-----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, M18r6J+w1GkCjiAitJXWTFuIjSrK3i8oIqTp/ZzO4h+frApw83XXUh13IlINWi5x Jr79BoenDkhxcVLaCrJ27w== 0000950168-97-001324.txt : 19970520 0000950168-97-001324.hdr.sgml : 19970520 ACCESSION NUMBER: 0000950168-97-001324 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATHEY PRODUCTS CORP CENTRAL INDEX KEY: 0000008109 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [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: 97608881 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 ATHEY PRODUCTS CORP. 10-Q 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 March 31, 1997 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.) 1839 South Main Street, Wake Forest, North Carolina 27587-9289 - ------------------------------------------------------------------------------- (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 March 31, 1997: 3,805,608 -------------- ---------- ATHEY PRODUCTS CORPORATION I N D E X Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets as of March 31, 1997 (unaudited) and December 31, 1996. 3 & 4 Statements of Operations for the three months ended March 31, 1997 (unaudited) and March 31, 1996 (unaudited). 5 Statements of Cash Flows for the three months ended March 31, 1997 (unaudited) and March 31, 1996 (unaudited). 6 Notes to Financial Statements. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 10 PART II. OTHER INFORMATION 11 2 ATHEY PRODUCTS CORPORATION BALANCE SHEETS - -------------------------------------------------------------------------------
March 31, 1997 December 31,1996 ------------------ ------------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 6,984 $ 6,984 Accounts receivable (less allowances for doubtful accounts of $350,000 and $350,000 in 1997 and 1996, respectively) 3,651,520 3,738,103 Insurance settlement receivable - 564,380 Inventories 19,738,311 18,949,568 Prepaid expenses 708,510 723,535 Refundable income taxes 639,657 544,457 Deferred income taxes 267,000 331,000 ------------------ ------------------- Total current assets 25,011,982 24,858,027 ------------------ ------------------- OTHER ASSETS: Marketable securities 1,465,693 1,450,650 Other 109,800 115,223 ------------------ ------------------- Total other assets 1,575,493 1,565,873 ------------------ ------------------- PROPERTY, PLANT AND EQUIPMENT: Land and land improvements 47,785 47,785 Buildings 3,589,821 3,574,941 Machinery and equipment 5,339,628 5,270,958 ------------------ ------------------- 8,977,234 8,893,684 Less accumulated depreciation (5,506,272) (5,390,353) ------------------ ------------------- Total property, plant and equipment net 3,470,962 3,503,331 ------------------ ------------------- $ 30,058,437 $ 29,927,231 ================== ===================
See notes to financial statements 3 ATHEY PRODUCTS CORPORATION BALANCE SHEETS - -------------------------------------------------------------------------------
March 31, 1997 December 31, 1996 ---------------- -------------------- (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowing $ 750,000 $ - Checks issued in excess of bank balance 375,852 - Current portion of obligations under capital lease 32,269 42,912 Accounts payable 2,214,536 2,951,507 Employee compensation and amounts withheld 421,443 357,641 Accrued pension and other expenses 385,069 280,379 Warranty reserve 746,007 690,000 ---------------- -------------------- Total current liabilities 4,925,176 4,322,439 ---------------- -------------------- NONCURRENT LIABILITIES: Obligations under capital lease 14,507 14,507 Deferred income taxes 448,919 454,040 ---------------- -------------------- Total noncurrent liabilities 463,426 468,547 ---------------- -------------------- SHAREHOLDERS' EQUITY: Common stock, par value $2 per share: Authorized 10,000,000 shares; Issued 4,020,469 shares 8,040,918 8,040,918 Additional paid-in capital 16,218,394 16,218,394 Retained earnings 985,684 1,234,514 Unrealized gain on marketable securities available-for-sale, net of related tax effect 353,397 333,233 Less cost of 214,851 and 158,751 common shares in treasury in 1997 and 1996, respectively (928,558) (690,814) ---------------- -------------------- Total shareholders' equity 24,699,835 25,136,245 ---------------- -------------------- $ 30,058,437 $ 29,927,231 ================ ====================
See notes to financial statements. 4 ATHEY PRODUCTS CORPORATION STATEMENTS OF OPERATIONS
Three Months Ended Three Months Ended March 31, 1997 March 31, 1996 ------------------- -------------------- (Unaudited) (Unaudited) NET SALES $ 7,772,375 $ 9,021,033 Cost of goods sold 6,436,380 7,557,489 ------------------- -------------------- Gross profit 1,335,995 1,463,544 Selling, administrative and engineering expenses 1,610,435 1,538,699 ------------------- -------------------- Loss from operations (274,440) (75,155) Other income 5,251 367,406 Other expenses 10,841 4,502 ------------------- -------------------- Earnings (loss) before income taxes (280,030) 287,749 Income tax expense (benefit) (31,200) 16,710 ------------------- -------------------- NET EARNINGS (LOSS) (248,830) 271,039 =================== ==================== NET EARNINGS (LOSS) PER SHARE $ (0.06) $ 0.07 =================== ==================== WEIGHTED AVERAGE SHARES OUTSTANDING 3,917,684 3,973,459 =================== ==================== See notes to financial statements. 5 ATHEY PRODUCTS CORPORATION STATEMENTS OF CASH FLOWS
Three Months Ended Three Months Ended March 31,1997 March 31,1996 ----------------- ------------------- (Unaudited) (Unaudited) OPERATING ACTIVITIES: Net earnings (loss) $ (248,830) $ 271,039 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation and amortization 115,919 107,001 Provision for deferred income tax 64,000 (217,966) Gain on sale of equipment - (237,144) Changes in operating assets & Liabilities Accounts receivable 86,583 (3,874,665) Insurance settlement receivable 564,380 - Inventories (788,743) 305,006 Prepaid expenses 15,025 (29,907) Refundable income taxes (95,200) 517 Other assets 5,423 - Accounts payable (736,971) (237,186) Employee compensation and amounts withheld 63,802 15,094 Accrued pension and other expenses 104,690 (17,299) Warranty reserve 56,007 34,920 Income taxes payable - 234,185 ----------------- ------------------- Net cash used in operating activities (793,915) (3,646,405) ----------------- ------------------- INVESTING ACTIVITIES: Purchase of plant equipment (83,550) (163,325) Proceeds from disposal of assets - 928,231 ----------------- ------------------- Net cash provided by (used in) investing activities (83,550) 764,906 ----------------- ------------------- FINANCING ACTIVITIES: Proceeds from line of credit 1,850,000 - Repayment of line of credit (1,100,000) - Checks issued in excess of bank balance 375,852 - Principal paid on obligations under capital lease (10,643) (10,420) Purchase of common stock for treasury (237,744) - ----------------- ------------------- Net cash provided by (used in) financing activities 877,465 (10,420) ----------------- ------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS - (2,891,919) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,984 3,072,088 ----------------- ------------------- CASH AND CASH EQUIVALENTS ----------------- ------------------- END OF PERIOD $ 6,984 $ 180,169 ================= =================== SUPPLEMENTAL CASH FLOW DISCLOSURES: Interest paid $ 10,841 $ 3,649 ================= ===================
See notes to financial statements. 6 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, 1996. 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 3,917,684 and 3,973,459 in 1997 and 1996, respectively. Certain 1996 financial statement amounts have been reclassified to conform with the 1997 presentation with no effect on net income. 7 ATHEY PRODUCTS CORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS During 1995, plans were developed to significantly reduce the Company's cost structure and to 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. The Company also phased-out the manufacture of non-strategic product lines, including Trailers, Track Assemblies and Refuse Collection Products. The restructuring plan is expected to enable the Company to improve its competitive position in its core business, reduce costs, increase efficiency and improve profitability. During 1996, as a continuation of its restructuring plan, the Company incurred approximately $274,626 of additional charges in the first quarter of 1997. Approximately $107,142 of this amount related to the disposal and write-down to net realizable values of certain assets. Approximately $167,484 of this amount is primarily attributable to the additional expenses which were incurred during 1996 relating to the closure of operations of the manufacturing facility in Sioux Falls, South Dakota. The effect was a decrease in net earning after tax of $181,253 or $ .05 per share. In addition, in February 1996, the Company sold its South Dakota land, building and certain inventory and manufacturing equipment. The statement of operations for 1996 includes a pretax gain of $234,355 in connection with this sale. The remaining inventory and equipment were transferred to the Company's Wake Forest, North Carolina manufacturing plant. The effect was an increase in net earnings after tax of $154,674 or $ .04 per share. Three Months Ended March 31, 1997 ("First Quarter 1997") as compared to Three Months Ended March 31, 1996 ("First Quarter 1996") The Company's net sales for the First Quarter 1997 were $7,772,375, a 13.8% decrease from the $9,021,033 recorded in the First Quarter 1996. The sales decline reflected a 26.4% decrease in the number of sweepers shipped, partially offset by a increase in replacement part sales. The decline in sweeper sales was attributable to several factors, including the severe winter weather followed by floods affecting the Company's dealers in the upper midwest markets. Recently approved legislation in southern California, which is an important market for the Company's products, required all cities and counties in the region to improve their street sweeping and to control dust on unpaved roads. The local governments delayed their budgeted purchases until these regulations could be clarified. In addition, a recently passed tire tread weight law in the state of Washington caused some unexpected delays in bids for orders. 8 Cost of Sales as a percentage of net sales was 82.8% in the First Quarter 1997 as compared to 83.8% in the First Quarter 1996. Cost of goods sold in 1996 included approximately $ 107,142 in expenditures associated with the disposal and write-down to net realizable values of certain assets. The Company's selling, administrative and engineering expenses increased from 17.1% to 20.7% of net sales, while in dollar terms they increased $71,736 to $1,610,435 due to higher warranty expenses. In addition, the Company expanded its domestic and international marketing initiatives and increased its sales and field service personnel. As a result, salaries, related employee benefits and travel expenditures were higher in 1997. Approximately $167,484 of additional expenses were incurred during the First Quarter 1996 relating to the closure of operations of the manufacturing facility in Sioux Falls, South Dakota. Other income for the First Quarter 1997 was $5,251 as compared to $367,406 in the First Quarter 1996. Included in other income for the First Quarter 1996 was $234,355 which represents the gain from the Company's sale in February, 1996 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. In addition, interest income declined from $90,802 in 1996 to $2,154 in 1997 due to a lower average investment in cash and cash equivalents. The 11.1% income tax benefit rate for the First Quarter 1997 includes an increase in the valuation reserve allowance of $64,000 against recorded deferred tax assets. The loss after tax for the First Quarter 1997 was $248,830 or $.06 per share, as compared to net earnings after tax of $271,039 or $.07 per share for the First Quarter 1996. Effects of Inflation The Company attempts to minimize the impact of inflation on production and operating costs through cost control programs and productivity improvements. Over the past three years, the rate of inflation has not had a significant impact on the Company's operations. Prices paid for raw materials and other manufacturing inputs have remained fairly stable throughout this period. 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 March 31, 1997 the Company had working capital of $20,086,806; the ratio of current assets to current liabilities was 5.1 to 1; and the debt to equity ratio was .22 to 1. 9 This compares to working capital of $20,535,588; a ratio of current assets to current liabilities of 5.8 to 1; and a debt to equity ratio of .19 to 1 at December 31, 1996. As part of its authorized stock repurchase program, the Company used $237,744 for financing activities in 1997 to repurchase its common stock. 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 had available an unsecured line of credit of $5,000,000 of which $750,000 had been utilized at March 31, 1997. 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. 10 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. None. 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: May 15, 1997 /s/ James H. Stumpo - --------------------------- -------------------- James H. Stumpo President and Chief Executive Officer Date: May 15, 1997 /s/ Franz M. Ahting - --------------------------- ------------------- Franz M. Ahting Vice President Finance 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1997 MAR-31-1997 6,984 0 3,651,520 350,000 19,738,311 25,011,982 8,977,234 5,506,272 30,058,437 4,925,176 0 0 0 8,040,918 16,658,917 30,058,437 7,772,375 0 6,436,380 6,436,380 0 0 10,841 (280,030) (31,200) 0 0 0 0 (248,830) (.06) 0
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