UNITED STATES
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 August 31, 1996
or
[ ] Transition report under Section 13 or 15(d) of the
Exchange Act.
For the transition period from __________ to __________
Commission File Number: 0-10571
TOP AIR MANUFACTURING, INC.
(Exact name of small business issuer as specified in its charter)
Iowa 42-1155462
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
317 Savannah Park Road, Cedar Falls, Iowa 50613
(Address of principal executive offices) (Zip Code)
(319) 268-0473
(Issuer's telephone number, including area code)
406 Highway 20
Parkersburg, Iowa 50665
(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
4,013,765 Common Shares were outstanding as of September 30, 1996.
TOP AIR MANUFACTURING, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed balance sheets, August 31, 1996
(unaudited) and May 31, 1996 1
Unaudited condensed statements of operations
three months ended August 31, 1996 and 1995 2
Unaudited condensed statements of cash flows,
three months ended August 31, 1996 and 1995 3
Notes to condensed financial statements (unaudited) 4
Item 2. Management's Discussion and Analysis or
Plan of Operation 5 & 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports of Form 8-K 7 & 8
TOP AIR MANUFACTURING, INC.
CONDENSED BALANCE SHEETS
ASSETS
AUGUST 31, MAY 31,
1996 1996*
CURRENT ASSETS
Cash and cash equivalents $ 3,169 $ 517
Trade receivables, net of
allowance for doubtful accounts
August 31, 1996 $172,500;
May 31, 1996 $167,000 1,404,678 1,564,968
Inventories (Note 2) 2,694,926 2,635,802
Income tax benefits 13,006 --
Equipment held for sale 727,978 755,546
Other current assets 295,973 309,110
---------- ---------
Total Current Assets 5,139,730 5,265,943
---------- ---------
LONG TERM RECEIVABLES AND OTHER
ASSETS
Notes receivable, net of current
portion 157,077 160,216
Other assets 65,892 65,920
---------- ---------
222,969 226,136
---------- ---------
PROPERTY AND EQUIPMENT, at cost,
less accumulated depreciation
August 31, 1996 $1,006,473;
May 31, 1996 $967,939 1,120,148 1,007,653
---------- ----------
6,482,847 6,499,732
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt 79,333 81,497
Other Liabilities and accrued
items 1,060,460 1,455,656
---------- ----------
Total Current Liabilities 1,139,793 1,537,153
---------- ----------
LONG-TERM DEBT 1,248,665 830,111
---------- ----------
STOCKHOLDERS' EQUITY
Common stock 250,860 250,860
Additional paid-in capital 1,388,730 1,388,730
Retained earnings 2,474,490 2,512,569
---------- ----------
4,114,080 4,152,159
Less cost of treasury stock 19,691 19,691
---------- ----------
4,094,389 4,132,468
---------- ----------
$6,482,847 $6,499,732
========== ==========
*Condensed from Audited Financial Statements.
See notes to Condensed Financial Statements.
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
Three Months ended August 31, 1996 and 1995
1996 1995
Net Sales $1,890,119 $1,445,179
---------- ----------
Cost and Expenses
Cost of goods sold 1,319,725 1,083,884
Selling and administrative expenses 546,610 455,731
Research and development expenses 97,005 81,265
Interest expense 23,585 32,407
---------- ----------
1,986,925 1,653,287
---------- ----------
(96,806) (208,108)
Other Income 39,627 23,229
---------- ----------
Income (loss) before Income Taxes (57,179) (184,879)
Income Taxes (credits) (19,100) (72,000)
---------- ----------
Net income (loss) $ (38,079) $ (112,879)
========== ==========
Earnings (loss) per Common Share (.01) (.03)
========== ==========
Weighted Average Number of Shares 4,013,765 3,784,472
========== ==========
See Notes to Condensed Financial Statements.
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Three months Ended August 31, 1996 and 1995.
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash (used in) operating
activities $ (267,549) $ (343,847)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of equipment 46,413 19,000
Purchase of property and equipment (195,577) (99,221)
Payments received on long-term
notes receivable 2,975 5,125
---------- -----------
Net cash (used in) investing
activites (146,189) (75,096)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings -- 882,100
Proceeds from long-term borrowings 1,337,000 1,900,000
Principal payments on short term
borrowings -- (389,100)
Principal payments on long-term
borrowings (920,610) (2,304,612)
Purchase of common stock for the
treasury -- (19,691)
--------- ----------
Net cash provided by
financing activites 416,390 68,697
---------- ---------
Increase (decrease) in Cash and
Cash Equivalents 2,652 (350,246)
CASH AND CASH EQUIVALENTS
Beginning 517 414,748
---------- -----------
Ending $ 3,169 $ 64,502
========== ===========
See notes to Condensed Financial Statements.
TOP AIR MANUFACTURING, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Condensed Financial Statements
The condensed balance sheet as of August 31, 1996 and the
statements of operations and cash flows for the three
months ended August 31, 1996 and 1995, have been prepared
by the Company without audit. In the opinion of
management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows
at August 31, 1996 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 principals have been
condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the
Company's May 31, 1996 Annual Report to Shareholders. The
results of operations for the periods ended August 31,
1996 and 1995 are not necessarily indicative of the
operating results for the full year.
Note 2. Inventories
Inventories consist of the following:
August 31, May 31,
1996 1996
Finished Goods $ 2,447,821 $ 2,453,691
Work in Process 28,703 38,303
Raw Materials and Supplies 218,402 143,808
------------ -----------
$ 2,694,926 $ 2,635,802
============ ===========
TOP AIR MANUFACTURING, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Net Sales:
Net sales for the first quarter of fiscal 1996 increased 31% to
$1,890,119 compared to $1,445,179 for the same period last year.
The increase was primarily a result of the incremental sales
picked up in the acquisition of Clay Equipment of $421,638. The
prior years first quarter only included two months for Clay
Equipment sales because the acquisition occurred on June 26,
1995. Also, a sales increase of approximately $200,000 of Top
Air products was offset by a similar sales decrease of Clay
products.
Operating Costs & Expenses:
The Company's cost of goods sold for the quarter ended August 31, 1996
decreased to 70% of net sales compared to 75% for the first
quarter of the previous year. The decrease, as a percentage of
sales, was a result of overhead being spread over a higher volume
of sales, with a majority of the sales increase consisting of
wholegoods which have higher profit margins than parts sales.
Operating expenses increased 20% to $643,615 for the first
quarter of fiscal 1996 compared to $536,996 for the previous
year. The increase was primarily a result of the incremental
expenses incurred from the Clay Equipment acquisition because
as mentioned above the prior years first quarter only included
two months of Clay activity.
Interest Expense:
Interest expense decreased 27% to $23,585 compared to $32,407 for
the first quarter of last year. The decrease was due to lower
levels of short-term and long-term debt outstanding during the
period.
Income Taxes:
The income tax credits of $19,100 and $72,000 for the quarters
ended August 31, 1996 and 1995, represent the benefit that would
be received if the loss of the quarter was carried back to
reclaim income tax paid in prior years.
TOP AIR MANUFACTURING, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Material Changes in Financial Position:
The Company's loss from operations of $38,079 combined with net
purchaes of fixed assets of approximately $100,000, net of
depreciation, offset by an increase in a long-term line of credit
of approximately $420,000 used to pay current liabilities,
resulted in an increase in working capital of approximately
$270,000.
Liquidity and Capital Resources:
At August 31, 1996 the Company had working capital of $3,999,937
an increase of $932,191 over a year ago and an increase of
$271,147 since May 31, 1996. The increase from a year ago was
a result of reclassifying approximately $728,000 of equipment to
current assets held for sale related to relocation of the old
Clay facility to the newly constructed plant and approximately a
$300,000 reduction in short term debt without a related increase
in receivables or inventory. The increase since May 31, 1996 is
described above. The current ratio increased to 4.51 from 3.43
at May 31, 1996. The Company anticipates no significant out lays
for property and equipment in the forseeable future. The company
believes it has access to sufficient working capital for its
present and forseeable future.
TOP AIR MANUFACTURING, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Index to Exhibits of this Report
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter
ended August 31, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
TOP AIR MANUFACTURING, INC.
(Registrant)
Date October 15, 1996 /s/ Steven R. Lind
-----------------------------
Steven R. Lind
Principal Executive Officer
Date October 15, 1996 /s/ Steven F. Bahlmann
------------------------------
Steven F. Bahlmann
Principal Financial Officer
Index to Exhibits
Exhibit
Number Description
*3(a) Amended and restated Articles of Incorportion of the
Registrant, filed as Exhibit 3(c) to the Company's
Annual Report on Form 10-K for fiscal year 1991
(the "1991 Form 10-K")
*3(b) Amended and Restated By-laws of the Registrant, filed
as Exhibit 3(d) to the 1991 Form 10-K
*3(c) Amendments to the Amended and Restated By-laws,
effective October 21, 1992, filed as Exhibit 3(c) to
the Company's Annual Report on Form 10-KSB for fiscal
year 1993 (the "1993 Form 10-KSB)
*9 Amended and Restated Voting Trust Agreement by and
among Robert J. Freeman and Dennis W. Dudley and
their successors, dated September 15, 1992, filed as
Exhibit 9 to the 1993 Form 10-KSB
*10(a) Promissory note dated January 1, 1991, between the
Company and Wayne C. Dudley (the "Dudley Note"),
filed as Exhibit 10(b) to the 1991 Form 10-K
*10(b) Letter amendment, dated August 5, 1994, to the Dudley
Note, filed as Exhibit 10(c) to the Company's Annual
Report on Form 10-K for fiscal year 1994 (the "1994
Form 10-KSB")
*10(c) 1993 Stock Option Plan adopted by the Board of
Directors November 6, 1992, filed as Exhibit 10(c) to
the 1993 Form 10-KSB
*10(d) Summary Plan description for 401(k) plan adopted by
the Board of directors on October 22, 1991, filed as
Exhibit 28(b) to the Company's Annual Report on Form
10-K for fiscal year 1992 (the "1992 Form 10-K")
*10(e) Promissory note dated May 16, 1996 between the
Company and Norwest Bank Iowa, N.A.
*10(f) Variable balance promissory note dated November 1,
1995, between the Company and Norwest Bank Iowa, N.A.
*10(g) Credit and Security Agreement originally dated October
3, 1994, between the Company and Norwest Bank Iowa, N.A.
**11 Statement re computation of loss per share
**27 Financial Data Schedule
(Filed in EDGAR version only)
- - ------------------------
* Incorporated by reference to the indicated documents or parts
thereof, previously filed with the Commission.
** Filed herewith.
TOP AIR MANUFACTURING, INC.
EXHIBIT 11 - COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
Column A Column B Column C
Weighted Income
Average (Loss) Per
Number of Net Common
Shares Income Share
Outstanding* (Loss) (B divided by A)
Three months ended:
August 31, 1996 4,013,765 (38,079) (.01)
August 31, 1995 3,784,472 (112,879) (.03)
Three Months Ended
August 31,
1996 1995
*Computation of weighted average number
of common shares outstanding and common
equivalent shares:
Common shares outstanding at the
beginning of the period 4,013,765 3,174,433
Weighted average of common shares
issued during the period -- 610,039
Weighted average of the common
equivalent shares attributable to
stock options granted, computed under
the treasury stock method# -- --
--------- ---------
Weighted average number of common and
common equivalent shares 4,013,765 3,784,472
========= =========
#The stock options have not been included because they are anti-
dilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> AUG-31-1996
<CASH> 3,169
<SECURITIES> 0
<RECEIVABLES> 1,404,678
<ALLOWANCES> 172,500
<INVENTORY> 2,694,926
<CURRENT-ASSETS> 5,139,730
<PP&E> 2,126,621
<DEPRECIATION> 1,006,473
<TOTAL-ASSETS> 6,482,847
<CURRENT-LIABILITIES> 1,139,793
<BONDS> 0
0
0
<COMMON> 250,860
<OTHER-SE> 3,843,529
<TOTAL-LIABILITY-AND-EQUITY> 6,482,847
<SALES> 1,890,119
<TOTAL-REVENUES> 1,929,746
<CGS> 1,319,725
<TOTAL-COSTS> 1,963,340
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,585
<INCOME-PRETAX> (57,179)
<INCOME-TAX> (19,100)
<INCOME-CONTINUING> (38,079)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (38,079)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
