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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: January 31, 1996
[ ] 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 - 2,647,860 shares outstanding at
February 29, 1996.
<PAGE>
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following Financial Statements are attached hereto in response to
Item 1:
Condensed Consolidated Balance Sheet
January 31, 1996 (Unaudited)
October 31, 1995
Consolidated Statement of Earnings
Three months ended January 31, 1996
and 1995 (Unaudited)
Condensed Consolidated Statement of Cash Flows
Three months ended January 31, 1996
and 1995 (Unaudited)
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation
Material Changes in Financial Condition. Cash decrease resulted
primarily from inventory purchases, prepaid general insurance, and payment of
fiscal year 1995 accrued bonus. Inventory increased to meet the higher sales
level scheduled to ship in the second quarter. Other current assets increased
primarily from prepaid general insurance.
Accounts and note payable increase resulted from increased inventory
purchases, operating costs, and extending payments on payables in lieu of
borrowing on the line of credit. The majority of the decrease in other current
liabilities resulted from lower accrued payroll, bonus, and commissions.
The Company continues to negotiate with the State of Michigan
regarding the repurchase of certain outstanding common stock, convertible
preferred stock and non-convertible preferred stock of the Company, which
stock is currently owned by the State of Michigan Retirement Systems. The
Company cannot predict the outcome of such negotiations. Refer to Item 6 of
the Company's 10-KSB for the fiscal year ended October 31, 1995 for additional
information.
Material Changes in Results of Operation. Sales in the first quarter
of 1996 were 22% higher than the first quarter of 1995. Higher sales are the
result of higher backlog going into the first quarter combined with increased
marketing activity.
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Costs of products sold were 66% in the first quarter 1996 compared to
61% a year ago resulting primarily from installation cost overruns on a major
job combined with overall increased costs of material. Selling, general and
administrative expenses were 30% in the first quarter of 1996 and 1995.
Elimination of interest expense resulted from paying off all debt due
the State of Michigan in the fourth quarter of 1995.
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, 1995 is hereby incorporated by
reference. The private party responsible for remediation has once again
revised the amount it is seeking in damages to approximately $166,000.
The Company is subject to other claims and lawsuits arising in the
ordinary course of business. In the opinion of management, all such pending
claims are either adequately covered by insurance or, if not insured, will not
have a material adverse effect on the Company.
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.
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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: March 1, 1996 By: /s/ John J. Wallace
---------------------
John J. Wallace
Its: Chairman of the Board
Date: March 1, 1996 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 January 31, 1996
--------------------
Financial Statements
--------------------
PRAB, INC.
(A Michigan Corporation)
5944 E. Kilgore Road
P.O. Box 2121
Kalamazoo, Michigan 49003
<PAGE>
<TABLE>
<CAPTION>
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PRAB, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
January 31, October 31,
1996 1995
----------- -----------
Unaudited (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 39,964 $ 323,297
Accounts Receivable 2,388,246 2,373,362
Inventories (Note 2) 1,395,924 1,134,356
Other current assets 232,059 76,285
Deferred income taxes 364,500 362,190
---------- ----------
Total current assets 4,420,693 4,269,490
---------- ----------
Property, plant and equipment
(net of accumulated depreciation
of $3,074,184 and $3,053,409
respectively) 961,174 961,299
---------- ----------
Other assets 17,930 17,961
---------- ----------
Total assets $5,399,797 $5,248,750
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts and note payable $1,301,272 $ 980,067
Other current liabilities 765,324 1,069,225
---------- ----------
Total current liabilities 2,066,596 2,049,292
---------- ----------
Other non-current liabilities 14,137 13,883
---------- ----------
Stockholder's equity:
Convertible preferred stock 1,500,000 1,500,000
Non-convertible preferred stock 300,000 300,000
Common stock 264,786 264,786
Additional paid-in capital 1,120,789 1,120,789
(net of deficit of $4,228,988
eliminated October 31, 1995)
Retained Earnings (Note 5) 133,489 --
---------- ----------
Total stockholders' equity 3,319,064 3,185,575
---------- ----------
Total liabilities and stock-
holders' equity $5,399,797 $5,248,750
========== ==========
<FN>
Note: The balance sheet at October 31, 1995, has been taken from the
audited financial statements at that date and condensed.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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PRAB, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Three Months Ended
January 31
--------------------------
1996 1995
---- ----
<S> <C> <C>
Net Sales $ 3,423,441 $ 2,801,348
----------- -----------
Costs and expenses:
Cost of products sold 2,245,415 1,695,637
Selling, general and
administrative expenses 1,036,026 833,838
----------- -----------
3,281,441 2,529,475
----------- -----------
Operating income 142,000 271,873
----------- -----------
Other income (deductions):
Interest expense 475 (48,146)
Non-competition agreement 14,989 29,978
Sale of property, plant and
equipment 25 25
----------- -----------
15,489 (18,143)
----------- -----------
Income before income taxes 157,489 253,730
Provision for income taxes -- --
----------- -----------
Net income $ 157,489 $ 253,730
=========== ===========
Earnings Per Common Share: (Note 4)
Primary $ .03 $ .05
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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PRAB, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three months ended
January 31
----------------------
1996 1995
---- ----
<S> <C> <C>
Net cash provided by (used in)
operating activities $(217,858) $ 261,248
--------- ---------
Cash flows from investing activities:
Acquisition of property,
plant and equipment (41,500) (24,503)
Proceeds from notes receivable 0 41,450
Sale of property, plant and equipment 25 25
--------- ---------
Net cash provided by (used in)
investing activities: (41,475) 16,972
--------- ---------
Cash flows from financing activities:
Payment on long-term debt and
current maturities 0 (278,894)
Dividend payments (24,000) (5,250)
--------- ---------
Net cash provided by (used in)
financing activities (24,000) (284,144)
--------- ---------
Net increase (decrease) in cash $(283,333) $ (5,924)
========= =========
</TABLE>
<PAGE>
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PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The condensed consolidated balance sheet at January 31, 1996, the
consolidated statement of earnings and the condensed consolidated statement of
cash flows for the three-month periods ended January 31, 1996 and 1995, 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 January 31, 1996, 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,
1995, annual report to stockholders. The results of operations for the period
ended January 31, 1996, is not necessarily indicative of the operating results
for the full year.
2. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
January October
31, 1996 31, 1995
-------- --------
<S> <C> <C>
Raw materials $1,061,991 $ 892,152
Work in process 220,074 141,413
Finished goods and display units 113,859 100,791
---------- ----------
Total inventories $1,395,924 $1,134,356
========== ==========
</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 January 31, 1996
there were no borrowings on the line of credit.
<PAGE>
10/10
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
4. EARNINGS PER COMMON SHARE:
Primary share amounts are computed based on weighted average number of
shares actually outstanding plus the dilutive 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 convertible and
non-convertible preferred stock.
Fully diluted earnings per common share amounts are not presented for
January 31, 1996 and 1995 because of immaterial difference from primary
earnings per share in 1996 and 1995.
Following is a reconciliation of the weighted average number of shares
actually outstanding with the number of shares used in the computations of
primary earnings per common share.
<TABLE>
<CAPTION>
Three Months Ended
January 31,
------------------
1996 1995
---- ----
<S> <C> <C>
Primary:
Weighted average number of
shares actually outstanding 2,647,860 2,602,860
Convertible preferred stock 2,000,000 2,000,000
Stock options 96,687 90,537
--------- ---------
4,744,547 4,693,397
========= =========
</TABLE>
5. ELIMINATION OF DEFICIT IN RETAINED EARNINGS
On October 31, 1995 the Company eliminated the earnings deficit amount on
its balance sheet through a quasi-reorganization in accordance with the state
laws of Michigan. The capital surplus (additional paid-in capital) was used to
eliminate in its entirety a deficit of $4,228,988 in the balance sheet under
stockholders' equity. Retained earnings shown on the balance sheet in future
years reflects earnings beginning November 1, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> JAN-31-1996
<CASH> $ 39,964
<SECURITIES> 0
<RECEIVABLES> 2,421,851
<ALLOWANCES> 33,605
<INVENTORY> 1,395,924
<CURRENT-ASSETS> 4,420,693
<PP&E> 4,035,359
<DEPRECIATION> 3,074,184
<TOTAL-ASSETS> 5,399,797
<CURRENT-LIABILITIES> 2,066,596
<BONDS> 0
0
1,800,000
<COMMON> 264,786
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,399,797
<SALES> 3,423,441
<TOTAL-REVENUES> 3,423,441
<CGS> 2,245,415
<TOTAL-COSTS> 3,281,441
<OTHER-EXPENSES> (15,014)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (475)
<INCOME-PRETAX> 157,489
<INCOME-TAX> 0
<INCOME-CONTINUING> 157,489
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 157,489
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
