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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, 1998
-------------
[ ] 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, 1998.
Transitional Small Business Disclosure Format
(Check One): Yes___ No__X__
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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
July 31, 1998 (Unaudited)
October 31, 1997
Consolidated Statement of Earnings
Three months ended July 31, 1998
and 1997 (Unaudited)
Nine months ended July 31, 1998
and 1997 (Unaudited)
Condensed Consolidated Statement
of Cash Flows
Nine months ended July 31, 1998
and 1997 (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 lower sales in the third quarter of 1998 versus the
fourth quarter of 1997. Inventory increased principally in work in process
due to high shipments forecast for August.
Accounts and note payable decrease resulted from lower accounts
payables. Other current liabilities decreased mainly from lower customer
deposits.
Long term debt decreased due to the Company paying in full the 12%
subordinated notes in November 1997 combined with quarterly payments on the
term debt.
Additional paid-in capital increased from recording income tax
recoveries directly to additional paid-in capital.
Material Changes in Results of Operations. Sales in the first nine
months of 1998 were 15% higher than the first nine months of 1997. Higher
sales resulted from a high back log going into the first quarter. New
business booking levels for 1998 have basically been level with 1997
bookings.
Costs of products sold were 61% in the first nine months of 1998
compared to 60% a year ago. Selling, general, and administrative expenses
were 30% in the first nine months of 1998
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compared to 32% a year ago.
Lower interest expense resulted from lower debt combined with lower
interest rates on term debt and the line of credit due the bank.
The order backlog of $4,674,000 at the end of the third quarter ended
July 31, 1998 compares with $4,732,000 at the end of the previous quarter
ended April 30, 1998 and $5,032,000 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.
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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 4, 1998 By: /S/ Gary A. Herder
----------------------
Gary A. Herder
Its: President and Chief
Executive Officer
Date: September 4, 1998 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, 1998
--------------------
Financial Statements
--------------------
PRAB, INC.
(A Michigan Corporation)
5944 E. Kilgore Road
P.O. Box 2121
Kalamazoo, Michigan 49003
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PRAB, INC.
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEET
July 31, October 31,
1998 1997
-------- -----------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 62,853 $ 26,235
Accounts Receivable 2,891,844 3,364,163
Inventories (Note 2) 1,670,164 1,367,463
Other current assets 175,000 206,068
Deferred income taxes 290,000 290,000
---------- ----------
Total current assets 5,089,861 5,253,929
---------- ----------
Property, plant and equipment
(net of accumulated depreciation
of $3,454,461 and $3,353,310
respectively) 1,084,743 1,041,231
---------- ----------
Other assets
Deferred charges and other assets 99,003 123,570
Deferred income taxes 536,678 523,000
---------- ----------
Total other assets 635,681 646,570
---------- ----------
Total assets $6,810,285 $6,941,730
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts and note payable $1,434,592 $1,563,251
Other current liabilities 1,773,184 1,952,383
---------- ----------
Total current liabilities 3,207,776 3,515,634
---------- ----------
Long term debt 510,000 1,340,817
---------- ----------
Other non-current liabilities 16,897 16,039
---------- ----------
Stockholder's equity:
Convertible preferred stock 275,000 275,000
Common stock 175,734 175,734
Additional paid in capital 1,056,542 709,467
Retained Earnings 1,568,336 909,039
---------- ----------
Total stockholders' equity 3,075,612 2,069,240
---------- ----------
Total liabilities and stock-
holders' equity $6,810,285 $6,941,730
========== ==========
Note: The balance sheet at October 31, 1997, has been taken from the
- ----- audited financial statements at that date and condensed.
</TABLE>
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PRAB, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Three months ended Nine months ended
July 31, July 31,
------------------------ --------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $4,795,518 $4,185,738 $13,471,304 $11,737,246
---------- ---------- ----------- -----------
Cost and expenses:
Cost of products sold 2,848,939 2,396,540 8,178,648 7,068,799
Selling, general and
administrative expenses 1,437,399 1,351,142 4,059,097 3,711,150
---------- ---------- ----------- -----------
4,286,338 3,747,682 12,237,745 10,779,949
---------- ---------- ----------- -----------
Operating Income 509,180 438,056 1,233,559 957,297
---------- ---------- ----------- -----------
Other income (deductions):
Interest expense (26,666) (66,530) (92,820) (225,118)
Gain on sale of property,
plant and equipment -- -- 1,276 --
---------- ---------- ----------- -----------
Income before income taxes
and extraordinary item 482,514 371,526 1,142,015 732,179
Provision for income taxes 168,015 133,000 390,769 268,000
---------- ---------- ----------- -----------
Income before extraordinary
item 314,499 238,526 751,246 464,179
Extraordinary Item - Loss on
extinguishment of debt
(net of income taxes of
$39,931) (Note 5) -- -- 77,512 --
---------- ---------- ----------- -----------
Net Income $ 314,499 $ 238,526 $ 673,734 464,179
========== ========== =========== ===========
Earnings (Loss) Per Common
Share: (Note 4)
Basic:
Earnings before
extraordinary item $ .18 $ .13 $ .42 $ .26
Extraordinary item -- -- (.04) --
---------- ---------- ----------- -----------
Net Earnings $ .18 $ .13 $ .38 $ .26
========== ========== =========== ===========
Diluted:
Earnings before
extraordinary item $ .14 $ .11 $ .33 $ .21
Extraordinary item -- -- (.03) --
---------- ---------- ----------- -----------
Net Earnings $ .14 $ .11 $ .30 $ .21
========== ========== =========== ===========
</TABLE>
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PRAB, INC.
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
July 31,
------------------------
1998 1997
---- ----
<S> <C> <C>
Net cash provided by (used in)
operating activities $1,188,163 $ 1,582,321
---------- -----------
Cash flows from investing activities:
Acquisition of property,
plant and equipment (185,807) (220,776)
Proceeds from sale of equipment 1,700 0
---------- -----------
Net cash provided by (used in)
investing activities: (184,107) (220,776)
---------- -----------
Cash flows from financing activities:
Payment on long-term debt and
current maturities (950,000) (570,000)
Net Increase (Decrease) in short-term
borrowings (3,000) (904,000)
Dividend payments (14,438) (12,375)
---------- -----------
Net cash provided by (used in)
financing activities (967,438) (1,486,375)
---------- -----------
Net increase (Decrease) in cash $ 36,618 $ (124,830)
========== ===========
</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, 1998, the
consolidated statement of earnings and the condensed consolidated statement
of cash flows for the three month and nine month periods ended July 31, 1998
and 1997, 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, 1998, 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, 1997, annual report to stockholders. The results of operations for the
period ended July 31, 1998, is not necessarily indicative of the operating
results for the full year.
Net Income and Earnings Per Common Share for the three months and
nine months ended July 31, 1997 have been previously restated as described in
Note 5 of Notes to Condensed Consolidated Financial Statements contained in
the Company's Form 10-QSB/A (Amendment No.1) for the quarterly period ended
July 31, 1997.
2. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
July 31, October 31,
1998 1997
-------- -----------
<S> <C> <C>
Raw materials $ 946,719 $ 938,863
Work in process 606,515 348,597
Finished goods and display
units 116,930 80,003
---------- -----------
Total inventories $1,670,164 $ 1,367,463
========== ===========
</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, 1998 the
amount borrowed on the line of credit was $447,000. The line of credit also
supported a $6,749 letter of credit which left a balance of $1,216,251
available to the Company.
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PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. RECONCILIATION OF EARNINGS PER SHARE:
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED JULY 31, 1998
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Income before
extraordinary item $314,499
Less: Preferred stock
dividends 4,813
Basic EPS
Income available
to common
stockholders 309,686 1,757,339 $.18
Effect of dilutive
securities
Stock options 131,984
Convertible
preferred stock 4,813 366,667
Diluted EPS
Income available to Common
stockholders & assumed
conversions $ 314,499 2,255,990 $.14
<CAPTION>
FOR THE QUARTER ENDED JULY 31, 1997
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Income before
extraordinary item $ 238,526
Less: Preferred stock
dividends 4,125
Basic ESP
Income available
to common
stockholders 234,401 1,757,339 $.13
Effect of dilutive
securities
Stock options 62,551
Convertible
preferred stock 4,125 366,667
Diluted EPS
Income available to Common
stockholders & assumed
conversions $ 238,526 2,186,557 $.11
</TABLE>
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PRAB, INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. RECONCILIATION OF EARNINGS PER SHARE (CONTINUED):
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED JULY 31, 1998
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Income before
extraordinary item $751,246
Less: Preferred stock
dividends 14,438
Basic EPS
Income available
to common
stockholders 736,808 1,757,339 $.42
Effect of dilutive
securities
Stock options 128,732
Convertible
preferred stock 14,438 366,667
Diluted EPS
Income available to Common
stockholders & assumed
conversions $751,246 2,252,738 $.33
<CAPTION>
FOR THE NINE MONTHS ENDED JULY 31, 1997
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Income before
extraordinary item $464,179
Less: Preferred stock
dividends 12,375
Basic EPS
Income available
to common
stockholders 451,804 1,757,339 $.26
Effect of dilutive securities
Stock option 69,909
Convertible
preferred stock 12,375 366,667
Diluted EPS
Income available to Common
stockholders & assumed
conversions $464,179 2,193,915 $.21
</TABLE>
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PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. LONG-TERM DEBT:
The company's 12% subordinated notes were repaid in November 1997.
Since the payoff amount of this debt exceeded its carrying amount, the
transaction decreased income by $77,512 net of income taxes of $39,931.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JUL-31-1998
<CASH> 62,853
<SECURITIES> 0
<RECEIVABLES> 2,891,844
<ALLOWANCES> 0
<INVENTORY> 1,670,164
<CURRENT-ASSETS> 5,089,861
<PP&E> 4,539,204
<DEPRECIATION> 3,454,461
<TOTAL-ASSETS> 6,810,285
<CURRENT-LIABILITIES> 3,207,776
<BONDS> 0
<COMMON> 175,734
0
275,000
<OTHER-SE> 2,624,878
<TOTAL-LIABILITY-AND-EQUITY> 6,810,285
<SALES> 13,471,304
<TOTAL-REVENUES> 13,471,304
<CGS> 8,178,648
<TOTAL-COSTS> 12,237,745
<OTHER-EXPENSES> (1,276)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 92,820
<INCOME-PRETAX> 1,142,015
<INCOME-TAX> 390,769
<INCOME-CONTINUING> 751,246
<DISCONTINUED> 0
<EXTRAORDINARY> 77,512
<CHANGES> 0
<NET-INCOME> 673,734
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.30
</TABLE>
