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: April 30, 1996
--------------
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ________ to _______
Commission file number: 0-10187
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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
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(Issuer's telephone number)
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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
Section13 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
May 31, 1996.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following Financial Statements are attached hereto in response to
Item 1:
Condensed Consolidated Balance Sheet
April 30, 1996 (Unaudited)
October 31, 1995
Consolidated Statement of Earnings
Three months ended April 30, 1996
and 1995 (Unaudited)
Six months ended April 30, 1996
and 1995 (Unaudited)
Condensed Consolidated Statement
of Cash Flows (Unaudited)
Six months ended April 30, 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. Accounts receivable increase
results primarily from several customers withholding payment until the
installed equipment operates to their satisfaction. Inventory increase
resulted primarily from increased work in process. Other current assets
increased primarily from prepaid insurance.
Accounts and note payable increase resulted from increased inventory
purchases and operating costs.
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.
2
<PAGE>
Material Changes in Results of Operation. Sales in the first half of
1996 were 19% higher than the first half of 1995. Higher sales are the result
of a continuing strong domestic economy combined with increased marketing
activity and a high backlog of orders at the beginning of fiscal 1996.
Costs of products sold were 65% in the first half of 1996 compared to
60% a year ago. The higher costs of sales percent resulted primarily from
installation cost overruns on a major job, higher warranty expense, and
increased material costs. Selling, general and administrative expenses were
30% in the first six months of 1996 compared to 31% in the same period a year
ago.
Elimination of interest expense resulted from paying off all debt due
the State of Michigan in the fourth quarter of 1995.
Non-competition agreement income results from normal amortization over
the life of the agreement which ended in December 1995.
The order backlog of $3,595,000 at the end of the second quarter ended
April 30, 1996 compares with $3,366,000 at the end of the previous quarter
ended January 31, 1996 and $3,005,000 at the end of the second 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, 1995 is hereby incorporated by
reference. The private party responsible for remediation has 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.
3
<PAGE>
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: June 3, 1996 By: /S/ John J. Wallace
---------------------
John J. Wallace
Its: Chairman of the Board
Date: June 3, 1996 By: /S/ Robert W. Klinge
---------------------
Robert W. Klinge
Its: Controller
4
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report on Form 10-QSB
For the Quarter Ended April 30, 1996
Financial Statements
PRAB, INC.
(A Michigan Corporation)
5944 E. Kilgore Road
P.O. Box 2121
Kalamazoo, Michigan 49003
5
<PAGE>
<TABLE>
<CAPTION>
PRAB, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, October 31,
1996 1995
---------- -----------
Unaudited (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 305,207 $ 323,297
Accounts Receivable 2,604,798 2,373,362
Inventories (Note 2) 1,276,345 1,134,356
Other current assets 184,301 76,285
Deferred income taxes 364,591 362,190
---------- ----------
Total current assets 4,735,242 4,269,490
---------- ----------
Property, plant and equipment
(net of accumulated depreciation
of $3,114,766 and $3,053,409
respectively) 938,078 961,299
---------- ----------
Other assets 17,901 17,961
---------- ----------
Total assets $5,691,221 $5,248,750
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts and note payable $1,132,985 $ 980,067
Other current liabilities 1,030,414 1,069,225
---------- ----------
Total current liabilities 2,163,399 2,049,292
---------- ----------
Other non-current liabilities 14,391 13,883
---------- ----------
Stockholders' 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) 327,856 --
---------- ----------
Total stockholders' equity 3,513,431 3,185,575
---------- ----------
Total liabilities and stock-
holders' equity $5,691,221 $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>
6
<PAGE>
<TABLE>
<CAPTION>
PRAB, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Three months ended Six months ended
April 30, April 30,
----------------------- -----------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $3,686,315 $3,157,563 $7,109,756 $5,958,911
---------- ---------- ---------- ----------
Costs and expenses:
Cost of products sold 2,385,996 1,894,249 4,631,411 3,589,886
Selling, general and
administrative expenses 1,082,165 984,229 2,118,191 1,818,067
---------- ---------- ---------- ----------
3,468,161 2,878,478 6,749,602 5,407,953
---------- ---------- ---------- ----------
Operating Income 218,154 279,085 360,154 550,958
---------- ---------- ---------- ----------
Other income (deductions) :
Interest expense 435 (27,565) 910 (75,711)
Non-Competition Agreement -- 29,978 14,989 59,956
Sale of property, plant,
and equipment (222) 1,369 (197) 1,394
---------- ---------- ---------- ----------
213 3,782 15,702 (14,361)
---------- ---------- ---------- ----------
Income before income taxes 218,367 282,867 375,856 536,597
Provision for income taxes -- -- -- --
---------- ---------- ---------- ----------
Net income $ 218,367 $ 282,867 $ 375,856 $ 536,597
========== ========== ========== ==========
Net Income per share: (Note 4)
Primary $ 0.04 $ 0.06 $ 0.07 $ 0.11
========== ========== ========== ==========
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
PRAB, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended
April 30
-----------------------
1996 1995
---- ----
<S> <C> <C>
Net cash provided by (used in)
operating activities $ 95,282 $ 398,199
--------- ---------
Cash flows from investing activities:
Acquisition of property,
plant and equipment (65,418) (71,614)
Proceeds from note receivable 0 83,840
Proceeds from sale of equipment 46 1,394
---------- ---------
Net cash provided by (used in)
investing activities: (65,372) 13,620
---------- ---------
Cash flows from financing activities:
Payment on long-term debt and
current maturities 0 (363,263)
Dividend Payments $ (48,000) (10,500)
---------- ---------
Net cash provided by (used in)
financing activities (48,000) (373,763)
---------- ---------
Net increase (decrease) in cash $ (18,090) $ 38,056
========= =========
</TABLE>
8
<PAGE>
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The condensed consolidated balance sheet at April 30, 1996, the
consolidated statement of earnings and the condensed consolidated statement of
cash flows for the three-month and six month periods ended April 30, 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 April 30, 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 April 30, 1996, is not necessarily indicative of the operating results
for the full year.
2. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
April 30, October 31,
1996 1995
----------- -----------
<S> <C> <C>
Raw materials $ 889,733 $ 892,152
Work in process 272,753 141,413
Finished goods and
display units 113,859 100,791
----------- ----------
Total inventories $ 1,276,345 $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 April 30, 1996
there were no borrowings on the line of credit.
9
<PAGE>
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
April 30, 1996 and 1995 because of immaterial difference from primary earnings
per share in both periods.
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 Six Months Ended
April 30 April 30
-------------------- --------------------
1996 1995 1996 1995
--- ---- ---- ----
<S> <C> <C> <C> <C>
Primary:
Weighted average number
of shares actually
outstanding 2,647,860 2,602,860 2,647,860 2,602,860
Convertible preferred
stock 2,000,000 2,000,000 2,000,000 2,000,000
Stock options 62,498 135,912 66,893 133,504
--------- --------- --------- ---------
4,710,358 4,738,772 4,714,753 4,736,364
========= ========= ========= =========
</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.
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<CASH> $ 305,207
<SECURITIES> 0
<RECEIVABLES> 2,604,798
<ALLOWANCES> 0
<INVENTORY> 1,276,345
<CURRENT-ASSETS> 4,735,242
<PP&E> 4,052,844
<DEPRECIATION> 3,114,766
<TOTAL-ASSETS> 5,691,221
<CURRENT-LIABILITIES> 2,163,399
<BONDS> 0
0
1,800,000
<COMMON> 264,786
<OTHER-SE> 1,448,645
<TOTAL-LIABILITY-AND-EQUITY> 5,691,221
<SALES> 7,109,756
<TOTAL-REVENUES> 7,109,756
<CGS> 4,631,411
<TOTAL-COSTS> 6,749,602
<OTHER-EXPENSES> (14,792)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (910)
<INCOME-PRETAX> 375,856
<INCOME-TAX> 0
<INCOME-CONTINUING> 375,856
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 375,856
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
