U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended: April 30, 1995
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ________ to ________
Commission file number: 0-10187
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Prab, Inc.
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(Exact name of small business issuer as
specified in its charter)
Michigan 38-1654849
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5944 E. Kilgore Rd, P.O. Box 2121, Kalamazoo, Michigan 49003
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(Address of principal executive offices)
(Zip Code)
(616) 382-8200
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(Issuer's telephone number)
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(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes..X.. No.....
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock, par value $.10 per share - 2,602,860 shares outstanding at
May 31, 1995.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following Financial Statements are attached hereto in response to
Item 1:
Condensed Consolidated Balance Sheet
April 30, 1995 (Unaudited)
October 31, 1994
Consolidated Statement of Earnings
Three months ended April 30, 1995
and 1994 (Unaudited)
Six months ended April 30, 1995
and 1994 (Unaudited)
Condensed Consolidated Statement
of Cash Flows (Unaudited)
Six months ended April 30, 1995
and 1994 (Unaudited)
Notes to Condensed Consolidated
Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation
Material changes in Financial Condition. Note receivable decrease
resulted from monthly payments received. Accounts receivable decreased due to
in house collection efforts. Inventory increased to meet the higher sales
levels scheduled to ship in the third quarter combined with increased levels
of inventory for stock.
Accounts and note payable increase resulted from increased inventory
purchases combined with increased operating costs to meet the higher sales
levels.
Long term debt decreased from scheduled quarterly payments plus an
additional $200,000 prepayment in the first quarter.
Future Event. The agreement with the State of Michigan calls for an
"Annual Mandatory Note Prepayment" to be paid to the State within 120 days
after the fiscal year end. The current calculation projects a payment that
would pay the present debt off in its entirety. Due to the growth in business
and the requirements of cash to fund this growth, the Company may be required
to borrow a portion or all of the funds to make this payment.
Material Changes in Results of Operation. Sales in the first half of 1995
were 45% higher than the first half of 1994. The higher sales resulted from an
increase of $1,959,000 in Conveyor Segment sales versus the same period a year
ago.
Costs of products sold were 60% in the first half of 1995 compared to 63%
a year ago. The lower costs of sales percent resulted from improved
productivity. Selling, general and administrative expenses were 31% in the
first six months of 1995 compared to 35% in the same period a year ago
resulting from higher sales.
Decreased interest expense resulted from lower debt.
Non-competition agreement income results from normal amortization over
the life of the agreement.
Trends. Bookings of $6,690,000 for the first six months of 1995 are up
40% compared to the same period a year ago. Business activity going into the
third quarter remains strong. Sales are forecast to be higher in the third
quarter than they were in the second quarter. The Company's management remains
optimistic that bookings in the third quarter will continue at a level
comparable or better than the second quarter.
The order backlog of $3,005,000 at the end of the second quarter ended
April 30, 1995 compares with $2,803,000 at the end of the previous quarter
ended January 31, 1995 and $2,046,000 at the end of the second quarter a year
ago.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In December, 1992, litigation was commenced against the Company in the
United States District Court for the Western District of Michigan entitled
Charter Township of Oshtemo, City of Kalamazoo, Kalamazoo County, and the
Upjohn Company v. American Cyanamid Company et al. The Company is one of 38
defendants in this action. The litigation arises out of the Company's disposal
of waste at a local landfill which has been subsequently identified as a
"superfund site". The information set forth in Item 3 of the Company's Form
10-KSB for the fiscal year ended October 31, 1994 is hereby incorporated by
reference.
The Company is also aware of two product liability actions against the
Company. The amount of one lawsuit is for $3,250,000 which exceeds the
Company's product liability insurance protection by approximately $1,250,000,
while the other lawsuit is for unspecified damages. The Company intends to
vigorously defend its case and believes that a settlement or related judgement
would not result in a material loss to the Company. No amounts are recorded on
the books of the Company in anticipation of a loss as a result of these two
contingencies.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter
for which this report is filed.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PRAB, INC.
Date: June 5, 1995 By: /s/ John J. Wallace
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John J. Wallace
Its: Chairman of the Board
Date: June 5, 1995 By: /s/ Robert W. Klinge
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Robert W. Klinge
Its: Controller
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report on Form 10-QSB
For the Quarter Ended April 30, 1995
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Financial Statements
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PRAB, INC.
(A Michigan Corporation)
5944 E. Kilgore Road
P.O. Box 2121
Kalamazoo, Michigan 49003
PRAB, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, October 31,
1995 1994
----------- -----------
Unaudited (Note)
ASSETS
Current assets:
Cash $ 293,714 $ 255,658
Note Receivable 87,684 171,524
Accounts Receivable 1,671,031 1,803,086
Inventories (Note 2) 1,302,679 889,843
Other current assets 226,330 183,262
Deferred income taxes 337,000 337,000
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Total current assets 3,918,438 3,640,373
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Property, plant and equipment
(net of accumulated depreciation
of $2,975,231 and $2,913,318
respectively) 890,300 894,112
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Other assets 47,096 81,308
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Total assets $ 4,855,834 $ 4,615,793
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts and note payable $ 791,568 $ 598,426
Other current liabilities 1,014,907 1,111,108
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Total current liabilities 1,806,475 1,709,534
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Long-term debt 616,832 985,525
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Other non-current liabilities 13,375 27,679
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Stockholders' equity:
Convertible preferred stock 1,500,000 1,500,000
Non-convertible preferred stock 300,000 300,000
Common stock 260,286 260,286
Additional paid-in capital 5,339,113 5,349,613
Accumulated deficit (4,980,247) (5,516,844)
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Total stockholders' equity 2,419,152 1,893,055
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Total liabilities and stock-
holders' equity $ 4,855,834 $ 4,615,793
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<FN>
Note: The balance sheet at October 31, 1994, has been taken from the
audited financial statements at that date and condensed.
PRAB, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Three months ended Six months ended
April 30, April 30,
----------------------------- -----------------------------
1995 1994 1995 1994
---- ---- ---- ----
Net Sales $ 3,157,563 $ 2,323,283 $ 5,958,911 $ 4,097,207
------------ ------------ ------------ ------------
Costs and expenses:
Cost of products sold 1,894,249 1,485,065 3,589,886 2,579,434
Selling, general and
administrative expenses 984,229 739,814 1,818,067 1,450,980
------------ ------------ ------------ ------------
2,878,478 2,224,879 5,407,953 4,030,414
------------ ------------ ------------ ------------
Operating Income 279,085 98,404 550,958 66,793
------------ ------------ ------------ ------------
Other income (deductions) :
Interest expense (27,565) (49,839) (75,711) (101,380)
Non-Competition Agreement 29,978 29,978 59,956 59,956
Sale of property, plant, and
equipment 1,369 -- 1,394 933
------------ ------------ ------------ ------------
3,782 (19,861) (14,361) (40,491)
------------ ------------ ------------ ------------
Income before income taxes 282,867 78,543 536,597 26,302
Provision for income taxes -- -- -- --
------------ ------------ ------------ ------------
Net income $ 282,867 $ 78,543 $ 536,597 $ 26,302
============ ============ ============ ============
Net Income per share: (Note 4)
Primary $ 0.06 $ 0.02 $ 0.11 $ 0.00
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PRAB, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended
April 30
1995 1994
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Net cash provided by (used in)
operating activities $ 398,199 $ 95,600
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Cash flows from investing activities:
Acquisition of property,
plant and equipment (71,614) (16,720)
Proceeds from note receivable 83,840 132,988
Proceeds from sale of equipment 1,394 933
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Net cash provided by (used in)
investing activities: 13,620 117,201
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Cash flows from financing activities:
Payment on long-term debt and
current maturities (363,263) (166,480)
Dividend Payments (10,500) (10,500)
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Net cash provided by (used in)
financing activities (373,763) (176,980)
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Net increase (decrease) in cash $ 38,056 $ 35,821
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PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The condensed consolidated balance sheet at April 30, 1995, the
consolidated statement of earnings and the condensed consolidated statement of
cash flows for the three-month and six month periods ended April 30, 1995 and
1994, have been prepared by the Company without audit. In the opinion of
management, all adjustments necessary to present fairly the financial
position, results of operations and cash flows at April 30, 1995, and for all
periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's October 31,
1994, annual report to stockholders. The results of operations for the period
ended April 30, 1995, is not necessarily indicative of the operating results
for the full year.
2. INVENTORIES:
Inventories consist of the following:
April October
30, 1995 31, 1994
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Raw materials $ 734,889 $ 452,813
Work in process 285,487 130,817
Finished goods and display
units 282,303 306,213
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Total inventories $ 1,302,679 $ 889,843
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3. UNUSED LINE OF CREDIT:
The current agreement allows maximum financing of $500,000. All of the
Company's assets provide security for the borrowings. As of April 30, 1995
there were no borrowings on the line of credit.
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
4. EARNINGS PER COMMON SHARE
Primary share amounts are computed based on weighted average number of
shares actually outstanding plus the dilutive shares that would be outstanding
assuming conversion of the convertible preferred stock and exercise of
dilutive stock options, all of which are considered to be common stock
equivalents. The number of shares that would be issued from the exercise of
stock options has been reduced by the number of shares that could have been
purchased from the proceeds at the average market price of the company's
stock. Net income has been adjusted for dividends on the non-convertible
preferred stock.
Fully diluted earnings per common share amounts are not presented for
April 30, 1995 and 1994 because of immaterial difference from primary earnings
per share in 1995 and being identical in 1994.
Following is a reconciliation of the weighted average number of shares
actually outstanding with the number of shares used in the computations of
primary earnings per common share.
Three Months Ended Six Months Ended
April 30 April 30
1995 1994 1995 1994
---------------------- ----------------------
Primary:
Weighted average number of
shares actually
outstanding 2,602,860 2,602,860 2,602,860 2,602,860
Convertible preferred
stock 2,000,000 2,000,000 2,000,000 2,000,000
Stock options 135,912 -- 133,504 --
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4,738,772 4,602,860 4,736,364 4,602,860
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