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 May 28, 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 May 28, 1995: 1,640,353.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SI HANDLING SYSTEMS, INC.
Balance Sheets
(in thousands, except share data)
May February
ASSETS 28, 1995 26, 1995
Current assets:
Cash and cash equivalents, principally
time deposits $ 2,350 571
Receivables:
Trade 3,694 6,654
Notes and other receivables 71 147
Total receivables 3,765 6,801
Costs and estimated earnings in excess
of billings 2,122 1,400
Inventories:
Raw materials 891 847
Finished goods and work in process 1,017 998
Total inventories 1,908 1,845
Deferred income tax benefits 322 242
Prepaid expenses and other current assets 118 266
Total current assets 10,585 11,125
Property, plant and equipment, at cost:
Land 27 27
Buildings and improvements 3,298 3,298
Machinery and equipment 3,976 3,958
7,301 7,283
Less accumulated depreciation 5,725 5,613
Net property, plant and equipment 1,576 1,670
Investment in joint venture 275 251
Other assets, at cost less accumulated
amortization of $48 in 1996 and $161
in 1995 87 90
Total assets $12,523 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)
May February
LIABILITIES AND STOCKHOLDERS' EQUITY 28, 1995 26, 1995
Current liabilities:
Current installments of long-term debt $ 22 21
Accounts payable 1,395 2,386
Customers' deposits and billings in
excess of costs and estimated earnings 2,092 1,425
Accrued salaries, wages, and commissions 438 453
Income taxes payable 152 7
Accrued royalties payable 288 620
Liabilities and deferred credits related
to obligations and receipts under the
AGV Asset Purchase Agreement 1,031 931
Accrued other liabilities 843 703
Total current liabilities 6,261 6,546
Long-term liabilities:
Long-term debt, excluding current
installments:
Mortgages payable 63 71
Revolving credit loan payable to bank - 500
Total long-term debt 63 571
Deferred compensation 87 94
Total long-term liabilities 150 665
Stockholders' equity:
Common stock, $1 par value; authorized
5,000,000 shares; issued 1,679,134
shares in 1996 and 1995 1,679 1,679
Additional paid-in capital 4,525 4,525
Retained earnings (deficit) 168 (17)
6,372 6,187
Less treasury stock, at cost (38,781
shares in 1996 and 39,056 shares in
1995) (260) (262)
Total stockholders' equity 6,112 5,925
Total liabilities and stockholders'
equity $12,523 13,136
See accompanying notes to financial statements.
<PAGE>
Item 1. Financial Statements (Continued)
SI HANDLING SYSTEMS, INC.
Statements of Operations
(in thousands, except share and per share data)
Three Months Ended
May 28, May 29,
1995 1994
Net sales $ 6,097 7,779
Cost of sales 4,504 6,298
Gross profit 1,593 1,481
Selling, general, and
administrative expenses 1,159 1,400
Product development costs 105 80
Interest expense 4 14
Interest income (25) (2)
Other expense (income), net (65) (19)
1,178 1,473
Earnings from operations
before income taxes 415 8
Income tax expense 65 3
Net earnings $ 350 5
Net earnings per common
share and common share
equivalent* $ .21 -
Dividends per share $ .10 .10
*Earnings per share are based on the weighted average number of shares
outstanding and equivalent shares from dilutive stock options, which were
1,652,000 and 1,658,000, respectively, at May 28, 1995 and May 29, 1994.
See accompanying notes to financial statements.
<PAGE>
Item 1. Financial Statements (Continued)
SI HANDLING SYSTEMS, INC.
Statements of Cash Flows
(in thousands)
Three Months Ended
May 28, May 29,
1995 1994
Cash flows from operating activities:
Net earnings $ 350 5
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Depreciation of plant and equipment 112 139
Amortization of intangibles and deferred
costs 3 (7)
Equity in income of joint venture (24) (25)
Changes in operating assets and liabilities:
Receivables 3,036 (1,558)
Costs and estimated earnings in excess
of billings (722) (111)
Inventories (63) 549
Deferred income tax benefits (80) -
Prepaid expenses and other current assets 148 14
Other noncurrent assets - 2
Accounts payable (991) (223)
Customers' deposits and billings in excess
of costs and estimated earnings 667 (686)
Accrued salaries, wages, and commissions (15) 55
Income taxes payable 145 3
Accrued royalties payable (332) (104)
Liabilities and deferred credits related
to obligations and receipts under the
AGV Asset Purchase Agreement 100 (275)
Accrued other liabilities (24)
Deferred compensation (7) 10
Net cash provided by (used in)
operating activities 2,303 (2,212)
Cash flows from investing activities:
Additions to property, plant and equipment (18) (94)
Net cash used in investing activities (18) (94)
Cash flows from financing activities:
Sale of treasury stock in connection with
employee stock option plan 1 -
Repayment of long-term debt, including
current portion (7) (7)
Increase in (repayment of) loan
payable to bank (500) 2,300
Net cash provided (used) by financing
activities (506) 2,293
<PAGE>
Item 1. Financial Statements (Continued)
SI HANDLING SYSTEMS, INC.
Statements of Cash Flows (Continued)
(in thousands)
Three Months Ended
May 28, May 29,
1995 1994
Increase (decrease) in cash and cash
equivalents 1,779 (13)
Cash and cash equivalents, beginning of period 571 640
Cash and cash equivalents, end of period $2,350 627
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 5 7
Income taxes $ - -
Supplemental disclosure of noncash financing
activities:
Cash dividends declared in May but
payable in June $ 164 164
See accompanying notes to financial statements.
<PAGE>
Item 1. Financial Statements (Continued)
SI HANDLING SYSTEMS, INC.
Notes to Financial Statements
Three Months ended May 28, 1995 and May 29, 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 $2,350
during the first three months of fiscal 1996 from $571 at the end
of fiscal 1995. The increase resulted from cash provided by
operating activities totalling $2,303 and proceeds of $1 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 $7 and the
revolving credit loan payable to bank of $500, and purchases of
equipment of $18. Funds used by operating activities during the
<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)
first three months of fiscal 1995 were $2,212.
The Company has a three-year, $5,000 committed revolving credit
facility with an original expiration date of July 31, 1996;
however, during April, 1995 the Company's principal bank extended
the expiration date of the revolving credit facility to 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.
During the first quarter of fiscal 1996, the Company repaid its
borrowings under the revolving credit facility.
On March 31, 1992, the Company concluded the aquisition 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 $1,000, which was paid on March 31, 1993. The acquisition has
been accounted for as a purchase.
During fiscal 1995, the Company announced the sale of its AGVS
product line to Apogee Robotics, Inc. as previously described in
the Company's Annual Report on Form 10-K.
The Company has not accepted new AGVS contracts since October 6,
1994 but remains liable to complete existing AGVS contracts. The
Company believes that it will be able to complete existing
contracts and presently anticipates continuing the sale of parts
and other services (aftermarket business) relative to AGVS.
On May 11, 1995, the Board of Directors of the Company declared
a cash dividend of ten cents ($.10) per share, reflecting
confidence in the favorable impact of the actions taken relative to
AGVS and the fiscal 1995 Corporate restructuring and the increase
in the backlog of business at February 26, 1995 versus the prior
year end.
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)
Three Months Ended May 28, 1995 vs. Three Months Ended May 29,
1994
The Company's net income for the first quarter of fiscal 1996 was
$350 compared to net income of $5 for the first quarter of fiscal
1995. Net sales of $6,097 for the first quarter of fiscal 1996
decreased 21.6% compared to net sales of $7,779 for the first
quarter 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 currently being aimed at the AGVS parts and service
(aftermarket) business.
Gross profit as a percentage of sales was 26.1% for the first
quarter of fiscal 1996 compared to 19.0% for the first quarter of
fiscal 1995. The increase in gross profit percentage for the first
quarter 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 difficulties in executing
and concluding several AGVS contracts as additional costs became
necessary to meet contractual throughput and durability
requirements.
Product development costs of $105 were higher by $25 in the
first quarter of fiscal 1996 than in the comparable fiscal 1995
period. Development programs in the first quarter of fiscal 1996
included improvements to the Order Selection and Sortation product
lines, with particular emphasis aimed at the Accupic Pick-To-Light
and Small Parcel Sortation Systems. Development programs in the
first quarter of fiscal 1995 included improvements to the AGVS and
Order Selection product lines.
Selling, general, and administrative expenses of $1,159 were
lower by $241 in the first quarter of fiscal 1996 than in the first
quarter of fiscal 1995. The favorable variance is due to a
reduction in overhead expenses pertaining to the Company's
Automated Guided Vehicle Systems product line which was sold
effective August 26, 1994 and later rescinded. Also contributing
to the favorable variance was the cost improvement measure of
manpower reductions associated with restructuring the Company's
operations during the fourth quarter of fiscal 1995.
Interest income of $25 was higher by $23 in the first quarter
of fiscal 1996 than in the comparable fiscal 1995 period. The
increase in interest income is primarily attributable to the higher
level of funds available for short-term investments during fiscal
1996.
The favorable variance in other expense (income), net, is
primarily attributable to the improved performance of its joint
<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)(Continued)
Three Months Ended May 28, 1995 vs. Three Months Ended May 29,
1994 (Continued)
venture company, SI/BAKER.
The Company incurred income tax expense of $65 during the
first quarter of fiscal 1996 compared to income tax expense of $3
in the comparable fiscal 1995 period. During the first quarter 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 projected
profitability of the Company.
PART II - OTHER INFORMATION
None.
<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)
Barry V. Mack
Dated:07/11/95 Vice President - Finance
(Signature)
<PAGE>
Schedule A
SI/BAKER, INC.
Financial Statements
May 31, 1995
<PAGE>
SI/BAKER, INC.
Balance Sheets
May 31, 1995 and February 28, 1995
(in thousands, except share data)
May February
ASSETS 31, 1995 28, 1995
Current assets:
Cash and cash equivalents, principally
time deposits $1,690 1,830
Receivables:
Trade 1,421 940
Other receivables 11 12
Total receivables 1,432 952
Costs and estimated earnings in excess
of billings 80 271
Inventories - purchased parts 13 13
Deferred income tax benefits 30 30
Prepaid expenses and other current assets 42 8
Total current assets 3,287 3,104
Machinery and equipment, at cost 62 57
Less: accumulated depreciation 13 11
Net machinery and equipment 49 46
Deferred income tax benefits 4 4
Total assets $3,340 3,154
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 764 586
Customers' deposits and billings in
excess of costs and estimated earnings 1,771 1,572
Accrued salaries, wages, and commissions 64 122
Income taxes payable 12 6
Accrued royalties payable 79 257
Accrued other liabilities 99 108
Total current liabilities 2,789 2,651
Stockholders' equity:
Common stock, $1 par value; authorized
1,000 shares; issued 200 shares - -
Additional paid-in capital 200 200
Retained earnings 351 303
Total stockholders' equity 551 503
Total liabilities and stockholders'
equity $3,340 3,154
<PAGE>
SI/BAKER, INC.
Statements of Operations
Three months ended May 31, 1995 and 1994
(in thousands)
Three Months Ended
May 31, May 31,
1995 1994
Net sales $ 1,957 1,400
Cost of sales 1,591 1,172
Gross profit 366 228
Selling, general, and
administrative expenses 185 156
Product development costs 36 35
Royalty expense, net 78 -
Interest income (24) (6)
Other (income) expense, net 3 (40)
278 145
Earnings from operations
before income taxes 88 83
Income tax expense 40 33
Net earnings $ 48 50
<PAGE>
SI/BAKER, INC.
Statements of Cash Flows
Three months ended May 31, 1995 and 1994
(in thousands)
Three Months Ended
May 31, May 31,
1995 1994
Cash flows from operating activities:
Net earnings $ 48 50
Adjustments to reconcile net earnings
to net cash used by operating
activities:
Depreciation of machinery and equipment 2 1
Changes in operating assets and liabilities:
Receivables (480) 566
Costs and estimated earnings in excess
of billings 191 (411)
Prepaid expenses and other current assets (34) (40)
Accounts payable 178 (331)
Customers' deposits and billings in excess
of costs and estimated earnings 199 (301)
Accrued salaries, wages, and commissions (58) 3
Income taxes payable 6 (24)
Accrued royalties payable (178) -
Accrued other liabilities (9) 9
Net cash used by operating activities (135) (478)
Cash flows used in investing activities:
Additions to machinery and equipment (5) (5)
Decrease in cash and cash equivalents (140) (483)
Cash and cash equivalents, beginning of period 1,830 806
Cash and cash equivalents, end of period $1,690 323
Supplemental disclosure of cash flow
information:
Cash paid during the period for income taxes $ 34 57
