1/11
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, 2000
[ ]
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 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 29, 2000.
Transitional Small Business Disclosure Format
(Check One): Yes _____ No __X__
2/11
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, 2000 (Unaudited)
and October 31, 1999
Consolidated Statement of Earnings
Three months ended January 31, 2000
and 1999 (Unaudited)
Condensed Consolidated Statement of Cash Flows
Three months ended January 31, 2000
and 1999 (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 2000 versus the fourth
quarter of 1999. Inventory increase resulted from a combination of additional
work in process and stock inventory. Other current assets increased primarily
from prepaid expenses.
Accounts and note payable increase resulted primarily from an
additional $300,000 draw on the line of credit. Other current liabilities
decreased from paying the fiscal year 1999 accrued bonus and profit sharing,
combined with lower accruals for customer deposits and commissions.
The Company repurchased all of its outstanding convertible preferred
stock from the State of Michigan Retirement Systems on December 28, 1999 for
a price of $1.63 per share plus accrued dividends of $3,545. This transaction
eliminated the convertible stock and reduced additional paid in capital by
$322,667, the premium paid above book value.
Material Changes in Results of Operation. Sales in the first quarter
of 2000 were 4% higher than the first quarter of 1999. Higher sales are the
result of increased order activity in the first quarter of 2000 versus a year
ago.
Costs of products sold were 62% in the first quarter of 2000 and
1999. Selling, general and administrative expenses were 37% in the first
quarter of 2000 compared to 36% in the same period a year ago.
Lower interest expense resulted from being relatively debt free until
December 28, 1999 when $601,000 was drawn on the line of credit to repurchase
the convertible preferred stock.
3/11
The order backlog of $2,820,000 at the end of the first quarter ended
January 31, 2000 compares with $2,084,000 at the end of the previous quarter
ended October 31, 1999.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: On January 13, 2000, the Company
filed a Form 8-K reporting the repurchase of 366,667 shares of
the Company's convertible preferred shares from the State of
Michigan Retirement Systems on December 28, 1999 at the price
of $1.63 per share.
4/11
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 6, 2000 By: /S/ Gary A. Herder
----------------------
Gary A. Herder
Its: Chairman, President and
Chief Executive Officer
Date: March 6, 2000 By: /S/ Robert W. Klinge
----------------------
Robert W. Klinge
Its: Chief Financial Officer
5/11
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report on Form 10-QSB
For the Quarter Ended January 31, 2000
Financial Statements
PRAB, INC.
(A Michigan Corporation)
5944 E. Kilgore Road
P.O. Box 2121
Kalamazoo, Michigan 49003
6/11
PRAB, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
January 31, October 31,
2000 1999
----------- -----------
Unaudited (Note)
ASSETS
Current assets:
Cash $ 85,790 $ 46,637
Accounts Receivable 2,291,934 3,031,402
Inventories (Note 2) 1,751,237 1,549,939
Other current assets 271,440 189,388
Deferred income taxes 411,442 411,442
---------- ----------
Total current assets 4,811,843 5,228,808
---------- ----------
Property, plant and equipment
(net of accumulated depreciation
of $3,714,411 and $3,666,262
respectively) 1,029,180 1,027,069
---------- ----------
Other assets
Deferred charges and other assets 123,316 113,118
Deferred income taxes 348,012 350,803
---------- ----------
Total other assets 471,328 463,921
---------- ----------
Total assets $6,312,351 $6,719,798
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts and note payable $1,584,448 $1,187,267
Other current liabilities 1,126,816 1,335,960
---------- ----------
Total current liabilities 2,711,264 2,523,227
---------- ----------
Other non-current liabilities 18,681 18,372
---------- ----------
Stockholder's equity:
Convertible preferred stock (Note 4) -- 275,000
Common stock 175,734 175,734
Additional paid-in capital 1,073,077 1,395,743
Retained Earnings 2,333,595 2,331,722
---------- ----------
Total stockholders' equity 3,582,406 4,178,199
---------- ----------
Total liabilities and stock-
holders' equity $6,312,351 $6,719,798
========== ==========
Note: The balance sheet at October 31, 1999, has been taken from the
- ----- audited financial statements at that date and condensed.
7/11
PRAB, INC.
CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
Three Months Ended
January 31
--------------------------
2000 1999
---- ----
Net Sales $ 3,423,213 $ 3,298,912
----------- -----------
Costs and expenses:
Cost of products sold 2,135,384 2,040,921
Selling, general and
administrative expenses 1,273,051 1,199,446
----------- -----------
3,408,435 3,240,367
----------- -----------
Interest
Operating income 14,778 58,545
----------- -----------
Interest expense 4,440 21,259
----------- -----------
Income before income taxes 10,338 37,286
Provision for income taxes 4,920 16,637
----------- -----------
Net Income $ 5,418 $ 20,649
=========== ===========
Earnings (Loss) Per Common Share:
(Note 5)
Basic $ (0.18) $ .01
=========== ===========
Diluted $ (0.18) $ .01
=========== ===========
8/11
PRAB, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Three months ended
January 31
----------------------
2000 1999
---- ----
Net cash provided by (used in)
operating activities $ 390,623 $ 425,492
--------- ---------
Cash flows from investing activities:
Acquisition of property,
plant and equipment (50,260) (11,690)
--------- ---------
Net cash provided by (used in)
investing activities: (50,260) (11,690)
Cash flows from financing activities:
Net Increase (Decrease) in short
term borrowings 300,000 (200,000)
Dividend payments (3,544) (5,500)
Repurchase of stock (597,666) 0
--------- ---------
Net cash provided by (used in)
financing activities (301,210) (205,500)
--------- ---------
Net increase (decrease) in cash $ 39,153 $ 208,302
========= =========
9/11
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
The condensed consolidated balance sheet at January 31, 2000, the
consolidated statement of earnings and the condensed consolidated statement
of cash flows for the three-month periods ended January 31, 2000 and 1999,
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, 2000, 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, 1999, annual report to stockholders. The results of operations for
the period ended January 31, 2000, is not necessarily indicative of the
operating results for the full year.
2. INVENTORIES:
Inventories consist of the following:
January 31, October 31,
2000 1999
----------- -----------
Raw materials $ 1,096,953 $ 1,061,442
Work in process 474,588 236,471
Finished goods and display units 179,696 252,026
---------- ----------
Total inventories $ 1,751,237 $ 1,549,939
=========== ===========
3. UNUSED LINE OF CREDIT:
The Company has a $1,750,000 line of credit which is subject to a
borrowing formula based upon certain asset levels of the Company. As of
January 31, 2000, $1,671,425 was available to the Company under the line of
credit and the Company had borrowed $600,000 of such amount.
4. CONVERTIBLE PREFERRED STOCK:
On December 28, 1999 the Company redeemed 366,667 shares of convertible
preferred stock from the State of Michigan Retirement Systems(SMRS). The
redemption price of $1.63 per share plus accrued dividends of $3,545 totaled
$601,212. The purchase was financed by a draw on the Company's line of
credit.
10/11
PRAB, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
5. RECONCILIATION OF EARNINGS PER SHARE:
FOR THE QUARTER ENDED JANUARY 31, 2000
INCOME SHARES PER-SHARE
(Numerator) (Denominator) Amount
----------- ------------- --------
Net Income $ 5,418
Less: Preferred stock
dividends 3,544
Preferred stock redemption
premium 322,667
-------
Basic EPS
Income Available
to common stockholders (320,793) 1,757,339 $(.18)
=====
Effect of dilutive securities
Stock options --
Convertible preferred stock -- --
--------- ---------
Diluted EPS
Income available to Common
stockholders + assumed
conversions $(320,793) 1,757,339 $(.18)
========= ========= =====
FOR THE QUARTER ENDED JANUARY 31, 1999
Net Income $ 20,649
Less: Preferred stock
dividends 5,500
---------
Basic EPS
Income Available
to common stockholders 15,149 1,757,339 $ .01
=====
Effect of dilutive securities
Stock options 132,769
Convertible preferred stock -- --
--------- --------
Diluted EPS
Income available to Common
stockholders + assumed
conversions $ 15,149 1,890,108 $.01
========= ========= =====
Convertible preferred stock had an antidilutive effect on diluted earnings
per share for the quarters ended January 31, 2000 and 1999 and was not used
in the calculation of diluted earnings per share for these quarters. Stock
options had an antidilutive effect on diluted earnings per share for the
quarter ended January 31, 2000 and was not used in the calculation of diluted
earnings per share for that quarter.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-2000
<PERIOD-START> NOV-01-1999
<PERIOD-END> JAN-31-2000
<CASH> 85,790
<SECURITIES> 0
<RECEIVABLES> 2,291,934
<ALLOWANCES> 0
<INVENTORY> 1,751,237
<CURRENT-ASSETS> 4,811,843
<PP&E> 4,743,591
<DEPRECIATION> 3,714,411
<TOTAL-ASSETS> 6,312,351
<CURRENT-LIABILITIES> 2,711,264
<BONDS> 0
<COMMON> 175,734
0
0
<OTHER-SE> 3,406,672
<TOTAL-LIABILITY-AND-EQUITY> 6,312,351
<SALES> 3,423,213
<TOTAL-REVENUES> 3,423,213
<CGS> 2,135,384
<TOTAL-COSTS> 3,408,435
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,440
<INCOME-PRETAX> 10,338
<INCOME-TAX> 4,920
<INCOME-CONTINUING> 5,418
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,418
<EPS-BASIC> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
