1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934 (FEE
REQUIRED)
For the Fiscal Year Ended May 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission File NO. 0-12866
CABRE CORP
(Exact name of registrant as specified in its charter)
Delaware 75-1907070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1209 Orange Street 19801
Wilmington, Delaware (ZipCode)
(Address of principal executive offices)
Registrant's telephone number, including area code: (302) 658 7581
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Common Stock, $2.00 par value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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__
As of July 31, 1995, there were outstanding 906,591 shares of
the registrant's common stock, par value $2.00, which is the only
class of common stock of the registrant. As of that date, and based on the
closing bid price, the aggregate market value of the shares of common stock
held by non-affiliates of the registrant was approximately $541,422.
Documents Incorporated by Reference
None
<PAGE>
PART I
Item 1. BUSINESS
General
From incorporation in Texas in June 1983 as a public company until
December 1990, Cabre Corp, then known as K Med Centers, Inc.,
managed outpatient medical centers throughout the Dallas/Fort Worth
Metroplex. The company ceased operations in December 1990, but continued
as an inactive public "shell" corporation and reorganized in the
state of Delaware on December 26, 1991. On January 24, 1992 Cabre Corp
acquired all of the issued and outstanding shares of Antenna Products
Corporation in an exchange of stock.
On November 1, 1993 Cabre acquired Audile Inc. in an exchange of
stock. Cabre sold the operation to Audile employees in February 1995,
and in May, 1995, based on defaulted payments on notes, wrote off
remaining investments.
On November 1, 1993 Cabre Corp established Thirco, Inc. On
November 14, 1994 Cabre formed Metal Finishing Corp and on November
30, 1994 purchased the assets of Edd's Metal Finishng Corp for a
combination of cash and deferred notes. Cabre Corp operates as a
holding company with Antenna Products Corporation, Metal Finishing
Corp, and Thirco, Inc. as its current operating subsidiaries. Cabre
Corp has no other business activity. Cabre Corp's address is 1209
Orange Street, Wilmington, Delaware 19801. Telephone Number, (302)658-7581.
Antenna Products Corporation
Antenna Products Corporation was incorporated in Texas in 1984 to
continue business began in 1972 and operated as a closely held
"C" corporation until January 24, 1992. Thereafter, Antenna Products
has operated as a wholly owned subsidiary of Cabre Corp . Antenna
Products address is 101 S.E. 25th Avenue, Mineral Wells, Texas 76067.
The telephone number is (817) 325-3301.
Antenna Products' principal business is to design and
manufacture standard and custom antennas, support structures, and
accessories. The company's principal products generally relate to the high
frequency (HF), very high frequency (VHF), and ultra high frequency
(UHF) communication frequency spectrums. With a diversity of
communication and navigation aid products, Antenna Products'market
extends from long range communication circuits to short range
tactical communication lines and includes shipboard applications as
well as ground to air navigation and landing aids. Examples of
Antenna Products' wide variety of products include ground to air
collinear antennas, instrument landing antennas and towers, fixed
system multi-port antenna arrays, tactical quick erect antennas
and masts, shipboard antenna tilting devices, transport pallets,
surveillance antennas, antenna rotators, positioners and controls,
and high power broadcast baluns.
Antenna Products' customer base is primarily government and
government prime contractor focused, although a limited industrial
and commercial market exists. Antenna Products' market is
international in scope. The company currently focuses on exploiting the
domestic market and has a limited amount of foreign sales. The specialized
needs of the company's customers and the technology required to meet those
needs change constantly. Accordingly, the company stresses its engineering,
installation, service and other support capabilities. The
company uses its own sales and engineering staffs to service its
principal markets. Many of the company's contracts are large relative
to total annual sales volume and therefore the composition of the
customer base is different year to year. In 1995 the U. S.
Government was the single largest customer, and accounted for 26% of
the sales volume. APTI totaled 26% of sales, Marconi
Communications contributed 11%, and Litton Data Systems 10%. Orders
for equipment in some of these product categories are in backlog and,
therefore, the U.S. Government and Marconi Communications are expected to be
major clients again in 1996.
Antenna Products is one of many suppliers of antennas and related
manufacturing services to the government and government prime
contractors. Antenna Products competes on the basis of cost
and product performance in a market with no dominant supplier. Due to
fixedprice contracts and pre-defined contract specifications prevalent
within this market, the company competes primarily on the basis of
its ability to provide state-of-the-art solutions in the
technologically demanding marketplace while maintaining its
competitive pricing.
Because most manufacturing requirements are established on a
contract basis, the majority of the inventory is work in process. Less
than 10% of total inventory is maintained in stock for delivery to
customers. Some raw materials are kept on hand to support customer delivery
schedules. Antenna Products performs work for the United States
Government primarily under fixed-price prime contracts and
subcontracts. Under fixed-price contracts, Antenna Products realizes
any benefit or detriment occasioned by lower or higher costs of
performance.
Antenna Products is subject to certain risks common to all companies
which derive a portion of their revenues from the United States
government. These risks include rapid changes in technology, changes in
levels of government spending, and possible cost overruns. Recognition
of profits on major contracts is based upon estimates of final
performance which may change as contracts progress. Contract prices
and costs incurred are subject to Government Procurement
Regulations, and costs may be questioned by the Government and are
subject to disallowance. United States Government contracts contain a
provision that they may be terminated at any time for the
convenience of the Government. In such event, the contractor is
entitled to recover allowable costs plus any profits earned to the
date of termination. Collections are generally set in accordance with
federal acquisition standards which require payment in accordance with
"Net 30" terms after acceptance of goods. The company is not
directly regulated by any governmental agency in the United States.
Most of Antenna Products' customers, and the antenna and tower
industries in general, are subject to meeting various government
standards. These performance standards necessitate Antenna
Products' ability to produce antenna designs which can be updated
to conform to customer requirements in a changing regulatory
environment. These regulations have not adversely affected
operations.
Antenna Products is committed to reinvesting from 2% to 5% of
sales in research and development projects, and bid and proposal
activities. The mix of expenditures between the two areas in any
given year is a function of the demand for new independently developed
innovative systems and the level of requirements solicited. In
1995 Antenna Products invested 5.0% of sales to independent research and
development (R&D). The level of expenditures as a ratio to sales is
expected to decrease in 1996. The level of expenditures for R&D in
1994 and 1993 were 2.3% of sales and 1.2% of sales, respectively.
The company received one patent in fiscal year 1994 and will
continue to patent innovations unique to the trade. The company
however does not consider patents to be material to its
operations nor would the loss of any patents adversely affect
operations.
Metal Finishing Corp
Cabre Corp's subsidiary, Metal Finishing Corp, a Texas Corporation,
purchased the assets of Edd's Metal Finishes Corp., a Texas
Corporation, on November 30, 1994. Edd's Metal Finishes Corp had
been a vendor to Antenna Products Corporation (a subsidiary of Cabre)
for over ten years. Metal Finishing Corp operates in Grand
Prairie, Texas. Metal Finishing Corp offers a wide range of metal
finishes and surface enhancements. Industries serviced range from
medical, electronics, oil patch, fastener, packaging, automotive
to commercial as well as aerospace and defense contracted work. Metal
Finishing is the chemical science of electrolytically depositing thin layers
of metals such as silver, zinc, cadmium, nickel or copper to base materials
such as steel, aluminum, brass etc. This process is also more
commonly known as "plating" and the deposits created are most often
utilized for added corrosion and wear resistance as well as their
ability to meet the required aesthetic values. Metal Finishing
competes on the basis of cost and quality of service in a market with no
dominant provider. Due to the nature of the service provided, inventory
consists of small amounts of chemicals and metals.
Thirco, Inc.
Thirco, Inc was formed on November 1, 1993 as a Delaware company
to purchase and lease equipment and facilities to the other operating
units of Cabre. The primary lease arrangements are with Antenna
Products. Thirco will occasionally assist in servicing the banking
needs of Cabre's operating units. Since all activity is internal to
Cabre and its operating subsidiaries, financial data is consolidated
with Cabre. Thirco does not intend to engage in any outside business
transactions.
Seasonality
Cabre's businesses are not dependent on seasonal factors.
Backlog
The backlog of orders on July 31, 1995 at Antenna Products
amounted to approximately $6.1 million. Backlog of orders at July 31,
1994 was approximately $11.9 million. About 90% of the current
backlog will be delivered in the 1995 fiscal year. As a service
provider Metal Finishing has no recorded backlog.
Raw Material Source And Supply
Cabre's operating subsidiaries' principal raw materials are steel,
aluminum, other metal alloys, plastic and composite tubing, hardware,
electrical wire, wire rope, plating chemicals, and electronic or
electro mechanical components. The materials are commonly available
from numerous sources, including local distributors in quantities
sufficient to meet the needs of the subsidiaries. The availability
and supply of raw materials is not considered to be a problem for
Antenna Products or Metal Finishing.
Employees
As of July 31, 1995, Cabre employed 114 full time employees. Antenna
Products had 102 employees and Metal Finishing had 12 employees. 25
were employed in administrative functions, 17 in engineering and
support roles, and 72 in operational categories. None of the company's
employees are subject to collective bargaining agreements. As a matter
of policy, the company seeks to maintain good relations with employees
and believes that such relations are beneficial.
Foreign Sales
Antenna Products' sales in international markets are primarily to
foreign governments or prime contractors to foreign governments, and
as such represents a small percentage of the overall Company annual
volume. The level of profits from and the commitment of assets to
this portion of the business is no greater or no less than that of
other market segments. International sales for 1995, 1994, and 1993
were 5.5%, 4.5%, and 6.2%, respectively, of total sales.
Item 2. PROPERTIES
Antenna Products Corporation, owns a ten acre industrial site located
along US Highway 180 in Mineral Wells, Texas. The facility consists of
a main building containing 60,000 square feet of manufacturing area and
10,000 square feet of administrative and engineering offices;
a second building containing 20,000 square feet of manufacturing and
shipping area; and a newly completed 15,000 square foot building
utilized for receiving and material control. Three additional
auxiliary buildings which total in excess of 13,350 square feet are
utilized for chemical etching, painting and storage. The facilities
are in good condition and with the current complement of machinery and
equipment are suitable and more than adequate to meet production
requirements. Dependent on the mix of product types in process in any
given time period, the Company could potentially more than double output
with current and planned plant, property and equipment. Antenna Products
carries a bank note on the manufacturing facility that is amortized over
twenty years and expires in the year 2011.
Metal Finishing owns a 13,000 square foot facility in Grand
Prairie, Texas with state of the art plating equipment and a fully
closed loop waste water treatment system. The facilities are in good
condition with ability to increase capacity by 50 to 100% by adding
additional employees. Metal Finishing has a note on the plating
facility that is amortized over 10 years. The note held by the prior
owner expires in the year 2004.
Thirco owns a fifty acre test site in Mineral Wells, Texas.
The site includes three buildings with 28,000 square feet of
space. The space is currently set up and being leased to Antenna
Products for test activity with some storage of inventory.
The two larger buildings, if needed, are suitable with rearrangement and some
conversion expense, for additional manufacturing utilization.
Item 3. LEGAL PROCEEDINGS
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of
fiscal year 1995.
Item 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of Cabre Corp are selected and/or reaffirmed
by the Board of Directors at the first meeting after the annual
shareholders meeting to serve at the discretion of the Board of
Directors.
Name Age Position
Gary W. Havener 54 President and Chief Executive Officer
Gary L. Skaggs 51 Vice President, Secretary,Treasurer,
and Chief Financial Officer
Gary W. Havener was elected by the Board of Directors as
President and Chief Executive Officer of Cabre Corp on January 24,
1992. Mr. Havener has served as the Sole Director of Antenna
Products Corporation since 1986 and as the Sole Director of Thirco,
Inc. since its inception in November 1994. Mr. Havener served as the
President of Antenna Products Corporation from 1986 until December 1988.
Since 1984 Mr. Havener has served as the President of Sinan Corp.
Gary L. Skaggs was elected by the Board of Directors as Vice
President, Secretary Treasurer, and Chief Financial Officer of Cabre
Corp on January 24, 1992. Mr. Skaggs has served as
President of Antenna Products Corporation since December 1988. Mr.
Skaggs joined Antenna Products in May 1987 as Executive Vice
President and Chief Financial Officer. Mr. Skaggs also serves as
President of Thirco, Inc., and Metal Finishing Corp.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
The information in this item should be read in conjunction with the
Management Discussion and Analysis of Financial Condition and
Results of Operations in Item 6, and the Consolidated
Financial Statements and the Related Notes thereto in Item 7.
Market Information For The Common Stock
Cabre Corp's common stock is traded in the OverThe-Counter market and
is quoted in the NASDAQ System under the symbol "CABR". Prior to
May 18, 1992 the stock had been traded as K Med Centers, Inc. under
the symbol "KMED".
Effective June 16, 1994 Cabre Corp stock was reverse split one
share for each twenty outstanding. Trading was based on 943,533
total common stock, par $2.00, outstanding until July 19, 1995 when
36,943 shares of Cabre stock were retired. Since July 19, 1995
trading is based on 906,591 outstanding shares.
The table below presents the high and low prices for the last
two fiscal years and reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual
transactions.
BID
Quarter Ended High Low
*August 1993 1/2 3/16
*November 1993 7/8 1/4
*February 1994 11/16 1/4
*May 1994 3/8 3/16
August 1994 4 7/8 3 1/2
November 1994 4 1/4 3 1/2
February 1995 3 1/4 3 1/4
May 1995 2 1/2 2 1/4
* Prior to 1 for 20 reverse split
Holders
At July 31, 1995 there were approximately 540 holders of record of
common stock.
Dividends
Cabre Corp has never paid a regular cash dividend on common
stock and has no plans to institute payment of regular dividends.
The Company, in October 1991, before the acquisition of Antenna
Products Corporation, paid a partial liquidating dividend of $0.92 per share
that totaled $1,505,075.
Cabre Corp's subsidiary, Antenna Products Corporation, paid a
special dividend in 1990 and 1991 of $300,000 and $276,372
respectively, in conjunction with the redemption of Class "A" stock of
Antenna Products Corporation.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Selected Financial Data
The following table presents selected financial data of Cabre Corp.
The historical data (years 1991 - 1994) represents the audited data
for the subsidiary Antenna Products Corporation and as such the
number of common shares have been adjusted as if the merger with
Cabre Corp had been effective as of the year ending 1990. This
historical data should be read in conjunction with Consolidated
Financial Statements and the Related Notes thereto in Item 7. Net income for
1991 includes the special cash dividends paid out for the
retirement of stock, shown herein as footnote (1).
<TABLE>
FISCAL YEAR ENDING MAY 31
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net Sales $13,099,671 $12,312,099 $9,396,731 $8,238,664 $10,344,899
Income from
continuing
operations $141,679 $463,436 $303,469 $274,750 $327,120
Income per share
from continuing
operations (2) $.15 $0.52 $0.35 $0.33 $0.39
Total Assets $10,102,63 $8,623,717 $6,115,833 $5,004,044 $5,340,534
Long Term Debt $2,814,89 $2,079,166 $2,015,549 $1,932,257 $1,989,869
Dividends Per
Common Share (1),
(2) $0.00 $0.00 $0.00 $0.0 $0.39
</TABLE>
<F1>
(1) In 1991 Antenna Products Corporation made a special distribution of
cash as part of the redemption of its former Class A Common Stock.
The repurchase of the Class A Common was completed in 1991 with the
conversion of remaining shares to Class B Common Stock. This repurchase
reduced Antenna Products Corporation's Common Stock to a single Common
Stock and the Class designation was removed.
<F2>
(2) Adjusted to give retroactive effect to the 1 for 20 reverse
stock split dated June 16, 1994.
Results of Operation
Cabre Corp's on-going operation is that of its subsidiaries, Antenna
Products Corporation, Metal Finishing Corp, and Thirco, Inc.
as previously discussed in item 1. The management discussion
presented in this item relates to the operations of subsidiary
units and the associated Consolidated Financials as presented in
item 7.
Year ended May 31, 1995 ("1995") Compared with Year Ended May 31, 1994 ("1994")
Antenna Products Corporation
Net sales increased by $0.5 million or 4% to $12.9 million. The
delivery of two major contracts, an antenna system for APTI
and tilting mechanisms for the US Navy, accounted for the
increase in volume. Orders and deliveries of various broadcast
system components to Marconi also contributed to the higher level
of activities in the subsidiary. Orders were down from prior year
with $8.8 million of bookings in the current fiscal year. The ending
backlog of firm orders at year end was $5.1 million. Orders and
backlog are expected to increase in 1996 due to the large number of
bids now outstanding. Gross margin rates increased to 26.1% in 1995
from 23.4% in 1994 as a result of having fewer development contracts
in house in the current year. Selling and administrative expenses
increased to $2,588 thousand less intercompany in 1995 from $1,930
thousand in 1994 as aresult of higher levels of R&D and proposal
efforts combined with increased marketing activity. R&D activity reached
5.0% of sales or $640 thousand, principally in the advancement of telescoping
mast designs and the development of a series of fixed system hf antennas. A
A new telephone system and the upgrade of computer systems in
manufacturing added to the increase in expense. Net interest expense
increased to $484 thousand from $257 thousand, due to higher
interest rates and higher loan balances. Higher levels of work in
process inventories and slower payments from the US Government
contributed to higher loan balances. This trend is expected to
continue throughout 1996. Net profit before taxes for the subsidiary
was $211 thousand or 1.6% of sales in 1995 compared to $650 thousand
or 5.2% of sales in 1994. The lower performance in 1995 is
attributed to the higher expenses and interest as noted.
Metal Finishing Corp
Metal Finishing was incorporated on November 14, 1994 and having
purchased the assets of a former vendor of Antenna Products,
commenced operation on December 1, 1994. All financial data
represents six months of operation without comparative period data.
Net sales for the operation was $267 thousand. Due to certain
one time expenses related to improving the quality of the plating
process the subsidiary experienced an operating loss of ($53
thousand). The subsidiary operation is expected to be profitable in 1996.
Cabre Corp consolidated sales and income from continuing operations
were $13.1 million and $142 thousand respectively in 1995 compared
to $12.3 million and $463 thousand respectively in 1994. Net loss
for 1995 was $337 thousand compared to a net profit of $339 thousand for
1994. The loss from the discontinued Audile operation and the loss
from the subsequent sale of Audile totaled $479 thousand. Audile,
Inc. after more than one year of operation failed to enter the audio
market with its advanced audio correction speaker system. Significant
development and marketing expenses were being incurred and, in
February 1995, Cabre sold the operation to the employees and former
owners for a return of Cabre stock and a series of notes. In April
1995 Audile defaulted on its note payment and Cabre subsequently
seized the assets of Audile and sold at auction miscellaneous audio
and computer equipment. All investments in Audile have been written
down in the 1995 period.
Year Ended May 31, 1994 ("1994") Compared With Year Ended May 31, 1993 ("1993")
Net sales increased $2.9 million or 31% to $12.3 million
primarily as a result of deliveries of antenna and antenna structural
equipment to the US Navy, Litton Data Systems, and Wilcox. Orders for the year
were $10.3 million compared to $9.4 million in 1993. Gross margin
rates decreased from 25.0% in 1993 to 23.4% in 1994. In 1994, the company
delivered a number of large programs at low margins, as well as a
government development contract which was performed at a loss.
Selling and administrative expenses increased from $1,716 thousand in
1993 to $1,930 thousand in 1994. Expenses increased due to an increase
in personnel and marketing activity. Research and development expense
increased to $285 thousand compared to $111 thousand in 1993. Net
interest expense was $235 thousand compared to $231 thousand in 1993.
Net income for 1994 was $349 thousand compared to $290 thousand in
1993. The increase is attributed to the increased revenues.
Liquidity and Capital Resources
Funds generated from company operations are the major internal sources
of liquidity and are supplemented by funds derived from capital
markets, principally bank facilities. The company has available for
the funding of its operations a $4.0 million revolving demand line of
credit which expires in September 1995. As of July 31, 1995, $400 thousand was
available and unused under its revolving line of credit.
Net cash flows from operations was negative $977 thousand in 1995
compared to a positive $46 thousand in 1994. The major component of
the negative cash flow was an increase in inventory of $887
thousand. WorkIn-Process at year end was higher than previous years
as a result of production efforts for delivery of tilt mechanisms to the US
Navy early in 1996. Accounts payable were also higher than normal as a
result of purchases of materials to support the production requirements
of tilt mechanisms and broadcast systems for another large customer. Cash
and cash equivalents were $154 thousand, $500 thousand lower than the prior
year as a result of the investment losses in the now discontinued Audile
operation.
Capital expenditures for 1995 were $1.0 million for manufacturing equipment,
upgraded facilities, and computer hardware and software. The largest
components were for Antenna Products with four pieces of CNC machinery
at $353 thousand, a new 15,000 square foot building used for incoming
receiving and storage at $274 thousand, and two design stations for
engineering at $132 thousand. With modern tools in place and with the
upgrades provided to both the Antenna Products and Metal Finishing
facilities, the company intends to limit its 1996 capital program to less
than $200 thousand. Bank lines are already established to support
equipment purchases that may be required. The current facilities and
equipment that are at hand in both operations are currently deemed
sufficient to meet the expectations of required 1996 deliveries.
The company's revolving credit facilities are regulated under a
borrowing base formula using inventories and accounts receivable
as collateral. The interest rate is established as one percentage point
over Wall Street prime and subject to a loan agreement with
restrictive covenants. The most restrictive financial covenant requires
Antenna Products to maintain $1.6 million in tangible net worth and
$1.2 million of working capital. At year end Antenna Products' had equity
of $1.8 million and working capital of $1.3 million. The agreement
is renewable in September 1995. The company anticipates renewal of this
credit line and has projected that these credit limits are sufficient
to cover the financing needs of the company in the coming year.
The company has a long term bank note for $1.2 million collateralized by
the Antenna Products plant, property, and equipment. The current
balance is $1.0 million with payments amortized over 20 years ending in 2011.
The interest is variable at one half point over prime interest
rate with the note supported by an FmHA guarantee under the federal
guidelines of a rural business industry loan. Antenna Products
also has an $800 thousand note to a principal stockholder on which it pays
interest at the prime interest rate. The commencement of principal
payments are prohibited under the terms of the bank note until the bank
debt is first paid.
The company has a long term bank note for $450 thousand collateralized by
Metal Finishing equipment and machinery. Interest is variable at
one point over prime with payments amortized over ten years ending in 2004.
The balance at year end was $437 thousand. The company also has a
note to the prior owner of the Metal Finishing operation for $340 thousand
collateralized by the Metal Finishing facility. Interest is variable at
one point over prime with payments amortized over ten years ending in 2004.
The balance on the note at year end was $323 thousand.
The company does not expect any changes in payments or other
provisions of the loan agreements now in place.
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
CABRE CORP AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS
May 31, 1995 and 1994
<CAPTION>
ASSETS
1995 1994
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 154,027 $ 654,320
Accounts receivable:
Trade, net of allowances
for doubtful accounts of $7,022
each year 1,106,111 1,134,058
United States Government 659,469 841,548
Inventories 3,496,678 2,464,912
Prepaid expenses and other assets 17,972 84,852
Income taxes receivable 324,163 -
Deferred income taxes 124,363 201,715
----------- ----------
Total current assets 5,882,783 5,381,405
----------- ----------
Property and equipment, net 4,219,848 2,928,166
----------- ----------
Goodwill, net of accumulated amortization
of $41,117 in 1994 - 311,318
----------- ----------
Security Deposits - 2,828
----------- ----------
Total assets $ 10,102,631 $ 8,623,717
============ ===========
<CAPTION>
LIABILITIES AND SHAREHOLDERS'EQUITY
<S>
Current liabilities: <C> <C>
Notes payable $ 3,400,000 $ 2,210,000
Current portion of long-term debt 447,916 203,260
Accounts payable 474,812 580,706
Accrued expenses 338,920 414,445
Income taxes payable - 167,189
------------ -----------
Total current liabilities 4,661,648 3,575,600
------------ -----------
Long-term debt, less current portion 2,014,895 1,279,166
Note payable to shareholder 800,000 800,000
Deferred income taxes 383,084 305,820
------------ -----------
Total long-term liabilities 3,197,979 2,384,986
------------ -----------
Total liabilities 7,859,627 5,960,586
------------ -----------
Commitments and contingencies(Note 12) - -
Shareholders' equity
Preferred Stock, $2.00 par,2,000,000
shares authorized,no shares issued
and outstanding (Note 8) - -
Common stock, $2.00 par, 6,000,000
shares authorized, 906,591 and
943,534 shares issued and
outstanding 1,813,361 1,887,247
Additional paid in capital 126,381 135,617
Retained earnings 303,262 640,267
------------ ------------
Total shareholders' equity 2,243,004 2,663,131
------------ ------------
Total liabilities and
shareholders' equity $ 10,102,631 $ 8,623,717
============ ============
<CAPTION>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CABRE CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years ended May 31, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Sales and contract revenues $ 13,099,671 $12,312,099
Cost of sales and contracts 9,715,939 9,429,673
------------ -----------
Gross Profit 3,383,732 2,882,426
Sales and administrative expenses 2,704,594 1,930,334
------------ -----------
Operating Profit 679,138 952,092
------------ -----------
Other income (expense):
Interest expense (592,648) (234,810)
Interest income 77,844 9,180
Gain (loss) on disposal of assets 1,355 (58,413)
Other 55,610 23,462
------------ -----------
Total other income (expense) (457,839) (260,581)
------------ ------------
Income from continuing operations 221,299 691,511
before income taxes
Provision for income taxes 79,620 228,075
------------ ------------
Income from continuing operations 141,679 463,436
Discontinued operations (Note 3):
Loss from discontinued operations,
net of income tax benefit of
$104,227 and $58,789 (202,324) (114,097)
Loss from sale of discontinued
operations, plus income taxes
of $25,071 (276,360) -
------------ -----------
Net income (loss) (337,005) 349,339
Preferred stock dividends - (10,500)
------------ -----------
Net income (loss) available
for common stock $ (337,005) $ 338,839
============ ============
Earnings (loss) per common share:
Continuing operations $ .15 $ .52
Discontinued operations (0.51) (0.14)
------------ ------------
Net income (loss) $ (0.36) $ 0.38
============ ============
See accompaning notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CABRE CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years ended May 31, 1995 and 1994
<CAPTION>
Preferred Stock Common Stock
Additional
Number of Number of Paid In Retained
Shares Amount Shares Amount Capital Earnings Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance May 31, 1993 2,000,000 $200,000 834,885 $1,669,949 $ - $ 301,428 $2,171,377
Redemption of preferred stock (2,000,000) (200,000) - - - - (200,000)
Issuance of shares in acquisition
of Audile, Inc. (note 3 - - 108,649 217,298 135,617 - 352,915
Net income - - - - - 349,339 349,339
Preferred stock dividends - - - - - (10,500) (10,500)
----------- -------- ------- ---------- -------- ---------- -----------
Balance May 31, 1994 - - 943,534 1,887,247 135,617 640,267 2,663,131
Acquisition of common stock in
connection with sale of Audile - - (36,943) (73,886) (9,236) - (83,122)
Net loss - - - - - (337,005) (337,005)
---------- -------- -------- ---------- -------- ---------- -----------
Balance May 31, 1995 - $ - 906,591 $1,813,361 $126,381 $ 303,262 $2,243,004
========== ======== ======== ========== ======== ========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CABRE CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years ended May 31, 1995 and 1994
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (337,005) $ 349,339
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization 367,278 375,777
Deferred federal income tax benefit 154,616 (118,719)
Loss (gain) on sale of assets (1,355) 58,413
Loss on sale of subsidiary
before income taxes 251,288 -
Changes in assets and liabilities:
Accounts receivable 291,026 (868,516)
Inventory (873,434) 48,015
Payments received (144,332) (77,523)
Security deposits - (2,828)
Prepaid expenses (21,104) (72,598)
Accounts payable and accrued expenses (172,932 265,559
Income taxes payable/receivable (491,352 89,005
---------- ----------
Net cash provided (used) by
operating activities (977,306) 45,924
---------- ----------
Cash flows from investing activities:
Acquisition of Edd's Metal Finishing (655,000) -
Purchase of property and equipment (1,059,327) (649,560)
Proceeds from sale of assets 20,955 1,350
---------- ----------
Net cash used by investing activities (1,693,372) (648,210)
---------- ----------
Cash flows from financing activities:
Net borrowings under bank lines of credit 1,190,000 1,185,000
Issuance of long-term debt 1,297,895 333,384
Principal payments on long term debt (317,510) (151,141)
Dividends on preferred stock - (10,500)
Redemption of preferred stock - (200,000)
---------- ----------
Net cash provided by financing activities 2,170,385 1,156,743
---------- ----------
Net increase (decrease) in cash
and cash equivalents (500,293) 554,457
Cash and cash equivalents at
beginning of period 654,320 99,863
Cash and cash equivalents at end of period $ 154,027 $ 654,320
========== ==========
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest (none capitalized) $ 540,633 $ 240,515
Income taxes 170,000 199,000
<CAPTION>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CABRE CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended May 31, 1995 and 1994
1.Business
The Company operates as a "Holding" company with Antenna Products
Corporation, Audile, Inc. (see Note 3), Thirco, Inc. and Metal
Finishing Corp. as its wholly owned subsidiaries. Antenna Products
and Metal Finishing Corp. are operating subsidiaries with Thirco
serving as an equipment leasing company to Cabre's operating units.
Antenna Products Corporation designs, manufactures and markets
antenna systems, towers, and communications accessories worldwide
for the U.S. Government, both military and civil agencies, and prime
contractors representing Antenna Products principal customers.
Metal Finishing Corp performs a wide range of metal finishes and
surface enhancements to industries ranging from medical,
electronics, oil & gas, fastener, packaging, and automotive as well
as aerospace and defense contract work.
Following is a schedule of the Company's sales to major customers,
as a percentage of total sales:
Year ended May 31
1995 1994
Federal Government 26% 33%
APTI 26% 11%
Marconi Communications 11% *
Litton Data Systems 10% 28%
* less than 10%
2.Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany balances
and transactions are eliminated in consolidation.
Sales and Contract Revenues and Related Costs
Sales and major production contract revenues, and related costs, are
recorded as completed units are shipped (unit price method).
Estimated losses on production contracts are reported in full at
such time as the contract estimate indicates a loss.
Inventories
Inventories are stated at the lower of first-in, first-out cost or
market, net of any applicable progress payments.
Property and Equipment
Property and equipment are recorded at cost and depreciated by the
straight-line method over the expected useful lives of the assets.
Expenditures for normal maintenance and repairs are charged to
income, and significant improvements are capitalized. The cost of
assets sold or abandoned and the related accumulated depreciation
are eliminated from the accounts and the net amount, less proceeds
from disposal, is charged or credited to income.
Use of Estimates and Assumptions
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent
assets and liabilities, and the reported revenues and expenses.
Actual results could vary from the estimates that were used.
Income Taxes
The Company has adopted, effective June 1, 1993, the method of
accounting for income taxes pursuant to Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109) which requires a change from the deferred method to the asset
and liability method of computing deferred income taxes. The
objective of the asset and liability method is to establish deferred
tax assets and liabilities for the temporary differences between the
financial reporting basis and the tax basis of the Company's assets
and liabilities at enacted tax rates expected to be in effect when
such amounts are realized or settled. The change had no effect on
the Company's financial statements as of or for the year ended May
31, 1994.
Research and Development Costs
Research and development costs are charged to operations when
incurred and are included in operating expenses. The amounts
charged for the years ended May 31, 1995 and 1994 were $640,453 and
$284,630, respectively.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents
include cash and certificates of deposit with maturities of less
than three months.
Goodwill
Goodwill represents the excess of purchase price over fair value of
tangible assets acquired in the Audile acquisition (Note 3).
Goodwill is being amortized on the straight line basis over five
years.
Shares, Per Share Data, Earnings (Loss) Per Share and Reverse Stock
Split
Earnings (loss) per share are computed by dividing net income (loss)
available for common stock by the weighted average number of common
shares outstanding during the year. Weighted average shares
outstanding were 934,298 and 898,263 for the years ended May 31,
1995 and 1994, respectively. All share and per share information
herein has been retroactively adjusted for a 1 for 20 reverse stock
split approved by shareholders on June 14, 1994.
3. Acquisitions and Sale of Subsidiary
The Company, in an exchange of stock, acquired Audile, Inc. on
November 1, 1993. Cabre issued 108,649 shares of its common stock
for all of the outstanding shares of Audile, Inc. Audile, as a
wholly owned subsidiary of Cabre, operates in the consumer
electronics, entertainment, and interactive multi-media markets.
The acquisition has been accounted for as a purchase. Accordingly,
the operations of Audile have been incorporated in the accompanying
financial statements from the date of acquisition. The shares
issued were valued at $352,915 and the purchase price has been
allocated principally to goodwill. Pro forma information as
if the acquisition had taken place at the beginning of each year
is not presented since Audile has had no revenues and its operations
are not material to the Company's consolidated results of operations.
Audile has had no sales to date.
The Company sold Audile to one of its former shareholders in
February 1995 for a note of $592,000 and 36,943 shares of Company
common stock valued at $83,122. In May 1995, the Company foreclosed
on the note and repossessed the collateral, subsequently selling the
repossessed assets for approximately $19,000. The Company has
reflected the operations of Audile in the accompanying financial
statements as a discontinued operation. The loss from sale of
discontinued operations was recognized in the Company's fourth
fiscal quarter.
On November 30, 1994, the Company's subsidiary, Metal Finishing
Corp, purchased the assets of Edd's Metal Finishes Corp. for cash of
$315,000 and a note payable to the seller of $340,000. The
acquisition has been accounted for as a purchase and accordingly,
the operations of the acquired business have been included in the
accompanying consolidated financial statements since the date of
acquisition. Pro forma information as if the acquisition had taken
place at the beginning of each year is not presented since the
operations are not material to the Company's consolidated results of
operations.
4.Inventories
The major components of inventories are as follows:
1995 1994
Raw materials $ 1,596,022 $ 805,826
Work in process 1,257,521 1,332,162
Finished goods 668,665 496,786
3,522,208 2,634,774
Less:
Progress Payments (25,530) (169,862)
$ 3,496,678 $ 2,464,912
Certain general and administrative expenses such as depreciation,
insurance, property taxes and utilities are capitalized in inventory
based upon percentages developed by the Company. Total general and
administrative expenses capitalized in inventory during the years
ended May 31, 1995 and 1994 were $885,709 and $667,446,
respectively.
5.Property and Equipment
The following is a summary of the Company's property and equipment:
Estimated
Useful Life 1995 1994
Land __ $ 475,136 $ 375,136
Buildings and improvements 15 - 30 years 2,023,217 1,564,248
Machinery and equipment 10 years 3,306,478 2,442,855
Automobiles and trucks 3 years 100,096 100,096
Office furniture and fixtures 10 years 652,453 490,844
----------- ------------
6,557,380 4,973,179
Less accumulated depreciation (2,337,532) (2,045,013)
Net property and equipment $ 4,219,848 $ 2,928,166
6.Notes Payable
At May 31, 1995 and 1994 notes payable consist of a revolving note
payable to a bank, maximum amount $4,000,000, interest payable
monthly at the prime rate plus 1% until September 30, 1995, when any
unpaid principal and interest shall be due.
Prime rate was 9.5% and 7.25% at May 31, 1995 and 1994 respectively.
Borrowings under the revolving note payable are collateralized by
accounts receivable and inventories and cannot exceed an amount
determined by a formula based upon the amount of certain qualified
receivables and inventories as defined in the loan agreement. At
May 31, 1995 available borrowings under this credit facility were
limited to the borrowing base amount of $3,750,000. Borrowings are
guaranteed by an officer of the Company and a principal shareholder
and the Company must maintain a minimum net worth of $1,600,000 and
working capital of $1,200,000.
7.Long-Term Debt
<TABLE>
At May 31, 1995 and 1994, long-term debt consists of the following:
<CAPTION>
1995 1994
<S> <C> <C>
Subordinated note payable to a principal shareholder.
In the initial years only interest (at the prime rate) is
payable with monthly principal payments scheduled to begin
in June 1997 and maturing in May 2001. $ 800,000 $ 800,000
Notes payable to a finance company, payable in monthly
installments of $19,955 including interest at rates ranging from
8.5% to 10.1% until September 1997, collateralized by equipment
with a net book value of $157,603. 327,829 307,898
Note payable to a bank, guaranteed 80% by a U.S. Government
Agency, payable $8,900 per month, including interest at the
prime rate plus 1/2%; collateralized by certain real estate and
fixtures and guaranteed by a principal shareholder; the Company
is required to maintain $1,100,000 in working capital and $1,000,000
in equity. 1,044,422 1,073,120
Notes payable to banks, payable in monthly installments of $11,779
including interest at prime plus 1.5% until November 1998,
collateralized by equipment with a net book value of $596,719. 292,045 101,408
Note payable to a bank payable in monthly installments of $1,080
plus interest at 10% until May 1998, collateralized by equipment
with a net book value of $48,610 38,888 -
Note payable to an individual payable in monthly installments of
$2,833 plus interest at prime plus 1%, collateralized by a first
lien deed of trust on land and buildings. 323,002 -
Note payable to a bank, payable in monthly installments of $5,820,
plus interest at prime plus 1%, collateralized by all machinery and
equipment, inventory and accounts receivable of Metal Finishing Corp
436,625 -
---------- ----------
3,262,811 2,282,426
Less current portion of long-term debt 447,916 203,260
Noncurrent portion of long-term debt $ 2,814,895 $2,079,166
</TABLE>
Maturities of long-term debt for each of the five years subsequent to
May 31, 1995 are as follows:
1996 $ 447,916
1997 488,699
1998 342,389
1999 271,702
2000 278,383
Thereafter 1,433,722
8.Shareholders' Equity
The Company's preferred stock accrued dividends at $.007 per share,
payable quarterly and dividends were cumulative. The shares were
redeemed by the Company in 1994 at par value.
9.Income Taxes
Components of the net income tax expense for the years ended May 31,
1995 and 1994 are as follows:
Years Ended May 31
1995 1994
Income taxes at statutory
rate on income (loss) before income taxes $ (114,424) $ 176,330
Non-deductible loss on sale of subsidiary 110,508 -
Other 4,380 (7,044)
---------- -----------
Total provision, including discontinued
operations $ 464 $ 169,286
========== ===========
Deferred portion of provision
(benefit) $ 154,616 $ (118,719)
Current portion of provision (benefit) (154,152) 288,005
---------- -----------
Total $ 464 $ 169,286
========== ===========
The components of the deferred income tax provision (benefit) were
as follows:
Years Ended May 31
1995 1994
Accrued warranty claims $ 27,200 $ (34,000)
Accrued group insurance - 8,180
Provision for allowance for
valuation of inventory 30,600 (98,600)
Depreciation 88,400 12,140
Other 8,416 (6,439)
--------- ----------
Total $ 154,616 $ (118,719)
========= ==========
Components of the net deferred tax liability at May 31,1995 and 1994
are as follows:
Years Ended May 31
1995 1994
Deferred tax liability for
taxable temporary differences $ 383,084 $ 305,820
Deferred tax assets for deductible
temporary differences (124,363) (201,715)
--------- ----------
$ 258,721 $ 104,105
========== ==========
Taxable temporary differences arise from differences between
depreciation of property, plant and equipment for tax and financial
purposes. Deductible temporary differences result from differences
in timing of deduction of certain expenses, principally warranties,
vacation accruals and group insurance and from an inventory
valuation allowance for financial statement purposes.
10. Profit Sharing Plan
The Company has an employee profit sharing plan under Section 401(k)
of the Internal Revenue Code. All employees with a minimum of one
year of employment are eligible to participate. Employees may
contribute to the plan up to 20% of their salary with a maximum of
$9,240 in 1995 and $8,994 in 1994. The Company will match employee
contributions for an amount up to 3% of each employee's salary if
certain earnings requirements are met. Contributions are invested
at the direction of the employee in one or more funds. Company
contributions vest after three years of service. Company
contributions amounted to $62,065 and $49,077 for the years ended
May 31, 1995 and 1994, respectively.
11.Segment Information
The Company has historically operated in one business segment, the
manufacture of antenna systems, antenna towers, and communications
accessories. Effective November 30, 1994 (see Note 3), the Company
also began to operate in the metal finishes market. The metal
finishes segment amounted to less than 10% of the Company's
consolidated operations during the period.
12. Concentration of Credit Risk
The Company invests its cash and certificates of deposit primarily
in deposits with major banks. Certain deposits are in excess of
federally insured limits. The Company has not incurred losses
related to its cash.
The Company sells its products to the U.S. Government, both military
and civil agencies and prime contractors. Although the Company
might be directly affected by the well-being of the defense
industry, management does not believe significant credit risk exists
at May 31, 1995.
Ongoing credit evaluations of customers' financial condition are
performed and, generally, no collateral is required. The Company
maintains reserves for potential credit losses and such losses have
not exceeded management's expectations.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
PART III
Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This information is included in Part I as Item 4A., entitled
"Executive Officers of the Registrant", and will be included in the
definitive Proxy Statement dated August 12,1995 as filed with the
Securities and Exchange Commission, and is incorporated herein
by reference.
Item 10. EXECUTIVE COMPENSATION
This information will be included in the Company's definitive
Proxy Statement dated August 12,1995 filed with the Securities and
Exchange Commission and is incorporated herein by reference.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information will be included in the Company's definitive
Proxy Statement dated August 12,1995 filed with the Securities and Exchange
Commission and is incorporated herein by reference.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information will be included in the Company's definitive
Proxy Statement dated August 12,1995 filed with the Securities and
Exchange Commission and is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a)
The following documents are filed as part of this report:
1. Independent Auditors' Report
2. Financial Statement Schedules. Not applicable.
All other schedules have been omitted because the required
information is shown in the consolidated financials or notes
thereto, or they are not applicable.
3. Exhibits
None
(b) Reports On Form 8-K. On February 10, 1995 the registrant filed
a Form 8-K for the purpose of disclosing the company's sale of
its wholly owned subsidiary, Audile Inc., a Delaware Corporation
to Robert L. Kay, the original founder of the company for a
combination of securities and cash.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
DATED: August 25, 1995.
Cabre Corp
BY:/s/Gary L. Skaggs
Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Gary W. Havener Director, President, August 25, 1995
& Chief Executive Officer
/s/ Gary L. Skaggs Director, Vice President, August 25,1995
Chief Financial Officer,
Secretary, and Treasurer
/s/ Sam B. Ligon Director August 25,1995
/s/ Paul St. Amant Director August 25,1995
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000724267
<NAME> CABRE CORP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> MAY-31-1995
<CASH> 154,027
<SECURITIES> 0
<RECEIVABLES> 1,772,602
<ALLOWANCES> 7,022
<INVENTORY> 3,496,678
<CURRENT-ASSETS> 5,882,783
<PP&E> 4,587,126
<DEPRECIATION> 367,278
<TOTAL-ASSETS> 10,102,631
<CURRENT-LIABILITIES> 4,661,648
<BONDS> 0
<COMMON> 1,813,361
0
0
<OTHER-SE> 429,643
<TOTAL-LIABILITY-AND-EQUITY> 10,102,631
<SALES> 13,099,671
<TOTAL-REVENUES> 13,234,480
<CGS> 9,715,939
<TOTAL-COSTS> 2,704,594
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 592,648
<INCOME-PRETAX> 221,299
<INCOME-TAX> 79,620
<INCOME-CONTINUING> 141,679
<DISCONTINUED> (478,684)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (337,005)
<EPS-PRIMARY> .15
<EPS-DILUTED> (.36)
</TABLE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
Cabre Corp
We have audited the accompanying consolidated balance sheets
of Cabre Corp and subsidiaries as of May 31, 1995 and 1994,
and the related consolidated statements of operations,
shareholders' equity and cash flows for the years then
ended. These consolidated financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the financial position of Cabre Corp and subsidiaries as of
May 31, 1995 and 1994 and the results of their operations
and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.
/s/ Jackson & Rhodes, P.C.
8140 Walnut Hill Lane, Suite 800
Dallas, Texas 75231-4335
Dallas, Texas
July 26, 1995
