UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(X) Filed by the Registrant
( )Filed by a Party other than the Registrant
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to 240.14a-12
Williams Industries, Incorporated
---------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required.
WILLIAMS INDUSTRIES, INCORPORATED
8624 J.D. Reading Drive
Manassas, Virginia 20109
NOTICE OF ANNUAL MEETING TO SHAREHOLDERS
To Be Held November 5, 2005
To the Shareholders of
Williams Industries, Incorporated:
The Annual Meeting of the Shareholders of Williams Industries, Incorporated
will be held at the Ernst Community Center of Northern Virginia Community
College, 8333 Little River Turnpike, Fairfax, Virginia, (Route 236 at the
intersection of Wakefield Chapel Road, just west of the Intersection of
Interstate 495 and Route 236) at 10:00 A.M. on November 5, 2005 for the
following purposes:
(1) To elect six directors to serve until the next Annual Meeting or until
their successors are elected and qualified.
(2) To transact such other business as may properly come before the Annual
Meeting and any adjournments thereof.
Only shareholders of record at the close of business on September 22, 2005
are entitled to notice of the Annual Meeting and to vote at the Annual
Meeting. A list of such shareholders of record will be available at the
Company's executive offices for inspection by shareholders for a period of at
least ten days prior to the Annual Meeting. You are urged to execute the
enclosed proxy and return it in the accompanying envelope at your earliest
convenience. Such action will not affect your right to vote in person should
you find it possible to attend the meeting.
By Order of the Board of Directors
/s/ Marianne V. Pastor
Marianne V. Pastor
Secretary
WILLIAMS INDUSTRIES, INCORPORATED
8624 J. D. Reading Drive
Manassas, Virginia 20109
ANNUAL MEETING OF SHAREHOLDERS
To be Held November 5, 2005
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies to be used at the Annual Meeting of Shareholders of Williams
Industries, Incorporated (the "Company"), to be held at the Ernst Community
Center of Northern Virginia Community College, 8333 Little River Turnpike,
Fairfax, Virginia, (Route 236 at the intersection of Wakefield Chapel Road,
just west of the intersection of Interstate 495 and Route 236) at 10:00 A.M.
on Saturday, November 5, 2005, and at all adjournments thereof. It is
anticipated that this proxy material will be mailed to shareholders on or
about October 11, 2005.
The solicitation of the proxy accompanying this statement is being made
by the management of the Company, and the cost of solicitation will be borne
by the Company. The solicitation may be made by mail, telephone or oral
communication with shareholders. The Annual Report to Shareholders for the
Fiscal Year ended July 31, 2005 accompanies this proxy statement. Additional
copies of the Annual Report may be obtained by writing to the Secretary of
the Company at P.O. Box 1770, Manassas, Virginia 20108. The financial
statements for the period ending July 31, 2005, included in the Annual Report
to Shareholders, were audited by McGladrey & Pullen, LLP, the Company's
current independent registered public accounting firm. It is anticipated that
representatives of McGladrey and Pullen will be present at the Annual Meeting
and will be given the opportunity to make a statement and respond to
questions.
A proxy for use at the Annual Meeting is enclosed. Any shareholder who
executes and delivers such proxy has the right to revoke it at any time
before it is exercised, by filing with the Secretary of the Company either an
instrument revoking it or a duly executed proxy bearing a later date. In
addition, the powers of the proxy holder will be suspended if the person
executing the proxy is present at the meeting and elects to vote in person.
The only outstanding voting security of the Company is its Common Stock,
$.10 par value, of which there were issued and outstanding 3,649,735 shares
on September 22, 2005, which is the record date for the purpose of
determining the shareholders entitled to notice of and to vote at the Annual
Meeting. With the possible exception of the election of directors, each
holder of Common Stock will be entitled to one vote, in person or by proxy,
for each share of Common Stock outstanding in the shareholder's name on the
books of the Company as of the record date. While the Company's Articles of
Incorporation provide for cumulative voting in an election of directors, the
Virginia Code provides that shares otherwise entitled to vote cumulatively
not be voted cumulatively at a particular meeting unless the meeting notice
or proxy statement states conspicuously that cumulative voting is authorized;
or unless a shareholder gives notice to the secretary of the corporation not
less than 48 hours before the time set for the meeting of his intent to
cumulate his votes during the meeting. Cumulative voting means that the
shareholders are entitled to multiply the number of votes they are entitled
to cast by the number of directors for whom they are entitled to vote and
cast the product for a single candidate or distribute the product among two
or more candidates. If one shareholder gives his notice, all other
shareholders are entitled to cumulate their vote. The Company does not
intend that there be cumulative voting at the meeting, but in the event
cumulative voting should be instituted by a shareholder, the Company's proxy
holders will use their discretion in voting any unmarked proxies. All marked
proxies will be voted for nominees as directed in the proxy, but marked
proxies may not authorize voting more than one vote per nominee.
PROPOSAL I - ELECTION OF DIRECTORS
Nominees
The Board of Directors has fixed the number of directors to be elected
at the Annual Meeting at six, each to hold office until the next Annual
Meeting and until the director's successor shall be elected and qualified.
The Company has no standing nominating committee; the Board of Directors
chooses management's nominees. It is the Board's view, given the size of the
Company and the highly specific nature of qualifications needed in a
potential director, that a separate nominating committee is not in the best
interests of the Company. Each director has the opportunity to suggest any
nominee and such suggestions are comprehensively reviewed. The Board does
not have a charter for the Company's nominating process nor does the Board
have a specific policy for consideration of nominees recommended by security
holders, but there have been no recommended nominees from security holders.
The Company pays no fees to third parties for evaluating or identifying
potential nominees.
The Company's transfer agent will be appointed to tabulate shares
present, in person or by proxy, and to tabulate votes. Abstentions will be
counted as present at the meeting and will be recorded as abstentions. They
will not be recorded as votes either for or against the nominees. So long as
a quorum (a majority of the outstanding shares) is present, directors will be
elected by plurality vote; i.e., the six nominees receiving the most votes
will be elected. Thus, neither a vote against nor an abstention will have any
effect on the outcome of the election of directors; only votes for a nominee
will have any such effect. Generally, shares held of record by a broker or
other nominee for the benefit of a beneficial owner may only be voted by that
broker or nominee, and if the broker or nominee does not vote the shares, the
shares will not be tabulated as present or voting at the meeting. However, as
provided by Virginia law, the Company may, but is not required to, accept the
vote of a beneficial owner upon presentation of evidence acceptable to the
Company that the voter is indeed the beneficial owner of the shares. The
following table sets forth information concerning the nominees:
Nominees
Name Age Position with the Company Elected
Frank E. Williams, III(1) 46 President, Chairman of the 1991
(2)(5) Board, Chief Financial Officer
Frank E. Williams, Jr. (l)(2)(5) 71 None 1970
R. Bentley Offutt (3)(4) 67 None 1994
Stephen N. Ashman (3)(4) 57 None 1998
William J. Sim (2)(3) 60 None 1998
John A. Yerrick (5) 65 Consultant 2003
(1) Frank E. Williams, Jr. may be considered a "control person" of the
Company, as the term control is defined by the rules of the Securities and
Exchange Commission. Mr. Williams, III, is the son of Mr. Williams, Jr. Mr.
Williams, III, is a member of the Executive Committee, the Long
Range/Strategic Planning Committee and the Shareholder Relations' Committee.
(2) Member of standing Executive Committee. This committee, which acts
on behalf of the Board in situations where Board action is necessary but not
obtainable on short notice and if such action is authorized by applicable
law, reviewed seven items during the year and also met as a "committee of the
whole" with other board members present either in person or by conference
call three times during the year.
(3) Member of standing Audit Committee. Mr. Ashman is chairman of this
committee. This committee, which met four times during the past fiscal year,
consults with and authorizes the engagement of the Company's independent
auditors and provides recommendations to the Board concerning the Company's
accounting procedures.
(4) Member of standing Compensation Committee. Mr. Offutt is chairman of
this committee, which met two times during the last fiscal year, sets the
compensation for the President and establishes guidelines, to be implemented
within the President's discretion, for the compensation of other officers.
(5) Member of the Executive Committee and the Long Range/Strategic Planning
Committee.
The Nominees have had the following principal occupations or employment for
at least the past five years:
Mr. Williams, III has held the position of Chairman of the Board and
President since November 1994. On September 8, 1994, he was elected Chief
Financial Officer. He was elected as a vice president of the Corporation in
1991. For more than five years prior thereto he was an officer of various
Company subsidiaries and remains an officer and/or director of several
subsidiaries.
Mr. Williams, Jr., until November 1994, was the Chairman of the Board and
President of Williams Industries, Inc. He is a founder and Chairman of
Bosworth Steel Erectors, Inc., formerly known as the Williams and Beasley
Company; the Chairman of the Board of Williams Enterprises of Georgia, Inc.;
and the principal owner of Structural Concrete Products, LLC and Industrial
Alloy Fabricators, LLC; all organizations that are not otherwise affiliated
with Williams Industries, Inc. Mr. Williams, Jr., is also the Chairman of
the Board of Kaiser Group Holdings and a member of the board of Capital Bank.
Mr. Offutt is the president of Offutt Securities, Inc., a Baltimore
institutional research brokerage firm founded in 1987. The firm specializes
in small and mid-cap value stocks.
Mr. Ashman is a principal with SAS advisors, an area consulting firm.
Effective August 2002, he was elected Chairman of the Board of Directors of
Capital Bank, N.A., and its holding company. Mr. Ashman is also on the board
of directors of Prudent Capital, a mezzanine fund in Washington, D.C., and
NextGen Capital, a venture capital fund in Fairfax, VA. He is active in a
number of community organizations and is a board member of several community
groups.
Mr. Sim is Senior Vice President of Pepco Holdings, Inc. (PHI), a regional
energy holding company that provides utility service to more than 1.8 million
customers. PHI is the parent company of Potomac Electric Power Company, an
electric utility serving Washington, D.C. and suburban Maryland. In his
current position, Mr. Sim is responsible for operations across all PHI
utilities, including Pepco, Delmarva Power and Atlantic City Electric. Mr.
Sim is also active in a number of business and civic organizations, as well
as being a registered professional engineer. He is on the board of directors
of the Washington Building Congress, a regional construction-industry
association, and a member of the Board of Visitors, A. James Clark School of
Engineering at the University of Maryland.
Mr. Yerrick is a self-employed financial consultant, a position he has held
since June 2002. Prior to that time, he was a senior audit partner in the
international accounting firm of Deloitte & Touche. During his 39 years with
the firm, Mr. Yerrick held a variety of positions including Partner-in-Charge
of Audit for the Washington, D.C. practice, Managing Partner for the
Baltimore practice and most recently Deputy Professional Practice Director
for the Washington, D.C./Baltimore practice. He is presently serving on the
board of a privately held company, and serves on the finance committee of
Vital Voices Global Partnership, Inc., a nonprofit organization supporting
the economic and political advancement of women in developing countries.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE ELECTION OF DIRECTORS OF THE NOMINEES NAMED ABOVE
Further Information Concerning the Board of Directors
During the past fiscal year, the Board of Directors held five regular
meetings. All directors attended more than 75% of the board meetings during
the fiscal year. Numerous committee meetings, involving individual directors
in different capacities, were also held.
Executive Officers
The executive officers of the Company serve at the discretion of the
Board and presently include: Frank E. Williams, III, Chairman of the Board,
Chief Executive Officer, and Chief Financial Officer.
Compliance with Section 16 of the Securities Exchange Act of 1934, as amended
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and holders of 10% or
more of the Company's Common Stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership
of equity securities of the Company. The Company believes that all reports
required pursuant to Section 16(a) with respect to the 2005 fiscal year were
filed in a timely fashion.
Corporate Governance and Other Matters
The Board of Directors selects the nominees for directors. The
Company's by-laws also permit shareholders eligible to vote at the Annual
Meeting to make nominations for directors, through written notice no later
than 60 days prior to the date of the anniversary of the immediately
preceding annual meeting, to the Secretary of the Company. The by-laws also
permit shareholders to propose other business to be brought before an annual
meeting, provided that such proposals are made pursuant to the same timely
notice in writing to the Secretary of the Company. No such nominations or
proposals have been received in connection with the Annual Meeting.
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth information regarding ownership, as of
September 30, 2005 of the Common Stock of the Company by: (1) each person
known by the Company to own beneficially more than 5 percent of the Common
Stock; (2) each director; (3) each nominee for director; and (4) all officers
and directors as a group. Except as noted, the persons listed possess all
ownership rights attached to the shares opposite their name, including the
right to vote and dispose of the shares.
Directors:
Beneficial Owner Number of Shares Percentage of Class
Frank E. Williams, Jr. 1,698,376 (l)(3) 46.16 (1)
Frank E. Williams, III 1,085,799 (2)(3) 29.50 (2)
R. Bentley Offutt 13,795 (3) 0.37
Stephen N. Ashman 23,295 (3) 0.63
William J. Sim 17,795 (3) 0.48
John A. Yerrick 2,149 -
Officers and Directors as
a group (9 persons) 1,821,498 (3)(4) 49.50%
(1) Includes 166,779 shares owned by his wife, as to which Mr. Williams, Jr.
disclaims beneficial ownership; 730,283 shares owned or controlled by the
Williams Family Limited Partnership of which the Williams Family Corporation
(of which Mr. Williams, Jr. is the President and controlling person) is the
General Partner; 338,300 shares by Williams Enterprises of Georgia, Inc., of
which Mr. Williams Jr. is the control person as Chairman of the Board and a
beneficial owner, as are Mr. Frank E. Williams, III, and H. Arthur Williams;
3,000 shares as trustee for a minor child; and 1,000 shares held by the
Williams Family Foundation, a charitable organization exempt under Section
501(c)(3) of the Internal Revenue code of 1986. The Foundation's purpose is
to use and apply its income and principal assets exclusively for charitable,
scientific, literary, and educational purposes. Mr. Williams, Jr. is a
trustee of the Foundation and votes the stock. The business address of Mr.
Williams, Jr. is 2789-B Hartland Road, Falls Church, Virginia 22043.
(2) Includes 730,283 shares owned or controlled by the Williams Family
Limited Partnership, duplicative of the shares listed for Mr. Williams, Jr.,
but included here because Mr. Williams, III, has a beneficial interest in
these shares; 338,300 shares owned by Williams Enterprises of Georgia,
duplicative of shares listed for Mr. Williams Jr. but listed here because Mr.
Williams III has beneficial ownership; 344 shares owned by his wife to which
Mr. Williams, III, disclaims beneficial interest, and 3,000 shares held in
trust for his minor child. Mr. Williams, III, is also a trustee of the
Williams Family Foundation.
(3) Includes options granted to directors.
(4) Includes 21,321 shares owned directly by H. Arthur Williams, the son of
Mr. Frank E. Williams, Jr., and the brother of Mr. Frank E. Williams, III.
Mr. H. Arthur Williams is a Vice President of Williams Industries and he also
has a beneficial interest in the Williams Family Limited Partnership and
Williams Enterprises of Georgia. These shares are described in Items 1 and 2
of the preceding table.
Based on research of records of the Securities and Exchange Commission and on
information from the Nasdaq National Market reports, the Company believes
that there are no additional holders with more than a five percent position
in the Company's stock at this time.
EXECUTIVE OFFICERS AND DIRECTORS COMPENSATION
General
The following table sets forth the total annual compensation paid or accrued
by the Company to or for the account of Mr. Frank E. Williams, III, the
Company's Chief Executive Officer. Mr. Williams, III, has no employment
contracts, termination of employment or change-in-control arrangements,
pension plans, options (other than those disclosed herein) or any long term
incentive arrangements with the Company. Mr. Williams, III, as do other
eligible employees, participates in the Company's 401(k) plan, which provides
for Company contributions.
SUMMARY COMPENSATION TABLE
Annual Compensation
---------------------
Name and Year Annual Compensation
Principal Position
- -------------------- ----------------------------------------------
Salary Other Bonus Long-Term
---- ---------- ---------- ---------- ----------
Frank E. 2005 $147,004 $ 7,170(1)
Williams, III 2004 $147,004 $ 7,170(1) $ 64,500(2) 0
Chief Executive 2003 $148,511 $ 9,590(1) $108,000(3) $9,930(4)
Officer
(1) Includes car allowance and directors' meeting fees
(2) Mr. Williams, III was paid $19,180 from accrued bonus for the fiscal
year ended July 31, 2000 and $45,320 from accrued bonus for the fiscal
year ended July 31, 2001.
(3) Mr. Williams, III, was paid $78,000 for prior years accrued bonus and
was granted $30,000 for Fiscal 2002, for which he has not been paid.
(4) Mr. Williams, III, was granted options for 3,000 shares of Williams
Industries' stock at $3.91 per share.
In addition to the above, on July 12, 2003 during a regularly scheduled
meeting of the Board of Directors of the Company, upon motion of Mr. Stephen
Ashman, chairman of the Audit Committee, and seconded by Mr. Thomas Mitchell,
the independent directors of the Company voted to compensate Mr. Williams,
III, in the amount of $50,000 for agreeing to provide his personal guaranty
on a Company bond for the Woodrow Wilson Bridge project. This compensation,
which is being accrued but not yet paid, will be paid over the life of the
Woodrow Wilson Bridge contract, proportional to the payments received by the
Company divided by the contract price.
Directors' Fees
The Company's "outside" directors are compensated $650 per month for serving
as directors; $250 per meeting attended in person; $100 per telephone
meeting; $200 per committee meeting attended; and a stock grant of restricted
stock equal to $600 per month to be calculated monthly using the current
share price at the end of the month with the shares to be accumulated and
transferred once a year in January. The Chairman of the Audit Committee
receives an additional stipend of $500 per month and other committee chairs
receive $50 per month. Mr. Williams, III, is considered to be an "insider"
and does not receive the compensation previously noted. All directors are
reimbursed traveling expenses incurred in connection with meetings, with five
such meetings normally being held each year.
The Company also issues options to non-employee directors. The options and
shares issued upon exercise of these options are issued pursuant to Rule 144
of the 1933 Securities Act. In 2005, non-employee directors each received
options for 6,000 shares of company stock at an exercise price of $4.10 per
share. No options were issued in 2004.
In 2003, the Company's shareholders approved an equity compensation plan for
non-employee directors, as summarized below. The plan includes the following
elements:
1. Shares Reserved. 100,000 shares of Common Stock are reserved for issue
under the Plan. If an award lapses or the participant's rights with respect
to such otherwise terminate, any shares subject to such award will again be
available for future awards under the Plan.
2. Administration. All grants under the Plan will be determined by the
Compensation Committee of the Company.
3. Eligibility. An award may be granted to any director who is not an
employee of the Company. Directors who are employees may receive equity
awards under the Company's 1996 Incentive Compensation Plan, but not under
this Plan.
4. Awards. Under the Plan, the following types of awards may be granted.
No consideration will be paid by the participant on account of any grant.
* Restricted Stock. The Compensation Committee may grant annual awards
of shares of Common Stock bearing restrictions ("Restricted Stock")
prohibiting a transfer of the Restricted Stock for a period of time (except
for certain transfers by operation of the law not at the volition of the
participant). The Compensation Committee will establish the number of shares
to be granted to each non-employee director and the terms and conditions of
each grant. However, the fair market value of the number of shares issued to
any director in any year cannot exceed $15,000 and the non-transferability
period must be at least six months. On completion of the non-transferability
period the restrictions will expire. The grant of Restricted Stock will not
result in Federal taxable income to a participant or a tax deduction to the
Company. When the restrictions expire, a participant will realize ordinary
taxable income in an amount equal to the fair market value of the stock at
the time the restrictions expire, and the Company will be entitled to a
corresponding deduction.
* Options. The Compensation Committee may grant options to purchase
shares of Common Stock. The exercise price and expiration date of the
options will be determined at the discretion of the Compensation Committee,
except that the exercise price must be at least 50% of the fair market value
of the stock at the date of grant, the expiration date must be no later than
10 years after date of grant, and the exercise price and expiration dates
cannot be changed after the date of grant. These options will be non-
qualified options not entitled to favorable Federal tax treatment under the
Internal Revenue Code. The grant of an option will not result in taxable
income to the participant or a tax deduction for the Company, however upon
exercise of an option the participant will recognize compensation taxable as
ordinary income in an amount equal to the difference between the exercise
price and the fair market value of the stock on the date of exercise, and the
Company will be entitled to a corresponding deduction.
5. Accounting Effect. Accounting principles will require that restricted
share awards be charged against earnings on a pro-rata basis over the
restrictions period and will be based on the value of the stock at the date
of grant. Options granted at fair value will not be charged against
earnings.
6. Amendment of Plan. The Plan may be amended by the Compensation Committee
to correct typographical errors, to clarify ambiguities and to make other
such editorial changes. However, except by shareholder approval, the Plan
may not be amended: (1) to change the expiration date of the Plan; (2) to
increase the number of shares to be issued under the Plan (other than to
reflect a reorganization, stock split, merger, spin-off or similar
transaction); (3) to decrease the exercise price or change the expiration
date of outstanding options; (4) to increase the value of restricted stock
which may be issued to any participant; (5) to expand the class of
participants in the Plan; (6) to expand the types of options or award under
the Plan; or (7) to make any other amendment which materially changes the
terms of the Plan.
6. Expiration Date. The Plan will expire in 2013, ten years after its
approval by shareholders.
Compensation Committee Report
Pursuant to rules adopted by the Securities and Exchange Commission designed
to enhance disclosure of public companies' policies toward executive
compensation, set forth below is a report submitted by the Company's
Compensation Committee (the Committee) addressing the Company's compensation
policies with respect to executive officers.
The Compensation Committee consisted of R. Bentley Offutt, Chairman, Stephen
N. Ashman and John A. Yerrick. The Compensation Committee is responsible for
establishing and administering the policies that govern annual compensation,
bonuses, stock options and all other forms of compensation for corporate
executive officers. In November of each year, salaries are discussed in
committee, changes are recommended to the Board, and voted on by the Board
for the forthcoming calendar year.
The Committee structures executive compensation in a manner designed to
provide competitive levels of compensation and to assist the Company in
attracting and retaining qualified executives. Compensation is a direct
result of the company's performance and therefore can be said to be
performance driven. The Committee calculates executive compensation,
including bonuses, with a specific formula based on the Company's results.
Certain thresholds have to be achieved prior to the authorization for any
bonus. The Committee is generally familiar with executive compensation paid
in the Washington, D.C. metropolitan area, but has not made a detailed
comparison of the Company's executive compensation as compared to other
companies in the area or the industry. The Committee recommends executive
compensation to the full Board of Directors, which considers substantially
the same factors as the Committee in determining whether to approve its
recommendations.
/s/ R. Bentley Offutt, Chairman
/s/ Stephen N. Ashman
/s/ John A. Yerrick
Compensation Committee Interlocks and Insider Participation
Mr. Williams, III is a director and the Chief Executive Officer of the
Company. Mr. H. Arthur Williams, the president of a Company subsidiary, is
the brother of Mr. Williams, III, and the son of Mr. Frank E. Williams, Jr.,
a Company director. The Williams family is considered to be a "control
group" of the Company, as the term control is defined by the Securities and
Exchange Commission.
Certain Transactions
Mr. Frank E. Williams, Jr., who owns or controls approximately 46% of
the Company's stock at July 31, 2005, and is a director of the Company, also
owns controlling interests in the outstanding stock of Williams Enterprises
of Georgia, Inc., Structural Concrete Products, LLC. and Industrial Alloy
Fabricators, LLC. Additionally, Mr. Williams, Jr. owns a substantial interest
in Bosworth Steel Erectors, Inc. (formerly Williams and Beasley Company).
Revenue earned and costs incurred with these entities during the three years
ended July 31, 2005, 2004 and 2003 are reflected below. In addition, amounts
receivable and payable to these entities at July 31, 2005, 2004 and 2003 are
also reflected below.
(in thousands) 2005 2004 2003
------ ------ ------
Revenues $1,158 $ 400 $2,442
Billings to entities $1,099 $ 380 $1,293
Cost and expenses $ 319 $ 675 $1,478
incurred from
Balance July 31,
2005 2004
------ ------
Accounts receivable $ 663 $ 650
Notes payable $ 667 $ 188
Accounts payable $ 400 $ 77
Billings in excess of costs and
estimated earnings on
uncompleted contracts $ 82 $ -
Accrued Interest Payable $106 $ 73
In the year ended July 31, 2005, the company borrowed $665,000 from Mr.
Williams, Jr. to cover short-term cash requirements. The note is payable on
demand with interest ranging from the prime rate to the prime rate plus 1%.
Subsequent to the year ended July 31, 2005, the Company sold its
Richmond, Virginia property to Mr. Williams, Jr. and leased it back on a
long-term basis, with an option to buy the property back for the same price
for which it was sold.
In July 2004, the Company borrowed $100,000 from Mr. Williams, Jr. to
cover short-term cash requirements. The note is payable on demand with
interest at the prime rate.
Subsequent to the year ended July 31, 2004, the Company borrowed an
additional $200,000 from Mr. Williams, Jr., payable on demand with interest
at prime.
The Company is obligated to the Williams Family Limited Partnership
under a lease agreement for real property with an option to purchase. The
partnership is controlled by individuals who own, directly or indirectly,
approximately 44% of the Company's stock. The lease, which has an original
term of five years and an extension option for five years, commenced February
15, 2000. The lease contains an option to purchase up to ten acres at the
"original pro-rata cost" of $567,500. The Company pays annual lease payments
of approximately $56,000 plus real estate taxes of $11,000 per year. The
Company recognized lease expense for the three years ended July 31, 2005,
2004 and 2003 as follows:
(in thousands) 2005 2004 2003
------ ------ ------
Lease Expense $ 34 $ 78 $ 56
Interest Expense $ 26 $ 13 $ -
Balance July 31,
2005 2004
------ ------
Note Payable $1,381 $ 100
Accounts Payable $ 149 $ 116
Accrued interest payable $ 18 $ -
Subsequent to the year ended July 31, 2005, the Company borrowed
$125,000 from the Williams Family Limited Partnership, payable on demand with
interest at prime.
The Company sold its interest in Construction Insurance Agency, Inc.
(CIA) to George R. Pocock, a former officer of the Company, in 2001 and
recorded a note receivable related to the sale. The note bears interest at
7.5%, is secured by the CIA stock and is due in monthly installments of
$2,374 including principal and interest, with a final payment of $138,812 due
on October 31, 2005. At July 31, 2005 and 2004, the balance due on the note
was $141,797 and $158,946, respectively.
Costs incurred with CIA, for insurance premiums and brokerage fees, for
the years ended July 31, 2005, 2004 and 2003 are reflected below. In
addition, amounts payable at July 31, 2005 and 2005 are also reflected below.
(in thousands) 2005 2004 2003
------ ------ ------
Costs incurred from $381 $206 $231
Balance July 31,
2005 2004
------ ------
Accounts Payable $116 $109
Directors Frank E. Williams, Jr. and Stephen N. Ashman are shareholders
and directors of a commercial bank from which the Company obtained a $240,000
note payable on December 23, 2002. The note is payable in sixty equal monthly
payments of principal of $4,000 plus interest at 5.75% or the current Prime
rate, whichever is greater. The note, which replaced an existing note payable
that had a higher interest rate and payment, was negotiated at arms length
under normal commercial terms. Interest expensed for the years ended July 31,
2005, 2004 and 2003 is reflected below. The balance outstanding at July 31,
2005 and 2004, which is reflected below, is included in Note 6, Unsecured:
Installment obligations.
(in thousands) 2005 2004 2003
------ ------ ------
Costs incurred from $ 11 $ 12 $ 9
Balance July 31,
2005 2004
------ ------
Accounts payable $116 $164
During the year ended July 31, 2002, the Company entered into an
agreement with Alabama Structural Products (ASP), Inc., a subsidiary of a
company controlled by Frank E. Williams, Jr., a Director of the Company, to
lease a 21,000 square foot building in Gadsden, Alabama for the expansion of
S.I.P. of Delaware, Inc. The lease payment is $2,500 per month. Additionally,
the Company had a labor reimbursement agreement with ASP to provide labor to
operate the Gadsden plant. The labor agreement was terminated during the
year ended July 31, 2005.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is composed of three outside
directors. The committee's Chairman, Stephen N. Ashman, an independent
director, is a Certified Public Accountant who serves as the Audit
Committee's financial expert. The Audit Committee's primary function is to
oversee the Company's system of internal controls, financial reporting
practices and audits to determine that their quality, integrity and
objectivity are sufficient to protect stockholder interests. Each member of
the Committee is an independent director as defined by the National
Association of Securities Dealers (NASD) rules. The committee has adopted a
writer charter, which has been approved by the Board of Directors, and which
is set forth in Appendix A of this Proxy Statement.
The Audit Committee, either in person or by conference call, met four times
during Fiscal 2005 to review the overall audit scope, plans and results of
the independent auditors, the Company's internal controls, emerging
accounting issues, expenses, and audit fees. The Committee met separately
without management present and with the independent auditors to discuss the
audit. The Committee reviewed the Company's annual financial statements
prior to issuance. Audit Committee findings are reported to the full Board
of Directors.
McGladrey & Pullen, LLP, the Company's registered public accounting firm for
2005, is responsible for expressing an opinion on the conformity of the
Company's audited financial statements with generally accepted accounting
principles. The Committee has discussed with McGladrey & Pullen the matters
that are required to be discussed by the Statement on Auditing Standards No.
61 (Communication with Audit Committees). McGladrey & Pullen has provided
to the Committee the written disclosures and the letter required by
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees), and the Committee discussed with McGladrey & Pullen that
Firm's independence. The Committee is satisfied that McGladrey & Pullen
does not currently provide any non-audit services to the Company.
The Audit Committee is satisfied that the internal control system is adequate
and that the Company employs appropriate accounting and auditing procedures.
Based on these considerations, the Committee recommended to the Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for 2005.
The foregoing report is provided by the following independent directors, who
constitute the Audit Committee:
/s/ Stephen N. Ashman, Chairman
/s/ R. Bentley Offutt
/s/ William J. Sim
INDEPENDENT AUDITORS
McGladrey & Pullen served as the Company's independent registered public
accounting firm during the year ended July 31, 2005 and performed the audit
for that year. In order to assure that the Company's audit fees are
competitive and consistent with necessary services, the Company's audit
committee reviews proposals from independent certified public accounting
firms, including McGladrey & Pullen, seeking to serve as the Company's
independent auditors. Representatives of McGladrey & Pullen are expected to
be present at the Annual Meeting, will have the opportunity to make a
statement and to respond to appropriate questions from stockholders.
Audit Fees. The aggregate fees to be paid to McGladrey & Pullen for
professional services rendered for the audit of the Company's annual
financial statements for the fiscal year ended July 31, 2005 (the "2005
fiscal year") and the reviews of the financial statements included in the
Company's Form 10-Qs for 2005 fiscal year will total approximately $115,000.
This fee does not include payment for any work that any accounting firm might
do in relation to an audit of the company's employee benefit plans.
Financial Information Systems Design and Implementation Fees. There were no
fees billed for professional services related to financial information
systems design and implementation by McGladrey & Pullen for the 2005 fiscal
year.
All Other Fees. The total aggregate fees that will be billed for services
rendered by McGladrey and Pullen, including statutory audits and other
regulatory compliance reporting, including the $115,000 shown in the prior
item in this section, will be $125,000.
OTHER MATTERS
No business other than that set forth above is expected to come before
the Annual Meeting or any adjournment thereof. Should other business
properly come before the meeting or any adjournment thereof, the proxy
holders will vote upon the same, according to their discretion and best
judgment.
COMMON STOCK PERFORMANCE
The following chart compares the value of $100 invested on August
1, 2000 in the Company's common stock, the Russell 2000 index and a peer
group Index consisting of the common stocks issued by four companies
selected by management. The Russell 2000 index represents a broad
market group which management believes more nearly represents the
Company's market capitalization than the Nasdaq Composite Index in which
the Company participates. The Peer Group was chosen as the nearest
practicable representative peer group of companies that meet Securities
and Exchange Commission requirements. However, management believes
that the Company's mix of products and services over the period
represented was unique in the heavy construction industry, with no other
publicly traded company being truly comparable.
Chart is not shown in this EDGAR filing
year ended July 31:
2000 2001 2002 2003 2004 2005
------ ------ ------ ------ ------ ------
Williams Industries 100 141.82 163.64 132.73 148.73 133.82
Peer Group index 100 159.06 78.30 110.38 136.85 256.96
Russell 2000 Index 100 96.83 78.38 95.08 110.12 135.78
The broad market index chosen was: The peer group was made
Russell 2000 Index up of the following companies:
Granite Construction Inc.
The peer group chosen was: Meadow Valley Corp.
Customer selected stock list Perini Corp.
Schuff International, Inc.
Source: This document was compiled using publicly available historic quote
data.
SHAREHOLDER PROPOSALS
Any shareholder of the Company who wishes to present a proposal to be
considered at the next Annual Meeting of Shareholders and who wishes to have
the proposal presented in the Company's Proxy Statement for such meeting must
deliver such proposal in writing to the Company's principal executive offices
not later than June 14, 2006. If the shareholder does not want the proposal
presented in the Company's proxy, the Company's By-Laws provide that a
proposal for consideration at the annual meeting must be submitted to the
Company by written notice at least sixty days prior to the anniversary date
of the preceding meeting or not later than September 29, 2006.
MISCELLANEOUS
The management of the Company knows of no matters to be presented at the
meeting other than the election of directors and the ratification of the
director's option plan. However, if other matters come before the meeting, it
is the intention of the persons named in the accompanying proxy to vote the
proxy in accordance with their judgments on such matters, and discretionary
authority to do so is included in the proxy.
AT THE WRITTEN REQUEST OF ANY RECORD HOLDER OF THE COMMON STOCK ON THE
RECORD DATE, SEPTEMBER 22, 2005, OR OF ANY BENEFICIAL HOLDER OF SUCH SHARES
ON SUCH DATE WHO MAKES A GOOD FAITH REPRESENTATION THAT SUCH SHAREHOLDER WAS
SUCH A BENEFICIAL HOLDER, THE COMPANY WILL SUPPLY TO SUCH A SHAREHOLDER A
COPY OF THE COMPANY'S FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION FOR THE FISCAL YEAR ENDED JULY 31, 2005. PLEASE ADDRESS ALL
REQUESTS TO WILLIAMS INDUSTRIES, INCORPORATED, P.O. BOX 1770, MANASSAS,
VIRGINIA 20108.