-----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, NOB14f74/yWVsx14AtSyqq3vEt9fqmp5EjlsDWLtY/RSq+/yyWDhFn8TScO7PGO+ Dj5GS0HONNZoI5Zn7Isk8w== 0000008598-97-000012.txt : 19971119 0000008598-97-000012.hdr.sgml : 19971119 ACCESSION NUMBER: 0000008598-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971118 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: SEC FILE NUMBER: 000-04431 FILM NUMBER: 97723175 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, 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 (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: 1,093,678 AUTO-GRAPHICS, INC. Form 10-Q PART I -- FINANCIAL INFORMATION Item 1. Financial Statements. Unaudited Condensed Consolidated Statement of Income For Nine Months Ended September 30 1997 1996 Net sales $6,715,381 $6,689,936 Costs and expenses: Cost of sales 4,038,256 3,948,391 Selling, general & administrative 2,164,791 2,342,523 Interest/other 187,305 167,736 Total costs and expenses 6,390,352 6,458,650 Income from operations 325,029 231,286 Provision for taxes based on income 148,000 106,000 Net income $ 177,029 $ 125,286 Net income per share $ 0.16 $ 0.11 Shares outstanding 1,093,678 1,109,278 See Notes to Unaudited Condensed Consolidated Financial Statements AUTO-GRAPHICS, INC. Form 10-Q Unaudited Condensed Consolidated Statement of Income For Three Months Ended September 30 1997 1996 Net sales $2,839,053 $2,144,490 Costs and expenses: Cost of sales 1,836,889 1,226,716 Selling, general & administrative 784,784 786,003 Interest 81,025 58,240 Total costs and expenses 2,702,698 2,070,959 Income from operations 136,355 73,531 Provision for taxes based on income 63,000 33,000 Net income $ 73,355 $ 40,531 Net income per share $ 0.07 $ 0.04 Shares outstanding 1,093,678 1,109,278 See Notes to Unaudited Condensed Consolidated Financial Statements AUTO-GRAPHICS, INC. Form 10-Q Unaudited Balance Sheets September 30, 1997 and December 31, 1996 ASSETS 1997 1996 (Audited) Current assets: Cash $ 102,357 $ 364,094 Accounts receivable, less allowance for doubtful accounts ($38,000 in 1997 and 1996) 2,581,220 1,882,305 Unbilled production costs 228,803 94,143 Finished goods inventory 17,470 28,939 Other current assets 410,684 188,440 Total current assets 3,340,534 2,557,921 Equipment and leasehold improvements, at cost 11,351,896 9,589,699 Less accumulated depreciation 5,837,359 5,164,177 Net equipment and leasehold improvements 5,514,537 4,425,522 Other assets 197,250 148,507 $ 9,052,321 $ 7,131,950 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes Payable $ 600,000 $ -- Accounts payable 502,249 330,056 Deferred income 455,069 444,388 Accrued payroll and related liabilities 343,014 191,290 Other accrued liabilities 141,394 127,037 Current portion of long-term debt 655,000 655,000 Total current liabilities 2,696,726 1,747,771 Long-term debt, less current portion 2,944,073 2,100,881 Deferred taxes based on income 664,939 664,939 Total liabilities 6,305,738 4,513,591 Stockholders' equity: Foreign Currency Translation 1,195 -- 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 1,500,021 1,368,780 Total stockholders' equity 2,746,583 2,618,359 $ 9,052,321 $ 7,131,950 See Notes to Unaudited Condensed Consolidated Financial Statements AUTO-GRAPHICS, INC. Form 10-Q Unaudited Statements of Cash Flows For the Nine Months Ended September 30 Increase (Decrease) in Cash 1997 1996 Cash flows from operating activities: Net income $ 177,029 $ 125,286 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 673,182 712,987 Deferred taxes -- -- Changes in operating assets and liabilities: Accounts receivable (698,915) 447,961 Unbilled production costs (134,661) (23,342) Finished goods inventory 11,469 13,704 Other current assets (222,244) (14,584) Other assets (48,743) (273,392) Accounts payable 172,193 (319,121) Deferred income 10,681 (97,431) Accrued payroll and related liabilities 151,725 105,674 Other accrued liabilities 29,913 (9,038) Interest and income taxes payable (15,556) 88,455 Net cash provided by operating activities 106,073 757,159 Cash flows from investing activities: Capital expenditures (1,762,197) (818,991) Cash flows from financing activities: Borrowings under long-term debt 1,295,000 550,000 Principal payments under debt agreements (451,808) (405,000) Net borrowings (payments)under line-of-credit agreement 600,000 -- Repurchase of capital stock (50,000) (60,350) Net cash provided by (used in) financing activities 1,393,192 84,650 Effect of exchange rate change on cash 1,195 -- Net change in cash (261,737) 22,818 Cash at beginning of year 364,094 106,518 Cash at end of year $ 102,357 $ 129,336 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 212,265 $ 193,589 Income taxes 163,555 17,546 See Notes to Unaudited Condensed Consolidated Financial Statements AUTO-GRAPHICS, INC. Form 10-Q Notes to Unaudited Condensed Consolidated Financial Statements September 30, 1997 NOTE 1. The Unaudited Condensed Consolidated 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, 1997, the results of operations and the statement of cash flows for the nine months ended September 30, 1997 and 1996 pursuant to the rules and regulations of the Securities and Exchange Commission. The consolidated financial statements include the accounts of Auto-Graphics, Inc. and all its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated. 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. NOTE 3. As of July 1, 1997, the Company acquired the assets of the Library Information Systems ("LIS") division of ISM Information Systems Management Manitoba Corporation ("ISM"), a subsidiary of IBM Canada, Ltd. The LIS business includes bibliographic cataloging and interlibrary resource sharing software and related services. The assets acquired include a database containing over 55 million bibliographic and authority records together with the holdings of most Canadian public and university libraries, software, computer equipment, furniture, and leasehold improvements. The Company has formed a wholly-owned subsidiary in Canada called A-G Canada Ltd. headquartered in Etobicoke, Ontario near Toronto, and hired seventeen former employees of the LIS division. Results for the three months ending September 30, 1997 have been included in these consolidated financial statements. 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 September 30, 1997 Liquidity and capital resources. Working capital decreased $166,000. Long-term debt was increased by $843,000 as a result of the acquisition financing. Actual capital expenditures were $1,762,000. The average collection period for accounts receivable increased from 67 days at December 31, 1996 to 82 days at September 30, 1997, partially due to delayed funding of two large customers. 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 $1,250,000 ($650,000 available at September 30, 1997) with interest at the bank's prime rate. Management believes that the current line of credit, which is renewed annually in June, will again be renewed in 1998, and is sufficient to handle cyclical working capital needs. There are no compensating balance requirements, 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 $3,750,000 ($206,000 available at June 30, 1997), with interest equal to 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 June and management believes that the current line of credit will be renewed in 1998. 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, or compensatory balance requirements. 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 1997, and $55,000 to be paid in June 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. AUTO-GRAPHICS, INC. Form 10-Q RESULTS OF OPERATIONS First Nine Months 1997 as Compared to First Nine Months 1996 Net sales were essentially unchanged at $6.7 million year to date. Cost of sales increased $90,000 or 2%. Selling, general and administrative expenses decreased $178,000 or 8%. As a percentage of sales, these expenses decreased from 35% to 32%. Interest expense/other increased $20,000 or 11%. Net interest expense increased $19,000 as a result of lower interest rates on higher average borrowings in 1997 associated with the acquisition financing. Other income in 1996 was $26,000 versus $25,000 in 1997 representing expense reimbursements from other firms. Income from operations increased $94,000, or 41%, to $325,000 in 1997, up from $231,000 in 1996. Net income increased $52,000, or 41%, to a $177,000 net income in 1997, up from an $125,000 net profit in 1996. Net income per share increased 45% to $0.16 in 1997, up from $0.11 in 1996. Third Quarter 1997 as Compared to Third Quarter 1996 Net sales increased $695,000 or 32%. Cost of sales increased $610,000 or 50% reflecting additional operating costs associated with additional sales. Selling, general and administrative expenses were essentially unchanged from 1996. As a percentage of sales, these expenses decreased from 37% to 28%. Interest expense/other increased $23,000. Net interest expense increased $22,000 due to higher debt levels associated with financing the acquisition offset by lower interest rates. Other income in 1996 was $26,000 versus $25,000 in 1997 representing expense reimbursements from other firms. Income from operations increased $62,000 from $74,000 in 1996 to $136,000 in 1997 due to the marginal contribution of the revenues from the acquisition. Net income increased $33,000 to $73,000 in 1997, up 81%. Net income per share increased from $0.04 to $0.07. AUTO-GRAPHICS, INC. Form 10-Q 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. The Company filed Form 8-K on April 29, 1997 covering exhibits to the Form 10-K report for the year ended December 31, 1996. These exhibits were separated from the 10-K prior to the filing thereof and were subsequently refiled during the period covered by this report. b. The Company filed Form 8-K on July 15, 1997 covering the Company's acquisition of the assets of the Library Information Systems division of ISM Information Systems Management Manitoba Corporation, a subsidiary of IBM Canada, Ltd. as of July 1, 1997. c. Exhibits: 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. AUTO-GRAPHICS, INC. Date 11/14/97 ss/ Robert S. Cope Robert S. Cope, President and Treasurer Date 11/14/97 ss/ Daniel E. Luebben Daniel E. Luebben, Chief Financial Officer and Secretary EX-5 2 [ARTICLE] 5 [LEGEND] This schedule contains summary financial information extraxted from the Balance Sheet and related Statement of Income of Auto-Graphics, Inc. as of September 30, 1997 and is qualified in its entirety by reference to such financial statements. [/LEGEND] [PERIOD-TYPE] 9-MOS [FISCAL-YEAR-END] DEC-31-1997 [PERIOD-END] SEP-30-1997 [CASH] 102357 [SECURITIES] 0 [RECEIVABLES] 2619220 [ALLOWANCES] 38000 [INVENTORY] 246273 [CURRENT-ASSETS] 410684 [PP&E] 11351896 [DEPRECIATION] 5837359 [TOTAL-ASSETS] 9052321 [CURRENT-LIABILITIES] 2696726 [BONDS] 0 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 109368 [OTHER-SE] 2637215 [TOTAL-LIABILITY-AND-EQUITY] 9052321 [SALES] 6715381 [TOTAL-REVENUES] 6740341 [CGS] 4038256 [TOTAL-COSTS] 6203047 [OTHER-EXPENSES] 0 [LOSS-PROVISION] 0 [INTEREST-EXPENSE] 212265 [INCOME-PRETAX] 325029 [INCOME-TAX] 148000 [INCOME-CONTINUING] 177029 [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] 177029 [EPS-PRIMARY] .16 [EPS-DILUTED] .16
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