SOURCE: International Baler Corporation

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: November 30, 2012

or

?     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

000-14443

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 February 28, 2013.

 

 

 

 

 

 

 

 

INTERNATIONAL BALER CORPORATION

 

 

 

 

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

PAGE

 

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

 

 

 

 

 

 

 

 

 

Balance Sheets as of January 31, 2013, (unaudited) and October 31, 2012

 

 

 

 

 

 

 

 

 

Statements of Income Operations for the three months ended January 31, 2013 and 2012 (unaudited).

 

 

 

 

 

 

 

 

 

Statements of Changes in Stockholders’ Equity for the period from October 31, 2012 to January 31, 2013 (unaudited).

 

 

 

 

 

 

 

 

 

Statements of Cash Flows for the three months ended January 31, 2013 and 2012 (unaudited).

 

 

 

 

 

 

 

 

 

Notes to Financial Statements (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

6

 

 

 

 

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

7

 

 

 

 

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

7

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

8

 

 

 

 

 

 

 

ITEM 5.

OTHER INFORMATION

8

 

 

 

 

 

 

 

ITEM 6.

EXHIBITS

8

 

 

 

 

 

 

SIGNATURES

 

 

 

 

 

 

 

 

CERTIFICATIONS

 

 

 

 

 

 

 

 

 

 

 

INTERNATIONAL BALER CORPORATION

BALANCE SHEETS

 

 

 

 

 

 

 

January 31, 2013

 

October 31, 2012

ASSETS

 

Unaudited

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

1,741,825

$

1,719,140

Accounts receivable, net of allowance for doubtful accounts

 

 

 

 

of $65,764 at January 31, 2013 and October 31, 2012

 

1,163,936

 

1,435,793

Inventories

 

3,681,821

 

4,195,551

Prepaid expense and other current assets

 

92,456

 

128,453

Deferred income taxes

 

151,259

 

151,259

Total current assets

 

6,831,297

 

7,630,196

 

 

 

 

 

Property, plant and equipment, at cost:

 

2,954,867

 

2,871,755

Less: accumulated depreciation

 

1,882,014

 

1,843,014

Net property, plant and equipment

 

1,072,853

 

1,028,741

 

 

 

 

 

Other assets:

 

 

 

 

Other assets

 

1,396

 

5,000

Deferred income taxes

 

242

 

242

Total other assets

 

1,638

 

5,242

 

 

 

 

 

TOTAL ASSETS

$

7,905,788

$

8,664,179

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

$

615,266

$

706,255

Accrued liabilities

 

248,001

 

456,313

Current portion of deferred compensation

 

-

 

17,211

Customer deposits

 

426,848

 

984,962

Total current liabilities

 

1,290,115

 

2,164,741

 

 

 

 

 

Total liabilities

 

1,290,115

 

2,164,741

 

 

 

 

 

Commitments and contingencies (Note 8)

 

-

 

-

 

 

 

 

 

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 January 31, 2013 and October 31, 2012

 

64,299

 

64,299

Additional paid-in capital

 

6,419,687

 

6,419,687

Retained earnings

 

813,097

 

696,862

 

 

7,297,083

 

7,180,848

 

 

 

 

 

Less: Treasury stock, 1,245,980 shares

 

 

 

 

at January 31, 2013 and October 31, 2012, at cost

 

(681,410)

 

(681,410)

 

 

 

 

 

Total stockholders' equity

 

6,615,673

 

6,499,438

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

7,905,788

$

8,664,179

 

 

 

 

 

 

See accompanying notes to Financial Statements.

1

 

 

INTERNATIONAL BALER CORPORATION

STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED JANUARY 31, 2013 AND 2012

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

Equipment

$

3,496,627

 

$

3,809,380

Parts and service

 

399,239

 

 

461,415

Total net sales

 

3,895,866

 

 

4,270,795

 

 

 

 

 

 

Cost of sales

 

3,177,289

 

 

3,306,169

 

 

 

 

 

 

Gross profit

 

718,577

 

 

964,626

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense:

 

 

 

 

 

Selling expense

 

252,821

 

 

163,402

Administrative expense

 

272,347

 

 

223,067

Total operating expense

 

525,168

 

 

386,469

 

 

 

 

 

 

Operating income

 

193,409

 

 

578,157

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

Interest income

 

430

 

 

1,666

Interest expense

 

(3,604)

 

 

-

Total other income (expense)

 

(3,174)

 

 

1,666

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

190,235

 

 

579,823

 

 

 

 

 

 

Income tax provision

 

74,000

 

 

224,000

 

 

 

 

 

 

Net income

$

116,235

 

$

355,823

 

 

 

 

 

 

 

 

 

 

 

 

Basic income per share

$

0.02

 

$

0.07

 

 

 

 

 

 

Weighted average number of shares outstanding

 

5,183,895

 

 

5,183,895

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to financial statements.

 

 

 

 

 

 

2

 

 

INTERNATIONAL BALER CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED JANUARY 31, 2013

UNAUDITED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

Treasury Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NUMBER OF SHARES ISSUED

 

PAR VALUE

 

ADDITIONAL PAID-IN CAPITAL

 

EARNINGS

NUMBER OF SHARES

 

COST

 

TOTAL STOCK- HOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at October 31, 2012

6,429,875

$

64,299

$

6,419,687

$

696,862

1,245,980

$

(681,410)

$

6,499,438

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

-

 

-

 

-

 

116,235

-

 

-

 

116,235

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 31, 2013

6,429,875

$

64,299

$

6,419,687

$

813,097

1,245,980

$

(681,410)

$

6,615,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

INTERNATIONAL BALER CORPORATION

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED JANUARY 31, 2013 AND 2012

UNAUDITED

 

 

 

 

 

 

 

 

2013

 

 

 

2012

 

 

 

 

 

 

 

 

 

 

Cash flow from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

116,235

 

 

$

355,823

 

Adjustments to reconcile net income to net cash provided

 

 

 

 

 

 

 

 

by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

42,604

 

 

 

35,102

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

271,857

 

 

 

(576,623

)

Inventories

 

 

513,730

 

 

 

(985,023

)

Prepaid expenses and other assets

 

 

32,324

 

 

 

34,803

 

Accounts payable

 

 

(90,989

)

 

 

540,454

 

Accrued liabilities and deferred compensation

 

 

(225,523

)

 

 

52,805

 

Customer deposits

 

 

(558,114

)

 

 

600,573

 

Net cash provided by operating activities

 

 

102,124

 

 

 

57,914

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Proceeds from notes receivable from former Director

 

 

3,673

 

 

 

3,538

 

Purchase of property and equipment

 

 

(83,112

)

 

 

(12,916

)

Net cash used in investing activities

 

 

(79,439

)

 

 

(9,378

)

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

22,685

 

 

 

48,536

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

1,719,140

 

 

 

2,875,149

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

1,741,825

 

 

$

2,923,685

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during period for:

 

 

 

 

 

 

 

 

Interest

 

$

  

 

 

 

  

 

Income taxes

 

 

  

 

 

 

40,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to financial statements.

 

 

 

 

 

 

 

 

4

 

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.

 

 

 

2.

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 three-month period ended January 31, 2013 are not necessarily indicative of the results that may be expected for the year ending October 31, 2013. The accompanying balance sheet as of October 31, 2012 was derived from the audited financial statements as of October 31, 2012.

             

 

 

 

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 allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly including the analysis of historical trends, customer credit worthiness and the aging of receivables. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.             

 

(b)

 

Inventories:

 

Inventories are stated at the lower of cost or market. Cost is determined by a method that approximates the first-in, first-out method. Work in process and finished goods are valued based on underlying costs to manufacture balers which include direct materials, direct and indirect labor, and overhead. Company personnel review the potential usage of inventory and inventory components on a regular basis.

 

 

(c)

 

Revenue Recognition:

 

The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from installations and start-ups and repair services in the period in which the service is provided.

 

(d)

 

Warranties and Service:

 

The Company typically warrants its products for one (1) year from the date of sale as to materials and six (6) months as to labor, and offers a service plan for other required repairs and maintenance. The Company maintains an accrued liability for expected warranty claims. The warranty accrual is based on historical warranty costs, the quantity and types of balers under warranty, and known warranty issues.

 

Following is a tabular reconciliation of the changes in the warranty accrual for the three-month period ended January 31:

 

 

 

 

2013

 

 

 

2012

 

Beginning balance

 

$

60,000

 

 

$

54,859

 

Warranty service provided

 

 

(32,681

)

 

 

(59,746

)

New product warranties

 

 

34,966

 

 

 

57,140

 

Changes to pre-existing warranty accruals

 

 

(2,285

)

 

 

7,606

 

Ending balance

 

$

60,000

 

 

$

59,859

 

 

 

 

 

 

 

 

 

 

 

 

(e)

 

Fair Value of Financial Instruments:

 

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and customer deposits, approximate their fair value due to the short-term nature of these assets and liabilities.

 

4.

 

Related Party Transactions:

 

The Company had a note receivable from its former president and director totaling $3,673 at October 31, 2012, which was paid in full at January 31, 2013. Interest accrued at the rate of 6% per annum.

 

The Company had an agreement with the former president and director of the Company for deferred compensation payments. The Company made payments of $5,813 per month through January 2013. A portion of the payments were used to repay the outstanding note receivable discussed above.

 

Leland E. Boren, a stockholder and director of the Company, is the owner of Avis Industrial Corporation (Avis). Mr. Boren controls 51.0% of the outstanding shares of the Company. Avis owns 100% of The American Baler Company, a competitor of the Company. These baler companies operate independent of each other. The Company had no equipment sales to, or purchases from, The American Baler Company for the three months ended January 31, 2013 or in fiscal year ended October 31, 2012.

5

 

 

5.

 

Inventories:

 

Inventories consisted of the following:

 

 

 

January 31, 2013

 

 

October 31, 2013

 

Raw materials

$

1,574,125

 

$

1,638,855

 

Work in process

 

1,743,062

 

 

1,356,062

 

Finished goods

 

364,634

 

 

1,200,634

 

 

$

3,681,821

 

$

4,195,551

 

 

 

6.

 

Debt:

 

The Company has a $1,650,000 line of credit agreement with First Merchants Bank of Muncie, Indiana that was entered into on January 7, 2013. The line of credit allows the Company to borrow at an interest rate equal to the sum of the LIBOR Rate applicable to each interest period plus 2.24%. The line of credit is secured by all assets of the Company and has a term of two years. The line of credit had no outstanding balance at January 31, 2013

 

7.

 

Income Taxes:

 

As of January 31, 2013, the Company’s anticipated annual effective tax rate is 39%. The difference between income taxes as provided at the federal statutory tax rate of 34% and the Company’s actual income tax is primarily the result of state income tax expense and permanent deductible differences.

 

Tax assets are recognized in the balance sheet if it is more likely than not that they will be realized on future tax returns. Factors considered included, historical results of operations, volatility of the economic conditions and projected earnings based on current operations. Based on this evidence, it is more likely than not that the deferred tax assets would be realized. Accordingly, the valuation allowance as of January 31, 2013 and at October 31, 2012 is $0. However, if it is determined that all or part of the deferred tax assets will not be used in the future, an adjustment to the deferred tax assets would be charged against net income in the period such determination is made. As of January 31, 2013 and October 31, 2012, net deferred tax assets were $151,501.

 

8.

 

Commitments and Contingencies:

 

The Company, in the ordinary course of business, is subject to claims made, and from time to time is named as a defendant in legal proceedings relating to the sales of its products. The Company believes that the reserves reflected in its financial statements are adequate to pay losses and loss adjustment expenses which may result from such claims and proceedings; however, such estimates may be more or less than the amount ultimately paid when the claims are settled. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity.

 

On August 26, 2010, the Company was served with a wrongful death lawsuit filed by the Estate of a former employee who was injured in a workplace accident while an employee of the Company. The accident occurred in September 2008. The Plaintiff has demanded $2,500,000 to settle this claim. The Company intends to vigorously defend this case and has contacted its liability insurance carrier to request defense and indemnification of any losses incurred in connection with this lawsuit. A motion to dismiss the Complaint was granted without prejudice in January 2012, allowing the Plaintiff the ability to file an amended Complaint. There has been no activity related to this lawsuit since January 2012.

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion should be read together with our unaudited financial statements and the related notes thereto included in Part I, Item 1 “Financial Statements”. For further information, refer to the Company’s Annual Report on Form 10-K for the year ended October 31, 2012, and the Management Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10-Q.

 

Results of Operations: Three Month Comparison

 

In the first quarter ended January 31, 2013, the Company had net sales of $3,865,866, compared to net sales of $4,270,795 in the first quarter of fiscal 2012, a decrease of 8.8%. The decrease in sales was the result of a slowdown in the demand for balers for recycling. The Company sold four synthetic rubber balers in the first quarter of 2013 versus six in the first quarter of fiscal 2012.

 

The Company had net income of $116,235 in the first quarter, compared to net income of $355,823 in the first quarter of 2012. The lower net income was the result of the lower level of shipments in the first quarter of the current fiscal year. Also, the Company had higher costs for sales salaries due to the addition of two regional sales managers and higher cost for general liability insurance.

 

The sales order backlog was $ 2,760,000 at January 31, 2013 and $7,800,000 at January 31, 2012.

 

Financial Condition and Liquidity:

 

Net working capital at January 31, 2013 was $5,541,182, as compared to $5,465,455 at October 31, 2012. The Company currently believes that it will have sufficient cash flow to be able to fund operating activities for the next twelve months.

 

Average days sales outstanding (DSO) in the first three months of fiscal 2013 were 31.9 days, as compared to 28.4 days in the first three months of fiscal 2012. DSO is calculated by dividing the total of the month-end net accounts receivable balances for the period by three, and dividing that result by the average day’s sales for the period (period sales ÷ 91.25).

 

During the three months ended January 31, 2013 and 2012, the Company made additions to plant and equipment of $83,112 and $12,916, respectively.

 

The Company has a $1,650,000 line of credit agreement with First Merchants Bank of Muncie, Indiana. The line of credit allows the company to borrow at an interest rate equal to the sum of the LIBOR Rate applicable to each interest period plus 2.24%. The line of credit and the Company’s previous line of credit is secured by all assets of the Company and has a term of two years. The line of credit had no outstanding balance at January 31, 2013 and October 31, 2012, respectively, and the unused line of credit was $1,650,000 at January 31, 2013.

 

In the event that the Company’s line of credit would not be available, the Company would pursue a line of credit from other sources, and take steps to minimize expenditures, such as delaying capital expenditures and reducing overhead costs.

6

 

 

Forward Looking Statements

 

Certain statements in this Report contain forward-looking statements within the meaning of Section 21B of the Securities and Exchange Act of 1934, as amended. These forward-looking statements represent the Company’s present expectations or beliefs concerning future events. The Company cautions that such statements are necessarily based on certain assumptions which are subject to risks and uncertainties including, but not limited to, changes in general economic conditions and changing competition which could cause actual results to differ materially from those indicated.

 

ITEM 3.               QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The Company is exposed to changes in interest rates as a result of its financing activities, including its borrowings on the revolving line of credit facility. Based on the current level of borrowings, a change in Interest rates is not expected to have a material effect on operations or financial position.

 

ITEM 4.              CONTROLS AND PROCEDURES

 

Controls and Procedures

 

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosures.

 

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 

As of the end of the period covered by this report, and under the supervision and with the participation of the management, including the Company’s Chief Executive Officer and Chief Financial Officer, management evaluated the effectiveness of the design and operation of these disclosure controls and procedures. Based on this evaluation and subject to the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

 

Management, with the participation of the Company’s principal executive and principal financial officers, assessed the effectiveness of the Company’s internal control over financial reporting as of January 31, 2013. This assessment was performed using the criteria established under the Internal Control-Integrated Framework established by Committee of Sponsoring Organization of the Treadway Commission (“COSO”).

 

As part of a continuing effort to improve the Company’s business processes management is evaluating its internal controls and may update certain controls to accommodate any modifications to its business processes or accounting procedures.

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Changes in Internal Control over Financial Reporting

 

The Company’s management, including CEO and CFO, confirm that there were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended January 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

PART II.              OTHER INFORMATION

 

ITEM 1.              LEGAL PROCEEDINGS

 

On August 26, 2010, the Company was served with a wrongful death lawsuit filed by the Estate of a former employee who was injured in a workplace accident while an employee of the Company. The accident occurred in September 2008. The Plaintiff has demanded $2,500,000 to settle this claim. The Company intends to vigorously defend this case and has contacted its liability insurance carrier to request defense and indemnification of any losses incurred in connection with this lawsuit. A motion to dismiss the Complaint was granted without prejudice in January 2012, allowing the Plaintiff the ability to file an amended Complaint. There has been no activity related to this lawsuit since January 2012.

 

 

ITEM 5. OTHER INFORMATON

 

None.

  

ITEM 6.               EXHIBITS

 

The following exhibits are submitted herewith:

 

Exhibit No.

Description

31.1

Certification of D. Roger Griffin, Chief Executive Officer, pursuant to Rule 13a–14(a)/15d-14(a).

 

 

31.2

Certification of William E. Nielsen, Chief Financial Officer, pursuant to Rule 13a–14(a)/15d-14(a).

 

 

32.1

Certification of D. Roger Griffin, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

32.2

Certification of William E. Nielsen, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned there unto duly authorized.

 

 

INTERNATIONAL BALER CORPORATION

 

 

Date: March 13th 2013

International Baler

 

By: /s/ D. Roger Griffin

 

D. Roger Griffin
Chief Executive Officer

 

Date: March 13th 2013

International Baler

 

By: /s/ William E. Nielsen

 

D. William E. Nielsen
Chief Financial Officer

 

 

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