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, 1998
----------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
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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)
- -----------------------------------------------------------------------------
(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 - 1,757,339 shares outstanding at May 31, 1998.
Transitional Small Business Disclosure Format
(Check One): Yes ____ No__ X___
1/13
<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, 1998 (Unaudited)
October 31, 1997
Consolidated Statement of Earnings
Three months ended April 30, 1998
and 1997 (Unaudited)
Six months ended April 30, 1998
and 1997 (Unaudited)
Condensed Consolidated Statement
of Cash Flows (Unaudited)
Six months ended April 30, 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 from lower sales in the second quarter of 1998 versus the fourth
quarter of 1997. Inventory increased as a result of purchasing raw materials
and components for stock. Other current assets increased primarily from
prepaid trade shows and employee benefits.
Accounts and note payable decrease resulted primarily from paying down
the line of credit by $400,000 which was partially offset by increased
accounts payables. Other current liabilities decreased from paying the fiscal
year 1997 accrued bonus and profit sharing, combined with lower accruals for
warranty and commissions.
Long term debt decreased due to the Company paying in full the 12%
subordinated notes in November 1997 combined with the first and second
quarter payments on the term debt.
Additional paid-in capital increased from recording income tax
recoveries directly to paid-in capital.
2/13
<PAGE>
Material Changes in Results of Operations. Sales in the first six
months of 1998 were 15% higher than the first six months of 1997. Higher
sales resulted from a high back log going into the first quarter combined
with adequate new business bookings in the first six months to maintain a
fairly good level of business in the second quarter.
Costs of products sold were 61% in the first six months of 1998
compared to 62% a year ago. Selling, general and administrative expenses were
30% in the first six months of 1998 compared to 31% in the same period 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 $4,732,000 at the end of the second quarter
ended April 30, 1998 compares with $3,232,000 at the end of the previous
quarter ended January 31, 1998 and $3,280,000 at the end of the second
quarter a year ago.
PART II - OTHER INFORMATION
---------------------------
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.
3/13
<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 5, 1998 By: /S/ Gary A. Herder
-------------------
Gary A. Herder
Its: President and Chief
Executive Officer
Date: June 5, 1998 By: /S/ Robert W. Klinge
-----------------
Robert W. Klinge
Its: Controller
4/13
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report on Form 10-QSB
For the Quarter Ended April 30, 1998
--------------------
Financial Statements
--------------------
PRAB, INC.
(A Michigan Corporation)
5944 E. Kilgore Road
P.O. Box 2121
Kalamazoo, Michigan 49003
5/13
<PAGE>
<TABLE>
<CAPTION>
PRAB, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
April 30, October 31,
1998 1997
--------- -----------
Unaudited (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 88,065 $ 26,235
Accounts Receivable 2,310,605 3,364,163
Inventories (Note 2) 1,661,782 1,367,463
Other current assets 257,657 206,068
Deferred income taxes 290,000 290,000
---------- ----------
Total current assets 4,608,109 5,253,929
---------- ----------
Property, plant and equipment
(net of accumulated depreciation
of $3,407,561 and $3,353,310
respectively) 1,084,988 1,041,231
---------- ----------
Other assets
Deferred charges and other assets 109,346 123,570
Deferred income taxes 532,478 523,000
---------- ----------
Total other assets 641,824 646,570
---------- ----------
Total assets $6,334,921 $6,941,730
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts and note payable $1,335,584 $1,563,251
Other current liabilities 1,778,816 1,952,383
---------- ----------
Total current liabilities 3,114,400 3,515,634
---------- ----------
Long term debt 600,000 1,340,817
---------- ----------
Other non-current liabilities 16,611 16,039
---------- ----------
Stockholders' equity:
Convertible preferred stock 275,000 275,000
Common stock 175,734 175,734
Additional paid in capital 894,527 709,467
Retained Earnings 1,258,649 909,039
---------- ----------
Total stockholders' equity 2,603,910 2,069,240
---------- ----------
Total liabilities and stock-
holders' equity $6,334,921 $6,941,730
========== ==========
</TABLE>
Note: The balance sheet at October 31, 1997, has been taken from the
audited financial statements at that date and condensed.
6/13
<PAGE>
<TABLE>
<CAPTION>
PRAB, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Three months ended Six months ended
April 30, April 30,
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 4,443,023 $ 4,077,317 $ 8,675,786 $ 7,551,508
----------- ----------- ----------- -----------
Costs and expenses:
Cost of products sold 2,604,324 2,506,538 5,329,709 4,672,259
Selling, general and
administrative expenses 1,340,100 1,178,601 2,620,422 2,360,009
----------- ----------- ----------- -----------
3,944,424 3,685,139 7,950,131 7,032,268
----------- ----------- ----------- -----------
Operating Income 498,599 392,178 725,655 519,240
----------- ----------- ----------- -----------
Interest expense 27,447 75,090 66,154 158,587
----------- ----------- ----------- -----------
Income before income taxes
and extraordinary item 471,152 317,088 659,501 360,653
Provision for income taxes 154,504 114,000 222,754 135,000
----------- ----------- ----------- -----------
Income before extraordinary
item 316,648 203,088 436,747 225,653
Extraordinary Item - Loss on
extinguishment of debt (net of
income taxes of $39,931)
(Note 5) -- -- 77,512 --
----------- ----------- ----------- -----------
Net income $ 316,648 $ 203,088 $ 359,235 $ 225,653
=========== =========== =========== ===========
Earnings (Loss) Per Common Share:
(Note 4)
Basic:
Earnings before
extraordinary item $ .18 $ .11 $ .24 $ .12
Extraordinary item -- -- (.04) --
----------- ----------- ----------- -----------
Net Earnings $ .18 $ .11 $ .20 $ .12
=========== =========== =========== ===========
Diluted:
Earnings before
extraordinary item $ .14 $ .09 $ .19 $ .10
Extraordinary item -- -- (.03) --
----------- ----------- ----------- -----------
Net Earnings $ .14 $ .09 $ .16 $ .10
=========== =========== =========== ===========
</TABLE>
7/13
<PAGE>
<TABLE>
<CAPTION>
PRAB, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six months ended
April 30
--------------------------
1998 1997
------ ----
<S> <C> <C>
Net cash provided by (used in)
operating activities $ 1,465,913 $ 232,800
----------- -----------
Cash flows from investing activities:
Acquisition of property,
plant and equipment (136,158) (90,236)
Proceeds from sale of equipment 1,700 0
----------- -----------
Net cash provided by (used in)
investing activities: (134,458) (90,236)
----------- -----------
Cash flows from financing activities:
(Payment)/Proceeds on long-term
debt and current maturities (860,000) (180,000)
Net increase (decrease) in Short
term borrowings (400,000) (379,000)
Dividend Payments (9,625) (8,250)
----------- -----------
Net cash provided by (used in)
financing activities (1,269,625) (567,250)
----------- -----------
Net increase (decrease) in cash $ 61,830 $ (424,686)
=========== ===========
</TABLE>
8/13
<PAGE>
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The condensed consolidated balance sheet at April 30, 1998, the
consolidated statement of earnings and the condensed consolidated statement
of cash flows for the three-month and six month periods ended April 30, 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 April 30, 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 April 30, 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 six
months ended April 30, 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
April 30, 1997.
2. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
April October
30, 1998 31, 1997
----------- ---------
<S> <C> <C>
Raw materials $ 1,074,243 $ 938,863
Work in process 476,850 348,597
Finished goods and display
units 110,689 80,003
----------- ----------
Total inventories $ 1,661,782 $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 April 30, 1998
the amount borrowed on the line of credit was $50,000. The line of credit
also supported a $6,749 letter of credit which left a balance of $1,613,251
available to the Company.
9/13
<PAGE>
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
4. RECONCILIATION OF EARNINGS PER SHARE:
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED APRIL 30, 1998
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Income before
extraordinary item $316,648
Less: Preferred stock
dividends 4,813
Basic EPS
Income available
to common
stockholders 311,835 1,757,339 $.18
Effect of dilutive
securities
Stock options 134,020
Convertible preferred stock 4,813 366,667
Diluted EPS
Income available to Common
stockholders & assumed
conversions $316,648 2,258,026 $.14
<CAPTION>
FOR THE QUARTER ENDED APRIL 30, 1997
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Income before
extraordinary item $203,088
Less: Preferred stock
dividends 4,125
Basic EPS
Income available
to common stockholders 198,963 1,757,339 $.11
Effect of dilutive securities
Stock options 66,197
Convertible preferred stock 4,125 366,667
Diluted EPS
Income available to Common
stockholders & assumed
conversions $203,088 2,190,203 $.09
</TABLE>
10/13
<PAGE>
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4. RECONCILIATION OF EARNINGS PER SHARE (CONTINUED):
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED APRIL 30, 1998
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Income before
extraordinary item $436,747
Less: Preferred stock
dividends 9,625
Basic EPS
Income available
to common stockholders 427,122 1,757,339 $.24
Effect of dilutive
securities
Stock options 126,941
Convertible preferred stock 9,625 366,667
Diluted EPS
Income available to Common
stockholders & assumed
conversions $436,747 2,250,947 $.19
<CAPTION>
FOR THE SIX MONTHS ENDED APRIL 30, 1997
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
Income before
extraordinary item $225,653
Less: Preferred stock
dividends 8,250
Basic EPS
Income available
to common stockholders 217,403 1,757,339 $.12
Effect of dilutive securities
Stock options 73,260
Convertible preferred stock 8,250 366,667
Diluted EPS
Income available to Common
stockholders & assumed
conversions $225,653 2,197,266 $.10
</TABLE>
11/13
<PAGE>
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.
12/13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> APR-30-1998
<CASH> 88,065
<SECURITIES> 0
<RECEIVABLES> 2,310,605
<ALLOWANCES> 0
<INVENTORY> 1,661,782
<CURRENT-ASSETS> 4,608,109
<PP&E> 4,492,549
<DEPRECIATION> 3,407,561
<TOTAL-ASSETS> 6,334,921
<CURRENT-LIABILITIES> 3,114,400
<BONDS> 0
<COMMON> 175,734
0
275,000
<OTHER-SE> 2,153,176
<TOTAL-LIABILITY-AND-EQUITY> 6,334,921
<SALES> 8,675,786
<TOTAL-REVENUES> 8,675,786
<CGS> 5,329,709
<TOTAL-COSTS> 7,950,131
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66,154
<INCOME-PRETAX> 659,501
<INCOME-TAX> 222,754
<INCOME-CONTINUING> 436,747
<DISCONTINUED> 0
<EXTRAORDINARY> 77,512
<CHANGES> 0
<NET-INCOME> 359,235
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.16
</TABLE>
