10-Q 1 form10q.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark one) (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001 OR ( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT FOR THE TRANSITION PERIOD FROM TO --------- --------- Commission file number 0-439 ------------ AMERICAN LOCKER GROUP INCORPORATED -------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) DELAWARE 16-0338330 ----------------------------------- ------------------------------------- (State of other jurisdiction of (IRS Employer Identification number) incorporation or organization) 608 ALLEN STREET, JAMESTOWN, NY 14701 -------------------------------------------------------------------------------- (Address of principal executive offices) (716) 664-9600 -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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. Yes X No --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes No Not Applicable ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding of each of the issuer's class of common stock equity as of the latest practicable date: May 2, 2001 Common Stock $1.00 par value - 2,062,440 1 Part I - Financial Information Item 1 - Financial Statements American Locker Group Incorporated and Subsidiaries Consolidated Balance Sheets
MARCH 31, December 31, 2001 2000 --------- ------------ ASSETS Current assets: Cash and cash equivalents $ 2,233,188 $ 3,696,359 Accounts and notes receivable, less allowance for doubtful accounts of $267,514 in 2001 and $324,000 in 2000 4,067,381 4,633,422 Inventories 6,540,674 4,818,348 Prepaid expenses 175,576 45,209 Deferred income taxes 668,769 668,769 ----------- ----------- Total current assets 13,685,588 13,862,107 Property, plant and equipment: Land 500 500 Buildings 388,195 389,959 Machinery and equipment 10,581,146 10,378,983 ----------- ----------- 10,969,841 10,769,442 Less allowance for depreciation (9,159,858) (9,048,950) ----------- ----------- 1,809,983 1,720,492 Total assets $15,495,571 $15,582,599 =========== ===========
2 American Locker Group Incorporated and Subsidiaries Consolidated Balance Sheets
MARCH 31, December 31, 2001 2000 ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,521,065 $ 1,513,203 Commissions, salaries, wages and taxes thereon 154,244 323,769 Other accrued expenses 697,294 659,852 Federal, state and foreign income taxes payable - 458,825 Current portion of long-term debt 200,000 200,000 ------------ ------------ Total current liabilities 2,572,603 3,155,649 Long-term liabilities: Long-term debt 83,319 133,320 Pension and other benefits 401,717 470,375 Deferred income taxes 99,430 99,430 ------------ ------------ 584,466 703,125 Stockholders' equity: Common stock, $1 par value: Authorized shares - 4,000,000 Issued shares - 2,511,450 in 2001, 2,511,550 in 2000 Outstanding shares - 2,062,440 in 2001, 2,062,540 in 2000 2,511,450 2,511,550 Other capital 564,844 565,331 Retained earnings 13,206,838 12,550,001 Treasury stock at cost (449,010 shares in 2001, 449,010 in 2000) (3,717,603) (3,717,603) Accumulated other comprehensive income (227,027) (185,454) ------------ ------------ Total stockholders' equity 12,338,502 11,723,825 ------------ ------------ Total liabilities and stockholders' equity $ 15,495,571 $ 15,582,599 ============ ============ See accompanying notes.
3 American Locker Group Incorporated and Subsidiaries Consolidated Statements of Income
THREE MONTHS ENDED MARCH 31, 2001 2000 ------- ------- Net sales $8,116,568 $7,859,150 Cost of products sold 5,704,225 5,663,542 ----------- ---------- 2,412,343 2,195,608 Selling, administrative and general expenses 1,447,968 1,394,909 ----------- ---------- 964,375 800,699 Interest income 56,009 45,255 Other (expense) income--net 78,403 59,111 Interest expense (15,505) (50,787) Income before income taxes 1,083,282 854,278 Income taxes 426,445 331,387 ----------- ---------- Net Income $656,837 $522,891 =========== ========== Earnings per share of common stock: Basic $0.32 $0.23 =========== ========== Diluted 0.32 0.23 =========== ========== Dividends per share of common stock: $0.00 $0.00 =========== ========== See accompanying notes.
4 American Locker Group Incorporated and Subsidiaries Consolidated Statements of Cash Flows
THREE MONTHS ENDED MARCH 31, 2001 2000 ------- ------- OPERATING ACTIVITIES Net income $656,837 $522,891 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 170,931 200,731 Pension and other benefits (68,658) 85,788 Change in assets and liabilities: Accounts and notes receivable 566,041 (173,589) Inventories (1,722,326) (192,158) Prepaid expenses (130,367) 12,638 Accounts payable and accrued expenses (124,221) (616,958) Income taxes (458,825) 47,957 ------------- ----------- Net cash provided by operating activities (1,110,588) (112,700) INVESTING ACTIVITIES Purchase of property, plant and equipment (260,422) (87,949) ------------- ----------- Net cash used in investing activities (260,422) (87,949) FINANCING ACTIVITIES Debt repayment (50,001) (50,001) Common stock purchased for treasury - (5,737) Common stock purchased and retired (587) - Proceeds from common stock issued - 13,812 ------------- ----------- New cash used in financing activities (50,588) (41,926) Effect of exchange rate changes on cash (41,573) 9,987 ------------- ------------ Net decrease in cash (1,463,171) (232,588) Cash and cash equivalents at beginning of period 3,696,359 3,285,983 ------------- ----------- Cash and cash equivalents at end of period $2,233,188 $3,053,395 ============= =========== Supplemental cash flow information: Cash paid during the period for: Interest $15,505 $50,789 ============= =========== Income Taxes $831,000 $281,250 See accompanying notes.
5 Notes to Consolidated Financial Statements American Locker Group Incorporated and Subsidiaries 1. The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, the condensed financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company's management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of such condensed financial statements have been included. Operating results for the three month period ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. 2. Provision for income taxes is based upon the estimated annual effective tax rate. 3. Net income per common share is computed by dividing net income by the weighted average number of shares outstanding, plus, when dilutive, the common stock equivalents which would arise from the exercise of stock options, during the periods. Basic and diluted weighted average shares outstanding were 2,062,474 (2,280,097 in 2000) and 2,078,179 (2,302,240 in 2000) respectively at March 31, 2001. 4. Inventories are valued at the lower of cost or market. Cost is determined by using the last-in, first-out method for substantially all of the inventories.
MARCH 31, December 31, 2001 2000 Raw materials $3,342,928 $2,888,897 Work-in-process 1,605,933 1,541,110 Finished goods 2,189,841 986,369 ---------- ---------- $7,138,702 $5,416,376 Less allowance to reduce carrying value to LIFO basis 598,028 598,028 ---------- ---------- $6,540,674 $4,818,348 ========== ========== 5. Total comprehensive income, consisting of net income and foreign currency translation adjustment, was $615,264 and $532,878 for the three months ended March 31, 2001 and March 31, 2000 respectively.
6 Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations American Locker Group Incorporated and Subsidiaries FIRST THREE MONTHS 2001 VS FIRST THREE MONTHS 2000 First quarter 2001 sales were $8,117,000 versus sales of $7,859,000 in the first quarter of 2000. Plastic locker sales to the United States Postal Service (USPS) in the first quarter were $5,616,000 compared to $5,577,000 during the same period in 2000. Cluster Box Units (CBUs) accounted for $5,281,000 of this year's first quarter plastic locker sales versus $5,339,000 the same period in 2000, a decrease of 1%. The decrease in sales of CBUs relates to fewer units in total purchased by the USPS compared to last year's first quarter. Sales of Outdoor Parcel Lockers (OPLs) were $335,000 compared to $238,000 in the first quarter of 2000, an increase of 41%. This increase is due to the Company's status as the sole, approved supplier for Outdoor Parcel Lockers. Sales of metal, mechanical and electronic lockers were $2,501,000 in the first quarter this year, an increase of 10% over last year's $2,282,000. Sales of the Company's other locker products increased due to a general increase in demand across all markets served by the Company as well as the effect of new products introduced since the first quarter of 2000. On April 15, 2001 the Company was awarded a two-year contract for indefinite quantities of CBUs and OPLs. The contract minimum is one unit which is solely a legal minimum and not indicative of USPS requirements. The new contract also provides four two-year options to extend the contract at the discretion of the USPS. The Company lowered its CBU prices 3-5% and has submitted a fourth model for USPS approval. The new model, designated the Type I, contains eight mail compartments, two parcel compartments, and one outgoing mail compartment. USPS authorization to ship the new Type I is anticipated in late May or early June 2001. The USPS also awarded indefinite quantity contracts to two competitors, both of whom produce aluminum CBUs. The Company believes that the long-term outlook for CBU volume remains favorable in light of the continued USPS commitment to the CBU program and its resulting operating cost reduction benefits. The USPS decision to discontinue the purchase of Neighborhood Delivery and Collection Box Units (NDCBUs) in 1999 has also had a positive impact on the CBU market. The CBU is the modernization of the NDCBU and is an integral part of the USPS delivery cost reduction program identified as Centralized Delivery. As previously disclosed, total CBU demand is influenced by a number of factors over which the Company has no control, including but not limited to: USPS budgets, policies and financial performance, domestic new housing starts, postal rate increases, and the weather as these units are installed outdoors. 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. Inventories increased in the first quarter compared to year end 2000 by $1,723,000 due to lower than forecast orders for CBUs. Prepaid expenses increased by $130,000 due to advance payments on new tooling. The increase in the revenue from the Company's other locker products is, in part due to the new plastic coin-operated locker, which the Company introduced in April 2000, as well as increases in various other locker product lines. 7 Consolidated costs of products sold as a percentage of sales was 70.3% during the first quarter of 2001 compared to 72.1% in the first quarter of 2000. Selling, general and administrative costs for the first quarter of 2001 compared to the same period in 2000 ($1,448,000 - 2001; $1,395,000 - 2000), decreased 3.8%. Selling, general and administrative costs represented 17.8% of sales in the first quarter of 2001, up from 17.7% of sales for the same period in 2000. Interest income was $56,000 in the first quarter of 2001 compared to $45,000 in the first quarter of 2000. The increase relates primarily to higher cash balances and higher interest rates. Interest expense of $16,000 in the first quarter of 2001 decreased from $51,000 in the first quarter of 2000 due to an decrease in the balance outstanding under the Company's term loan agreements. 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 5.32 to 1 at March 31, 2001 and 4.39 to 1 at December 31, 2000, respectively. Working capital, the excess of current assets over current liabilities, was $11,113,000 at March 31, 2001, an increase of $407,000 over $10,706,000 at December 31, 2000. Cash used in operating activities was $1,111,000 during the first three months of 2001, compared to $113,000 used in operating activities for the same period of 2000. The Company expects that cash generated from operations in 2001 will be adequate to fund the needs for working capital, capital expenditures and debt payments. However, if necessary, the Company has a $3,000,000 revolving bank line-of-credit available to assist in satisfying future operating cash needs. 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. 8 Part II Item 6. Exhibits and Reports on Form 8-K (a) Exhibit 10.1 Order/Solicitation/Offer/USPS Material Contracts U.S. Postal Service #072368-01-P-0378, dated April 6, 2001. (b) Exhibit 10.2 U.S. Postal Service Contract Modification #M001 to #072368-01-P-0378, dated April 9, 2001. (c) The Company did not file any reports on Form 8-K during the three months ended March 31, 2001. 9 S I G N A T U R E ----------------- In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICAN LOCKER GROUP INCORPORATED (Registrant) /s/Edward F. Ruttenberg ------------------------------------ Edward F. Ruttenberg Chairman and Chief Executive Officer Date: 5/11/01 -------------------- 10