SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT FOR
THE TRANSITION PERIOD FROM TO
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Commission file number 0-439
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AMERICAN LOCKER GROUP INCORPORATED
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(Exact name of small business issuer as specified in its charter)
DELAWARE 16-0338330
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(State of other jurisdiction of (IRS Employer Identification number)
incorporation or organization)
608 ALLEN STREET, JAMESTOWN, NY 14701
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(Address of principal executive offices)
(716) 664-9600
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements. Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes No Not Applicable
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APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's class of common
stock equity as of the latest practicable date: May 2, 2001
Common Stock $1.00 par value - 2,062,440
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Part I - Financial Information
Item 1 - Financial Statements
American Locker Group Incorporated and Subsidiaries
Consolidated Balance Sheets
MARCH 31, December 31,
2001 2000
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ASSETS
Current assets:
Cash and cash equivalents $ 2,233,188 $ 3,696,359
Accounts and notes receivable, less allowance
for doubtful accounts of $267,514 in 2001
and $324,000 in 2000 4,067,381 4,633,422
Inventories 6,540,674 4,818,348
Prepaid expenses 175,576 45,209
Deferred income taxes 668,769 668,769
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Total current assets 13,685,588 13,862,107
Property, plant and equipment:
Land 500 500
Buildings 388,195 389,959
Machinery and equipment 10,581,146 10,378,983
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10,969,841 10,769,442
Less allowance for depreciation (9,159,858) (9,048,950)
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1,809,983 1,720,492
Total assets $15,495,571 $15,582,599
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American Locker Group Incorporated and Subsidiaries
Consolidated Balance Sheets
MARCH 31, December 31,
2001 2000
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,521,065 $ 1,513,203
Commissions, salaries, wages and taxes thereon 154,244 323,769
Other accrued expenses 697,294 659,852
Federal, state and foreign income taxes payable - 458,825
Current portion of long-term debt 200,000 200,000
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Total current liabilities 2,572,603 3,155,649
Long-term liabilities:
Long-term debt 83,319 133,320
Pension and other benefits 401,717 470,375
Deferred income taxes 99,430 99,430
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584,466 703,125
Stockholders' equity:
Common stock, $1 par value:
Authorized shares - 4,000,000
Issued shares - 2,511,450 in 2001, 2,511,550 in 2000
Outstanding shares - 2,062,440 in 2001,
2,062,540 in 2000 2,511,450 2,511,550
Other capital 564,844 565,331
Retained earnings 13,206,838 12,550,001
Treasury stock at cost (449,010 shares in 2001,
449,010 in 2000) (3,717,603) (3,717,603)
Accumulated other comprehensive income (227,027) (185,454)
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Total stockholders' equity 12,338,502 11,723,825
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Total liabilities and stockholders' equity $ 15,495,571 $ 15,582,599
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See accompanying notes.
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American Locker Group Incorporated and Subsidiaries
Consolidated Statements of Income
THREE MONTHS ENDED MARCH 31,
2001 2000
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Net sales $8,116,568 $7,859,150
Cost of products sold 5,704,225 5,663,542
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2,412,343 2,195,608
Selling, administrative and general expenses 1,447,968 1,394,909
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964,375 800,699
Interest income 56,009 45,255
Other (expense) income--net 78,403 59,111
Interest expense (15,505) (50,787)
Income before income taxes 1,083,282 854,278
Income taxes 426,445 331,387
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Net Income $656,837 $522,891
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Earnings per share of common stock:
Basic $0.32 $0.23
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Diluted 0.32 0.23
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Dividends per share of common stock: $0.00 $0.00
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See accompanying notes.
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American Locker Group Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
THREE MONTHS ENDED MARCH 31,
2001 2000
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OPERATING ACTIVITIES
Net income $656,837 $522,891
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 170,931 200,731
Pension and other benefits (68,658) 85,788
Change in assets and liabilities:
Accounts and notes receivable 566,041 (173,589)
Inventories (1,722,326) (192,158)
Prepaid expenses (130,367) 12,638
Accounts payable and accrued expenses (124,221) (616,958)
Income taxes (458,825) 47,957
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Net cash provided by operating activities (1,110,588) (112,700)
INVESTING ACTIVITIES
Purchase of property, plant and equipment (260,422) (87,949)
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Net cash used in investing activities (260,422) (87,949)
FINANCING ACTIVITIES
Debt repayment (50,001) (50,001)
Common stock purchased for treasury - (5,737)
Common stock purchased and retired (587) -
Proceeds from common stock issued - 13,812
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New cash used in financing activities (50,588) (41,926)
Effect of exchange rate changes on cash (41,573) 9,987
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Net decrease in cash (1,463,171) (232,588)
Cash and cash equivalents at beginning of period 3,696,359 3,285,983
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Cash and cash equivalents at end of period $2,233,188 $3,053,395
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Supplemental cash flow information:
Cash paid during the period for:
Interest $15,505 $50,789
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Income Taxes $831,000 $281,250
See accompanying notes.
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Notes to Consolidated Financial Statements
American Locker Group Incorporated and Subsidiaries
1. The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q.
Accordingly, the condensed financial statements do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
Company's management, all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation of such condensed
financial statements have been included. Operating results for the three
month period ended March 31, 2001 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2001.
2. Provision for income taxes is based upon the estimated annual effective tax
rate.
3. Net income per common share is computed by dividing net income by the
weighted average number of shares outstanding, plus, when dilutive, the
common stock equivalents which would arise from the exercise of stock
options, during the periods. Basic and diluted weighted average shares
outstanding were 2,062,474 (2,280,097 in 2000) and 2,078,179 (2,302,240 in
2000) respectively at March 31, 2001.
4. Inventories are valued at the lower of cost or market. Cost is
determined by using the last-in, first-out method for substantially
all of the inventories.
MARCH 31, December 31,
2001 2000
Raw materials $3,342,928 $2,888,897
Work-in-process 1,605,933 1,541,110
Finished goods 2,189,841 986,369
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$7,138,702 $5,416,376
Less allowance to
reduce carrying
value to LIFO
basis 598,028 598,028
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$6,540,674 $4,818,348
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5. Total comprehensive income, consisting of net income and foreign currency
translation adjustment, was $615,264 and $532,878 for the three months
ended March 31, 2001 and March 31, 2000 respectively.
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Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations
American Locker Group Incorporated and Subsidiaries
FIRST THREE MONTHS 2001 VS FIRST THREE MONTHS 2000
First quarter 2001 sales were $8,117,000 versus sales of $7,859,000 in the first
quarter of 2000. Plastic locker sales to the United States Postal Service (USPS)
in the first quarter were $5,616,000 compared to $5,577,000 during the same
period in 2000. Cluster Box Units (CBUs) accounted for $5,281,000 of this year's
first quarter plastic locker sales versus $5,339,000 the same period in 2000, a
decrease of 1%. The decrease in sales of CBUs relates to fewer units in total
purchased by the USPS compared to last year's first quarter. Sales of Outdoor
Parcel Lockers (OPLs) were $335,000 compared to $238,000 in the first quarter of
2000, an increase of 41%. This increase is due to the Company's status as the
sole, approved supplier for Outdoor Parcel Lockers. Sales of metal, mechanical
and electronic lockers were $2,501,000 in the first quarter this year, an
increase of 10% over last year's $2,282,000. Sales of the Company's other locker
products increased due to a general increase in demand across all markets served
by the Company as well as the effect of new products introduced since the first
quarter of 2000.
On April 15, 2001 the Company was awarded a two-year contract for indefinite
quantities of CBUs and OPLs. The contract minimum is one unit which is solely a
legal minimum and not indicative of USPS requirements. The new contract also
provides four two-year options to extend the contract at the discretion of the
USPS. The Company lowered its CBU prices 3-5% and has submitted a fourth model
for USPS approval. The new model, designated the Type I, contains eight mail
compartments, two parcel compartments, and one outgoing mail compartment. USPS
authorization to ship the new Type I is anticipated in late May or early June
2001.
The USPS also awarded indefinite quantity contracts to two competitors, both of
whom produce aluminum CBUs.
The Company believes that the long-term outlook for CBU volume remains favorable
in light of the continued USPS commitment to the CBU program and its resulting
operating cost reduction benefits. The USPS decision to discontinue the purchase
of Neighborhood Delivery and Collection Box Units (NDCBUs) in 1999 has also had
a positive impact on the CBU market. The CBU is the modernization of the NDCBU
and is an integral part of the USPS delivery cost reduction program identified
as Centralized Delivery. As previously disclosed, total CBU demand is influenced
by a number of factors over which the Company has no control, including but not
limited to: USPS budgets, policies and financial performance, domestic new
housing starts, postal rate increases, and the weather as these units are
installed outdoors. The Company believes its CBU product line continues to
represent the best value when all factors including price, quality of design and
construction, long-term durability and service are considered.
Inventories increased in the first quarter compared to year end 2000 by
$1,723,000 due to lower than forecast orders for CBUs. Prepaid expenses
increased by $130,000 due to advance payments on new tooling.
The increase in the revenue from the Company's other locker products is, in part
due to the new plastic coin-operated locker, which the Company introduced in
April 2000, as well as increases in various other locker product lines.
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Consolidated costs of products sold as a percentage of sales was 70.3% during
the first quarter of 2001 compared to 72.1% in the first quarter of 2000.
Selling, general and administrative costs for the first quarter of 2001 compared
to the same period in 2000 ($1,448,000 - 2001; $1,395,000 - 2000), decreased
3.8%. Selling, general and administrative costs represented 17.8% of sales in
the first quarter of 2001, up from 17.7% of sales for the same period in 2000.
Interest income was $56,000 in the first quarter of 2001 compared to $45,000 in
the first quarter of 2000. The increase relates primarily to higher cash
balances and higher interest rates.
Interest expense of $16,000 in the first quarter of 2001 decreased from $51,000
in the first quarter of 2000 due to an decrease in the balance outstanding under
the Company's term loan agreements.
LIQUIDITY AND SOURCES OF CAPITAL
The Company's liquidity is reflected in the ratio of current assets to current
liabilities or current ratio and its working capital. The current ratio was 5.32
to 1 at March 31, 2001 and 4.39 to 1 at December 31, 2000, respectively. Working
capital, the excess of current assets over current liabilities, was $11,113,000
at March 31, 2001, an increase of $407,000 over $10,706,000 at December 31,
2000. Cash used in operating activities was $1,111,000 during the first three
months of 2001, compared to $113,000 used in operating activities for the same
period of 2000.
The Company expects that cash generated from operations in 2001 will be adequate
to fund the needs for working capital, capital expenditures and debt payments.
However, if necessary, the Company has a $3,000,000 revolving bank
line-of-credit available to assist in satisfying future operating cash needs.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Forward-looking statements in this report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including without limitation the following: (i) the Company's
plans, strategies, objectives, expectations, and intentions are subject to
change at any time at the discretion of the Company, (ii) the Company's plans
and results of operations will be affected by the Company's ability to manage
its growth and inventory, and (iii) other risks and uncertainties indicated from
time to time in the Company's filings with the Securities and Exchange
Commission.
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Part II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.1 Order/Solicitation/Offer/USPS Material Contracts U.S.
Postal Service #072368-01-P-0378, dated April 6, 2001.
(b) Exhibit 10.2 U.S. Postal Service Contract Modification #M001 to
#072368-01-P-0378, dated April 9, 2001.
(c) The Company did not file any reports on Form 8-K during the three
months ended March 31, 2001.
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S I G N A T U R E
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In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN LOCKER GROUP
INCORPORATED
(Registrant)
/s/Edward F. Ruttenberg
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Edward F. Ruttenberg
Chairman and Chief Executive Officer
Date: 5/11/01
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