UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, NW
Washington, DC 20549
FORM 10-QSB
(Mark One)
( ) QUARTERLY REPORT UNDER SECTION_13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 5, 1998
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission file number 2-69336
CRAMER, INC.
A Kansas Corporation IRS Employment I.D. #48-0638707
625 Adams Street
Kansas City, Kansas 66105 Telephone No. (913) 621-6700
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 ( No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
4,051,400 shares of common stock, no par value.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CRAMER, INC.
BALANCE SHEET
UNAUDITED
(Amounts in $000's, except share data)
ASSETS 4/5/98 12/31/97
CURRENT ASSETS:
Cash $ 33 $ 52
Trade receivables,
net of allowance of $21 979 990
Inventories 1,288 1,242
Prepaid expenses 272 302
Total current assets 2,572 2,586
PROPERTY AND EQUIPMENT:
At cost 5,634 5,614
Accumulated depreciation
and amortization 4,919 4,881
Net property and equipment 715 733
OTHER ASSETS:
Intangible pension asset 212 212
Goodwill 197 198
Other non current assets 218 219
Total Assets $ 3,914 $ 3,948
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Notes payable $ 1,015 $ 1,188
Accounts payable 654 498
Accrued liabilities 520 549
Total current liabilities 2,189 2,235
NONCURRENT LIABILITIES:
Pension benefits payable 560 581
Other 270 234
Total noncurrent liabilities 830 815
Stockholders' equity:
Common stock, no par value;
authorized, 6,000,000
shares; issued and outstanding,
4,051,400 shares at
April 5,1998 and
December 31, 1997 3,824 3,824
Accumulated deficit (2,715) (2,712)
1,109 1,112
Minimum pension liability
adjustment (214) (214)
Net stockholders' equity 895 898
Total Liabilities and
Stockholders' Equity $ 3,914 $ 3,948
<PAGE>
CRAMER, INC.
STATEMENTS OF INCOME
UNAUDITED
(Amounts in $000's, except per share data)
QUARTER ENDED
4/5/98 3/30/97
Net sales $ 3,180 $ 2,859
Cost of sales 2,339 2,145
Gross profit 841 714
Operating expenses:
Selling 576 424
General and administrative 269 249
Total operating expenses 845 673
Income (loss) from operations (4) 41
Other income (expense):
Interest expense, net (25) (24)
Other, net 26 16
Total other income (expense) 1 (8)
Income (loss) before income taxes (3) 33
Income taxes 0 0
Net income (loss) $ (3) $ 33
Earnings (loss) per share
based on weighted average
number of common equivalent
shares outstanding, 4,051,400
and 3,840,650 for the quarters
ending 4/5/98 and 3/30/97,
respectfully $ 0.00 $ 0.01
<PAGE>
CRAMER, INC.
STATEMENTS OF CASH FLOWS
UNAUDITED
(Amounts in $000's)
QUARTER ENDED
4/5/98 3/30/97
Cash flows from operating activities:
Net income(loss) $ (3) $ 33
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 40 48
Changes in operating assets
and liabilities:
Accounts receivable 11 44
Inventory (46) (95)
Prepaid expenses 30 1
Other assets 0 (27)
Accounts payable and accrued
expenses 127 (119)
Other noncurrent liabilities 15 31
Net cash provided by
(used in) operating
activities 174 (84)
Cash flows from investing activities:
Capital expenditures (20) (35)
Cash flows from financing activities:
Principal payments on notes payable
and long-term notes (1,003) (2,994)
Proceeds from issuance of
notes payable and long-term
notes 830 3,064
Net cash provided by (used in)
financing activities (173) 70
Net increase (decrease) in cash (19) (49)
Cash at beginning of year 52 117
Cash at end of quarter $ 33 $ 68
Supplemental disclosures:
Cash paid during the quarter for:
Interest $ 25 $ 24
Income tax $ 0 $ 0
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Except for the historical information contained herein, this
report on Form 10-QSB contains forward-looking statements that
involve risk and uncertainties. The Company's actual results
could differ materially. In connection with the "safe harbor"
provisions of the Private Securities Litigation Reform Act of
1995, Cramer, Inc. reminds readers that there are many
important factors that could cause the Company's actual
results to differ materially from those projected in
forward-looking statements of the Company made by, or on
behalf of, the Company. When used in this Form_10-QSB and in
other filings by the Company with the Securities and Exchange
Commission, in the Company's press releases and in oral
statements made with the approval of an authorized executive
officer, words or phrases such as "will likely result", "are
expected to", "will continue", "is anticipated", "estimate",
"project" or similar expressions are intended to identify
forward-looking statements. The Company wishes to caution
readers not to place undue reliance on such forward-looking
statements.
There are a number of reasons why investors should not place
undue reliance on forward-looking statements. Among the
risks and uncertainties that could cause the Company's actual
results for future periods to differ materially from any
forward-looking statements made are the following:
. Fluctuations or reductions in product demand and market
acceptance
. The level of product development by the Company
. Capacity and supply constraints or difficulties
. The results of financing efforts
. The effect of new laws and regulations
. Unexpected additional expenses or operating losses
. Competition
. The Company's reliance on certain vendors for key components.
The foregoing list of risks and uncertainties is not meant to
be complete.
<PAGE>
A. Summary of Operations
At $3,180,000 net sales for the first quarter of 1998 were
$321,000 or 11% larger than for the same period in 1997. The
increase in net sales reflects the continued strengthening of
the Company's seating and utility products business. The
intake of new orders were $3,235,000 in the first quarter of
1998 as compared to 2,914,000 in the same period in 1997, an
increase of 11%. At April 5, 1998, the Company's backlog of
unfilled orders was $813,000, an increase of $7,000 from the
level at December 31, 1997. Substantially all of the
Company's backlog is scheduled to ship in the next three
months.
The Company's gross margin in the first quarter of 1998
increased by $127,000 from the level in the first quarter of
1997. As a percentage of sales, margins improved from 24.9%
to 26.4%. The improvements in margins reflects sales price
increases instituted in the summer of 1997 and improved
manufacturing efficiency achieved as a result of the increased
sales volume.
Selling expenses were $576,000 in the first quarter of 1998,
an increase of $152,000 as compared to the first quarter of
1997. Approximately $34,000 of the increase represents
commissions and similar costs that vary directly with sales
volume. Of the remaining increase, $88,000 relates to the
ongoing introduction costs for the Company's new Floating Arms
articulating keyboard product. The remaining increase is due
to expanded marketing programs necessary to develop the
increased sales in the seating and utility products lines.
General and administrative expenses during the first quarter
of 1998 increased by $20,000 when compared to the first
quarter of 1997. The increase consists primarily of
additional engineering expenses incurred to expand the
Company's product offering and to shorten the new product
development process.
Primarily as a result of the increase in selling expenses,
income (loss) from operations in the first quarter of 1998
decreased by $45,000 as compared to the results in the first
quarter of 1997.
Other, non-operating income in the first quarter of 1998
increased by $10,000 as compared to the first quarter of 1997.
The increase is due to the receipt of $18,000 in workers
compensation insurance premium refunds. The refunds are due
to positive experience in workers compensation costs which
management attributes to the Company's proactive and
innovative safety and return to work programs instituted in
prior years.
<PAGE>
While the results for the first quarter of 1998 were lower
than in the same period in 1997, management believes that
1998's year-end results will improve on those realized in
1997. The increase in new order intake and net sales are
anticipated to continue throughout the remainder of 1998 as
the Company realizes the benefit of new product introduction
already completed and scheduled for the second quarter of the
year. Furthermore, the introductory costs associated with the
Company's new articulating keyboard product are expected to
fall in proportion to sales volume as the distribution of this
product line is established and as technical enhancements to
the product are completed.
B. FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES
The Company's trade accounts receivables decreased by $11,000
from December 31, 1997 to April 5, 1998. The decrease
occurred despite having approximately the same total sales
volume in February and March 1998 as compared to the last two
months of 1997 and is a result of management's continued
emphasis on improving its cash flow by reducing days sales
outstanding.
Inventory increased by $46,000 during the first quarter of
1998. The increase is primarily in raw materials and work in
progress. Late in the first quarter of 1998, the Company
began increasing its stock of seating components in order to
support the shipment of three new chair lines scheduled for
release during the second quarter of this year.
Capital expenditures were held in tight control and aggregated
only $20,000 during the first quarter of 1998. Purchases
during the quarter consisted primarily of factory tooling.
The rate of purchases of capital equipment purchases is
anticipated to increase significantly during the remainder of
1998. Scheduled capital equipment expenditures include
enhancements to the Company's manufacturing equipment,
computer hardware, and the purchase of additional tooling
necessary for third and fourth quarter new product
introductions.
The Company's accounts payable increased by $156,000 from the
December 31, 1997 level. The increase is the result of
refinements in the Company's vendor payment strategy whereby
payment terms to non-critical suppliers have been slightly
extended.
As a result of the positive cash flow from operations, the
Company reduced its borrowing under its short-term line of
credit by $173,000 during the first quarter of 1998.
The Company continues to participate in a consolidated cash
management and credit facility with its parent, Rotherwood
(see discussion in Note 3 to the Financial Statements in the
Company's 1997 Form 10KSB). Management believes that the
Company's access to this facility, along with existing cash
balances and cash generated from future operations, will be
adequate to meet future operating requirements and liquidity
needs.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a defendant in several lawsuits relating to
product liability claims arising from accidents allegedly
occurring in connection with the use of its products. The
claims are covered by insurance and are being defended by the
Company's independent counsel or by counsel assigned by the
Company's insurance carriers, but are subject to deductibles
ranging from $0 to $100,000. A number of the claimants allege
substantial damages. While management believes the Company
has substantial defenses with respect to the claims, the
ultimate outcome of such litigation cannot be predicted with
certainty. The Company has reasonably estimated and accrued
in its financial statements its portion of the deductible as
a product liability contingency. Such claims are an ordinary
aspect of the Company's business.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
<PAGE>
SIGNATURES
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.
CRAMER, INC.
(Registrant)
Date: May 14, 1998 /s/ Gary A. Rubin
Gary A. Rubin
Vice President, Finance & CFO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED APRIL 5, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> APR-05-1998
<CASH> 33
<SECURITIES> 0
<RECEIVABLES> 979
<ALLOWANCES> 21
<INVENTORY> 1288
<CURRENT-ASSETS> 272
<PP&E> 5634
<DEPRECIATION> 4919
<TOTAL-ASSETS> 3914
<CURRENT-LIABILITIES> 2235
<BONDS> 0
0
0
<COMMON> 3824
<OTHER-SE> (2729)
<TOTAL-LIABILITY-AND-EQUITY> 3914
<SALES> 3180
<TOTAL-REVENUES> 3180
<CGS> 2339
<TOTAL-COSTS> 3184
<OTHER-EXPENSES> (26)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> (3)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
