-----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, UxuAw1YcM/btXxvkXi5SlETHbTfW0bz0Yn2vLGRxrbT8lbbjl4BxcKYMIzdCgIBJ 7Hgb6ktWmsjxN6JVlxv7TQ== 0000898431-98-000106.txt : 19980318 0000898431-98-000106.hdr.sgml : 19980318 ACCESSION NUMBER: 0000898431-98-000106 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980317 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN LOCKER GROUP INC CENTRAL INDEX KEY: 0000008855 STANDARD INDUSTRIAL CLASSIFICATION: PARTITIONS, SHELVING, LOCKERS & OFFICE AND STORE FIXTURES [2540] IRS NUMBER: 160338330 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-00439 FILM NUMBER: 98567228 BUSINESS ADDRESS: STREET 1: 15 W SECOND ST CITY: JAMESTOWN STATE: NY ZIP: 14701 BUSINESS PHONE: 7166649600 MAIL ADDRESS: STREET 1: 15 WEST SECOND STREET CITY: JAMESTOWN STATE: NY ZIP: 14701 FORMER COMPANY: FORMER CONFORMED NAME: AVM CORP DATE OF NAME CHANGE: 19850520 10KSB 1 FORM 10-KSB FOR AMER. LOCKER GROUP INC U. S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1997 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from ________ to __________ Commission file number 0-439 American Locker Group Incorporated ------------------------------------------------------------------------------ (Name of small business issuer in its charter) Delaware 16-0338330 - ------------------------------------------------------------------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 608 Allen Street, Jamestown, New York 14702-1000 ------------------------------------------------------------------------------ Address of principal executive offices) (Zip Code) Issuer's telephone number 1-716-664-9600 Securities registered under Section 12(b) of the Exchange Act: Title of each class Name of each exchange on which registered NONE Securities registered under Section 12(g) of the Exchange Act: Common Stock Par Value $1.00 Per Share ------------------------------------------------------------------------------ (Title of class) 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/ /. Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year. $29,295,533. 1 Issuers aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of March 13, 1998: $17,110,899. State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 604,695 shares common stock ($1.00 par value) as of March 13, 1998. DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive Proxy Statement for the Annual Stockholders' Meeting to be held May 19, 1998, are incorporated by reference into Part III. Transitional Small Business Disclosure Form (check one): / / Yes /X/ No 2 PART I ITEM 1. DESCRIPTION OF BUSINESS American Locker Group Incorporated (the "Company") is engaged primarily in the sale and rental of coin, key and electronically controlled checking lockers and related locks and the sale of plastic centralized mail and parcel distribution lockers. The key controlled checking lockers are sold to the recreational and transportation industries, bookstores, military posts, law enforcement agencies, libraries and for export. The electronically controlled lockers are sold for use as secure storage in the business environment and the electronically controlled, coin operated lockers are sold for use in transportation industry and other uses. The plastic centralized mail and parcel distribution lockers are sold to the United States Postal Service ("USPS") for use in centralized mail and parcel delivery in new housing and industrial developments. The Company is an engineering, assembling and marketing enterprise which also manufactures its own mechanical locks for use in its products. The Company was incorporated on December 15, 1958, as a subsidiary of its former publicly-owned parent. In April 1964, the Company's shares were distributed to the stockholders of its former parent, and it became a publicly-held corporation. From 1965 to 1989, the Company acquired and disposed of a number of businesses including the disposition of its original voting machine business. One of the Company's subsidiaries is a party to a Manufacturing Agreement with Signore, Inc., formerly a wholly owned subsidiary of the Company, to furnish fabricating, assembly and shipping services. The Agreement, which became effective January 1, 1990, has been extended and now is for a term expiring June 30, 2000. The Agreement provides that the cost to the Company for these services be equal to Signore's standard cost divided by 80%. BUSINESS SEGMENT INFORMATION The Company, including its foreign subsidiary, is engaged in one business: sale and rental of coin and key or electronically controlled checking lockers and locks and the sale of plastic centralized mail and parcel distribution lockers. The Company has developed a polycarbonate all-weather parcel locker for the United States Postal Service, and has shipped over 144,000 of the units from March 1989 through March 10, 1998. Cluster Box Units, i.e. (combination letter box - CBU), are plastic parcel and letter units for the United States Postal Service which has been approved and field tested. In November 1994, the Company negotiated a contract to sell Type Three CBUs in quantity to the United States Postal Service. Type One and Type Two CBU's are approved and included in the current contract. As of March 10, 1998, Cluster Box Units with aggregate invoice prices in excess of $39,000,000 have been shipped to the United States Postal Service pursuant to the 1994 contract and subsequent contracts. Components of these units are made by outside vendors and the units are assembled by The Company's wholly-owned subsidiary, American Locker Security Systems, Inc. (ALSSI). The units are sold directly by ALSSI to the United States Postal Service. The checking lockers are fabricated by Signore Inc. and are marketed in the United States by ALSSI. Lockers for the Canadian market are manufactured by Signore Inc. with locks supplied from ALSSI. Lockers are marketed in Canada by the Canadian Locker Company, Ltd. ("Canadian Locker"), a wholly-owned subsidiary. These sales are made outright, through salaried employees and distributors, to customers who need storage facilities requiring a key controlled lock system in the recreational, governmental and institutional type industries. 3 Canadian Locker also owns and operates coin operated lockers in air, bus and rail terminals and retail locations in Canada. ALSSI manufactures the lock system, which is coin or key controlled and operated, for use in lockers sold by ALSSI and Canadian Locker. ALSSI also provides nationwide and Canadian maintenance and repair services with respect to coin operated lockers previously sold by ALSSI. The Company has developed a coin operated baggage cart system and is operating the system at one major Canadian airport, and has sold several cart systems for use in American airports. Additional information with respect to business segment data, including significant customers, is disclosed in Note 10 of the financial statements included in Item 7 of this Form 10-KSB. COMPETITION While the Company is not aware of any reliable trade statistics, it believes that its subsidiaries, ALSSI and Canadian Locker are the dominant suppliers of key controlled checking lockers in the United States and Canada. However, the Company faces more active competition from several other manufacturers of locker products sold to the United States Postal Service and other purchasers. RAW MATERIALS Present sources of supplies and raw materials incorporated into the Company's metal and plastic lockers and locks are generally considered to be adequate and are currently available in the market place. The Company's supplier of polycarbonate plastic which is used in the parcel lockers and CBU's entered this market in March 1992 and is presently supplying this raw material which meets strict specifications imposed by the United States Postal Service. In the event the present supplier declines to continue to supply this material, the Company would be required to seek an alternate source of supply. The Company's metal lockers are manufactured by Signore Inc. pursuant to the Manufacturing Agreement, except for the locks which are manufactured by ALSSI. PATENTS The Company owns a number of patents, none of which it considers material to the conduct of its business. 4 EMPLOYEES The Company actively employed 120 individuals as of December 31, 1997, in its businesses of whom 41 are in Canada. The Company considers its relations with its employees to be satisfactory. None of the Company's employees are represented by a union. RESEARCH AND DEVELOPMENT The Company engages in research and development activities relating to new and improved products as an incident of its normal manufacturing operations in conjunction with the continuing operations. It expended $48,735, $44,634, and $148,527 in 1997, 1996 and 1995, respectively, for such activity in its continuing businesses, which does not include new product development costs. COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS Based on the information available to it, except as noted below, the Company believes that it is in compliance with present federal, state and local environmental laws and regulations. In 1994, the Company received correspondence from the owner of certain real property which was sold by the Company in 1978 and which was allegedly contaminated at the time of sale. The correspondence sought, among other things, contributions for past and future remediation costs. The Company has denied liability with respect to this matter. No developments occurred with respect to this matter in 1997. In July 1994, the Company was notified by the Department of Law of the State of New York that the State of New York believes that the Company, Bristol-Myers Squibb Company, Inc., General Electric, Inc., Pass & Seymour, Inc. and R. E. Dietz are liable for past and future investigation and remediation costs related to the site in Pompey, New York, previously operated by Solvent Savers, Inc. as a spent solvent recovery facility. In 1997, the Company and the State of New York entered into an agreement whereby the State released the Company from any and all claims for any and all civil liability relating to the site. In return, the Company contributed $90,000 to reimburse the state for a percentage of its response costs related to the site. The Company's insurance carrier at the time of the alleged incident agreed to pay $25,000 of the settlement sum and also bore the legal costs of the Company's defense. GENERAL Backlog of orders is not significant in the Company's business as shipments usually are made shortly after orders are received. The Company's sales do not have marked seasonal variations. During 1997, 1996 and 1995, one customer, the United States Postal Service, accounted for 69.2%, 61.8% and 61.2% of net sales, respectively. The loss of this customer, or a reduction in its orders, could adversely affect the Company's operations and financial results. 5 EXECUTIVE OFFICERS OF THE COMPANY YEAR FIRST ASSUMED NAME AGE OFFICE HELD WITH COMPANY POSITION - ------------------------------------------------------------------------------ Harold J. Ruttenberg 83 Chairman of the Board, 1973 Chief Executive Officer, and Treasurer Roy J. Glosser 37 President and Chief 1996 Operating Officer Mr. H. J. Ruttenberg has been employed in his positions for more than five years, and Mr. Glosser assumed his position in May 1996. Prior to that date, Mr. Glosser served as Vice President - Operations of the Company since 1995 and has been employed by the Company since 1992 in operations and product development. There are no arrangements or understandings pursuant to which any of the officers were elected as officers, except for an employment contract between the Company and Roy J. Glosser. Except as provided in such employment contract, all officers hold office for one year and until their successors are elected and qualified; provided, however, that any officer is subject to removal with or without cause, at any time, by a vote of the majority of the Board of Directors. There have been no events under any bankruptcy act, no criminal proceedings and no judgments or injunctions material to the evaluation of the ability and integrity of any executive officer during the past five years. 6 ITEM 2. DESCRIPTION OF PROPERTY The location and approximate floor space of the Company's principal plants, warehouses and office facilities are as follows (* indicates leased facility): APPROXIMATE FLOOR SPACE LOCATION SUBSIDIARY IN SQ. FT. PRODUCTS - -------- --------- ----------- -------- Jamestown, NY Principal Executive Office 37,000 * Office space/ American Locker Company, Inc. Assembly and and American Locker Security Warehouse Systems, Inc. Jamestown, NY American Locker Security 21,300 * Assembly and Systems, Inc. Warehouse Pittsburgh, PA Executive Office 1,000 * Office space Ellicottville, NY American Locker Security 12,800 Lock manufac- Systems, Inc. - Lock Shop turing service and repair Toronto, Canadian Locker Company, Ltd. 4,000 * Coin- Ontario operated lockers and locks Toronto, Ontario Canadian Locker Company, Ltd. 3,000 * Warehouse ------ TOTAL 79,100 ====== The Company believes that its facilities which are of varying ages and types of construction and the machinery and equipment utilized in such plants are in good condition and are adequate for its presently contemplated needs. All facilities are leased except for the Ellicottville facility. The leases on these properties terminate at various times from 1998 through 2001. ITEM 3. LEGAL PROCEEDINGS Four female former employees of the Company have alleged in suits entitled Derr et al. v. American Locker Group, Inc., 94-CV-0515S(M), (US District Court for Western District of New York) that they were the victims of sex discrimination in their terminations and/or compensation and seeking unspecified damages. The Company has filed an answer denying all charges. Discovery is completed and the Company has filed a Motion for Summary Judgment on all counts. The Motion is under consideration by the Court. The Company intends to vigorously defend this matter. See "Item 1. Business - Compliance with Environmental Laws and Regulations." 7 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of the security holders, by means of solicitation of proxies or otherwise, during the fourth quarter of 1997. 8 PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's shares of Common Stock (Par Value $1.00 per share) are not listed on any exchange, but are traded on the over-the-counter market and quotations are reported by the National Association of Security Dealers, Inc. through their Automated Quotation System (NASDAQ) on the National Market System. The trading symbol is ALGI. The following table shows the range of the low and high sale prices for each of the calendar quarters indicated. PER COMMON SHARE MARKET PRICE DIVIDEND 1996 HIGH LOW DECLARED ---- ---- ---- -------- First Quarter $13.50 $ 9.75 $0.00 Second Quarter 13.75 12.00 0.00 Third Quarter 15.75 10.75 0.00 Fourth Quarter 15.75 13.00 0.00 ------ Total $0.00 DIVIDEND 1997 HIGH LOW DECLARED ---- ---- ---- -------- First Quarter $14 $13 $0.00 Second Quarter 14.25 11.25 0.00 Third Quarter 24 12 0.00 Fourth Quarter 28 18.25 0.00 ----- Total $0.00 As of March 13, 1998, the Company had 1,444 security holders of record. By agreement with its principal lender, the Company's ability to declare future dividends is restricted. See Note 3 to the financial statements included in Item 7 of this Form 10-KSB. 9 ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - 1997 COMPARED TO 1996 In 1997, consolidated sales of $29,295,533 increased 30% over 1996 sales of $22,517,589. Income before income taxes rose 90% to $3,454,508 compared to $1,819,184 in 1996. Sales of the Company's plastic lockers to the United States Postal Service (USPS) increased 51% from $12,658,767 in 1996 to $19,112,209 in 1997. Revenues from the Company's other, non-plastic locker products increased 3% from $9,858,822 in 1996 to $10,183,324 in 1997. Consolidated cost of sales as percentage of sales decreased slightly to 70.0% in 1997 from 70.1% in 1996. Gross margin gains due to higher volume efficiencies on Cluster Box Units (CBU's) were mostly offset by price concessions to the USPS. The Company's present contract with the USPS covers all three types of CBU's and the Outdoor Parcel Locker (OPL). The contract was awarded March 27, 1996 for a period of one year expiring April 14, 1997. On April 16, 1997 the USPS exercised the first of four one-year options to extend the contract to April 14, 1998. During 1997, the Company delivered approximately 16,000 CBU's (all three types combined) and approximately 16,000 OPL's. We anticipate that OPL shipments will decline as the USPS buys more CBU's, all of which have parcel compartments built in. As previously announced, the USPS instituted procurement policy that strictly limits purchase of NDCBU's (the steel predecessor to plastic or aluminum CBU's) in relation to the new CBU's. Fourth quarter 1997 CBU shipments increased dramatically due to execution of this policy and the Company's ability to maintain its dominant market share position. The USPS has advised the Company that it will exercise the second of four option years extending the contract to mid-April 1999. Prices and quantities under the contract renewal have not yet been finalized and are still subject to negotiation. In February 1998, both aluminum CBU competitors substantially lowered their prices to slightly below our current prices. The Company has advised the USPS in previous negotiating meetings that the Company's policy is to lower our selling prices based on cost reductions that we intend to share with the USPS. While the effect of this price reduction on the Company's market share is undetermined at present, the Company believes its CBU product line continues to represent the best value when all factors, including price, quality of design and construction, long term durability and service are considered. Selling, administrative and general expenses of $5,119,905 during 1997 increased 2.6% from the $4,989,497 in 1996. The increase in selling, administrative and general expenses relates to increased freight and selling expenses associated with the increased shipment volume. Interest income increased to $51,270 in 1997 compared to $43,270 in 1996 due to improvements in daily cash management procedures and higher balances available for overnight investment. Total other expense was $56,762 in 1997 as compared to other income of $248,605 in 1996. Interest expense decreased to $181,678 in 1997 from $208,827 recorded in 1996. 10 RESULTS OF OPERATIONS 1996 TO 1995 In 1996, consolidated sales of $22,517,589 decreased approximately 5% as compared to 1995 sales of $23,677,940 and the Company's net income decreased by 36%. Sales of the Company's plastic lockers decreased from $13,362,573 in 1995 to $12,658,767 in 1996. Revenues from the Company's other, non-plastic locker products decreased 4.4% from $10,315,367 in 1995 to $9,858,822 in 1996. Consolidated cost of sales as percentage of sales increased to 70.1% compared to 68.4% in 1995, providing a 1.7% decrease in gross margin. The decrease relates to the lower volumes and increased depreciation expense resulting from the Type One and Type Two CBU tooling. As stated earlier, the Company's present contract with the USPS was awarded March 27, 1996 and covers OPL's and all three types of CBU's. Under the terms of this contract, the Company delivered approximately 6,800 CBU's and 12,400 OPL's through December 31, 1996. Selling, administrative and general expenses of $4,989,497 during 1996 increased 2.6% from the $4,861,477 in 1995. The increase in selling, administrative and general expenses is the result of increased bad debt expense, group health insurance and was partially offset by lower compensation expense. Interest income in 1996 decreased from 1995 due to a decrease on the balance of note receivable during 1996. Other income of $248,605 in 1996 increased from the $244,769 recorded in 1995. Interest expense increased 25.6% in 1996 from the $166,289 recorded in 1995 due to increases in the average borrowings outstanding during the year, resulting from the $1,000,000 borrowing in March 1996 of long-term debt, and the average borrowing rate experienced during 1996. LIQUIDITY AND SOURCES OF CAPITAL The Company's liquidity is reflected in the ratio of current assets to current liabilities or current ratio and its working capital. The current ratio was 2.90 to 1 and 2.47 to 1 at the end of 1997 and 1996, respectively. Working capital, or the excess of current assets over current liabilities, was $6,558,095 at December 1997 and $5,165,135 at December 31, 1996. The increase in working capital resulted primarily from the increased business activity with the USPS in 1996 and 1997. In 1997, the Company's operations generated $1,461,266 in cash from operating activities. Principally, operating cash was utilized to fund the increase in inventory $296,860, to pay income taxes, to meet scheduled debt payments, to purchase equipment and to repurchase stock. The Company also has a $3,000,000 line-of-credit available to assist in satisfying future operating cash needs, if required. However, the Company anticipates that it will generate positive cash flow from operations in 1998. In 1997, from January through August, the Company continued to make principal payments on the term loan at the rate of $50,000 per month. In August 1997, the outstanding balance on this 11 loan was paid in full using the proceeds of a new term loan in original principle amount of $1,000.000, payable at $16,667 per month plus interest. Additionally, a second term loan for $2,315,000 payable at $38,583 per month plus interest, was instituted in August 1997. Proceeds from this loan were used for the repurchase of a large block of Company stock. At December 31, 1997 the outstanding balances on these loans were $933,333 and $2,160,667, respectively. Also at December 31, 1997, the Company has an outstanding balance of $850,000 under a $3,000,000 line-of-credit with its principal bank. This $850,000 borrowing was a yearend overnight borrowing to allow for a cash balance in excess of $1,000,000. The $850,000 was repaid on the first day of business in January 1998. The Company's policy is to maintain modern equipment and adequate capacity. During 1997, 1996 and 1995, the Company expended $520,000, $234,000 and $1,232,600, respectively, for capital additions. Capital expenditures in 1997 and 1996 were financed principally from operations. In addition, 1998 capital expenditures are also expected to be financed from operations. IMPACT OF INFLATION AND CHANGING PRICES Although inflation has slowed in recent years, it is still a factor in the economy and the Company continues to seek ways to mitigate its impact. To the extent permitted by competition, the Company passes increased costs on to its customers by increasing sales prices over time. The Company will continue to find ways to control the administrative overhead necessary to successfully run the business. By controlling these costs, the Company can continue to be competitively priced with other top quality locker manufacturers and distributors. The Company has used the LIFO method of accounting for its inventories since 1974. This method matches current costs with current revenues and during an inflationary period, reduces reported income but improves cash flow due to a reduction of taxes based on income. IMPACT OF NEW ACCOUNTING STANDARDS In June 1997, the Financial Accounting Standards Board issued Statement 130, "Reporting Comprehensive Income." Statement 130 establishes new rules for the reporting and display of comprehensive income and its components; however, adoption in 1998 will have no impact on the Company's net income or shareholders' equity. Statement 130 requires the foreign currency translation adjustment, which currently is reported in shareholders' equity, to be included in other comprehensive income and the disclosure of total comprehensive income. If the Company adopted Statement 130 for the year ended December 31, 1997, the total of other comprehensive income items, reported as a component of shareholders' equity, and comprehensive income (which includes net income) would be $(34,493) and $2,077,982, respectively, and would be displayed separately. In June 1997, the Financial Accounting Standards Board issued Statement 131, "Disclosure About Segments of an Enterprise and Related Information," which is effective for years beginning after December 15, 1997. Statement 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim 12 financial reports. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. The Company will adopt the new requirements retroactively during 1998. Management does not expect that the adoption of this statement will result in the Company reporting additional segments. ADDRESSING THE YEAR 2000 ISSUE The Year 2000 issue relates to the fact that many computers and computer programs support only two digits to specify a year in the date field. Therefore, if not corrected, these systems may fail or create erroneous results in dealing with matters which refer to dates after December 31, 1999. The Company is aware of the issues and is actively pursuing a course of action to address them. The Company's basic strategy is to replace its existing computer system with one that is Year 2000 compatible. The vast majority of hardware (personal computers and local area network devices) has already been purchased and installed. The Company plans to select and install the new operating system (software) prior to the end of 1998. The Company is not able to project, at this time, the ultimate cost of its Year 2000 project. However, the Company does not expect that the expense to address the Year 2000 issue will have a material effect on 1998 operations. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Forward-looking statements in this report, including without limitation, statements relating to the Company's plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) the Company's plans, strategies, objectives, expectations, and intentions are subject to change at any time at the discretion of the Company, (ii) the Company's plans and results of operations will be affected by the Company's ability to manage its growth and inventory, and (iii) other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission. 13 ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Auditors Board of Directors and Stockholders American Locker Group Incorporated and Subsidiaries We have audited the accompanying consolidated balance sheets of American Locker Group Incorporated and Subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the management of the Company. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of American Locker Group Incorporated and Subsidiaries at December 31, 1997 and 1996, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. /s/Ernst & Young, LLP Buffalo, New York February 18, 1998 14
American Locker Group Incorporated and Subsidiaries Consolidated Balance Sheets DECEMBER 31 1997 1996 ----------------------------- ASSETS Current assets: Cash and cash equivalents $ 1,154,045 $ 1,229,222 Accounts and notes receivable, less allowance for doubtful accounts of $438,784 in 1997 and 4,519,710 3,363,277 $386,309 in 1996 Inventories 3,636,528 3,339,668 Prepaid expenses 89,656 97,917 Prepaid federal, state and foreign income taxes 32,515 28,986 Deferred income taxes 576,861 619,096 ------- ------- Total current assets 10,009,315 8,678,166 Property, plant and equipment: Land 500 500 Buildings 511,649 505,970 Machinery and equipment 8,004,338 7,617,871 --------- --------- 8,516,487 8,124,341 Less allowances for depreciation and amortization (7,267,199) 6,782,429 ---------- --------- 1,249,288 1,341,912 - - Deferred income taxes 5,122 -- ----- --------- Total assets $11,263,725 $10,020,078 =========== ===========
15
American Locker Group Incorporated and Subsidiaries Consolidated Balance Sheets DECEMBER 31 1997 1996 ----------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Demand note payable $ 850,000 $ 1,125,000 Accounts payable: Trade 737,467 660,202 Related party 434,565 381,196 ------- ------- 1,172,032 1,041,398 Commissions, salaries, wages and taxes thereon 330,956 298,671 Other accrued expenses 435,232 447,962 Current portion of long-term debt 663,000 600,000 ------- ------- Total current liabilities 3,451,220 3,513,031 Deferred income taxes -- 44,580 Long-term obligations: Long-term debt 2,431,000 700,000 Pension benefits 322,521 271,690 Postretirement benefits 139,839 132,630 ------- ------- 2,893,360 1,104,320 Stockholders' equity: Common stock, $1 par value: Authorized shares -- 4,000,000 Issued and outstanding shares -- 601,445 in 1997 and 800,024 in 1996 601,445 800,024 Other capital -- 1,027,527 Retained earnings 4,466,780 3,645,183 Foreign currency translation adjustment (149,080) (114,587) -------- -------- Total stockholders' equity 4,919,145 5,358,147 --------- --------- Total liabilities and stockholders' equity $ 11,263,725 $ 10,020,078 ============ ============
See accompanying notes. 16
American Locker Group Incorporated and Subsidiaries Consolidated Statements of Income YEAR ENDED DECEMBER 31 1997 1996 1995 -------------------------------------------- Net sales $ 29,295,533 $ 22,517,589 $ 23,677,940 Cost of products sold 20,533,950 15,791,956 16,207,181 ---------- ---------- ---------- 8,761,583 6,725,633 7,470,759 Selling, administrative and general expenses 5,119,905 4,989,497 4,861,477 --------- --------- --------- 3,641,678 1,736,136 2,609,282 Interest income 51,270 43,270 59,716 Other (expense) income - net (56,762) 248,605 244,769 Interest expense (181,678) (208,827) (166,289) -------- -------- -------- Income before income taxes 3,454,508 1,819,184 2,747,478 Income taxes 1,342,033 674,352 956,909 --------- ------- ------- Net income $ 2,112,475 $ 1,144,832 $ 1,790,569 =========== =========== =========== Earnings per share of common stock: Basic $2.90 $1.41 $2.12 ----- ----- ----- Diluted $2.82 $1.39 $2.08 ----- ----- ----- Dividends per share of common stock: $0.00 $0.00 $0.00 ===== ===== ===== See accompanying notes.
17 American Locker Group Incorporated and Subsidiaries Consolidated Statements of Stockholders' Equity
FOREIGN CURRENCY TOTAL COMMON OTHER RETAINED TRANSLATION STOCKHOLDERS' STOCK CAPITAL EARNINGS ADJUSTMENT EQUITY --------------------------------------------------------------------------- Balance at January 1, 1995 $ 858,876 $ 1,571,970 $ 709,782 $ (134,977) $ 3,005,651 Net income -- -- 1,790,569 -- 1,790,569 Foreign currency -- -- -- 21,262 21,262 translation Common stock purchased and retired (40,251 (40,251) (313,165) -- -- (353,416) shares) ----------- ----------- ----------- ----------- ----------- Balance at December 31, 1995 818,625 1,258,805 2,500,351 (113,715) 4,464,066 Net income -- -- 1,144,832 -- 1,144,832 Foreign currency -- -- -- (872) (872) translation Common stock purchased and retired (18,601 shares) (18,601) (231,278) -- -- (249,879) ------- -------- -------- -------- -------- Balance at December 31, 1996 800,024 1,027,527 3,645,183 (114,587) 5,358,147 Net income -- -- 2,112,475 -- 2,112,475 Foreign currency -- -- -- (34,493) (34,493) translation Common stock purchased and retired (198,579 shares) (198,579) (1,027,527) (1,290,878) -- (2,516,984) -------- ---------- ---------- --------- ---------- Balance at December 31, 1997 $ 601,445 $ -- $4,466,780 $ (149,080) $ 4,919,145 ======= ======== ============ ============ ===========
See accompanying notes. 18
American Locker Group Incorporated and Subsidiaries Consolidated Statements of Cash Flows YEAR ENDED DECEMBER 31 1997 1996 1995 -------------------------------------------------- OPERATING ACTIVITIES Net income $ 2,112,475 $ 1,144,832 $ 1,790,569 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 600,632 622,392 404,006 Loss (gain) on disposition of property, plant and equipment 490 (20,224) (27,346) Deferred income taxes (credits) (7,467) (124,245) 46,000 Retirement benefits 50,831 39,106 58,042 Postretirement benefits 7,209 7,000 9,120 Change in assets and liabilities: Accounts and notes receivable (1,164,644) 461,028 384,683 Inventories (296,860) (564,015) (670,019) Prepaid expenses 7,603 46,090 43,541 Accounts payable and accrued expenses 154,526 (280,424) (138,984) Income taxes (3,529) (859,005) 811,101 ------ -------- ------- Net cash provided by operating activities 1,461,266 472,535 2,710,713 INVESTING ACTIVITIES Purchase of property, plant and equipment (520,358) (234,621) (1,232,604) Proceeds from sale of property, plant and equipment 3,702 43,104 32,675 ----- ------ ------ Net cash used in investing activities (516,656) (191,517) (1,199,929) FINANCING ACTIVITIES Net (repayment) borrowings under line of credit (275,000) (275,000) 200,000 Additional borrowings 3,315,000 1,000,000 -- Debt repayments (1,521,000) (600,000) (600,000) Common stock purchased and retired (2,516,984) (249,879) (353,416) ---------- -------- -------- Net cash used in financing activities (997,984) (124,879) (753,416) Effect of exchange rate changes on cash (21,803) (7,404) 7,434 ------- ------ ----- Net (decrease) increase in cash (75,177) 148,735 764,802 Cash and cash equivalents at beginning of year 1,229,222 1,080,487 315,685 --------- --------- ------- Cash and cash equivalents at end of year $ 1,154,045 $ 1,229,222 $ 1,080,487 =========== =========== =========== Supplemental cash flow information: Cash paid during the year for: Interest $ 172,953 $ 208,827 $ 160,607 =========== =========== =========== Income taxes paid $ 1,345,562 $ 1,650,823 $ 59,684 =========== =========== =========== See accompanying notes.
19 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1997 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION AND BUSINESS DESCRIPTION The consolidated financial statements include the accounts of American Locker Group Incorporated and its subsidiaries (the Company), all of which are wholly-owned. Intercompany accounts and transactions have been eliminated in consolidation. The Company is engaged in one business: coin and key or electronically controlled metal and plastic centralized mail and parcel distribution lockers and locks. The Company sells to customers throughout North America as well as internationally. CASH AND CASH EQUIVALENTS Cash includes currency on hand and demand deposits with financial institutions. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. INVENTORIES Inventories are valued principally at the lower of cost or market, cost determined by the last-in, first-out method. PROPERTIES AND DEPRECIATION Property, plant and equipment are stated at cost. Provisions for depreciation have been computed for accounting purposes by the straight-line and declining-balance methods based on estimated useful lives. Provisions for depreciation have been computed for tax purposes under accelerated tax methods. INCOME TAXES The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. The effect of a change in tax rates is recognized in the period that includes the enactment date. 20 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) EARNINGS PER SHARE In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). SFAS 128 replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. SFAS 128 did not impact previously reported earnings per share. FOREIGN CURRENCY The assets and liabilities of the Company's foreign subsidiary are translated to U.S. dollars at current exchange rates. Revenue and expense accounts are translated at weighted average exchange rates prevailing during the year. Foreign currency gains and losses are included in determining net income for the period in which the exchange rate changes. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of cash and cash equivalents, accounts and notes receivable, accounts payable, and accrued liabilities approximate fair value due to the short-term maturities of these assets and liabilities. The interest rates on substantially all of the Company's bank borrowings are adjusted regularly to reflect current market rates. Accordingly, the carrying amounts of the Company's short-term and long-term borrowings also approximate fair value. STOCK-BASED COMPENSATION The Company accounts for stock options granted under its stock-based compensation plan in accordance with the intrinsic value based method of accounting as prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), as allowed under Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). Accordingly, compensation cost for stock options is measured as the excess, if any, of the fair market value of the Company's stock at the date of grant over the amount an employee must pay to acquire the stock. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates. 21 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 2. INVENTORIES Inventories consist of the following:
DECEMBER 31 1997 1996 --------------------------- Finished products $ 1,041,732 $ 982,888 Work-in-process 1,559,037 1,742,320 Raw materials 1,869,576 1,625,633 --------- --------- 4,470,345 4,350,841 Less allowance to reduce to LIFO basis (833,817) (1,011,173) -------- ---------- Net inventories $ 3,636,528 $3,339,668 =========== ==========
In 1996, inventory quantities were reduced resulting in liquidations in LIFO inventory quantities carried at lower costs in prior years. The effect of this liquidation was to decrease cost of products sold and increase net income by approximately $69,000 and $43,700 ($.05 per share). No such LIFO liquidation occurred in 1997. 3. DEBT Long-term debt consists of the following:
DECEMBER 31 1997 1996 --------------------------- Note payable to bank, unsecured, payable through August 31, 2002, payable at $38,583 per month plus interest at prime plus .25% (8.75% at December 31, 1997) $2,160,667 $ -- Note payable to bank, unsecured, payable through August 31, 2002, payable at $16,667 per month plus interest at prime plus .15% (8.65% at December 31, 1997) 933,333 -- Note payable to bank, unsecured, payable $50,000 per month plus interest at prime plus .25% -- 1,300,000 --------- --------- Total long-term debt 3,094,000 1,300,000 Less current portion 663,000 600,000 ------- ------- Long-term portion $2,431,000 $ 700,000 ========== ==========
The credit agreement underlying the notes payable to bank requires the maintenance of certain levels of net worth and working capital and requires the maintenance of a certain current ratio and ratio of liabilities to net worth. In addition, the credit agreement has restrictions on the payment of dividends. The Company was in compliance with these covenants at yearend. 22 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 3. DEBT (CONTINUED) Required principal payments on long-term obligations in each of the years through final maturity are as follows: 1998 $ 663,000 1999 663,000 2000 663,000 2001 663,000 2002 442,000 At December 31, 1997, the Company had outstanding $850,000 under a $3,000,000 unsecured line of credit agreement with a bank. Such borrowings are repayable on demand with interest at the prime rate. The weighted average interest rate on outstanding short-term borrowings amounted to 8.5%, 8.3%, and 8.8% in 1997, 1996 and 1995, respectively. 4. OPERATING LEASES The Company leases several operating facilities and vehicles under noncancelable operating leases. Future minimum lease payments consist of the following at December 31, 1996: 1998 $ 262,652 1999 184,398 2000 187,621 2001 188,935 ------- $ 823,606 =========== Rent expense amounted to $360,352, $351,222, and $410,763 in 1997, 1996 and 1995, respectively. 23 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 5. INCOME TAXES Differences between accounting rules and tax laws cause differences between the bases of certain assets and liabilities for financial reporting purposes and tax purposes. The tax effects of these differences, to the extent they are temporary, are recorded as deferred tax assets and liabilities. Significant components of the Company's deferred tax assets and liabilities at December 31 are as follows:
1997 1996 ------------------------ Deferred tax liabilities: Property, plant and equipment $ 161,203 $ 178,461 Prepaid expenses 28,899 17,209 ------ ------ Total deferred tax liabilities 190,102 195,670 Deferred tax assets: Postretirement benefits 62,336 60,252 Pension costs 129,009 108,676 Allowance for doubtful accounts 173,278 152,190 Accrued expenses 71,094 52,658 Other employee benefits 47,205 39,951 Inventory costs 274,303 341,599 Other 14,860 14,860 ------ ------ Total deferred tax assets 772,085 770,186 ------- ------- Net deferred tax assets $ 581,983 $ 574,516 ========== ========== Current deferred tax asset $ 576,861 $ 619,096 Long-term deferred tax asset (liability) 5,122 (44,580) ----- ------- $ 581,983 $ 574,516 ========== ==========
For financial reporting purposes, income before income taxes includes the following components:
1997 1996 1995 ------------------------------------------- United States $ 3,475,062 $ 1,802,858 $ 2,714,028 Foreign (loss) income (20,554) 16,326 33,450 ------- ------ ------ $ 3,454,508 $ 1,819,184 $ 2,747,478 =========== ============ ============
24 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 5. INCOME TAXES (CONTINUED) Significant components of the provision for income taxes are as follows:
1997 1996 1995 ------------------------------------------------ Current: Federal $ 1,162,327 $ 670,960 $ 834,400 State 199,227 118,437 117,900 Foreign (12,054) 9,200 33,700 Prior year taxes -- -- (75,091) --------- ------- ------- Total current 1,349,500 798,597 910,909 Deferred: Federal (6,347) (105,608) 55,900 State (1,120) (18,637) (9,900) ------ ------- ------ (7,467) (124,245) 46,000 ------ -------- ------ $ 1,342,033 $ 674,352 $ 956,909 =========== =========== ===========
The differences between the federal statutory rate and the effective tax rate as a percentage of income before taxes are as follows:
1997 1996 1995 ------------------------------------ Statutory income tax rate 34% 34% 34% State and foreign income taxes 3 4 1 Other permanent differences 2 (1) - -- -- -- 39% 37% 35% -- -- --
6. PENSION PLAN The Company and its subsidiaries have a defined benefit pension plan covering substantially all employees. Benefits for the salaried employees are based on specified percentages of the employees annual compensation. The benefits for hourly employees are based on stated amounts for each year of service. The plan's assets are invested in fixed interest rate group annuity contracts with an insurance company. Due to the funding status of the plans, the Company has not had to fund the plan since 1981. 25 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 6. PENSION PLAN (CONTINUED) The summary of the components of net periodic pension expense follows:
1997 1996 1995 ------------------------------------ Service cost-benefits earned during the period $ 155,750 $ 161,276 $ 193,514 Interest cost on projected benefit obligation 129,881 120,169 113,188 Return on plan assets (131,333) (127,945) (155,711) Net amortization and deferral (103,467) (114,394) (92,949) -------- -------- ------- Net pension expense $ 50,831 $ 39,106 $ 58,042 ========== ======== ========
The following table sets forth the funded status and amounts recognized in the statements of consolidated financial position at December 1997 and 1996.
1997 1996 ------------------------ Actuarial present value of benefit obligations: Vested benefit obligation $ 1,840,739 $ 1,544,146 Non-vested benefit obligation 31,139 28,541 ----------- ----------- Accumulated benefit obligation $ 1,871,878 $ 1,572,687 =========== =========== Projected benefit obligation for service rendered to date $ 2,089,481 $ 1,764,414 Plan assets at fair value 1,911,849 1,876,393 ----------- ----------- Excess of projected benefit obligations over plan (177,632) 111,979 assets Unrecognized net loss 381,049 250,095 Unrecognized prior service cost 3,118 1,330 Unrecognized net transition asset (529,056) (635,094) ----------- ----------- Net liability recognized in the statement of consolidated financial position $ (322,521) $ (271,690) =========== ===========
The average discount rate used in determining the actuarial value of the projected benefit obligations was 7% in 1997 and 7.25% in 1996. The rates of future years' compensation levels was 5% in 1997 and 5.25% in 1996. The expected long-term rate of return on plan assets was 7.25% in 1997 and 1996. Effective January 1, 1998, the Company implemented a Supplemental Executive Retirement Plan Based upon actuarial calculations, the projected benefit obligation of the plan is approximately $200,000 and the annual expense will be approximately $64,000. 26 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 7. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS In addition to the Company's defined benefit plan, the Company provides a life insurance benefit to substantially all employees upon retirement. Retirees eligible to participate in this plan have their life insurance premiums paid on their behalf by the Company. The insurance premiums related to this plan are paid annually. The following table presents the plan's status reconciled with amounts recognized in the Company's statement of financial position:
DECEMBER 31 1997 1996 ------------------------ Accumulated postretirement benefit obligation: Retirees $ (63,199) $ (59,941) Fully eligible active plan participants (52,059) (49,375) Other active plan participants (18,044) (17,114) ------- ------- Accumulated postretirement benefit obligation (133,302) (126,430) Unrecognized net gain (6,537) (6,200) ------ ------ Accrued postretirement benefit cost $ (139,839) $ (132,630) ========== ==========
Net periodic postretirement benefit cost includes the following components:
DECEMBER 31 1997 1996 1995 ------------------------------------ Service cost $ 1,517 $ 1,474 $ 1,882 Interest cost 7,180 6,971 8,238 Net gain (1,488) (1,445) -- ====== ====== ======= Net periodic postretirement benefit cost $ 7,209 $ 7,000 $10,120 ======= ======= =======
The weighted average discount rate used in determining the accumulated postretirement benefit obligations was 7.25% at December 31, 1997 and 1996. 8. CAPITAL STOCK AND STOCK OPTIONS The Certificate of Incorporation authorizes 4,000,000 shares of common stock and 1,000,000 shares of convertible preferred stock. In 1988, the Company adopted the American Locker Group Incorporated 1988 Stock Incentive Plan, permitting the Company to provide incentive compensation of the types commonly known as incentive stock options, stock options and stock appreciation rights. The price of option shares or appreciation rights granted under the plan shall be not less than the fair market value of common stock on the date of grant, and the term of the stock option or appreciation right shall 27 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 8. CAPITAL STOCK AND STOCK OPTIONS (CONTINUED) not exceed ten years from date of grant. Upon exercise of a stock option, the option price shall be payable to the Company in cash, or at the discretion of the committee, in shares of common stock valued at the fair market value on the date of payment, or a combination thereof. Upon exercise of a stock appreciation right granted in connection with a stock option, the optionee shall surrender the option and receive payment from the Company of an amount equal to the difference between the option price and the fair market value of the shares applicable to the options surrendered on the date of surrender. Such payment may be in shares, cash or both at the discretion of the Company's Stock Option-Executive Compensation Committee. At December 31, 1997, 1996 and 1995, there were no stock appreciation rights outstanding under this plan. The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related Interpretations in accounting for its employee stock options. Under APB 25, because the exercise price of the Company's employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized. Pro forma information regarding net income and earnings per share is required by Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") and has been determined as if the Company had accounted for its employee stock options under the fair value method of SFAS 123. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rates of 6.0%; dividend yields of 0.0; volatility factors of the expected market price of the Company's common stock of .37; and a weighted-average expected life of the option of 5 years. If the fair value based method accounting provisions of SFAS 123 had been adopted, net income for 1997 would have been $2,069,635 and basic and diluted earnings per share would have been $2.85 and $2.76, respectively. The per share fair value of the options granted in 1997 using these assumptions was $4.76. The 1996 and 1995 net income and earnings per share would not have been impacted. A summary of the activity in the Company's Employee Option Plan and related information for the years ended December 31 follows: 28 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 8. CAPITAL STOCK AND STOCK OPTIONS (CONTINUED)
1997 1996 1995 ---- ---- ---- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Options Price Options Price Options Price -------------------------------------------------------- Outstanding - beginning of year 25,500 $ 3.23 25,500 $ 3.23 25,500 $ 3.23 Granted 15,000 $11.25 -- -- -- -- ------ ------ ------ ------ ------ ------- Outstanding - end of year 40,500 $ 6.20 25,500 $ 3.23 25,500 $ 3.23 ------ ------- ------ ------- ------ -------
The exercise prices for options outstanding as of December 31, 1997 were as follows: $2.875 - 19,000 shares, $4.25 - 6,500 shares, and $11.25 - 15,000 shares. The weighted-average remaining contractual life of those options is 4.53 years. 9. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31:
1997 1996 1995 -------------------------------------- Numerator: Net income $2,112,475 $1,144,832 $1,790,569 Denominator: Denominator for basic earnings per share - weighted average shares 727,447 808,102 845,350 outstanding Effect of dilutive securities: Employee stock options 22,585 18,867 15,232 ---------- ---------- ---------- Denominator for diluted earnings per share - weighted average shares out- standing and assumed 750,032 826,969 860,582 ========== ========== ========== conversions Basic earnings per share $ 2.90 $ 1.41 $ 2.12 ========== ========== ========== Diluted earnings per share $ 2.82 $ 1.39 $ 2.08 ========== ========== ==========
29 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 10. BUSINESS SEGMENT DATA The Company has operations in the United States and Canada. The geographic distribution of sales, operating income and identifiable assets for 1997, 1996 and 1995 are as follows:
UNITED STATES CANADA ELIMINATIONS TOTAL ---------------------------------------------------- 1997 - ------- Revenues from unaffiliated customers $27,995,453 $ 1,300,080 $ -- $29,295,533 Transfers between geographic areas 397,052 -- 397,052 -- ----------- ----------- ----------- ----------- Total revenues $28,392,505 $ 1,300,080 $ 397,052 $29,295,533 =========== =========== =========== =========== Operating income 3,635,05 $ 6,626 $ -- $ 3,641,678 =========== =========== =========== =========== Identifiable assets $11,209,415 $ 944,075 $ 889,765 $11,263,725 =========== =========== =========== =========== 1996 - ----------- Revenues from unaffiliated customers $20,830,473 $ 1,687,116 $ -- $22,517,589 Transfers between geographic areas 665,165 -- 665,165 -- ----------- ----------- ----------- ----------- Total revenues $21,495,638 $ 1,687,116 $ 665,165 $22,517,589 =========== =========== =========== =========== Operating income $ 1,698,760 $ 37,376 $ -- $ 1,736,136 =========== =========== =========== =========== Identifiable assets $ 9,978,585 $ 931,258 $ 889,765 $10,020,078 =========== =========== =========== =========== 1995 - ----------- Revenues from unaffiliated customers $22,112,011 $ 1,565,929 $ -- $23,677,940 Transfers between geographic areas 485,377 -- 485,377 -- ----------- ----------- ----------- ----------- Total revenues $22,597,388 $ 1,565,929 $ 485,377 $23,677,940 =========== =========== =========== =========== Operating income $ 2,579,420 $ 29,862 $ -- $ 2,609,282 =========== =========== =========== =========== Identifiable assets $10,060,749 $ 934,201 $ 888,765 $10,106,185 =========== =========== =========== ===========
In 1997, 1996 and 1995, the Company had export sales of $1,824,837, $1,123,434, and 30 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 10. BUSINESS SEGMENT DATA (CONTINUED) $1,730,087, respectively. In 1997, 1996 and 1995, export sales represented approximately 6.2%, 5.0% and 7.3%, respectively of the Company's consolidated net sales. Sales to the U.S. Postal Service represented 69.2%, 61.8% and 61.2% of net sales in 1997, 1996 and 1995, respectively. At December 31, 1997 and 1996, the Company had secured receivables from customers under time payment arrangements totaling $181,445 and $306,532, respectively. At December 31, 1997, the Company had unsecured trade receivables from customers considered to be distributors of $310,758 (including a United Kingdom distributor of $188,424) and from governmental agencies of $2,381,643. At December 31, 1996, the Company had unsecured trade receivables from customers considered to be distributors of $312,709 (including a United Kingdom distributor of $129,932) and from governmental agencies of $1,610,504. Other concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of entities comprising the Company's customer base and their dispersion across many different industries. 31
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 11. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following is a tabulation of the unaudited quarterly results of operations for the years ended December 31, 1997 and 1996: 1997 --------------------------------------------------------- THREE MONTHS ENDED MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 --------------------------------------------------------- Net sales $ 5,283,597 $ 7,722,976 $ 6,906,402 $9,382,558 ============ ============= ============= ========== Gross profit $ 1,617,925 $ 2,333,741 $ 2,044,312 $2,765,545 ============ ============= ============= ========== Net income $ 223,806 $ 553,973 $ 423,887 $ 910,809 ============ ============= ============= ========== Earnings per share - Basic $ .28 $ .70 $ .59 $ 1.33 ============ ============= ============= ========== Earnings per share - Diluted $ .27 $ .68 $ .57 $ 1.30 ============ ============= ============= ========== 1996 ---------------------------------------------------------- THREE MONTHS ENDED MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 ---------------------------------------------------------- Net sales $ 4,946,120 $ 5,961,890 $ 5,955,670 $ 5,653,909 ============ ============ ============ ============= Gross profit $ 1,447,412 $ 1,922,588 $ 1,781,680 $ 1,573,953 ============ ============ ============ ============= Net income $ 192,612 $ 335,955 $ 364,735 $ 251,530 ============ ============ ============ ============= Earnings per share - Basic $ .24 $ .41 $ .45 $ .31 ============ ============ ============ ============= Earnings per share - Diluted $ .23 $ .41 $ .44 $ .31 ============ ============ ============ =============
32 AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 11. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) - (CONTINUED) The Company's accounting practice for interim periods provides for possible inventory, insurance, pension and income tax adjustments. Such adjustments resulted in increasing 1997 fourth quarter pretax income by $177,356 for inventory costs and increasing net income by $57,586 for income tax expense. A decrease in fourth quarter pretax income of $58,040 was due to adjustments for pension costs. In 1996 such adjustments resulted in increasing fourth quarter pretax income by $103,791 for inventory costs and increasing net income by $158,682 for income tax expense. A decrease in fourth quarter pretax income in the amount of $48,141 was due to adjustments for pension costs and receivable reserves. In 1995, adjustments resulted in increasing fourth quarter pretax income by $51,000 for insurance and pension costs and increasing net income by $178,000 for income tax expense. A decrease in 1995 fourth quarter pretax income of $209,000 was due to adjustments for inventory costs. 12. RELATED PARTIES One of the Company's subsidiaries has entered into a manufacturing agreement with Signore, Inc. a former wholly-owned subsidiary of the Company, under which Signore will furnish fabricating, assembly and shipping services. The Agreement, which expires on April 30, 2000, provides that the cost to the Company for these services will be equal to Signore's standard cost divided BY 80%. Purchases from Signore under the Agreement amounted to $3,632,254, $3,489,499 and $3,470,582 for the years ended December 31, 1997, 1996 and 1995, respectively. Two Directors of the Company are Stockholders and Directors of Rollform of Jamestown Inc., a rollforming company. One of the Company's subsidiaries purchased $114,004, $90,084 and $98,571 of fabricated parts from Rollform of Jamestown, Inc. in 1997, 1996 and 1995, respectively, at prices that the Company believes are at arms length. 13. CONTINGENCIES The Company has been named as a defendant by four former employees alleging discrimination and seeking unspecified damages. The Company has denied all charges and it intends to vigorously defend this matter. It is management's opinion that the ultimate outcome of this matter will not have a material impact on the Company's financial position or operating results. Although no formal legal proceedings have been directed towards the Company, it has been alleged that the Company and/or one of its previously owned subsidiaries is a potentially responsible party at a site suspected to have some form of environmental contamination. The Company believes that it bears no liability for this site. 33 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with accountants on accounting and financial disclosures during 1997 or 1996. PART III Item 9, 10, 11, and 12 will be contained in American Locker Group Incorporated's Annual Proxy Statement, incorporated herein by reference, which will be filed within 120 days after year-end. ITEM 13. EXHIBITS AND REPORTS ON FORM 8-KSB (a) Exhibits - Exhibits required by Item 601 of Regulation S-B are submitted as a separate section herein immediately following the "Exhibit Index". (b) Reports on Form 8-KSB filed in the fourth quarter of 1997 - None. 34 In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICAN LOCKER GROUP INCORPORATED /S/ HAROLD J. RUTTENBERG ------------------------ Harold J. Ruttenberg Chairman, Chief Executive Officer, Treasurer and Principal Accounting Officer March 17, 1998 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE - --------- ----- ---- /S/ HAROLD J. RUTTENBERG Chairman, Chief March 17, 1998 - ------------------------ Harold J. Ruttenberg Executive Officer, Treasurer, Principal Accounting Officer and Director /S/ ROY J. GLOSSER President, Chief March 17, 1998 - ------------------------ Roy J. Glosser Operating Officer and Director Director March __, 1998 - ------------------------ Thomas Phillips Johnson /S/ ALAN H. FINEGOLD Director March 17, 1998 - ------------------------ Alan H. Finegold /S/ THOMAS LYNCH, IV Director March 17, 1998 - ------------------------ Thomas Lynch, IV /S/ JAMES E. RUTTENBERG Director March 17, 1998 - ------------------------ James E. Ruttenberg /S/ EDWARD F. RUTTENBERG Director March 17, 1998 - ------------------------ Edward F. Ruttenberg 35 EXHIBIT INDEX PRIOR FILING OR SEQUENTIAL PAGE EXHIBIT NO. NO. HEREIN - ----------- ---------- 3.1 Certificate of Incorporation of Exhibits to Form 10-K American Locker Group Incorporated for Year ended December 31, 1980 3.2 Amendment to Certificate of Form 10-C filed May 6, Incorporation changing name of 1985 company 3.3 Amendment to Certificate of Exhibit to Form 10-K for Incorporation limiting liability year ended December 31, of Directors and Officers 1987 3.4 By-laws of American Locker Group Exhibit to Form 10-K for Incorporated as amended and year ended December 31, restated 1985 3.5 Amendment to By-laws of American Exhibit to Form 10-K for Locker Group Incorporated dated year ended December 31, January 15, 1992 1991 10.1 American Locker Group Exhibit to Form 10-K for Incorporated 1988 Stock Incentive year ended December 31, Plan 1988 10.2 First Amendment dated March 28, Exhibit to Form 10-K for 1990 to American Locker Group year ended December 31, Incorporated 1988 Stock 1989 Incentive Plan 10.3 Form of Indemnification Agreement Exhibit to Form 10-K for between American Locker Group year ended December 31, Incorporated and its directors 1987 and officers 10.4 Corporate Term Loan Agreement Exhibit to Form 10-K for between American Locker Group year ended December 31, Incorporated and Manufacturers 1991 and Traders Trust Company covering $2,400,000 loan 10.5 Approved Line of Credit from Exhibit to Form 10-K for Manufacturers and Traders Trust year ended December 31, Company to American Locker Group 1990 Incorporated in the amount of $1,000,000 10.6 Amendment Agreement dated May 1, Exhibit to Form 10-KSB 1994 between Manufacturing and for year ended Traders Trust Company and December 31, 1994 American Locker Group Incorporated [Increase in Term Loan to $1,850,000] 10.7 Amendment Agreement dated Exhibit to Form 10-KSB March 12, 1996 between for year ended Manufacturing and Traders Trust December 31, 1995 Company and American Locker Group Incorporated [Increase in Term Loan to $1,800,000] 10.8 Employment Agreement between Exhibit to Form 10-GSB American Locker Group for quarter ended June Incorporated and Roy J. Glosser 30, 1996 10.9 Manufacturing Agreement dated as Exhibit to Form 8-K of December 29, 1989 between dated January 11, 1990 American Locker Security Systems Inc. and Signore, Inc. 10.10 First Amendment dated May 3, 1995 Exhibit to Form 10-KSB to Manufacturing Agreement dated for year ended December as of December 29, 1989 between 31, 1995 American Locker Security Systems Inc. and Signore Inc. 10.11 Second Amendment dated March 15, Exhibit to Form 10-KSB 1996 to Manufacturing Agreement for the year ended dated as of December 29, 1989 December 31, 1995 between American Locker Security Systems Inc. and Signore Inc. 10.12 Third Amendment dated May 21, Exhibit to Form 10-QSB 1996 to Manufacturing Agreement for the quarter ended dated as of December 29, 1989 June 30, 1996 between American Locker Security Systems Inc. and Signore Inc. 10.13 Agreement dated as of May 21, Exhibit to Form 10-QSB 1996 between American Locker for the quarter ended Group Incorporated and Edward F. June 30, 1996 Ruttenberg 10.14 Contract dated March 27, 1996 Exhibit to Form 10-QSB between the U.S. Postal Service for the quarter ended and American Locker Security March 31, 1996 Systems, Inc. 10.15 Modification #MO3 to USPS Exhibits to Form 10QSB Contract #072368-96-B-0741 dated for the quarter ended April 16, 1997 March 31, 1997 10.16 First Amendment dated May 20, Exhibits to Form 10QSB 1997 to Agreement dated as of for the quarter ended May 21, 1996 between American June 30, 1997 Locker Group Incorporated and Edward F. Ruttenberg 10.17 Fourth Amendment to Manufacturing Exhibits to Form 10QSB Agreement dated as of May 20, for the quarter ended 1997 between American Locker June 30, 1997 Security Systems, Inc. and Signore, Inc. 10.18 Amendment dated August 22, 1997 Exhibit to Form 10QSB to Corporate Term Loan Agreement for the quarter ended dated August 30, 1991 between September 30, 1997 American Locker Group Incorporated and Manufacturers and Traders Trust Company 10.19 Modification M05 to USPS Contract Exhibit to Form 10QSB #072368-96-B-0741, dated for the quarter ended October 9, 1997, which replaces September 30, 1997 steel pedestals with aluminum pedestals for American Locker Outdoor Parcel Lockers 10.20 Modification M06 to USPS Contract Exhibit to Form 10QSB #072368-96-B-0741, dated for the quarter ended October 23, 1997 regarding prices September 30, 1997 and minimum quantities through April 14, 1998 10.21 Form of American Locker Group Page ________ Incorporated Supplemental Executive Retirement Benefit Plan 22.1 List of Subsidiaries Page ________ 27.1 Financial Data Schedule Page ________ 38 Exhibit 22.1 List of Subsidiaries The following companies are subsidiaries of the Company and are included in the consolidated financial statements of the Company: PERCENTAGE OF JURISDICTION OF VOTING SECURITIES NAME ORGANIZATION OWNED ---- ------------ ----- American Locker Security Systems, Delaware 100% Inc. American Locker Company, Inc. Delaware 100% American Locker Company of Canada, Dominion of Canada 100% (1) Ltd. Canadian Locker Company, Ltd. Dominion of Canada 100% (2) American Locker Security Systems Virgin Islands 100% (1) International (1) Owned by American Locker Security Systems, Inc. (2) Owned by American Locker Company of Canada, Ltd. 39 EX-10 2 EXHIBIT 10.21 Exhibit 10.21 AMERICAN LOCKER GROUP INCORPORATED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ARTICLE I. PURPOSE OF THE PLAN The purposes of the American Locker Group Incorporated Supplemental Executive Retirement Plan are to recognize the substantial contributions to the success and profitability of American Locker Group Incorporated (the "Company") made by certain executive level employees who have served the Company for many years and, thereby, to promote and maintain the profitability of the Company by attracting and retaining executives of outstanding competence. ARTICLE II. DEFINITIONS In this Plan, the following words and phrases shall have the following meanings: 2.01 "ACTUAL RETIREMENT" shall mean the date upon which the Eligible Executive ceases (for reasons other than death) all active employment with the Company. 2.02 "BOARD" shall mean the Board of Directors of the Company. 2.03 "CHANGE OF CONTROL" shall mean a change in ownership or control of the Company such that: (i) any "person" as such term is used in Sections 13(d) and 14(d) of the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (other than the Company, or any Company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act whether or not the Company is then subject to the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company's then outstanding securities; or (ii) during any period of two (2) consecutive years (not including any period prior to the execution of this Trust Agreement) there shall cease to be a majority of the Board comprised as follows: individuals who at the beginning of such period constituted the Board and any new director(s) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved; or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 80% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, the stockholders of the Company approve a plan of complete liquidation of the Company, or the Company enters into an agreement for the sale or other disposition of all or substantially all of the Company's assets, in a single transaction or a series of related transactions, or the Company otherwise disposes of such assets. 2.04 "COMMITTEE" shall mean a committee of no less than three persons appointed by the Board to administer this Plan; provided, however, in the event the Board, in its discretion, has not or does not appoint a Committee, or in the event that the members of such Committee have resigned or are unable to serve for any reason, "Committee" shall mean the Board of Directors; and provided further, no person who has been designated as an Eligible Executive shall be permitted to take part in the deliberations of the Committee with regard to a determination of his or her participation in or benefits under this Plan. 2.05 "COMPANY" shall mean American Locker Group Incorporated, a Delaware corporation, with its principal place of business in Jamestown, New York. 2.06 "ELIGIBLE EXECUTIVE" shall mean an officer or key employee of the Company (or of a corporation the majority of the stock of which is owned by the Company) who is designated as an Eligible Executive by the Board and who acknowledges and agrees in writing to be bound by the terms and conditions of the Plan. No director who is not or was not also an employee may become an Eligible Executive. 2.07 "HEALTH BENEFIT" shall mean an insurance arrangement which supplements Medicare, if such arrangement is then offered by an insurance company licensed to do business in any state in the United States. 2.08 "PLAN" shall mean this American Locker Group Incorporated Supplemental Executive Retirement Plan. 2.09 "SPOUSE" shall mean the person to whom the Eligible Employee is married at the time of his or her death. 2.10 "SPOUSE BENEFIT" is a monthly amount equal to 50% of the amount of an Eligible Employee's Supplemental Benefit payable to the Eligible Employee's Spouse for the Spouse's life commencing with the first day of the month next following the Eligible Employee's death and continuing until the first day of the month immediately preceding the death of the Spouse. 2.11 "SUPPLEMENTAL BENEFIT" shall mean a benefit payable in a monthly amount determined by the Board of Directors at the time an Eligible Employee is designated as eligible to participate in this Plan for the life of the Eligible Executive on the first day of each month commencing with the month in which the earlier of the events described in Section 4.1 occurs and ending with the month in which the Eligible Executive's death occurs. ARTICLE III. ELIGIBILITY TO PARTICIPATE An executive employee of the Company shall be entitled to participate in this Plan only if he or she (i) is designated as an Eligible Executive under this Plan by the Board of Directors in a resolution duly adopted, (ii) the resolution of the Board of Directors designating the Eligible Employee sets forth the amount of the Supplemental Benefit payable to the Eligible Employee or a formula or other method of determining the Supplemental Benefit payable to the Eligible Employee, (iii) is notified in writing of the Board's resolution and of the terms and conditions of the Plan and (iv) agrees in writing, in a form acceptable to the Committee, to be bound by the terms and conditions of this Plan. The Committee shall cause each person whose recommendation is accepted to be notified in writing of his or her eligibility to participate in the Plan and to be supplied with a written copy of this Plan as then in effect. Except with respect to employees designated as Eligible Executives in accordance with this Article III, no employee and no person claiming through an employee shall have any right to any benefits under this Plan. ARTICLE IV. BENEFITS UNDER THE PLAN 4.01 BENEFIT PAYABLE TO THE ELIGIBLE EXECUTIVE. Commencing with the earlier of a Change in Control or the Eligible Executive's Actual Retirement, the Company shall pay or cause to be paid to the Eligible Executive the Supplemental Benefit and shall cause the Eligible Executive and the Eligible Executive's dependents, if any, to be covered under the Health Benefit for the life of the Eligible Employee. 4.02 BENEFIT PAYABLE TO SPOUSE. If the Spouse survives the Eligible Executive, the Company shall pay to the Spouse the Spouse Benefit and shall cause the Spouse and the Spouse's dependents, if any, to be covered under the Health Benefit for the life of the Spouse. 4.03 CESSATION OF COMPANY OBLIGATION. Upon the death of the later to die of the Eligible Executive and the Spouse, the Company's obligation with respect to an Eligible Executive shall cease and no amount shall be payable under this Plan to any other person. ARTICLE V. MISCELLANEOUS 5.01 ADMINISTRATION. This Plan shall be administered by the Committee which shall have all powers and authority necessary to interpret the Plan and take any action the Committee, in its collective discretion, deems necessary or appropriate. The determinations and action of the Committee shall be final and binding upon the Company and each Eligible Executive. 5.02 WITHHOLDING. To the extent amounts payable hereunder are determined by the Company in good faith to be subject to federal, state or local income or other tax, the Company may withhold from each such payment an amount necessary to meet the payor's obligation under the applicable federal, state or local law. 5.03 NO SEPARATE FUND. The amounts payable under this Plan are payable from the general assets of the Company and no special fund or arrangement is intended to be established hereby nor shall the Company be required to earmark, place in trust or otherwise segregate assets with respect to this Plan or any benefits hereunder. In the event any amount becomes payable under this Plan, the payee or potential payee of such amount shall have rights no greater than the rights of a general creditor of the Company. 5.04 GOVERNING LAW. This Plan shall be construed under the laws of the Commonwealth of Pennsylvania, without regard to its principles of conflict of laws. 5.05 FUTURE EMPLOYMENT. Eligibility to participate in this Plan shall not be construed as providing to any Eligible Executive the right to be retained in the employment of the Company. 5.06 NO PLEDGE OR ATTACHMENT. No benefit which is or may become payable under this Plan shall be subject to any anticipation, alienation, sale, transfer, pledge, encumbrance or hypothecation or subject to any attachment, levy or similar process and any attempt to effect any such action shall be null and void. 5.07 AMENDMENT AND TERMINATION; EFFECT ON BENEFITS. This Plan may not be terminated until all benefits payable to or with respect to each Eligible Employee have been paid in full. No amendment or purported amendment to this Plan shall have the effect of reducing or eliminating an benefit accrued hereunder as of the date of such amendment or causing any Eligible Employee (or his Spouse) to cease to be eligible to receive benefits hereunder. This Plan may not be amended or terminated (except to increase benefits hereunder) after the earliest to occur of the following: (a) the Actual Retirement of the Executive; (b) the death of the Eligible Executive; or (c) a Change in Control of the Company. ARTICLE VI. EXECUTION To record the due adoption of this Plan, the Company has caused its duly authorized officer to execute the Plan, for and on behalf of the Company, as of the 1st day of January, 1998. AMERICAN LOCKER GROUP INCORPORATED By: /S/ROY J. GLOSSER --------------------- Roy J. Glosser Title: President and Chief Operating Officer EX-27 3 FDS AMERICAN LOCKER GROUP
5 AMERICAN LOCKER GROUP INCORPORATED FINANCIAL DATA SCHEDULE DECEMBER 31, 1997 This schedule contains summary financial information extracted from SEC Form 10-KSB and is qualified in its entirety by reference to such financial statements. 0000008855 AMERICAN LOCKER GROUP INC. 1 U.S. DOLLARS 6-MOS DEC-30-1997 JUN-30-1997 DEC-30-1997 1 1,154,045 0 4,519,710 438,784 3,636,528 10,009,315 8,516,487 7,267,199 11,263,725 3,451,220 2,431,000 0 0 601,445 4,317,700 11,263,725 29,295,533 29,290,041 20,533,950 20,533,950 0 0 181,678 3,454,508 1,342,033 2,112,475 0 0 0 2,112,475 2.90 2.82
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