UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Amendment No. 1)
(Mark One)
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended August 31, 1998.
or
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from _______ to __________.
Commission File Number: 1-13679
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TOP AIR MANUFACTURING, INC.
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(Exact name of small business issuer as specified in its charter)
Iowa 42-1155462
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
317 Savannah Park Road, Cedar Falls, Iowa 50613
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(Address of principal executive offices) (Zip Code)
(319) 268-0473
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(Issuer's telephone number, including area code)
Not Applicable
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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
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4,978,757 Common Shares were outstanding as of September 30, 1998.
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This report contains certain forward-looking statements within the meaning of
the Federal securities laws which, while reflective of management's beliefs or
expectations, involve certain risks and uncertainties, many of which are beyond
the control of the Company. Accordingly, the Company's actual results and the
timing of certain events could differ materially from those discussed herein.
Factors that could cause or contribute to such differences include, but are not
limited to, those factors discussed herein and those factors discussed in
Exhibit 99 to the Company's Annual Report on Form 10-KSB for the fiscal year
ended May 31, 1998.
RESULTS OF OPERATIONS
Net Sales:
Top Air Manufacturing Inc.'s net sales for the first quarter of fiscal 1999
decreased 14% to $2,240,909 compared to $2,597,927 for the same period last
year. The decrease is a result of an overall downturn in the agricultural
economy. Lower worldwide demand for grain and high domestic production has
resulted in depressed commodity prices effecting both grain and livestock
farming operations. The Company is assessing the potential impact this downturn
may have on the demand for agricultural equipment in order to make the necessary
adjustments to minimize negative effects on profitability for the rest of fiscal
1999.
Operating Costs & Expenses:
The Company's cost of goods sold for the quarter ended August 31, 1998 increased
to 73% of net sales compared to 72% for the first quarter of the previous year.
The increase, as a percentage of sales, was a result of fixed costs being spread
over a lower volume of sales.
Operating expenses increased 7% to $859,183 for the first quarter of fiscal 1999
compared to $800,344 for the previous year. The increase was primarily a result
of increased administrative expenses from the relocation of a Company officer,
the cost of a consultant to help develop improved production control procedures
and the addition of one employee to account for and implement these new
procedures.
Interest Expense:
Interest expense increased 62% to $117,637 compared to $72,699 for the first
quarter of last year. The increase was due to higher levels of short-term and
long-term debt outstanding during the period primarily as a result of the
purchase of new production machinery and increased levels of inventory.
Income Taxes:
The income tax credits of $131,931 and $52,615 for the quarters ended August 31,
1998 and 1997, represent the benefit that would be received if the loss of the
quarter was carried back to reclaim income tax paid in prior years.
TOP AIR MANUFACTURING, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Material Changes in Financial Position:
The Company's loss from operations of $225,821 was primarily responsible for the
decrease in working capital of approximately $214,000.
Liquidity and Capital Resources:
At August 31, 1998 the Company had working capital of $5,483,531 an increase of
$559,532 over a year ago and a decrease of $214,092 since May 31, 1998. The
increase from a year ago is primarily a result of approximately $785,000 of
income from operations which was offset by a reclassification of a current note
receivable of approximately $135,000, to long term and the purchase of nearly
$100,000 of property and equipment with short-term debt. The decrease since May
31, 1998 is described in the changes in financial position above. The current
ratio decreased to 2.23 from 2.48 at May 31, 1998.
On September 28, 1998 the Company repurchased 100,000 shares of its common stock
for the treasury from Wayne Dudley, a director of the Company. The purchase was
made in a private transaction at the closing market price on that date.
The Company is currently expanding its manufacturing facility in Cedar Falls,
Iowa by nearly 27,000 square feet. This expansion will improve the processing
flows and will enable the Company to produce grain wagons and carts and liquid
manure tanks simultaneously. The total cost of the project, which will include
the purchase of additional manufacturing equipment, will be approximately $1
million and will be substantially completed by January 1999. This project is
being financed with long-term bank debt. The Company believes it has access to
sufficient working capital to fund its operations for the foreseeable future.
Year 2000 Readiness Disclosure:
The Company is in the process of forming a formal working group to address
possible risks and the associated costs of the upcoming Millennium change. This
group's role will be to identify all Company computers and control systems, to
devise remedies for systems incapable of properly processing date-related and
other data due to such Millennium change, to determine the cost associated with
such remedial actions and to develop contingency plans. The group will also poll
vendors and customers, where appropriate, to identify possible problems such
third parties may encounter due to the Millennium change.
The Company has been advised that its main computer hardware and software sytems
will continue to function through the Millennium change and believes that
actions and costs required to prepare all other Company systems for the
Millennium change will not have a material impact on its business, operations or
financial condition.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TOP AIR MANUFACTURING, INC.
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(Registrant)
Date: January 15, 1999 /s/ Steven R. Lind
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Steven R. Lind
President and Chief Executive Officer;
Principal Executive Officer
Date: January 15, 1999 /s/ Steven F. Bahlmann
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Steven F. Bahlmann
Chief Accounting Officer;
Principal Accounting Officer
EXHIBIT INDEX
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Exhibit Number Description
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11 Computation of Earnings (Loss) Per Common Share (F1)
27 Financial Data Schedule (F1)
(F1) Previously filed with the Company's Quarterly Report on Form 10-QSB for the
quarterly period ended August 31, 1998.