SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
(Amendment No. 1)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For The Quarterly Period Ended June 30, 2004
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT FOR THE
TRANSITION PERIOD FROM ____ TO
Commission file number 0-439
American Locker Group Incorporated
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(Exact name of business issuer as specified in its charter)
Delaware 16-0338330
- ------------------------------- ------------------------------------
(State of other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
608 Allen Street, Jamestown, NY 14701
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(Address of principal executive offices)
(716) 664-9600
----------------------------------------------------
(Registrant's telephone number, including area code)
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 ( ) No (X)
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes ( ) No (X)
As of July 1, 2005 there were outstanding 1,534,146 shares of the registrant's
Common Stock, $1 par value.
1
EXPLANATORY NOTE
This amendment to the Quarterly Report on Form 10-Q for the quarter ended
June 30, 2004 (the "Form 10-Q") of American Locker Group, Inc. (the "Company")
is being filed in order to restate the consolidated financial statements for the
three months and six months ended June 30, 2004 and 2003 and to make
corresponding changes to Item 2, Management's Discussion and Analysis of
Financial Condition and Results of Operations, and Item 4, Controls and
Procedures. The restated financial statements reflect, among other things, an
increase in net income from $875,185 as first reported to $1,080,985 for the six
months ended June 30, 2004, and a decrease in cost of products sold from
$14,021,716 as first reported to $13,618,806 for such period and an increase in
inventories from $6,316,385 as first reported to $6,659,385 as of June 30, 2004.
These adjustments result from inventory costing errors. As a result, cost of
goods sold was overstated and inventory values were understated in the quarter
ended June 30, 2004. In addition, the Company has reclassified purchase
discounts in the amount of $25,045 for the second quarter of 2004, $59,910 for
the six months ended June 30, 2004, $32,332 for the second quarter of 2003 and
$55,360 for the six months ended June 30, 2003. These reclassifications reduce
cost of sales and other income. As set forth in Item 4 of this Form 10-Q/A and
more fully described in Item 9A of the Annual Report on Form 10-K filed by the
Company with respect to the year ended December 31, 2004, the Company has
determined that its disclosure controls and procedures were not effective as of
June 30, 2004. As described in such report on Form 10-K, the Company has adopted
and is implementing changes to its system of disclosure controls and internal
controls.
No attempt has been made in this Form 10-Q/A to update other disclosures
presented in the Form 10-Q, except as required to reflect the effects of the
restatement. This Form 10-Q/A does not reflect events occurring after the filing
of the Form 10-Q or modify or update those disclosures, including the exhibits
to the Form 10-Q affected by subsequent events. Information not affected by the
restatement is unchanged and reflects the disclosures made at the time of the
original filing of the Form 10-Q. This Form 10-Q/A includes, however, as
Exhibits 31.1, 31.2 and 32.1 new certifications of the Company's Chief Executive
Officer and principal accounting officer, as required by applicable rules.
Accordingly, this Form 10-Q/A should be read in conjunction with the Company's
filings made with the Securities and Exchange Commission subsequent to the
filing of the Form 10-Q, including any amendments to those filings.
2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
2004 2003
------------- ------------
(RESTATED)
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 3,308,283 $ 3,597,990
Accounts and notes receivable, less allowance for doubtful
accounts of $111,000 in 2004 and $371,000 in 2003 4,158,120 4,682,946
Inventories 6,659,385 5,458,865
Prepaid expenses 269,475 118,819
Prepaid income taxes 119,086 --
Deferred income taxes 729,546 729,546
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Total current assets 15,243,895 14,588,166
Property, plant and equipment:
Land 500,500 500,500
Buildings 3,452,299 3,456,766
Machinery and equipment 11,522,752 12,137,813
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15,475,551 16,095,079
Less allowance for depreciation (10,756,985) (11,092,999)
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4,718,566 5,002,080
Goodwill 6,155,204 6,155,204
Deferred income taxes 53,756 53,756
Other assets 15,941 74,274
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Total assets $ 26,187,362 $ 25,873,480
============= ============
3
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
2004 2003
------------- ------------
(RESTATED)
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,632,907 $ 1,713,010
Commissions, salaries, wages and taxes thereon 278,549 573,762
Other accrued expenses 877,762 658,405
Income taxes payable 137,200 148,218
Current portion of long-term debt 1,641,316 1,641,316
------------- ------------
Total current liabilities 4,567,734 4,734,711
Long-term liabilities
Long-term debt 6,006,916 6,664,171
Pension, benefits and other long-term liabilities 407,789 312,458
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6,414,705 6,976,629
Stockholders' equity:
Common stock, $1.00 per value:
Authorized shares - 4,000,000
Issued shares - 1,534,146 in 2004 and 2003,
Outstanding shares - 1,534,146 in 2004 and 2003 1,726,146 1,726,146
Other capital 97,812 97,812
Retained earnings 15,899,065 14,818,080
Treasury stock at cost (192,000 shares in 2004 and 2003) (2,112,000) (2,112,000)
Accumulated other comprehensive loss (406,100) (367,898)
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Total stockholders' equity 15,204,923 14,162,140
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Total liabilities and stockholders' equity $ 26,187,362 $ 25,873,480
============= ============
See accompanying notes.
4
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
2004 2003
------------ ------------
(RESTATED)
Net Sales $ 19,808,471 $ 18,663,283
Cost of products sold 13,618,806 12,945,167
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Gross profit 6,189,665 5,718,116
Selling, administrative and general expenses 4,221,550 3,919,623
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1,968,115 1,798,493
Interest income 9,590 11,241
Other (expense) income - net 19,353 72,141
Interest expense (229,409) (290,175)
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Income before income taxes 1,767,649 1,591,700
Income taxes 686,664 614,231
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Net income $ 1,080,985 $ 977,469
============ ============
Earnings per share of common stock:
Basic $ .70 $ .64
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Diluted $ .69 $ .63
============ ============
Dividends per share of common stock: $ 0.00 $ 0.00
============ ============
See accompanying notes.
5
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED JUNE 30,
2004 2003
------------ ------------
Net Sales $ 10,254,164 $ 9,831,534
Cost of products sold 7,206,337 6,878,783
------------ ------------
Gross profit 3,047,827 2,952,751
Selling, administrative and general expenses 2,214,889 1,960,936
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832,938 991,815
Interest income 4,157 5,216
Other (expense) income - net 11,563 37,437
Interest expense (113,660) (142,094)
------------ ------------
Income before income taxes 734,998 892,374
Income taxes 284,833 343,965
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Net income $ 450,165 $ 548,409
============ ============
Earnings per share of common stock:
Basic $ .29 $ .36
============ ============
Diluted $ .29 $ .35
============ ============
Dividends per share of common stock: $ 0.00 $ 0.00
============ ============
See accompanying notes.
6
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
2004 2003
----------- -----------
(RESTATED)
OPERATING ACTIVITIES
Net income $ 1,080,985 $ 977,469
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization 408,022 433,793
Change in assets and liabilities:
Accounts and notes receivable 518,314 (682,161)
Inventories (1,134,796) 597,348
Prepaid expenses (150,915) (223,113)
Accounts payable and accrued expenses (154,604) (526,781)
Pension and other benefits 95,489 27,324
Income taxes (128,586) 228,374
----------- -----------
Net cash provided by operating activities 533,909 832,253
INVESTING ACTIVITIES
Purchase of property, plant and equipment (133,967) (167,494)
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Net cash used in investing activities (133,967) (167,494)
FINANCING ACTIVITIES
Debt repayment (657,255) (628,356)
Line of credit repayment -- (25,000)
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Net cash used in financing activities (657,255) (653,356)
Effect of exchange rate changes on cash (32,394) 137,864
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Net (decrease) increase in cash (289,707) 149,267
Cash and cash equivalents at beginning of period 3,597,990 2,002,225
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,308,283 $ 2,151,492
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See accompanying notes.
7
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 accounting principles generally
accepted in the United States 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 June 30, 2004 are not necessarily indicative
of the results that may be expected for the year ended December 31,
2004.
The consolidated balance sheet at December 31, 2003 has been derived
from the audited financial statements at the date, but does not
include all of the financial information and footnotes required by
generally accepted accounting principles for complete financial
statements. For further information, refer to the Company's
consolidated financial statements and the notes thereto included in
the Company's annual report on Form 10-K for the year ended December
31, 2003.
2. Provision for income taxes is based upon the estimated annual effective
tax rate.
3. The Company reports earnings per share in accordance with the Statement of
Financial Accounting Standards No. 128, "Earnings Per Share." The
following table sets forth the computation of basic and diluted
earnings per common share:
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2004 JUNE 30, 2003
---------------- ----------------
(RESTATED)
Numerator:
Net income available to common shareholders $ 1,080,985 $ 977,469
=========== ===========
Denominator:
Denominator for basic earnings per share - weighted
average shares 1,534,146 1,517,146
Effect of Dilutive Securities:
Stock options 32,337 35,746
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Denominator for diluted earnings per share -
adjusted weighted average shares and assumed
conversion 1,566,483 1,552,892
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Basic earnings per common share $ .70 $ .64
=========== ===========
Diluted earnings per common share $ .69 $ .63
=========== ===========
8
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 2004 JUNE 30, 2003
------------------ ------------------
(RESTATED)
Numerator:
Net income available to common shareholders $ 450,165 $ 548,409
=========== ===========
Denominator
Denominator for basic earnings per share - weighted
average shares 1,534,146 1,517,146
Effect of Dilutive Securities:
Stock options 43,530 36,570
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Denominator for diluted earnings per share -
adjusted weighted average shares and assumed
conversion 1,577,676 1,553,716
=========== ===========
Basic earnings per common share $ .29 $ .36
=========== ===========
Diluted earnings per common share $ .29 $ .35
=========== ===========
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.
JUNE 30, DECEMBER 31,
2004 2003
----------- ------------
(RESTATED)
Raw materials $ 2,224,370 $ 1,760,657
Work-in-process 1,896,464 1,689,774
Finished goods 2,802,047 2,271,930
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6,922,881 5,722,361
Less allowance to reduce to LIFO basis (263,496) (263,496)
----------- ------------
$ 6,659,385 $ 5,458,865
=========== ============
5. Total comprehensive income (as restated) consisting of net income and
foreign currency translation adjustment was $1,042,783 and $1,663,229
for the six months ended June 30, 2004 and 2003, respectively and
$425,047 and $630,623 for the three months ended June 30, 2004 and
June 30, 2003, respectively.
6. The following sets forth the components of net periodic benefit cost of
the Company's defined benefit pension plan for the nine months ended
June 30, 2004 and 2003:
9
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2004 JUNE 30, 2003
---------------- ----------------
Service cost $ 146,298 $ 123,658
Interest cost 115,980 103,176
Expected return on plan assets (108,740) (90,582)
Net actuarial loss 26,976 16,336
Amortization of prior service cost 754 754
---------- ----------
Net periodic benefit cost $ 181,268 $ 153,342
========== ==========
The following sets forth the components of net periodic benefit cost of the
Company's defined benefit pension plan for the three months ended June 30,
2004 and 2003:
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 2004 JUNE 30, 2003
------------------ ------------------
Service cost $ 73,149 $ 61,829
Interest cost 57,990 51,587
Expected return on plan assets (54,370) (45,291)
Net actuarial loss 13,488 8,168
Amortization of prior service cost 377 377
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Net periodic benefit cost $ 90,634 $ 76,670
========= =========
For additional information on the Company's defined benefit pension plan,
please refer to Note 7 of the Company's Consolidated Financial Statements
included in the 2003 Annual Report on Form 10-K.
10
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
FIRST SIX MONTHS 2004 VERSUS FIRST SIX MONTHS 2003
Overall Results and Outlook
2004 results increased slightly compared to 2003, despite increased steel and
aluminum prices, and secondarily, price reductions extended to the United States
Postal Service (USPS) and continued weakness in certain areas of the economy in
which the Company sells its products (including entertainment and leisure
activity facilities). Sales volume increased and net income increased slightly
by $103,000 in 2004 versus 2003 despite declining gross margin, higher selling,
administrative and general expenses and a decrease in service maintenance
contract revenue. Earnings per share on a diluted basis increased to $0.69 in
2004 versus $0.63 in 2003, as a result of the increased net income.
In April 2004, the Company's contracts with the USPS were extended for a six
month term expiring on October 15, 2004. We have been advised by the USPS that
it will, as in past years, seek bids with respect to these contracts and that
the Company has been pre-qualified to bid. The USPS has also advised the Company
that our current competitor (which has an existing USPS contract for aluminum
CBUs) has been pre-qualified to bid along with three new potential competitors.
The USPS has also indicated that it will upgrade the specification that CBUs are
designed to meet to increase resistance to mail theft. The Company has reviewed
drafts of the new specification and has initiated design efforts to address the
increased security requirements. If the USPS does issue a new specification, the
Company will incur increased capital expenditures to modify or replace existing
tooling. We can not predict the amount or timing of these expenditures until the
specification is finalized and our design solution is built and tested. We
anticipate the contracting process will be completed by October 15, 2004 but can
not predict the outcome. The Company believes that its product line provides the
best value to the USPS when all factors including price, quality of design and
construction, long-term durability and service are considered. The current
contracts cover all four types of plastic CBUs, aluminum CBUs and the Outdoor
Parcel Locker (OPL). 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, postal purchasing practices and the
weather, as these units are installed outdoors. The Company believes its CBU
product line, including its aluminum CBUs represent the best value when all
factors including price, quality of design and construction, long-term
durability and service are considered.
In July, 2004 the Company received large, bulk orders for plastic and aluminum
CBUs from several USPS districts. These orders are primarily in addition to the
normal order flow we would have expected in the third quarter and may not be
indicative of future USPS order patterns. The orders are all able to be shipped
prior to August 30, 2004 and the Company has accelerated production in order to
meet the required schedule. Therefore, third quarter 2004 sales are expected to
be considerably higher than the same period in 2003.
11
Net Sales
Sales for the first six months of 2004 of $19,808,000 increased $1,145,000 or 6%
compared to sales of $18,663,000 during the same period in 2003. Plastic locker
sales to the USPS and developers or distributors for use in the delivery of U.S.
mail totaled $9,843,000 in 2004 compared to $10,065,000 during 2003. Plastic
CBUs sales were $9,569,000 in 2004 compared to $9,702,000 during 2003. Sales of
Outdoor Parcel Lockers (OPLs) were $274,000 in 2004 compared to $363,000 in
2003, as a result of lower purchase levels by the USPS. The decrease in sales of
Plastic CBUs from 2003 to 2004 is the result of decreased purchases from the
USPS, as well as price reductions, ranging from zero to 2% depending on the CBU
or OPL type, which became effective in April 2003. The price reductions had an
impact of reducing sales by approximately $43,000 in the first six months of
2004 versus the comparable period in 2003.
Sales of metal, coin and key-only and electronically controlled lockers, and
aluminum CBUs were $9,965,000 for the first six months of 2004 and $8,598,000
for the first six months of 2003. This $1,367,000 increase consists of
additional sales of $1,841,000 made by the Company's subsidiary, Security
Manufacturing Corporation (SMC), offset by decreases in sales of other locker
products, as well as the termination of the Company's luggage cart services at
the Detroit International Airport in January 2004. The Company no longer
provides any luggage cart rental services.
Cost of Sales
Consolidated cost of sales as a percentage of sales was 68.8% in 2004 versus
69.7% in 2003. Despite this slight overall decline, the cost of sales was
negatively impacted by increases in aluminum and steel material costs
experienced during the first six months of 2004 that have not been passed
through to customers in the form of price increases.
Selling, Administrative and General Expenses
Selling, administrative and general expenses were $4,222,000 during the first
six months of 2004, an increase of $302,000 from $3,920,000 during the first six
months of 2003. The increase is primarily due to an increase of $187,000 in
engineering costs in 2004 compared to 2003 amounts, relating to product
development, as well as $114,000 incurred in June 2004 relating to an early
retirement program covering three employees that elected to retire. Annual
savings going forward from these retirements are projected to exceed $200,000.
Also, certain selling expenses increased in 2004 due to increased sales. 2003
expenses were impacted by a charge of $65,000 for a severance agreement relating
to a terminated management employee at SMC. Selling, administrative and general
expenses were 21% of sales for the first six months of 2004 and 2003.
Interest Expense
Interest expense for 2004 was $229,000 compared to $290,000 for 2003. The
decrease resulted from lower outstanding debt during 2004 compared to 2003 as
the Company continues to make scheduled debt payments on its outstanding debt.
No new long term debt was incurred during 2004 or 2003. The Company reduced its
outstanding debt by $1,675,000 from June 30, 2003 to June 30, 2004.
Other Income - net
12
Other income - net consists primarily of service maintenance revenues, which
were $32,000 in 2004 and $69,000 in 2003. The decline in service maintenance
revenue is the result of fewer ongoing maintenance agreements.
Income Taxes
Income taxes increased in 2004 versus 2003 due to the increased income before
income taxes. The effective tax rate was 39% in 2004 and 2003.
SECOND QUARTER 2004 VERSUS SECOND QUARTER 2003
Second quarter sales were $10,254,000 in 2004, an increase of $423,000 from the
same period in 2003. The increase was primarily related to increases in sales of
other locker products which includes aluminum CBUs by the SMC subsidiary.
Plastic locker sales were $5,346,000 and $5,584,000 in 2004 and 2003,
respectively, a decline of $238,000. The decline is the result of the factors
discussed above.
Cost of products sold as a percentage of sales was 70.3% during the second
quarter of 2004 compared to 70.0% during the second quarter of 2003. This
percentage held relatively steady despite rising material costs and changes in
product mix.
Selling, administrative and general expenses were 21.6% of net sales during the
second quarter of 2004 compared to 19.9% in the second quarter of 2003. The
increased percentage is due in part to the $114,000 incurred in June 2004
relating to the early retirement program.
Other income - net decreased $26,000 during the second quarter of 2004 compared
to 2003. This caption consists primarily of service maintenance contracts.
Interest expense in the second quarter of 2004 of $114,000 decreased from
$142,000 in 2003 as a result of the reduction in outstanding debt.
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 3.3
to 1 at June 30, 2004 and 3.1 to 1 at December 31, 2003. Working capital, the
excess of current assets over current liabilities, was $10,676,000 at June 30,
2004, an increase of $823,000 over $9,853,000 at December 31, 2003.
Cash provided by operating activities was $534,000 during the first six months
of 2004 compared to $832,000 of cash provided by operating activities in 2003.
This decrease of cash in 2004 relates primarily to replacing and increasing
inventory of plastic and aluminum CBUs that were below normal levels at December
31, 2003 in preparation for historically higher shipments as the weather
improves in most of the United States. Anticipating that USPS order patterns and
sales to other customers will be similar to previous years, the Company expects
that cash will continue to be generated by operations for the balance of 2004.
The Company's policy is to maintain modern equipment and adequate capacity.
During the first
13
six months of 2004, the Company expended $134,000 for capital additions.
Currently, there are no significant capital projects forecasted by the Company.
It is expected that capital expenditures will be funded from cash on hand or
cash generated from operations in 2004.
The Company anticipates that cash on hand and cash generated from operations in
2004 will be adequate to fund working capital needs, 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, no amount is outstanding under the line of credit at June 30, 2004.
EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS
There are no recently issued accounting standards that the Company believes will
have a material impact on its financial position or results of operations.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Forward-looking statements in this report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including without limitation the following: (i) the Company's
plans, strategies, objectives, expectations, and intentions are subject to
change at any time at the discretion of the Company, (ii) the Company's plans
and results of operations will be affected by the Company's ability to manage
its growth and inventory, (iii) the risk that the Company's contracts with the
USPS will not be renewed or that that orders placed by the USPS under such
contracts will be substantially reduced, and (iv) other risks and uncertainties
indicated from time to time in the Company's filings with the Securities and
Exchange Commission.
Item 4. Controls and Procedures
The Company carried out an evaluation, under the supervision and with the
participation of its management, including its principal executive officer and
principal accounting officer, of the effectiveness of its disclosure controls
and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act,
as of June 30, 2004. These disclosure controls and procedures are designed to
provide reasonable assurance to the Company's management and board of directors
that information required to be disclosed by the Company in the reports that it
files under the Exchange Act is accumulated and communicated to its management
as appropriate to allow timely decisions regarding required disclosure. Based on
that evaluation, including all matters discussed in the paragraphs below, the
principal executive officer and principal accounting officer of the Company have
concluded that the Company's disclosure controls and procedures as of June 30,
2004 were not effective, at the reasonable assurance level, to ensure that (a)
material information relating to the Company is accumulated and made known to
the Company's management, including its principal executive officer and
principal accounting officer, to allow timely decisions regarding required
disclosure and (b) is recorded, processed, summarized and reported within the
14
time periods specified in SEC's rules and forms. There were no changes in the
Company's internal control over financial reporting during the second quarter of
2004.
Subsequent to the period covered by this Quarterly Report, management became
aware of an inventory costing error, requiring a restatement of financial
statements to reflect, among other things, increases in net income and inventory
and a decrease in cost of products sold. As a result, cost of goods sold was
overstated and inventory values were understated as of and for the quarter ended
June 30, 2004 and the six months ended June 30, 2004. After investigating this
matter and consulting with the Company's independent registered public
accounting firm, the Company has adjusted the interim financial statements to
correct the inventory costing error and has disclosed the impact of such changes
in this Quarterly Report.
In addition, taking into account the communications dated May 11, 2005 and June
28, 2005 by the Company's independent registered public accounting firm to the
Audit Committee of the Board of Directors, management identified material
weaknesses in the Company's internal control over financial reporting with
respect to its fiscal year ended December 31, 2004. A description of those
material weaknesses and the Company's related remediation efforts is set forth
in Item 9A, Controls and Procedures, of the Company's Annual Report on Form 10-K
for its fiscal year ended December 31, 2004.
15
PART II. OTHER INFORMATION
Item 6. Exhibits
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and
Rule 15d-14(a) of the Securities Exchange Act, as amended
31.2 Certification of Principal Accounting Officer pursuant to Rule 13a-14(a)
and Rule 15d-14(a) of the Securities Exchange Act, as amended
32.1 Certification of Chief Executive Officer and Principal Accounting
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
16
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN LOCKER GROUP INCORPORATED
(Registrant)
/s/ Edward F. Ruttenberg
------------------------------------
Edward F. Ruttenberg
Chairman, Chief Executive Officer,
Chief Operating Officer and Treasurer
Date: July 27, 2005
17