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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, 1995
[ ] 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 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, 1995.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following Financial Statements are attached in response to Item 1:
Condensed Consolidated Balance Sheet
July 31, 1995 (Unaudited)
October 31, 1994
Consolidated Statement of Earnings
Three months ended July 31, 1995
and 1994 (Unaudited)
Nine months ended July 31, 1995
and 1994 (Unaudited)
Condensed Consolidated Statement
of Cash Flows
Nine months ended July 31, 1995
and 1994 (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
collecting on high receivables at the end of June. Inventories increased
primarily from jobs scheduled to ship in the fourth quarter.
Accounts and note payable increase resulted from increased inventory
purchases combined with increased operating costs to meet the higher sales
level.
Long term debt decreased from scheduled quarterly payments, plus $300,000
of prepayments.
Future Events. The agreement with the State of Michigan calls for an
"Annual Mandatory Note Prepayment" to be paid to the State within 120 days
after the fiscal year end. The current calculation projects a payment that
would pay the present debt off in its entirety. Current cash projections
indicate a large portion or possibly all of the remaining debt may be paid
prior to October 31, 1995.
Material Changes in Results of Operation. Sales in the first nine months
of 1995 were 37% higher than the first nine months of 1994. The higher sales
resulted from an increase of $2,642,000 in Conveyor Segment sales versus the
same period a year ago.
Costs of products sold were 61% in the first nine months of 1995 compared
to 61% a year ago. Selling, general and administrative expenses
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were 30% in the first nine months of 1995 compared to 32% in the same period a
year ago resulting from higher sales.
Decreased interest expense resulted from lower debt.
Non-competition agreement income results from normal amortization over
the life of the agreement.
Trends. Bookings of $11,532,000 for the first nine months of 1995 are up
47% compared to the same period a year ago. Business activity going into the
fourth quarter remains strong. Sales are forecast to be higher in the fourth
quarter than they were in the third quarter.
The order backlog of $4,147,000 at the end of the third quarter ended
July 31, 1995 compares with $3,005,000 at the end of the previous quarter
ended April 30, 1995 and $2,117,000 at the end of the third quarter a year
ago.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In December, 1992, litigation was commenced against the Company in the
United States District Court for the Western District of Michigan entitled
Charter Township of Oshtemo, City of Kalamazoo, Kalamazoo County, and the
Upjohn Company v. American Cyanamid Company et al. The Company is one of 38
defendants in this action. The litigation arises out of the Company's disposal
of waste at a local landfill which has been subsequently identified as a
"superfund site". The information set forth in Item 3 of the Company's Form
10-KSB for the fiscal year ended October 31, 1994 is hereby incorporated by
reference.
The Company is also aware of three product liability actions against the
Company. The amount of one lawsuit is for $3,250,000 which exceeds the
Company's product liability insurance protection by approximately $1,250,000.
Another is for $10,000,000 which exceeds the Company's product liability
insurance protection by approximately $8,000,000, while the other lawsuit is
for unspecified damages.
The Company intends to vigorously defend its case and believes that a
settlement or related judgement would not result in a material loss to the
Company. No amounts are recorded on the books of the Company in anticipation
of a loss as a result of these three contingencies.
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 5, 1995 By: /S/ John J. Wallace
----------------------------------
John J. Wallace
Its: Chairman of the Board
Date: September 5, 1995 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, 1995
------------------------
Financial Statements
------------------------
PRAB, INC.
(A Michigan Corporation)
5944 E. Kilgore Road
P.O. Box 2121
Kalamazoo, Michigan 49003
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<TABLE>
<CAPTION>
PRAB, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
July 31, October 31,
1995 1994
----------- -----------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 609,130 $ 255,658
Note Receivable 58,891 171,524
Accounts Receivable 2,083,875 1,803,086
Inventories (Note 2) 1,278,220 889,843
Other current assets 166,009 183,262
Deferred income taxes 337,000 337,000
----------- -----------
Total current assets 4,533,125 3,640,373
----------- -----------
Property, plant and equipment
(net of accumulated depreciation
of $3,014,243 and $2,913,318
respectively) 924,687 894,112
----------- -----------
Other assets 41,615 81,308
----------- -----------
Total assets $ 5,499,427 $ 4,615,793
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts and note payable $ 954,834 $ 598,426
Other current liabilities 1,317,832 1,111,108
----------- -----------
Total current liabilities 2,272,666 1,709,534
----------- -----------
Long-term debt 439,077 985,525
----------- -----------
Other non-current liabilities 13,629 27,679
----------- -----------
Stockholder's equity:
Convertible preferred stock 1,500,000 1,500,000
Non-convertible preferred stock 300,000 300,000
Common stock 261,786 260,286
Additional paid-in capital 5,340,918 5,349,613
Accumulated deficit (4,628,649) (5,516,844)
----------- -----------
Total stockholders' equity 2,774,055 1,893,055
----------- -----------
Total liabilities and stock-
holders' equity $ 5,499,427 $ 4,615,793
=========== ===========
<FN>
Note: The balance sheet at October 31, 1994, has been taken from
the audited financial statements at that date and condensed.
</TABLE>
<PAGE>
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<TABLE>
<CAPTION>
PRAB, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Three months ended Nine months ended
July 31, July 31,
---------------------------- ----------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 3,718,123 $ 2,987,072 $ 9,677,034 $ 7,084,279
----------- ----------- ----------- -----------
Cost and expenses:
Cost of products sold 2,319,604 1,738,729 5,909,490 4,318,163
Selling, general and
administrative expenses 1,053,733 840,399 2,871,793 2,291,379
----------- ----------- ----------- -----------
3,373,337 2,579,128 8,781,283 6,609,542
----------- ----------- ----------- -----------
Operating Income 344,786 407,944 895,751 474,737
----------- ----------- ----------- -----------
Other income (deductions):
Interest expense (23,393) (43,097) (99,104) (144,477)
Non-Competition Agreement 29,978 29,978 89,934 89,934
Sale of property, plant,
and equipment 227 15 1,614 948
----------- ----------- ----------- -----------
6,812 (13,104) (7,556) (53,595)
----------- ----------- ----------- -----------
Income before income taxes
and extraordinary item 351,598 394,840 888,195 421,142
Provision for income taxes -- -- -- --
----------- ----------- ----------- -----------
Income before extraordinary
item 351,598 394,840 888,195 421,142
Extraordinary item - gain on
extinguishment of debt (Net of
income tax of $0) (Note 4) -- 135,274 -- 135,274
----------- ----------- ----------- -----------
Net Income $ 351,598 $ 530,114 $ 888,195 $ 556,416
=========== =========== =========== ===========
Net Income per share:(Note 5)
Before extraordinary item $ 0.07 $ 0.08 $ 0.18 $ 0.09
Extraordinary Item 0.00 0.03 0.00 0.03
----------- ----------- ----------- -----------
Primary $ 0.07 $ 0.11 $ 0.18 $ 0.12
=========== =========== =========== ===========
</TABLE>
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<TABLE>
<CAPTION>
PRAB, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
July 31,
------------------------
1995 1994
--------- ---------
<S> <C> <C>
Net cash provided by (used in)
operating activities $ 941,174 $ 222,782
--------- ---------
Cash flows from investing activities:
Acquisition of property, plant
and equipment (145,013) (35,580)
Proceeds from note receivable 112,633 164,312
Proceeds from sale of equipment 1,614 948
--------- ---------
Net cash provided by (used in)
investing activities: (30,766) 129,680
--------- ---------
Cash flows from financing activities:
Payment on long-term debt and
current maturities (549,741) (426,890)
Proceeds from sale of common stock 8,555 0
Dividend payments (15,750) (15,750)
--------- ---------
Net cash provided by (used in)
financing activities (556,936) (442,640)
--------- ---------
Net increase (Decrease) in cash $ 353,472 $ (90,178)
========= =========
</TABLE>
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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, 1995, the
consolidated statement of earnings and the condensed consolidated statement of
cash flows for the three month and nine month periods ended July 31, 1995 and
1994, 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, 1995, 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,
1994, annual report to stockholders. The results of operations for the period
ended July 31, 1995, is not necessarily indicative of the operating results
for the full year.
2. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
July 31, October 31,
1995 1994
----------- ----------
<S> <C> <C>
Raw materials $ 801,416 $ 452,813
Work in process 216,687 130,817
Finished goods and display
units 260,117 306,213
----------- ----------
Total inventories $ 1,278,220 $ 889,843
=========== ==========
</TABLE>
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, 1995
there were no borrowings on the line of credit.
4. GAIN ON EXTINGUISHMENT OF DEBT:
During June 1994 the Company paid to Westinghouse Electric Corporation
$100,000 as payment in full on a promissory note
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PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. GAIN ON EXTINGUISHMENT OF DEBT (Continued):
dated January 31, 1991 with an outstanding principal balance of $227,074 and
with accrued interest of $8,200.
The State of Michigan approved the Westinghouse debt extinguishment upon
reaching agreement with the Company requiring the Company to pay either (1) a
minimum annual mandatory note prepayment of $200,000 for fiscal year ending
October 31, 1994 due March 1, 1995, or (2) on or before October 31, 1994 remit
prepayments of $200,000.
The Company has remitted a $100,000 prepayment at the end of July 1994
and an additional prepayment of $150,000 at the end of August which
voluntarily exceeded the State of Michigan requirement by $50,000.
5. 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 non-convertible preferred stock.
Fully diluted net income per share amounts are not presented for 1995 and
1994 because of immaterial difference from 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.
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PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. NET INCOME PER SHARE (CONTINUED):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
--------------------- ---------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Primary:
Weighted average number of
shares actually outstanding 2,612,643 2,602,860 2,606,102 2,602,860
Convertible preferred stock 2,000,000 2,000,000 2,000,000 2,000,000
Stock options 125,591 -- 119,834 --
--------- --------- --------- ---------
4,738,234 4,602,860 4,725,936 4,602,860
========= ========= ========= =========
</TABLE>
6. CASH FLOWS:
Significant non-cash investing and financing activities are as follows:
A. As discussed more fully in Note 4, during the third quarter of 1994
the Company recorded a gain on extinguishment of debt, resulting
from a non-cash reduction to a promissory note of $127,074 and
reduction of accrued interest payable of $8,200.
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FINANCIAL DATA SCHEDULE
(EDGAR Exhibit 27)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> JUL-31-1995
<CASH> 609,130
<SECURITIES> 0
<RECEIVABLES> 2,083,875
<ALLOWANCES> 0
<INVENTORY> 1,278,220
<CURRENT-ASSETS> 4,533,125
<PP&E> 3,938,930
<DEPRECIATION> 3,014,243
<TOTAL-ASSETS> 5,499,427
<CURRENT-LIABILITIES> 2,272,666
<BONDS> 439,077
<COMMON> 261,786
0
1,800,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,774,055
<SALES> 9,677,034
<TOTAL-REVENUES> 9,677,034
<CGS> 5,909,490
<TOTAL-COSTS> 8,781,283
<OTHER-EXPENSES> (91,548)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 99,104
<INCOME-PRETAX> 888,195
<INCOME-TAX> 0
<INCOME-CONTINUING> 888,195
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 888,195
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
