-----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, J6VcT9T9iQw86taw+ddNLgIGyavTloZmaQcBMRayJ9ESbZT99YUe2CKZqyKxbCZo SegRkNkibgBCY8h7aPPIIw== 0000008598-97-000005.txt : 19970520 0000008598-97-000005.hdr.sgml : 19970520 ACCESSION NUMBER: 0000008598-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 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: 97608439 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 March 31, 1997 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 91768-3200 (Address of principal executive offices)(zip code) Registrant's telephone number, including area code: (909) 595-7204 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: 1,093,678 AUTO-GRAPHICS, INC. Form 10-Q March 31, 1997 TABLE OF CONTENTS Unaudited Condensed Statements of Income............................................1 Unaudited Balance Sheets............................2 Unaudited Statements of Cash Flows..............3 & 4 Notes to the Unaudited Condensed Financial Statements..............................5 Management's Discussion and Analysis of Financial Condition and Results of Operations........................................6 Part II - Other Information.........................8 -1- AUTO-GRAPHICS, INC. Form 10-Q PART I -- FINANCIAL INFORMATION Item 1. Financial Statements. Unaudited Condensed Statements of Income For the Three Months Ended March 31 1997 1996 Net sales $ 1,794,368 $ 2,267,101 Costs and expenses: Cost of sales 970,764 1,301,309 Selling, general & administrative 678,563 826,034 Interest/Other 56,189 59,964 Total costs and expenses 1,705,516 2,187,307 Income from operations 88,852 79,794 Provision for taxes based on income 39,000 37,000 Net income $ 49,852 $ 42,794 Net income per share $ .05 $ .04 Shares outstanding 1,093,678 1,110,178 See Notes to Unaudited Condensed Financial Statements -2- AUTO-GRAPHICS, INC. Form 10-Q Unaudited Balance Sheets March 31, 1997 and December 31, 1996 ASSETS 1997 1996 Current assets: Cash $ 140,786 $ 364,094 Accounts receivable, less allowance for doubtful accounts ($38,000 in 1996 and 1995) 1,406,580 1,882,305 Unbilled production costs 292,073 94,143 Finished goods inventory 50,398 28,939 Other current assets 218,881 188,440 Total current assets 2,108,718 2,557,921 Equipment and leasehold improvements, at cost 9,784,816 9,589,699 Less accumulated depreciation 5,363,733 5,164,177 Net equipment and leasehold improvements 4,421,083 4,425,522 Other assets 195,944 148,507 TOTAL ASSETS $ 6,725,745 $ 7,131,950 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 144,015 $ 330,056 Deferred income 364,061 444,388 Accrued payroll and related liabilities 228,170 191,290 Other accrued liabilities 100,469 127,037 Current portion of long-term debt 655,000 655,000 Total current liabilities 1,491,715 1,747,771 Long-term debt, less current portion 1,950,881 2,100,881 Deferred taxes based on income 664,939 664,939 Total liabilities 4,107,535 4,513,591 Stockholders' equity: Common stock, $.10 par value, 4,000,000 shares authorized, 1,093,678 shares issued and outstanding in 1997, and 1,109,278 shares issued and outstanding in 1996 109,368 110,928 Capital in excess of par value 1,135,999 1,138,651 Retained earnings 1,372,843 1,368,780 Total stockholders' equity 2,618,210 2,618,359 TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 6,725,745 $ 7,131,950 See Notes to Unaudited Condensed Financial Statements -3- AUTO-GRAPHICS, INC. Form 10-Q Unaudited Statements of Cash Flows For the Three Months Ended March 31 Increase (Decrease) in Cash 1997 1996 Cash flows from operating activities: Net income $ 49,852 $ 42,794 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 199,556 268,740 Deferred taxes -- -- Changes in operating assets and liabilities: Accounts receivable 475,725 194,558 Unbilled production costs (197,930) (180,341) Finished goods inventory (21,459) 12,189 Other current assets (30,441) (41,113) Other assets (47,437) -- Accounts payable (186,041) (103,698) Deferred income (80,327) (204,960) Accrued payroll and related liabilities 36,880 82,493 Other accrued liabilities (2,269) (7,673) Interest and income taxes payable (24,300) 27,716 Net cash provided by operating activities 171,809 90,705 Cash flows from investing activities: Capital expenditures (195,117) (316,649) Cash flows from financing activities: Borrowings under long-term debt -- 350,000 Principal payments under debt agreements (150,000) (112,500) Repurchase of capital stock (50,000) (58,900) Net cash provided by (used in) financing activities (200,000) 178,600 Net increase in cash (223,308) (47,344) Cash at beginning of year 364,094 106,518 Cash at end of year $ 140,786 $ 59,174 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 65,238 $ 68,789 Income taxes 63,000 37,000 See Notes to Unaudited Condensed Financial Statements. -5- AUTO-GRAPHICS, INC. Form 10-Q Notes to Unaudited Condensed Financial Statements March 31, 1997 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 March 31, 1997, the results of operations and the statement of cash flows for the three months ended March 31, 1997 and 1996 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, 1996 including, without limitation, the financial statements included therein. NOTE 2. 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 1997, the Company purchased and retired the third block of 15,600 shares. -6- AUTO-GRAPHICS, INC. Form 10-Q Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION December 31, 1996 to March 31, 1997 Liquidity and capital resources. Working capital decreased $193,000. Long-term debt was reduced by $150,000. Actual capital expenditures were $195,000. The average collection period for accounts receivable increased from 67 days at December 31, 1996 to 71 days at March 31, 1997. The Company has a revolving credit facility 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 March 31, 1997) 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, commitment fees or note guarantors. This agreement contains the same loan covenants as the capital line of credit. The Company also has a capital line of credit facility providing for maximum borrowings of $3,000,000 ($504,000 available at March 31, 1997), with interest at 0.75% above the bank's prime rate, for the purchase of equipment and financing of 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. Among other requirements, the capital line of credit note payable requires the Company to maintain minimum financial covenant ratios, and prohibits the payment of cash dividends. There are no commitment fees, compensatory balance requirements or note guarantors. In June 1995, the Company entered into a stock repurchase agreement with a former director of the Company, whereby the Company agreed to purchase and retire, in 1995, 115,000 of 141,000 shares of Company stock owned by the stockholder. The total transaction cost of $230,000 will be paid in four annual installments beginning in 1995 plus interest of 5.5% per annum ($65,000 paid in June 1995, $55,000 paid in June 1996 and $55,000 to be paid in June 1997 and 1998). The Company's capital resources may be used to support working capital requirements, capital investment and possible acquisitions of businesses, products or technologies complementary to the Company's current business. The Company believes that current cash reserves and cash flow from operations are sufficient to fund its operations in 1997. However, during this period or thereafter, the Company may require additional financing. There can be no assurance that such additional financing will be available on terms favorable to the Company, or at all. -7- RESULTS OF OPERATIONS First Quarter 1997 as Compared to First Quarter 1996 Net sales decreased $473,000 or 21% to $1,794,000. Sales in first quarter 1996, of $2,267,000, were higher as they included initial service and equipment sales for new customers of the Company's Impact/ONLINE(tm) product, while 1997 reflects the on-going sales of services. Cost of sales decreased $330,000 or 25%. Gross margins continue to improve from 43% in 1996 to 46% in 1997 due to changes in operating costs generally attributable to variable costs fluctuating with product mix and sales volume. Selling, general and administrative expenses decreased $147,000 or 18%. As a percentage of sales, these expenses increased from 36% to 39%. Interest expense/other was $56,000 in 1997, down 6% from $60,000 in 1996 primarily due to lower interest as a result of lower average borrowings. Net Income improved 16% to $49,900, up from $42,800 in 1996. Net Income per share increased 25% to $0.05 in 1997 from $0.04 in 1996. -8- AUTO-GRAPHICS, INC. Form 10-Q PART II - OTHER INFORMATION Item 1. Legal Proceedings. Gannam/Kubat Publishing, Inc. (which is the other 50% stockholder in the Company's Datacat, Inc. subsidiary) and such shareholder's wholly owned affiliate Diversified Printing and Publishing, Inc. (which has rendered printing services to Datacat payment of which has been deferred) filed a complaint against the Company and its President in a legal action previously initiated by Diversified against Datacat seeking to collect payments for printing services which it had previously agreed to defer in the approximate amount of $350,000. The suit against the Company alleges that payments by Datacat against a commitment to the Company for pre-1994 database creation and maintenance services in the approximate amount of $575,000 were unauthorized or excessive; and that, absent such prior obligation and payments in respect thereof, Datacat would not have had to defer payment to Diversified. The Company also agreed to defer collection for certain services rendered to Datacat equal to or exceeding the amount claimed by Diversified. The Company anticipates the resolution of such matter in favor of Datacat, and thus the Company; and, in any event, the Company does not expect the outcome of such dispute will have a materially adverse effect on the Company's financial position or results of operations. The pleadings in the above referenced legal action were filed as an exhibit with the Company's Annual Report to the US Securities and Exchange Commission on Form 10-K as of December 31, 1996. 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 -9- AUTO-GRAPHICS, INC. Form 10-Q Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: None (b) The Company has not filed any reports on Form 8-K during the period covered by this report. 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 5/14/97 ss/ Robert S. Cope Robert S. Cope, President and Treasurer Date 5/14/97 ss/ Daniel E. Luebben Daniel E. Luebben, Vice-President, Chief Financial Officer and Secretary EX-27 2
5 This schedule contains summary financial information extracted from the Balance Sheet and related Statement of Income of Auto-Graphics, Inc. as of March 31, 1997 and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1997 MAR-31-1997 140786 0 1444579 38000 342471 2108718 9784816 5363733 6725745 1491714 0 0 0 109368 2508844 6725745 1794368 1803417 970764 1649327 0 0 65238 88853 39000 49853 0 0 0 49853 .05 .05
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