SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended August 27, 1995 Commission File No. 0-3362
SI HANDLING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 22-1643428
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 Kuebler Road, Easton, PA 18040
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: 610-252-732l
Indicate by checkmark 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
Number of shares of common stock, par value $1.00 per share, outstanding as
of August 27, 1995: 2,467,010.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SI HANDLING SYSTEMS, INC.
Balance Sheets
(in thousands, except share data)
August February
ASSETS 27, 1995 26, 1995
Current assets:
Cash and cash equivalents, principally
time deposits $ 2,303 571
Receivables:
Trade 4,067 6,654
Notes and other receivables 80 147
Total receivables 4,147 6,801
Costs and estimated earnings in excess
of billings 2,113 1,400
Inventories:
Raw materials 726 847
Finished goods and work in process 992 998
Total inventories 1,718 1,845
Deferred income tax benefits 322 242
Prepaid expenses and other current assets 79 266
Total current assets 10,682 11,125
Property, plant and equipment, at cost:
Land 27 27
Buildings and improvements 3,298 3,298
Machinery and equipment 4,091 3,958
7,416 7,283
Less accumulated depreciation 5,836 5,613
Net property, plant and equipment 1,580 1,670
Investment in joint venture 392 251
Other assets, at cost less accumulated
amortization of $51 in 1996 and $161
in 1995 85 90
Total assets $12,739 13,136
See accompanying notes to financial statements.
<PAGE>
Item 1. Financial Statements (Continued)
SI HANDLING SYSTEMS, INC.
Balance Sheets
(in thousands, except share data)
August February
LIABILITIES AND STOCKHOLDERS' EQUITY 27, 1995 26, 1995
Current liabilities:
Current installments of long-term debt $ 22 21
Accounts payable 1,133 2,386
Customers' deposits and billings in
excess of costs and estimated earnings 2,062 1,425
Accrued salaries, wages, and commissions 448 453
Income taxes payable 223 7
Accrued royalties payable 431 620
Liabilities and deferred credits related
to obligations and receipts under the
AGV Asset Purchase Agreement 807 931
Accrued other liabilities 911 703
Total current liabilities 6,037 6,546
Long-term liabilities:
Long-term debt, excluding current
installments:
Mortgages payable 59 71
Revolving credit loan payable to bank - 500
Total long-term debt 59 571
Deferred compensation 89 94
Total long-term liabilities 148 665
Stockholders' equity:
Common stock, $1 par value; authorized
5,000,000 shares; issued 2,501,392
shares in 1996 and 1,679,134 shares
in 1995 2,501 1,679
Additional paid-in capital 3,703 4,525
Retained earnings (deficit) 580 (17)
6,784 6,187
Less treasury stock, at cost (34,382 shares
in 1996 and 39,056 shares in 1995) (230) (262)
Total stockholders' equity 6,554 5,925
Total liabilities and stockholders'
equity $12,739 13,136
See accompanying notes to financial statements.
<PAGE>
Item 1. Financial Statements (Continued)
<TABLE>
SI HANDLING SYSTEMS, INC.
Statements of Operations
(in thousands, except share and per share data)
<CAPTION>
Three Months Ended Six Months Ended
August 27, August 28, August 27, August 28,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $ 6,884 5,507 12,981 13,286
Cost of sales 5,253 5,186 9,757 11,484
Gross profit 1,631 321 3,224 1,802
Selling, general,
and administrative
expenses 1,274 1,380 2,433 2,780
Product development
costs 78 129 183 209
Interest expense 4 21 8 35
Interest income ( 43) - (68) (2)
Other expense
(income), net ( 174) - (239) (19)
1,139 1,530 2,317 3,003
Earnings (loss)
from operations
before income
taxes 492 (1,209) 907 (1,201)
Income tax expense
(benefit) 71 ( 3) 136 -
Net earnings (loss) $ 421 (1,206) 771 ( 1,201)
Net earnings (loss)
per common share
and common share
equivalent* $ .17 (.49) .31 (.49)
Dividends per share** $ - - .07 .07
* On July 18, 1995, the Board of Directors declared a three-for-two stock
split that was distributed on August 11, 1995 to stockholders of record on
July 31, 1995. Earnings (loss) per share for all periods presented reflect
the three-for-two stock split and are based on the weighted average number
of shares outstanding and equivalent shares from dilutive stock options,
which were 2,479,000 and 2,456,000, respectively, at August 27, 1995 and
August 28, 1994.
** Dividends per share for all periods presented were adjusted for the
three-for-two stock split that was distributed on August 11, 1995 to
stockholders of record on July 31, 1995.
See accompanying notes to financial statements.
<PAGE>
Item 1. Financial Statements (Continued)
SI HANDLING SYSTEMS, INC.
Statements of Cash Flows
(in thousands) Six Months Ended
August 27, August 28,
1995 1994
Cash flows from operating activities:
Net earnings (loss) $ 771 (1,201)
Adjustments to reconcile net earnings
(loss) to net cash provided by
(used in)operating activities:
Depreciation of plant and equipment 223 265
Amortization of intangibles and deferred
costs 5 (13)
Equity in income of joint venture (141) (72)
Gain on disposition of equipment - (2)
Changes in operating assets and liabilities:
Receivables 2,654 (432)
Costs and estimated earnings in excess
of billings (713) 1,130
Inventories 127 176
Deferred income tax benefits (80) 329
Prepaid expenses and other current asset 187 (7)
Other noncurrent assets - 8
Accounts payable (1,253) (270)
Customers' deposits and billings in excess
of costs and estimated earnings 637 (733)
Accrued salaries, wages, and commissions (5) (4)
Income taxes payable 216 -
Accrued royalties payable (189) (56)
Liabilities and deferred credits related
to obligations and receipts under the
AGV Asset Purchase Agreement (124) -
Accrued other liabilities 208 (182)
Deferred compensation (5) 29
Net cash provided by (used in)
operating activities 2,518 ( 1,035)
Cash flows from investing activities:
Proceeds from the disposition of property,
plant and equipment - 2
Additions to property, plant and equipment (133) (128)
Net cash used in investing activities (133) (126)
Cash flows from financing activities:
Sale of treasury stock in connection with
employee stock option plan 23 -
Repayment of long-term debt, including
current portion (11) (10)
Increase in (repayment of) loan
payable to bank (500) 1,300
Dividends paid on common stock (164) (164)
Dividends paid to stockholders for
fractional shares in connection with
three-for-two stock split (1) -
Net cash provided (used) by financing
activities (653) 1,126
<PAGE>
Item 1. Financial Statements (Continued)
SI HANDLING SYSTEMS, INC.
Statements of Cash Flows (Continued)
(in thousands)
Six Months Ended
August 27, August 28,
1995 1994
Increase (decrease) in cash and cash
equivalents 1,732 (35)
Cash and cash equivalents, beginning of period 571 640
Cash and cash equivalents, end of period $2,303 605
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 8 28
Income taxes $ - -
See accompanying notes to financial statements.
<PAGE>
Item 1. Financial Statements (Continued)
SI HANDLING SYSTEMS, INC.
Notes to Financial Statements
Six Months Ended August 27, 1995 and August 28, 1994
(1) The information contained in this 10-Q report is unaudited and
is subject to year-end adjustments and audit. However, in the
opinion of management, the interim financial statements
furnished reflect all adjustments and accruals which are
necessary to a fair statement of results for the interim
periods presented.
During March, 1993, SI Handling Systems, Inc. (the "Company"
or "SI") and Automated Prescription Systems, Inc. ("APS") formed a
joint venture named SI/BAKER, INC. ("SI/BAKER" or the "joint
venture"). The joint venture draws upon the automated materials
handling systems experience of SI and the automated pill counting
and dispensing products of APS to provide automated pharmacy
systems. Each member company contributed $100,000 in capital to
fund the joint venture.
The joint venture designs and installs computer controlled,
fully automated, integrated systems for managed care pharmacy
operations. The joint venture's systems are viewed as labor saving
devices which address the issues of improved productivity and cost
reduction. Systems can be expanded as customers' operations grow
and they may be integrated with a wide variety of components to
meet specific customer needs.
Schedule A contains the SI/BAKER, INC. financial statements.
The information contained in the SI/BAKER, INC. financial
statements is unaudited and is subject to year-end adjustments and
audit. However, in the opinion of management, the interim
financial statements furnished reflect all adjustments and accruals
which are necessary to a fair statement of results for the interim
periods presented.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources - $(000's)
The Company's cash and cash equivalents increased to $2,303
during the first six months of fiscal 1996 from $571 at the end of
fiscal 1995. The increase resulted from cash provided by operating
activities totaling $2,518 and proceeds of $23 from the sale of
treasury stock in connection with the employee stock option plan.
Partially offsetting the increase in cash and cash equivalents was
the repayments of long-term debt of $11 and the revolving credit
loan payable to bank of $500, purchases of equipment of $133, the
payment of $164 in cash dividends to stockholders, and the payment of $1
in cash dividends to stockholders for fractional shares in connection
with the three-for-two stock split. Funds used by operating activities
during the first six months of fiscal 1995 were $1,035.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
SI HANDLING SYSTEMS, INC.
Liquidity and Capital Resources - $(000's) (Continued)
The Company has a three-year, $5,000 committed revolving credit
facility with an expiration date of July 31, 1997. The revolving
credit facility is secured by a lien position on accounts receivable
and land and buildings and contains various restrictive covenants
relating to additional indebtedness, asset acquisitions or dispositions,
and maintenance of certain financial ratios. The Company was in
compliance with all covenants during fiscal 1996 or had obtained
appropriate waivers from the lender.
On March 31, 1992, the Company concluded the acquisition of all
of the outstanding capital stock of BT Systems, Inc. ("BT Systems"),
a U.S. corporation, from its Swedish parent company, BT Systems AB,
for $2,000. The Company paid $1,000 in cash and issued a 6% note
for $1,000, which was paid on March 31, 1993. The acquisition had
been accounted for as a purchase.
During fiscal 1995, the Company announced the sale of its AGVS
product line to Apogee Robotics, Inc.("Apogee") as previously described
in the Company's Annual Report on Form 10-K. The Company has negotiated
a settlement agreement for the litigation with Apogee, and both parties
are encouraging the bankruptcy court to approve it. The Company believes
that the bankruptcy court will decide on the settlement agreement
during the third quarter of fiscal 1996. The Company expects that the
proposed settlement agreement, when approved in its current form, will not
have a material adverse effect on the Company's financial position or
results of operations.
The Company has not accepted new AGVS contracts since October 6, 1994
but remains liable to complete existing AGVS contracts. The Company
believes that it will be able to complete existing contracts and presently
anticipates continuing the sale of parts and other services (aftermarket
business) relative to AGVS.
On July 18, 1995, the Board of Directors of the Company declared
a three-for-two stock split that was distributed on August 11, 1995 to
the stockholders of record on July 31, 1995. The purpose of the stock
split was to increase the number of outstanding shares and broaden
ownership and availability of the Company's common stock.
The Company anticipates that its financial resources consisting of
its current assets, anticipated cash flow, and the available revolving
credit facility will adequately finance its operating requirements in
the foreseeable future, including the effects of the rescinded Apogee
transaction.
The Company plans to consider expansion opportunities as they arise,
although ongoing operating results of the Company, the economics of
the expansion, and the circumstances justifying the expansion will be
key factors in determining the amount of resources the Company will devote
to further expansion. At this time, the Company does not have any
material capital commitments.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
SI HANDLING SYSTEMS, INC.
Results of Operations - $(000's)
(a) Six Months Ended August 27, 1995 vs. Six Months Ended August
28, 1994
The Company's net income for the first six months of fiscal 1996
was $771 compared to a net loss of $1,201 for the first six months
of fiscal 1995. Net sales of $12,981 for the first six months of
fiscal 1996 decreased 2.3% compared to net sales of $13,286 for the
first six months of fiscal 1995. The sales decrease in fiscal 1996 is
primarily attributable to a decline in AGVS sales due to the Company's
reduced emphasis on the AGVS product line, with selling efforts
relating to those products currently confined to the parts and service
business. Partically offsetting the decline in AGVS sales is an increase
in sales of the Company's Cartrac product, principally in the
automotive market.
Gross profit as a percentage of sales was 24.8% for the first six
months of fiscal 1996 compared to 13.6% for the first six months of
fiscal 1995. The increase in gross profit percentage for the first
six months of fiscal 1996 is primarily attributable to a change in
mix favoring the Company's traditional products, such as Order
Selection and Cartrac. Contributing to the lower gross profit
percentage in the fiscal 1995 comparable period were primarily
two factors: difficulties in executing and concluding several AGVS
contracts as additional costs became necessary to meet contractual
throughput and durability requirements, and overhead expenses related
to AGVS operations.
Selling, general, and administrative expenses of $2,433 were lower
by $347 in the first six months of fiscal 1996 than in the comparable
fiscal 1995 period. The favorable performance is due primarily to a
reduction in selling expenses pertaining to the Company's AGVS product
line. Also contributing to the favorable performance was the cost
improvement measure of personnel reductions associated with the
restructuring action that occurred during the fourth quarter of fiscal
1995.
Product development costs of $183 were lower by $26 in the first
six months of fiscal 1996 than in the comparable fiscal 1995 period.
Development programs in the first six months of fiscal 1996 included
improvements to the Order Selection and Sortation product lines, with
particular emphasis aimed at the Pick-To-Light and Small Parcel Sortation
System. Development programs in the first six months of fiscal 1995
included improvements to the AGVS and Order Selection product lines.
Interest income of $68 was higher by $66 in the first six months of
fiscal 1996 than in the comparable fiscal 1995 period. The increase
in interest income is primarily attributable to the higher level of
funds provided by operations and available for short-term investments
during fiscal 1996.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
SI HANDLING SYSTEMS, INC.
Results of Operations - $(000's)
Interest expense of $8 was lower by $27 in the first six months of
fiscal 1996 than in the comparable fiscal 1995 period. The decrease
in interest expense is primarily attributable to a lower level of
borrowings under the Company's revolving credit facility during
fiscal 1996.
The favorable variance in other expense (income), net, is primarily
attributable to the strong performance recorded by the SI/BAKER, INC.
joint venture.
The Company incurred income tax expense of $136 during the first
six months of fiscal 1996 compared to the recognition of no income
tax expense in the comparable fiscal 1995 period. During the first
six months of fiscal 1996, income tax expense was less than the statutory
rate of 34% due to the recognition of previously unrecognized deferred
tax assets which are anticipated to be realizable due to the current
and projected profitability of the Company.
(b) Three Months Ended August 27, 1995 vs. Three Months Ended August 28,
1994
Changes in the second quarter of the current fiscal year compared
to the prior year were consistent with those previously noted above for
the six-month period, except for the following areas:
Net sales of $6,884 for the second quarter of fiscal 1996
increased 25.0% compared to net sales of $5,507 for the second quarter
of fiscal 1995. The sales increase is primarily attributable to sales
of the Company's Cartrac product, principally in the automotive market.
Partially offsetting the increase was a decline in AGVS sales due to the
Company's reduced emphasis on the AGVS product line, with selling efforts
relating to those products currently confined to the parts and service
business.
Gross profit as a percentage of sales was 23.7% for the second quarter
of fiscal 1996 compared to 5.8% for the second quarter of fiscal 1995.
The change is consistent with that noted above for the six-month period;
however, the impact is far more pronounced in light of the relationship of
higher overhead to lower revenues occurring in the fiscal 1995 comparable
period.
The Company incurred income tax expense of $71 during the second quarter
of fiscal 1996, while the Company recognized an income tax benefit of $3
during the second quarter of fiscal 1995.
<PAGE>
SI HANDLING SYSTEMS, INC.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders was held on July 18,
1995 with the following item being submitted to a vote by stockholders:
1. The election of five directors.
Details of the proposal noted above were provided to stockholders
in the form of a Notice of Annual Meeting and Proxy Statement dated
June 12, 1995 and mailed on June 14, 1995, with such solicitation being
in accordance with Regulation 14 of Securities and Exchange Act of 1934.
There was no solicitation in opposition to the management's nominees as
listed in the Proxy Statement, and all management's nominees were elected.
Item 5. Other Information
On July 1, 1995, Joel L. Hoffner resigned as Vice President -
Product Management in order to pursue another non-competing career
opportunity. On July 18, 1995, Mr. David A. Clark was elected Vice
President - Warehousing & Distribution Systems of the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended August
27, 1995.
<PAGE>
SI HANDLING SYSTEMS, INC.
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.
SI HANDLING SYSTEMS, INC.
(Registrant)
/s/ Barry V. Mack
Barry V. Mack
Dated:10/10/95 Vice President - Finance
(Signature)
<PAGE>
Schedule A
SI/BAKER, INC.
Financial Statements
August 31, 1995
<PAGE>
SI/BAKER, INC.
Balance Sheets
August 31, 1995 and February 28, 1995
(In Thousands, Except Share Data)
August February
ASSETS 31, 1995 28, 1995
Current assets:
Cash and cash equivalents, principally
time deposits $2,154 1,830
Receivables:
Trade 467 940
Other receivables - 12
Total receivables 467 952
Costs and estimated earnings in excess
of billings 243 271
Inventories - purchased parts 13 13
Deferred income tax benefits 30 30
Prepaid expenses and other current assets 16 8
Total current assets 2,923 3,104
Machinery and equipment, at cost 62 57
Less: accumulated depreciation 16 11
Net machinery and equipment 46 46
Deferred income tax benefits 4 4
Total assets $2,973 3,154
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 556 586
Customers' deposits and billings in
excess of costs and estimated earnings 1,075 1,572
Accrued salaries, wages, and commissions 127 122
Income taxes payable 207 6
Accrued royalties payable 88 257
Accrued other liabilities 136 108
Total current liabilities 2,189 2,651
Stockholders' equity:
Common stock, $1 par value; authorized
1,000 shares; issued 200 shares--
Additional paid-in capital 200 200
Retained earnings 584 303
Total stockholders' equity 784 503
Total liabilities and stockholders'
equity $2,973 3,154
<PAGE>
</TABLE>
<TABLE>
SI/BAKER, INC.
Statements of Operations
Six Months Ended August 31, 1995 and 1994
(In Thousands)
<CAPTION>
Three Months Ended Six Months Ended
August 31, August 31, August 31, August 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $ 2,268 1,674 4,225 3,074
Cost of sales 1,459 1,303 3,050 2,475
Gross profit 809 371 1,175 599
Selling, general,
and administrative
expenses 258 214 443 370
Product development
costs 55 57 91 92
Royalty expense, net 88 - 166 -
Interest income ( 24) ( 2) ( 48) ( 8)
Other (income)
expense, net ( 2) ( 47) 1 ( 87)
375 222 653 367
Earnings from
operations
before income
taxes 434 149 522 232
Income tax expense 201 56 241 89
Net earnings $ 233 93 281 143
</TABLE>
<PAGE>
SI/BAKER, INC.
Statements of Cash Flows
Six Months Ended August 31, 1995 and 1994
(In Thousands)
Six Months Ended
August 31, August 31,
1995 1994
Cash flows from operating activities:
Net earnings $ 281 143
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation of machinery and equipment 5 3
Changes in operating assets and
liabilities:
Receivables 485 666
Costs and estimated earnings in
excess of billings 28 (225)
Prepaid expenses and other
current assets (8) (25)
Accounts payable (30) 201
Customers' deposits and billings
in excess of costs and estimated
earnings (497) (443)
Accrued salaries, wages, and
commissions 5 14
Income taxes payable 201 (3)
Accrued royalties payable (169) -
Accrued other liabilities 28 24
Net cash provided by operating activities 329 355
Cash flows used in investing activities:
Additions to machinery and equipment (5) (14)
Increase in cash and cash equivalents 324 341
Cash and cash equivalents, beginning of
period 1,830 806
Cash and cash equivalents, end of period $2,154 $1,147
Supplemental disclosure of cash flow
information:
Cash paid during the period for income
taxes $ 40 93
<PAGE>
EXHIBIT INDEX
27 - FINANCIAL DATA SCHEDULE
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED
FROM FORM 10-Q FOR THE QUARTER
ENDED AUGUST 27, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000090045
<NAME> SI HANDLING SYSTEMS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-03-1996
<PERIOD-END> AUG-27-1995
<CASH> 2,303
<SECURITIES> 0
<RECEIVABLES> 4,067
<ALLOWANCES> 0
<INVENTORY> 1,718
<CURRENT-ASSETS> 10,682
<PP&E> 7,416
<DEPRECIATION> 5,836
<TOTAL-ASSETS> 12,739
<CURRENT-LIABILITIES> 6,037
<BONDS> 59
<COMMON> 2,501
0
0
<OTHER-SE> 4,053
<TOTAL-LIABILITY-AND-EQUITY> 12,739
<SALES> 12,981
<TOTAL-REVENUES> 12,981
<CGS> 9,757
<TOTAL-COSTS> 9,757
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> 907
<INCOME-TAX> 136
<INCOME-CONTINUING> 771
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 771
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
