-----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, WLfM6cGnaX8Sl4fz3yeuBaBu8ab0rM1Q6+LvbaD3ISduT5FqlZNcqmkcMEhJRQkH Q4GyMcv9/xdsiYsMCFYNJQ== 0000950168-98-001746.txt : 19980521 0000950168-98-001746.hdr.sgml : 19980521 ACCESSION NUMBER: 0000950168-98-001746 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980520 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: SEC FILE NUMBER: 000-12649 FILM NUMBER: 98629061 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 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from ____________________ to ___________________ 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 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, 1998: 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, 1998 (unaudited) and December 31, 1997. 3 - 4 Statements of Operations for the three months ended March 31, 1998 (unaudited) and March 31, 1997 (unaudited). 5 Statements of Cash Flows for the three months ended March 31, 1998 (unaudited) and March 31, 1997 (unaudited). 6 Notes to Financial Statements. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 9 PART II. OTHER INFORMATION 10 - 11
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ATHEY PRODUCTS CORPORATION BALANCE SHEETS - ------------------------------------------------------------------------------------------------------------------------------- March 31, 1998 December 31,1997 ----------------------------------------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 6,880 $ 6,880 Accounts receivable (less allowances for doubtful accounts of $200,000) 3,598,542 2,865,872 Inventories 17,655,454 18,108,545 Prepaid expenses 183,083 357,828 Refundable income taxes 749,045 749,045 Deferred income taxes 227,072 227,072 ------------------ -------------------- Total current assets 22,420,076 22,315,242 ------------------ -------------------- OTHER ASSETS: Marketable securities 1,689,843 1,681,224 Other 26,586 26,586 ------------------ -------------------- Total other assets 1,716,429 1,707,810 ------------------ -------------------- PROPERTY, PLANT AND EQUIPMENT: Land and land improvements 47,785 47,785 Buildings 3,792,307 3,777,922 Machinery and equipment 5,654,385 5,606,727 ------------------ -------------------- 9,494,477 9,432,434 Less accumulated depreciation (5,907,745) (5,790,493) ------------------ -------------------- Total property, plant and equipment net 3,586,732 3,641,941 ------------------ -------------------- $ 27,723,237 $ 27,664,993 ================== ====================
See notes to financial statements. 3
ATHEY PRODUCTS CORPORATION BALANCE SHEETS - ------------------------------------------------------------------------------------------------------------------------ March 31, 1998 December 31, 1997 -------------------------------------------------- (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowing $ 716,000 $ - Excess of outstanding checks over bank balance 492,262 949,800 Current portion of obligations under capital lease 3,636 14,507 Accounts payable 969,982 1,518,743 Employee compensation and amounts withheld 256,425 217,755 Accrued pension and other expenses 374,273 129,917 Warranty reserve 1,370,449 1,276,000 ------------------ -------------------- Total current liabilities 4,183,027 4,106,722 ------------------ -------------------- NONCURRENT LIABILITIES: Deferred income taxes 470,834 476,904 ------------------ -------------------- Total noncurrent liabilities 470,834 476,904 ------------------ -------------------- 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 (752,478) (734,798) Unrealized gain on marketable securities available-for-sale, net of related tax effect 491,100 485,411 Less cost of 214,851 common shares in treasury (928,558) (928,558) ------------------ -------------------- Total shareholders' equity 23,069,376 23,081,367 ------------------ -------------------- $ 27,723,237 $ 27,664,993 ================== ====================
See notes to financial statements. 4
ATHEY PRODUCTS CORPORATION STATEMENTS OF OPERATIONS - -------------------------------------------------------------------------------------------------------------------------------- Three Months Ended Three Months Ended March 31, 1998 March 31, 1997 --------------------------------------------------------- (Unaudited) (Unaudited) NET SALES $ 7,048,468 $ 7,772,375 Cost of goods sold 5,518,988 6,436,380 --------------------- --------------------- Gross profit 1,529,480 1,335,995 Selling, administrative and engineering expenses 1,562,208 1,610,435 --------------------- --------------------- Loss from operations (32,728) (274,440) Other income 7,133 5,251 Other expenses 1,085 10,841 --------------------- --------------------- Loss before income tax benefit (26,680) (280,030) Income tax benefit (9,000) (31,200) --------------------- --------------------- NET LOSS $ (17,680) $ (248,830) ===================== ===================== NET EARNINGS (LOSS) PER SHARE $ - $ (0.06) ===================== ===================== WEIGHTED AVERAGE SHARES OUTSTANDING 3,805,608 3,917,684 ===================== =====================
See notes to financial statements. 5
ATHEY PRODUCTS CORPORATION STATEMENTS OF CASH FLOWS - ------------------------------------------------------------------------------------------------------------------------------ Three Months Ended Three Months Ended March 31,1998 March 31,1997 ------------------ ------------------- (Unaudited) (Unaudited) OPERATING ACTIVITIES: Net loss $ (17,680) $ (248,830) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 117,252 115,919 Provision for deferred income tax (9,000) 64,000 Changes in operating assets and liabilities: Accounts receivable (732,670) 86,583 Insurance settlement receivable - 564,380 Inventories 453,091 (788,743) Prepaid expenses 174,745 15,025 Refundable income taxes - (95,200) Other assets - 5,423 Accounts payable (548,761) (736,971) Employee compensation and amounts withheld 38,670 63,802 Accrued pension and other expenses 244,356 104,690 Warranty reserve 94,449 56,007 ------------------ ------------------- Net cash used in operating activities (185,548) (793,915) ------------------ ------------------- INVESTING ACTIVITIES: Purchase of plant equipment (62,043) (83,550) ------------------ ------------------- Net cash used in investing activities (62,043) (83,550) ------------------ ------------------- FINANCING ACTIVITIES: Proceeds from line of credit 2,237,000 1,850,000 Repayment of line of credit (1,521,000) (1,100,000) Excess of outstanding checks over bank balance (457,538) 375,852 Principal paid on obligations under capital lease (10,871) (10,643) Purchase of common stock for treasury - (237,744) ------------------ ------------------- Net cash provided by financing activities 247,591 877,465 ------------------ ------------------- NET CHANGE IN CASH AND CASH EQUIVALENTS - - CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,880 6,984 ------------------ ------------------- CASH AND CASH EQUIVALENTS END OF PERIOD $ 6,880 $ 6,984 ================== =================== SUPPLEMENTAL CASH FLOW DISCLOSURES: Interest paid $ 5,244 $ 10,841 ================== ===================
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, 1997. 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 3,805,608 and 3,917,684 in 1998 and 1997, respectively. Certain 1997 financial statement amounts have been reclassified to conform with the 1998 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 - --------------------- Three Months Ended March 31, 1998 ("First Quarter 1998") - -------------------------------------------------------- as compared to Three Months Ended March 31, 1997 ("First Quarter 1997") - -------------------------------------------------------- The Company's net sales for the First Quarter 1998 were $7,048,468, a 9.3% decrease from the $7,772,375 recorded in the First Quarter 1997. The sales decline reflected an 8.6% decrease in the number of sweepers shipped, but was partially offset by a 2% increase in unit sales prices and an increase in replacement part sales. Although 1998 First Quarter sales orders increased over 1997, these orders were received during the last half of the Quarter and the normal manufacturing cycle on these orders had not been completed by the end of the Quarter. Cost of Sales as a percentage of net sales was 78.3% in the First Quarter 1998 as compared to 82.8% in the First Quarter of 1997. This reduction in the cost of sales percentage is primarily due to higher margins on a larger number of runway sweepers shipped to foreign markets. The Company's selling, administrative and engineering expenses increased from 20.7% to 22.2% of net sales, while in dollar terms they decreased $48,227 to $1,562,208. This overall percentage increase was due to slightly higher warranty expenses, which were partially offset by a decrease in salaries during the First Quarter of 1998. Other income for the First Quarter 1998 was $7,133 as compared to $5,251 in the First Quarter 1997. In addition, interest income increased from $2,154 in 1997 to $5,647 in 1998 due to a higher average investment in cash and cash equivalents. The net loss after income tax for the First Quarter 1998 was $17,680 or $.- per share, as compared to a net loss after income tax of $248,830 or $.06 per share for the First Quarter 1997. 8 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, 1998 the Company had working capital of $18,237,049; the ratio of current assets to current liabilities was 5.4 to 1; and the debt to equity ratio was .20 to 1. This compares to working capital of $18,208,520; a ratio of current assets to current liabilities of 5.4 to 1; and a debt to equity ratio of .20 to 1 at December 31, 1997. As part of its authorized stock repurchase program, the Company did not incur any expenditures for financing activities in 1998 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 $716,000 had been utilized at March 31, 1998. 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. 9 PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings. None ----------------- Item 2. Changes in Securities and Use of Proceeds. None ------------------------------------------ Item 3. Defaults upon Senior Securities. None. -------------------------------- Item 4. Submission of Matters to a Vote of Security Holders. None. ---------------------------------------------------- Item 5. Other Information. ------------------ The Company has had various changes in executive management since April 30, 1998. The Company accepted the resignations of Franz M. Ahting and James H. Stumpo as officers and directors effective April 30, 1998, and May 7, 1998, respectively. Mr. Ahting was Vice-President Finance, Chief Financial Officer, Corporate Treasurer and Secretary. Mr. Stumpo was President and Chief Executive Officer. Effective May 11, 1998, the Board of Directors of the Company elected Wes O. Brant as Vice-President and Chief Operating Officer; Thomas N. Nelson as Vice-President, Sales & Marketing; and Phyllis C. Pearce as Assistant Secretary. Mr. Brant was formerly Director of Engineering; Mr. Nelson was Director of Sales & Marketing; and Ms. Pearce continues in her position as Executive Assistant. On an interim basis, the Company's financial responsibilities will be performed by internal personnel and Mr. Brant will direct the operations of the Company until a new President is elected. Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) No exhibits have been filed as part of this Report. (b) No reports on Form 8-K have been filed during for the Quarter for which this report is filed. 10 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: 05/20/98 /s/ Wes O. Brant - ----------------------------- --------------------------- Wes O. Brant Vice-President Chief Operating Officer Date: 05/20/98 /s/ Lawrence R. Phillips, Jr. - ----------------------------- --------------------------- Lawrence R. Phillips, Jr. Supervisor, Accounting 11 EX-27 2 FDS -- ATHEY PRODUCTS CORP
5 0000008109 Athey Products Corp 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 6,880 0 3,598,542 200,000 17,655,454 22,420,076 9,494,477 5,907,745 27,723,237 4,183,027 0 0 0 8,040,918 15,028,458 27,723,237 7,048,468 0 5,518,988 1,562,208 1,085 0 5,244 (26,680) (9,000) (17,680) 0 0 0 (17,680) 0 0
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