-----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, RmlgJQmt+gKomcPnUo9A5LsQmI6ZH0W2l92vuSwzCXepoiJBqNSPLZTkji1K6BdK 2NyoUskepYMw5ZY68UIEQA== 0000912057-97-017666.txt : 19970515 0000912057-97-017666.hdr.sgml : 19970515 ACCESSION NUMBER: 0000912057-97-017666 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIED DEVICES CORP CENTRAL INDEX KEY: 0000869495 STANDARD INDUSTRIAL CLASSIFICATION: BOLTS, NUTS, SCREWS, RIVETS & WASHERS [3452] IRS NUMBER: 133087510 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-24012 FILM NUMBER: 97605281 BUSINESS ADDRESS: STREET 1: 2365 MILBURN AVENUE CITY: BALDWIN STATE: NY ZIP: 11510 BUSINESS PHONE: 5162239100 FORMER COMPANY: FORMER CONFORMED NAME: ILLUSTRIOUS MERGERS INC DATE OF NAME CHANGE: 19600201 10QSB 1 10QSB Form 10-QSB Quarterly Reports UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10--QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997. [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 02--24012 ALLIED DEVICES CORPORATION --------------------------------------------------------------- (Exact name of registrant as specified in its charter) Nevada --------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) 13-3087510 --------------------------------------------------------------- (I.R.S. Employer Identification No.) 2365 Milburn Avenue, Baldwin,N.Y. 11510 --------------------------------------------------------------- (Address of principal executive offices-- Zip code) Registrant's telephone number, including area code: 516--223--9100 Check whether the issuer (1) filed all reports required to be filed by section 13 or 15 (d) of the Exchange Act during the past 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 --- --- Common Stock, Par Value $.001 4,499,842 (CLASS) (Shares Outstanding at May 3, 1997) ----------------------------- ----------------------------------- PART I ALLIED DEVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS Allied Devices Corporation Consolidated Balance Sheets
MARCH 31, SEPTEMBER 30, 1997 1996 - --------------------------------------------------------------- ------------- ------------- ASSETS (UNAUDITED) Current: Cash........................................................ $ 203,920 $ 54,919 Accounts receivable......................................... 2,375,874 2,193,606 Inventories................................................. 5,897,511 5,882,556 Prepaid and other........................................... 130,593 41,619 ------------- ------------- Total current............................................ 8,607,898 8,172,700 Property, plant and equipment, net............................. 1,949,428 1,965,746 Goodwill....................................................... 99,621 110,577 Other.......................................................... 70,687 88,817 ------------- ------------- Total assets............................................. $ 10,727,634 $ 10,337,840 ------------- ------------- ------------- ------------- Liabilities and Stockholders' Equity Current: Accounts payable............................................ $ 943,239 $ 1,092,758 Taxes payable............................................... 35,809 55,693 Accrued expenses............................................ 298,296 438,035 Current portion of long term debt and capital lease obligations............................................... 122,284 119,401 ------------- ------------- Total current............................................ 1,399,628 1,705,887 Long term debt and capital lease obligations................... 2,864,903 2,642,401 Deferred taxes................................................. 182,188 182,188 ------------- ------------- Total liabilities............................................ 4,446,719 4,530,476 Stockholders' Equity: Capital stock............................................... 4,500 4,402 Paid-in capital............................................. 2,477,720 2,409,086 Retained earnings........................................... 3,798,695 3,393,876 ------------- ------------- Total stockholders' equity.................................. 6,280,915 5,807,364 ------------- ------------- Total liabilities and stockholders' equity.................. $ 10,727,634 $ 10,337,840 ------------- ------------- ------------- -------------
See accompanying notes to financial statements. Allied Devices Corporation and Subsidiaries Consolidated Statements of Income and Retained Earnings
QUARTER ENDED SIX MONTHS ENDED MARCH 31, MARCH 31, -------------------------- -------------------------- 1997 1996 1997 1996 ------------ ------------ ------------ ------------ (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) Net sales................................................ $ 4,105,444 $ 4,831,880 $ 7,631,798 $ 9,126,006 Cost of sales............................................ 2,534,732 3,176,220 4,921,082 6,119,408 ------------ ------------ ------------ ------------ Gross profit.......................................... 1,570,712 1,655,660 2,710,716 3,006,598 Selling, general and administrative expenses............. 1,079,299 1,086,960 1,961,758 2,090,478 ------------ ------------ ------------ ------------ Income from operations................................... 491,413 568,700 748,958 916,120 Interest expense (net)................................... 57,983 83,851 104,341 150,004 ------------ ------------ ------------ ------------ Income before taxes on income............................ 433,430 484,849 644,616 766,116 Taxes on income.......................................... 161,236 179,404 239,797 280,661 ------------ ------------ ------------ ------------ Net income............................................... $ 272,194 $ 305,445 $ 404,819 $ 485,455 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Earnings per share....................................... $ 0.05 $ 0.06 $ 0.08 $ 0.09 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Weighted average number of shares of common stock outstanding............................................ 5,689,488 5,659,838 5,689,488 5,659,838 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
See accompanying notes to financial statements. Allied Devices Corporation and Subsidiaries Consolidated Statements of Cash Flows
SIX MONTHS ENDED MARCH 31, ------------------------ 1997 1996 ----------- ----------- (UNAUDITED) (UNAUDITED) Cash flows from operating activities: Net income........................................................ $ 404,819 $ 485,455 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization.................................... 237,201 189,685 Provision for bad debts.......................................... 247 52,773 Decrease (increase) in: Accounts receivable............................................. (182,516) (531,213) Inventories..................................................... (14,955) (332,263) Prepaid expenses and other current assets....................... (88,974) 31,767 Other assets.................................................... 11,145 (158,562) Increase (decrease) in: Accounts payable................................................ (149,519) 144,121 Taxes payable................................................... (19,884) (266,505) Accrued expenses and other current liabilities.................. (139,739) 86,819 ----------- ----------- Net cash provided by (used in) operating activities............. 57,825 (297,923) ----------- ----------- Cash flows from investing activities: Capital expenditures.............................................. (202,941) (153,850) ----------- ----------- Net cash used in investing activities........................... (202,941) (153,850) ----------- ----------- Cash flows from financing activities: Increase (decrease) in revolving loan............................. 283,662 357,889 Proceeds from notes payable....................................... -- 700,000 Payments of principal and accrued interest on long-term debt and capital lease obligations........................................ (58,277) (598,355) Proceeds from sale of common stock................................ 68,731 (12,897) ----------- ----------- Net cash provided by (used in) financing activities............. 294,116 446,637 ----------- ----------- Net increase (decrease) in cash................................... 149,001 (5,136) Cash, at beginning of period...................................... 54,919 198,486 ----------- ----------- Cash, at end of period............................................. $ 203,920 $ 193,350 ----------- ----------- ----------- -----------
See accompanying notes to financial statements. ALLIED DEVICES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (INFORMATION FOR MARCH 31, 1997 AND 1996 IS UNAUDITED) 1. BUSINESS Allied Devices Corporation and subsidiaries (the "Company") are engaged primarily in the manufacture and distribution of standard precision mechanical components and a line of screw machine products throughout the United States. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation/principles and consolidation The accompanying consolidated financial statements include the accounts of Allied Devices Corporation and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements and related notes thereto as of March 31, 1997 and 1996, and for the three and six months then ended, are unaudited and have been prepared on a basis consistent with the Company's annual financial statements. Such unaudited financial statements include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of such data. Results for the three and six months ended March 31, 1997 are not necessarily indicative of the results that may be expected for the entire year ending September 30, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-KSB for the year ended September 30, 1996. (b) Inventories Inventories are valued at the lower of cost (last-in, first-out (LIFO) method) or market. For the three and six months ended March 31, 1997 and 1996, inventory was determined by applying a gross profit method, as opposed to the year ended September 30, 1996, when inventory was determined by a physical count. The Company has estimated that the change in the excess of the FIFO valuation over the LIFO cost of its inventories will not be significant during fiscal 1997. ALLIED DEVICES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (INFORMATION FOR MARCH 31, 1997 AND 1996 IS UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Depreciation and amortization Property, plant and equipment is stated at cost. Depreciation and amortization of property, plant and equipment is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows: Buildings and improvements 30 years Machinery and equipment 10 years Furniture, fixtures and office equipment 5--7 years Tools, molds and dies 8 years Leasehold improvements Lease term (d) Earnings per share Earnings per share is based on the weighted average number of shares of common stock and common stock equivalents outstanding during each period. Earnings per share is computed using the treasury stock method, modified for options and warrants outstanding in excess of 20% of the outstanding shares of the Company's common stock. Under the treasury stock method the number of shares outstanding reflects an assumed use of the proceeds from the assumed exercise of stock options and warrants to repurchase shares of the Company's common stock at the average market value during the period. The proceeds generated from the assumed exercise of options and warrants in excess of 20% of the outstanding shares are applied to the assumed repayment of debt with the assumed related interest expense savings being included in the Company's results from operations for earnings per share computations. ALLIED DEVICES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (INFORMATION FOR MARCH 31, 1997 AND 1996 IS UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e) Intangible assets The excess of cost over fair value of net assets acquired is being amortized over a period of 20 years. (f) Revenue recognition Sales are recognized upon shipment of products. (g) New accounting pronouncement In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share," which is effective for fiscal years ending after December 15, 1997. The Company will adopt Statement No. 128 for the year ending September 30, 1998. The effect on the consolidated financial statements of Statement No. 128 will not be material on a fully diluted basis. 3. INVENTORIES INVENTORIES ARE SUMMARIZED AS FOLLOWS:
MARCH 31, SEPTEMBER 30, 1997 1996 ----------- ------------- Raw materials.................................................... $ 243,349 $ 238,325 Work-in-process.................................................. 504,278 512,527 Finished goods................................................... 6,423,901 6,404,976 ----------- ------------- 7,171,528 7,155,828 Less: adjustment to LIFO......................................... (1,274,017) (1,273,272) ----------- ------------- $ 5,897,511 $ 5,882,556 ----------- ------------- ----------- -------------
4 ALLIED DEVICES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) RESULTS OF OPERATIONS: SIX MONTHS ENDED MARCH 31, 1997 COMPARED WITH SIX MONTHS ENDED MARCH 31, 1996 ITEM 2--RESULTS OF OPERATIONS: SIX MONTHS ENDED MARCH 31, 1997 COMPARED WITH SIX MONTHS ENDED MARCH 31, 1996: All statements contained herein that are not historical facts, including, but not limited to, statements regarding the Company's current business strategy, the Company's projected sources and uses of cash, and the Company's plans for future development and operations, are based upon current expectations. These statements are forward-looking in nature and involve a number of risks and uncertainties. Actual results may differ materially. Among the factors that could cause actual results to differ materially are the following: the availability of sufficient capital to finance the Company's business plans on terms satisfactory to the Company; competitive factors; changes in labor, equipment and capital costs; changes in regulations affecting the Company's business; future acquisitions or strategic partnerships; general business and economic conditions; and factors described from time to time in the Company's reports filed with the Securities and Exchange Commission. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which statements are made pursuant to the Private Litigation Reform Act of 1995 and, as a result, are pertinent only as of the date made. Net sales for the quarter and six months ended March 31, 1997 were $4,105,000 and $7,632,000, respectively, 15% and 16% lower than in the comparable periods of the prior year. Management attributes this decrease to the following factors: - Towards the end of the Company's fiscal 1996, customers in the semiconductor equipment industry had experienced a slowdown and had, as of August 1996, begun to defer shipments originally scheduled for delivery in the period September, 1996 to February, 1997 until after March, 1997. Management estimates that approximately $750,000 in shipments were deferred during the first quarter (October--December 1996) and approximately $500,000 during the second quarter (January--March, 1997). Recently, as the third quarter of fiscal 1997 has begun, the pace of shipments has improved, giving signs that the industry's slowdown is ending. ALLIED DEVICES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) RESULTS OF OPERATIONS: SIX MONTHS ENDED MARCH 31, 1997 COMPARED WITH SIX MONTHS ENDED MARCH 31, 1996 - A number of other prominent customers suspended or curtailed buying during the Company's first fiscal quarter (October to December, 1996) in order to minimize inventories for calendar year-end. Management estimates that at least $245,000 in shipments were deferred as a result of this factor. The Company's on-going advertising campaign in certain trade magazines is focused on the advantages of having Allied Devices as a source, and it appears to be expanding awareness of the Company's products and services in the markets it has targeted. The rate at which the Company is adding new customers remains healthy and steady. Customer retention appears to be excellent, which management attributes to the success of various innovative approaches to customer service. Reported gross margins for the second quarter and six months of fiscal 1997 were 38.26% and 35.52%, respectively, as compared to 34.27% and 32.79% for the comparable periods in the prior year. Improved procurement practices and favorable market conditions lowered material expense to approximately 32% of net sales during the first six months of fiscal 1997, from approximately 38% in the first six months of fiscal 1996. While the Company lowered spending on factory payroll and overhead during the six month period, it did not completely offset the reduction in volume, thus partially mitigating the savings in materials expense. The Company did institute certain modest price increases during the second quarter of fiscal 1997, affecting specific product groupings in the Company's catalog. Management estimates the effect on revenues to be less than 1%. The LIFO reserve increased by approximately $1,000 during the six months ended March 31, 1997. Selling, general and administrative expenses as a percentage of net sales were 26.29% and 25.71% in the second quarter and six months of fiscal 1997, as compared to 22.50% and 22.75% in the comparable periods of fiscal 1996. Such expenditures were cut back more than 6% during the six months, yet expressed as a percentage of sales they increased due to the reduction in volume. ALLIED DEVICES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) RESULTS OF OPERATIONS: SIX MONTHS ENDED MARCH 31, 1997 COMPARED WITH SIX MONTHS ENDED MARCH 31, 1996 Interest expense for the second quarter and six months of fiscal 1997 amounted to $58,000 and $104,000, respectively, approximately 30% lower than in the comparable periods of fiscal 1996. Provision for income taxes is estimated at 37.2% of pre-tax income for both the second quarter and six months of fiscal 1997, as a combination of federal and state taxes. LIQUIDITY AND FINANCIAL RESOURCES During the first six months of fiscal 1997, the Company's financial condition remained healthy. Operations generated cash of $58,000, and additional financing generated cash of $294,000. Capital expenditures used $203,000 of this cash, with the remainder increasing cash on hand by $149,000. Working capital increased by $741,000 to $7,208,000 during the period, principally as a result of the following changes in current assets and liabilities. (a) Accounts receivable increased by $183,000 as a function of the time required to collect receivables. The average collection period increased to about 53 days at the end of the second quarter of fiscal 1997 from about 45 days at the end of fiscal 1996. (b) Inventories increased by 1/4 of 1% during the six months, or $15,000. Turns on inventory were 1.7 times during the six months as compared to 2.0 times during fiscal 1996. This change in turnover rate is attributable to the decrease in shipping volume during the six month period. (c) Prepaid and other current assets increased by $89,000 as the Company booked certain annual expenses in full and is recognizing them by quarter. (d) Current liabilities, exclusive of current portions of long-term debt and capital lease obligations, decreased $309,000 as accounts payable and accrued expenses decreased $289,000 and taxes payable decreased by $20,000. (e) Current portions of debt and capital lease obligations increased by $3,000. (f) Cash balances increased by $149,000. ALLIED DEVICES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) RESULTS OF OPERATIONS: SIX MONTHS ENDED MARCH 31, 1997 COMPARED WITH SIX MONTHS ENDED MARCH 31, 1996 Outlays for capital expenditures in the six month period were $203,000 as management continued to carry out its capital spending plans, adding to capacity and modernizing and automating its manufacturing processes. Capital spending plans for the remainder of fiscal 1997 call for expenditures of approximately $125,000. The Company is completing installation of a computer and management information system, which will involve the expenditure of an additional $50,000 during fiscal 1997. This is scheduled for completion during the fourth quarter of this fiscal year. Other expenditures will be for production machinery and tooling. Management believes that the Company's working capital as now constituted will be adequate for the needs of the on-going core business. Management further believes that the Company's current financial resources will not be adequate to fund its acquisition program. It is management's intention to complete at least one acquisition during fiscal 1997, and to do so will, in all likelihood, require raising additional debt and/or equity capital. Management believes that it has several sources for such capital and expects that the combination of capital raised and acquisitions completed will produce anti-dilutive results for the Company's existing stockholders. While this is management's intention, there is no guarantee that they will be able to achieve this objective. The Company is not relying on the receipt of any new capital for its existing operations, but it is important to note that some of the most promising elements of management's expansion plans may not be possible without raising additional capital. In the event that such additional equity funds are raised, management intends to implement its plans and will do so in keeping with its judgment at that time as to how best to deploy such added capital. PART II. OTHER INFORMATION Item 4--Submission of Matters to a Vote of Security Holders. On March 26, 1997, the Company held its 1997 Annual Meeting of Stockholders. At the Annual Meeting, the following matters were submitted to a vote of stockholders. 1. The following seven individuals, constituting the full Board of Directors of the Company, were nominated and elected to serve as directors of the Company. Mark Hopkinson FOR: 3,950,518 WITHHOLD AUTHORITY: 1,000 P.K. Bartow FOR: 3,950,518 WITHHOLD AUTHORITY: 1,000 Salvator Baldi FOR: 3,950,518 WITHHOLD AUTHORITY: 1,000 Gail F. Lieberman FOR: 3,950,418 WITHHOLD AUTHORITY: 1,100 Christopher T. Linen FOR: 3,950,518 WITHHOLD AUTHORITY: 1,000 Michael Michaelson FOR: 3,950,518 WITHHOLD AUTHORITY: 1,000 Robert J. Smallacombe FOR: WITHHOLD 3,950,518 AUTHORITY: 1,000 PART II. OTHER INFORMATION (Continued) 2. The holders of 3,944,458 shares of common stock voted in favor, the holders of 2,110 shares of common stock voted against, and the holders of 4,950 shares of common stock abstained with respect to the ratification of the selection of BDO Seidman, LLP, independent certified public accountants, to serve as independent accountants of the Company for the fiscal year ending September 30, 1997. 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. Date: May , 1997 ALLIED DEVICES CORPORATION (Registrant) By: ___________________________________ M. Hopkinson Chairman EX-27 2 EXHIBIT 27 FDS
5 This schedule contains summary financial information extracted from March 1997 10-Q 0000869495 ALLIED DEVICES CORP. 3-MOS SEP-30-1997 JAN-01-1997 MAR-30-1997 203,920 0 2,432,439 56,565 5,897,511 8,607,898 6,956,307 4,976,879 10,727,634 1,399,628 0 0 0 4,500 6,276,415 10,727,634 4,105,444 4,105,444 2,534,732 2,534,732 1,079,299 56,565 57,983 433,430 161,236 272,194 0 0 0 272,194 .05 .05
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