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
ANNUAL MEETING OF SHAREHOLDERS
To be Held November 11, 2006
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 11, 2006, and at all adjournments thereof.
It is anticipated that this proxy material will be mailed to
shareholders on or about October 16, 2006.
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, 2006 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, 2006, 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 3,654,100 shares on September 29, 2006, which is the
record date for the purpose of determining the shareholders
entitled to notice of and to vote at the Annual Meeting. Williams
Industries' treasury stock is not included in the issued and
outstanding calculations in this document. 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 five, 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 five 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) 47 President, Chairman of the 1991
(2) (5) Board, Chief Financial Officer
Frank E. Williams, Jr. (1) 72 None 1970
(2) (5)
Stephen N. Ashman (3)(4) 58 None 1998
William J. Sim (2)(3) 61 None 1998
John A. Yerrick (5) 66 None 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 eight 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. Bentley
Offutt, who did not stand for re-election, was chairman of this
committee, which met two times during the last fiscal year. The
committee sets the compensation for the President and establishes
guidelines, to be implemented within the President's discretion,
for the compensation of other officers. A new chairman will be
named at the company's annual organizational meeting in November.
(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. Ashman is a principal with SAS advisors, an area consulting
firm, and Chairman of the Board of Capital Bank, N.A., Rockville,
Maryland. Mr. Ashman serves on the advisory boards of: Prudent
Capital, a mezzanine fund; NextGen Capital, a venture capital
fund; and Ategra Community Financial Institutions, a hedge fund.
He is active in a number of charitable and arts organizations in
the Washington, DC metropolitan area.
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 is the WBC incoming chairman for 2006-2007. He is also 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. Numerous committee meetings, involving
individual directors in different capacities, were also held. All
directors attended more than 75% of the board and committee
meetings during the fiscal year.
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 2006 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, 2006 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. 1,735,497 (1)(3) 46.35 (1)
Frank E. Williams, III 1,168,836 (2)(3) 31.22 (2)
Stephen N. Ashman 34,795 (3) 0.93
William J. Sim 29,295 (3) 0.78
John A. Yerrick 8,149 (3) -
Officers and Directors as
a group (10 persons) 1,979,835 (3)(4)(5) 52.80%
(1) Includes 169,179 shares owned by his wife, as to which Mr.
Williams, Jr. disclaims beneficial ownership; 739,423 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 is Mr. Frank E. Williams, III, and H. Arthur
Williams; 8,000 shares as trustee for minor grandchildren; and
5,000 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 739,423 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.
(5) Calculation assumes full dilution if all outstanding options
were to be exercised. The shares of Mr. R. Bentley Offutt, who is
not standing for reelection, are also included in the calculation.
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
the time of this filing.
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. 2006 $147,004 $7,170(1) 0 0
Williams, III 2005 $147,004 $7,170(1) 0 0
Chief Executive 2004 $147,004 $7,170(1) $64,500(2) 0
Officer
(1) Includes car allowance.
(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.
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, who was a director at the time,
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 has not yet been paid,
is being accrued 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 entitled to compensation of
$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. All of the directors
declined any stock issuance during the fiscal year ended July 31,
2006. 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.
Prior to 2003, the Company had a plan which allowed the issuance
of options to non-employee directors on an annual basis. The
options and shares issued upon exercise of these options were
issued pursuant to Rule 144 of the 1933 Securities Act.
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, 2006, 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, 2006,
2005, and 2004 are reflected below. In addition, amounts
receivable and payable to these entities at July 31, 2006, 2005
and 2004 are also reflected below.
(in thousands) 2006 2005 2004
-------- -------- --------
Revenues $ 680 $1,158 $ 400
Billings to entities $ 864 $1,099 $ 380
Cost incurred from $ 461 $ 319 $ 675
Balance July 31,
2006 2005
-------- --------
Accounts receivable $843 $663
Notes Payable $ 21 $667
Accounts Payable $538 $400
Billings in excess of costs
and estimated earnings on
uncompleted contracts $ 69 $ 82
Accrued Interest Payable $ 2 $106
In the year ended July 31, 2005, the company borrowed
$665,000 from Mr. Williams, Jr. to cover short-term cash
requirements. The notes were paid during fiscal 2006.
During the year ended July 31, 2006, 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.
The Company is obligated to the Williams Family Limited
Partnership under a lease agreement for real property with an
equity sharing formula in the event of the sale of the property.
The partnership is controlled by individuals who own, directly or
indirectly, approximately 48% of the Company's stock. The lease,
which had an original term of five years, commenced on February
2000 and was extended by one year to February 2006. On July 31,
2006, a modified agreement was reached and the term was extended
through February 2010. The Company pays annual lease payments plus
real estate taxes. The Company recognized lease expense for the
three years ended July 31, 2005, 2004 and 2003 as follows:
(in thousands) 2006 2005 2004
-------- -------- --------
Lease Expense $ 43 $ 34 $ 78
Interest Expense $157 $ 26 $ 13
During the year ended July 31, 2006, the Company borrowed
$1,861,000 from the Williams Family Limited Partnership and repaid
$580,000. Notes Payable and Accounts Payable, representing lease
payments, are reflected below:
Balance July 31,
2006 2005
-------- --------
Note Payable $3,072 $1,381
Accounts Payable $ 192 $ 149
Accrued interest payable $ - $ 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 5.75% or the current Prime rate plus
0.75%, whichever is greater. The rate at July 31, 2006 was 9%.
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, 2006, 2005 and 2004 is reflected below. The balance
outstanding at July 31, 2006 and 2005, which is reflected below,
is included in Note 3, Related Party Transactions:
Installment obligations:
(in thousands) 2006 2005 2004
-------- -------- --------
Interest Expense $ 8 $ 11 $ 12
Balance July 31,
2006 2005
-------- --------
Notes Payable $ 72 $116
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 has 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.
During the year ended July 31, 2006, in order to resolve loan
and lease defaults, the Company sold seven previously owned or
leased cranes to FlexLease, LLC, an entity owned by Director Frank
E. Williams, Jr., his son H. Arthur Williams, President of
Williams Steel Erection Company, Inc. and General Counsel Daniel
K. Maller, also a Vice President of Williams Bridge Company.
Subsequent to July 31, 2006, one additional crane was sold to
FlexLease. These transactions, which were approved by the
Company's independent Directors, included buy-back provisions,
which will allow the Company to pursue alternate financing for
these cranes. These cranes support the construction activities of
the Company. The Company entered into short term lease agreements
on five cranes, one of which was subsequently sold to a non-
affiliated third party during the year, and a financing agreement
on two cranes. Lease expense for the three years ended July 31,
2006, 2005 and 2004 is reflected below. Additionally, Notes
payable and Accounts payable, representing lease payments at July
31, 2006 and 2005 are reflected below.
(in thousands) 2006 2005 2004
-------- -------- --------
Lease Expense $115 $- $-
Balance July 31,
2006 2005
-------- --------
Note payable $1,109 $-
Accounts Payable $ 51
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 written 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 2006 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 2006, 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 2006. 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,
2006 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,
2006 (the "2006 fiscal year") and the reviews of the financial
statements included in the Company's Form 10-Q's for 2006 fiscal
year will total approximately $173,500. This fee does not
include payment for any work that McGladrey and Pullen did 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 2006 fiscal year.
Audit Related Fees. The additional audit related fees billed by
McGladrey and Pullen during fiscal year 2006 are primarily related
to the audit of the Company's Employee Savings and Benefit Plan
and total approximately $32,500.
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, 2001 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 which 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:
2001 2002 2003 2004 2005 2006
Williams Industries 100 115.38 93.59 104.87 94.36 56.41
Peer Group index 100 58.64 71.73 89.24 192.71 300.67
Russell 2000 Index 100 80.95 98.19 113.72 140.22 144.51
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
15, 2007. 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 7, 2007.
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 29, 2006, 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, 2006. PLEASE ADDRESS
ALL REQUESTS TO WILLIAMS INDUSTRIES, INCORPORATED, P.O. BOX 1770,
MANASSAS, VIRGINIA 20108.