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SOURCE: International Baler Corporation

9/11/2012 3:27:00 PM

International Baler Corporation - 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

FORM 10-Q

_________________

? QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: __July 31, 2012_

? TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: _____ to ______

INTERNATIONAL BALER CORPORATION

(Exact name of registrant as specified in its charter)

_________________

Delaware	0-14443	13-2842053
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation or Organization)	File Number)	Identification No.)

5400 Rio Grande Avenue, Jacksonville, FL 32254
(Address of Principal Executive Offices) (Zip Code)

(904-358-3812)
(Registrant’s telephone number, including area code)

N/A
(Former name or 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 ? No ?

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ? No ?

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer ?

Accelerated filer ?

Non-accelerated filer ?

Smaller reporting company ?

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ? No ?

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by SectionS 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ? No ?

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 5,183,895 shares of common stock August 30, 2012.

PART I

INTERNATIONAL BALER CORPORATION

TABLE OF CONTENTS

			PAGE

PART I. FINANCIAL INFORMATION

	ITEM 1.	FINANCIAL STATEMENTS

		Balance Sheets as of July 31, 2012, (unaudited) and October 31, 2011	2

		Statements of Income Operations for the three months and nine months ended July 31, 2012 and 2011 (unaudited).	3

		Statements of Changes in Stockholders’ Equity for the nine months ended July 31, 012 (unaudited).	4

		Statements of Cash Flows for the nine months ended July 31, 2012 and 2011 (unaudited).	5

		Notes to Financial Statements (unaudited)	6


	ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS	8

	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	9

	ITEM 4.	CONTROLS AND PROCEDURES	9

PART II. OTHER INFORMATION

	ITEM 1.	LEGAL PROCEEDINGS	10

	ITEM 5.	OTHER INFORMATION	10

	ITEM 6.	EXHIBITS	11

SIGNATURES			12

CERTIFICATIONS

INTERNATIONAL BALER CORPORATION
BALANCE SHEETS




		July 31, 2012			October 31, 2011
ASSETS		(Unaudited)

Current assets:
Cash and cash equivalents	$	2,758,479		$	2,875,149
Accounts receivable, net of allowance for doubtful accounts
of $65,764 at July 31, 2012 and $50,764 October 31, 2011		993,834			1,038,979
Inventories		3,981,154			2,583,100
Prepaid expense and other current assets		143,550			87,894
Deferred income taxes		180,313			180,313
Total current assets		8,057,330			6,765,435

Property, plant and equipment, at cost:		2,869,368			2,761,004
Less: accumulated depreciation		1,815,998			1,711,704
Net property, plant and equipment		1,053,370			1,049,300

Other assets:
Other assets		1,396			1,396
Note from former Director		—			2,988
Deferred income taxes		11,074			11,074
Total other assets		12,470			15,458

TOTAL ASSETS	$	9,123,170		$	7,830,193

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable	$	1,049,936		$	630,556
Accrued liabilities		595,063			525,655
Current portion of deferred compensation		33,588			67,000
Customer deposits		1,027,165			1,299,252
Total current liabilities		2,705,752			2,522,463

Deferred compensation, net of current portion		—			15,722
Total liabilities		2,705,752			2,538,185

Commitments and contingencies (Note 9)

Stockholders' equity:
Preferred stock, par value $.0001,
10,000,000 shares authorized, none issued		—			—
Common stock, par value $.01,
25,000,000 shares authorized; 6,429,875 shares
issued at July 31, 2012 and October 31, 2011		64,299			64,299
Additional paid-in capital		6,419,687			6,419,687
Retained earnings (deficit)		614,842			(510,568	)
		7,098,828			5,973,418

Less: Treasury stock, 1,245,980 shares
at July 31, 2012 and October 31, 2011, at cost		(681,410	)		(681,410	)

Total stockholders' equity		6,417,418			5,292,008

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,123,170		$	7,830,193

See accompanying notes to financial statements.

INTERNATIONAL BALER CORPORATION
STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED JULY 31, 2012 and 2011

UNAUDITED




	Three Months				Nine Months

		2012		2011		2012		2011
Net Sales:
Equipment	$	4,666,461	$	2,699,995	$	12,611,610	$	6,551,045
Parts and Service		426,692		405,113		1,386,297		1,235,781
Total Net Sales		5,093,153		3,105,108		13,997,907		7,786,826

Cost of Sales		4,023,479		2,377,455		10,867,098		6,037,624

Gross Profit		1,069,674		727,653		3,130,809		1,749,202


Operating Expense:
Selling Expense		185,376		130,995		553,326		357,400
Administrative Expense		278,112		203,938		741,686		548,460
Total Operating Expense		463,488		334,933		1,295,012		905,860

Operating Income		606,186		392,720		1,835,797		843,342

Other Income (Expense):
Interest Income		1,392		2,021		4,613		6,417
Total Other Income		1,392		2,021		4,613		6,417


Income Before Income Taxes		607,578		394,741		1,840,410		849,759

Income Tax Provision		237,000		154,000		715,000		329,500

Net Income	$	370,578	$	240,741	$	1,125,410	$	520,259


Basic Income per share	$	0.07	$	0.05	$	0.22	$	0.10
Diluted Income per share		0.07		0.05		0.22		0.10

Weighted average number of shares outstanding - Basic		5,183,895		5,183,895		5,183,895		5,041,038
- Diluted		5,183,895		5,183,895		5,183,895		5,115,867

See accompanying notes to financial statements.

	INTERNATIONAL BALER CORPORATION
	STATEMENTS OF STOCKHOLDERS' EQUITY
	FOR THE NINE MONTHS ENDED JULY 31, 2012
	UNAUDITED





		Common Stock							Treasury Stock

		NUMBER				ADDITIONAL		RETAINED	NUMBER				TOTAL
		OF SHARES		PAR		PAID-IN		EARNINGS	OF				STOCKHOLDERS'
		ISSUED		VALUE		CAPITAL		(DEFICIT)	SHARES		COST		EQUITY

Balance at October 31, 2011		6,429,875	$	64,299	$	6,419,687	$	(510,568)	1,245,980	$	(681,410)	$	5,292,008

	Net Income	-0-		-0-		-0-		1,125,410	-0-		-0-		1,125,410

Balance at July 31, 2012		6,429,875	$	64,299	$	6,419,687	$	614,842	1,245,980	$	(681,410)	$	6,417,418

See accompanying notes to financial statements.

INTERNATIONAL BALER CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JULY 31, 2012 AND 2011
UNAUDITED


		2012			2011

Cash flow from operating activities:
Net income	$	1,125,410		$	520,259
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization		104,294			65,317
Provision for doubtful accounts		15,000			—
Deferred income taxes		—			329,500
Changes in operating assets and liabilities:
Accounts receivable		30,145			(441,772	)
Inventories		(1,398,054	)		(1,112,704	)
Prepaid expenses and other current assets		(63,283	)		(62,356	)
Accounts payable		419,380			261,216
Accrued liabilities and deferred compensation		20,274			11,252
Customer deposits		(272,087	)		692,875
Net cash (used in) provided by operating activities		(18,921	)		263,587

Cash flows from investing activities:
Proceeds from notes receivable from former Director		10,615			9,998
Purchases of property and equipment		(108,364	)		(213,866	)
Net cash used in investing activities		(97,749	)		(203,868	)

Cash Flows from financing activities:
Issuance of common stock		—			75,000
Net cash provided by financing activities		—			75,000

Net (decrease) increase in cash and cash equivalents		(116,670	)		134,719

Cash and cash equivalents at beginning of period		2,875,149			2,101,204

Cash and cash equivalents at end of period	$	2,758,479		$	2,235,923

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes	$	640,000		$	—

See accompanying notes to financial statements.

INTERNATIONAL BALER CORPORATION

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. Nature of Business:

International Baler Corporation (the Company) is a manufacturer of baling equipment which is designed to compress a variety of materials into bales for easier handling, shipping, disposal, storage, and for recycling. Materials commonly baled include scrap metal, corrugated boxes, newsprint, aluminum cans, plastic bottles, and other solid waste. More sophisticated applications include baling of textile materials, fibers and synthetic rubber. The Company offers a wide variety of balers, standard models as well as custom models, and conveyors to meet specific customer requirements.

The Company’s customers include recycling facilities, distribution centers, textile mills, and companies which generate the materials for baling and recycling. The Company sells its products worldwide with 10% to 35% of its annual sales outside the United States.

Basis of Presentation:

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information in footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the nine-month period ended July 31, 2012 are not necessarily indicative of the results that may be expected for the year ending October 31, 2012. The accompanying balance sheet as of October 31, 2011 was derived from the audited financial statements as of October 31, 2011.

3. Summary of Significant Accounting Policies:

(a) Accounts Receivable & Allowance for Doubtful Accounts:

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowanc