Company's selling, administrative and engineering expenses remained relatively unchanged, increasing from 18.8% to 18.9% of net sales, while decreasing $137,060 to $4,621,396. Approximately $127,000 of additional expenses were incurred during the first quarter of 1996 which related to the closure of operations of the manufacturing facility in Sioux Falls, South Dakota. -9- Other income for the nine months ended June 30, 1996 was $407,327 as compared to $256,196 recorded in the first nine months of 1995. Included in other income for the first half of 1996 was $234,355 which represents the gain from the Company's sale of its South Dakota land, building and certain related inventory and manufacturing equipment. The Company also received $85,343 in 1996 representing a prorata distribution of reorganization proceeds in a bankruptcy case in which the Company was a creditor. The Company had recorded $110,953 as a receivable, of which the entire amount had been reserved at December 31, 1995. Interest income declined from $227,199 in 1995 to $79,363 in 1996 due primarily to a lower average investment in cash and cash equivalents. The income tax benefit for the nine month period ended September 30, 1996 varies from the customary relationship of a 34% income tax expense primarily because of a approximately $77,000 credit from a reduction in the deferred tax asset valuation allowance. Net earnings after tax for the nine months ended September 30, 1996 were $54,999 or $.01 per share, as compared to $70,276 or $.02 per share for the nine months ended September 30, 1995. Three Months Ended September 30, 1996 ("Third Quarter 1996") as compared to Three Months Ended September 30, 1995 ("Third Quarter 1995") The Company's net sales for the Third Quarter 1996 were $7,410,849, representing a 21.9% increase from net sales of $6,077,772 achieved in the Third Quarter 1995. The increase in sales reflects an increase in unit sales volume and slightly higher average unit selling prices. The improvement in sales activity was partially offset by the Company's phasing out the manufacture of certain product lines and the transfer of other product lines from the Company's South Dakota facility to its Raleigh, North Carolina plant. The gross profit margin was 19.1% of net sales for the Third Quarter 1996 compared with 15.1% in the Third Quarter 1995. The Company's gross margins had been negatively impacted in the Third Quarter 1995 by inefficiencies associated with the lower overall sales volume levels experienced during that quarter. Selling, administrative and engineering expenses remained relatively unchanged, declining $30,150 or 2.1% to $1,474,847 in the Third Quarter 1996 as compared to $1,444,697 recorded in the Third Quarter 1995. This decline is partially attributable to the Company's continuing cost reduction programs. -10- Other income was $26,297 in the Third Quarter 1996, down from $83,471 reported for the Third Quarter 1995. The decrease in other income was mainly due to lower interest income which is reflective of a lower average investment portfolio of cash and cash equivalents. The Company's effective tax benefit rate declined slightly to 34.0% of pre-tax loss in the Third Quarter 1996 compared to 21.1% of pre-tax loss in the prior year period. The change in rate primarily reflects a credit from the reduction in valuation allowance. The net loss after tax for the Third Quarter 1996 was $26,754 or $ .01 per share, as compared to a net loss after tax of $351,767 or $.09 per share recorded for the same period in 1995. Effects of Inflation The Company attempts to minimize the impact of inflation on production and operating costs through cost control programs and productivity improvements. The rate of inflation has not had significant impact on the Company's operations. Prices paid for raw materials and other manufacturing inputs have remained fairly stable throughout the periods indicated. On a longer-term basis, the Company has demonstrated an ability to adjust the selling prices of its products in reaction to changing costs. Liquidity and Capital Resources At September 30, 1996 the Company had working capital of $20,962,006. The ratio of current assets to current liabilities was 6.5 to 1 and the debt to equity ratio was .17 to 1. This compares to working capital of $20,451,939; a ratio of current assets to current liabilities of 6.8 to 1; and a debt to equity ratio of .16 to 1 at December 31, 1995. The Company generally relies upon internally generated funds to satisfy working capital requirements and to fund capital expenditures. Other than utilizing the available line of credit as needed, the Company does not presently plan to borrow long-term funds or sell securities. The Company believes that existing working capital, cash flow from future operations, and the available bank line of credit provide adequate resources to finance the cash requirements of future capital expenditures. -11- PART II - OTHER INFORMATION Item 1. Legal Proceedings. None Item 2. Changes in Securities. None Item 3. Defaults upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. The following is included as an exhibit to this report: 27. Financial Data Schedule -12- 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. ATHEY PRODUCTS CORPORATION Date: November 13, 1996 /s/ James H. Stumpo - - --------------------------- ------------------------------ James H. Stumpo, President Date: November 13, 1996 /s/ Franz M. Ahting ------------------------------ Franz M. Ahting, V.P. Finance -13- EX-27 2 EXHIBIT 27 - FINANCIAL DATA SCHEDULE
5 9-MOS 9-MOS DEC-31-1996 DEC-31-1995 SEP-30-1996 SEP-30-1995 2,098,574 3,072,088 0 0 4,371,169 2,369,107 325,070 300,000 17,190,457 17,022,201 24,782,790 24,008,067 8,786,971 10,696,529 5,368,495 6,554,487 29,919,548 29,325,917 3,820,784 3,556,128 0 0 8,040,918 8,040,918 0 0 0 0 17,602,577 17,206,952 29,919,548 29,325,917 24,486,078 25,307,860 0 0 20,292,613 20,599,028 0 0 4,621,396 4,758,456 25,070 40,751 10,851 7,404 (32,814) 193,676 (87,813) 123,400 54,999 70,276 0 0 0 0 0 0 54,999 70,276 0.01 0.02 0 0
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