UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10Q
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended January 31, 2006
Commission File No. 0-8190
WILLIAMS INDUSTRIES, INCORPORATED
(Exact name of registrant as specified in its charter)
Virginia 54-0899518
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
8624 J.D. Reading Drive, Manassas, Virginia 20109
(Address of principal executive offices)
P.O. Box 1770, Manassas, VA 20108
(Mailing address of principal executive offices)
(703) 335-7800
(Registrant's telephone number, including area code)
Not Applicable
(Former names, former addresses 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 by check mark whether the registrant is an accelerated
filer (as defined in Rule 126-2 of the Exchange Act).
YES NO X
At January 31, 2006, the Registrant had outstanding 3,653,400 shares of
Common Stock.
WILLIAMS INDUSTRIES, INCORPORATED
FORM 10-Q
FOR THE QUARTER ENDED January 31, 2006
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets - January 31,
2006 and July 31, 2005 (Unaudited) 1
Condensed Consolidated Statements of Operations -
Three and six months ended January 31, 2006
and 2005 (Unaudited) 2
Condensed Consolidated Statements of Cash Flows -
Six months ended January 31, 2006 and 2005
(Unaudited) 3
Notes to Condensed Consolidated Financial Statements
(Unaudited) 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISKS 20
ITEM 4. CONTROLS AND PROCEDURES 20
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 22
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 24
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 24
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 25
ITEM 5. OTHER INFORMATION 26
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 26
CERTIFICATIONS AND SIGNATURES 27
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands except share data)
ASSETS
--------
January 31, July 31,
2006 2005
----------- ----------
CURRENT ASSETS
Cash and cash equivalents $ 557 $ 764
Accounts receivable, net 13,917 14,432
Inventory 2,019 5,251
Costs and estimated earnings in excess
of billings on uncompleted contracts 3,184 1,517
Prepaid and other assets 2,380 1,834
----------- ----------
Total current assets 22,057 23,798
----------- ----------
PROPERTY AND EQUIPMENT, AT COST 23,139 25,091
Accumulated depreciation (13,976) (13,486)
----------- ----------
Property and equipment, net 9,163 11,605
----------- ----------
OTHER ASSETS 240 133
----------- ----------
TOTAL ASSETS $ 31,460 $ 35,536
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Current portion of notes payable $ 9,964 $ 9,760
Accounts payable 7,336 8,388
Billings in excess of costs and estimated
earnings on uncompleted contracts 2,630 6,343
Deferred income - 9
Financing obligation resulting from sale-
leaseback transaction 319 -
Other liabilities 2,280 2,474
----------- ----------
Total current liabilities 22,529 26,974
LONG-TERM LIABILITIES
Notes payable, less current portion 1,087 3,512
Financing obligation resulting from sale-
leaseback transaction 2,750 -
----------- ----------
Total Liabilities 26,366 30,486
----------- ----------
MINORITY INTERESTS 184 172
----------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock -3,653,400 and 3,649,535
shares issued and outstanding 365 365
Additional paid-in capital 16,608 16,594
Accumulated deficit (12,063) (12,081)
----------- ----------
Total stockholders' equity 4,910 4,878
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 31,460 $ 35,536
=========== ==========
See Notes To Condensed Consolidated Financial Statements.
1
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
($000 omitted)
Three Months Ended Six Months Ended
January 31, January 31,
2006 2005 2006 2005
REVENUE --------- --------- --------- ---------
Construction $ 3,699 $ 4,454 $ 7,407 $ 9,543
Manufacturing 7,400 8,003 15,739 15,376
Other 50 69 107 137
--------- --------- --------- ---------
Total revenue 11,149 12,526 23,253 25,056
--------- --------- --------- ---------
DIRECT COSTS
Construction 2,415 3,323 5,208 6,911
Manufacturing 5,028 6,396 11,254 12,108
--------- --------- --------- ---------
Total direct costs 7,443 9,719 16,462 19,019
--------- --------- --------- ---------
GROSS PROFIT 3,706 2,807 6,791 6,037
--------- --------- --------- ---------
EXPENSES
Overhead 1,326 1,583 2,281 3,255
General and administrative 1,516 1,840 3,203 3,594
Depreciation 397 518 830 1,053
Interest 193 200 447 387
--------- --------- --------- ---------
Total expenses 3,432 4,141 6,761 8,289
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES,
MINORITY INTERESTS AND
EXTRAORDINARY ITEM 274 (1,334) 30 (2,252)
INCOME TAX PROVISION - 850 - 500
--------- --------- --------- ---------
INCOME (LOSS) BEFORE MINORITY
INTERESTS AND EXTRAORDINARY ITEM 274 (2,184) 30 (2,752)
Minority interests (6) (3) (12) (12)
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM $ 268 $(2,187) $ 18 $(2,764)
EXTRAORDINARY ITEM
Gain on extinguishment of debt - 828 - 828
--------- --------- --------- ---------
NET INCOME (LOSS) $ 268 $(1,359) $ 18 $(1,936)
========= ========= ========= =========
NET INCOME (LOSS) PER COMMON SHARE:
BASIC:
Income (loss)
before extraordinary item 0.07 (0.59) 0.01 (0.75)
Extraordinary item 0.00 0.22 0.00 0.22
--------- --------- --------- ---------
PROFIT (LOSS)
PER COMMON SHARE-BASIC $ 0.07 $(0.37) $ 0.01 $(0.53)
========= ========= ========= =========
DILUTED:
Income (loss)
before extraordinary item 0.07 (0.59) 0.01 (0.75)
Extraordinary item 0.00 0.22 0.00 0.22
--------- --------- --------- ---------
INCOME (LOSS)
PER COMMON SHARE-DILUTED $ 0.07 $(0.37) $ 0.01 $(0.53)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING:
BASIC AND DILUTED 3,650,753 3,639,554 3,650,144 3,637,125
--------- --------- --------- ---------
See Notes To Condensed Consolidated Financial Statements
2
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited in thousands)
Six Months Ended
January 31, January 31,
2006 2005
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 18 $(1,936)
NET CASH USED IN OPERATING ACTIVITIES (2,436) (193)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (151) (2,210)
Decrease in restricted cash - 522
Proceeds from sale of
property, plant and equipment 1,819 -
NET CASH
PROVIDED BY (USED IN) INVESTING ACTIVITIES 1,668 (1,688)
`
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from borrowings 5,802 4,333
Repayments of notes payable (5,273) (1,610)
Issuance of common stock 14 55
NET CASH PROVIDED BY FINANCING ACTIVITIES 543 2,778
NET DECREASE IN CASH AND CASH EQUIVALENTS (207) (1,039)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 764 1,343
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 557 $ 304
See Notes To Condensed Consolidated Financial Statements.
3
WILLIAMS INDUSTRIES, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2006
1. INTERIM FINANCIAL STATEMENTS
This document includes unaudited interim financial statements that
should be read in conjunction with the Company's latest audited annual
financial statements. However, in the opinion of management, these financial
statements contain all adjustments, consisting only of normal recurring
items, necessary for a fair presentation of the Company's financial position
as of January 31, 2006 and July 31, 2005, the results of its operations for
the three and six months ended January 31, 2006 and 2005, respectively, and
its cash flows for the six months ended January 31, 2006 and 2005,
respectively. Operating results for the six months ended January 31, 2006 are
not necessarily indicative of the results expected for the full fiscal year.
For further information, refer to the consolidated financial statements and
footnotes included in the Company's Annual Report on Form 10-K for the year
ended July 31, 2005.
The Company is facing a liquidity and business crisis after suffering
operating losses for several years. It has tapped its available sources of
operating cash, and borrowed approximately $2 million from its largest
shareholder and his affiliated entities. The Company is operating under a
Forbearance Agreement with its major lender pursuant to which approximately
$5 million was scheduled to be repaid by March 6, 2006. At January 31, 2006,
the Company was behind in payment of $65,000 of interest to this bank, which
notified the Company on February 24, 2006, of such default, which the Company
subsequently cured. The Company has negotiated a short extension of the
maturity date of these obligations, which were not repaid on March 6, 2006.
On March 16, 2006, the Company and United Bank entered into a term sheet
confirming the agreement in principle to enter into a Second Amendment to
Forbearance Agreement not later than March 30, 3006, providing in pertinent
part as follows:
(1) The Company will make a payment of $250,000;
(2) The Company will remit $200,000 into a money market account to be drawn
against to pay interest;
(3) The term of the Forbearance Agreement will be extended through July 31,
2006;
(4) The Williams Family Limited Partnership (WFLP) will increase the amount
of its pledge of additional collateral by $758,000 in addition to $1 million
pledged in the original agreement;
(5) Frank E. Williams, Jr., will reaffirm his personal guarantee of $242,000
of the Company's obligations to United Bank;
(6) In the event the Company makes an additional principal payment to the
bank of $1 million by July 31, 2006, the term of the Forbearance Agreement
will be extended through December 31, 2006.
The Company expects to have the Second Amendment documented and closed within
the allotted time.
In addition, the Company is in default of nearly all of its other debts
and leases by virtue of failing to make scheduled payments in a timely
fashion.
Because of the Company's financial condition and the highly competitive
market in its areas of operation, there remains significant risk that the
Company may not be able to maintain its level of operations. The Company
operates in an industry where such problems are common, and where there are
large risks related to estimating and performing work and collecting amounts
earned.
The Company is pursuing a number of contingency plans to address these
issues. During the six months ended January 31, 2006, the Company sold and
leased back its Richmond, Virginia property, paying debt of approximately $2
million. Additionally, the Company sold owned and leased cranes and other
equipment, reducing debt by $1.4 million, and reducing future annual cash
flows by approximately $500,000. Additional plans include negotiations with
lenders and customers, additional sales of equipment and real property, asset
and stock-based credit facilities, and the sale, discontinuance,
reorganization or liquidation of one or more subsidiaries.
For the quarter ended January 31, 2006, the Company applied Statement of
Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment",
which replaced SFAS No. 123 "Accounting for Stock-Based Compensation" as
amended by SFAS No. 148, "Accounting for Stock-Based Compensation-Transition
and Disclosure" to account for its stock option plans. The new standard
requires public companies to treat stock options and all other forms of
shared-based payments to employees as compensation costs in the income
statement; however, the approach is similar to the guidance set forth in SFAS
No. 123. The adoption of SFAS No. 123 (R) had no impact on the Company's
condensed consolidated financial statements for the three months ended January
31, 2006 since there were no grants during those periods and all prior grants
were fully vested at that date, the date the statement was first applied. The
Company generally grants options for common stock at an option price equal to
the fair market value of the stock on the date of grant. The Company's stock
option plans are more fully described in the Company's Annual Report on Form
10-K for fiscal year ended July 31, 2005.
No stock options were issued during the quarter ended January 31, 2006.
During the quarter ended January 31, 2005, the Company issued a total of
30,000 common stock options to its non-employee directors (6,000 shares per
director) at a price of $4.10 a share. The Company used the intrinsic method
of valuing stock options, and as prescribed by APB No. 25, it did not expense
the value of stock options. The following table shows the effect as if
compensation cost for all options had been determined based on the fair
market value recognition provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation" as
amended by SFAS No. 148 "Accounting for Stock-Based Compensation " Transition
and Disclosure."
Three Months Ended Six Months Ended
January 31, January 31,
2006 2005 2006 2005
--------- --------- --------- ---------
AS REPORTED
Net Income (Loss) $268 $(1,359) $18 $(1,936)
(in thousands)
Net Income (Loss) Per Common
Share Basic and Diluted $0.07 $(0.37) $0.01 $(0.53)
Stock-based compensation - (43) - (43)
(in thousands)
PRO-FORMA
Net Income (Loss) $268 $(1,402) $18 $(1,979)
(in thousands)
Net Income (Loss) Per Common
Share Basic and Diluted $0.07 $(0.38) $0.01 $(0.54)
2. RELATED-PARTY TRANSACTIONS
Mr. Frank E. Williams, Jr., who owned or controlled approximately 45% of
the Company's stock at January 31, 2006, and is a director of the Company,
also owns controlling interests in the outstanding stock of Williams
Enterprises of Georgia, Inc., and Structural Concrete Products, LLC.
Additionally, Mr. Williams, Jr. owns a substantial interest in Bosworth Steel
Erectors, Inc. Amounts receivable and payable to these entities at January
31, 2006 and July 31, 2005, and revenue earned and costs incurred with these
entities during the three and six months ended January 31, 2006 and 2005 are
reflected below.
Three Months Ended Six Months Ended
January 31, January 31,
2006 2005 2006 2005
--------- --------- --------- ---------
(in thousands)
Revenue $77 $228 $209 $503
Billings to entities $129 $88 $227 $552
Costs and expenses incurred $119 $91 $269 $214
Balance Balance
January 31 July 31,
2006 2005
--------- ---------
Accounts receivable $741 $663
Notes Payable $109 $667
Accounts Payable $677 $400
Billings in excess of costs and estimated
earnings on uncompleted contracts $51 $82
Accrued Interest Payable $5 $106
During the quarter ended January 31, 2006, the Company recorded a new
note payable to Mr. Williams, Jr. of approximately $21,000 for past due
director related fees.
During the quarter ended October 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 it back for the same price for which it was sold
(See Note 6).
The Company is obligated to the Williams Family Limited Partnership
(WFLP) under a lease agreement for real property with an option to purchase.
WFLP is controlled by individuals who own, directly or indirectly,
approximately 49% of the Company's stock. The lease, which had an original
term of five years and an extension option for five years, commenced February
15, 2000. The original term was extended one year to February 15, 2006, and
subsequently extended to February 15, 2010. The lease contains an option to
purchase up to ten acres at the "original pro-rata cost" of $567,500. The
Company currently incurs annual lease expense of approximately $43,000.
During the three months ended January 31, 2006, the Company borrowed
$455,000 from WFLP. Lease and interest expense for the three and six months
ended January 31, 2006 and 2005 is reflected below. Additionally, at January
31, 2006 and July 31, 2005, Notes Payable, Accounts Payable, representing
lease payments, and Accrued Interest Payable to WFLP are reflected below.
Three Months Ended Six Months Ended
January 31, January 31,
2006 2005 2006 2005
--------- --------- --------- ---------
(in thousands)
Lease Expense $11 $11 $21 $12
Interest Expense $30 $ 3 $41 $ 5
Balance Balance
January 31 July 31,
2006 2005
--------- ---------
Notes Payable $1,930 $1,381
Accounts Payable $ 171 $ 149
Accrued Interest Payable $ 73 $ 18
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 the current Prime Rate plus
..75%, which was 8.25% at January 31, 2006. 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 expense for
the three and six months ended January 31, 2006 and 2005 is reflected below.
The balance outstanding at January 31, 2006 and July 31, 2005 is also
reflected below.
Three Months Ended Six Months Ended
January 31, January 31,
2006 2005 2006 2005
--------- --------- --------- ---------
(in thousands)
Interest Expense $3 $3 $5 $6
Balance Balance
January 31 July 31,
2006 2005
--------- ---------
Note Payable $ 92 $116
Directors
On January 1, 2006, the Company executed notes payable to the non-
employee members of the Board of Directors, excluding Frank E. Williams, Jr.,
for unpaid director related fees totaling $60,000. The notes accrue interest
at 7% and are payable by September 1, 2006.
3. SEGMENT INFORMATION
Information about the Company's operations for the three and six months
ended January 31, 2006 and 2005 is as follows (in thousands):
Three Months Ended Six Months Ended
January 31, January 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues:
Construction $ 4,136 $ 5,232 $ 8,222 $11,145
Manufacturing 7,481 8,883 16,269 16,979
Other 237 225 392 458
--------- --------- --------- ---------
11,854 14,340 24,883 28,582
--------- --------- --------- ---------
Intersegment revenues:
Construction 437 778 815 1,602
Manufacturing 81 880 530 1,603
Other 187 156 285 321
--------- --------- --------- ---------
705 1,814 1,630 3,526
--------- --------- --------- ---------
Consolidated revenues:
Construction 3,699 4,454 7,407 9,543
Manufacturing 7,400 8,003 15,739 15,376
Other 50 69 107 137
--------- --------- --------- ---------
Total Consolidated
Revenues $11,149 $12,526 $23,253 $25,056
--------- --------- --------- ---------
Operating income (loss):
Construction $ 419 $(181) $ 12 $ (7)
Manufacturing 448 (632) 1,157 (1,203)
--------- --------- --------- ---------
Consolidated operating income
(loss) 867 (813) 1,169 (1,210)
General corporate expense, net (400) 507 (692) 173
Interest expense (193) (200) (447) (387)
Income tax provision - (850) - (500)
Minority interests (6) (3) (12) (12)
--------- --------- --------- ---------
Coporate income (loss) $268 $(1,359) $18 $(1,936)
--------- --------- --------- ---------
The majority of revenues are derived from projects on which the Company
is a subcontractor of a material supplier, contractor or subcontractor.
Where the Company acts as a subcontractor, it is invited to bid by firms
seeking construction services or materials. Therefore, it is important to
maintain favorable business relations with those firms. Over a period of
years, the Company has established such relationships with a number of
companies. During the six months ended January 31, 2006, two customers in the
manufacturing segment accounted for 22% and 20% of total "consolidated
revenue" and 33% and 30% of "manufacturing revenue". One customer in the
construction segment accounted for 13% of "consolidated revenue" and 41% of
"construction revenue". For the six months ended January 31, 2005, two
customers in the manufacturing segment accounted for 26% and 15% of total
"consolidated revenue" and 43% and 24% of "manufacturing revenue". While no
customers in the construction segment accounted for more than 10% of total
"consolidated revenue", two customers in the construction segment accounted
15% and 14% of "construction revenue".
The Company's bridge girder subsidiary is dependent upon one supplier of
rolled steel plate. The Company's stay-in-place metal decking subsidiary has
several suppliers of galvanized rolled steel. The Company strives to maintain
good relations with these vendors, generally receiving orders on a timely
basis at reasonable cost for this market. If the relations with these vendors
were to deteriorate or the vendors were to go out of business, the Company
would have trouble meeting contract deadlines. Other major suppliers of
rolled steel plate have limited excess production available to "new"
customers.
4. INVENTORIES
Materials inventory consists of structural steel, steel plates and
galvanized steel coils. Cost of materials inventory is accounted for using
either the specific identification or the average cost method. The cost of
supplies inventory is accounted for using the first-in, first-out, (FIFO)
method. No significant amount of inventory is included in contracts in
process.
5. PURCHASE OF ASSETS
During the six months ended January 31, 2006, the Company capitalized
Property and Equipment, for use in its operations, of approximately $151,000,
which was mainly for capital repairs to equipment.
6. SALE-LEASEBACK TRANSACTION
On September 23, 2005, the Company sold its Richmond, Virginia property
for $2,750,000 to the Company's founder and largest shareholder, and
concurrently entered into an agreement to lease the property back at $228,000
per year through April 30, 2011, subject to increases related to the variable
interest rate in the buyer's financing. In addition, the Company received an
option to buy the property back any time during the lease term for the same
price for which it was sold. Consideration equal to the full purchase price
was received at closing. Because the Company has an option to repurchase the
property at the same price for which it was sold and therefore has the
ability to benefit from future appreciation in the value of the property, and
because the present value of future payments is significantly less than the
property's fair value, the transaction has been accounted for as a financing
transaction. As a result, consideration received from the purchaser is
included in the accompanying consolidated balance sheet as a financing
obligation and payments made under the lease are being treated as interest
expense (at an effective rate of approximately 8.7%). A sale will be
recognized if and when the Company's lease and related option to repurchase
expire.
The land and building in this transaction are included in property and
equipment as follows:
Balance
January 31,
(In thousands) 2006
---------
Land $357
Building & improvements 2,190
---------
Total property at cost 2,547
Less: Accumulated depreciation (1,436)
---------
Property, net $1,111
=========
Depreciation on the building will continue to be charged to operations until
a sale has been recognized.
Future minimum payments required under the leaseback, as of January 31, 2006,
are due as follows:
During the year ending January 31:
2007 $228
2008 228
2009 228
2010 228
2011 228
2012 19
-------
Total $1,159
-------
Interest expense relating to this financing agreement was $57,000 and $81,000
for the three and six months ended January 31, 2006, respectively.
During the quarter ended January 31, 2006, Mr. Williams, Jr. and two
officers of the Company formed a company named "FlexLease LLC" to address
crane finance and lease defaults and to assist with financing and disposing
of cranes and other assets. All transactions with FlexLease were approved in
advance by the Company's independent directors. On November 30, 2005,
FlexLease acquired four cranes, two which were leased by the Company, for
aggregate consideration of $950,000. The cranes were leased back to the
company for approximately $7,000 per month, subject to the Company's right to
buy each crane for the amount paid by FlexLease plus a fee of 1%-2% depending
on when such right is exercised. Three of the cranes are expected to remain
in company operations. The fourth was sold subsequent to the quarter ended
January 31, 2006. The deferred gain on this transaction is shown as
"Financing transaction resulting from sale-leaseback transaction" under
Current Liabilities on the Condensed Consolidated Balance Sheet. The Company
has an accounts receivable balance due from FlexLease of approximately
$136,000 at January 31, 2006 related to this transaction.
The two Company cranes in this transaction are included in property and
equipment as follows:
Balance
January 31,
(In thousands) 2006
---------
Cranes & Heavy Equipment $1,032
Less: Accumulated depreciation (903)
---------
Property, net $129
=========
Depreciation on the cranes will continue to be charged to operations until a
sale has been recognized. Future minimum lease payments of approximately
$28,000 will be payable within the next four months, the current term of the
lease.
7. Extraordinary Item
During the three months ended January 31, 2005, the Company recognized
income of $828,000 on the write-off of debt on which the statute of
limitations had run. The debt was a bank loan, which was personally obtained
by Frank E. Williams, Jr. for the Company, and for which he was indemnified
by the Company. In 1995, Mr. Williams, Jr. was released from the loan by the
bank, leaving the Company directly liable. The bank failed to pursue
collection of the loan, and in the opinion of counsel, the bank is now
precluded from collection of this debt. In prior periods, the loan had been
carried in "Other liabilities" on the Balance Sheet.
8. RECLASSIFICATIONS
Certain Balance Sheet and Statement of Operations items for prior
periods have been reclassified to conform to current period classifications.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
- -------
The subsidiaries of Williams Industries, Inc. provide specialized
services and products for the construction industry. They operate in the
commercial, industrial, governmental and infrastructure construction markets,
with the operating components divided into construction and manufacturing
segments. The services provided include: steel, precast concrete and
miscellaneous metals erection and installation; crane rental; rigging;
fabrication of welded steel plate girders and rolled beams, "stay-in-place"
bridge decking, and light structural and other metal products.
The Company is facing a liquidity and business crisis after suffering
operating losses for several years. It has tapped its available sources of
operating cash, and borrowed approximately $2 million from its largest
shareholder and his affiliated entities. The Company is operating under a
Forbearance Agreement with its major lender pursuant to which approximately
$5 million was scheduled to be repaid by March 6, 2006. At January 31, 2006,
the Company was behind in payment of $65,000 of interest to this bank, which
notified the Company on February 24, 2006, of such default, which the Company
subsequently cured. The Company has negotiated a short extension of the
maturity date of these obligations, which were not repaid on March 6, 2006.
On March 16, 2006, the Company and United Bank entered into a term sheet
confirming the agreement in principle to enter into a Second Amendment to
Forbearance Agreement not later than March 30, 3006, providing in pertinent
part as follows:
(1) The Company will make a payment of $250,000;
(2) The Company will remit $200,000 into a money market account to be drawn
against to pay interest;
(3) The term of the Forbearance Agreement will be extended through July 31,
2006;
(4) The Williams Family Limited Partnership (WFLP) will increase the amount
of its pledge of additional collateral by $758,000 in addition to $1 million
pledged in the original agreement;
(5) Frank E. Williams, Jr., will reaffirm his personal guarantee of $242,000
of the Company's obligations to United Bank;
(6) In the event the Company makes an additional principal payment to the
bank of $1 million by July 31, 2006, the term of the Forbearance Agreement
will be extended through December 31, 2006.
The Company expects to have the Second Amendment documented and closed within
the allotted time.
In addition, the Company is in default on many of its other debts and
leases by virtue of failing to make scheduled payments in a timely fashion.
Because of the Company's financial condition and the highly competitive
market in its areas of operation, there remains significant risk that the
Company may not be able to maintain its level of operations. The Company
operates in an industry where such problems are common, and where there are
large risks related to estimating and performing work and collecting amounts
earned.
During the quarter ended January 31, 2006, the Company's construction
segment sold owned and leased cranes for approximately $2.1 million,
decreasing notes payable by approximately $900,000 and reducing lease
obligations.
The Company closed the Bessemer, Alabama plant and sold two shot
blasting machines, one owned and one leased, recording a loss of $19,000 on
the owned machine and reducing cash requirements and lease expense annually
by $99,000 on the leased machine. All other assets were sold or transferred
to other Company facilities. There was no additional liability to the Company
as a result of the sale and other closeout activities.
The Company requires significant working capital to procure materials
for contracts to be performed over relatively long periods, and for purchases
and modifications of specialized equipment. Furthermore, in accordance with
normal payment terms, the Company's customers often retain a portion of
amounts otherwise payable to the Company as a guarantee of project
completion. To the extent the Company is unable to receive progress payments
in the early stages of a project, the Company's cash flow could be adversely
affected. Collecting progress payments is a common problem in the
construction industry as are short-term cash considerations.
During the quarter ended January 31, 2006, the Company's bridge girder
subsidiary substantially completed its work on its I-95/395/495 contract,
allowing it to continue fabricating the remaining phases of its Woodrow
Wilson Bridge contract, as well as other contracts in its backlog.
The construction segment was profitable for the quarter ended January
31, 2006 as it worked on more profitable contracts and sold fixed assets,
mainly cranes, for approximately $1.7 million generating a net gain of
approximately $75,000, which contributed to its profitability.
Due to acceleration of the Company's line of credit and other defaulted
loans, these loans are now classified as Current portion of Notes Payable on
the Condensed Consolidated Balance Sheet and included in Total current
liabilities, contributing to the Company's working capital deficit of
$472,000 at January 31, 2006.
Material Changes in Financial Condition
- -----------------------------------------
For the six months ended January 31, 2006, the following changes
occurred:
The Company's Cash and Cash Equivalents decreased $207,000 as the
Company used cash to fund operations.
Accounts Receivable decreased approximately $515,000 from a decline in
billings and increased efforts to collect older receivables.
Inventory decreased $3.2 million as the Company used steel plate and
galvanized steel coils to produce its work, mainly on the I95/395/495
Springfield Interchange and the Woodrow Wilson Bridge contracts. The Company
believes it has adequate inventory on hand to meet current needs.
Property and Equipment, at Cost decreased approximately $2 million as
the Company sold six cranes with a cost of approximately $1.9 million. The
Company sold manufacturing equipment with a cost of $141,000. The Company
purchased or capitalized major repairs on equipment amounting to $151,000.
Prepaid and Other Assets increased $546,000 as the Company financed its
workers' compensation insurance premiums for the next policy year.
Other Assets increased $107,000 from the deferral of financing fees
related to the Richmond property sale and the deferral of future capital
repair costs on equipment.
At January 31, 2006, the Company had approximately $5.5 million in
variable rate notes payable. Total Notes Payable increased $848,000 during
the six months ended January 31, 2006. The Company borrowed approximately
$6.1 million which included the financing obligation resulting from the sale-
leaseback transaction of $3 million, $1.5 million used to finance annual
insurance renewals, $500,000 borrowed to fund prior years workers'
compensation insurance payments, $580,000 borrowed from a related party to
fund operations and $520,000 for operations. The Company repaid $5.3 million,
of which approximately $2 million was paid from the proceeds of the Richmond,
Virginia property sale, $1.5 million was paid from crane sales and $1.8
million was paid from operations.
Accounts Payable decreased $1.1 million. The Company paid material
billings related to inventory used in the manufacturing segment.
Billings In Excess of Costs and Estimated Earnings on Uncompleted
Contracts net of Costs and Estimated Earnings in Excess of Billings,
decreased $5.4 million, mainly related to billings associated with the
completion of the I-95/395/495 contract.
Stockholders' Equity increased $32,000 to $4.9 million due to the profit
of $18,000 for the six months ended January 31, 2006, and the issuance of
stock under the Company's Stock Purchase Plan of $14,000.
For the six months ended January 31, 2006, the Company used net cash of
$207,000. It used $2.4 million in operations. It generated $1.7 million from
investing activities, mainly from the sale of six heavy lift cranes. The
Company generated net cash of $543,000 from financing activities, where the
Company borrowed $5.8 million and repaid $5.3 million. The borrowings
included financing insurance premiums and expenses of $2 million, $500,000
borrowed for operations and $580,000 borrowed from a related party for
operations. The balance of the borrowing was due to the sale and leaseback of
the Company's Richmond, Virginia property for $2.75 million, treating the
sale as a financing transaction due to the leaseback and option to repurchase
the property.
Material Changes in Results of Operations
- -------------------------------------------
Three Months Ended January 31, 2006 Compared to
Three Months Ended January 31, 2005
For the quarter ended January 31, 2006, the Company reported a decrease
in revenues, an increase in gross profit and gross profit percentage and an
increase in its net income when compared to the quarter ended January 31,
2005.
The Company reported net income of $268,000, or $0.07 per share, on
total revenue of $11.1 million for 2006 as compared to a net loss of $1.4
million, or $0.37 per share, on total revenue of $12.5 million for 2005.
Included in the loss for 2005 was a gain on extinguishment of debt of
$828,000, related to the write off of debt, and the reversal of $850,000 of
tax benefit.
In the manufacturing segment, while revenues decreased $603,000, gross
profit increased $765,000 and gross profit percentage increased from 20.1% in
2005 to 32.1% in 2006 as the segment's subsidiaries fabricated steel under
contracts with more favorable gross margins. Operating results increased by
more than $1 million from a loss of $632,000 for 2005 to income of $448,000
for 2006. During 2006, the Company's bridge girder subsidiary's Manassas,
Virginia plant substantially completed work on the I-95/395/495 contract,
which had operated at a loss during the prior year, and began work on its
remaining backlog of work. It also completed the closedown of its Bessemer,
Alabama plant, selling all remaining assets and terminating all lease
obligations without further liability to the Company. The Alabama plant had
operated at a loss. The Company's stay-in-place decking subsidiary was also
more profitable as material prices stabilized and it worked on more
profitable contracts.
Construction segment revenues declined $755,000 when the two quarters
are compared. Gross profit increased $153,000 and the gross profit percentage
increased from 25% in 2005 to 35% in 2006. The segment's crane rental
subsidiary was profitable as it sold two owned cranes, two leased cranes and
other excess equipment. These sales resulted in lower interest expense, lease
expense and maintenance cost. The segments erection subsidiary was profitable
as it worked on more profitable contracts. The segment's operating income was
approximately $419,000 for 2006 compared to an operating loss of $181,000 for
2005.
During 2006, Overhead decreased $257,000 due partially to labor and
other costs being charged directly to the Company's bridge girder fabrication
company's I-95/395/495 contract. Since that was the only contract the
Company's Manassas, Virginia plant worked, all resources of labor and other
costs were charged directly to that contract. There were additional savings
due to the close down of the Company's Bessemer, Alabama plant, which was
operational 2005, as well as a reduction of approximately $70,000 from the
construction segment.
General and Administrative expenses decreased $324,000, mainly in the
Company's construction segment where it reduced costs.
Depreciation expense decreased $121,000 related to equipment sales over
the past four quarters, the close down of the Bessemer, Alabama plant and
fewer depreciable assets.
Interest expense remained constant.
Six Months Ended January 31, 2006 Compared to
Six Months Ended January 31, 2005
For the six months ended January 31, 2006, the Company reported a
decrease in revenue, an increase in gross profit and gross profit percentage
and an increase in its net income when compared to the six months ended
January 31, 2005.
The Company reported net income of $18,000, or $0.01 per share, on total
revenue of $23.3 million for 2006 as compared to a net loss of $1.9 million,
or $0.53 per share, on total revenue of $25.1 million for 2005. Included in
the loss for 2005 was a gain on extinguishment of debt of $828,000, related
to the write off of debt, and the reversal of $500,000 of tax benefit.
In the manufacturing segment, revenues increased $363,000, gross profit
increased $1.2 million and gross profit percentage increased from 21.3% in
2005 to 28.5% for 2006 as the segment's subsidiaries fabricated steel under
contracts with more favorable gross margins. Operating income increased by
approximately $2.4 million from a loss of $1.2 million for 2005 to a profit
of $1.2 for 2006. During 2006, the Company's bridge girder subsidiary's
Manassas, Virginia plant substantially completed work on the I-95/395/495
contract, which had operated at a loss during the prior year, and began work
on its remaining backlog. It also completed the closedown of its Bessemer,
Alabama plant, selling all remaining assets and terminating all lease
obligations without further liability to the Company. The Alabama plant had
operated at a loss. The Company's Stay-in-place decking subsidiary was also
more profitable as material prices have stabilized and it was worked on more
profitable contracts.
Construction segment revenues declined $2.1 million when the two
quarters are compared. Gross profit decreased $433,000 and the gross profit
percentage increased from 28% in 2005 to 30% in 2006. The segment's crane
rental subsidiary was profitable as it sold six owned cranes, two leased
cranes and other excess equipment. These sales resulted in lower interest,
lease expense and maintenance cost. The segment's steel erection subsidiary
was profitable as it worked on more profitable contracts. The segment's
operating profit was approximately $12,000 for 2006 compared to an operating
loss of $7,000 for 2005.
For the 2006, Overhead decreased $974,000 due mainly to labor and other
costs that were charged directly to the Company's bridge girder fabrication
company's I-95/395/495 contract. Since that was the only contract the
Company's Manassas, Virginia plant worked, all resources of labor and other
costs were charged directly to that contract. There were additional savings
due to the close down of the Company's Bessemer, Alabama plant, which was
operational in the six months ended January 31, 2005, as well as a reduction
of approximately $170,000 from the construction segment.
General and Administrative expenses decreased $391,000, mainly in the
Company's construction segment where it reduced costs.
Depreciation expense decreased $223,000 related to equipment sales over
the past four quarters, the close down of the Bessemer, Alabama plant and
fewer depreciable assets.
Interest expense increased $60,000 due to higher interest rates.
BACKLOG
At January 31, 2006, the Company's backlog was $33 million, which is a
decrease of approximately $16 million from January 2005 and $6 million from
July 31, 2005. It is anticipated that the backlog will be completed within
the next twelve months.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
The Company's cash equivalents, invested in interest-bearing
instruments, are presented at fair value on the Company's balance sheets.
The Company's exposure to market risks for changes in interest rates relate
primarily to these investments and current and long-term debt.
Item 4. Controls and Procedures
As of January 31, 2006, an evaluation was performed under the
supervision and with the participation of the Company's management, including
Chief Executive Officer (CEO) and Controller, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures.
Based on that evaluation, the Company's management, including the CEO and
Controller, concluded that the disclosure controls and procedures were
effective as of January 31, 2006. There have been no significant changes in
the Company's internal controls or in other factors that could significantly
affect internal controls subsequent to January 31, 2006.
Disclosure controls and procedures are the Company's controls and
procedures that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act, is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and
forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by the Company in the reports that it files under the Exchange Act
are accumulated and communicated to management, including the principal
executive officers and principal financial officer, as appropriate to allow
timely decisions regarding required disclosure.
Safe Harbor for Forward-Looking Statements
The Company is including the following cautionary statements to make
applicable and take advantage of the safe harbor provisions within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 for any forward-looking statements made by,
or on behalf of, the Company in this document and any materials incorporated
herein by reference. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or performance
and underlying assumptions and other statements, which are other than
statements of historical facts. Such forward-looking statements may be
identified, without limitation, by the use of the words "anticipates,"
"estimates," "expects," "intends," and similar expressions. From time to
time, the Company or one of its subsidiaries individually may publish or
otherwise make available forward-looking statements of this nature. All such
forward-looking statements, whether written or oral, and whether made by or
on behalf of the Company or its subsidiaries, are expressly qualified by
these cautionary statements and any other cautionary statements which may
accompany the forward-looking statements. In addition, the Company disclaims
any obligation to update any forward-looking statements to reflect events or
circumstances after the date hereof.
Forward-looking statements made by the Company are subject to risks and
uncertainties that could cause actual results or events to differ materially
from those expressed in, or implied by, the forward-looking statements.
These forward-looking statements may include, among others, statements
concerning the Company's revenue and cost trends, cost reduction strategies
and anticipated outcomes, planned capital expenditures, financing needs and
the availability of such financing, and the outlook for future activity in
the Company's market areas. Investors or other users of forward-looking
statements are cautioned that such statements are not a guarantee of future
performance by the Company and that such forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
materially from those expressed in, or implied by, such statements. Some,
but not all of the risks and uncertainties, in addition to those specifically
set forth above, include general economic and weather conditions, market
prices, environmental and safety laws and policies, federal and state
regulatory and legislative actions, tax rates and policies, rates of interest
and changes in accounting principles or the application of such principles to
the Company.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
General
- -------
The Company is party to various claims arising in the ordinary course of
its business. Generally, claims exposure in the construction services
industry consists of workers' compensation, personal injury, products'
liability and property damage. The Company believes that its insurance and
other expense accruals, coupled with its primary and excess liability
coverage, provide adequate coverage for such claims or contingencies.
The Company is operating under a Forbearance Agreement with its major
lender pursuant to which approximately $5 million was scheduled to be repaid
by March 6, 2006. At January 31, 2006, the Company was behind in payment of
$65,000 of interest to this bank, which notified the Company on February 24,
2006, of such default, which the Company subsequently cured. The Company has
negotiated a short extension of the maturity date of these obligations, which
were not repaid on March 6, 2006. On March 16, 2006, the Company and United
Bank entered into a term sheet confirming the agreement in principle to enter
into a Second Amendment to Forbearance Agreement not later than March 30,
3006, providing in pertinent part as follows:
(1) The Company will make a payment of $250,000;
(2) The Company will remit $200,000 into a money market account to be drawn
against to pay interest;
(3) The term of the Forbearance Agreement will be extended through July 31,
2006;
(4) The Williams Family Limited Partnership (WFLP) will increase the amount
of its pledge of additional collateral by $758,000 in addition to $1 million
pledged in the original agreement;
(5) Frank E. Williams, Jr., will reaffirm his personal guarantee of $242,000
of the Company's obligations to United Bank;
(6) In the event the Company makes an additional principal payment to the
bank of $1 million by July 31, 2006, the term of the Forbearance Agreement
will be extended through December 31, 2006.
The Company expects to have the Second Amendment documented and closed within
the allotted time.
As a result of payment and other alleged defaults, Provident Leasing
threatened foreclosure and sale of a heavy lift crane leased by the Company,
valued at approximately $400,000. The Company entered into a forbearance
agreement providing for monthly payments until January 15, 2006, when the
account was due in full. The Company negotiated a payoff amount of $410,000
for this lease, which subsequent to the quarter ended January 31, 2006 was
acquired by FlexLease LLC, an entity owned by related parties, and leased to
the company for approximately $3,000 per month, subject to the Company's
right to buy the crane for the amount paid by FlexLease plus a fee of 1%-2%
depending on when such right is exercised.
As a result of payment and other alleged defaults, the Company has been
negotiating with CIT Group, who has offered to restructure a note secured by
three heavy lift cranes and to waive defaults on a note secured by another
crane. These notes totaled approximately $1.1 million at January 31, 2006.
The Company expects to enter into an agreement along the lines offered by
CIT, providing that the Company will sell one of the three cranes,
restructure the payments on the two remaining cranes, and continue making
payments under the other note.
As a result of payment and other alleged defaults, the Company has been
negotiating with Financial Federal Credit, Inc. (FFCI), who offered to
restructure two notes which were secured by five cranes. Three of the cranes
were sold by the Company for approximately $560,000 during the quarter ended
October 31, 2005 and the proceeds paid to FFCI. After FFCI filed suit to
collect the remaining amounts it claimed, the Company entered into a
settlement agreement providing for payment of $100,000 which was delivered,
and further payment of $1,009,000 due not later than March 17, 2006, or else
the Company has agreed to entry of a judgment for $1,067,000 and possession
of the cranes at issue. On March 17, 2006, in order to raise the funds
necessary to pay FFCI, the Company sold the two cranes to an entity owned by
related parties, and leased to the company for approximately $18,000 per
month, subject to the Company's right to buy the cranes for the amount paid
plus a fee of 1%-3% depending on when such right is exercised.
On October 18, 2005, the Company received notice from NASDAQ that it was
not in compliance with certain continued listing criteria for the NASDAQ
National Market per Marketplace Rule 4450(a)(3). Specifically, the notice
stated that the stockholder's equity at July 31, 2005, as published in the
Company's Form 10-K filed on October 14, 2005, was less than the required $10
million.
Subsequent to the Company's appeal to a NASDAQ panel, NASDAQ ruled that
the Company's stock should be transferred to the NASDAQ Capital Market. The
Company's stock began trading on the NASDAQ Capital Market on February 21,
2006.
ITEM 2. Changes in Securities and Use of Proceeds
None.
ITEM 3. Defaults Upon Senior Securities
United Bank. The Company is operating under a Forbearance Agreement with its
major lender pursuant to which approximately $5 million was scheduled to be
repaid by March 6, 2006. At January 31, 2006, the Company was behind in
payment of $65,000 of interest to this bank, which notified the Company on
February 24, 2006, of such default, which the Company subsequently cured. The
Company has negotiated a short extension of the maturity date of these
obligations, which were not repaid on March 6, 2006. On March 16, 2006, the
Company and United Bank entered into a term sheet confirming the agreement in
principle to enter into a Second Amendment to Forbearance Agreement not later
than March 30, 3006, providing in pertinent part as follows:
(1) The Company will make a payment of $250,000;
(2) The Company will remit $200,000 into a money market account to be drawn
against to pay interest;
(3) The term of the Forbearance Agreement will be extended through July 31,
2006;
(4) The Williams Family Limited Partnership (WFLP) will increase the amount
of its pledge of additional collateral by $758,000 in addition to $1 million
pledged in the original agreement;
(5) Frank E. Williams, Jr., will reaffirm his personal guarantee of $242,000
of the Company's obligations to United Bank;
(6) In the event the Company makes an additional principal payment to the
bank of $1 million by July 31, 2006, the term of the Forbearance Agreement
will be extended through December 31, 2006.
The Company expects to have the Second Amendment documented and closed within
the allotted time.
In order to fund the repayment of the United Bank notes, the Company is
pursuing various financing options, including conventional, asset-based, and
equity secured financing. Because of the Company's financial condition,
management believes that the cost of debt may be higher than normal market
rates.
Equipment Notes/Leases. Elsewhere in this document and in the quarterly
filing for October 31, 2005, the Company described the status of its notes
and leases with several other equipment lenders and lessors. The Company
continues to pursue negotiations with these parties and the sale and/or
refinancing of equipment as necessary to meet or satisfy its obligations.
ITEM 4. Submission of Matters to a Vote of Security Holders
On November 5, 2005, the shareholders of Williams Industries, Inc.
elected the Company's board of directors at the annual meeting of
shareholders. Elected were: Stephen N. Ashman, R. Bentley Offutt, William J.
Sim, Frank E. Williams, Jr., Frank E. Williams, III and John A. Yerrick.
The results of the November 5, 2005 shareholder's election of directors
are as follows:
Nominee For Abstain
- -------------------- ------------ -----------
Stephen N. Ashman 3,267,904 116,663
R. Bentley Offutt 3,274,911 109,656
William J. Sim 3,328,013 56,554
Frank E. Williams, Jr. 3,267,729 116,838
Frank E. Williams, III 3,267,729 116,838
John A. Yerrick 3,321,006 63,561
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 31.1 Section 302 Certification for
Frank E. Williams, III
Exhibit 31.2 Section 302 Certification for
Christ H. Manos
Exhibit 32.1 Section 906 Certification for
Frank E. Williams, III and
Christ H. Manos
Exhibit 99 Press Release announcing second quarter earnings
(b) Reports on Form 8-K
(1) December 5, 2005
Item 9.01. Press release announcing that the Company is not
in compliance with public float requirements for
inclusion in the NASDAQ National Market and that
the Company has until February 28, 2006 to return
to compliance with this standard.
(2) March 6, 2006
Item 2.04. Announcing that the Company failed to make its
payment of approximately $4.8 million on March 6,
2006 to United Bank under its Forbearance
Agreement dated June 30, 2005, as amended
September 30, 2005.
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
undersigned thereunto duly authorized:
March 17, 2006 Williams Industries, Incorporated
-----------------------------------
Registrant
/s/ Frank E. Williams, III
-----------------------------------
Frank E. Williams, III
Chairman of the Board, President,
Chief Executive Officer,
Chief Financial Officer
21