UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended May 30, 1999
Commission File No. 0-3362
SI HANDLING SYSTEMS, INC.
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(Exact Name Of Registrant As Specified In Its Charter)
Pennsylvania 22-1643428
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(State Or Other Jurisdiction Of (I.R.S. Employer
Incorporation Or Organization) Identification No.)
600 Kuebler Road, Easton, PA 18040
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(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 610-252-7321
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Indicate by checkmark 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
--- ---
Number of shares of common stock, par value $1.00 per share, outstanding as of
May 30, 1999: 3,708,412.
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
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SI Handling Systems, Inc.
Balance Sheets (Unaudited)
(In Thousands, Except Share Data)
May February
30, 1999 28, 1999
---------- ----------
Assets
- ------
Current assets:
Cash and cash equivalents, principally
time deposits $ 2,118 1,829
------ ------
Receivables:
Trade 7,382 7,603
Notes and other receivables 141 51
------ ------
Total receivables 7,523 7,654
------ ------
Costs and estimated earnings in excess
of billings 3,709 7,709
Inventories:
Raw materials 1,129 1,002
Finished goods and work-in-process 2,270 1,613
------ ------
Total inventories 3,399 2,615
------ ------
Deferred income tax benefits 613 600
Prepaid expenses and other current assets 262 199
------ ------
Total current assets 17,624 20,606
------ ------
Property, plant and equipment, at cost:
Land 27 27
Buildings and improvements 3,485 3,485
Machinery and equipment 4,714 4,544
------ ------
8,226 8,056
Less: accumulated depreciation 6,658 6,426
------ ------
Net property, plant and equipment 1,568 1,630
------ ------
Deferred income tax benefits 276 175
Investment in joint venture 1,069 1,041
Other assets, at cost less accumulated
amortization of $101 in 2000 and $90
in 1999 572 128
------ ------
Total assets $ 21,109 23,580
====== ======
See accompanying notes to financial statements.
- 2 -
Item 1. Financial Statements (Continued)
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SI Handling Systems, Inc.
Balance Sheets (Unaudited)
(In Thousands, Except Share Data)
May February
30, 1999 28, 1999
---------- ----------
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Current installments of long-term debt $ 9 9
Accounts payable 3,191 4,079
Customers' deposits and billings in excess
of costs and estimated earnings 3,152 4,173
Accrued salaries, wages, and commissions 532 761
Income taxes payable 120 410
Accrued royalties payable 207 357
Accrued other liabilities 1,537 1,416
------ ------
Total current liabilities 8,748 11,205
------ ------
Long-term liabilities:
Long-term debt, excluding current installments:
Mortgage payable 14 16
------ ------
Total long-term debt 14 16
Deferred compensation 451 212
------ ------
Total long-term liabilities 465 228
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Stockholders' equity:
Common stock, $1 par value; authorized
20,000,000 shares; issued 3,708,412
shares in 2000 and 3,705,048 shares
in 1999 3,708 3,705
Additional paid-in capital 2,780 2,767
Retained earnings 5,408 5,675
------ ------
Total stockholders' equity 11,896 12,147
------ ------
Total liabilities and stockholders' equity $ 21,109 23,580
====== ======
See accompanying notes to financial statements.
- 3 -
Item 1. Financial Statements (Continued)
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SI Handling Systems, Inc.
Statements of Operations (Unaudited)
(In Thousands, Except Share And Per Share Data)
Three Months Ended
---------------------------
May May
30, 1999 31, 1998
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Net sales $ 9,952 8,800
Cost of sales 8,115 6,487
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Gross profit on sales 1,837 2,313
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Selling, general and
administrative expenses 1,614 1,668
Product development costs 153 119
Interest expense 2 2
Interest income (29) (45)
Equity in income
of joint venture (28) (10)
Other income, net (43) (33)
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1,669 1,701
--------- ---------
Earnings before
income taxes 168 612
Income tax expense 64 235
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Net earnings $ 104 377
========= =========
Basic earnings
per share $ .03 .10
========= =========
Diluted earnings
per share $ .03 .10
========= =========
Cash dividends
per share $ .10 .10
========= =========
Average shares
outstanding 3,706,636 3,715,445
Dilutive effect of
stock options 16,161 35,853
Dilutive effect of
phantom stock units 14,135 9,499
--------- ---------
Average shares
outstanding
assuming dilution 3,736,932 3,760,797
========= =========
See accompanying notes to financial statements.
- 4 -
Item 1. Financial Statements (Continued)
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SI Handling Systems, Inc.
Statements of Cash Flows (Unaudited)
(In Thousands, Except Share Data)
Three Months Ended
------------------------
May May
30, 1999 31, 1998
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Cash flows from operating activities:
Net earnings $ 104 377
Adjustments to reconcile net earnings
to net cash provided
by operating activities:
Depreciation of plant and equipment 93 100
Amortization of intangibles 11 2
Gain on disposition of equipment (2) -
Equity in income of joint venture (28) (10)
Change in operating assets and liabilities,
net of effects of the acquisition of
Modular Automation Corp.:
Receivables 177 2,603
Costs and estimated earnings in
excess of billings 4,349 2,015
Inventories (615) (220)
Prepaid expenses and other
current assets (63) 43
Other noncurrent assets 39 -
Accounts payable (888) (2,172)
Customers' deposits and billings
in excess of costs and estimated
earnings (1,021) 1,497
Accrued salaries, wages, and
commissions (229) (880)
Income taxes payable (290) -
Accrued royalties payable (150) (244)
Accrued other liabilities (250) (93)
Deferred compensation (15) -
----- -----
Net cash provided by
operating activities 1,222 3,018
----- -----
Cash flows from investing activities:
Proceeds from the disposition of
equipment 2 -
Acquisition of Modular Automation Corp.,
net of cash acquired (919) -
Additions to property, plant and equipment (30) (36)
----- -----
Net cash used by
investing activities (947) (36)
----- -----
See accompanying notes to financial statements.
- 5 -
Item 1. Financial Statements (Continued)
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SI Handling Systems, Inc.
Statements of Cash Flows (Unaudited) (Continued)
(In Thousands, Except Share Data)
Three Months Ended
------------------------
May May
30, 1999 31, 1998
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Cash flows from financing activities:
Sale of common shares in connection
with employee incentive stock
option plan 16 33
Repayment of long-term debt (2) (1)
Repayment of revolving credit
loan payable to bank - (1,000)
----- -----
Net cash provided (used) by
financing activities 14 (968)
----- -----
Increase in cash and
cash equivalents 289 2,014
Cash and cash equivalents, beginning
of period 1,829 752
----- -----
Cash and cash equivalents, end of period $ 2,118 2,766
===== =====
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 1 3
===== =====
Income taxes $ 354 235
===== =====
Supplemental disclosures of
noncash financing activities:
Cash dividends declared in May but
payable in June $ 371 372
===== =====
Issuance of 14,886 common shares in
exchange for 5,978 common shares
delivered to the Company by officers
in connection with the employee
incentive stock option plan $ - 84
===== =====
See accompanying notes to financial statements.
- 6 -
Item 1. Financial Statements (Continued)
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SI Handling Systems, Inc.
Notes To Financial Statements
Three Months Ended May 30, 1999 and May 31, 1998
(1) The information contained in this 10-Q report is unaudited and is subject
to year-end adjustments and audit. However, in the opinion of management,
the interim financial statements furnished reflect all adjustments and
accruals which are necessary to a fair statement of results for the interim
periods presented. Results for interim periods are not necessarily
indicative of results expected for the fiscal year. Refer to the Company's
10-K for the year ended February 28, 1999 for more complete financial
information.
(2) SI Handling Systems, Inc. ("SI" or the "Company") and McKesson Automated
Prescription Systems, Inc. ("McKesson APS"), formerly known as Automated
Prescription Systems, Inc., are co-venturers in a joint venture named
SI/BAKER, INC. ("SI/BAKER" or the "joint venture"). On September 29, 1998,
McKesson Corporation [NYSE:MCK], a healthcare supply management company,
announced the completion of its acquisition of Automated Prescription
Systems, Inc. Automated Prescription Systems, Inc. was renamed McKesson
Automated Prescription Systems, Inc. The SI/BAKER joint venture draws upon
the automated materials handling systems experience of SI and the automated
pill counting and dispensing products of McKesson APS to provide automated
pharmacy systems. Each member company contributed $100,000 in capital to
fund the joint venture.
The joint venture designs and installs computer controlled, fully
automated, integrated systems for managed care pharmacy operations. The
joint venture's systems are viewed as labor saving devices which address
the issues of improved productivity and cost reduction. Systems can be
expanded as customers' operations grow and they may be integrated with a
wide variety of components to meet specific customer needs.
Schedule A contains the SI/BAKER, INC. financial statements. The
information contained in the SI/BAKER, INC. financial statements is
unaudited and is subject to year-end adjustments and audit. However, in the
opinion of management, the interim financial statements furnished reflect
all adjustments and accruals which are necessary to a fair statement of
results for the interim periods presented.
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations
---------------------
Liquidity And Capital Resources
- -------------------------------
The Company's cash and cash equivalents increased to $2,118,000 during the
first three months of fiscal 2000 from $1,829,000 at the end of fiscal 1999. The
increase resulted from cash provided by operating activities totaling $1,222,000
and proceeds of $16,000 from the sale of common stock in connection with the
employee incentive stock option plan. Partially offsetting the increase in cash
and cash equivalents from these sources were the repayment of long-term debt of
$2,000, the purchases of capital equipment of $30,000, and the acquisition of
Modular Automation Corp., net of cash acquired for $919,000. Funds provided by
operating activities during the first three months of fiscal 1999 were
$3,018,000.
- 7 -
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations
---------------------
Liquidity and Capital Resources (Continued)
- -------------------------------
On April 13, 1999, the Company acquired all of the outstanding capital
stock of Modular Automation Corp. ("MAC") of Greene, New York for $1,957,000.
The purchase price of the acquisition was allocated to the assets acquired based
on fair value with the remainder representing goodwill. Since its formation in
1981, MAC was a respected supplier of Automated Guided Vehicle ("AGV") Systems.
The acquisition of the AGV technology complements and expands the Company's AGV
product offerings. The acquired AGV products and personnel have been integrated
into the Company's existing Easton, Pennsylvania facility.
The Company has a $5,000,000 committed revolving credit facility which is
secured by a lien position on accounts receivable, land, and buildings and
contains various restrictive covenants relating to additional indebtedness,
asset acquisitions or dispositions, and maintenance of certain financial ratios.
The Company was in compliance with all covenants during the first three months
of fiscal 2000. Currently, the committed revolving credit facility has an
expiration date of August 31, 2000. The Company did not have any borrowings
under the committed revolving credit facility during the first three months of
fiscal 2000.
On March 4, 1996, SI/BAKER established a $2,500,000 Line of Credit Facility
(the "Facility") with its principal bank (the "Bank"). Under terms of the
Facility, SI/BAKER's parent companies, SI and McKesson APS, have each provided a
limited guarantee and surety in an amount not to exceed $1,000,000 for a
combined guarantee of $2,000,000 to the Bank for the payment and performance of
the related note, including any further renewals or modifications of the
Facility. During fiscal 1998, the Bank increased the borrowing availability to
$3,000,000 and extended the expiration date of the Facility. On March 18, 1999,
SI/BAKER repaid its outstanding debt under the Facility of $500,000. As of May
31, 1999 SI/BAKER did not have any borrowings under the Facility. The Facility
has an expiration date of August 31, 1999.
On October 14, 1998, the Board of Directors of the Company authorized
management to purchase up to $400,000 of the Company's common stock through open
market transactions or negotiated transactions at prices not to exceed
prevailing market prices. During fiscal 1999, the Company spent $399,000 on
purchases of its common stock through open market transactions as part of the
stock purchase program.
The Company believes that its financial resources consisting of its current
assets, anticipated cash flow, and the available revolving credit facility will
adequately finance its operating requirements for the foreseeable future.
The Company plans to consider expansion opportunities as they arise,
although ongoing operating results of the Company, the economics of the
expansion, and the circumstances justifying the expansion will be key factors in
determining the amount of resources the Company will devote to further
expansion. At this time, the Company does not have any material capital
commitments.
- 8 -
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations (Continued)
---------------------
Results Of Operations
- ---------------------
Three Months Ended May 30, 1999 Versus Three Months Ended May 31, 1998
- ----------------------------------------------------------------------
The Company's net earnings for the first three months of fiscal 2000 were
$104,000 compared to net earnings of $377,000 for the first three months of
fiscal 1999.
Backlog at the end of the first three months of fiscal 2000 was
$28,254,000. During the first three months of fiscal 2000, the Company received
orders totaling approximately $18,300,000. Two orders, totaling approximately
$10,200,000, engage the Company to modernize and expand two distribution
facilities for a major government agency. These contracts, won under a
competitive bidding process, are scheduled to be completed by the second half of
fiscal 2001.
Net sales of $9,952,000 for the first three months of fiscal 2000 increased
13.1% compared to net sales of $8,800,000 for the first three months of fiscal
1999. The largest increases in sales occurred in the Order Selection and
Switch-Cart product lines. During the first three months of fiscal 2000, Order
Selection sales of approximately $4,825,000 rose approximately $2,450,000 when
compared to the first quarter of fiscal 1999 due primarily to progress made on a
systems integration contract aimed at expanding the distribution process at a
major health and beauty aids company. During the first three months of fiscal
2000, Switch-Cart sales of approximately $3,330,000 rose approximately $425,000
when compared to the first quarter of fiscal 1999 due primarily to progress made
on a contract with a major government agency. Partially offsetting the increase
in Order Selection and Switch-Cart sales during the first three months of fiscal
2000 was a decrease in sales of approximately $1,725,000 across the Company's
other products lines, with the majority of the decrease relating to sales of the
Company's Cartrac, Sortation, and Automated Guided Vehicle product lines.
Gross profit as a percentage of sales was 18.5% for the first three months
of fiscal 2000 compared to 26.3% for the first three months of fiscal 1999. The
decrease in the gross profit percentage for the first three months of fiscal
2000 was primarily attributable to competitive pressures as well as to
first-time design inefficiencies associated with the development of enhanced
products related to contracts in process. Also contributing to the higher gross
profit percentage in the first three months of fiscal 1999 was the favorable
performance on several contracts, principally for the Company's higher margin
proprietary products, initiated in the prior fiscal year that were nearing
completion during the first quarter of fiscal 1999.
Selling, general and administrative expenses of $1,614,000 were lower by
$54,000 in the first nine months of fiscal 2000 than in the comparable fiscal
1999 period. The decrease in selling, general, and administrative expenses was
primarily attributable to the fiscal 1999 comparable period containing a larger
amount of costs associated with product promotion and sales efforts aimed at
expanding the Company's customer base of business.
Product development costs of $153,000 were higher by $34,000 in the first
three months of fiscal 2000 than in the comparable fiscal 1999 period.
Development programs in the first three months of fiscal 2000 included
enhancements to the Switch-Cart and Order Selection product lines with efforts
directed towards unit picking techniques. Development programs in the first
three months of fiscal 1999 included enhancements to the Company's product
controls and features and improvements to the Sortation and Order Selection
product lines, with particular
- 9 -
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations (Continued)
---------------------
Results Of Operations
- ---------------------
Three Months Ended May 30, 1999 Versus Three Months Ended May 31, 1998
- ----------------------------------------------------------------------
(Continued)
emphasis aimed at the controls platform for Dispen-SI-matic Systems and unit
picking techniques.
Interest income of $29,000 was lower by $16,000 in the first three months
of fiscal 2000 than in the comparable fiscal 1999 period. The decrease in
interest income was primarily attributable to the lower level of funds available
for short-term investments during the first three months of fiscal 2000.
Equity in income of joint venture represents the Company's proportionate
share of its investment in SI/BAKER which is being accounted for under the
equity method. The favorable variance of $18,000 for the first three months of
fiscal 2000 in the equity in income of joint venture was attributable to
SI/BAKER's increase in sales to approximately $2,972,000, as compared to the
comparable fiscal 1999 period of approximately $2,074,000 and growth in the
gross profit percentage to 21%, as compared to the comparable fiscal 1999 gross
profit percentage of 16%. The sales increase in fiscal 2000 was primarily
attributable to a larger backlog of orders entering fiscal 2000 versus a smaller
backlog of orders at the beginning of fiscal 1999. The favorable variance in the
gross profit percentage was primarily attributable the fiscal 1999 first quarter
gross profit percentage being unfavorably impacted by difficulties in executing
and concluding several contracts as additional costs became necessary to meet
contractual throughput requirements. Partially offsetting the favorable variance
were SI/BAKER's increases of (1) $36,000 in revenue-based royalty costs due to
the parent companies, (2) $96,000 in product development expenses for software
and controls capabilities for various new products addressing changing market
requirements, and (3) $107,000 in selling, general and administrative expenses.
The increase in selling, general and administrative expenses was primarily
attributable to an increase of $36,000 of expenses based on revenue and profit
performance and an increase of $55,000 in costs associated with sales and
administrative efforts aimed at expanding SI/BAKER's customer base of business.
The favorable variance of $10,000 in other income, net, was primarily
attributable to an increase in the revenue-based royalty income related to the
SI/BAKER joint venture.
The Company incurred income tax expense of $64,000 during the first three
months of fiscal 2000 compared to income tax expense of $235,000 in the
comparable fiscal 1999 period. Income tax expense was generally recorded at
statutory federal and state tax rates expected to apply for each fiscal year.
Year 2000
- ---------
The Year 2000 issue relates to the ability of computer systems,
microprocessors, and other electronic devices to deal appropriately with dates
on or after January 1, 2000 and other dates used for special programmatic
functions (i.e. 9999). The effect of the Year 2000 issue may include computer
failures and business interruption.
The Company has assembled a team of internal staff to oversee the matter
and is underway in completing its Year 2000 assessment. Internally, the Company
has upgraded its business system to address the Year 2000 issue. Externally, the
Company has and will continue to survey its suppliers, financial institutions,
and other organizations to ensure that those parties have appropriate plans to
remediate Year
- 10 -
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations (Continued)
---------------------
Year 2000 (Continued)
- ---------
2000 issues where their systems or business activities may impact the Company's
operations. However, based on the response of its survey to date, the Company
cannot presently estimate the impact of the failure of third parties to be Year
2000 compliant. Also, customers may utilize the services, on a fee basis, of the
Company's customer support group to assess and upgrade their materials handling
systems purchased from the Company for Year 2000 compliance. Costs incurred to
date and estimated costs to complete the Company's Year 2000 compliance efforts
are not expected to be material.
The outline of the general phases of the Company's Year 2000 project is as
follows: (1) Year 2000 methodology and compliance training for key personnel;
(2) inventorying Year 2000 items, internally and externally; (3) assigning
priorities to identified Year 2000 items; (4) assessing the Year 2000 compliance
of items determined to be material to the Company; (5) remediating or replacing
material items that are determined not to be Year 2000 compliant; (6) testing
material items for Year 2000 compliance; and (7) designing and implementing
contingency plans to the extent deemed necessary. The Company has substantially
completed phases (1) through (5) relating to existing internal hardware,
software, facilities and equipment; however, testing is ongoing as hardware,
software, and equipment are remediated, upgraded or replaced. Additionally, the
Company continues to assess and test newly engaged suppliers and their products
for Year 2000 compliance as part of the Company's normal business operations.
The Company has not completed its external surveys or contingency plans in the
case that it is not Year 2000 compliant by the Year 2000. The Company will
continue to monitor its Year 2000 compliance program, address any material
issues and develop contingency planning as it deems appropriate.
The scheduled completion date for the Company's efforts to address the Year
2000 issue is August 1999. The failure to identify or correct a material Year
2000 problem could result in an interruption in, or a failure of, certain
business activities or operations such as the Company's ability to service its
customers. Such failures could materially and adversely affect the Company's
results of operations, liquidity, and financial condition. The Company's Year
2000 assessment process is expected to significantly reduce the Company's level
of uncertainty about the Year 2000 problem and, in particular, about the Year
2000 compliance and readiness of its material suppliers and customers. However,
due to the general uncertainty inherent in the Year 2000 problem, resulting in
part from the uncertainty of the Year 2000 readiness of suppliers and customers,
the Company is unable to determine at this time whether the consequences of Year
2000 failures will have a material impact on the Company's results of
operations, liquidity, and financial condition.
Cautionary Statement
- --------------------
Certain statements contained herein are not based on historical fact and
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 or by the Securities and Exchange Commission
rules, regulations, and releases. The Company intends that such forward-looking
statements be subject to the safe harbors created thereby. Among other things,
they regard the Company's earnings, liquidity, financial condition, and certain
operational matters. Words or phrases denoting the anticipated results of future
events, such as "anticipate," "believe," "estimate," "expect," "may," "will,"
"will likely," "are expected to," "will continue," "project," and similar
expressions that denote uncertainty, are
- 11 -
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations (Continued)
---------------------
Cautionary Statement (Continued)
- --------------------
intended to identify such forward-looking statements. The Company's actual
results, performance, or achievements could differ materially from the results
expressed in, or implied by, such "forward-looking statements": (1) as a result
of risks and uncertainties identified in connection with those forward-looking
statements, including those factors identified herein, and in the Company's
other publicly filed reports; (2) as a result of factors over which the Company
has no control, including the strength of domestic and foreign economies, sales
growth, competition, certain costs increases, and any potential exposures
relating to Year 2000 matters; or (3) if the factors on which the Company's
conclusions are based do not conform to the Company's expectations.
Quantitative and Qualitative Disclosures about Market Risk
- ----------------------------------------------------------
The Company does not believe that its exposures to interest rate risk or
foreign currency exchange risks, risks from commodity prices, equity prices and
other market changes that affect market risk sensitive instruments are material
to its results of operations.
PART II - OTHER INFORMATION
Item 5. Other Information
- ------- -----------------
Effective July 21, 1999, Elmer D. Gates will become Chairman of the Board
of Directors and William R. Johnson will become President and CEO of the
Company.
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibit 10.10 - Executive Employment Agreement with William Johnson dated
March 29, 1999.
Exhibit 27 - Financial Data Schedule
(b) During the quarter ended May 30, 1999, a Form 8-K was filed on April 29,
1999. The filing pertained to the election by the Board of Directors of
William R. Johnson as President and Director, effective March 29, 1999. As
President, Mr. Johnson succeeds Leonard S. Yurkovic who has led the Company
as President and CEO since 1988. Mr. Yurkovic will continue as Vice
Chairman of the Board of Directors, but will retire as CEO of the Company,
effective July 21, 1999.
- 12 -
SI Handling Systems, Inc.
SIGNATURE
---------
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.
SI HANDLING SYSTEMS, INC.
/s/ Barry V. Mack
Barry V. Mack
Vice President - Finance
(Principal Financial Officer)
Dated: July 13, 1999
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- 13 -
Schedule A
SI/BAKER, INC.
Financial Statements
May 31, 1999
- 14 -
SI/BAKER, INC.
Balance Sheets
May 31, 1999 and February 28, 1999
(In Thousands, Except Share Data)
May February
31, 1999 28, 1999
-------- --------
Assets
- ------
Current assets:
Cash and cash equivalents, principally
time deposits $ 468 154
Receivables:
Trade 3,200 1,658
Other receivables 136 238
----- -----
Total receivables 3,336 1,896
----- -----
Costs and estimated earnings in
excess of billings 1,037 2,516
Deferred income tax benefits 258 258
Prepaid expenses and other current
assets 136 136
----- -----
Total current assets 5,235 4,960
----- -----
Machinery and equipment, at cost 186 176
Less: accumulated depreciation 104 95
----- -----
Net machinery and equipment 82 81
----- -----
Equipment leased to customer 487 487
Less: accumulated depreciation 420 370
----- -----
Net equipment leased to customer 67 117
----- -----
Deferred income tax benefits 51 51
----- -----
Other assets - 95
----- -----
Total assets $ 5,435 5,304
===== =====
- 15 -
SI/BAKER, INC.
Balance Sheets
May 31, 1999 and February 28, 1999
(In Thousands, Except Share Data)
May February
31, 1999 28, 1999
-------- --------
Assets
- ------
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Note payable to bank $ - 500
Accounts payable:
Trade 626 510
Affiliated companies 66 15
----- -----
Total accounts payable 692 525
----- -----
Customers' deposits and billings in
excess of costs and estimated
earnings 1,341 1,104
Accrued salaries, wages, and
commissions 92 91
Income taxes payable 44 -
Accrued royalties payable 316 209
Accrued product warranties 712 660
Accrued other liabilities 29 10
----- -----
Total current liabilities 3,226 3,099
----- -----
Deferred compensation 72 123
----- -----
Stockholders' equity:
Common stock, $1 par value; authorized
1,000 shares; issued 200 shares - -
Additional paid-in capital 200 200
Retained earnings 1,937 1,882
----- -----
Total stockholders' equity 2,137 2,082
----- -----
Total liabilities and stockholders'
equity $ 5,435 5,304
===== =====
- 16 -
SI/BAKER, INC.
Statements of Operations
Three Months Ended May 31, 1999 and 1998
(In Thousands)
Three Months Ended
-------------------------
May May
31, 1999 31, 1998
-------- --------
Net sales $ 2,972 2,074
Cost of sales 2,348 1,743
----- -----
Gross profit on sales 624 331
----- -----
Selling, general and
administrative
expenses 311 204
Product development
costs 96 -
Royalty expense
to parent companies 119 83
Interest income (5) (2)
Interest expense 4 14
Other income, net (2) (2)
----- -----
523 297
----- -----
Earnings before
income taxes 101 34
Income tax expense 46 14
----- -----
Net earnings $ 55 20
===== =====
- 17 -
SI/BAKER, INC.
Statements of Cash Flows
Three Months Ended May 31, 1999 and 1998
(In Thousands)
Three Months Ended
-----------------------
May May
31, 1999 31, 1998
-------- --------
Cash flow from operating activities:
Net earnings $ 55 20
Adjustments to reconcile net earnings to net
cash provided (used) by operating activities:
Depreciation of machinery and
equipment and leased equipment 59 38
Changes in operating assets and
liabilities:
Receivables (1,440) 1,387
Costs and estimated earnings
in excess of billings 1,479 (666)
Inventories - 118
Prepaid expenses and other
current assets - (163)
Other assets 95 (29)
Accounts payable 167 27
Customers' deposits and
billings in excess of costs
and estimated earnings 237 (481)
Accrued salaries, wages, and
commissions 1 (361)
Income taxes payable 44 (44)
Accrued royalties payable 107 1
Accrued product warranties 52 24
Accrued other liabilities 19 (8)
Deferred compensation (51) -
----- -----
Net cash provided (used)
by operating activities 824 (137)
----- -----
Cash flows from investing activities:
Additions to machinery and equipment (10) (25)
----- -----
Net cash used by investing activities (10) (25)
----- -----
Cash flows from financing activities:
Repayment of note payable to bank (500) -
----- -----
Net cash used by financing activities (500) -
----- -----
Increase (decrease) in cash and cash equivalents 314 (162)
Cash and cash equivalents,
beginning of period 154 388
----- -----
Cash and cash equivalents, end of period $ 468 226
===== =====
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Income taxes $ 2 207
===== =====
Interest $ 3 20
===== =====
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SI HANDLING SYSTEMS, INC.
FORM 10-Q
EXHIBIT INDEX
Exhibit No.
- ----------
10.10 Executive Employment Agreement with William Johnson dated March 29,
1999.
27 Financial Data Schedule.
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