UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, NW
Washington, DC 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 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 X 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 7/5/98 12/31/97
CURRENT ASSETS:
Cash $ 26 $ 52
Trade receivables, net of
allowance of $21 1,270 990
Inventories 1,260 1,242
Prepaid expenses 263 302
Total current assets 2,819 2,586
PROPERTY AND EQUIPMENT:
At cost 5,668 5,614
Accumulated depreciation and
amortization 4,964 4,881
Net property and equipment 704 733
OTHER ASSETS:
Intangible pension asset 212 212
Goodwill 197 198
Other non current assets 207 219
Total Assets $ 4,139 $ 3,948
liabilities and equity
CURRENT LIABILITIES:
Notes payable $ 1,192 $ 1,188
Accounts payable 611 498
Accrued liabilities 629 549
Total current liabilities 2,432 2,235
NONCURRENT LIABILITIES:
Pension benefits payable 513 581
Other 280 234
Total noncurrent liabilities 793 815
STOCKHOLDERS' EQUITY:
Common stock, no par value; authorized,
6,000,000 shares; issued and outstanding,
4,051,400 shares at July 5,1998 and
December 31, 1997 3,824 3,824
Accumulated deficit (2,696) (2,712)
1,128 1,112
Minimum pension liability adjustment (214) (214)
Net stockholders'
equity 914 898
Total Liabilities and
Stockholders' Equity $ 4,139 $ 3,948
<PAGE>
CRAMER, INC.
STATEMENTS OF INCOME
UNAUDITED
(Amounts in Thousands, Except Per Share Data)
QUARTER ENDED SIX MONTHS ENDED
7/5/98 6/29/97 7/5/98 6/29/97
NET SALES $3,276 $3,244 $6,456 $6,103
COST OF SALES 2,277 2,350 4,616 4,495
Gross profit 999 894 1,840 1,608
OPERATING EXPENSES:
Selling expenses 608 530 1,184 954
General and
administrative 319 277 588 526
Total operating
expenses 927 807 1,772 1,480
Income from
operations 72 87 68 128
OTHER INCOME (EXPENSE):
Interest expense, net (22) (23) (47) (47)
Other, net (31) (11) 5 5
Total other income
(expense) (53) (34) (52) (42)
INCOME BEFORE INCOME TAXES 19 53 16 86
INCOME TAX EXPENSE 0 0 0 0
NET INCOME $ 19 $ 53 $ 16 $ 86
Net income per
share based on weighted
average number of
common equivalent
shares outstanding
- basic and diluted $0.01 $0.01 $ 0.01 $ 0.02
Weighted Average Common
Equivalent Shares
Outstanding
Basic 4,051,400 3,840,650 4,051,400 3,840,650
Diluted 4,051,400 3,855,317 4,051,400 3,855,317
There is no difference between Net Income and Total Comprehensive
Income for the quarter or six month periods ending July 5, 1998
and June 29,1997
<PAGE>
CRAMER, INC.
STATEMENTS OF CASH FLOWS
UNAUDITED
(Amounts in $000's)
SIX MONTHS ENDED
7/5/98 6/29/97
Cash flows from operating activities:
Net income $ 16 $ 86
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 96 101
Changes in operating assets
and liabilities:
Accounts receivable (280) 31
Inventory (18) (37)
Prepaid expenses 39 10
Accounts payable and accrued expenses 193 (106)
Other noncurrent liabilities (22) (63)
Net cash provided by operating
activities 24 22
Cash flows from investing activities:
Capital expenditures (54) (69)
Cash flows from financing activities:
Principal payments on notes payable
and long-term notes (1,834) (4,284)
Proceeds from issuance of notes
payable and long-term notes 1,838 4,312
Net cash provided by financing
activities 4 28
Net increase (decrease) in cash (26) (19)
Cash at beginning of year 52 117
Cash at end of period $ 26 $ 98
Supplemental disclosures:
Cash paid during the period for:
Interest $ 47 $ 45
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.
A. Summary of Operations
The intake of new orders were $6,818,000 in the first
half of 1998 as compared to $6,182,000 in the same
period in 1997, an increase of 10%. The increase
reflects the continued strengthening of the Company's
seating and utility products business. At $6,456,000
net sales for the first half of 1998 were $353,000 or
6% larger than for the same period in 1997.
<PAGE>
At July 5, 1998, the Company's backlog of unfilled
orders was $1,168,000, an increase of $362,000 from the
level at December 31, 1997. Approximately $200,000 of
the Company's backlog is scheduled to ship in the
months of September and October with the remainder
being scheduled to ship in the coming month.
The Company's gross margin in the first half of 1998
increased by $232,000 from the level in the first half
of 1997. As a percentage of sales, margins improved
from 26.4% to 28.5%. 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 $1,184,000 in the first half of
1998, an increase of $230,000 as compared to the first
half of 1997. Approximately $42,000 of the increase
represents commissions and similar costs that vary
directly with sales volume. Of the remaining increase,
$173,000 relates to the ongoing introduction costs for
the Company's new articulating keyboard product.
General and administrative expenses during the first
half of 1998 increased by $62,000 when compared to the
first half 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 from operations in the first half of
1998 decreased by $60,000 as compared to the results in
the first half of 1997.
While the results for the first half 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 products introduced in the first half 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 increased by
$280,000 from December 31, 1997 to July 5, 1998. The
Company shipped several unusually large orders in the
last three weeks of the 1998 2nd quarter. In
accordance with the Company's normal terms of sale,
these amounts were not yet due at quarter end.
<PAGE>
Inventory increased by $18,000 during the first half of
1998. Management has increased the Company's stock of
component parts in order to support the shipment of
three new chair lines and one new ladder line
introduced during the second quarter of this year.
Capital expenditures were held in tight control and
aggregated only $54,000 during the first half of 1998.
Purchases during the period consisted primarily of
factory tooling. The rate of capital equipment
purchases is anticipated to increase during the
remainder of 1998 as enhancements to the Company's
manufacturing equipment and the purchase of tooling
necessary for additional new product introductions are
completed.
The Company's accounts payable increased by $113,000
from the December 31, 1997 level. The increase is the
result of a slight increase in the aging of vendor
balances prior to payment.
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
On April 17, 1998, the Company solicited proxies
concerning the election of Directors at a meeting held
on May 18, 1998.
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: August 12, 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 JULY 5, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANICIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUL-05-1998
<CASH> 26
<SECURITIES> 0
<RECEIVABLES> 1,270
<ALLOWANCES> 21
<INVENTORY> 1,260
<CURRENT-ASSETS> 263
<PP&E> 5,668
<DEPRECIATION> 4,964
<TOTAL-ASSETS> 4,139
<CURRENT-LIABILITIES> 2,432
<BONDS> 0
0
0
<COMMON> 3,824
<OTHER-SE> (2,910)
<TOTAL-LIABILITY-AND-EQUITY> 4,139
<SALES> 6,456
<TOTAL-REVENUES> 6,456
<CGS> 4,616
<TOTAL-COSTS> 6,388
<OTHER-EXPENSES> (52)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47
<INCOME-PRETAX> 16
<INCOME-TAX> 0
<INCOME-CONTINUING> 16
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
