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 November 30, 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 (IRS Employer Identification No.)
incorporation or organization)
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 November 30,
1997.
CABRE CORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
November 30, 1997 and May 31, 1997
ASSETS
November 30, 1997 May 31, 1997
(Unaudited) (Audited)
----------------- ------------
Current assets:
Cash and cash equivalents $ 83,634 $ 90,461
Accounts receivable:
Trade, net of allowances for doubtful
accounts of $59,822 each year 1,581,671 835,828
United States Government 127,684 196,815
Inventories 2,901,061 2,419,086
Prepaid expenses and other assets 26,008 8,162
Deferred income taxes 162,609 162,609
------------- -----------
Total current assets 4,882,677 3,712,961
------------- -----------
Property and equipment, net 3,292,214 3,460,736
------------- -----------
$ 8,174,891 $ 7,173,697
============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,120,000 $ 615,000
Current portion of long-term debt 231,147 233,796
Accounts payable 737,581 502,733
Accrued expenses 452,532 471,204
Income taxes payable 134,638 11,225
------------- ------------
Total current liabilities 2,675,898 1,833,958
------------- ------------
Long-term debt,less current portion 1,509,240 1,621,956
Note payable to shareholder, less
current portion 800,000 800,000
Deferred income taxes 432,231 469,644
------------- ------------
Total long-term liabilities 2,741,471 2,891,600
------------- ------------
Total liabilities 5,417,369 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 issued in May
1997 and 906,464 in November 1997 1,813,106 1,813,111
Additional paid in capital 126,381 126,381
Retained earnings 818,035 508,647
----------- ----------
Total shareholders' equity 2,757,522 2,448,139
----------- ----------
$ 8,174,891 $7,173,697
See accompanying notes to consolidated financial statements.
CABRE CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended Three Months Ended
Nov 30, 1997 Nov 30, 1996 Nov 30, 1997 Nov 30, 1996
------------ ------------ ------------ ------------
Sales and contract
revenues $ 4,505,683 $ 5,069,612 $ 2,450,521 $ 2,084,773
Cost of sales and
contracts 3,458,201 4,077,691 1,816,583 1,655,905
----------- ----------- ------------ -----------
Gross Profit 1,047,482 991,921 633,938 428,868
Sales and
administration
expenses 409,193 516,806 201,642 263,801
----------- ----------- ----------- -----------
Operating Profit 638,289 475,115 432,296 165,067
----------- ----------- ----------- -----------
Other income (expense):
Interest expense (156,102) (154,585) (78,248) (70,463)
Interest income 68 659 49 370
Other (12,872) 3,230 (5,850) 5,654
---------- ----------- ------------ ----------
Total other income
(expense) (168,906) (150,696) (84,049) (64,439)
---------- ----------- ------------ ----------
Income before taxes 469,383 324,419 348,247 100,628
Provision for income
taxes 160,000 111,084 118,000 34,145
---------- ----------- ----------- -----------
Net income $ 309,383 $ 213,335 $ 230,247 $ 66,483
========== =========== =========== ==========
Earnings per common
share $ 0.34 $ 0.23 $ 0.25 $ 0.07
========== =========== =========== ==========
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)
Six Months Ended
November 30, 1997 November 30, 1996
Cash flows from operating
activities:
Net income $ 309,383 $ 213,335
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 173,514 184,112
Deferred federal income tax (37,413) -
Changes in assets and
liabilities:
Accounts receivable (676,722) (368,945)
Inventory (481,975) 927,107
Prepaid expenses (17,846) (9,367)
Accounts payable and accrued
expenses 216,181 144,370
Income taxes payable 123,413 61,084
---------- ---------
Net cash provided (used) by
financing activities (391,465) 1,151,696
---------- ---------
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 505,000 (1,005,000)
Purchase of treasury stock (5) -
Principal payments on long term
debt (115,365) (116,656)
---------- -----------
Net cash provided by financing
activities 389,630 (1,121,656)
---------- -----------
Net increase (decrease) in cash
and cash equivalents (6,827) 24,329
Cash and cash equivalents at
beginning of period 90,461 154,363
--------- -----------
Cash and cash equivalents at end
of period $ 83,634 $ 178,692
========= ===========
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest (none capitalized) $ 156,102 $ 154,585
Income taxes 74,000 50,000
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
November 30, 1997, the results of operations for the six months ending
November 30, 1997 and 1996, and the cash flows for the six months ended
November 30, 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 PCS antennas (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 November 30, 1997 at Antenna Products amounted to
approximately $5.5 million. About 80% 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:
November 30, 1997 May 31, 1997
Raw materials $ 592,608 $ 975,492
Work in process 1,847,198 792,471
Finished goods 461,255 651,123
-------------- -------------
$ 2,901,061 $ 2,419,086
============== =============
4. Notes Payable
At November 30, 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, 1998, when any unpaid principal and interest
shall be due.
Prime rate was 8.50% at November 30, 1997 and 1996.
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 November 30, 1997,
available borrowings under this credit facility were limited to the
borrowing base amount of $2,887,025. 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 November 30, 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. 950,048 993,988
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. 243,678 272,008
Note payable to a finance company payable in monthly
installments of $12,429, including interest at 9.47%
until March 1999. 194,798 318,630
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. 357,528 394,719
--------- --------
$2,546,052 $2,779,345
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
Second Quarter Ended November 30, 1997 Compared to Second Quarter Ended
November 30, 1996
- -----------------------------------------------------------------------
The Company's net profit for the quarter ended November 30, 1997 was $230,247
compared to $66,483 in the quarter ended November 30, 1996. The increased
profitability was the result of improved performance and higher sales of
Antenna Products. Overall sales were 18% higher this year with $2.45 million
total deliveries in the second quarter of fiscal year 1998 compared to $2.08
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 second quarter of fiscal
year 1998, $202 thousand versus $264 thousand in the second quarter of fiscal
year 1997. Interest expense in the second quarter of fiscal year 1998 was
slightly higher, $78 thousand versus $70 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 November 30, 1997, compared to a
total backlog of $2.6 million on November 30, 1996.
Six Months Ended November 30, 1997 Compared to Six Months Ended November 30,
1996
- ---------------------------------------------------------------------------
For the six month period ending November 30, 1997 the net profit was $309,383
compared to a net profit of $213,335 in the same six month period of 1996.
Sales were $4.51 million in the first half of fiscal year 1998, 11% lower than
the $5.07 million of sales in the first half of fiscal year 1997. The gross
profit margin for the first six months was 23% compared to 20% for the first
six months of last year. Sales and administrative expenses as a ratio to
sales were 9% in the first six months of this year compared to 10% in the same
period last year. Warranty charges of $34,485 were slightly lower than last
year's rate, and averaged less than 1% of sales. Discretionary products
development spending was $103,673, or 2% of sales, 1% lower than the
comparable period last year. The product development efforts have resulted in
the development of a new line of tactical vehicular mounted antennas for
military applications in the UHF and VHF frequency ranges. The new antennas
are rugged, spring mounted designs that are capable of transmitting and
receiving simultaneously when used with frequency hopping radios. Sales of
the new tactical antennas totaled $235 thousand in the first six months of
this year.
Marketing of the new line of commercial antennas for the wireless
telecommunications industry continues with limited success. Antenna Products
was selected as the antenna supplier for one of the C-Band license holders.
The first C-Band cell sites using Antenna Products' PCS antennas were
completed in November. The coverage provided by the antennas has been
reported as excellent and orders for the next construction phase are expected
in the third quarter. Twelve PCS sector and two AMR omnidirectional antennas
are currently being evaluated at seven customer sites. The field tests must
be completed before Antenna Products can be accepted as an approved vendor
with each of these customers and bid on their 1998 antenna requirements.
More information on new products at Antenna Products is available on the
Internet web page at://WWW.antennaproducts.com.
Liquidity and Capital Resources
- -------------------------------
The Company's current assets total $4,882,677 as of November 30, 1997 with
$4,610,416 in inventory and accounts receivable. Receivables are $1,709,355
at the quarter ending November 30, 1997 compared to $1,032,643 at fiscal 1997
year-end. Net inventories have increased from $2,419,086 at May 31, 1997 to
$2,901,061. Cash accounts have decreased $6,827 from May 31, 1997. There
were nominal capital additions during this period. Current liabilities of the
company increased $841,940 from fiscal year end as the result of material
purchased for work in- process on contracts at Antenna Products.
Approximately 80% of this work in-process will deliver 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. 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. The Company at
November 30, 1997 had $880,000 remaining in loan availability against this
revolving credit line.
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: January 8, 1998 s/o/f: Clark D. Wraight
----------------
Vice President
and Principal Financial Officer
3
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] MAY-31-1998
[PERIOD-END] NOV-30-1997
[CASH] 83,634
[SECURITIES] 0
[RECEIVABLES] 1,709,355
[ALLOWANCES] 0
[INVENTORY] 2,901,061
[CURRENT-ASSETS] 4,882,677
[PP&E] 3,292,214
[DEPRECIATION] 173,514
[TOTAL-ASSETS] 8,174,891
[CURRENT-LIABILITIES] 2,675,898
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 1,813,106
[OTHER-SE] 944,416
[TOTAL-LIABILITY-AND-EQUITY] 8,174,891
[SALES] 4,505,683
[TOTAL-REVENUES] 4,505,683
[CGS] 3,458,201
[TOTAL-COSTS] 409,193
[OTHER-EXPENSES] 12,804
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 156,102
[INCOME-PRETAX] 469,383
[INCOME-TAX] 160,000
[INCOME-CONTINUING] 309,383
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 309,383
[EPS-PRIMARY] .34
[EPS-DILUTED] .34
</TABLE>
