-----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, V9M0V5PzlO49JoCKYHC0FmgOSHsd5BLvFzZU+gPgcqEGl3wF1eDOf/P5KFXqPdnj A3ycogfljrt4hulsaxeMwg== 0001005477-97-000337.txt : 19970222 0001005477-97-000337.hdr.sgml : 19970222 ACCESSION NUMBER: 0001005477-97-000337 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970213 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: 97530808 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 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 December 31, 1996. [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0 - 24012 ALLIED DEVICES CORPORATION - -------------------------------------------------------------------------------- (Exact name of small business issuer 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) Issuer'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 4,401,842 - ----------------------------- ----------------------------------------- (CLASS) (Shares Outstanding at February 13, 1997) PART I ALLIED DEVICES CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS Allied Devices Corporation Balance Sheets ================================================================================ December 31, September 30, 1996 1996 - -------------------------------------------------------------------------------- Assets (Unaudited) Current: Cash $63,621 $54,919 Accounts receivable 1,788,064 2,193,606 Inventories 5,918,681 5,882,556 Prepaid and other 186,699 41,619 - -------------------------------------------------------------------------------- Total current 7,957,064 8,172,700 Property, plant and equipment, net 1,974,749 1,965,746 Goodwill 105,099 110,577 Other 81,404 88,817 - -------------------------------------------------------------------------------- Total assets $10,118,316 $10,337,840 ================================================================================ Liabilities and Stockholders' Equity Current: Accounts payable $969,999 $1,092,758 Taxes payable 86,127 55,693 Accrued expenses 313,339 438,035 Current portion of long term debt and capital lease obligations 122,284 119,401 - -------------------------------------------------------------------------------- Total current 1,491,750 1,705,887 Long term debt and capital lease obligations 2,504,389 2,642,401 Deferred taxes 182,188 182,188 - -------------------------------------------------------------------------------- Total liabilities 4,178,327 4,530,476 Stockholders' Equity: Capital stock 4,402 4,402 Paid-in capital 2,409,086 2,409,086 Retained earnings 3,526,501 3,393,876 - -------------------------------------------------------------------------------- Total stockholders' equity 5,939,989 5,807,364 - -------------------------------------------------------------------------------- Total liabilities and stockholders' equity $10,118,316 $10,337,840 ================================================================================ 3 Allied Devices Corporation Consolidated Statements of Income ================================================================================ For the three months ended December 31, 1996 1995 - -------------------------------------------------------------------------------- (Unaudited) (Unaudited) Net sales $3,526,354 $4,294,126 Cost of sales 2,386,351 2,943,188 - -------------------------------------------------------------------------------- Gross profit 1,140,004 1,350,938 Selling, general and administrative expenses 882,460 1,003,518 - -------------------------------------------------------------------------------- Income from operations 257,544 347,420 Interest expense (net) 46,358 66,153 - -------------------------------------------------------------------------------- Income before taxes on income 211,186 281,267 Taxes on income 78,561 101,257 - -------------------------------------------------------------------------------- Net income $ 132,625 $ 180,010 ================================================================================ Earnings per share $ 0.03 $ 0.04 ================================================================================ Weighted average shares (treasury method) 5,689,488 5,660,838 ================================================================================ 4 Allied Devices Corporation Consolidated Statements of Cash Flows ================================================================================ For the three months ended December 31, 1996 1995 - -------------------------------------------------------------------------------- Cash flows from operating activities: (Unaudited) Net income $ 180,010 $ 132,625 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 116,884 86,799 Provision for bad debts 670 590 Reserve for note receivable -- 75,000 Other -- -- Decrease (increase) in: Accounts receivable 404,873 (97,658) Inventories (36,125) (166,211) Prepaid and other (145,079) 41,045 Other assets 3,920 (136,975) Increase (decrease) in: Accounts payable (122,759) 83,525 Taxes payable 30,434 (77,998) Accrued expenses (124,696) 80,816 - -------------------------------------------------------------------------------- Net cash provided by operating activities 260,746 68,943 - -------------------------------------------------------------------------------- Cash flows from investing activities: Capital expenditures (116,915) (45,772) - -------------------------------------------------------------------------------- Cash flows from financing activities: Increase (decrease) in bank borrowings (106,338) 36,131 Payments of long-term debt and capital lease obligations (28,791) (103,778) - -------------------------------------------------------------------------------- Net cash used in financing activities (135,129) (67,647) - -------------------------------------------------------------------------------- Net decrease in cash 8,702 (44,476) Cash, at beginning of period 54,919 198,486 - -------------------------------------------------------------------------------- Cash, end of period $ 63,621 $ 154,010 ================================================================================ 5 Allied Devices Corporation and Subsidiaries Notes to Consolidated Financial Statements (Information for December 31, 1996 and 1995 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 (a) Basis of presentation/principles of consolidation Significant Accounting Policies 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 December 31, 1996 and 1995, and for the three 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 months ended December 31, 1996 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 months ended December 31, 1996 and 1995, 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. 6 Allied Devices Corporation and Subsidiaries Notes to Consolidated Financial Statements (Information for December 31, 1996 and 1995 is unaudited) ================================================================================ 2. Summary of (c) Depreciation and amortization Significant Accounting Policies (Continued) 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) Income taxes The Company and its subsidiaries file a consolidated federal income tax return and separate state income tax returns. The Company follows the liability method of accounting for income taxes. (e) 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. 7 Allied Devices Corporation and Subsidiaries Notes to Consolidated Financial Statements (Information for December 31, 1996 and 1995 is unaudited) ================================================================================ 2. Summary of (f) Intangible assets Significant Accounting Policies (Continued) The excess of cost over fair value of net assets acquired is being amortized over a period of 20 years. (g) Revenue recognition Sales are recognized upon shipment of products. (h) Statement 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. 3. Inventories Inventories are summarized as follows: December 31, September 30, 1996 1996 ----------------------------------------------------- Raw materials $ 244,567 $ 238,325 Work-in-process 520,072 512,527 Finished goods 6,429,114 6,404,976 ----------------------------------------------------- 7,193,753 7,155,828 Less: adjustment to LIFO (1,275,072) (1,273,272) ----------------------------------------------------- $ 5,918,681 $ 5,882,556 ===================================================== 8 Allied Devices Corporation and Subsidiaries Notes to Consolidated Financial Statements (Information for December 31, 1996 and 1995 is unaudited) ================================================================================ 4. Commitments The Company rents facilities in Baldwin, Ronkonkoma, and Freeport, New York under various operating lease agreements expiring through December 1999. In addition, the Company also leases certain machin- ery and equipment and office equipment under various capital lease agreements expiring through 2000. The following is a schedule of total future minimum lease payments under non cancelable operating leases: Years ended September 30, ------------------------- 1997 $268,000 1998 $275,000 1999 $203,000 Rent expense amounted to approximately $77,000 and $256,000 for the three months ended December 31, 1996 and for fiscal year ended September 30, 1996, respectively. 9 Allied Devices Corporation and Subsidiaries Results of Operations: Three Months Ended December 31, 1996 Compared with Three Months Ended December 31, 1995: ================================================================================ Item 2- Results of Operations: three months ended December 31, 1996 compared with three months ended December 31, 1995: Net sales for the quarter and three months ended December 31, 1996, the Company's first quarter of fiscal 1997, were $3,526,000, as compared to $4,294,000 in the comparable period of the prior year, a decrease of approximately 17.9%. Management attributes this decrease principally to the following factors: o Towards the end of 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 quarter. Recently, as the second quarter of fiscal 1997 has begun, the same customers are accelerating delivery dates, indicating that they have used up accumulated inventory and have seen a resumption of demand. o A number of other prominent customers suspended or curtailed buying during the quarter ended December 31, 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 serves. 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. 10 Allied Devices Corporation and Subsidiaries Results of Operations: Three Months Ended December 31, 1996 Compared with Three Months Ended December 31, 1995: ================================================================================ Reported gross margin for the first quarter of fiscal 1997 was 33.21%, as compared to 31.46% for the comparable period of the prior year. Improved procurement practices and favorable market conditions lowered materials expense to approximately 33% of net sales during the first quarter of fiscal 1997, from approximately 36% in the first quarter of fiscal 1996. While the Company lowered spending on factory payroll and overhead during the quarter, it did not completely offset the reduction in volume, thus partially mitigating the savings in materials expense. There were no material price increases during this quarter. LIFO reserves increased approximately $2,000 during the period. Selling, general and administrative expenses as a percentage of net sales were 25.02% in the first quarter of fiscal 1997 as compared to 23.37% in the comparable period of fiscal 1996. Such expenditures were cut back more than 12% during the quarter, yet expressed as a percentage of sales they increased. Interest expense of $46,000 in the fiscal 1997 period was $20,000 lower than in the first quarter of fiscal 1996. This is the net result of lower interest rates (approximately 7.5% in fiscal 1997, as compared to approximately 9.8% in fiscal 1996) on slightly lower average levels of indebtedness. Provision for income taxes is estimated at 37.2% of pre-tax income for the fiscal 1997 period, as a combination of federal and state taxes. 11 Allied Devices Corporation and Subsidiaries Results of Operations: Three Months Ended December 31, 1996 Compared with Three Months Ended December 31, 1995: ================================================================================ Liquidity and Financial Resources During the first quarter of fiscal 1997, the Company's financial condition remained stable. Operations generated cash of $261,000, which was $9,000 more than was used for capital expenditures ($117,000) and for payment of debt ($135,000 net), resulting in an increase of cash on hand. Working capital decreased by $1,000 to $6,465,000 during the quarter, principally as a result of the following changes in current assets and current liabilities: o Accounts receivable decreased by $455,000 as a function of lower volume of shipments. Such decrease was partially offset by an increase ($50,000) in the average collection period from about 45 days at the end of fiscal 1996 to about 46 days at the end of the first quarter of fiscal 1997. o Inventories increased by $36,000 during the quarter. Turns on inventory were 1.6 times during the quarter, as compared to 2.0 times during fiscal 1996. This change in turnover rate is attributable to the decrease in shipping volume during the quarter. o Prepaid and other current assets increased by $145,000 as the Company prepaid various administrative expenses. o Current liabilities, exclusive of current portions of long-term debt and capital lease obligations, decreased $217,000 as accounts payable and accrued expenses decreased $247,000, and taxes payable increased by $30,000. o Current portions of long-term debt and capital lease obligations increased by $3,000. o Cash balances increased by $9,000. 12 Allied Devices Corporation and Subsidiaries Results of Operations: Three Months Ended December 31, 1996 Compared with Three Months Ended December 31, 1995: ================================================================================ Outlays for capital expenditures in the quarter were $117,000 as management continued to carry out its capital spending plans, adding to capacity and modernizing and automating its manufacturing processes. The Company is in the process of installing a computer and information management system, which will involve the expenditure of approximately $50,000 in fiscal 1997 and is scheduled for completion in the third quarter of this fiscal year. Management expects to keep other capital expenditures to a minimum until shipments have returned to a satisfactory level. 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 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. 13 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: February 13, 1997 ALLIED DEVICES CORPORATION - ----------------------- -------------------------- (Registrant) By: ____________________________ M. Hopkinson Chairman 14 EX-27 2 FDS
5 3-MOS SEP-30-1997 OCT-01-1996 DEC-31-1996 63,621 0 1,846,144 58,080 5,918,681 7,957,064 6,840,282 4,865,533 10,118,316 1,491,750 2,504,389 0 0 4,402 5,935,587 10,118,316 3,526,354 3,526,354 2,386,351 2,386,351 882,460 58,080 46,358 211,186 78,561 132,625 0 0 0 132,625 .03 .03
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