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, 2002
--------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
------------- --------------
Commission file number: 0-10187
-------------
Prab, Inc.
-----------------------------------------------------
(Exact name of small business issuer as
specified in its charter)
Michigan 38-1654849
-----------------------------------------------------------------------------
(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
-------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(616) 382-8200
---------------------------------------------------------------
(Issuer's telephone number)
--------------------------------------------------------------------------
(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 - 1,744,849 shares outstanding at
May 31, 2002.
Transitional Small Business Disclosure Format
(Check One): Yes No X
----- ------
Page 1 of 13
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, 2002 (Unaudited)
October 31, 2001
Consolidated Statement of Earnings
Three months ended April 30, 2002
and 2001 (Unaudited)
Six months ended April 30, 2002
and 2001 (Unaudited)
Condensed Consolidated Statement
of Cash Flows (Unaudited)
Six months ended April 30, 2002
and 2001 (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 due to
operating activities providing $385,000 of additional cash in the first six
months. The increase in accounts receivable as well as the decrease in inventory
resulted from high sales in the month of April of $1,996,000.
Accounts and note payable increase resulted primarily from receiving
material for a large order scheduled to ship April through July.
Common stock and additional paid-in capital decrease resulted from the
Company repurchasing a total of 23,944 shares of the Company's common stock from
two unrelated persons. The price paid was $1.20 per share.
Page 2 of 13
Material Changes in Results of Operations. Sales in the first six
months of 2002 were 13% lower than the first six months of 2001. However, sales
in the second quarter increased 14% when compared to the same period a year ago.
Lower sales in the first six months primarily resulted from a decreased backlog
at the end of fiscal year 2001 versus the end of fiscal year 2000 combined with
the September 11, 2001 terrorist attack on New York city which further weakened
the economy. The increase in second quarter sales primarily resulted from the
initial shipments of a large order scheduled to be shipped April through July.
Order activity in the first six months of 2002 is 14%lower versus a year ago.
New order bookings have decreased for both the Prab Conveyor and Hapman Conveyor
product lines.
Costs of products sold were 63% in the first six months of 2002 and
2001. Selling, general and administrative expenses were 35% in the first six
months of 2002 and 37% in the same period a year ago. The higher percentage in
2001 was partially due to $43,811 of relocation expenses incurred to move the
Company's lone employee from Arizona back to Kalamazoo in an effort to
reorganize and strengthen the sales department. The annualized warranty expense
for fiscal 2002 based on the first six months is $274,000 compared to $277,000
actual expense in fiscal 2001.
Lower interest expense resulted from being debt free the first six
months of 2002.
Gain on sale of equipment resulted primarily from the sale of two used
lift trucks and several other pieces of manufacturing equipment that were fully
depreciated.
The order backlog of $3,096,000 at the end of the second quarter ended
April 30, 2002 compares with $3,441,000 at the end of the previous quarter ended
January 31, 2002 and $4,186,000 at the end of the second quarter a year ago.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders. The Company's
"Annual Meeting of Shareholders" was held on March 26, 2002. At the meeting the
following directors were elected: Gary A. Herder, James H. Haas, Eric V. Brown,
Jr., John W. Garside, William G. Blunt and Frederick J. Schroeder, Jr.
In addition, the appointment of Plante & Moran, LLP to be the principal
independent accountants for the Company for the current fiscal year was ratified
by the shareholders.
Page 3 of 13
Following is the voting breakdown for each matter and nominee for office:
Broker
For Against Withheld Abstentions Non-Votes
--- ------- -------- ----------- ---------
Nominees for Board of Directors:
Gary A. Herder 1,581,413 0 0 18,848 0
James H. Haas 1,581,545 0 0 18,716 0
John W. Garside 1,581,545 0 0 18,716 0
William G. Blunt 1,581,545 0 0 18,716 0
Frederick J. Schroeder 1,581,545 0 0 18,716 0
Eric V. Brown Jr. 1,581,385 0 0 18,876 0
Ratification of the Selection of Plante & Moran, LLP as Independent Public Accountants:
1,583,254 4,261 0 12,746 0
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.
Page 4 of 13
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 11, 2002 By: /S/ Gary A. Herder
--------------------
Gary A. Herder
Its: Chairman, President and
Chief Executive Officer
Date: June 11, 2002 By: /S/ Robert W. Klinge
---------------------
Robert W. Klinge
Its: Chief Financial Officer
Page 5 of 13
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report on Form 10-QSB
For the Quarter Ended April 30, 2002
--------------------------------
Financial Statements
--------------------------------
PRAB, INC.
(A Michigan Corporation)
5944 E. Kilgore Road
P.O. Box 2121
Kalamazoo, Michigan 49003
Page 6 of 13
PRAB, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, October 31,
2002 2001
----------- -----------
Unaudited (Note)
ASSETS:
Current assets:
Cash $ 939,064 $ 621,795
Accounts Receivable 2,379,299 1,846,566
Inventories (Note 2) 1,277,920 1,504,818
Other current assets 168,668 245,321
Deferred income taxes 288,910 288,910
----------- -----------
Total current assets $ 5,053,861 $ 4,507,410
----------- -----------
Property, plant and equipment
(net of accumulated depreciation of
$3,833,529 and $3,804,298, respectively) 819,060 879,108
----------- -----------
Other Assets
Other assets 14,540 13,114
Unamortized pension cost 110,573 110,573
Deferred income taxes 188,199 228,058
----------- -----------
Total other assets 313,312 351,745
----------- -----------
Total assets $ 6,186,233 $ 5,738,263
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts and note payable $ 678,452 $ 312,183
Other current liabilities 1,152,127 1,139,713
----------- -----------
Total current liabilities 1,830,579 1,451,896
----------- -----------
Other non-current liabilities 226,809 226,140
----------- -----------
Stockholders' equity:
Common Stock 174,485 176,879
Additional paid-in capital 1,031,218 1,057,556
Retained earnings 3,058,699 2,961,349
Accumulated other comprehensive income (135,557) (135,557)
----------- -----------
Total stockholders' equity 4,128,845 4,060,227
----------- -----------
Total liabilities and stockholders' equity $ 6,186,233 $ 5,738,263
=========== ===========
Note: The balance sheet at October 31, 2001 has been taken from the audited
financial statements at that date and condensed.
Page 7 of 13
PRAB, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Three Months Ended Six Months Ended
April 30 April 30
------------------------- -------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
Net Sales $ 3,547,693 $ 3,111,072 $ 5,896,708 $ 6,794,816
Costs and expenses:
Cost of products sold 2,271,726 1,998,539 3,695,495 4,293,661
Selling, general and administrative
Expenses (Note 5) 1,135,169 1,184,502 2,065,992 2,487,797
----------- ----------- ----------- -----------
3,406,895 3,183,041 5,761,487 6,781,458
----------- ----------- ----------- -----------
Operating income (loss) 140,798 (71,969) 135,221 13,358
----------- ----------- ----------- -----------
Other income (expenses):
Interest expense 3,258 540 12,226 (5,712)
Gain on sale of property, plant and
Equipment -- -- 8,024 --
----------- ----------- ----------- -----------
Income (loss) before income taxes $ 144,056 $ (71,429) $ 155,471 $ 7,646
Provision for income taxes 51,745 (21,316) 58,121 (2,527)
----------- ----------- ----------- -----------
Net Income (Loss) $ 92,311 $ (50,113) $ 97,350 $ 10,173
=========== =========== =========== ===========
Earnings (loss) per common share:
(Note 4)
Basic $ .05 $ (.03) $ .06 $ .01
=========== =========== =========== ===========
Diluted $ .05 $ (.03) $ .05 $ .01
=========== =========== =========== ===========
Page 8 of 13
PRAB, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six months ended
April 30,
----------------------
2002 2001
---- ----
Net cash provided by (used in) operating activities $ 385,086 $ 994,509
---------------- ----------------
Cash flows from investing activities:
Acquisition of property, plant and equipment (47,185) (42,223)
Proceeds from sale of property and equipment 8,100 --
---------------- ----------------
Net cash provided by (used in) investing
activities: (39,085) (42,223)
----------------- ----------------
Cash flows from financing activities:
Net increase (decrease) in short term borrowings -- (425,000)
Proceeds from sale of common stock -- 32,500
Repurchase of common stock (28,732) --
----------------- ----------------
Net cash provided by (used in) financing activities (28,732) (392,500)
----------------- ----------------
Net increase (decrease) in cash 317,269 559,786
Cash - Beginning of year $ 621,795 $ 68,480
----------------- -----------------
Cash - End of second quarter $ 939,064 $ 628,266
================= =================
Page 9 of 13
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The condensed consolidated balance sheet at April 30, 2002, the
consolidated statement of earnings and the condensed consolidated statement of
cash flows for the three-month and six month periods ended April 30, 2002 and
2001, 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, 2002, 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, 2001, annual
report to stockholders. The results of operations for the period ended April 30,
2002, is not necessarily indicative of the operating results for the full year.
2. INVENTORIES:
Inventories consist of the following:
April October
30, 2002 31, 2001
------------- -------------
Raw materials $ 695,907 $ 1,036,253
Work in process 220,654 76,661
Finished goods and display
Units 361,359 391,904
----------------- ------------------
Total inventories $ 1,277,920 $ 1,504,818
================= ==================
3. UNUSED LINE OF CREDIT:
The company has a $1,000,000 line of credit that is subject to a
borrowing formula based upon certain asset levels of the Company. As of April
30, 2002, $935,030 was available to the Company under the line of credit and the
Company had no borrowings on the line of credit. The line of credit supports
letters of credit totaling $64,970 for the quarter ended April 30, 2002.
Page 10 of 13
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
4. RECONCILIATION OF EARNINGS PER SHARE:
FOR THE QUARTER ENDED APRIL 30, 2002
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
----------- ------------- ------
Net Income $ 92,311
Basic EPS
Income available to
Common stockholders 92,311 1,749,469 $ .05
================
Effect of dilutive securities
Stock options -- 19,040
----------------- ----------------
Diluted EPS
Income available to
Common stockholders &
Assumed conversions $ 92,311 1,768,509 $ .05
================= ================ ================
</Table>
FOR THE QUARTER ENDED APRIL 30, 2001
<Table>
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
----------- ------------- ------
Net Loss $ (50,113)
Basic EPS
Loss available to
Common stockholders (50,113) 1,806,150 $ (.03)
================
Effect of dilutive securities
Stock options -- 0
----------------- ----------------
Diluted EPS
Loss available to
Common stockholders &
Assumed conversions $ (50,113) 1,806,150 $ (.03)
================= ================ ================
Stock options had an antidilutive effect on diluted earnings per share for the
three months ended April 30, 2001 and was not used in the calculation of diluted
earnings per share for that period.
Page 11 of 13
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. RECONCILIATION OF EARNINGS PER SHARE (CONTINUED):
FOR THE SIX MONTHS ENDED APRIL 30, 2002
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
----------- ------------- ------
Net Income $ 97,351
Basic EPS
Income available to common stockholders 97,351 1,759,291 $ .06
=================
Effect of dilutive securities
Stock options -- 18,745
---------------- ----------------
Diluted EPS
Income available to
Common stockholders & assumed
conversions $ 97,351 1,778,036 $ .05
================ ================ =================
</Table>
FOR THE SIX MONTHS ENDED APRIL 30, 2001
<Table>
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
----------- ------------- ------
Net Income $ 10,173
Basic EPS
Income available to common stockholders 10,173 1,786,424 $ .01
=================
Effect of dilutive securities
Stock options -- 53,595
---------------- ----------------
Diluted EPS
Income available to
common stockholders & assumed
conversions $ 10,173 1,840,019 $ .01
================ ================ =================
Page 12 of 13
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. EMPLOYEE RELOCATION:
The Company, in the second quarter, offered its lone employee located
in Arizona the option of moving back to Kalamazoo, which the employee accepted.
The Company agreed to pay for three months of temporary living expenses, moving
expense, and expenses relating to selling the employee's home in Arizona.
Accordingly, $43,811 was included in selling, general, and administrative
expenses in the second quarter for fiscal year 2001.
Page 13 of 13