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 November 30, 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)
Not Applicable
(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 December 31, 1996.
<PAGE>
TOP AIR MANUFACTURING, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed balance sheets, November 30, 1996
(unaudited) and May 31, 1996 1
Unaudited condensed statements of operations
three months and six months ended November 30, 2
1996 and 1995
Unaudited condensed statements of cash
flows, six months ended November 30, 1996 and 1995 3 & 4
Notes to condensed financial statements (unaudited) 5
Item 2. Management's Discussion and Analysis or
Plan of Operation 6 & 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports of Form 8-K 8 & 9
<PAGE>
TOP AIR MANUFACTURING, INC.
CONDENSED BALANCE SHEETS
ASSETS
NOVEMBER 30, MAY 31,
1996 1996*
---------- --------
CURRENT ASSETS
Cash and cash equivalents $ 7,459 $ 517
Trade receivables, net of
allowance for doubtful
accounts November 30, 1996
$177,000; May 31, 1996 $167,000 889,390 1,564,968
Inventories (Note 2) 3,431,341 2,635,802
Income tax benefits 190,736 --
Equipment held for sale 249,350 755,546
Other current assets 332,024 309,110
---------- ----------
Total Current Assets 5,100,300 5,265,943
---------- ----------
LONG TERM RECEIVABLE AND OTHER ASSETS
Notes receivable, net of current
portion 153,989 160,216
Other assets 83,145 65,920
---------- ----------
237,134 226,136
---------- ----------
PROPERTY AND EQUIPMENT, at cost,
less accumulated depreciation
November 30, 1996 $1,114,068;
May 31, 1996 $967,939 1,881,831 1,007,653
---------- ----------
7,219,265 6,499,732
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt 275,136 81,497
Other Liabilities and accrued items 1,633,324 1,455,656
---------- ---------
Total Current Liabilities 1,908,460 1,537,153
---------- ----------
LONG-TERM DEBT 1,366,015 830,111
---------- ----------
STOCKHOLDERS' EQUITY
Common stock 250,860 250,860
Additional paid-in capital 1,388,730 1,388,730
Retained earnings 2,324,891 2,512,569
---------- ----------
3,964,481 4,152,159
Less cost of treasury stock 19,691 19,691
---------- ----------
3,944,790 4,132,468
---------- ----------
$7,219,265 $6,499,732
========== ==========
*Condensed from Audited Financial Statements.
See notes to Condensed Financial Statements.
-1-
<PAGE>
<TABLE>
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
November 30, November 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales $1,317,629 $2,521,886 $3,207,748 $3,967,065
---------- ---------- ---------- ----------
Costs and Expenses
Cost of goods
sold 936,939 1,874,456 2,256,664 2,958,340
Selling and
administrative
expenses 532,010 531,624 1,078,620 987,355
Research and
development
expenses 88,117 90,210 185,122 171,475
Interest
expense 27,607 53,830 51,192 86,237
---------- ---------- ---------- ----------
1,584,673 2,550,120 3,571,598 4,203,407
---------- ---------- ---------- ----------
(267,044) (28,234) (363,850) (236,342)
Other Income 33,095 22,480 72,722 45,709
---------- ---------- ---------- ----------
Income (loss)
before
Income Taxes (233,949) (5,754) (291,128) (190,633)
Income Taxes
(credits) (84,350) (2,300) (103,450) (74,300)
---------- ---------- ---------- ----------
Net Income
(loss) $ (149,599) $ (3,454) $ (187,678) $ (116,333)
========== ========== ========== ==========
Earnings (loss)
per Common Share $ (.04) $ .00 $ (.05) $ (.03)
========== ========== ========== ==========
Weighted Average
Number of Shares 4,013,765 4,013,040 4,013,765 3,898,132
========== ========== ========== ==========
</TABLE>
See Notes to Condensed Financial Statements.
-2-
<PAGE>
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Six months Ended November 30, 1996 and 1995.
1996 1995
---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash (used in) operating
activities $ (255,199) $ (892,846)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of equipment 520,945 55,250
Purchase of property and equipment (1,024,326) (134,456)
Payments received on long-term
notes receivable 5,979 10,784
---------- -----------
Net cash (used in) investing
activites (497,402) (68,422)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings 79,000 2,458,100
Proceeds from long-term borrowings 2,587,000 1,900,000
Principal payments on short term
borrowings -- (1,429,100)
Net proceeds from issuance of common
stock November 30, 1996 none;
November 30, 1995 1,666 shares -- 1,291
Principal payments on long-term
borrowings (1,936,457) (2,357,943)
Purchase of common stock for the
treasury -- (19,691)
---------- -----------
Net cash provided by financing
activities 729,543 552,657
---------- -----------
Increase (decrease) in Cash and
Cash Equivalents 6,942 (408,611)
CASH AND CASH EQUIVALENTS
Beginning 517 414,748
---------- -----------
Ending $ 7,459 $ 6,137
========== ===========
See notes to Condensed Financial Statements.
-3-
<PAGE>
TOP AIR MANUFACTURING, INC.
UNAUDITED CONDENSED STATEMENTS OF CASH FLOW
Six months Ended November 30, 1996 and 1995.
1996 1995
---------- ---------
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)
==========
-4-
<PAGE>
TOP AIR MANUFACTURING, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Condensed Financial Statements
The condensed balance sheet as of November 30, 1996 and the condensed
statements of operations for the three months and six months ended
November 30, 1996 and 1995 and the condensed statements of cash flows
for the six months ended November 30, 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 November 30, 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 November 30, 1996 and 1995 are not necessarily
indicative of the operating results for the full year.
Note 2. Inventories
Inventories consist of the following:
November 30, May 31,
1996 1996
---- ----
Finished Goods $2,883,237 $2,453,691
Work in Process 79,748 38,303
Raw Materials and Supplies 468,356 143,808
---------- ----------
$3,431,341 $2,635,802
========== ==========
-5-
<PAGE>
TOP AIR MANUFACTURING, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Net Sales:
Net sales for the second quarter and six months ended November 30, 1996 were
$1,317,629 and $3,207,748, which was a decrease of 48% and 19%, respectively,
compared to sales for the same periods last year. The second quarter decrease
was a result of the Company closing its facilities in Parkersburg, IA and
Cedar Falls, IA and moving into the newly constructed plant in the Cedar Falls
Industrial Park. The move, which was entirely completed during the second
quarter, caused reduced shipments of wholegoods for a period of eight weeks.
With the new facility beginning operation in the month of December, 1996,
shipments rebounded to surpass the previous year by approximately $110,000.
The Company feels confident that the shortfall is a temporary result of the
move and the trend experienced in December will continue to increase during
the third quarter. Total open orders on December 31, 1996 were $3.5 million
compared to $1.5 million on the same date last year. The increased backlog is
a result of a successful early order sales program for units to be delivered
for the spring selling season. The decrease for the six month period was a
result of the reasons mentioned above, offset by the first quarter increase
from the timing of the Clay Equipment acquisition occuring on June 26, 1995.
Operating Costs & Expenses:
The Company's cost of goods sold for the second quarter and six months ended
November 30, 1996 decreased to 71% and 70% compared to 74% and 75% for the
same periods of the previous year. The decreases were a result of fixed
overhead expenses being reduced during the down time of the move, the majority
of the moving expenses being borne by local and federal agencies and the
elimination of duplication of efforts from operating out of two facilities.
Operating expenses decreased to $620,127 and increased to $1,263,742 for the
second quarter and six months ended November 30, 1996 compared to $621,834 and
$1,158,830 for the same periods last year. The increase for the six month
period primarily resulted from incremental expenses incurred from the timing
of the acquisition of Clay Equipment as mentioned above.
-6-
<PAGE>
TOP AIR MANUFACTURING, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Interest Expense:
Interest expense decreased 49% to $27,607 from $53,830 for the second quarter
and 41% to $51,192 from $86,237 for the six months ended November 30, 1996.
The decrease was due to lower levels of short-term and long-term debt
outstanding during the period.
Income Tax Expense:
The income tax credits of $84,350 and $2,300 for the quarters ended November
30, 1996 and 1995 and $103,450 and $74,300 for the six months ended November
30, 1996 and 1995, represent the benefit that would be received if the loss
for the periods were carried back to reclaim income tax paid in prior years.
Material Changes in Financial Position:
The Company's loss from operations of $187,678 combined with net purchases of
fixed assets of approximately $500,000, (net of depreciation), offset by an
increase in trade receivables and inventories of approximately $120,000 that
were funded by long-term line of credit, resulted in a decrease in working
capital of $536,950.
Liquidity and Capital Resources:
At November 30, 1995 the Company had working capital of $3,191,840, an
increase of $252,767 over a year ago and a decrease of $536,950 since May 31,
1996. The increase from a year ago is primarily a result of $249,350 of
equipment that was reclassified to current assets held for sale. The increase
since May 31, 1996 is described above. The current ratio decreased to 2.67
from 3.43 at May 31, 1996. The Company anticipates no significant outlays for
property and equipment in the foreseeable future. The Company believes it has
access to sufficient working capital for its present and foreseeable future.
-7-
<PAGE>
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
November 30, 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 January 14, 1997 /s/ Steven R. Lind
----------------------------------
Steven R. Lind
Principal Executive Officer
Date January 14, 1997 /s/ Steven F. Bahlmann
-----------------------------------
Steven F. Bahlmann
Principal Financial Officer
-8-
EXHIBIT 11 - COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
<TABLE>
<CAPTION>
Column A Column B Column C
Weighted Income
Average (Loss) Per
Number of Net Common
Shares Income Share
Outstanding* (Loss) (B/A)
<S> <C> <C> <C>
Six months ended:
November 30, 1996 4,013,765 (187,678) (.05)
November 30, 1995 3,898,132 (116,333) (.03)
Three months ended:
November 30, 1996 4,013,765 (149,599) (.04)
November 30, 1995 4,013,040 (3,454) .00
<CAPTION>
Six Months Ended Three Months Ended
November 30, November 30,
1996 1995 1996 1995
---------------- ------------------
<S> <C> <C> <C> <C>
*Computation of weighted
average number of
common shares
outstanding and
common equivalent
shares:
Common shares out-
standing at the
beginning of the
period 4,013,765 3,174,433 4,013,765 4,012,099
Weighted average of
common shares
issued during
the period -- 723,699 -- 941
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 3,898,132 4,013,765 4,013,040
========= ========= ========= =========
<FN>
#The stock options have not been included because they are anti dilutive.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> NOV-30-1996
<CASH> 7,459
<SECURITIES> 0
<RECEIVABLES> 889,390
<ALLOWANCES> 177,000
<INVENTORY> 3,431,341
<CURRENT-ASSETS> 5,100,300
<PP&E> 2,995,899
<DEPRECIATION> 1,114,068
<TOTAL-ASSETS> 7,219,265
<CURRENT-LIABILITIES> 1,908,324
<BONDS> 0
0
0
<COMMON> 250,860
<OTHER-SE> 3,693,930
<TOTAL-LIABILITY-AND-EQUITY> 7,219,265
<SALES> 3,207,748
<TOTAL-REVENUES> 3,280,470
<CGS> 2,256,664
<TOTAL-COSTS> 3,520,406
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51,192
<INCOME-PRETAX> (291,128)
<INCOME-TAX> (103,450)
<INCOME-CONTINUING> (187,678)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (187,678)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
