SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended
March 31, 1996
Commission File Number 0-4431
AUTO-GRAPHICS, INC.
(exact name of registrant as specified in its charter)
California 95-2105641
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3201 Temple Avenue, Pomona, California 91768-3200
(Address of principal executive offices)(zip code)
Registrant's telephone number, including area code: (909) 595-7204
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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
Total Shares Outstanding:
Common Stock: 1,110,178
AUTO-GRAPHICS, INC.
Form 10-Q
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
Unaudited Condensed Statements of Income
For the Three Months Ended March 31
1996 1995
Net sales $2,267,101 $2,191,711
Costs and expenses:
Cost of sales 1,301,309 1,392,755
Selling, general & administrative 826,034 704,465
Interest/Other 59,964 40,325
Total costs and expenses 2,187,307 2,137,545
Income from operations 79,794 54,166
Provision for taxes based on income 37,000 25,000
Net income $ 42,794 $ 29,166
Net income per share $ .04 $ .02
Shares outstanding 1,110,178 1,264,478
See Notes to Unaudited Condensed Financial Statements
AUTO-GRAPHICS, INC.
Form 10-Q
Unaudited Balance Sheets
March 31, 1996 and December 31, 1995
ASSETS 1996 1995
CURRENT ASSETS (audited)
Cash $ 59,174 $ 106,518
Accounts receivable, less allow-
ance for doubtful accounts of
$38,000 in 1996 and 1995 1,784,687 1,979,245
Unbilled production costs 412,858 232,517
Finished Goods 48,757 60,946
Other 209,729 168,616
Total current assets 2,515,205 2,547,842
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
at cost 8,303,140 7,986,491
Less accumulated depreciation 4,308,601 4,057,170
Net equipment and leasehold
improvements 3,994,539 3,929,321
OTHER ASSETS 193,234 210,543
TOTAL ASSETS $6,702,978 $6,687,706
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to bank $ 350,000 $ --
Accounts payable 420,733 524,431
Deferred income 285,207 490,167
Accrued expenses 58,627 38,585
Accrued payroll & related
liabilities 270,394 187,901
Current portion of long-term debt 505,000 505,000
Total current liabilities 1,889,961 1,746,084
LONG TERM DEBT (less current portion) 1,793,381 1,905,881
DEFERRED TAXES BASED ON INCOME 593,939 593,939
TOTAL LIABILITIES 4,277,281 4,245,904
STOCKHOLDERS' EQUITY
Common stock, $.10 par value; 4,000,000
shares authorized, 1,110,178 shares
issued and outstanding in 1996, and
1,130,478 in 1995 111,018 113,048
Capital in excess of par value 1,140,011 1,151,092
Retained earnings 1,174,668 1,177,662
Total stockholders' equity 2,425,697 2,441,802
TOTAL LIABILITIES & EQUITY $6,702,978 $6,687,706
See Notes to Unaudited Condensed Financial Statements
AUTO-GRAPHICS, INC.
Form 10-Q
Unaudited Statements of
Cash Flows
For the Three Months Ended March 31
Increase (Decrease) in Cash
1996 1995
Cash flows from operating activities:
Net income/(loss) $ 42,794 $ 29,166
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 268,740 211,457
Provision for losses on
accounts receivable -- --
(Increase)/decrease in
accounts receivable 194,558 392,086
(Increase)/decrease in
unbilled production costs (180,341) (108,016)
(Increase)/decrease in
finished goods inventory 12,189 13,709
(Increase)/decrease in
other current assets (41,113) (43,314)
(Increase)/decrease in
other assets -- (3,059)
Increase/(decrease) in
accounts payable (103,698) (15,548)
Increase/(decrease) in
customer advances (204,960) (53,068)
Increase/(decrease) in
accrued expenses (7,673) (44,002)
Increase/(decrease) in
accrued payroll and
related liabilities 82,493 68,246
Increase/(decrease) in
interest and income taxes
payable 27,716 (17,087)
Increase/(decrease) in
deferred taxes -- --
Net cash provided by
operating activities 90,705 430,570
Cash flows from investing activities:
Capital expenditures (316,649) (262,941)
Net cash used in
investing activities (316,649) (262,941)
Cash flows from financing activities:
Principal payments under debt
agreements (112,500) (112,500)
Net borrowings under
line-of-credit agreement 350,000 --
Repurchase of capital stock (see
Note 3 of "Notes to Unaudited
Condensed Financial Statements") (58,900) (46,800)
Net cash provided by (used
in) financing activities 178,600 (159,300)
Net increase (decrease) in cash (47,344) 8,329
Cash at beginning of period 106,518 80,852
Cash at end of period $ 59,174 $ 89,181
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 68,789 $ 52,739
Income taxes 37,000 42,000
See Notes to Unaudited Condensed Financial Statements.
AUTO-GRAPHICS, INC.
Form 10-Q
Notes to Unaudited Condensed Financial Statements
March 31, 1996
NOTE 1. The unaudited condensed financial statements included herein have
been prepared by Registrant and include all normal and recurring adjustments
which are, in the opinion of Management, necessary for a fair presentation of
the financial position at March 31, 1996, the results of operations and the
statement of cash flows for the three months ended March 31, 1996 and 1995
pursuant to the rules and regulations of the Securities and Exchange
Commission.
The results of operations for the subject periods are not necessarily
indicative of the results for the entire year.
This Quarterly Report on Form 10-Q is qualified in its entirety by the
information included in the Company's Annual Report to the SEC on Form 10-K
for the period ending December 31, 1995 including, without limitation, the
financial statements included therein.
NOTE 2. In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 121, Accounting for the
Impairment of Long-Lived Assets, which the Company adopted in 1995. The
Standard requires the Company to review the carrying amount of long-lived
assets, identifiable intangibles, and related goodwill to determine whether
any indicators of impairment are present. At March 31, 1996 the Company's
review of it's long-lived assets showed no indications of loss or impairment
and, therefore, has not had a material effect on the Company's financial
position or results of operations.
NOTE 3. The Company entered into a stock repurchase agreement with a former
employee and officer of the Company, Douglas K. Bisch, whereby the Company
agreed to purchase and retire, over a seven-year period, 156,000 of 171,000
shares of Company stock owned by Mr. Bisch. In January 1996, the Company
purchased and retired the second block of 15,600 shares.
AUTO-GRAPHICS, INC.
Form 10-Q
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FINANCIAL CONDITION
December 31, 1995 to March 31, 1996
Liquidity and capital resources. Working capital decreased $176,500.
Long-term debt was reduced by $112,500. Actual capital expenditures were
$317,000. The average collection period for accounts receivable increased
from 70 days at December 31, 1995 to 73 days at March 31, 1996.
The Company has a revolving credit agreement with a bank under which
borrowings are secured by accounts receivable, whereby the Company may
borrow against its eligible accounts receivable up to a maximum of $1,000,000
($650,000 available at March 31, 1996) with interest at 0.5% above the bank's
prime rate. Management believes that the current line of credit, which is
renewed annually in May, will again be renewed in 1996, and is sufficient to
handle cyclical working capital needs. There are no compensating balance
requirements, commitment fees or note guarantors. This agreement contains
the same loan covenants as the capital line of credit note payable.
The Company also has a line of credit agreement with the bank providing for
maximum borrowings of $2,250,000 ($117,000 available at March 31, 1996), with
interest at 0.75% above the bank's prime rate, for the purchase of equipment
and financing of up to $500,000 in internal software development costs. The
capital line of credit is renewed annually in May and management believes
that the current line of credit will be renewed in 1996. Management does not
currently believe that increased credit will be required to finance capital
improvements in 1996. Among other requirements, the capital line of credit
note payable requires the Company to maintain minimum ratios of current
assets to current liabilities, debt to equity and cash flow to debt service,
minimum working capital and equity amounts, limits capital expenditures and
capital lease obligations and prohibits the payment of cash dividends. There
are no commitment fees, compensatory balance requirements or note guarantors.
The Company has a note payable due to a stockholder (per a stock repurchase
agreement) with an outstanding balance at March 31, 1996 of $165,000. The
note is payable in annual installments of $55,000 (to be paid June 1996, 1997
and 1998) plus interest at 5.5% per annum.
RESULTS OF OPERATIONS
First Quarter 1996 as Compared to First Quarter 1995
Net sales increased $75,000 or 3% to $2,267,000.
Cost of sales decreased $91,000 or 7%. Gross margins continue to improve
from 36% in 1995 to 43% in 1996. Significant factors in cost of sales
include changes in operating costs generally attributable to variable costs
fluctuating with product mix and sales volume.
Selling, general and administrative expenses increased $122,000 or 17% as a
result of the Company's focus on sales and marketing. The primary increases
are in additional sales personnel, new product promotion and a reorganization
of the sales and marketing departments. As a percentage of sales, these
expenses increased from 32% to 36%.
Interest expense/other increased $19,600 or 49% primarily due to higher rates
on higher average borrowings.
Net Income was $42,800 in 1996 up 47% from $29,200 in 1995.
Net Income per share improved to $0.04 in 1996, up from $0.02 in 1995.
AUTO-GRAPHICS, INC.
Form 10-Q
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None
Item 3. Defaults upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders. None
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: None
(b) The Company has not filed any reports on Form 8-K during the
period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
AUTO-GRAPHICS, INC.
Date 5/10/96 ss/ Robert S. Cope
Robert S. Cope, President
and Treasurer
Date 5/10/96 ss/ Daniel E. Luebben
Daniel E. Luebben, Vice-President,
Chief Financial Officer and Secretary