U.S. Securities and Exchange Commission
Washington D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to _______________
Commission file number 0-12866
CABRE CORP
(Exact name of small business issuer as specified in its charter)
Delaware 75-1907070
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
1209 Orange St., Wilmington, Delaware 19801
(Address of principal executive offices)
(302) 658-7581
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes (X) No
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 906,464 as of September 30,
1997.
CABRE CORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
August 31, 1997 and May 31, 1997
ASSETS
August 31, 1997 May 31, 1997
(Unaudited) (Audited)
--------------- ------------
Current assets:
Cash and cash equivalents $ 72,450 $ 90,461
Accounts receivable:
Trade, net of allowances for
doubtful accounts of $59,822
each year 1,118,082 835,828
United States Government 363,633 196,815
Inventories 2,694,199 2,419,086
Prepaid expenses and other assets 7,003 8,162
Deferred income taxes 162,609 162,609
------------ ------------
Total current assets 4,417,976 3,712,961
------------ ------------
Property and equipment, net 3,378,973 3,460,736
------------ ------------
$ 7,796,949 $ 7,173,697
============ ============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Notes payable $ 1,155,000 $ 615,000
Current portion of long-term debt 231,147 233,796
Accounts payable 538,805 502,733
Accrued expenses 471,502 471,204
Income taxes payable 43,225 11,225
------------ ------------
Total current liabilities 2,439,679 1,833,958
------------ ------------
Long-term debt, less current portion 1,560,343 1,621,956
Note payable to shareholder, less
current portion 800,000 800,000
Deferred income taxes 469,644 469,644
------------ ------------
Total long-term liabilities 2,829,987 2,891,600
------------ ------------
Total liabilities 5,269,666 4,725,558
------------ ------------
Commitments and Contingencies - -
Shareholders' equity
Preferred stock, $2.00 par,
2,000,000 shares authorized,
no shares issued and outstanding. - -
Common stock, $2.00 par, 6,000,000
shares authorized 906,466 shares in
May 1997 and 906,464 in August 1997 1,813,106 1,813,111
Additional paid in capital 126,381 126,381
Retained earnings 587,796 508,647
------------ ------------
Total shareholders' equity 2,527,283 2,448,139
------------ ------------
$ 7,796,949 $ 7,173,697
============ ============
See accompanying notes to consolidated financial statements.
CABRE CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Quarters ended August 31, 1997 and 1996
(Unaudited)
1997 1996
---- ----
Sales and contract revenues $ 2,055,162 $ 2,984,839
Cost of sales and contracts 1,641,618 2,421,786
----------- -----------
Gross Profit 413,544 563,053
Sales and administration expenses 207,551 253,005
----------- -----------
Operating Profit 205,993 310,048
Other income (expense):
Interest expense (77,854) (84,122)
Interest income 19 289
Other (7,022) (2,424)
------------ -----------
Total other income (expense) (84,857) (86,257)
------------ -----------
Income before taxes 121,136 223,791
Provision for income taxes 42,000 76,939
----------- -----------
Net income 79,136 146,852
=========== ===========
Earning per common share $ 0.09 $ 0.16
=========== ===========
See accompanying notes to consolidated financial statements.
CABRE CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters ended August 31, 1997 and 1996
(Unaudited)
1997 1996
---- ----
Cash flows from operating activities:
Net income $ 79,136 $ 146,852
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 86,755 92,054
Deferred federal income tax - 6,302
Changes in assets and liabilities:
Accounts receivable (449,072) (420,373)
Inventory (275,113) 881,187
Prepaid expenses 1,159 (12,281)
Accounts payable and accrued expenses 36,383 62,302
Income taxes payable 32,000 70,637
----------- ----------
Net cash provided (used) by operating
activities (488,752) 826,680
----------- ----------
Cash flows from investing activities:
Purchase of property and equipment (4,992) (5,711)
----------- ----------
Cash flows from financing activities:
Net borrowings (payments) under
bank line of credit 540,000 (810,000)
Purchase of treasury stock (5) -
Principal payments on long term debt (64,262) (55,146)
----------- ----------
Net cash provided by financing activities 475,733 (865,146)
----------- ----------
Net increase (decrease) in cash and
cash equivalents (18,011) (44,177)
Cash and cash equivalents at beginning
of period 90,461 154,363
----------- ----------
Cash and cash equivalents at end of period $ 72,450 $ 110,186
=========== ==========
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest (none capitalized) $ 77,854 $ 84,122
Income taxes 10,000 -
See accompanying notes to consolidated financial statements.
CABRE CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATD FINANCIAL STATEMENTS
(Unaudited)
1. Statement of Information Furnished
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-QSB instructions and in the opinion of
management contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of August
31, 1997, the results of operations for the three months ending August 31,
1997 and 1996, and the cash flows for the three months ended August 31,
1997 and 1996. These results have been determined on the basis of
generally accepted accounting principles and practices applied consistently
with those used in the preparation of the Company's audited financial
statements for its fiscal year ended May 31, 1997.
2. Business
Antenna Products Corporation
- ----------------------------
The Company operates as a "Holding" company with Antenna Products
Corporation, Metal Finishing Corp, and Thirco, Inc. As its subsidiaries.
Antenna Products and Metal Finishing are operating subsidiaries with Thirco
serving as an equipment leasing company to Cabre's operating units.
Antenna Products designs, manufactures and markets standard and custom
antennas, guyed and self supported towers, monopoles, support structures,
masts and communication accessories worldwide. Customers include the U.S.
Government, both military and civil agencies, U.S. Government prime
contractors and commercial clients. Examples of Antenna Products' U.S.
Government supplied 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. Examples of the
company's commercial products include panel, sector, omnidirectional and
closed loop PCS antennas, automatic meter reading (AMR), cellular, paging
and yagi antennas, guyed towers, self supported towers and monopoles.
Metal Finishing Corp
- --------------------
Metal Finishing Corp offers a wide range of metal plating, finishing, 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. 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 September 30, 1997 at Antenna Products amounted to
approximately $5.5 million. Backlog of orders at September 30, 1997 was
approximately $2.6 million. About 90% of the current backlog will be
delivered in the 1998 fiscal year. As a service provider Metal Finishing
has no recorded backlog.
3. Inventories
The major components of inventories are as follows:
August 31, 1997 May 31, 1997
Raw materials $ 512,791 $ 975,492
Work in process 1,771,067 792,471
Finished goods 410,341 651,123
----------- -----------
$ 2,694,199 $ 2,419,086
4. Notes Payable
At August 31, 1997 notes payable consist of a revolving note payable to a
bank, maximum amount $2,000,000, interest payable monthly at the prime rate
plus 1% until September 30, 1997, when any unpaid principal and interest
shall be due.
Prime rate was 8.50% and 8.25% at August 31, 1997 and 1996, 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 August 31, 1997,
available borrowings under this credit facility were limited to the
borrowing base amount of $2,633,000. Borrowings are guaranteed by a
principal shareholder and the Company must maintain a minimum net worth of
$1,500,000 and working capital of $1,000,000.
5. Long-Term Debt
At August 31, 1997 and 1996, long-term debt consists of the following:
1997 1996
---- ----
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 1999 and maturing in May 2004. $ 800,000 $ 800,000
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. 950,283 1,007,984
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. 246,511 280,507
Note payable to a finance company payable in
monthly installments of $12,429, including
interest at 9.47% until March 1999. 228,166 349,615
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. 366,530 400,151
---------- ----------
$2,591,490 $2,838,257
========== ==========
CABRE CORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OPERATION AND FINANCIAL CONDITION
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial condition and operating
results for the period included in the accompanying financial statements.
Results of Operations
- ---------------------
First Quarter Ended August 31, 1997 Compared to First Quarter Ended August 31,
1996
The Company's net profit for the quarters ended August 31, 1997 was $79,136
compared to $146,852 in the quarter ended August 31, 1996. The decreased
profitability was the result of lower sales in the first quarter. Overall
sales were 31% lower this year with $2.06 million total deliveries in the
first quarter of fiscal year 1998 compared to $2.98 million of deliveries for
the same time period of fiscal year 1997. However, due to the nature of long
term contracts, individual quarterly results may vary dramatically and not be
indicative of a trend.
Sales and administrative expenses were lower in the first quarter of fiscal
year 1998, $208 thousand versus $253 thousand in the first quarter of fiscal
year 1997. Interest expense in the first quarter of fiscal year 1998 was
slightly lower, $78 thousand versus $84 thousand in the same time period of
fiscal year 1997.
Due to Antenna Products' continued success in commercial markets, the
Company's backlog totaled $5.5 million on September 30, 1997, up from $5.1
million at year-end.
Liquidity and Capital Resources
- -------------------------------
The Company's current assets total $4,417,976 as of August 31, 1997 with
$4,175,914 in inventory and accounts receivable. Receivables are $1,481,715
at quarter ending August 31, 1997 compared to $1,032,643 at fiscal 1997 year-
end. Net inventories have increased slightly from $2,419,086 at May 31, 1997
to $2,694,199. Cash accounts have decreased $18,011 from May 31, 1997. There
were nominal capital additions during this period. Current liabilities of the
company increased $605,721 from fiscal year end as the result of material
purchased for a new $2.5 million contract to deliver Instrument Landing System
equipment to a major customer in FY98.
Management believes that cash flows from operations of the operating
subsidiaries and current cash balances, together with available lines of
credit, will be sufficient to fund operations and expenses for the near and
mid term future. The Company at August 31, 1997 had $845,000 remaining in
loan availability against its revolving credit lines. On September 30, 1997,
Antenna Products renewed its annual working credit line of $2.0 million with
loan advances subject to a borrowing base formula applied to inventory and
receivable balances.
CABRE CORP AND SUBSIDIARIES
PART II-OTHER INFORMATION
No Applicable Items.
SIGNATURE
Pursuant to the requirements 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.
Cabre Corp
Date: October 11, 1997
s/o/f:Clark D. Wraight, Vice President
and Principal Financial Officer
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