U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
Commission File No. 0-5418
WALKER INTERNATIONAL INDUSTRIES, INC.
(Exact name of Small Business Issuer as specified in its charter)
Delaware 13-2637172
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4 Ken-Anthony Plaza, South Lake Blvd., Mahopac, New York 10541
(Address of principal executive offices) (Zip Code)
(845) 628-9404
Issuer's telephone number, including area code
N/A
(Former name, former address and former fiscal year
if changed since last report)
The number of shares of Common Stock outstanding, par value $.10
per share, as of April 6, 2001 was 238,071.
Transitional Small Business Disclosure Format (check one):
Yes No X
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
February 28, November 30,
2001 2000
(Unaudited) (Audited)
Current assets
Cash and cash equivalents $ 477,799 $ 542,118
Trading securities - at market 9,180 -
Accounts receivable - less allowance for
doubtful accounts of $1,000 14,924 25,935
Inventories 52,078 51,850
Prepaid expenses 17,742 18,903
Prepaid income taxes 3,685 3,386
U.S. Government securities 444,480 29,915
Total current assets 1,019,888 672,107
Property, plant and equipment - at cost 1,057,539 1,052,840
Less accumulated depreciation 880,625 871,734
176,914 181,106
Other assets
U.S. Government securities - 414,416
Security deposit 1,700 1,700
Total other assets 1,700 416,116
Total $1,198,502 $1,269,329
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 74,487 $ 88,285
Customer deposits 7,393 15,529
Total current liabilities 81,880 103,814
Stockholders' equity
Common stock, $.10 par value, authorized
1,000,000 shares, issued 477,810 shares 47,781 47,781
Additional paid-in capital 1,082,843 1,082,834
Retained earnings 633,985 674,628
1,764,609 1,805,243
Less treasury stock - at cost - 239,739
and 236,739 shares, respectively 647,987 639,737
Total stockholders' equity 1,116,622 1,165,506
Total $1,198,502 $1,269,320
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
(Unaudited)
Three months ended
February 28, February 29,
2001 2000
Net sales $ 211,603 $ 230,977
Costs and expenses
Cost of sales 164,751 180,146
Selling, general and administrative 112,929 110,724
277,680 290,870
Operating loss (66,077) (59,893)
Investment income 25,437 23,307
Net loss (40,640) (36,586)
Other comprehensive income, net of income
tax on unrealized holding gains - -
Comprehensive loss $ (40,640) $ (36,586)
Loss per common share $ (.17) $ (.14)
Weighted average number of common shares
outstanding 239,904 247,767
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Three months ended
February 28, February 29,
2001 2000
Cash flows from operating activities
Net loss $ (40,640) $ (36,586)
Items not requiring the current use of cash
Depreciation 8,891 9,525
Amortization of bond premium and discount (152) (90)
Changes in items affecting operations
Investment in trading securities (9,180) 1,151
Accounts receivable 11,011 10,719
Inventories (228) 20,898
Prepaid expenses 1,161 (3,824)
Prepaid income taxes (299) (732)
Accounts payable and accrued expenses (13,798) (24,428)
Customer deposits (8,136) (23,267)
Income taxes payable - (368)
Net cash used by operating activities (51,370) (47,002)
Cash flows from investing activities
Maturity of held to maturity securities - 465,000
Purchase of held to maturity securities - (413,964)
Payments for purchase of equipment (4,699) (11,968)
Net cash provided (used) by
investing activities (4,699) 39,068
Cash flows from financing activities
Acquisition of common stock for treasury (8,250) (19,998)
Net cash used by financing activities (8,250) (19,998)
Net decrease in cash and
cash equivalents (64,319) (27,932)
Cash and cash equivalents - beginning 542,118 512,490
Cash and cash equivalents - end $ 477,799 $ 484,558
Supplemental Cash Flow Information
Cash payments for income taxes $ 299 $ 1,100
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2001
(NOTE A) - The accompanying consolidated financial statements are prepared
on the basis of generally accepted accounting principles. In the opinion of
the management of Walker International Industries, Inc. and Subsidiaries, all
adjustments are of a normal recurring nature and have been reflected for a
fair presentation of the unaudited balance sheet as of February 28, 2001, and
results of operations and cash flows for the quarters ended February 28, 2001
and February 29, 2000. The operating results for the periods are not
necessarily indicative of the results to be expected for the entire year.
(NOTE B) - INVESTMENT SECURITIES
Included in held-to-maturity securities are the following:
Gross
Unrealized Estimated
Description Cost Gain Fair Value
Held-to-Maturity
U.S. Government securities -
maturing January 31, 2002 $ 414,542 $ 6,426 $ 420,968
U.S. Government securities -
maturing October 31, 2001 29,938 278 30,216
$ 444,480 $ 6,704 $ 451,184
Included in trading securities are the following:
Carrying
Description Cost Fair Value Amount
Equity Securities $ 9,665 $ 9,180 $ 9,180
The change in net unrealized holding loss on trading securities that has
been included in earnings during the period amounted to $485.
(NOTE C) - An analysis of inventories is as follows:
February 28,November 30,
2001 2000
Raw materials $ 26,701 $ 24,594
Work-in-process 3,465 7,279
Finished goods 21,912 19,977
$ 52,078 $ 51,850
(NOTE D) - The provision for income taxes consists solely of state and local
taxes.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition and Liquidity
The Company's liquidity (current assets minus current liabilities) increased
by $369,715 to $938,008 at February 28, 2001, as compared to $568,293 at
November 30, 2000. This increase is primarily the result of a reclassification
of U.S. Government securities to Current Assets from Other Assets, due to the
securities now maturing in less than one year from February 28, 2001. The net
amount of the securities reclassified was $414,565. This was primarily offset
by the loss from operations of $40,640.
Net cash used by operating activities amounted to $51,370. This resulted
primarily from a net loss of $40,640 and a decrease in accounts payable and
accrued expenses of $13,798, offset in part by a decrease in accounts
receivable of $11,011. The Company purchased treasury stock in the
amount of $8,250.
The Company deems its present facilities and equipment to be adequate for its
immediate needs and it has no material commitments for capital expenditures.
The Company believes its present liquidity is adequate for its current and
long-term needs.
Results of Operations
Net sales for the period ended February 28, 2001 ("Fiscal 2001") were
$211,603, representing a decrease of $19,374 from sales in the comparable
period in 2000 ("Fiscal 2000"). This decrease resulted from a small decrease
in sales volume at our Kelly Color subsidiary.
In Fiscal 2001, cost of sales as a percentage of sales ("COS") was 77.9%, as
compared to COS of 78.0% in Fiscal 2000. In Fiscal 2001, selling, general and
administrative expenses were 53.4% as a percentage of sales as compared to
47.9% in Fiscal 2000. Though overhead was stable, this percentage increase was
primarily due to reduced sales. The Company earned investment income of
$25,437 in Fiscal 2001 as compared to $23,307 in Fiscal 2000.
For the above-stated reasons, the Company had a loss before provision for
income taxes of $40,640 ($.17 per share) in Fiscal 2001 as compared to $36,586
($.14 per share) in Fiscal 2000.
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
A. EXHIBITS
None.
B. REPORTS ON FORM 8-K
None.
SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: April 13, 2001
WALKER INTERNATIONAL
INDUSTRIES, INC.
By:/s/ Peter Walker
Peter Walker
President
By:/s/ Richard Norris
Richard Norris
Vice President
(Principal Financial and
Accounting Officer)