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: January 31, 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.
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(Exact name of small business issuer as
specified in its charter)
Michigan 38-1654849
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(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
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(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
February 28, 1998.
Transitional Small Business Disclosure Format
(Check One): Yes No X
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<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
January 31, 1998 (Unaudited)
and October 31, 1997
Consolidated Statement of Earnings
Three months ended January 31, 1998
and 1997 (Unaudited)
Condensed Consolidated Statement of Cash Flows
Three months ended January 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 from lower sales in the first quarter of 1998 versus the
fourth quarter of 1997. Inventory increased to meet higher sales scheduled to
ship in February and March.
The majority of the decrease in other current liabilities resulted
primarily from paying the fiscal year 1997 accrued bonus combined with lower
accrued commissions.
Long term debt decreased due to the Company paying in full the 12%
subordinated notes in November 1997 combined with the quarterly payment on
the term debt.
Material Changes in Results of Operation. Sales in the first quarter
of 1998 were 22% higher than the first quarter of 1997. Higher sales are a
result of a higher backlog going into the first quarter.
Costs of products sold were 64% in the first quarter 1998 compared
to 62% a year ago resulting primarily from increased material costs. Selling,
general and administrative expenses were 30% in the first quarter of 1998
compared to 34% in the same period a year ago. The decrease primarily results
from increasing sales without having a significant increase in overhead.
Lower interest expense resulted from lower debt combined with lower
interest rates on term debt and the line of credit due the bank.
<PAGE>
Page 3 of 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K:
During the quarter for which this report is filed, the Company
filed a report on Form 8-K dated January 9, 1998 reporting "Other
Events" under Item 5.
<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: March 5, 1998 By: /S/ Gary A. Herder
--------------------
Gary A. Herder
Its: President and Chief
Executive Officer
Date: March 5, 1998 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 January 31, 1998
--------------------
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>
January 31, October 31,
1998 1997
----------- -----------
Unaudited (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash .................................. $ 83,158 $ 26,235
Accounts Receivable ................... 2,521,036 3,364,163
Inventories (Note 2) .................. 1,583,257 1,367,463
Other current assets .................. 251,626 206,068
Deferred income taxes ................. 290,000 290,000
---------- ----------
Total current assets ................ 4,729,077 5,253,929
---------- ----------
Property, plant and equipment
(net of accumulated depreciation
of $3,361,905 and $3,353,310
respectively) ......................... 1,061,298 1,041,231
---------- ----------
Other assets
Deferred charges and other assets ..... 117,640 123,570
Deferred income taxes ................. 529,939 523,000
---------- ----------
Total other assets .................. 647,579 646,570
---------- ----------
Total assets ........................ $6,437,954 $6,941,730
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts and note payable ............. $1,734,566 $1,563,251
Other current liabilities ............. 1,868,109 1,952,383
---------- ----------
Total current liabilities ........... 3,602,675 3,515,634
---------- ----------
Long term debt .......................... 690,000 1,340,817
---------- ----------
Other non-current liabilities ........... 16,325 16,039
---------- ----------
Stockholder's equity:
Convertible preferred stock ........... 275,000 275,000
Common stock .......................... 175,734 175,734
Additional paid-in capital ............ 731,406 709,467
Retained Earnings ..................... 946,814 909,039
---------- ----------
Total stockholders' equity .......... 2,128,954 2,069,240
---------- ----------
Total liabilities and stock-
holders' equity ............... $6,437,954 $6,941,730
========== ==========
<FN>
Note: The balance sheet at October 31, 1997, 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
January 31
-------------------------
1998 1997
---- ----
<S> <C> <C>
Net Sales ................................. $ 4,232,763 $3,474,191
----------- ----------
Costs and expenses:
Cost of products sold ................... 2,725,385 2,165,721
Selling, general and
administrative expenses ............... 1,280,322 1,181,408
----------- ----------
4,005,707 3,347,129
----------- ----------
Operating income ...................... 227,056 127,062
----------- ----------
Interest expense ........................ 38,707 83,497
----------- ----------
Income before income taxes
and extraordinary item .................. 188,349 43,565
Provision for income taxes ................ 68,250 21,000
----------- ----------
Income - before extraordinary item ........ 120,099 22,565
Extraordinary Item - Loss on
extinguishment of debt (net of
income taxes of $39,931)
(Note 4) ................................ 77,512 --
----------- ----------
Net income ................................ $ 42,587 $ 22,565
=========== ==========
Earnings (Loss) Per Common Share:
(Note 5)
Basic:
Earnings before extraordinary item ..... $ .07 $ .01
Extraordinary item ..................... (.05) --
----------- ----------
Net Earnings ......................... $ .02 $ .01
=========== ==========
Diluted:
Earnings before extraordinary item .... $ .05 $ .01
Extraordinary item .................... (.03) --
----------- ----------
Net Earnings ........................ $ .02 $ .01
=========== ==========
</TABLE>
<PAGE>
Page 8 of 11
PRAB, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
January 31
----------------------
1998 1997
---- ----
<S> <C> <C>
Net cash provided by (used in)
operating activities .................... $ 793,548 $(300,988)
--------- ---------
Cash flows from investing activities:
Acquisition of property,
plant and equipment ................... (61,812) (30,554)
--------- ---------
Net cash provided by (used in)
investing activities: ................. (61,812) (30,554)
--------- ---------
Cash flows from financing activities:
(Payment)/Proceeds on long-term debt
and current maturities ................ (770,000) (90,000)
Net Increase (Decrease) in short
term borrowings ....................... 100,000 (45,000)
Dividend payments ....................... (4,813) (4,125)
--------- ---------
Net cash provided by (used in)
financing activities .................... (674,813) (139,125)
--------- ---------
Net increase (decrease) in cash ........... $ 56,923 $(470,667)
========= =========
</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 January 31, 1998, the
consolidated statement of earnings and the condensed consolidated statement
of cash flows for the three-month periods ended January 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 January 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 January 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 ended
January 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 January 31, 1997.
2. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
January 31, October 31,
1998 1997
----------- -----------
<S> <C> <C>
Raw materials $ 957,719 $ 938,863
Work in process 523,146 348,597
Finished goods and display units 102,392 80,003
--------- ---------
Total inventories $1,583,257 $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 January 31, 1998
the amount borrowed on the line of credit was $550,000. The line of credit
also supported a $6,749 letter of credit which left a balance of $1,113,251
available to the Company.
<PAGE>
Page 10 of 11
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
4. 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.
5. RECONCILIATION OF EARNINGS PER SHARE:
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED JANUARY 31, 1998
-------------------------------------------
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Income before extraordinary item ............ $120,099
Less: Preferred stock dividends ............. 4,813
Basic EPS
Income Available
to common stockholders ................. 115,286 1,757,339 $.07
Effect of dilutive securities
Stock options .......................... 119,107
Convertible preferred stock ................. 4,813 366,667
Diluted EPS
Income available to Common stockholders
+ assumed conversions .................. $120,099 2,243,113 $.05
<CAPTION>
FOR THE QUARTER ENDED JANUARY 31, 1997
-------------------------------------------
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
----------- ------------- ---------
Income before extraordinary item ............ $ 22,565
Less: Preferred stock dividends ............. 4,125
Basic EPS
Income Available
to common stockholders ................. 18,440 1,757,339 $.01
Effect of dilutive securities
Stock options ............................... 79,535
Convertible preferred stock ................. 4,125 366,667
Diluted EPS
Income available to Common stockholders
+ assumed conversions .................. $ 22,565 2,203,541 $.01
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 83,158
<SECURITIES> 0
<RECEIVABLES> 2,521,036
<ALLOWANCES> 0
<INVENTORY> 1,583,257
<CURRENT-ASSETS> 4,729,077
<PP&E> 4,423,203
<DEPRECIATION> 3,361,905
<TOTAL-ASSETS> 6,437,954
<CURRENT-LIABILITIES> 3,602,675
<BONDS> 0
<COMMON> 175,734
0
275,000
<OTHER-SE> 1,678,220
<TOTAL-LIABILITY-AND-EQUITY> 6,437,954
<SALES> 4,232,763
<TOTAL-REVENUES> 4,232,763
<CGS> 2,725,385
<TOTAL-COSTS> 4,005,707
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,707
<INCOME-PRETAX> 188,349
<INCOME-TAX> 68,250
<INCOME-CONTINUING> 120,099
<DISCONTINUED> 0
<EXTRAORDINARY> 77,512
<CHANGES> 0
<NET-INCOME> 42,587
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
