-----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, IPQtGaBv6efyy8x6u16Ut1k7iE0Bw3KWn303GC/Zxwyw/JYElkMqafTgW6t1hQf8 pA0xMWK+VoyyCngi59hwWg== 0000898431-96-000021.txt : 19960401 0000898431-96-000021.hdr.sgml : 19960401 ACCESSION NUMBER: 0000898431-96-000021 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 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: 1934 Act SEC FILE NUMBER: 000-00439 FILM NUMBER: 96541716 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 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, 1995 [ ] 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.) 15 West Second Street, Jamestown, New York 14701 (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. [ ] State issuer's revenues for its most recent fiscal year. $23,677,940. 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 27, 1996: $5,513,925. State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 818,625 shares common stock ($1.00 par value). DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive Proxy Statement for the Annual Stockholders' Meeting to be held May 21, 1996, 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 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. In October 1988, the Company sold the checking locker business at its then remaining major airport locations and in November 1993 sold its last locker concession in the United States. 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 checking lockers are fabricated by Signore and are marketed in the United States by the Company's wholly-owned subsidiary, - 3 - American Locker Security Systems, Inc. ("ALSSI"). Lockers for the Canadian market are manufactured by Signore 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. 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 previously sold by ALSSI. 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. The Company has developed a polycarbonate all-weather parcel locker for the United States Postal Service, and has shipped over 112,000 of the units from March 1989 through March 15, 1996. A Cluster Box Unit, i.e. (combination letter box), is a parcel plastic unit 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. As of March 15, 1996, Cluster Box Units with aggregate invoice prices in excess of $13,000,000 have been shipped pursuant to this contract. Components of these units are made by outside vendors and the units are assembled by ALSSI. The units are sold directly by ALSSI to the United States Postal Service. The Company is completing the tooling to manufacture two additional types of CBU, the Type One and Type Two, and as described below in "Management's Discussion and Analysis of Financial Condition and Results of Operations," the Company has negotiated a contract to sell these units to the USPS. Additional information with respect to business segment data, including significant customers, is disclosed in Note 9 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 - 4 - 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 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. Employees The Company actively employed 137 individuals as of December 31, 1995, in its businesses of whom 48 are in Canada. The Company considers its relations with its employees to be satisfactory, none of whom 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 $148,527, $75,473, and, and $290,000 in 1995, 1994 and 1993, 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. By letter dated June 29, 1994, counsel for Gowanda Electronics ("Gowanda") informed the Company that Gowanda intended to pursue claims against the Company for costs and damages allegedly incurred by Gowanda as a result of environmental contamination at Gowanda's property in Gowanda, New York (the "Property"). The Property was sold by a predecessor of the Company, the AVM Corporation, to Gowanda in 1978. According to Gowanda, groundwater and soil at the Property exhibit contamination with - 5 - petroleum products, solvents, and metals. Gowanda stated that the Company was responsible for this contamination and, therefore, is liable to Gowanda for past and future remediation costs under the Comprehensive Environmental Response, Compensation and Liability Act, the New York Navigation Law, and various common law theories. Gowanda also stated that it will seek additional damages from the Company if the environmental conditions at the Property prevent Gowanda's potential sale of the Property. 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. The defense of this suit has been assumed by the Company's insurance carrier, with a reservation of rights. 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, although third quarter shipments usually are lower than other quarters due to plant vacation shutdowns by the Company, its suppliers and some of its customers. During 1995, 1994 and 1993, one customer, the USPS, accounted for 61.2%, 45.8% and 28.6% of net sales, respectively. The loss of this customer could adversely affect the Company's operations. Executive Officers of the Company Year First Assumed Name Age Office Held with Company Position Harold J. Ruttenberg 81 Chairman of the Board, Chief Executive Officer, and Treasurer 1973 Alexander N. Ditonto 64 President, Secretary and Chief Operating Officer 1983 Roy J. Glosser 35 Vice President - Operations 1995 Michael A. Ditonto 31 Vice President - Business Development 1995 Messrs. H. J. Ruttenberg, and A. N. Ditonto have been employed in their respective positions for more than five years, except that - 6 - Mr. A. N. Ditonto became Secretary in 1992. Roy J. Glosser has been employed by the Company since 1992 in operations and product development. Prior to that time, Mr. Glosser served as product manager of Acu-Rite Inc., an electronic manufacturing firm. Mr. M. A. Ditonto has been employed by the Company since April 1993. Mr. M. A. Ditonto also serves as Vice President and as a director of Signore Inc. where he has been employed since March 1991. 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 Alexander N. Ditonto. Except as provided in such employment contract and the Employment Agreement expected to be entered into between the Company and Roy J. Glosser described below, 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. Mr. Alexander N. Ditonto has announced that he will not seek re-election as a director of the Company at its Annual Meeting to be held on May 21, 1996 and that he will retire as President, Chief Operating Officer and Secretary of the Company on May 21, 1996. The Company is expected to enter into an employment contract with Roy J. Glosser whereby Mr. Glosser would assume duties of the office of President and Chief Operating Officer of the Company effective May 21, 1996. Mr. Michael A. Ditonto has also advised the Company that he will resign as Vice President - Business Development effective May 21, 1996. He is expected to provide consulting services to the Company in the future. 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. 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 15,000 * Office space American Locker Company, Inc. and American Locker Security Electronics Systems, Inc. Lab - 7 - Jamestown, NY American Locker Security 57,000 * Warehouse Systems, Inc. Pittsburgh, PA Executive Office 1,000 * Office space Ellicottville, American Locker Security 12,800 Locks NY Systems, Inc. - Lock Shop Toronto, Canadian Locker Company, Ltd. 4,000 * Coin- Ontario operated lockers and locks Elk Grove American Locker Security 9,900 * Customer Village, IL Systems, Inc. service and lock repair -------- TOTAL 99,700 ======== 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 1996 through 1999. 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." 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 1995. - 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 1994 High Low Declared ____ ____ ____ ________ First Quarter $ 5 1/2 $ 5 $0.00 Second Quarter 6 5 0.00 Third Quarter 6 5 0.00 Fourth Quarter 6 5 0.00 _________ Total $0.00 ========= Dividend 1995 High Low Declared ____ ____ ____ ________ First Quarter $ 6 $ 5 $0.00 Second Quarter 9 8 1/4 0.00 Third Quarter 9 1/4 7 3/4 0.00 Fourth Quarter 13 8 1/2 0.00 ________ Total $0.00 ======== As of March 21, 1996, the Company had 1,607 security holders of record. - 9 - 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. - 10 - ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In 1995, consolidated sales of $23,677,940 increased 50% over 1994 sales of $15,766,423 and the Company substantially increased its profitability. Sales of the Company's plastic lockers increased 103% from $6,573,247 in 1994 to $13,362,573 in 1995. Plastic lockers are sold to the United States Postal Service ("USPS") under a contract received in November 1994 pursuant to which the Company provides plastic parcel lockers ("CBU's") to the USPS. Revenues from the Company's other, non-plastic locker products increased 12%, from $9,193,176 in 1994 to $10,315,367 in 1995. Consolidated cost of sales as a percentage of sales dropped to 68.4% in 1995 compared to 69.5% in 1994, providing a 1% increase in gross margin. The slight increase in gross margin relates to the sales mix which included higher sales on plastic lockers and lower sales on metal lockers. The Company's present contract with the USPS regarding Type Three CBU's will terminate on April 14, 1996. Under the terms of this contract the Company sold approximately 2,800 and 9,200 Type Three CBU's in 1994 and 1995, respectively. As noted below, the Company and the USPS have entered into a new one year contract, effective April 15, 1996 covering Outdoor Parcel Lockers (OPL) and Cluster Box Units (CBU) Type Three as well as Type One and Type Two. The new contract gives the Company a minimum order of 1,424 units of the OPL's and 6,000 units of the CBU's. Earnings for 1996 may decrease over 1995 results due to the uncertainty concerning the number of units the USPS may take under the new contract, the slightly lower margins anticipated on the Type Three CBU's and the increased depreciation expense resulting from the Type One and Type Two tools. On March 27, 1996, the Company was awarded a contract by the USPS to deliver Outdoor Parcel Lockers (OPL's) and all three types of Cluster Box Units (Type One, Type Two and Type Three) for a period of one year commencing on April 15, 1996. Terms of the contract specify that the Company will provide 60% of the USPS requirements for all four products on a nationwide basis, with guaranteed minimum quantities of 1,424 OPL's and 6,000 in the aggregate of Type One, Type Two and Type Three CBU's during the contract period. The contract also contains standard provisions allowing the USPS to extend the term of the contract for up to four option years as well as provisions allowing early termination for convenience by the USPS. Under this contract, margins on the OPL are expected to increase over 1995 levels and margins on the Type Three CBU's are expected to decrease compared to 1995 margins. The contracted prices are pending USPS audit. The contract further provides that once a specified number of CBU's are shipped, the purchase price for additional units will be reduced by a specified amount. The Company does not expect sales of the CBU's during 1996 to reach the level where such price - 11 - reductions would come into effect, although it is possible that such levels could be reached during 1997 or, if the USPS elects to exercise its renewal options under the contract, in later years. Selling, administrative and general expenses of $4,861,477 during 1995 increased 6% from the $4,594,679 recorded in 1994. The slight increase in selling, administration and general expenses is the result of the Company's continued growth in sales, offset in part by the Company's continuing efforts to downsize its administrative overhead costs by effectively consolidating administrative job responsibilities and reducing the level of corporate staff. Interest income in 1995 increased from 1994 due to an increase in the balance of notes receivable during 1995. Other income of $244,769 in 1995 increased from the $164,814 recorded in 1994. Other income in 1995 included an increase in cash discounts earned. Interest expense increased slightly, $1,658 in 1995 from $164,631 in 1994 due to an increase in the average borrowing rate experienced in 1995 compared to 1994. In 1994, consolidated sales of $15,766,423 increased 22% over 1993 sales of $12,957,393 and the Company returned to profitability. Sales of the Company's plastic lockers increased 106% from $3,194,609 in 1993 to $6,573,247 in 1994. A majority of the increase in plastic locker sales occurred during the fourth quarter of 1994, as the Company was awarded a significant contract in November 1994 to provide plastic Type Three CBU's to the USPS. Sales of the Company's plastic locker units were $3,490,354 in the forth quarter of 1994 compared to $965,318 in the fourth quarter of 1993. Revenue from the Company's other, non-plastic locker products declined 6%, from $9,762,784 in 1993 to $9,193,176 in 1994. Consolidated cost of sales sold as a percentage of sales rose to 69.5% in 1994 compared to 68.5% in 1993, a 1% decline in gross margin. The slight decrease in gross margin relates principally to the slightly lower sales and margins realized on metal locker units. Through December 31, 1994, 2,802 CBU Type Three have been shipped to the USPS. Selling, administrative and general expenses of $4,594,679 during 1994 decreased 9% from the $4,996,846 recorded in 1993. The decline in selling, administration and general expenses is the result of the Company's continued effort to downsize its administrative overhead costs by effectively consolidating administrative job responsibilities and reducing the level of corporate staff. Interest income in 1994 declined slightly from 1993 due to the reduction in invested funds. - 12 - Other income of $164,814 in 1994 was substantially less than the $525,044 recorded in 1993. Other income in 1993 included a gain of $379,483 related to the sale of the Company's locker assets previously on concession in various Greyhound bus stations. Interest expense increased $37,742 in 1994 from $126,689 in 1993 due to additional term debt borrowings and an increase in the average outstanding borrowings under the Company's line of credit facility in 1994 coupled with the increase in the average borrowing rate experienced in 1994 compared to 1993. 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 1.71 to 1 and 1.82 to 1 at the end of 1995 and 1994, respectively. Working capital, or the excess of current assets over current liabilities, was $3,459,221 at December 31, 1995 and $3,284,945 at December 31, 1994. The increase in working capital resulted primarily from the increased business activity with the USPS in 1995. In 1995, the Company's operations generated $2,710,713 in cash from operating activities. Principally, operating cash was utilized to fund the increase in inventory ($670,019) related to the increased business activity in 1995 with the USPS, 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 1996, as shipments and billings which occurred throughout 1995 under the USPS contract are anticipated to continue throughout 1996. The Company continues to purchase tooling required to manufacture Type One and Type Two CBU's and anticipates funding such expenses from operations. In 1995, the Company continued to make principal payments on the term loan at the rate of $50,000 per month and has reduced the outstanding balance of this loan to $900,000 as of December 31, 1995. On March 12, 1996, the Company increased its term loan facility by $1,000,000 which will provide liquidity to fund payment of federal, state and local taxes from 1995. Also at December 31, 1995, the Company had an outstanding balance of $1,400,000 under a $3,000,000 line-of-credit with its principal bank. The increased borrowings under the line of credit were utilized to fund increased inventory and receivables related to the increased sales volumes in late 1995 from the USPS. The Company's policy is to maintain modern equipment and adequate capacity. During 1995, 1994 and 1993, the Company expended $1,232,600, $197,000, and $238,000, respectively, for capital additions. Capital expenditures in 1995 and 1993 were financed principally from operations. - 13 - IMPACT OF ACCOUNTING CHANGES In February 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. The Company adopted the new method of accounting for income taxes in the first quarter of 1993 by recording a cumulative effect adjustment which resulted in a charge to net earnings of $76,466. At both December 31, 1995 and 1994, a valuation reserve of $74,000 has been established on the deferred tax benefit of future tax deductions due to limitations on the carryforward and carryback provisions of the various states in which the Company operates. In December 1990, the Financial Accounting Standards Board issued a new statement that requires the projected future cost of providing postretirement benefits such as health care and life insurance, be recognized as an expense as employees render service instead of when benefits are paid. The Company provides a certain level of life insurance benefits to its retirees, which are considered postretirement benefits under the guidelines of the new statement. The Company adopted the new method of accounting in the first quarter of 1993 by recording the impact of the accounting change (net of applicable taxes of $42,000) as a charge of $63,062 to 1993 earnings. In March 1995, the Financial Accounting Standards Board issued Statement No.121 "Accounting For Impairment of long Lived Assets to be Disposed Of". The Company will adopt this Statement in the first quarter of 1996 and does not believe that the effect of such adoption will be material. 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. As successfully demonstrated in 1995, the Company will continue to find ways to reduce the administrative overhead necessary to successfully run the business. By reducing 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. - 15 - ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Auditors Board of Directors and Stockholders American Locker Group Incorporated We have audited the accompanying statements of consolidated financial position of American Locker Group Incorporated and subsidiaries as of December 31, 1995 and 1994, and the related statements of consolidated operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. 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, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. As discussed in Notes 1 and 6, the Company changed its method of accounting for postretirement benefits other than pensions and income taxes in the year ended December 31, 1993. /s/ Ernst & Young LLP Erie, Pennsylvania February 16, 1996 - 16 - American Locker Group Incorporated and Subsidiaries Statements of Consolidated Financial Position December 31 1995 1994 ------------------------- Assets Current assets: Cash and cash equivalents $1,080,487 $ 315,685 Accounts receivable, less allowance for doubtful accounts of $136,509 in 1995 and $72,900 in 1994 3,631,234 4,070,723 Notes receivable, less allowance for doubtful notes of $139,203 in 1995 191,884 128,779 Inventories 2,775,615 2,105,537 Prepaid expenses 143,978 187,001 Deferred income taxes 536,319 502,047 ------------------------- Total current assets 8,359,517 7,309,772 Property, plant and equipment: Land 500 500 Buildings 496,196 489,986 Machinery and equipment 7,581,513 6,365,812 ------------------------- 8,078,209 6,856,298 Less allowances for depreciation and amortization 6,331,541 5,941,203 ------------------------- 1,746,668 915,095 ------------------------- Total assets $10,106,185 $8,224,867 ========================= - 17 - December 31 1995 1994 ------------------------- Liabilities and stockholders' equity Current liabilities: Demand note payable $1,400,000 $1,200,000 Accounts payable: Trade 965,432 865,244 Related party 377,214 610,922 ------------------------- 1,342,646 1,476,166 Commissions, salaries, wages and taxes thereon 348,549 246,547 Other accrued expenses 376,643 480,868 Federal, state and foreign income taxes payable 832,458 21,246 Current portion of long-term debt 600,000 600,000 ------------------------- Total current liabilities 4,900,296 4,024,827 Deferred income taxes 83,609 3,337 Long-term obligations: Long-term debt 300,000 900,000 Deferred pension income 232,584 174,542 Postretirement benefits 125,630 116,510 ------------------------- 658,214 1,191,052 Stockholders' equity: Common stock, $1 par value: Authorized shares -- 4,000,000 Issued and outstanding shares 818,625 in 1995 and 858,876 shares in 1994 818,625 858,876 Other capital 1,258,805 1,571,970 Retained earnings 2,500,351 709,782 Foreign currency translation adjustment (113,715) (134,977) -------------------------- Total stockholders' equity 4,464,066 3,005,651 -------------------------- Total liabilities and stockholders' equity $10,106,185 $8,224,867 ========================== See accompanying notes. - 18 - American Locker Group Incorporated and Subsidiaries Statements of Consolidated Operations Year ended December 31 1995 1994 1993 ----------------------------------- Net sales $23,677,940 $15,766,423 $12,957,393 Cost of products sold 16,207,181 10,971,085 8,873,261 ----------------------------------- 7,470,759 4,795,338 4,084,132 Selling, administrative 4,861,477 4,594,679 4,996,846 and general expenses ----------------------------------- 2,609,282 200,659 (912,714) Interest income 59,716 17,997 19,277 Other income - net 244,769 164,814 525,044 Interest expense (166,289) (164,631) (126,689) ----------------------------------- Income (loss) before income taxes and accounting changes 2,747,478 218,839 (495,082) Income taxes (credit) 956,909 74,600 (100,000) ----------------------------------- Income (loss) before 1,790,569 144,239 (395,082) accounting changes Accounting changes: Income taxes -- -- 76,466 Postretirement benefits, net of applicable taxes of ($42,000) -- -- 63,062 ----------------------------------- -- -- 139,528 ----------------------------------- Net income (loss) $1,790,569 $ 144,239 $ (534,610) =================================== Per share of common stock: Income (loss) before accounting changes $2.12 $0.17 $(0.44) Accounting changes -- -- (0.16) ----------------------------------- Net income (loss) $2.12 $0.17 $(0.60) ----------------------------------- Dividends $0.00 $0.00 $0.00 =================================== See accompanying notes. - 19 - American Locker Group Incorporated Statements of Consolidated Stockholders' Equity
Foreign Currency Total Common Other Retained Translation Stockholders' Stock Capital Earnings Adjustment Equity ------------------------------------------------------ Balance at January 1, 1993 $884,202 $1,708,397 $1,100,153 -- $3,692,752 Net (loss) -- -- (534,610) -- (534,610) Foreign currency translation -- -- -- $(46,987) (46,987) Common stock purchased and (12,779) (68,354) -- -- (81,133) retired ------------------------------------------------------ Balance at December 31, 1993 871,423 1,640,043 565,543 (46,987) 3,030,022 Net income -- -- 144,239 -- 144,239 Foreign currency translation -- -- -- (87,990) (87,990) Stock options exercised 10,500 15,037 -- -- 25,537 Common stock purchased and (23,047) (83,110) -- -- (106,157) retired ------------------------------------------------------ Balance at December 31, 1994 858,876 1,571,970 709,782 (134,977) 3,005,651 Net Income -- -- 1,790,569 -- 1,790,569 Foreign currency translation -- -- -- 21,262 21,262 Common stock purchased and (40,251) (313,165) -- -- (353,416) retired ------------------------------------------------------- Balance at December 31, 1995 $818,625 $1,258,805 $2,500,351 $(113,715)$4,464,066 ======================================================= See accompanying notes.
- 20 - American Locker Group Incorporated Statements of Consolidated Cash Flows Year ended December 31 1995 1994 1993 ----------------------------- Operating activities Net Income (loss) $1,790,569 $ 144,239 $(534,610) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Cumulative effect of accounting changes -- -- 139,528 Depreciation and amortization 404,006 556,027 837,303 Gain on disposition of property, plant and equipment (27,346) (31,214)(387,143) Deferred income taxes (credits) 46,000 (36,100)(142,100) Deferred pension 58,042 40,688 (11,119) Postretirement benefits 9,120 6,065 5,391 Change in assets and liabilities: Accounts and notes receivable 384,683 (1,697,432)(246,772) Income taxes 811,101 126,568 253,289 Inventories (670,019) (346,440) 255,130 Prepaid expenses 43,541 (55,058) (14,257) Accounts payable and accrued (138,984) 659,425 63,350 expenses Other noncurrent assets -- -- 24,082 ------------------------------ Net cash provided by (used in) operating activities 2,710,713 (633,232) 242,072 Investing activities Purchase of property, plant and equipment (1,232,604) (197,028)(238,659) Proceeds from sale of property, plant and equipment 32,675 41,317 421,776 ------------------------------ Net cash (used in) provided by investing activities (1,199,929) (155,711) 183,117 Financing activities Net borrowings under line of credit 200,000 400,000 300,000 Additional borrowings -- 1,850,000 -- Debt repayments (600,000)(1,350,000)(600,000) Common stock purchased and retired (353,416) (106,157) (81,133) Stock options exercised -- 25,537 -- ------------------------------ Net cash (used in) provided by financing activities (753,416) 819,380 (381,133) - 21 - Effect of exchange rate changes on cash 7,434 (32,377) (15,286) ------------------------------ Net increase (decrease) in cash 764,802 (1,940) 28,770 Cash and cash equivalents at beginning of year 315,685 317,625 288,855 ------------------------------ Cash and cash equivalents at end of year $1,080,487 $315,685 $317,625 ============================== Supplemental cash flow information: Cash paid during the year for: Interest $ 160,607 $168,318 $123,006 ============================== Income taxes paid (refunded) $59,684 $ 53,968 $(204,897) ============================== See accompanying notes. - 22 - 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 checking lockers and locks. The Company sells to customers throughout North America. Cash and Cash Equivalents Cash includes currency on hand and demand deposits with financial institutions. Cash equivalents are short-term, highly liquid investments both readily convertible to known amounts of cash and have original purchase maturities of three months or less. 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. Net Income Per Share Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares outstanding, plus, when dilative, the common stock equivalents which would arise from the exercise of stock options. Total shares used in the calculations amount to 845,356 in 1995, 862,017 in 1994 and 899,785 in 1993. - 23 - 1. Summary of Significant Accounting Policies (continued) Income Taxes Effective January 1, 1993, the Company changed its method of accounting for income taxes from the deferred method to the liability method required by FASB Statement No. 109, "Accounting for Income Taxes." The cumulative effect of adopting Statement 109 as of January 1, 1993, was to decrease net income by $76,466. For the years ended December 31, 1995, 1994 and 1993, application of the new rules did not have a material impact on tax expense. 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 (loss) 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. 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. Impact of Recently Issued Accounting Standard In March 1995, the FASB issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which requires impairment losses to be recorded on long- lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying value. The Company will adopt Statement No. 121 in the first quarter of 1996, and based on current circumstances, does not believe the effect of adoption will be material. - 24 - 2. Inventories December 31 1995 1994 ----------------------- Finished products $1,240,253 $ 677,187 Work-in-process 1,414,994 1,266,263 Raw materials 1,395,058 1,104,489 ---------------------- 4,050,305 3,047,939 Less allowance to reduce carrying value to LIFO basis 1,274,690 942,402 ---------------------- Net inventories $2,775,615 $2,105,537 ====================== 3. Demand Note Payable and Long-Term Debt December 31 1995 1994 ------------------- Note payable to bank, unsecured, due May 1997, payable $50,000 per month with interest at prime plus 1/4% (8.75% at December 31, 1995) $900,000 $1,500,000 Less current portion 600,000 600,000 --------------------- Long-term portion $300,000 $ 900,000 ===================== The credit agreement underlying the note 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 note has restrictions on the payment of dividends. The Company was in compliance with these covenants at year end. At December 31, 1995, the Company had outstanding $1,400,000 under a $3,000,000 unsecured line of credit agreement with the 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 8.8%, 6.7% and 6.0% in 1995, 1994 and 1993, respectively. Required principal payments on long-term obligations in each of the years through final maturity are as follows: 1996 - $600,000, 1997 - $300,000. Rent expense amounted to $410,763, $239,904 and $384,000 in 1995, 1994 and 1993, respectively. - 25 - 3. Demand Note Payable and Long-Term Debt (continued) The Company leases several operating facilities and vehicles under noncancelable operating leases. Future minimum lease payments by year and in the aggregate consists of the following at December 31, 1995. 1996 $162,678 1997 61,265 1998 20,634 -------- $244,577 ======== - 26 - 4. Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. At December 31, 1995, 1994 and 1993, a valuation reserve has been established on the deferred state tax benefit of future deductions due to limitations on carryforward and carryback provisions of the various states in which the Company operates. Significant components of the Company's deferred tax liabilities and assets at December 31 are as follows: 1995 1994 -------------------- Deferred tax liabilities: Property, plant and equipment $127,952 $ 23,493 Prepaid expenses 25,761 41,639 -------------------- Total deferred tax liabilities 153,713 65,132 Deferred tax assets: Postretirement benefits 61,052 57,804 Pension costs 93,033 69,816 Allowance for doubtful accounts 109,168 28,098 Accrued expenses 10,253 62,910 Other employee benefits 39,670 47,269 Inventory costs 353,284 356,059 Other 14,863 16,786 ------------------- Total deferred tax assets 681,323 638,742 Valuation allowance for deferred tax assets (74,900) (74,900) -------------------- Net deferred tax assets $452,710 $498,710 ==================== Current deferred tax asset $536,319 $502,047 Long-term deferred tax (liability) (83,609) (3,337) -------------------- $452,710 $498,710 ===================== - 27 - 4. Income Taxes (continued) For financial reporting purposes, income (loss) before income taxes and change in accounting includes the following components: 1995 1994 1993 ------------------------- United States $2,714,028 $195,836 $(465,307) Foreign 33,450 23,003 (29,775) ------------------------------ $2,747,478 $218,839 $(495,082) ============================== Significant components of the provision for income taxes are as follows: 1995 1994 1993 ------------------------------ Current: Federal $834,400 $79,000 $ 42,100 State 117,900 19,700 -- Foreign 33,700 12,000 -- Prior year taxes (75,091) -- -- ------------------------------ Total current 910,901 110,700 42,100 Deferred: Federal 55,900 (48,100) (178,100) State (9,900) 12,000 36,000 ------------------------------ 46,000 (36,100) (142,100) ------------------------------ $956,909 $74,600 $(100,000) ============================== - 28 - 4. Income Taxes (continued) The differences between the federal statutory rate and the effective tax rate as a percentage of income (loss) before taxes are as follows: 1995 1994 1993 ------------------------------ Statutory income tax rate 35% 35% 35% State and foreign income taxes 1 (1) (10) Tax credits -- (1) -- Permanent differences principally nontaxable income in 1995 and in 1993, and nondeductible expenditures in 1994 (1) 3 (5) Other -- (1) -- ------------------------------ 35% 35% 20% ============================== 5. Pension Plans The Company and its subsidiaries have several defined benefit pension plans covering substantially all employees. Benefits for the salaried employees are based on specified percentages of the employees annual compensation. The plans for hourly employees provide benefits of stated amounts for each year of service. The plans' 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. The summary of the components of net periodic pension expense (income) and the total pension expense (income) are as follows: 1995 1994 1993 ------------------------------ Service cost-benefits earned during the period $193,514 $192,700 $170,283 Interest cost on projected benefit obligation 113,188 99,287 85,882 Return on plan assets (155,711) (133,729) (160,303) Net amortization and deferral (92,949) (117,570) (105,774) ------------------------------ Net pension expense (income) $ 58,042 $ 40,688 $ (9,912) ------------------------------ The average discount rate used in determining the actuarial value of the projected benefit obligations was 7.5% in 1995 and 1994. The rates of future years' compensation levels was 5.5% in 1995 and 1994. The expected long-term rate of return on plan assets was 7.5% in 1995 and 1994. - 29 - 5. Pension Plans (continued) The following table sets forth the funded status and amounts recognized in the statements of consolidated financial condition for the hourly plan at December 1995 and 1994. 1995 1994 -------------------- Actuarial present value of benefit obligations: Vested benefit obligation $839,141 $716,538 Non-vested benefit obligation 3,746 6,744 -------------------- Accumulated benefit obligation $842,887 $723,282 ==================== Projected benefit obligation for service rendered to date $ 842,887 $ 723,282 Plan assets at fair value 1,252,097 1,177,134 --------------------- Plan assets in excess of projected benefit obligations 409,210 453,852 Unrecognized net loss 243,271 197,885 Unrecognized prior service cost 1,597 1,864 Unrecognized net transition asset (202,216) (235,918) ------------------- Net hourly plan pension asset recognized in the statement of consolidated financial condition $451,862 $ 417,683 ==================== The funded status and amounts recognized in the statement of consolidated financial condition for the salary plan at December 31, 1995 and 1994 are presented in the following table. 1995 1994 -------------------- Actuarial present value of benefit obligations: Vested benefit obligation $845,245 $623,354 Non-vested benefit obligation 31,798 61,459 -------------------- Accumulated benefit obligation $877,043 $684,813 ==================== Projected benefit obligation for service rendered to date $1,006,059 $ 789,127 Plan assets at fair value 854,183 846,040 --------------------- - 30 - Plan assets (deficiency) in excess of projected benefit obligations (151,876) 56,913 Unrecognized net loss 228,576 213,494 Asset deferred gain (761,146) (862,632) ------------------- Net salary plan pension liability recognized in the statement of consolidated financial condition $(684,446) $(592,225) ==================== The Company also contributes to a foreign pension plan, which amounts are not material. - 31 - 6. Postretirement Benefit Plans Other Than Pensions In addition to the Company's defined benefit plans, 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. In 1993, the Company adopted FASB Statement No. 106, "Employees' Accounting for Postretirement Benefits Other Than Pensions." The cumulative impact of the accounting change ($105,054, less applicable deferred income taxes of $42,000) reduced earnings by $.07 per share. The effect of adopting the new rules increased 1993 net periodic postretirement benefit cost by approximately $5,200 and decreased 1993 net income by $4,200. The following table presents the plan's status reconciled with amounts recognized in the Company's statement of financial position: December 31 1995 1994 ------------------------ Accumulated postretirement benefit obligation: Retirees $(56,778) $(52,656) Fully eligible active plan participants (46,770) (43,375) Other active plan participants (16,211) (15,034) ------------------------- Accumulated postretirement benefit obligation (119,759) (111,065) Unrecognized net gain (5,871) (5,445) ------------------------- Accrued postretirement benefit cost $(125,630) $(116,510) ========================= Net periodic postretirement benefit cost includes the following components: December 31 1995 1994 1993 ------------------------- Service cost $1,882 $1,882 $1,664 Interest cost 8,238 8,238 8,227 ------------------------- Net periodic postretirement benefit cost $10,120 $10,120 $9,891 ========================= - 32 - The weighted average discount rate used in determining the accumulated postretirement benefit obligations was 8% at December 31, 1995 and 1994. 7. 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 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, 1995, 1994 and 1993, there were no stock appreciation rights outstanding under this plan. A summary of the Stock Incentive Plan stock options for the years ended December 31, 1995, 1994 and 1993 is as follows: - 33 -
Number of Shares Option Price Under -------------------------------------- - ------- Option Per Share Aggregate ------------------------------------------------------ Outstanding - January 1, 1993 36,000 $2.875-$4.25 $112,437 Granted during the year -- 0.00 -- Exercised during the year -- 0.00 -- Cancellations -- 0.00 -- --------------- ---------- Outstanding - December 31, 1993 36,000 $2.875-$4.25 112,437 Granted during the year -- 0.00 -- Exercised during the year (10,500) 2.875 (30,188) Cancellations -- 0.00 -- --------------- ---------- Outstanding - December 31, 1994 25,500 $2.875-$4.25 82,249 Granted during the year -- 0.00 -- Exercised during the year -- 0.00 -- Cancellations -- 0.00 -- --------------- ---------- Outstanding - December 31, 1995 25,500 $2.875-$4.25 $82,249 =============== ==========
- 34 - 8. Related Party The President of the Company is also the President of Signore Inc., a former wholly-owned subsidiary of the Company. In addition, some Officers and Directors of the Company are Directors of Signore Inc. One of the Company's subsidiaries has entered into a manufacturing agreement with Signore, under which Signore will furnish fabricating, assembly and shipping services. The Agreement, which expires in 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 $3,470,582, $2,793,880 and $2,487,759 for the years ended December 31, 1995, 1994 and 1993, respectively. - 35 - 9. Business Segment Data The Company has operations in the United States and Canada. The geographic distribution of sales, operating profit (loss) and identifiable assets for 1995, 1994 and 1993 are as follows:
United States Canada Eliminations Total ------------------------------------------------------- 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 ======================================================= 1994 ----------------------------------- Revenues from unaffiliated customers $13,899,533 $1,866,890 $ -- $15,766,423 Transfers between geographic areas 617,762 -- 617,762 -- ------------------------------------------------------- Total revenues $14,517,295 $1,866,890 $ 617,762 $15,766,423 ======================================================= Operating income $ 128,037 $ 72,622 $ -- $ 200,659 ======================================================= Identifiable assets $ 8,264,864 $ 848,768 $ 888,765 $ 8,224,867 ======================================================= - 36 - 1993 ------------------------------------ Revenues from unaffiliated customers $10,998,499 $1,958,894 $ -- $12,957,393 Transfers between geographic areas 410,356 39,317 449,673 -- ------------------------------------------------------- Total revenues $11,408,855 $1,998,211 $ 449,673 $12,957,393 ======================================================= Operating loss $ (850,479) $ (62,235) $ -- $ (912,714) ======================================================= Identifiable assets $ 6,586,992 $ 925,924 $ 888,765 $ 6,624,151 =======================================================
In 1995, 1994 and 1993, the Company had export sales of $1,244,711, $2,009,086 and $2,016,610, respectively. In 1995, 1994 and 1993, export sales represented approximately 5.3%, 12.7% and 15.6%, respectively of the Company's consolidated net sales. Sales to the U.S. Postal Service represented 61.2%, 45.8% and 28.6% of net sales in 1995, 1994 and 1993, respectively. - 37 - 9. Business Segment Data (continued) At December 31, 1995 and 1994, the Company had secured receivables from customers under time payment arrangements totaling $331,087 and $128,779, respectively. At December 31, 1995, the Company had unsecured trade receivables from customers considered to be distributors of $351,122 (including a United Kingdom distributor of $119,249) and from governmental agencies of $1,858,497. At December 31, 1994, the Company had unsecured trade receivables from customers considered to be distributors of $519,200 (including a United Kingdom distributor of $78,100) and from governmental agencies of $2,386,500. The Company has not incurred any losses with respect to the aforementioned customers. 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. 10. Quarterly Results of Operations (Unaudited) The following is a tabulation of the unaudited quarterly results of operations for the years ended December 31, 1995 and 1994: 1995 Three Months Ended March 31 June 30 September 30 December 31 --------------------------------------------- Net sales $7,080,084 $5,273,245 $5,633,832 $5,690,779 ============================================= Gross profit $2,277,764 $1,699,121 $1,910,998 $1,582,876 ============================================= Net income $ 666,765 $ 242,766 $ 406,332 $ 474,706 ============================================= Net income $ .78 $ .28 $ .48 $ .58 per share ============================================= - 38 - 10. Quarterly Results of Operations (Unaudited) (continued) 1994 Three Months Ended March 31 June 30 September 30 December 31 --------------------------------------------- Net sales $3,473,596 $3,385,251 $3,107,603 $5,799,973 ============================================= Gross profit $1,023,929 $1,088,079 $ 948,976 $1,734,354 ============================================= Net (loss) income $(60,613) $(29,905) $(141,639) $376,396 ============================================= Net (loss) income $(.07) $(.03) $(.16) $.43 per share ============================================= The Company's accounting practice for interim periods provides for possible inventory, insurance, pension and income tax adjustments. Such adjustments resulted in increasing the 1995 fourth quarter pretax income by $51,000 for insurance and pension costs and $178,000 for income tax expense and decreasing fourth quarter pretax income by $208,900 for inventory costs. In 1994, fourth quarter adjustments relating to inventories and pensions decreased fourth quarter pretax income by $19,000. 11. Contingency 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 two sites suspected to have some form of environmental contamination. The Company believes that its contributions to these sites, if any, is deminimus, however, it is too early to predict the ultimate outcome of these matters. - 39 - 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 1995 or 1994. 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 1995 - None. - 40 - In accordance with Section 13 or 15(d) 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 /s/Harold J. Ruttenberg _______________________ Harold J. Ruttenberg Chairman, Chief Executive Officer, Treasurer and Principal Accounting Officer March 29, 1996 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 29, 1996 ----------------------- Executive Officer, Harold J. Ruttenberg Treasurer, Principal Accounting Officer and Director /s/Alexander N. Ditonto President, Secretary March 29, 1996 ----------------------- and Director Alexander N. Ditonto /s/Thomas Phillips Johnson Director March 29, 1996 -------------------------- Thomas Phillips Johnson /s/Alan H. Finegold Director March 29, 1996 ----------------------- Alan H. Finegold ----------------------- Director March 29, 1996 Thomas Lynch, IV /s/James E. Ruttenberg Director March 29, 1996 ----------------------- James E. Ruttenberg - 41 - EXHIBIT INDEX Prior Filing or Sequential Page Exhibit No. No. Herein 3.1 Certificate of Incorporation Exhibits to Form 10- of American Locker Group K for Year ended Incorporated December 31, 1980 3.2 Amendment to Certificate of Form 10-C filed Incorporation changing name May 6, 1985 of company 3.3 Amendment to Certificate of Exhibit to Form 10-K Incorporation limiting for year ended liability of Directors and December 31, 1987 Officers 3.4 By-laws of American Locker Exhibit to Form 10-K Group Incorporated as for year ended amended and restated December 31, 1985 3.5 Amendment to By-laws of Exhibit to Form 10-K American Locker Group for year ended Incorporated dated December 31, 1991 January 15, 1992 10.1 American Locker Group Exhibit to Form 10-K Incorporated 1988 Stock for year ended Incentive Plan December 31, 1988 10.2 First Amendment dated Exhibit to Form 10-K March 28, 1990 to American for year ended Locker Group Incorporated December 31, 1989 1988 Stock Incentive Plan 10.3 Form of Indemnification Exhibit to Form 10-K Agreement between American for year ended Locker Group Incorporated December 31, 1987 and its directors and officers 10.4 Corporate Term Loan Exhibit to Form 10-K Agreement between American for year ended Locker Group Incorporated December 31, 1991 and Manufacturers and Traders Trust Company covering $2,400,000 loan 10.6 Approved Line of Credit from Exhibit to Form 10-K Manufacturers and Traders for year ended Trust Company to American December 31, 1990 Locker Group Incorporated in the amount of $1,000,000 10.7 Amendment Agreement dated Exhibit to Form 10- May 1, 1994 between KSB for year ended Manufacturing and Traders December 31, 1994 Trust Company and American Locker Group Incorporated [Increase in Term Loan to $1,850,000] 10.8 Amendment Agreement dated Page ___ March 12, 1996 between Manufacturing and Traders Trust Company and American Locker Group Incorporated [Increase in Term Loan to $1,800,000] 10.9 Employment Agreement between Exhibit to Form 10-K American Locker Group for year ended Incorporated and December 31, 1988 Alexander N. Ditonto 10.10 Amendment dated January 16, Exhibit to Form 10-K 1990 to Employment Agreement for year ended between American Locker December 31, 1989 Group Incorporated and Alexander N. Ditonto 10.11 Amendment to Employment Exhibit to From 10- Agreement between American KSB for year ended Locker Group Incorporated December 31, 1994 and Alexander N. Ditonto dated August 20, 1993 10.12 Stock Acquisition Agreement Exhibit to Form 8-K dated December 29, 1989 dated January 11, between American Locker 1990 Group Incorporated and Signore, Inc. Employee Stock Ownership Trust 10.13 Manufacturing Agreement Exhibit to Form 8-K dated as of December 29, dated January 11, 1989 between American Locker 1990 Security Systems Inc. and Signore, Inc. 10.14 First Amendment dated May 3, Page ________ 1995 to Manufacturing Agreement dated as of December 29, 1989 between American Locker Security Systems Inc. and Signore Inc. 10.15 Second Amendment dated Page ________ March 15, 1996 to Manufacturing Agreement dated as of December 29, 1989 between American Locker Security Systems Inc. and Signore Inc. 22.1 List of Subsidiaries Page ________ 27.1 Financial Data Schedule Page ________ EX-10 2 Exhibit 10.8 AMENDMENT AGREEMENT This Amendment Agreement is made this 12th day of March, 1996, between Manufacturers and Traders Trust Company, a New York banking organization having its chief executive office at One M&T Plaza, Buffalo, New York 14240, (the "Bank") and American Locker roup Incorporated, a Delaware business corporation having its chief executive office at 15 West Second Street, Jamestown, New York 14701, (the "Borrower"). WHEREAS, the Bank and the Borrower previously entered into a Corporate Term Loan Agreement dated August 30, 1991, which was amended by an Amendment Agreement dated as of May 1, 1994 (as so amended, the "Loan Agreement"); and WHEREAS, the Bank and the Borrower now desire to amend certain provisions of the Loan Agreement; NOW, THEREFORE, effective as of the date of this Amendment Agreement, the Bank and the Borrower agree that: 1. Sections 2 and 3 of the Loan Agreement are amended in their entirety to read as follows: 2. LOAN. - 2 - a. Making and Obtaining Loan. Upon and subject to each term and condition of this Agreement, the Bank shall make the Loan to the Borrower, and the Borrower shall obtain the Loan from the Bank. The principal amount of the Loan shall be $1,800,000. b. Termination of Obligation. Any obligation of the Bank to make the Loan shall terminate no later than March 30, 1996. c. Repayment. The Borrower shall repay the principal amount of the Loan to the Bank in 36 monthly installments of $50,000 each, with the first of such installments to become due on March 31, 1996 and one of such installments to become due on the last day of each succeeding calendar month through February 28, 1999, when the Borrower shall repay the outstanding principal amount of the Loan to the Bank and pay to the Bank all interest owing pursuant to this Agreement and remaining unpaid and all other amounts owing by the Borrower to the Bank pursuant to this Agreement and remaining unpaid. d. Optional Repayment in Advance. The Borrower shall have the option of repaying the principal amount of the Loan to the Bank in advance in full or in part at any time and from time to time; provided, however, that (i) the amount of any such repayment in part shall be an integral multiple of $50,000 and (i) upon making any such repayment in full the Borrower shall pay to the Bank all interest owing pursuant to this Agreement and remaining unpaid and all other amounts owing by the Borrower to the Bank pursuant to this Agreement and remaining unpaid. Each such repayment in part shall be applied to the installments of the principal amount of the Loan in the inverse order of such installments becoming due. e. Interest. From and including the date the Loan is made to but not including the date the outstanding principal amount of the Loan is repaid in full, the Borrower shall pay to the Bank interest, calculated on the basis of a 360-day year for the actual number of days of each year (365 or 366, as applicable), on such outstanding principal amount at a rate per year that shall (i) on each day beginning before the maturity, whether by acceleration or otherwise, of such outstanding principal amount be 1/4% above the rate in effect such day as the Bank's Prime Rate and (ii) on each - 3 - day subsequent to the last day described in clause (i) of this sentence be 3% above the rate in effect such subsequent day as the Bank's Prime Rate; provided, however, that (A) in no event shall such interest be payable at a rate in excess of the maximum rate permitted by applicable law and (B) solely to the extent necessary to result in such interest not being payable at a rate in excess of such maximum rate, any amount that would be treated as part of such interest under a final judicial interpretation of applicable law shall be deemed to have been a mistake and automatically cancelled, and, if received by the Bank, shall be refunded to the Borrower, it being the intention of the Bank and of the Borrower that such interest not be payable at a rate in excess of such maximum rate. Except as otherwise provided in Section 2c of this Agreement, payments of such interest shall become due on the last day of each calendar month, beginning on March 31, 1996. f. General Provisions as to Repayment and Payment. Repayment of the principal amount of the Loan, payment of all interest owing pursuant to this Agreement and payment of all other amounts owing by the Borrower to the Bank pursuant to this Agreement shall be made in lawful money of the United States and in immediately available funds at the banking office of the Bank located at One M&T Plaza, Buffalo, New York, or at such other office of the Bank as may at any time and from time to time be specified in any notice delivered, given or sent to the Borrower by the Bank. No such repayment or payment shall be deemed to have been received by the Bank until received by the Bank at the office of the Bank determined in accordance with the preceding sentence, and any such repayment or payment received by the Bank at such office after 2:00 P.M. on any day shall be deemed to have been received by the Bank at the time such office opens for business on the next business day of the Bank. If the time by which any of the principal amount of the Loan is to be repaid is extended by operation of law or otherwise, the Borrower shall pay interest on the outstanding portion thereof during such period of extension as provided in Section 2e of this Agreement. 3. PREREQUISITES TO LOAN. The obligation of the Bank to make the Loan shall be conditioned upon the following: - 4 - a. No Default. (i) There not having occurred or existed at any time during the period beginning on the date of this Agreement and ending at the time the Loan is to be made, and there not existing at the time the Loan is to be made, any Event of Default or Potential Event of Default and (ii) the Bank not believing in good faith that any Event of Default or Potential Event of Default has so occurred or existed or so exists; b. Representations and Warranties. (i) Each representation and warranty made in this Agreement being true and correct as of all times during the period beginning on the date of this Agreement and ending at the time the Loan is to be made and as of the time the Loan is to be made, except to the extent updated in (A) a certificate executed by the Chief Executive Officer or the President or a Vice President of the Borrower and by the chief financial officer of the Borrower and received by the Bank before the time the Loan is to be made or (B) Exhibit A attached to and made a part of this Agreement, (ii) each other representation and warranty made to the Bank by or on behalf of the Borrower or by or on behalf of any Subsidiary or Other Obligor before the time the Loan is to be made being true and correct as of the date thereof, except to the extent updated in (A) a certificate executed by the Chief Executive Officer or the President or a Vice President of the Borrower and by the chief financial officer of the Borrower and received by the Bank before the time the Loan is to be made or (B) Exhibit A attached to and made a part of this Agreement, (iii) each financial statement provided to the Bank by or on behalf of the Borrower or by or on behalf of any Subsidiary or Other Obligor before the time the Loan is to be made being true and correct as of the date thereof and (iv) the Bank not believing in good faith that (A) any such representation or warranty, except as so updated, was or is other than true and correct as of any such time, or as of such date, of determination of the truth and correctness thereof or (B) any such financial statement was other than true and correct as of the date thereof; c. Proceedings. The Bank being satisfied as to each corporate or other proceeding in connection with any transaction contemplated by this Agreement; and - 5 - d. Receipt by Bank. The receipt by the Bank at or before the time the Loan is to be made of the following, in form and substance satisfactory to the Bank: i. A Promissory Note, appropriately completed and duly executed by the Borrower; ii. A Ratification of General Guaranty Agreement, appropriately completed and duly executed by American Locker Security Systems, Inc.; iii. A Ratification of General Guaranty Agreement, appropriately completed and duly executed by American Locker Company, Inc.; iv. A certificate executed by the Chief Executive Officer or the President or a Vice President of the Borrower and by the chief financial officer of the Borrower and stating that (A) there did not occur or exist at any time during the period beginning on the date of this Agreement and ending at the time the Loan is to be made, and there does not exist at the time the Loan is to be made, any Event of Default or Potential Event of Default and (B) each representation and warranty made in this Agreement was true and correct as of all times during the period beginning on the date of this Agreement and ending at the time the Loan is to be made and is true and correct as of the time the Loan is to be made, except to the extent updated in a certificate executed by the Chief Executive Officer or the President or a Vice President of the Borrower and by the chief financial officer of the Borrower and received by the Bank before the time the Loan is to be made. v. Evidence that each of the Borrower and all Subsidiaries is at the time the Loan is to be made in good standing under the law of the jurisdiction in which it is incorporated; - 6 - vi. A copy of the certificate or articles of incorporation or other charter document of each of the Borrower and all Subsidiaries certified by its Secretary to be complete and accurate at the time the Loan is to be made; vii. A copy of the by-laws or other organizational document of each of the Borrower and all Subsidiaries certified by its Secretary to be complete and accurate at the time the Loan is to be made; viii. Evidence of the taking, and of the continuation in full force and effect at the time the Loan is to be made, of each corporate or other action of the Borrower or of any other Person necessary to authorize the obtaining of the Loan by the Borrower, the execution, delivery to the Bank and performance of each Loan Document and the imposition or creation of any security interest, mortgage and other lien and encumbrance imposed or created pursuant to any Loan Document; ix. Evidence that each requirement contained in any Loan Document with respect to insurance is being met at the time the Loan is to be made; x. Each additional writing required by any Loan Document or deemed necessary or desirable by the Bank at the sole option of the Bank; and xi. Payment of all costs and expenses payable pursuant to the first sentence of Section 8 of this Agreement at or before the time the Loan is to be made. 2. Section 4a of the Loan Agreement is amended in its entirety to read as follows: a. Use of Proceeds. The proceeds of the Loan will be used only (i) to refinance existing indebtedness of the Borrower to the Bank in the approximate outstanding principal amount - 7 - of $800,000 and (ii) to pay the 1995 tax obligations of the Borrower. 3. The reference in Section 5c of the Loan Agreement to "1,800,000" is changed to "2,500,000." 4. The reference in Section 5d of the Loan Agreement to "$2,200,000" is changed to "$2,500,000." 5. The Loan Agreement is changed by this Amendment Agreement only to the extent that it is specifically amended by this Amendment Agreement, and, as so amended, the Loan Agreement shall remain in full force and effect. Effective as of the date of this Amendment Agreement, references in the Loan Agreement to "this Agreement" shall be deemed to be references to the Loan Agreement as amended by this Amendment Agreement. IN WITNESS WHEREOF, the Bank and the Borrower have caused this Amendment Agreement to be duly executed on the date shown at the beginning of this Amendment Agreement. MANUFACTURERS AND TRADERS TRUST COMPANY By /s/ Richard D. Bagosy --------------------------------- Title Banking Officer AMERICAN LOCKER GROUP INCORPORATED By /s/ Harold J. Ruttenberg --------------------------------- Harold J. Ruttenberg Chief Executive Officer EXHIBIT A TO AMENDMENT AGREEMENT DATED MARCH 12, 1996 BETWEEN MANUFACTURERS AND TRADERS TRUST COMPANY AND AMERICAN LOCKER GROUP INCORPORATED [Section numbers refer to section of the Corporate Loan Agreement, as amended] Section 4(b). The following sets forth the name and jurisdiction of the present Subsidiaries of the Borrower and the percentage of voting stock owned, directly or indirectly, by Borrower: Percentage of Voting Jurisdiction Securities of Owned by Name Organization Borrower ---- ------------ ---------- American Locker Company, Inc. Delaware 100% American Locker Company of Dominion of 100% (1) Canada, Ltd. Canada Canadian Locker Company, Ltd. Dominion of 100% (2) Canada American Locker Security Delaware 100% Systems, Inc. American Locker Security Virgin Islands 100% (1) Systems International (1) Owned by American Locker Security Systems, Inc. (2) Owned by American Locker Company of Canada, Ltd. Section 4(d). The disclosure on this Schedule A, Section 4(b), sets forth the corporate structure of the Borrower and its Subsidiaries. Section 4(e). The disclosure in this Schedule A, Section 4(q), sets forth certain matters regarding environmental compliance by the Borrower and its Subsidiaries. Section 4(m) Leases. Obligor Monthly Rent Expiration ------- ------------ ---------- 1. Borrower - Pittsburgh, PA $ 1,200.00 12/31/96 Executive Office 2. Borrower - Jamestown, NY $ 4,862.50 5/31/96 Corporate Office 3. Canadian Locker Company, CA$ 1,491.83 3/31/98 Ltd. ("CLCL") Toronto, Ont. Office - Nuggett St. 4. CLCL Toronto-Progress Court CA$ 2,616.07 2/28/99 5. CLCL - Calgary CA$ 850.01 1/1/97 6. American Locker $ 5,447.08 4/30/97 Security Systems, Inc. ("ALSSI")- National Service Center, Elk Grove Village IL 7. ALSSI - Hartford, CN $ 400.00 10/31/96 Sales Office 8. ALSSI - Snellville, GA $ 210.00 12/31/96 Sales Office 9. ALSSI - Mesquite, Texas $ 575.00 11/30/96 Sales Office 10. ALSSI - Jamestown, NY $ 8,416.00 11/15/96 Warehouse-Assembly 11. ALSSI - Huntington Beach, CA $ 582.00 6/30/96 - 2 - 12. Vehicle Leases United States (11 autos) $ 5,016.18 Various through 2/97 Canada (3 autos) CA$ 1,453.86 Various through 5/98 Fork Lifts (2) $ 882.84 Various through 9/98 - 3 - Section 4(q) Judgments and Litigation. 1. Four female former employees of the Borrower 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 Borrower has filed an answer denying all charges. Discovery is completed and the Borrower has filed a Motion for Summary Judgment on all counts. The Motion is under consideration by the Court. Additional Information 1. By letter dated June 29, 1994, counsel for Gowanda Electronics ("Gowanda") informed the Borrower that Gowanda intended to pursue claims against the Borrower for costs and damages allegedly incurred by Gowanda as a result of environmental contamination at Gowanda's property in Gowanda, New York (the "Property"). The Property was sold by a predecessor of the Borrower, the AVM Corporation, to Gowanda in 1978. According to Gowanda, groundwater and soil at the Property exhibit contamination with petroleum products, solvents, and metals. Gowanda stated that the Borrower was responsible for this contamination and, therefore, is liable to Gowanda for past and future remediation costs - 4 - under the Comprehensive Environmental Response, Compensation and Liability Act, the New York Navigation Law, and various common law theories. Gowanda also stated that it will seek additional damages from the Borrower if the environmental conditions at the Property prevent Gowanda's potential sale of the Property. 2. In July 1994, the Borrower was notified by the Department of Law of the State of New York that the State of New York believes that the Borrower, 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. The defense of this suit has been assumed by the Borrower's insurance carrier, with a reservation of rights. - 5 - Exhibit 10.4 FIRST AMENDMENT TO MANUFACTURING AGREEMENT This First Amendment made as of May 3, 1995, to Manufacturing Agreement dated December 29, 1989 between SIGNORE, INC., a Delaware corporation ("Seller") and AMERICAN LOCKER SECURITY SYSTEMS, INC., a Delaware corporation ("Buyer"). WHEREAS, Seller and Buyer are parties to a Manufacturing Agreement dated December 29, 1989, (the "Original Agreement"); and WHEREAS, Seller and Buyer wish to extend the term of the Original Agreement and make certain amendments thereto. NOW, THEREFORE, for good and valuable consideration and intending to be legally bound hereby, Seller and Buyer agree as follows: 1. All defined terms used herein shall have the definitions set forth in the Original Agreement. 2. Section 2 of the Original Agreement is amended and restated as follows: 2. Term. The term of the Agreement shall expire on April 30, 2000, provided, however, that it may be terminated by Buyer or Seller on one - 6 - hundred eighty-five (185) days written notice to the other party. 3. Buyer and Seller acknowledge that as of December 31, 1994, the Remaining Inventory Value of Locker Inventory (as defined in Section 3(f) of the Original Agreement) was $1,177,220.85 (prior to recognition of obsolete inventory described in Section 4(i) below). In accordance with the provisions of Section 3(f) of the Original Agreement, Buyer shall pay to Seller the sum of $212,015.64 in accordance with the following schedule: Payment Date Amount ------------ ------ April 20, 1995 $42,415.64 May 20, 1995 42,400.00 June 20, 1995 42,400.00 July 20, 1995 42,400.00 August 20, 1995 42,400.00 ----------- TOTAL $212,015.64 ============ 4. Buyer and Seller agree (i) that as of December 31, 1994, Locker Inventory contained $17,636.00 in obsolete inventory which was scrapped and deducted from the calculation of Remaining Inventory Value (as defined in - 7 - Section 3(f) of the Original Agreement; (ii) that Remaining Inventory Value was reduced by the withdrawal by ALSSI in 1991 of Locker Inventory with a value of $72,701.35; and (iii) that Locker Inventory determined on a proforma basis as of December 31, 1994 as if all payments required under Section 3 hereof had been made as of that date was $1,159,584.85 (i.e. Initial Locker Inventory of $1,037,906.56 less $72,701.35 less $17,636 plus $212,015.64). 5. Except as expressly provided herein, the Original Agreement shall remain unamended and in full force and effect. WITNESS the due execution hereof. SIGNORE, INC. By /s/Alexander N. Ditonto ------------------------ Title President AMERICAN LOCKER SECURITY SYSTEMS, INC. By /s/Harold J. Ruttenberg ------------------------- Title Chairman - 8 - Exhibit 10.15 SECOND AMENDMENT TO MANUFACTURING AGREEMENT This Second Amendment made as of March 15, 1996, to Manufacturing Agreement dated December 29, 1989 between SIGNORE, INC., a Delaware corporation ("Seller") and AMERICAN LOCKER SECURITY SYSTEMS, INC., a Delaware corporation ("Buyer"). WHEREAS, Seller and Buyer are parties to a Manufacturing Agreement dated December 29, 1989, which Agreement was amended pursuant to the First Amendment to Manufacturing Agreement dated as of May 3, 1995 (such Manufacturing Agreement, as amended by such First Amendment to Manufacturing Agreement, is referred to herein as the "Amended Agreement"); and WHEREAS, Seller and Buyer wish to make certain amendments to the Amended Agreement. NOW, THEREFORE, for good and valuable consideration and intending to be legally bound hereby, Seller and Buyer agree as follows: 1. All defined terms used herein shall have the definitions set forth in the Amended Agreement. 2. Section 2 of the Original Agreement is amended and restated as follows: The term of this Agreement shall expire on April 30, 2000. 3. Except as expressly provided herein, the Amended Agreement shall remain unamended and in full force and effect. WITNESS the due execution hereof. SIGNORE, INC. By /s/ Alexander N. Ditonto --------------------------- Title President AMERICAN LOCKER SECURITY SYSTEMS, INC. By /s/ Harold J. Ruttenberg --------------------------- Title Chairman - 9 - 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 Voting Jurisdiction of Securities NAME Organization Owned ---- ---------------- ---------- American Locker Security Systems, Inc. Delaware 100% American Locker Company, Inc. Delaware 100% American Locker Company of Canada, Ltd. Dominion of Canada 100% (1) Canadian Locker Company, Ltd. Dominion of Canada 100% (2) American Locker Security Systems International Virgin Islands 100% (1) (1) Owned by American Locker Security Systems, Inc. (2) Owned by American Locker Company of Canada, Ltd. - 10 - EX-27 3
5 This schedule contains summary financial information extracted from SEC Form 10-KSB and is qualified in its entirety by reference to such financial statements. YEAR DEC-31-1995 DEC-31-1995 1,080,487 0 3,823,118 275,712 2,775,615 8,359,517 8,078,209 6,331,541 10,106,185 4,900,296 300,000 0 0 818,625 3,645,441 10,106,185 23,677,940 23,677,940 16,207,181 26,079,489 166,289 0 0 2,747,478 956,909 1,790,569 0 0 0 1,790,569 2.12 2.12
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