-----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, IJMxI5s6DifnVC/9L6mNmX+NgegEr1U83pS5OGSed8T7BFNzfIGjxB8uNuWgEnwx FLrc5oO3kPxxteXYEkid3Q== 0000008598-96-000011.txt : 19961120 0000008598-96-000011.hdr.sgml : 19961120 ACCESSION NUMBER: 0000008598-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961115 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTO GRAPHICS INC CENTRAL INDEX KEY: 0000008598 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 952105641 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04431 FILM NUMBER: 96667155 BUSINESS ADDRESS: STREET 1: 3201 TEMPLE AVE CITY: POMONA STATE: CA ZIP: 91768 BUSINESS PHONE: 9095957204 MAIL ADDRESS: STREET 1: 3201 TEMPLE AVENUE CITY: POMONA STATE: CA ZIP: 91768 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: September 30, 1996 Commission File Number 0-4431 AUTO-GRAPHICS, INC. (exact name of registrant as specified in its charter) California 95-2105641 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 3201 Temple Avenue, Pomona, California 91768 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (909) 595-7004 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 Total Shares Outstanding: Common Stock: 1,109,278 AUTO-GRAPHICS, INC. Form 10-Q PART I -- FINANCIAL INFORMATION Item 1. Financial Statements. Unaudited Condensed Statement of Income For Nine Months Ended September 30 1996 1995 Net sales $6,689,936 $6,952,801 Costs and expenses: Cost of sales 3,948,391 4,401,095 Selling, general & administrative 2,342,523 2,264,250 Interest/other 167,736 120,481 Total costs and expenses 6,458,650 6,785,826 Income from operations 231,286 166,975 Provision for taxes based on income 106,000 78,000 Net income $ 125,286 $ 88,975 Net income per share $ 0.11 $ 0.08 Shares outstanding 1,109,278 1,130,478 See Notes to Unaudited Condensed Financial Statements Unaudited Condensed Statement of Income For Three Months Ended September 30 1996 1995 Net sales $2,144,490 $2,429,726 Costs and expenses: Cost of sales 1,226,716 1,527,812 Selling, general & administrative 786,003 805,266 Interest 58,240 38,667 Total costs and expenses 2,070,959 2,371,745 Income from operations 73,531 57,981 Provision for taxes based on income 33,000 28,000 Net income $ 40,531 $ 29,981 Net income per share $ 0.04 $ 0.03 Shares outstanding 1,109,278 1,130,478 See Notes to Unaudited Condensed Financial Statements Unaudited Balance Sheet September 30, 1996 and December 31, 1995 ASSETS CURRENT ASSETS 1996 1995 (Audited) Cash $ 129,336 $ 106,518 Accounts receivable, less allowance for doubtful accounts of $38,000 in 1996 and 1995 1,531,284 1,979,245 Unbilled production costs 255,859 232,517 Finished goods 47,242 60,946 Prepaid expenses and other 183,200 168,616 Total current assets 2,146,921 2,547,842 EQUIPMENT & LEASEHOLD IMPROVEMENTS, at cost 8,805,482 7,986,491 Less accumulated depreciation 4,718,227 4,057,170 Net equipment & leasehold improvements 4,087,255 3,929,321 OTHER ASSETS 432,005 210,543 TOTAL ASSETS $6,666,181 $6,687,706 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ -- $ -- Accounts payable 205,310 524,431 Customers' advance payments 392,736 490,167 Accrued expenses 118,001 38,585 Accrued payroll & related liabilities 293,575 187,901 Current portion of long-term debt 655,000 505,000 Total current liabilities 1,664,622 1,746,084 LONG-TERM DEBT 1,900,881 1,905,881 DEFERRED TAXES BASED ON INCOME 593,939 593,939 TOTAL LIABILITIES 4,159,442 4,245,904 STOCKHOLDER'S EQUITY Common stock, $.10 par value; 4,000,000 shares authorized, 1,109,278 shares issued and outstanding in 1996, and 1,130,478 in 1995 110,928 113,048 Capital in excess of par value 1,138,651 1,151,092 Retained earnings 1,257,160 1,177,662 Total stockholders' equity 2,506,739 2,441,802 TOTAL LIABILITIES AND EQUITY $6,666,181 $6,687,706 See Notes to Unaudited Condensed Financial Statements Unaudited Statement of Cash Flows For Nine Months Ended September 30 1996 1995 Cash flows from operating activities: Net income $ 125,286 $ 88,975 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 712,987 677,231 Provision for losses on accounts receivable -- -- (Increase) decrease in accounts receivable 447,961 235,170 (Increase) decrease in unbilled production costs (23,342) (102,626) (Increase) decrease in finished goods inventory 13,704 (2,374) (Increase) decrease in other current assets (14,584) (11,560) (Increase) decrease in other assets (273,392) (7,494) Increase (decrease) in accounts payable (319,121) 11,188 Increase (decrease) in customer advances (97,431) (46,187) Increase (decrease) in accrued expenses (9,038) (49,385) Increase (decrease) in accrued payroll and related liabilities 105,674 134,137 Increase (decrease) in interest and income taxes payable 88,455 (22,885) Increase (decrease) in deferred taxes -- (8,500) Net cash provided by operating activities $ 757,159 $ 895,690 Cash flows from investing activities: Proceeds from sale of fixed assets $ -- $ -- Capital expenditures (818,991) (1,079,531) Net cash used in investing activities (818,991) (1,079,531) Cash flows from financing activities: Borrowings under long-term debt 550,000 250,000 Principal payments under debt agreements (405,000) (337,500) Net borrowings under line-of-credit agreement -- 375,000 Repurchase of capital stock (60,350) (303,094) Stock repurchase debt (see Note 4) -- 165,000 Net cash provided by (used in) financing activities 84,650 149,406 Net increase (decrease) in cash 22,818 (34,435) Cash at beginning of period 106,518 80,852 Cash at end of period $ 129,336 $ 46,417 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 193,589 $ 164,350 Income taxes 17,546 109,298 See Notes to Unaudited Condensed Financial Statements Notes to Unaudited Condensed Financial Statements September 30, 1996 NOTE 1. The unaudited condensed financial statements included herein have been prepared by Registrant and include all normal and recurring adjustments which are, in the opinion of Management, necessary for a fair presentation of the financial position at September 30, 1996, the results of operations and the statement of cash flows for the six months ended September 30, 1996 and 1995 pursuant to the rules and regulations of the Securities and Exchange Commission. The results of operations for the subject periods are not necessarily indicative of the results for the entire year. This Quarterly Report on Form 10-Q is qualified in its entirety by the information included in the Company's Annual Report to the SEC on Form 10-K for the period ending December 31, 1995 including, without limitation, the financial statements included therein. NOTE 2. In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 121, Accounting for the Impairment of Long-Lived Assets, which the Company adopted in 1995. The Standard requires the Company to review the carrying amount of long-lived assets, identifiable intangibles, and related goodwill to determine whether any indicators of impairment are present. At September 30, 1996 the Company's review of it's long-lived assets showed no indications of loss or impairment and, therefore, has not had a material effect on the Company's financial position or results of operations. NOTE 3. The Company entered into a stock repurchase agreement with a former employee and officer of the Company, Douglas K. Bisch, whereby the Company agreed to purchase and retire, over a seven-year period, 156,000 of 171,000 shares of Company stock owned by Mr. Bisch. In January 1996, the Company purchased and retired the second block of 15,600 shares. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. FINANCIAL CONDITION December 31, 1995 to September 30, 1996 Liquidity and capital resources. Working capital decreased $319,000 due to an increase in accrued payroll and related liabilities, as well as an increase in current portion of long-term debt as a result of an increase earlier this year of the Company's capital line of credit note. Other assets increased $221,000 due to deferred database costs on several major contracts which will be recovered over more than one year. Net long-term debt decreased by $5,000. Capital expenditures were $819,000. The average collection period for accounts receivable improved from 70 days at December 31, 1995 to 66 days as of September 30, 1996. The Company has a revolving credit agreement with a bank under which borrowings are secured by accounts receivable, whereby the Company may borrow against its eligible accounts receivable up to a maximum of $1,000,000 ($1,000,000 available at September 30, 1996) with interest at 0.5% above the bank's prime rate. Management believes that the current line of credit, which is renewed annually in May, will again be renewed in 1997, and is sufficient to handle cyclical working capital needs. There are no compensating balance requirements or commitment fees. This agreement contains the same loan covenants as the equipment line of credit note payable. The Company also has a line of credit agreement with the bank providing for maximum borrowings of $3,000,000 ($554,119 available at September 30, 1996), with interest at 0.75% above the bank's prime rate, for the purchase of equipment and financing of up to $1,000,000 in internal software development costs. The capital line of credit is renewed annually in May and management believes that the current line of credit will be renewed in 1997. Management does not currently believe that increased credit will be required to finance capital improvements in 1996. Among other requirements, the capital line of credit note payable requires the Company to maintain minimum ratios of current assets to current liabilities, debt to equity and cash flow to debt service, minimum working capital and equity amounts, limits capital expenditures and capital lease obligations and prohibits the payment of cash dividends. There are no commitment fees or compensatory balance requirements or note guarantors. The Company has a note payable due to a stockholder (per a stock repurchase agreement) with an outstanding balance at September 30, 1996 of $110,000. The note is payable in annual installments of $55,000 (to be paid June 1997 and 1998) plus interest at 5.5% per annum. RESULTS OF OPERATIONS First Nine Months 1996 as Compared to First Nine Months 1995 Net sales decreased $263,000 or 4%. Cost of sales decreased $453,000 or 10% as a result of changes in variable costs fluctuating with product mix, continuing cost reduction measures and productivity gains. Selling, general and administrative expenses increased $78,000 or 3% as a result of the company's focus on sales and marketing. The primary increases are in additional sales and marketing staff, new product promotion and a reorganization of the sales and marketing departments. As a percentage of sales, these expenses increased from 33% to 35%. Interest expense/other increased $47,000 or 39%. Net interest expense increased $29,000 as a result of higher interest rates on higher average borrowings in 1996. Other income in 1996 was $26,000. In 1995 other income was $44,000. Income from operations increased $64,000, or 38%, to $231,000 in 1996, up from $167,000 in 1995. Net income increased $36,000, or 40%, to a $125,000 net profit in 1996, up from an $89,000 net profit in 1995. Net Income per Share increased 38% to $0.11, up from $0.08 in 1995. Third Quarter 1996 as Compared to Third Quarter 1995 Net sales decreased $285,000 or 12%. Cost of sales decreased $301,000 or 20%. Significant factors in cost of sales include changes in operating costs generally attributable to variable costs fluctuating with product mix. Selling, general and administrative expenses decreased $19,000 or 2%. As a percentage of sales, these expenses increased from 33% to 37%. Interest expense/other increased $20,000. Net interest expense increased $9,000. Other income in third quarter of 1995 was $19,000. In the third quarter 1996 other income was of $8,000. Income from operations increased $16,000 to $74,000 in 1996. Net income increased to $41,000 in 1996, up 35%. 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. (a) Exhibits: None (b) The Company filed Form 8-K on April 29, 1996 covering exhibits to the Form 10-K report for the year ended December 31, 1995. These exhibits were separated from the 10-K prior to the filing thereof and were subsequently refiled separately. 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. AUTO-GRAPHICS, INC. Date 11/14/96 ss/ Robert S. Cope Robert S. Cope, President and Treasurer Date 11/14/96 ss/ Daniel E. Luebben Daniel E. Luebben, Chief Financial Officer and Secretary EX-27 2 ARTICLE 5 FDS FOR 3RD QUARTER 10-Q
5 This schedule contains summary financial information extracted from the Balance Sheet and related Statement of Income of Auto-Graphics, Inc. as of September 30, 1996 and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1996 SEP-30-1996 129336 0 1569284 38000 303101 183200 8805482 4718227 6666181 1664622 0 0 0 110928 2395811 6666181 6689936 6715789 3948390 6290914 0 0 193589 231286 106000 125286 0 0 0 125286 .11 .12
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