<PAGE> 1
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 February 29, 1996
------------------------------------
or
/ / 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: 0-10571
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TOP AIR MANUFACTURING, INC.
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(Exact name of small business issuer as specified in its charter)
Iowa 42-1155462
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
406 Hwy 20, Parkersburg, Iowa 50665
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(Address of principal executive offices) (Zip Code)
(319) 346-1788
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(Issuer's telephone number, including area code)
Not Applicable
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(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 March 31, 1996.
<PAGE> 2
TOP AIR MANUFACTURING, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed balance sheets, February 29, 1996
(unaudited) and May 31, 1995 1
Unaudited condensed statements of operations
three months and nine months ended February 29,
1996 and February 28, 1995 2
Unaudited condensed statements of cash flows,
nine months ended February 29, 1996 and
February 28, 1995 3 & 4
Notes to condensed financial statements (unaudited) 5 & 6
Item 2. Management's Discussion and Analysis or
Plan of Operation 7 & 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9 & 10
<PAGE> 3
<TABLE>
<CAPTION>
TOP AIR MANUFACTURING, INC.
CONDENSED BALANCE SHEETS
ASSETS
FEBRUARY 29, MAY 31,
1996 1995<F*>
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 381 $ 414,748
Trade receivables, net of allowance
for doubtful accounts February 29,
1996 $91,663; May 31, 1995 $59,000 3,105,767 1,276,544
Inventories (Note 2) 2,978,183 1,553,830
Other current assets 339,535 96,649
---------- ----------
Total Current Assets 6,423,866 3,341,771
---------- ----------
LONG TERM RECEIVABLES AND OTHER ASSETS
Notes receivable, net of current
portion 299,629 54,711
Other assets 122,813 73,734
---------- ----------
422,442 128,445
---------- ----------
PROPERTY AND EQUIPMENT, at cost, less
accumulated depreciation February 29,
1996 $999,845; May 31, 1995 $831,371 1,610,259 778,706
---------- ----------
8,456,567 4,248,922
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt 1,248,936 69,385
Other Liabilities and accrued items 2,061,017 955,870
---------- ----------
Total Current Liabilities 3,309,953 1,025,255
---------- ----------
LONG-TERM DEBT 1,472,498 270,207
---------- ----------
DEFERRED INCOME TAX CREDITS 79,000 79,000
---------- ----------
STOCKHOLDERS' EQUITY
Common stock 250,860 198,402
Additional paid-in capital 1,417,960 840,877
Retained earnings 1,945,987 1,835,181
---------- ----------
3,614,807 2,874,460
Less cost of treasury stock 19,691 --
---------- ----------
3,595,116 2,874,460
---------- ----------
$8,456,567 $4,248,922
========== ==========
<FN>
<F*>Condensed from Audited Financial Statements.
See notes to Condensed Financial Statements.
</TABLE>
-1-
<PAGE> 4
<TABLE>
<CAPTION>
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
February 29 February 28 February 29 February 28,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales $3,409,863 $2,281,271 $7,376,928 $3,250,605
---------- ---------- ---------- ----------
Costs and Expenses:
Cost of goods sold 2,312,944 1,549,539 5,271,284 2,226,950
Selling and
administrative expenses 590,152 281,080 1,577,507 827,310
Research and
development expenses 97,805 35,704 269,280 117,293
Interest expense 57,641 35,888 143,878 56,901
---------- ---------- ---------- ----------
3,058,542 1,902,211 7,261,949 3,228,454
---------- ---------- ---------- ----------
351,321 379,060 114,979 22,151
Other Income 20,918 4,099 66,627 25,010
---------- ---------- ---------- ----------
Income before
Income Taxes 372,239 383,159 181,606 47,161
Income Taxes 145,100 152,100 70,800 18,700
---------- ---------- ---------- ----------
Net Income $ 227,139 $ 231,059 $ 110,806 $ 28,461
========== ========== ========== ==========
Earnings per
Common Share $ .06 $ .07 $ .03 $ .01
========== ========== ========== ==========
Weighted Average
Number of Shares 4,071,349 3,211,947 3,993,154 3,206,854
========== ========== ========== ==========
See Notes to Condensed Financial Statements.
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Nine months Ended February 29, 1996 and February 28, 1995.
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash (used in) operating
activities $ (803,598) $(2,310,581)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of equipment 63,950 54,650
Purchase of property and equipment (224,534) (289,809)
Payments received on long-term
notes receivable 15,009 20,610
Other -- (19,431)
----------- -----------
Net cash (used in) investing
activities (145,575) (233,980)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings 3,673,100 2,328,000
Proceeds from long-term borrowings 1,900,000 360,000
Principal payments on short term
borrowings (2,620,100) (388,000)
Net proceeds from issuance of common
stock February 29, 1996 1,666 shares
February 28, 1995 333 shares 1,291 198
Principal payments on long-term
borrowings (2,399,794) (195,828)
Purchase of common stock for the
treasury (19,691) --
----------- -----------
Net cash provided by (used in)
financing activities 534,806 2,104,370
----------- -----------
(Decrease) in Cash and Cash
Equivalents (414,367) (440,191)
CASH AND CASH EQUIVALENTS
Beginning 414,748 440,241
----------- -----------
Ending $ 381 $ 50
=========== ===========
See notes to Condensed Financial Statements.
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOW
Nine months Ended February 29, 1996 and February 28, 1995.
1996 1995
---------- ----------
<S> <C> <C>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Acquisition of Clay Equipment:
Working capital acquired $1,329,160
Fair value of other assets acquired,
principally property and equipment 1,127,825
Long-term debt assumed (1,828,735)
----------
$ 628,250
==========
Issuance of common stock, 837,666 shares $ (628,250)
==========
</TABLE>
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<PAGE> 7
TOP AIR MANUFACTURING, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Condensed Financial Statements
The condensed balance sheet as of February 29, 1996 and
the condensed statements of operations for the three
months and nine months ended February 29, 1996 and
February 28, 1995 and the condensed statements of cash
flows for the nine months ended February 29, 1996 and
February 28, 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 February
29, 1996 and for all periods presented have been made.
Treasury stock presented in the financial statements was
purchased at current market price and recorded at cost.
The ultimate disposition of the treasury stock had not
been determined as of February 29, 1996.
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, 1995 Annual Report to Shareholders.
The results of operations for the periods ended February 29,
1996 and February 28, 1995 are not necessarily
indicative of the operating results for the full year.
Note 2. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
February 29, May 31,
1996 1995
------------ -----------
<S> <C> <C>
Finished Goods $ 2,430,723 $1,470,682
Work in Process 394,726 36,095
Raw Materials and Supplies 152,734 47,053
------------ ----------
$ 2,978,183 $1,553,830
============ ==========
</TABLE>
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<PAGE> 8
TOP AIR MANUFACTURING, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 3. Acquisition
On June 26, 1995 the Company acquired substantially
all assets of Clay Equipment Corporation of Cedar Falls,
Iowa in exchange for 837,666 shares of the Company's
common stock and the assumption of certain liabilities.
The acquisition was accounted for using the purchase
method. The Company will combine the operations of Clay
Equipment and its current Parkersburg, Iowa location
into a newly constructed 85,000 square foot facility
located in Cedar Falls, Iowa during the summer of 1996.
The new facility will be built by the city of Cedar Falls
and leased to the Company.
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<PAGE> 9
TOP AIR MANUFACTURING, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Net Sales:
Net sales for the third quarter and nine months ended February
29, 1996 increased 49% and 127%, respectively, compared to
sales for the same periods last year. The increase for the
third quarter was primarily a result of two factors. First,
incremental sales picked up in the acquisition of Clay Equipment
were offset slightly by a decrease in sales of spraying equipment
of approximately $200,000. The decrease resulted from
accelerating shipments of spraying equipment into the second
quarter as previously mentioned. The increase for the nine month
period was a combination of an overall favorable agricultural
industry, incremental sales mentioned above and increased parts
sales during the summer from an extended spraying season. The
incremental sales from the acquisition of Clay Equipment were
$1,426,098 for the third quarter and $3,819,781 for the nine
month period.
Operating Costs & Expenses:
The Company's cost of goods sold for the third quarter ended
February 29, 1996 remained constant at 68% and increased to 71%
from 69% for the nine months ended February 29, 1996 compared
to the same periods of the previous year. The increase is
primarily a result of some duplication of effort associated with
the operation of two facilities since the purchase of Clay
Equipment. It is anticipated that higher profit margins will
be experienced after Top Air consolidates the two locations into
a newly constructed facility in the summer of 1996.
Operating expenses increased to $687,957 and $1,846,787 for the
third quarter and nine months ended February 29, 1996, compared
to $316,784 and $944,603 for the same periods last year. The
increases primarily resulted from incremental expenses incurred
from the acquisition of Clay Equipment.
Interest Expense:
Interest expense increased 61% to $57,641 from $35,888 for the
third quarter and 153% to $143,878 from $56,901 for the nine
months ended February 29, 1996. The increases were a result of
additional debt incurred from the acquisition of Clay Equipment
offset by somewhat lower levels of short-term operating debt
outstanding during the periods.
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<PAGE> 10
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 income from operations of $110,806 and the effects
of the acquisition of Clay Equipment which included the purchase of
fixed assets, net of depreciation, of approximately $900,000, and
other long-term assets of $180,000 offset by the assumption
of long-term debt of $1,320,000 and the issuance of $630,000 in
common stock increased working capital by approximately $980,000.
These effects coupled with net purchases of fixed assets of
approximately $160,000, resulted in an increase in overall
working capital of approximately $800,000 for the nine months
ended February 29, 1996.
Liquidity and Capital Resources:
At February 29, 1996, the Company had working capital of
$3,113,913 an increase of $1,131,046 from a year ago and an
increase of $797,397 since May 31, 1995. The increases are
primarily a result of the acquisition of Clay Equipment on
June 26, 1995. The current ratio decreased to 1.94 from 3.26
at May 31, 1995. The Company will move to a new facility in the
summer of 1996 as described in note 3 to the financial
statements. The Company believes it has access to sufficient
working capital for its present and foreseeable future.
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<PAGE> 11
TOP AIR MANUFACTURING, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number
------------
(11) Statement re computation of loss per common share
(b) There were no reports on Form 8-K filed for the quarter
ended February 29, 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 April 12, 1996 /s/ Steven R. Lind
------------------------------------ ----------------------------------
Steven R. Lind
Principal Executive Officer
Date April 12, 1996 /s/ Steven F. Bahlmann
------------------------------------ ----------------------------------
Steven F. Bahlmann
Principal Financial Officer
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<PAGE> 1
<TABLE>
TOP AIR MANUFACTURING, INC.
EXHIBIT 11 - COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
Column A Column B Column C
Weighted Income
Average Per
Number of Common
Shares Net Share
Outstanding<F*> Income (B-A)
--------------- -------- --------
<S> <C> <C> <C>
Nine months ended:
February 29, 1996 3,993,154 $110,806 $ .03
February 28, 1995 3,206,854 28,461 .01
Three months ended:
February 29, 1996 4,071,349 $227,139 $ .06
February 28, 1995 3,211,947 231,059 .07
<CAPTION>
Nine Months Ended Three Months Ended
February 29, February 28, February 29, February 28,
1996 1995 1996 1995
-------------------- ---------------------
<S> <C> <C> <C> <C>
<F*>Computation of weighted
average number of
common shares
outstanding and
common equivalent
shares:
Common shares out-
standing at the
beginning of the
period 3,174,433 3,174,100 4,013,765 3,174,433
Weighted average of
common shares
issued during
the period 762,103 282 -- --
Weighted average of
the common
equivalent shares
attributable to
stock options granted,
computed under the
treasury stock
method # 56,618 32,472 57,584 37,514
--------- --------- --------- ---------
Weighted average number
of common and common
equivalent shares 3,993,154 3,206,854 4,071,349 3,211,947
========= ========= ========= =========
</TABLE>
- 10 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the Top Air
Manufacturing, Inc. Quarterly Report on Form 10-QSB for the period ended
February 29, 1996 and is qualified in its entirety by reference to such report.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> FEB-29-1996
<CASH> 381
<SECURITIES> 0
<RECEIVABLES> 3,105,767
<ALLOWANCES> 91,663
<INVENTORY> 2,978,183
<CURRENT-ASSETS> 6,423,866
<PP&E> 2,610,104
<DEPRECIATION> 999,845
<TOTAL-ASSETS> 8,456,567
<CURRENT-LIABILITIES> 3,309,953
<BONDS> 0
<COMMON> 250,860
0
0
<OTHER-SE> 3,344,256
<TOTAL-LIABILITY-AND-EQUITY> 8,456,567
<SALES> 7,376,928
<TOTAL-REVENUES> 7,443,555
<CGS> 5,271,284
<TOTAL-COSTS> 7,118,071
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 143,878
<INCOME-PRETAX> 181,606
<INCOME-TAX> 70,800
<INCOME-CONTINUING> 110,806
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110,806
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
