-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NuKU2gFEfxZkOq3S8/R/yaoskyLsCwdg4vVlW43BB7drtv/9v/IHrq/z9K28tteM zzJKjUzI16Y4+Z6D2aTYLQ== 0000912057-96-022732.txt : 19961016 0000912057-96-022732.hdr.sgml : 19961016 ACCESSION NUMBER: 0000912057-96-022732 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961015 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: TAB PRODUCTS CO CENTRAL INDEX KEY: 0000096116 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE FURNITURE (NO WOOD) [2522] IRS NUMBER: 941190862 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07736 FILM NUMBER: 96642943 BUSINESS ADDRESS: STREET 1: 1400 PAGE MILL RD CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 4158522400 MAIL ADDRESS: STREET 1: 1400 PAGE MILL ROAD CITY: PALO ALTO STATE: CA ZIP: 94304 10-Q 1 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark one) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 1996 ------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------ ------ Commission file number: 1-7736 ------------- TAB PRODUCTS CO. ------------------------------------------------------------ (Exact name of Registrant as specified in its charter) DELAWARE 94-1190862 - --------------------------------- -------------------------------------- (State of Incorporation) (IRS Employer Identification No.) 1400 PAGE MILL ROAD, PALO ALTO, CALIFORNIA 94304 - ------------------------------------------ ----------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number - including area code (415) 852-2400 ------------------------- NOT APPLICABLE - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark 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 ------- ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common shares outstanding as of August 31, 1996 - 4,851,951 This report, including all exhibits and attachments, contains 13 pages. ------ TAB PRODUCTS CO. INDEX PART I. FINANCIAL INFORMATION Page No. ITEM 1. Financial Statements: Consolidated Condensed Balance Sheets August 31, 1996 and May 31, 1996 3 Consolidated Condensed Statements of Earnings Three months ended August 31, 1996 and 1995 4 Consolidated Condensed Statements of Cash Flows Three months ended August 31, 1996 and 1995 5 Supplemental Financial Data - Notes 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION ITEM 6. Exhibits 9 Signatures 12 2 TAB PRODUCTS CO. CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (000's omitted except share data) ASSETS August 31, 1996 May 31, 1996 --------------- ------------ Current assets: Cash and cash equivalents $ 8,134 $ 9,331 Short-term investments 3,772 2,322 Accounts receivable, less allowances of $679 and $620 for doubtful accounts 23,290 23,898 Inventories 11,241 11,313 Prepaid income taxes and other expenses 2,231 1,851 --------------- ------------ Total current assets 48,668 48,715 Property, plant and equipment, net of accumulated depreciation of $32,752 and $33,250 20,471 20,800 Goodwill, net 4,659 4,777 Other assets 4,476 4,835 --------------- ------------ $ 78,274 $ 79,127 --------------- ------------ --------------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 3,813 $ 3,813 Accounts payable 5,670 5,823 Compensation payable 2,587 3,553 Other accrued liabilities 7,980 8,102 --------------- ------------ Total current liabilites 20,050 21,291 --------------- ------------ Long-term debt 14,063 14,141 --------------- ------------ Deferred taxes and other non-current liabilities 2,234 2,233 --------------- ------------ Stockholders' equity: Preferred stock: $.01 par value, authorized - 500,000 shares, issued - none - - Common stock: $.01 par value, authorized - 25,000,000 shares, issued - August 1996 and May 1996 - 7,284,178 shares 73 73 Additional paid-in capital 12,705 12,705 Retained earnings 60,125 59,689 Treasury stock: August 1996 and May 1996 - 2,432,227 shares (31,365) (31,365) Cumulative translation adjustment 389 360 --------------- ------------ Total stockholders' equity 41,927 41,462 --------------- ------------ $ 78,274 $ 79,127 --------------- ------------ --------------- ------------ 3 TAB PRODUCTS CO. CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (UNAUDITED) (000's omitted except share data) Three Months Ended August 31 ------------------------- 1996 1995 ---------- ---------- Revenues $ 35,012 $ 37,414 ---------- ---------- Costs and expenses: Cost of revenues 20,907 22,823 Selling, general and administrative 12,449 13,021 Research and development 173 104 ---------- ---------- Total costs and expenses 33,529 35,948 ---------- ---------- Operating income 1,483 1,466 Interest, net (281) (418) ---------- ---------- Earnings before income taxes 1,202 1,048 Provision for income taxes 523 455 ---------- ---------- Net earnings $ 679 $ 593 ---------- ---------- ---------- ---------- Earnings per common and equivalent shares $ 0.14 $ 0.12 ---------- ---------- ---------- ---------- Average common and equivalent shares outstanding 4,861,596 4,851,951 4 TAB PRODUCTS CO. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (000's omitted) Three Months Ended August 31 ------------------------- 1996 1995 ----------- ---------- Operating Activities: Net earnings $ 679 $ 593 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization of property, 869 910 plant and equipment Other 60 26 Changes in operating assets and liabilities: Accounts receivable 549 26 Inventories 72 (620) Prepaid income taxes and other expenses (380) 735 Goodwill and other assets 477 7 Accounts payable (153) (320) Commissions payable (966) (150) Other accrued liabilities (121) 127 ----------- ---------- Net cash provided by operating activities 1,086 1,334 ----------- ---------- Investing Activities: Purchase of property, plant and equipment, net (541) (703) Purchases of short-term investments (1,929) (482) Sales of short-term investments 479 8 ----------- ---------- Net cash required by investing activities (1,991) (1,177) ----------- ---------- Financing Activities: Repayment of long-term debt (78) (79) Dividends paid (243) (243) ----------- ---------- Net cash required by financing activities (321) (322) ----------- ---------- Effect of exchange rate changes on cash 29 44 ----------- ---------- Decrease in cash and cash equivalents (1,197) (121) Cash and cash equivalents at beginning of period 9,331 6,753 ----------- ---------- Cash and cash equivalents at end of period $ 8,134 $ 6,632 ----------- ---------- ----------- ---------- 5 TAB PRODUCTS CO. SUPPLEMENTAL FINANCIAL DATA-NOTES (UNAUDITED) 1. Inventories consisted of the following (000's omitted): August 31, 1996 May 31, 1996 --------------- ------------ Finished goods $ 7,685 $ 7,421 Work in process 455 516 Raw materials 3,101 3,376 --------------- ------------ $ 11,241 $ 11,313 --------------- ------------ --------------- ------------ 2. Earnings per share data are computed using the average number of common and dilutive common equivalent shares outstanding. 3. Dividends declared for the three month periods ended August 31, 1996 and 1995 were as follows: Shares Dividend Record Date Outstanding Per Share ----------- ----------- --------- August 26, 1996 4,851,951 $.05 August 25, 1995 4,851,951 $.05 4. The above financial information reflects all adjustments consisting of normal recurring items which are, in the opinion of management, necessary for a fair presentation of the results of the interim periods. These financial statements should be read in conjunction with the company's audited financial statements for the year ended May 31, 1996. 5. During the quarter ended August 31, 1995 the company canceled stock options to purchase 776,500 shares of the company's common stock at prices ranging from $6.125 to $13.50 and exchanged them for options to purchase 576,500 shares of the company's common stock at current market value of $6.00 per share with new vesting periods. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION At August 31, 1996 the company had cash and short-term investments of $11.9 million, an increase of $.2 million from the $11.7 million at May 31, 1996. The company's working capital position at August 31, 1996 increased by $1.2 million to $28.6 million as compared with $27.4 million at May 31, 1996. The current ratio of 2.4 at August 31, 1996 was up from the 2.3 reported May 31, 1996. Accounts receivable at August 31, 1996 was $23.3 million as compared to $23.9 million at May 31, 1996. The company has an unsecured revolving line of credit of $10 million with a bank which expires on October 31, 1998. There were no borrowings outstanding under the line of credit at August 31, 1996. Management believes that the company's cash and cash equivalents, available credit facilities and operational cash flows will adequately finance anticipated growth, capital expenditures and debt obligations for the foreseeable future. Investments in property, plant and equipment to support operations were $.5 million during the three months ended August 31, 1996. Capital expenditures to support operations for fiscal 1997 are expected to be in the range of $3.0 to $3.5 million. At August 31, 1996, the company had $14.1 million of long-term debt outstanding which bears interest rates ranging from 6.9% to 9.0%. For the three month period ended August 31, 1996 the company paid cash dividends of $243,000 equal to the amount paid in the first quarter of fiscal 1996. RESULTS OF OPERATIONS REVENUES for the first quarter of fiscal 1997 were $35.0 million, down $2.4 million or 6.4% from revenues of $37.4 million for the first quarter of fiscal 1996. The decrease in revenues is due to lower revenues in several core product areas, which is primarily the result of a decrease in U.S. government revenues in the quarter. U.S. government revenues in the first quarter of fiscal 1996 were substantially higher than historical averages, while first quarter fiscal 1997 revenues were more in line with historical levels. COST OF REVENUES, as a percentage of revenues, was 59.7% for the first quarter of fiscal 1997, down from the 61.0% reported for the first quarter of fiscal 1996. Cost of revenues, as a percentage of revenues, declined from the first quarter of fiscal 1996 primarily as a result of continued emphasis on programs to reduce product costs. OPERATING EXPENSES, for the quarter ended August 31, 1996 were $12.6 million as compared to $13.1 million for the quarter ended August 31, 1995. The decrease in operating expenses is primarily the result of lower commissions expense on lower revenues compared to the first quarter of fiscal 1996. As a percentage of revenues, operating expenses were 36.1% for the quarter ended August 31, 1996 as compared to 35.1% for the quarter ended August 31, 1995. 7 INTEREST EXPENSE, net, was $281,000 in the first quarter of fiscal 1997 as compared to $418,000 in the first quarter of fiscal 1996. The decreases in interest expense, net for the three months ended August 31, 1996 was primarily due to a lower level of debt, as a result of debt repayments, and an increase of cash equivalents and short-term investment balances during the first quarter of fiscal 1997 as compared to the first quarter of fiscal 1996. EARNINGS PER SHARE for the three months ended August 31, 1996 were $.14 per share, an increase of 17% over the $.12 per share earned in the first quarter of the prior fiscal year. FACTORS WHICH MAY AFFECT QUARTERLY RESULTS The company's actual results could differ materially from those anticipated as a result of risks related to the company's ability to develop and market new products and services, market acceptance of new products and services, increasing demands for technological innovation, the costs of components for the company's products, competition and economic conditions in the company's markets, product sales mix and risks relating to government contracting. PART II: OTHER INFORMATION ITEMS 1 - 5. Not applicable. 8 ITEM 6. EXHIBITS (a) 10.1 Registrants 1981 Incentive Stock Option Plan (Exhibit (10) of the 1983 10-K)(1),(2) 10.2 Amended 1981 Incentive Stock Option Plan (Exhibit (10) of the 1987 10-K)(1),(2) 10.3 1991 Stock Option Plan (Exhibit 10.1 of the 1991 10-K)(1),(2) 10.4 Employment Agreement between John W. Peth and the Registrant dated March 21, 1991 (Exhibit 10.2 of the 1991 10-K)(1),(2) 10.5 Agreement between John W. Peth and the Registrant dated August 18, 1991 (Exhibit 10.3 of the 1991 10-K)(1),(2) 10.6 Agreement between Michael A. Dering and the Registrant dated May 15, 1989 (Exhibit 10.4 of the 1991 10-K)(1),(2) 10.7 Amendment to Agreement between Michael A. Dering and the Registrant dated August 28, 1991 (Exhibit 10.5 of the 1991 10-K)(1),(2) 10.8 Common Stock Purchase Agreement (Exhibit 10.2 of the 1992 10-K)(2) 10.9 Promissory Note dated October 18, 1991 (Exhibit 10.3 of the 1992 10-K)(2) 10.10 Bank of America Business Loan Agreement dated October 24, 1991 (Exhibit 10.4 of the 1992 10-K)(2) 10.11 Note Agreement of Tab Products Co. dated as of March 20, 1992 in the aggregate principal amount of $15,000,000 (Exhibit 10.5 of the 1992 10-K)(2) 10.12 Bank of America Revision Agreement dated March 20, 1992 (Exhibit 10.6 of the 1992 10-K)(2) 10.13 Agreement for Purchase and Sale of Assets (Exhibit 10.7 of the 1992 10-K)(2) 10.14 Amendment dated September 15, 1992 to Business Loan Agreement dated October 24, 1991 (Exhibit filed with Form 10-Q for the quarter ended November 30, 1993)(2) 10.15 Business Loan Agreement dated August 20, 1993 (Exhibit filed with Form 10-Q for the quarter ended November 30, 1993)(2) 10.16 Amendment dated July 27, 1993 to Note Agreement of Tab Products Co. dated as of March 20, 1992 (Exhibit filed with Form 10-Q for the quarter ended August 31, 1993)(2) 10.17 Bank of America Business Loan Agreement dated August 20, 1993 (Exhibit filed with Form 10-Q for the quarter ended August 31, 1993)(2) 10.18 Bank of America Amendment No. 1 dated October 6, 1993 to Business Loan Agreement (Exhibit filed with Form 10-Q for the quarter ended August 31, 1993)(2) 10.19 Bank of America Amendment No. 2 dated October 13, 1993 to Business Loan Agreement (Exhibit filed with Form 10-Q for the quarter ended August 31, 1993)(2) 9 10.20 Note Agreement of Tab Products Co. dated October 7, 1993 (Exhibit filed with Form 10-Q for the quarter ended August 31, 1993)(2) 10.21 Letter dated October 7, 1993 amending the Note Agreement dated March 20, 1992 (Exhibit filed with Form 10-Q for the quarter ended August 31, 1993)(2) 10.22 Bank of America Amendment No. 3 dated December 3, 1993 to Business Loan Agreement dated August 20, 1993 (Exhibit 10.22 filed with Form 10-Q for the quarter ended February 28, 1994)(2) 10.23 Bank of America Amendment No. 4 dated February 9, 1994 to Business Loan Agreement dated August 20, 1993 (Exhibit 10.23 filed with Form 10-Q for the quarter ended February 28, 1994)(2) 10.24 Bank of America Amendment No. 5 dated February 28, 1994 to Business Loan Agreement dated August 20, 1993 (Exhibit 10.24 filed with Form 10-Q for the quarter ended February 28, 1994)(2) 10.25 Bank of America Amendment No. 6 dated March 30, 1994 to Business Loan Agreement dated August 20, 1993 (Exhibit 10.25 filed with Form 10-Q for the quarter ended February 28, 1994)(2) 10.26 Bank of America Amendment No. 7 dated April 5, 1994 to Business Loan Agreement dated August 20, 1993 (Exhibit 10.26 filed with Form 10-Q for the quarter ended February 28, 1994)(2) 10.27 Letter dated October 27, 1993 amending the Prudential Note Agreement dated March 20, 1992 (Exhibit 10.27 filed with the 1994 Form 10-K)(2) 10.28 Bank of America Amendment No. 8 dated May 9, 1994 to Business Loan Agreement dated August 20, 1993 (Exhibit 10.28 filed with the 1994 Form 10-K)(2) 10.29 Bank of America Amendment No. 9 to Business Loan Agreement dated August 20, 1993 (Exhibit 10.29 filed with the 1994 Form 10-K)(2) 10.30 Bank of America Amendment No. 10 dated August 8, 1994 to Business Loan Agreement dated August 20, 1993 (Exhibit 10.30 filed with the 1994 Form 10-K)(2) 10.31 Bank of America Amendment No. 11 dated August 22, 1994 to Business Loan Agreement dated August 20, 1993 (Exhibit 10.31 filed with the 1994 Form 10-K)(2) 10.32 Letter dated June 15, 1995 amending the Prudential Note Agreement dated March 20, 1992 (Exhibit 10.32 filed with the 1995 Form 10-K)(2) 10.33 Letter dated July 21, 1995 amending the Prudential Note Agreement dated March 20, 1992 (Exhibit 10.33 filed with the 1995 Form 10-K)(2) 10.34 Bank of America Business Loan Agreement dated December 7, 1995 (Exhibit 10.34 filed with Form 10-Q for the quarter ended November 30, 1995)(2) 10.35 Letter dated December 13, 1995 amending the Prudential Note Agreement dated March 20, 1992 (Exhibit 10.35 filed with Form 10-Q for the quarter ended November 30, 1995)(2) 10.36 Bank of America Business Loan Agreement dated August 26, 1996 (Exhibit 10.36 filed with the 1996 Form 10-K)(2) 10 10.37 Letter dated August 20, 1996 amending the Prudential Note Agreement dated March 20, 1992 (Exhibit 10.37 filed with the 1996 Form 10-K)(2) (1) Compensatory Plan or Arrangement. (2) Incorporated by reference from the noted previously filed document. (b) None 11 SIGNATURES 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 under- signed thereunto duly authorized. TAB PRODUCTS CO. ----------------------------------- (Registrant) Date: October 15, 1996 /s/ John M. Palmer ----------------------------------- John M. Palmer, Vice President, Finance and Chief Financial Officer Date: October 15, 1996 /s/ James L. Anderson ----------------------------------- James L. Anderson, Controller 12 EX-27 2 EXHIBIT 27 (FDS)
5 1,000 3-MOS MAY-31-1997 JUN-1-1996 AUG-31-1996 8134 3772 23969 679 11241 48668 53223 32752 78274 20050 14063 0 0 41538 389 78274 32576 35012 18795 20907 12622 53 281 1202 523 679 0 0 0 679 .14 .14 Inventory detail at August 31, 1996 was finished goods $7685; work in process $455; raw materials $3101.
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