Page 1 of 11
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, 1997
[ ] 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 - 1,757,339 shares outstanding at
August 31, 1997.
<PAGE>
Page 2 of 11
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following Financial Statements are attached hereto in response to
Item 1:
Condensed Consolidated Balance Sheet
July 31, 1997 (Unaudited)
October 31, 1996
Consolidated Statement of Earnings
Three months ended July 31, 1997
and 1996 (Unaudited)
Nine months ended July 31, 1997
and 1996 (Unaudited)
Condensed Consolidated Statement
of Cash Flows
Nine months ended July 31, 1997
and 1996 (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 decrease
resulted primarily from collection of several large past due invoices
combined with a more aggressive collection effort which decreased days sales
outstanding to 45 days versus 59 days at the end of fiscal year 1996.
Inventory increased primarily from higher levels of work in process. Other
current assets increased primarily from prepaid general insurance, workers
compensation insurance, and employee benefits.
Accounts and note payable decreased due to completely paying off the
line of credit which was partially offset by increased accounts payable. The
increase in other current liabilities resulted primarily from increased
customer deposits. Long term debt decrease resulted from quarterly payments
in January, April, and July combined with an additional $300,000 voluntary
principal payment in July.
Material changes in Results of Operation. Sales in the first nine months of
1997 were 5% higher than the first nine months of 1996. Higher sales resulted
primarily from increased parts sales.
Costs of products sold were 60% in the first nine months of 1997
compared to 62% a year ago. The lower costs of sales percent in 1997 resulted
primarily from a more favorable product mix, lower
<PAGE>
Page 3 of 11
material cost as a percentage of sales, and installation cost overruns on a
job in the first nine months of 1996. Selling, general and administrative
expenses were 32% in the first nine months of 1997 compared to 30% in the
same period a year ago.
Interest expense increase resulted from debt incurred at the end of
fiscal year 1996 to repurchase Prab stock from the State of Michigan.
The order backlog of $5,032,000 at the end of the third quarter ended
July 31, 1997 compares with $3,280,000 at the end of the previous quarter
ended April 30, 1997 and $3,738,000 at the end of the third quarter a year
ago.
PART II - OTHER INFORMATION
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.
<PAGE>
Page 4 of 11
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, 1997 By: /S/ John J. Wallace
---------------------
John J. Wallace
Its: Chairman of the Board
Date: September 5, 1997 By: /S/ Robert W. Klinge
----------------------
Robert W. Klinge
Its: Controller
<PAGE>
Page 5 of 11
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report on Form 10-QSB
For the Quarter Ended July 31, 1997
Financial Statements
PRAB, INC.
(A Michigan Corporation)
5944 E. Kilgore Road
P.O. Box 2121
Kalamazoo, Michigan 49003
<PAGE>
Page 6 of 11
PRAB, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
July 31, October 31,
1997 1996
(Unaudited) (Note)
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 366,537 $ 491,367
Accounts Receivable 2,031,798 2,728,507
Inventories (Note 2) 1,482,730 1,143,456
Other current assets 165,169 37,843
Deferred income taxes 262,830 262,830
---------- ----------
Total current assets 4,309,064 4,664,003
---------- ----------
Property, plant and equipment
(net of accumulated depreciation
of $3,308,214 and $3,182,979
respectively) 1,026,262 930,721
---------- ----------
Other assets 365,133 360,337
---------- ----------
Total assets $5,700,459 $5,955,061
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts and note payable $1,287,892 $1,892,435
Other current liabilities 1,773,106 1,587,810
---------- ----------
Total current liabilities 3,060,998 3,480,245
---------- ----------
Long term debt 1,426,146 1,982,130
---------- ----------
Other non-current liabilities 15,765 14,940
---------- ----------
Stockholder's equity:
Convertible preferred stock 275,000 275,000
Common stock 175,734 175,734
Retained Earnings 746,816 27,012
---------- ----------
Total stockholders' equity 1,197,550 477,746
---------- ----------
Total liabilities and stock-
holders' equity $5,700,459 $5,955,061
========== ==========
<FN>
Note: The balance sheet at October 31, 1996, has been taken from the
audited financial statements at that date and condensed.
</TABLE>
<PAGE>
Page 7 of 11
PRAB, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
July 31, July 31,
---------------------- ---------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 4,185,738 $ 4,075,242 $ 11,737,246 $ 11,184,998
------------ ------------ ------------ ------------
Cost and expenses:
Cost of products sold 2,396,540 2,326,220 7,068,799 6,957,631
Selling, general and
administrative expenses 1,351,142 1,251,583 3,711,150 3,369,774
------------ ------------ ------------ ------------
3,747,682 3,577,803 10,779,949 10,327,405
------------ ------------ ------------ ------------
Operating Income 438,056 497,439 957,297 857,593
------------ ------------ ------------ ------------
Other income (deductions):
Interest expense (66,530) 3,990 (225,118) 4,900
Non-Competition Agreement -- -- -- 14,989
Litigation Settlement -- (63,767) -- (63,767)
Sale of property, plant,
and equipment -- 50 -- (147)
------------ ------------ ------------ ------------
(66,530) (59,727) (225,118) (44,025)
Income before income taxes 371,526 437,712 732,179 813,568
Provision for income taxes -- -- -- --
------------ ------------ ------------ ------------
Net Income $ 371,526 $ 437,712 $ 732,179 $ 813,568
============ ============ ============ ============
Net Income per share:
(Note 4)
Primary $ 0.17 $ 0.09 $ 0.33 $ 0.16
============ ============ ============ ============
</TABLE>
<PAGE>
Page 8 of 11
PRAB, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
July 31,
1997 1996
------------------------
<S> <C> <C>
Net cash provided by (used in)
operating activities $ 1,582,321 $ 391,670
----------- -----------
Cash flows from investing activities:
Acquisition of property,
plant and equipment (220,776) (109,525)
Proceeds from sale of equipment 0 96
----------- -----------
Net cash provided by (used in)
investing activities: (220,776) (109,429)
----------- -----------
Cash flows from financing activities:
Payment on long-term debt and
current maturities (570,000) 0
Net Increase (Decrease) in short-term
borrowings (904,000) 0
Dividend payments (12,375) (72,000)
----------- -----------
Net cash provided by (used in)
financing activities (1,486,375) (72,000)
Net increase (Decrease) in cash $ (124,830) $ 210,241
=========== ===========
</TABLE>
<PAGE>
Page 9 of 11
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The condensed consolidated balance sheet at July 31, 1997, the
consolidated statement of earnings and the condensed consolidated statement
of cash flows for the three-month and nine month periods ended July 31, 1997
and 1996, 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, 1997, 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, 1996, annual report to stockholders. The results of operations for the
period ended July 31, 1997, is not necessarily indicative of the operating
results for the full year.
2. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
July October
31, 1997 31, 1996
---------- ----------
<S> <C> <C>
Raw materials $ 887,375 $ 798,026
Work in process 390,338 171,355
Finished goods and display
units 205,017 174,075
---------- ----------
Total inventories $1,482,730 $1,143,456
========== ==========
</TABLE>
3. UNUSED LINE OF CREDIT:
The current agreement allows maximum financing of $1,670,000. All of the
Company's assets provide security for the borrowings. As of July 31, 1997
there were no borrowings on the line of credit.
<PAGE>
Page 10 of 11
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. 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 convertible and
non-convertible preferred stock.
Fully diluted net income per share amounts are not presented for 1997
and 1996 because of being identical with 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.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
1997 1996 1997 1996
-------------------- ----------------------
<S> <C> <C> <C> <C>
Primary:
Weighted average number of
shares actually outstanding 1,757,339 2,647,860 1,757,339 2,647,860
Convertible preferred stock 366,667 2,000,000 366,667 2,000,000
Stock options 62,551 75,635 69,909 62,821
--------- --------- --------- ---------
2,186,557 4,723,495 2,193,915 4,710,681
========= ========= ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> JUL-31-1997
<CASH> 366,537
<SECURITIES> 0
<RECEIVABLES> 2,031,798
<ALLOWANCES> 0
<INVENTORY> 1,482,730
<CURRENT-ASSETS> 4,309,064
<PP&E> 4,334,476
<DEPRECIATION> 3,308,214
<TOTAL-ASSETS> 5,700,459
<CURRENT-LIABILITIES> 3,060,998
<BONDS> 0
<COMMON> 175,734
0
275,000
<OTHER-SE> 746,816
<TOTAL-LIABILITY-AND-EQUITY> 5,700,459
<SALES> 11,737,246
<TOTAL-REVENUES> 11,737,246
<CGS> 7,068,799
<TOTAL-COSTS> 10,779,949
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 225,118
<INCOME-PRETAX> 732,179
<INCOME-TAX> 0
<INCOME-CONTINUING> 732,179
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 732,179
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
</TABLE>
