-----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, ECTor3w0OBoAvTlqQO55nF9PlS4ZfoUizyPU4rUxN0rsmD28exUFau3Qbt7pt2PK vslqNJApFP5qkKccH6eOaw== 0000950112-96-002776.txt : 19960814 0000950112-96-002776.hdr.sgml : 19960814 ACCESSION NUMBER: 0000950112-96-002776 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 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: 96610537 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 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 June 30, 1996. [ ] 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 4,402,342 (CLASS) (Shares Outstanding a August 12, 1996) - ----------------------------- -------------------------------------- PART I ALLIED DEVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS 2 ALLIED DEVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
June 30, September 30, 1996 1995 ----------- ------------ (Unaudited) Assets Current Assets: Cash $ 46,327 $ 198,486 Accounts receivable 2,366,345 2,182,111 Inventories 5,467,802 4,968,370 Prepaid and other current assets 42,498 52,993 ----------- ----------- Total current assets 7,922,972 7,401,960 Property, plant and equipment, net of accumulated depreciation and amortization of $4,680,969 and $4,415,028, respectively 1,934,050 1,756,398 Goodwill 116,056 132,491 Other 110,500 112,686 ----------- ----------- $10,083,577 $ 9,403,535 =========== =========== Liabilities and Stockholders' Equity: Current liabilities: Revolving loan payable $ 1,605,000 $ 1,604,038 Accounts payable 1,252,867 1,368,391 Taxes payable 20,000 286,505 Accrued expenses 448,730 391,137 Current portion-debt and leases 261,177 323,772 ----------- ----------- Total current liabilities 3,587,774 3,973,843 Long-term debt and leases 815,116 497,541 Deferred taxes 182,188 182,188 ----------- ----------- Total liabilities 4,585,078 4,653,572 ----------- ----------- Stockholders' equity: Common stock, $.001 par value, authorized 25,000,000 shares, issued and outstanding 4,402,342 and 4,297,342, respectively 4,402 4,297 Paid-in capital 2,379,192 2,352,819 Retained earnings 3,114,905 2,392,847 ----------- ----------- Total stockholders' equity 5,498,499 4,749,963 ----------- ----------- $10,083,577 $ 9,403,535 =========== ===========
See accompanying notes to financial statements. 3 ALLIED DEVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended June 30, June 30, --------------------------------- ---------------------------------- 1996 1995 1996 1995 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) (unaudited) Net sales $ 4,595,543 $ 4,222,767 $13,721,549 $11,501,001 Cost of sales 3,040,760 2,786,650 9,233,335 7,699,918 ----------- ----------- ----------- ----------- Gross profit 1,554,783 1,436,117 4,488,214 3,801,083 Selling, general and administrative expenses 1,142,264 964,219 3,159,575 2,670,059 ----------- ----------- ----------- ----------- Income from operations 412,519 471,898 1,328,639 1,131,024 Interest expense (net) 40,874 75,088 190,878 237,877 ----------- ----------- ----------- ----------- Income before taxes on income 371,645 396,810 1,137,760 893,147 Taxes on income 135,042 155,000 415,701 345,941 ----------- ----------- ----------- ----------- Net income $ 236,603 $ 241,810 $ 722,059 $ 547,206 =========== =========== =========== =========== Earnings per share $0.05 $0.05 $0.14 $0.10 ===== ===== ===== ===== Weighted average number of shares of common stock outstanding 5,659,838 5,703,338 5,659,838 5,686,837 =========== =========== =========== ===========
See accompanying notes to financial statements. 4 ALLIED DEVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended June 30, --------------------------------------- 1996 1995 ----------- ----------- (Unaudited) (Unaudited) Cash flows from operating activities: Net income $ 722,058 $ 547,206 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 292,855 262,452 Provision for bad debts 67,732 65,976 Decrease (increase) in: Accounts receivable (239,465) (349,454) Inventories (499,432) (253,442) Prepaid expenses and other current assets 10,495 (11,127) Other assets (20,792) (24,753) Increase (decrease) in: Accounts payable (115,524) 248,452 Taxes payable (266,505) 116,990 Accrued expenses and other current liabilities 57,593 (20,573) --------- --------- Net cash provided by operating activities 9,014 581,727 --------- --------- Cash flows from investing activities: Capital expenditures (178,956) (263,321) --------- --------- Net cash used in investing activities (178,956) (263,321) --------- --------- Cash flows from financing activities: Increase (decrease) in revolving loan 962 (187,663) Proceeds from notes payable 700,000 -- Payments of principal and accrued interest on long-term debt and capital lease obligations (709,657) (180,854) Proceeds from exercise of stock options and warrants 26,478 15,688 --------- --------- Net cash provided by (used in) financing activities 17,783 (352,829) --------- --------- Net increase (decrease) in cash (152,159) (34,423) Cash, at beginning of period 198,486 108,328 --------- --------- Cash, at end of period $ 46,327 $ 73,905 ========= =========
See accompanying notes to financial statements. 5 NOTE 1 Business The Company is comprised of Allied Devices Corporation ("ADCO"), and its wholly-owned subsidiaries (collectively the "Company"), Absolute Precision, Inc. ("Absolute"), and Empire Tyler Corporation ("Empire"). The Company is engaged primarily in the manufacture and distribution of standard precision mechanical components and a line of screw machine products. The Company sells all its products to the same base of customers located throughout the United States. Because the Company's product line comprises a comparable group of precision manufactured parts sold to a similar customer base, it considers itself to be engaged in a single business segment. NOTE 2 Summary of Significant Accounting Policies (a) Basis of presentation/principles of 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 June 30, 1996 and 1995, and for the three and nine 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 nine months ended June 30, 1996 are not necessarily indicative of the results that may be expected for the entire year ending September 30, 1996. 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, 1995. -6- ALLIED DEVICES CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SUMMARY OF ACCOUNTING POLICIES (Continued) (b) Inventories Inventories are valued at the lower of cost (last-in, first-out (LIFO) method) or market. For the three and nine months ended June 30, 1996 and 1995, inventory was determined by applying a gross profit method, as opposed to the year ended September 30, 1995, 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 1996. (c) Earnings per share Earnings per share is based on the weighted aver- age 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 the 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 price during the period. The proceeds generated from the assumed exercise of options and warrants in excess of 20% of the outstanding shares of common stock are applied to the assumed repayment of Company debt with the assumed related interest expense savings being included in the Company's results of operations for earnings per share computations. (d) Revenue recognition Sales are recognized upon shipment of products. (e) Statements of cash flows For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. -7- ALLIED DEVICES CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 INVENTORIES Inventories are summarized as follows: June 30, September 30, 1996 1995 ---------- ---------- Raw materials $235,722 $273,553 Work-in-process 815,831 538,730 Finished goods 5,692,677 5,328,138 ---------- ---------- 6,744,230 6,140,421 Less: adjustment to LIFO (1,276,428) (1,172,051) ---------- ---------- $5,467,802 $4,968,370 ========== ========== -8- Item 2 Results of Operations: Three and nine months ended June 30, 1996 compared with three and nine months ended June 30, 1995: 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 risk 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 cautions 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 nine months ended June 30, 1996, were $4,596,000 and $13,722,000, respectively, 8.8% and 19.3% higher than in the comparable period of the prior year. Management attributes this increase to a number of factors, principally: (1) an ongoing advertising campaign in certain trade magazines appears to be expanding and sustaining awareness of the Company's products and services in the markets it serves, producing an unprecedented volume of inquiries from potential customers; (2) a series of customer service improvement programs appears to have resulted in enhanced levels of customer retention and higher volumes of business with existing customers; (3) a program to extend the range of support services provided to the Company's customers seems to be enjoying broad acceptance; and (4) the sectors of the U.S. economy serviced by the Company remain generally robust, although a flattening in the semiconductor equipment sector has delayed certain deliveries by an estimated 3 to 6 months. Reported gross margins for the third quarter and nine months of fiscal 1996 were 33.83% and 32.70%, respectively, as compared to 34.01% and 33.05% for the comparable periods in the prior year. This stability arises from rising shop floor productivity (greater volume of shipments on -9- relatively stable factory operating costs) offsetting higher costs of materials. The Company has not instituted any significant price increases during the nine month period of fiscal 1996. The LIFO reserve increased by approximately $104,000 during the nine months ended June 30, 1996. Selling, general and administrative expenses as a percent of net sales were 24.86% and 23.03%, respectively, in the three and nine months of fiscal 1996 as compared to 22.83% and 23.22% in the comparable periods of fiscal 1995. The increase in expenses for the three months ended June 30, 1996 is principally due to higher accruals for overhead and workforce incentive bonuses. While general and administrative expenses have risen during fiscal 1996 (year-to-date), management's control of overhead during this period of expansion has resulted in these costs rising at a slower rate than shipments. Interest expense in the third quarter and nine months of fiscal 1996 amounted to $41,000 and $191,000, respectively, as compared to $75,000 and $238,000 in the comparable periods of fiscal 1995. This decline in interest expense is the result of both lower interest rates and lower levels of indebtedness. Provision for income taxes is estimated at 36% of pre-tax income for the fiscal 1996 period, as a combination of federal and state taxes. Liquidity and Financial Resources During the first nine months of fiscal 1996, operations generated cash of $9,000 and financing activities generated $18,000, the combined effect of which was $152,000 less than was used for capital expenditures ($179,000), resulting in a reduction of cash on hand. Working capital increased by $907,000 to $4,335,000 during the nine months, principally as a result of the following changes in current assets and current liabilities: (a) Accounts receivable increased by $184,000 as a function of rising volume of shipments partially offset by a reduction in the average collection period from about 51 days at the end of fiscal 1995 to about 47 days at the end of the third quarter of fiscal 1996. (b) Inventories increased by 10.0% during the nine months, or $499,000. Turns on inventory continued to improve, from 2.1 times during fiscal 1995 to 2.3 times during the nine month period. (c) Prepaid expenses and other current assets declined by -10- $11,000 as the Company expensed various prepaid expenses. (d) Current liabilities, exclusive of current portions of long-term debt and capital lease obligations, decreased $323,000 as accounts payable and accrued expenses decreased $58,000, taxes payable decreased by $266,000, and bank borrowings increased $1,000. (e) Current portions of debt and capital lease obligations decreased by $63,000 (net) as the Company retired certain current obligations. Outlays for capital expenditures in the quarter were $179,000 ($444,000 including capital lease acquisitions) as management continued to carry out its expansion plans, adding to capacity and modernizing and automating its manufacturing processes. The Company is in the process of implementing a new computer system (hardware and software), which will ultimately involve the expenditure of approximately $250,000, of which some 75% has been made. Other capital spending plans call for approximately $85,000 of additional investment in machinery and equipment for the remainder of fiscal 1996. Management believes that the Company's working capital as now constituted will be adequate for the needs of the on-going core business. During fiscal 1995, management had concluded that its banking agreements would become a financial constraint during fiscal 1996 if growth in sales volume continued at or above the rates of fiscal 1995. In January 1996, the Company entered into new credit agreements, increasing maximum availability under its revolving credit agreement from $2.5 million to $3.0 million and opening up new term financing lines for equipment totaling approximately $1.7 million (which had been about $400,000). Management further believes that the Company's financial resources will not be adequate to fund its acquisition program. It is management's intention to complete at least one acquisition during calendar 1996, and to do so will, in all likelihood, require raising additional 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 equity 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 -11- additional equity 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 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: August , 1996 ALLIED DEVICES CORPORATION ---------------------------------------------------------------------- (Registrant) By: --------------------------------------- M. Hopkinson Chairman -9- EX-27 2
5 6-MOS SEP-30-1996 JUN-30-1996 46,327 0 2,447,801 81,456 5,467,802 7,880,474 6,615,019 4,680,969 9,814,524 3,587,774 0 0 0 4,402 5,494,097 9,086,273 4,595,543 4,595,543 3,040,760 3,040,760 1,142,264 81,456 40,874 371,645 135,042 236,603 0 0 0 236,603 0.05 0.14
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