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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: July 31, 1996
-------------
[ ] 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.
- ------------------------------------------------------------------------------
(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 registrants 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 - 2,647,860 shares outstanding at
August 31, 1996.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following Financial Statements are attached hereto in response to
Item 1:
Condensed Consolidated Balance Sheet
July 31, 1996 (Unaudited)
October 31, 1995
Consolidated Statement of Earnings
Three months ended July 31, 1996
and 1995 (Unaudited)
Nine months ended July 31, 1996
and 1995 (Unaudited)
Condensed Consolidated Statement
of Cash Flows
Nine months ended July 31, 1996
and 1995 (Unaudited)
Notes to Condensed Consolidated
Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation
Material Changes in Financial Condition. Cash increased as a
result of higher customer deposits. Accounts receivable increased
primarily from the high shipments in July.
The Company continues to negotiate with the State of Michigan regarding
the repurchase of certain outstanding common stock, convertible preferred
stock and non-convertible preferred stock of the Company, which stock is
currently owned by the State of Michigan Retirement Systems. The Company
cannot predict the outcome of such negotiations. Refer to Item 6 of the
Company's 10-KSB for the fiscal year ended October 31, 1995 for additional
information.
Material changes in Results of Operation. Sales in the first nine months of
1996 were 16% higher than the first nine months of 1995. Higher sales are the
result of a continuing strong domestic economy combined with increased
marketing activity and a high backlog of orders at the beginning of fiscal
1996.
Costs of products sold were 62% in the first nine months of 1996
compared to 61% a year ago. The higher costs of sales percent resulted
primarily from installation cost overruns on a major job, higher warranty
expense, and increased material costs. Selling, general and administrative
expenses were 30% in the first nine months of 1996 compared to 30% in the same
period a year ago.
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Elimination of interest expense resulted from paying off all debt due
to the State of Michigan in the fourth quarter of 1995.
Non-competition agreement income results from normal amortization over
the life of the agreement which ended in December 1995.
Litigation settlement expense resulted from increasing the liability
reserve to equal the tentative settlement amount, refer to Part II, Item I.
Legal Proceedings, in this report.
Trends. Bookings of $11,795,000 for the first nine months of
1996 are up 2% compared to the same period a year ago. Business
activity going into the fourth quarter remains strong.
The order backlog of $3,738,000 at the end of the third quarter ended
July 31, 1996 compares with $3,595,000 at the end of the previous quarter
ended April 30, 1996 and $4,147,000 at the end of the third quarter a year
ago.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In July, 1996, the Company reached a tentative agreement on the
entitled litigation "Charter Township of Oshtemo, City of Kalamazoo, Kalamazoo
County, and the Upjohn Company V. American Cyanamid Company et al." The
agreement will require the Company to pay $88,767 to the Upjohn Company. This
tentative agreement required the Company to increase the previously recorded
liability of $25,000 by $63,767 in July.
The Company is subject to other claims and lawsuits arising in the
ordinary course of business. In the opinion of management, all such pending
claims are either adequately covered by insurance or, if not insured, will not
have a material adverse effect on the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8K:
No reports on Form 8-K have been filed during the
quarter for which this report is filed.
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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: September 6, 1996 By: /S/ John J. Wallace
---------------------
John J. Wallace
Its: Chairman of the Board
Date: September 6, 1996 By: /S/ Robert W. Klinge
----------------------
Robert W. Klinge
Its: Controller
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report on Form 10-QSB
For the Quarter Ended July 31, 1996
Financial Statements
PRAB, INC.
(A Michigan Corporation)
5944 E. Kilgore Road
P.O. Box 2121
Kalamazoo, Michigan 49003
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PRAB, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
July 31, October 31,
1996 1995
(Unaudited) (Note)
----------- -----------
ASSETS
Current Assets:
Cash $ 533,538 $ 323,297
Accounts Receivable 2,845,412 2,373,362
Inventories (Note 2) 1,218,410 1,134,356
Other current assets 127,542 76,285
Deferred income taxes 369,270 362,190
---------- ---------
Total current assets 5,094,172 4,269,490
---------- ----------
Property, plant and equipment
(net of accumulated depreciation
of $3,141,038 and $3,053,409
respectively) 940,088 961,299
---------- ----------
Other assets 17,869 17,961
---------- ----------
Total assets $6,052,129 $5,248,750
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts and note payable $ 934,788 $ 980,067
Other current liabilities 1,175,553 1,069,225
---------- ----------
Total current liabilities 2,110,341 2,049,292
---------- ----------
Other non-current liabilities 14,645 13,883
---------- ----------
Stockholder's equity:
Convertible preferred stock 1,500,000 1,500,000
Non-convertible preferred stock 300,000 300,000
Common stock 264,786 264,786
Additional paid-in capital 1,120,789 1,120,789
(net of deficit of $4,228,988
eliminated October 31, 1995)
Retained Earnings 741,568 - -
---------- ----------
Total stockholders' equity 3,927,143 3,185,575
Total liabilities and stock-
holders' equity $6,052,129 $5,248,750
========== ==========
<FN>
Note: The balance sheet at October 31, 1995, has been taken from the
audited financial statements at that date and condensed.
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PRAB, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Three months ended Nine months ended
July 31, July 31,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
Net Sales $ 4,075,242 $ 3,718,123 $11,184,998 $9,677,034
----------- ----------- ----------- ----------
Cost and expenses:
Cost of products sold 2,326,220 2,319,604 6,957,631 5,909,490
Selling, general and
administrative expenses 1,251,583 1,053,733 3,369,774 2,871,793
----------- ----------- ----------- ----------
3,577,803 3,373,337 10,327,405 8,781,283
----------- ----------- ----------- ----------
Operating Income 497,439 344,786 857,593 895,751
----------- ----------- ----------- ----------
Other income (deductions):
Interest expense 3,990 (23,393) 4,900 (99,104)
Non-Competition Agreement - - 29,978 14,989 89,934
Litigation Settlement (63,767) - - (63,767) - -
Sale of property, plant,
and equipment 50 227 (147) 1,614
----------- ----------- ----------- ----------
(59,727) 6,812 (44,025) (7,556)
----------- ----------- ----------- ----------
Income before income taxes 437,712 351,598 813,568 888,195
Provision for income taxes - - - - - - - -
----------- ----------- ----------- ----------
Net Income $ 437,712 $ 351,598 $ 813,568 $ 888,195
=========== =========== =========== ==========
Net Income per share:(Note 4)
Primary $ 0.09 $ 0.07 $ 0.16 $ 0.18
=========== =========== =========== ==========
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PRAB, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
July 31,
-----------------
1996 1995
---- ----
Net cash provided by (used in)
operating activities $ 391,670 $ 941,174
----------- ----------
Cash flows from investing activities:
Acquisition of property,
plant and equipment (109,525) (145,013)
Proceeds from note receivable 0 112,633
Proceeds from sale of equipment 96 1,614
----------- ----------
Net cash provided by (used in)
investing activities: (109,429) (30,766)
----------- ----------
Cash flows from financing activities:
Payment on long-term debt and
current maturities 0 (549,741)
Proceeds from sale of common stock 0 8,555
Dividend payments (72,000) (15,750)
----------- ----------
Net cash provided by (used in)
financing activities (72,000) (556,936)
----------- ----------
Net increase (Decrease) in cash $ 210,241 $ 353,472
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PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The condensed consolidated balance sheet at July 31, 1996, the
consolidated statement of earnings and the condensed consolidated statement of
cash flows for the three-month and nine month periods ended July 31, 1996 and
1995, 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 July 31, 1996, 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,
1995, annual report to stockholders. The results of operations for the period
ended July 31, 1996, is not necessarily indicative of the operating results
for the full year.
2. INVENTORIES:
Inventories consist of the following:
July October
31, 1996 31, 1995
---------- -----------
Raw materials $ 875,178 $ 892,152
Work in process 208,836 141,413
Finished goods and display
units 134,396 100,791
--------- -----------
Total inventories $1,218,410 $ 1,134,356
========= ===========
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 July 31, 1996
there were no borrowings on the line of credit.
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PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. NET INCOME PER SHARE
Primary share amounts are computed based on weighted average number of
shares actually outstanding plus the 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 convertible and non-convertible preferred
stock.
Fully diluted net income per share amounts are not presented for 1996 and
1995 because of being identical with primary net income per share.
Following is a reconciliation of the weighted average number of shares
actually outstanding with the number of shares used in the computations of
primary net income per share.
Three Months Ended Nine Months Ended
July 31, July 31,
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ------
Primary:
Weighted average number of
shares actually outstanding 2,647,860 2,612,643 2,647,860 2,606,102
Convertible preferred stock 2,000,000 2,000,000 2,000,000 2,000,000
Stock options 75,635 125,591 62,821 119,834
--------- --------- --------- ---------
4,723,495 4,738,234 4,710,681 4,725,936
========= ========= ========= =========