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 November 26, 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: 610-252-7321
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 November 26, 1995: 2,473,748.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SI Handling Systems, Inc.
Balance Sheets
(In Thousands, Except Share Data)
November February
Assets 26, 1995 26, 1995
Current assets:
Cash and cash equivalents, principally
time deposits $ 4,379 571
Receivables:
Trade 3,796 6,654
Notes and other receivables 72 147
Total receivables 3,868 6,801
Costs and estimated earnings in excess
of billings 763 1,400
Inventories:
Raw materials 961 847
Finished goods and work-in-process 998 998
Total inventories 1,959 1,845
Deferred income tax benefits 246 242
Prepaid expenses and other current assets 139 266
Total current assets 11,354 11,125
Property, plant and equipment, at cost:
Land 27 27
Buildings and improvements 3,298 3,298
Machinery and equipment 3,551 3,958
6,876 7,283
Less: accumulated depreciation 5,503 5,613
Net property, plant and equipment 1,373 1,670
Investment in joint venture 423 251
Other assets, at cost less accumulated
amortization of $54 in 1996 and $161
in 1995 82 90
Total assets $13,232 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)
November February
Liabilities and Stockholders' Equity 26, 1995 26, 1995
Current liabilities:
Current installments of long-term debt $ 22 21
Accounts payable 1,551 2,386
Customers' deposits and billings in excess
of costs and estimated earnings 1,905 1,425
Accrued salaries, wages, and commissions 742 453
Income taxes payable 223 7
Accrued royalties payable 401 620
Liabilities and deferred credits related
to obligations and receipts under the
AGV Asset Purchase Agreement 391 931
Accrued other liabilities 851 703
Total current liabilities 6,086 6,546
Long-term liabilities:
Long-term debt, excluding current installments:
Mortgages payable 54 71
Revolving credit loan payable to bank - 500
Total long-term debt 54 571
Deferred compensation 95 94
Total long-term liabilities 149 665
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 3,702 4,525
Retained earnings (deficit) 982 ( 17)
7,185 6,187
Less: Treasury stock, at cost (27,644 shares
in 1996 and 39,056 shares in 1995) ( 188) ( 262)
Total stockholders' equity 6,997 5,925
Total liabilities and stockholders' equity $ 13,232 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 Nine Months Ended
November 26, November 27, November 26, November 27,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $ 6,702 6,764 19,683 20,050
Cost of sales 5,166 5,385 14,923 16,869
Gross profit 1,536 1,379 4,760 3,181
Selling, general,
and administrative
expenses 1,282 1,247 3,715 4,027
Net income
associated with
the AGV Asset
Purchase
Agreement ( 250) - ( 250) -
Product development
costs 99 124 282 333
Interest expense 5 12 13 47
Interest income ( 49) - ( 117) ( 2)
Other income,
net ( 60) ( 14) ( 299) ( 33)
1,027 1,369 3,344 4,372
Earnings (loss)
from operations
before income
taxes 509 10 1,416 ( 1,191)
Income tax expense 76 - 212 -
Net earnings
(loss) $ 433 10 1,204 ( 1,191)
Net earnings (loss)
per common share
and common share
equivalent* $ .18 - .49 ( .49)
Dividends per
share** $ - - .07 .07
<PAGE>
Item 1. Financial Statements (Continued)
SI Handling Systems, Inc.
Statements of Operations (Continued)
(In Thousands, Except Share And Per Share Data)
<FN>
* 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 2,480,000 and 2,460,000,
respectively, at November 26, 1995 and November 27, 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.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Item 1. Financial Statements (Continued)
SI Handling Systems, Inc.
Statements of Cash Flows
(In Thousands)
Nine Months Ended
November November
26, 1995 27, 1994
Cash flows from operating activities:
Net earnings (loss) $ 1,204 (1,191)
Adjustments to reconcile net earnings
(loss) to net cash provided by (used in)
operating activities:
Depreciation of plant and equipment 338 361
Amortization of intangibles and
deferred costs 8 ( 26)
Equity in income of joint venture ( 172) ( 97)
Loss (gain) on disposition of equipment - ( 2)
Change in operating assets and liabilities:
Receivables 2,933 ( 371)
Costs and estimated earnings in
excess of billings 637 171
Inventories ( 114) 178
Deferred income tax benefits ( 4) 329
Prepaid expenses and other
current assets 127 101
Other noncurrent assets - 30
Accounts payable ( 835) ( 91)
Customers' deposits and billings
in excess of costs and
estimated earnings 480 ( 608)
Accrued salaries, wages, and
commissions 289 ( 22)
Income taxes payable 216 -
Accrued royalties payable ( 219) 30
Liabilities and deferred credits related
to obligations and receipts under the
AGV Asset Purchase Agreement ( 442) 647
Accrued other liabilities 148 7
Deferred compensation 1 37
Net cash provided by (used in)
operating activities 4,595 ( 517)
Cash flows from investing activities:
Proceeds from the disposition of property,
plant and equipment - 2
Additions to property, plant and equipment ( 139) ( 149)
Net cash used in investing activities ( 139) ( 147)
<PAGE>
Item 1. Financial Statements (Continued)
SI Handling Systems, Inc.
Statements of Cash Flows (Continued)
(In Thousands)
Nine Months Ended
November November
26, 1995 27, 1994
Cash flows from financing activities:
Sale of treasury stock in connection with
employee stock option plan 33 11
Repayment of long-term debt, including
current portion ( 16) ( 15)
Increase in (repayment of) loan
payable to bank ( 500) 600
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 ( 648) 432
Increase (decrease) in cash and cash
equivalents 3,808 ( 232)
Cash and cash equivalents, beginning
of period 571 640
Cash and cash equivalents, end of
period $ 4,379 408
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 11 43
Income taxes $ - -
Supplemental disclosure of noncash
investing and financing activities:
Relief of liability related to obligations
under the AGV Asset Purchase
Agreement due to disposal of
machinery and equipment $ 98 -
Issuance of 6,600 common shares
held in treasury in exchange for
3,162 common shares delivered
to treasury by an officer in
connection with the employee
incentive stock option plan $ 21 -
See accompanying notes to financial statements.
<PAGE>
Item 1. Financial Statements (Continued)
SI Handling Systems, Inc.
Notes To Financial Statements
Nine Months Ended November 26, 1995 and November 27, 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. ("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 $4,379 during
the first nine months of fiscal 1996 from $571 at the end of fiscal 1995.
The increase resulted from cash provided by operating activities
totaling $4,595 and proceeds of $33 from the sale of treasury stock in
connection with the employee incentive stock option plan. Partially
offsetting the increase in cash and cash equivalents were the repayments
of long-term debt of $16 and the revolving credit loan payable to bank
of $500, purchases of equipment of $139, 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 nine
months of fiscal 1995 were $517.
<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.
The negotiated Settlement Agreement for the litigation with Apogee, as
reported in the Form 10-Q for the quarter ended August 27, 1995, was
approved by the bankruptcy court, and the final Order of Dismissal was
entered on December 1, 1995. As part of the Settlement Agreement, the
parties agreed to the following: subsequent to the end of the third
quarter of fiscal 1996, the Company paid Apogee $150 and returned the
original certificate for 100,000 of Apogee preferred shares; Apogee
transferred any right, title or interest it may have had in the
Company's automated guided vehicle assets to the Company and disclaimed
any interest in the assets; and the parties released all claims that
they may have had against each other.
The Company's current Balance Sheet includes a reserve of $391,
captioned "Liabilities and deferred credits related to obligations and
receipts under the AGV Asset Purchase Agreement." This reserve includes
the $150 owed to Apogee under the Settlement Agreement and the accrual
of asset and lease charges, estimated legal fees and certain other costs
anticipated in connection with the resolution of the Apogee litigation
noted above.
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.
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) Nine Months Ended November 26, 1995 Versus Nine Months Ended
November 27, 1994
The Company's net income for the first nine months of fiscal 1996 was
$1,204 compared to a net loss of $1,191 for the first nine months of
fiscal 1995. Net sales of $19,683 for the first nine months of fiscal
1996 decreased 1.8% compared to net sales of $20,050 for the first nine
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 related to the
product currently confined to the parts and service business. Partially
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 24.2% for the first nine
months of fiscal 1996 compared to 15.9% for the first nine months of
fiscal 1995. The increase in gross profit percentage for the first nine
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 overhead expenses related to AGVS
operations.
Selling, general, and administrative expenses of $3,715 were lower by
$312 in the first nine 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.
Net income associated with the AGV Asset Purchase Agreement consisted
of income of $250 resulting from the reversal of accrued liabilities no
longer required due to the recent settlement of the Apogee litigation.
The Company did not recognize any expense or income during the
comparable fiscal 1995 period.
Product development costs of $282 were lower by $51 in the first nine
months of fiscal 1996 than in the comparable fiscal 1995 period.
Development programs in the first nine months of fiscal 1996 included
improvements to the Order Selection and Sortation product lines, with
particular emphasis aimed at Pick-To-Light and Small Parcel Sortation
Systems. Development programs in the first nine months of fiscal 1995
included improvements to the AGVS and Order Selection product lines.
Interest income of $117 was higher by $115 in the first nine 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) (Continued)
(a) Nine Months Ended November 26, 1995 Versus Nine Months Ended
November 27, 1994 (Continued)
Interest expense of $13 was lower by $34 in the first nine 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 income, net, is primarily attributable
to the strong performance recorded by the SI/BAKER, INC. joint venture.
The Company incurred income tax expense of $212 during the first nine
months of fiscal 1996 compared to the recognition of no income tax expense
in the comparable fiscal 1995 period. During the first nine 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 November 26, 1995 Versus Three Months
Ended November 27, 1994
Changes in the third quarter of the current fiscal year compared to the
prior year were consistent with those previously noted above for the nine
month period, except for the following areas.
Gross profit as a percentage of sales was 22.9% for the third quarter of
fiscal 1996 compared to 20.4% for the third quarter of fiscal 1995. The
change is consistent with that noted above for the nine-month period;
however, the comparable third quarter gross profit percentages were not
materially impacted by the Company's performance on its AGVS contracts.
Selling, general, and administrative expenses of $1,282 were higher by
$35 in the third quarter of fiscal 1996 than in the comparable fiscal 1995
period. The slight increase is primarily attributable to the addition of
resources aimed at restoring the Company's AGVS parts and service
business subsequent to the end of the third quarter of fiscal 1995. The
comparable fiscal 1995 period did not contain expenses related to the AGVS
parts and service business due to the intended sale of the Company's AGVS
product line to Apogee.
The Company incurred income tax expense of $76 during the third
quarter of fiscal 1996 compared to the recognition of no income tax
expense in the comparable fiscal 1995 period.
<PAGE>
SI Handling Systems, Inc.
PART II - OTHER INFORMATION
Item 5. Other Information
On December 21, 1995, John W. Adams resigned as Director of the
Company due to the increasing demands of his other business activities.
The Board of Directors of the Company are currently involved in the
selection process for his successor.
Woodstead Associates, L.P. ("Woodstead") recently sold its remaining
holdings (266,800 shares or 10.8%) of the Company's common stock in a
private sale transaction. The Company, with authorization from its
Board of Directors, repurchased 30,200 shares of the former
Woodstead holdings at $6-13/32 and retired the shares.
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
November 26, 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
Vice President - Finance
(Signature)
Dated: 01/10/96
<PAGE>
Schedule A
SI/BAKER, INC.
Financial Statements
November 30, 1995
<PAGE>
SI/BAKER, INC.
Balance Sheets
November 30, 1995 and February 28, 1995
(In Thousands, Except Share Data)
November February
Assets 30, 1995 28, 1995
Current assets:
Cash and cash equivalents, principally
time deposits $1,482 1,830
Receivables:
Trade 423 940
Other receivables 95 12
Total receivables 518 952
Costs and estimated earnings in
excess of billings 1,000 271
Inventories - purchased parts 13 13
Deferred income tax benefits 30 30
Prepaid expenses and other current assets 16 8
Total current assets 3,059 3,104
Machinery and equipment, at cost 68 57
Less: accumulated depreciation 18 11
Net machinery and equipment 50 46
Deferred income tax benefits 4 4
Total assets $3,113 3,154
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 709 586
Customers' deposits and billings in
excess of costs and estimated earnings 915 1,572
Accrued salaries, wages, and commissions 162 122
Income taxes payable 241 6
Accrued royalties payable 74 257
Accrued other liabilities 165 108
Total current liabilities 2,266 2,651
Stockholders' equity:
Common stock, $1 par value; authorized
1,000 shares; issued 200 shares - -
Additional paid-in capital 200 200
Retained earnings 647 303
Total stockholders' equity 847 503
Total liabilities and stockholders'equity $3,113 3,154
<PAGE>
<TABLE>
SI/BAKER, INC.
Statements of Operations
Nine Months Ended November 30, 1995 and 1994
(In Thousands)
<CAPTION>
Three Months Ended Nine Months Ended
November 30, November 30, November 30, November 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $ 1,810 1,491 6,035 4,565
Cost of sales 1,303 1,195 4,353 3,670
Gross profit 507 296 1,682 895
Selling, general,
and
administrative
expenses 298 178 741 548
Product
development
costs 40 44 131 136
Royalty expense,
net 73 - 239 -
Interest
income ( 23) ( 10) ( 71) ( 18)
Other (income)
expense,
net - - 1 ( 87)
388 212 1,041 579
Earnings from
operations
before income
taxes 119 84 641 316
Income tax
expense 56 34 297 123
Net earnings $ 63 50 344 193
</TABLE>
<PAGE>
SI/BAKER, INC.
Statements of Cash Flows
Nine Months Ended November 30, 1995 and 1994
(In Thousands)
Nine Months Ended
November 30, November 30,
1995 1994
Cash flows from operating activities:
Net earnings $ 344 193
Adjustments to reconcile net earnings
to net cash provided (used)
by operating activities:
Depreciation of machinery and
equipment 7 5
Changes in operating assets and
liabilities:
Receivables 434 ( 516)
Costs and estimated earnings
in excess of billings ( 729) ( 315)
Prepaid expenses and other
current assets ( 8) ( 19)
Accounts payable 123 283
Customers' deposits and
billings in excess of costs
and estimated earnings ( 657) 532
Accrued salaries, wages, and
commissions 40 ( 6)
Income taxes payable 235 31
Accrued royalties payable ( 183) -
Accrued other liabilities 57 96
Net cash provided (used) by
operating activities ( 337) 284
Cash flows used in investing activities:
Additions to machinery and equipment ( 11) ( 19)
Increase (decrease) in cash and cash
equivalents ( 348) 265
Cash and cash equivalents, beginning
of period 1,830 806
Cash and cash equivalents, end of period $ 1,482 1,071
Supplemental disclosure of cash flow
information:
Cash paid during the period for
income taxes $ 63 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 NOVEMBER 26,
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> 9-MOS
<FISCAL-YEAR-END> MAR-03-1996
<PERIOD-END> NOV-26-1995
<CASH> 4,379
<SECURITIES> 0
<RECEIVABLES> 3,796
<ALLOWANCES> 0
<INVENTORY> 1,959
<CURRENT-ASSETS> 11,354
<PP&E> 6,876
<DEPRECIATION> 5,503
<TOTAL-ASSETS> 13,232
<CURRENT-LIABILITIES> 6,086
<BONDS> 54
<COMMON> 2,501
0
0
<OTHER-SE> 4,496
<TOTAL-LIABILITY-AND-EQUITY> 13,232
<SALES> 19,683
<TOTAL-REVENUES> 19,683
<CGS> 14,923
<TOTAL-COSTS> 14,923
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> 1,416
<INCOME-TAX> 212
<INCOME-CONTINUING> 1,204
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,204
<EPS-PRIMARY> .49
<EPS-DILUTED> .49
</TABLE>
