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 quarterly period ended January 31, 2008
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 a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "large
accelerated filer and accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer Non-accelerated filer x
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). YES _ NO X
At January 31, 2008, the Registrant had outstanding 3,666,850
shares of Common Stock.
WILLIAMS INDUSTRIES, INCORPORATED
FORM 10-Q
FOR THE QUARTER ENDED JANUARY 31, 2008
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets - January 31, 2008
and July 31, 2007 (Unaudited) 1
Condensed Consolidated Statements of Operations -
Three and six months ended January 31, 2008 and
2007 (Unaudited) 2
Condensed Consolidated Statements of Cash Flows -
Six months ended January 31, 2008 and 2007
(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 19
ITEM 4T. CONTROLS AND PROCEDURES 19
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 21
ITEM 1A. RISK FACTORS 21
ITEM 2. UNREGISTERED SALES OF EQUITY IN SECURITIES
AND USE OF PROCEEDS 21
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 21
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 22
ITEM 5. OTHER INFORMATION 22
ITEM 6. EXHIBITS 22
CERTIFICATIONS AND SIGNATURES 23
<PAG
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands except share data)
ASSETS
--------
January 31, July 31,
2008 2007
---------- ----------
CURRENT ASSETS
Cash and restricted cash $ 130 $ 694
Accounts receivable, net 14,411 13,988
Inventory 2,961 2,105
Costs and estimated earnings in excess
of billings on uncompleted contracts 3,165 2,602
Prepaid and other assets 483 787
---------- ----------
Total current assets 21,150 20,176
---------- ----------
PROPERTY AND EQUIPMENT, AT COST 21,660 22,010
Accumulated depreciation (14,746) (14,485)
---------- ----------
Property and equipment, net 6,914 7,525
---------- ----------
OTHER ASSETS 178 99
---------- ----------
TOTAL ASSETS $ 28,242 $ 27,800
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Current portion of notes payable
Unaffiliated third parties $ 5,404 $ 5,907
Related parties 3,901 3,323
Accounts payable 8,286 6,831
Billings in excess of costs and estimated
earnings on uncompleted contracts 1,686 1,308
Financing obligations resulting from
sale-leaseback transactions 251 314
Other liabilities 2,752 2,894
---------- ----------
Total current liabilities 22,280 20,577
LONG-TERM LIABILITIES
Notes payable, less current portion
Unaffiliated third parties 234 403
Financing obligations resulting from
sale-leaseback transactions 3,892 3,957
---------- ----------
Total Liabilities 26,406 24,937
---------- ----------
MINORITY INTEREST 28 168
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock - 3,666,850 shares
issued and outstanding 366 366
Additional paid-in capital 16,638 16,638
Accumulated deficit (15,196) (14,309)
---------- ----------
Total stockholders' equity 1,808 2,695
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 28,242 $ 27,800
========== ==========
See Notes To Condensed Consolidated Financial Statements
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands except share data)
Three Months Ended Six Months Ended
January 31, January 31,
2008 2007 2008 2007
-------- -------- -------- --------
REVENUE
Manufacturing $ 5,617 $ 6,144 $12,552 $12,852
Construction 2,813 3,271 6,671 6,466
Other 14 66 25 181
-------- -------- -------- --------
Total revenue 8,444 9,481 19,248 19,499
-------- -------- -------- --------
DIRECT COSTS
Manufacturing 3,571 4,723 8,128 9,500
Construction 1,964 2,391 4,973 4,505
-------- -------- -------- --------
Total direct costs 5,535 7,114 13,101 14,005
-------- -------- -------- --------
GROSS PROFIT 2,909 2,367 6,147 5,494
-------- -------- -------- --------
GAIN ON LAND SALE - 1,136 - 1,136
-------- -------- -------- --------
EXPENSES
Overhead 1,187 1,228 2,433 2,360
General and administrative 1,640 1,822 3,269 3,568
Depreciation 353 391 708 770
Interest 289 206 609 433
-------- -------- -------- --------
Total expenses 3,469 3,647 7,019 7,131
-------- -------- -------- --------
LOSS BEFORE INCOME TAXES
AND MINORITY INTEREST (560) (144) (872) (501)
INCOME TAX PROVISION - - - -
-------- -------- -------- --------
LOSS BEFORE MINORITY INTEREST (560) (144) (872) (501)
Minority interest (12) 1 (15) (10)
-------- -------- -------- --------
NET LOSS $ (572) $ (143) $ (887) $ (511)
======== ======== ======== ========
NET LOSS PER COMMON SHARE:
LOSS PER COMMON SHARE-BASIC $(0.16) $(0.04) $(0.24) $(0.14)
======== ======== ======== ========
LOSS PER COMMON SHARE-DILUTED $(0.16) $(0.04) $(0.24) $(0.14)
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING: BASIC AND DILUTED 3,666,850 3,660,282 3,666,850 3,658,373
--------- --------- --------- ---------
See Notes To Condensed Consolidated Financial Statements
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited in thousands)
Six Months Ended
January 31, January 31,
2008 2007
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (887) $ (511)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 757 (348)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures
for property, plant and equipment (200) (680)
Proceeds from sale of
property, plant and equipment 143 1,296
---------- ----------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES (57) 616
---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from borrowings 5,859 4,022
Repayments of notes payable (6,081) (3,618)
Issuance of common stock - 20
Minority interest in dividends (155) -
---------- ----------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (377) 424
---------- ----------
NET (DECREASE) INCREASE IN CASH (564) 181
CASH, BEGINNING OF PERIOD 694 952
---------- ----------
CASH, END OF PERIOD $ 130 $1,133
========== ==========
See Notes To Condensed Consolidated Financial Statements
WILLIAMS INDUSTRIES, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2008
1. INTERIM FINANCIAL STATEMENTS AND COMPANY LIQUIDITY
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, 2008 and July 31, 2007 and the results of its operations
for the three and six months ended January 31, 2008 and 2007, respectively;
and its cash flows for the six months ended January 31, 2008 and 2007,
respectively. Operating results for the three and six months ended January
31, 2008 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, 2007.
During its regular meeting on March 7, 2007, the Williams Industries
Board of Directors, after reviewing the current and future costs of
remaining
a public corporation, approved the appointment of a committee of independent
directors to explore the possibility of taking the company private. The
Company has engaged legal counsel and financial analysts to assist the
committee in this regard. Additional information will be forthcoming as
appropriate.
Williams Industries, Incorporated (the Company) continues to face a
liquidity and business crisis, after suffering operating losses for several
years, tapping its available sources of operating cash, and borrowing $3.7
million from its largest shareholder. The Company is operating under a
Forbearance Agreement with its major lender, United Bank, pursuant to which
approximately $2.4 million was outstanding at January 31, 2008 and is
scheduled to be repaid by August 1, 2008. Subsequent to January 31, 2008 the
Company paid $500,000 to United Bank. Under the terms of the Forbearance
Agreement, it is anticipated that United Bank will "term out" the remaining
balance, possibly through 2011.
In addition, the Company is in default of nearly all of its other debts
and leases. Because of the Company's financial condition and uncertain
market
conditions in its areas of operation, there remains a significant risk that
the Company may not be able to book additional work to maintain its level of
operations. The Company operates in an industry where there are large risks
related to estimating and performing work and collecting amounts earned.
The
Company may continue to suffer operating losses and have difficulty meeting
its obligations.
In view of the Company's liquidity problems and in order to fund the
repayment of the United Bank notes, the Company is pursuing various financing
options, including conventional and asset-based financing, and exploring its
strategic options relative to the sale of individual assets or subsidiaries.
For example, the Company's present use of its land in Manassas, Virginia may
not be its "highest and best" use. Based on the sale price of the 3-acre
parcel sold in June 2006, the value of the Company's real property in
Manassas, Virginia may exceed $15 million. However, due to recent changes in
the real estate market, the value realized from the sale in June 2006 may
not reflect the value that would be realized at the present time. Management
has not ruled out any measure that may be necessary to protect the Company's
assets and preserve shareholder value.
As of this filing, the Company's three manufacturing subsidiaries have
made principal payments to United Bank to release their individual assets
from the Company's corporate financing. Two of the subsidiaries have
obtained high interest, asset-based financing to meet their cash needs, which
may limit their ability to assist the parent company in meeting its remaining
obligations on the United Bank debt. The principal payments made by the
three manufacturing subsidiaries to United Bank, including a payment made
through the sale/leaseback of the Company's Richmond facility, have
aggregated $2.5 million.
2. RELATED-PARTY TRANSACTIONS
The Company is obligated to the Williams Family Limited Partnership
(WFLP) under a lease agreement for real property, located in Manassas,
Virginia. WFLP is controlled by individuals who own, directly or indirectly,
approximately 55% 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, by agreement, one year to February
2006, and subsequently, on July 31, 2006, the agreement was modified as
follows: (i) the Agreement was extended through February 2010, (ii) unpaid
rent aggregating approximately $200,000 was deferred until September 30,
2007, (iii) Rent payments due after August 1, 2006 (approximately $6,000 per
month), if delinquent, will be subject to a 5% penalty on the payment amount
and will accrue interest at prime plus 3%; (iv) the option to purchase the
property which the Company had under the original lease was terminated and
replaced with an equity sharing formula which in the event of the sale of the
property would yield payment to the Company of 75% of the gain on the ten
acres previously subject to the option; and (v) in the event of a sale,
Williams Bridge shall have the option to continue its lease of the portion of
the property which has been cleared (approximately 2 acres) for the duration
of the lease term. The Company will incur annual rent expense of
approximately $54,000. The Company has not made payments to WFLP for rent
during the fiscal year ended July 31, 2007 and the six months ended January
31, 2008, therefore those balances incurred a five percent penalty and accrue
interest at the prime interest rate plus three percent. As reported in Form
8-K filed January 7, 2008, the WFLP has agreed to extend the balances owed
under (ii) above, now aggregating approximately $300,000, to September 30,
2008.
During the six months ended January 31, 2008, the Company borrowed
$505,000 from WFLP while repaying $127,000.
Lease and interest expense for the three and six months ended January
31, 2008 and 2007 are reflected below. Additionally, Notes Payable and
Accounts Payable, representing lease payments to WFLP at January 31, 2008
and July 31, 2007, are reflected below.
Three Months Ended Six Months Ended
January 31, January 31,
(in thousands) 2008 2007 2008 2007
------ ------ ------ ------
Lease Expense $13 $18 $26 $29
Interest Expense $80 $67 $165 $135
Balance Balance
January 31, July 31,
2008 2007
-------- --------
Notes Payable $3,702 $3,323
Accounts Payable $ 657 $ 659
As reported in Form 8-K filed January 7, 2008, the WFLP has agreed to
extend balances due September 30, 2007, aggregating approximately $3.3
million, to September 30, 2008.
Prior to July 31, 2007, in order to resolve loan and lease defaults,
the Company sold 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. Details
of these transactions have been previously detailed in the Company's 10k
for the year ended July 31, 2007. During the year ended July 31, 2007, the
Company entered into a short-term lease agreement for a crane previously
leased by the Company in contemplation of the sale of the crane on the open
market, providing for the buyout of the crane by FlexLease, with FlexLease
to earn a fee of 3% or to share any proceeds above the appraised value 50/50.
This crane was sold to an unaffiliated third party during the quarter ended
January 31, 2008. The Company received $67,500 on the sale, recording an
immaterial gain, while FlexLease retained a fee of $27,500.
Additionally, during the three months ended January 31, 2008, the
Company entered into a lease/purchase agreement with FlexLease to finance an
additional crane, previously leased by the Company. The negotiated buyout
of the lease was $200,000. The Company agreed to pay FlexLease based on a
capitalized cost of $210,000 with interest at FlexLease's cost of funds +
1%. In connection with financing this transaction, FlexLease negotiated a
lower rate on two cranes previously financed, which is expected to result
in cost savings to the Company of approximately $1,000 per month.
These transactions, which were approved by the Company's independent
directors and offered on better terms than available from unrelated lenders
and lessors, include buy-back provisions, which will allow the Company to
pursue alternate financing. These cranes support the construction activities
of the Company. At January 31, 2008, the Company had lease or financing
arrangements with FlexLease on eight cranes.
Lease and interest expense for the three and six months ended January
31, 2008 and 2007 are reflected below. Additionally, Notes payable and
Accounts payable, representing lease payments at January 31, 2008 and July
31, 2007 are reflected below.
Three Months Ended Six Months Ended
January 31, January 31,
(in thousands) 2008 2007 2008 2007
------ ------ ------ ------
Lease Expense $124 $ 42 $247 $114
Interest Expense $ 26 $ 36 $ 58 $ 70
Balance Balance
January 31, July 31,
2008 2007
-------- --------
Financing obligation resulting from
sale-leaseback transaction $988 $1,106
Accounts Payable $202 $ 154
The deferred gains on the transactions with FlexLease are shown as
"Financing obligations resulting from sale-leaseback transactions" under
Current and Long-Term Liabilities on the Condensed Consolidated Balance Sheet.
Mr. Frank E. Williams, Jr., who owned or controlled approximately 51%
of the Company's stock at January 31, 2008, also owns controlling interests
in 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, 2008 and July 31, 2007, and revenue earned and costs incurred
with these entities during the three and six months ended January 31, 2008
and 2007 are reflected below.
Three Months Ended Six Months Ended
January 31, January 31,
(in thousands) 2008 2007 2008 2007
------ ------ ------ ------
Revenue $243 $236 $352 $574
Billings to entities $204 $394 $313 $599
Costs and expenses incurred $ 98 $ 65 $186 $130
Balance Balance
January 31, July 31,
2008 2007
-------- --------
Accounts receivable $811 $965
Notes Payable $200 $ -
Accounts Payable $698 $538
Billings in excess of costs and estimated
earnings on uncompleted contracts net of Costs
and Estimated Earnings in Excess of Billings $ - $ 39
Directors Frank E. Williams, Jr. and Stephen N. Ashman are shareholders
and directors Capital Bank from which the Company obtained a $240,000 note
payable on December 23, 2002. 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. The final installment on this note was
paid during the quarter ended January 31, 2008. Interest expense for the
three and six months ended January 31, 2008 and 2007, respectively, is
reflected below. The balance outstanding at January 31, 2008 and July 31,
2007 is also reflected below.
Three Months Ended Six Months Ended
January 31, January 31,
(in thousands) 2008 2007 2008 2007
------ ------ ------ ------
Interest Expense $ - $ 2 $ 1 $ 4
Balance Balance
January 31, July 31,
2008 2007
-------- --------
Note Payable $ - $21
Subsequent to January 31, 2008, the Company entered into a new note
with Capital Bank for $602,000 at 7% interest payable over nine months, to
finance insurance premiums.
At January 31, 2008, the Company owed its non-employee members of the
Board of Directors approximately $205,000 for unpaid director fees.
3. SEGMENT INFORMATION
Information about the Company's operations for the three and six months
ended January 31, 2008 and 2007 is as follows (in thousands):
Three Months Ended Six Months Ended
January 31, January 31,
(in thousands) 2008 2007 2008 2007
-------- -------- -------- --------
Revenues:
Construction $3,189 $3,816 $ 7,622 $ 7,459
Manufacturing 5,698 6,279 13,223 12,993
Other 14 66 25 181
-------- -------- -------- --------
8,901 10,161 20,870 20,633
-------- -------- -------- --------
Intersegment revenues:
Construction 376 545 951 993
Manufacturing 81 135 671 141
Other - - - -
-------- -------- -------- --------
457 680 1,622 1,134
-------- -------- -------- --------
Consolidated revenues:
Construction 2,813 3,271 6,671 6,466
Manufacturing 5,617 6,144 12,552 12,852
Other 14 66 25 181
-------- -------- -------- --------
Total Consolidated Revenues $8,444 $9,481 $19,248 $19,499
-------- -------- -------- --------
Operating (loss) income:
Construction $(192) $ (222) $(475) $ (178)
Manufacturing 283 (437) 994 (271)
-------- -------- -------- --------
Consolidated operating income
(loss) 91 (659) 519 (449)
General corporate expense, net (362) (415) (782) (755)
Interest expense (289) (206) (609) (433)
Gain on land sale - 1,136 - 1,136
Minority interests (12) 1 (15) (10)
-------- -------- -------- --------
Corporate loss $(572) $ (143) $(887) $ (511)
======== ======== ======== ========
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. In the manufacturing
segment, for the six months ended January 31, 2007, one customer accounted
for 18% of "consolidated revenue" and 27% of "manufacturing revenue".
The Company's bridge girder subsidiary is dependent upon one producer
of discrete steel plate and one producer of heavy rolled steel beams for its
product, although the rolled beams are generally purchased through one of
several competitive "warehouse" vendors. The Company maintains good
relations with its vendors, generally receiving orders on a timely basis at
reasonable cost for this market. If the vendors were unwilling or unable to
continue selling steel to the Company, the Company would have trouble meeting
production deadlines in its contracts, as the other major suppliers of these
products have limited excess production available to "new" customers.
Subsequent to October 31, 2007, the Company learned that the discrete
steel plate producer agreed to be acquired by another company. While the
Company did not expect this acquisition to impair its important relationship
with the vendor, subsequently the vendor has changed its payment terms and
forward pricing agreements. In addition, steel prices have recently
escalated and suppliers have withdrawn or modified pricing commitments and
predictions upon which the Company depends for bidding. These developments
have and may continue to impact the Company's ability to perform its
contracts in an orderly and efficient way and to realize the expected
margins on certain work in its backlog. While the range of the possible
impact is large, management expects that the direct impact may be
approximately $250,000 or 5% of approximately $5 million of contracts.
Current and future bidding is also affected, but because these factors are
in place across the industry the Company expects that the future cost of raw
materials can be estimated so that new work can be booked. However, because
of the dynamics of public funding of infrastructure projects, cost escalation
does create additional risk of projects not being awarded because of overall
limits on appropriated funds.
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.
5. PURCHASE OF ASSETS
During the three months ended January 31, 2008, the Company capitalized
major repairs of equipment of approximately $71,000 in Property and
Equipment.
6. SALE-LEASEBACK TRANSACTIONS
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
$252,000 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 "Financing obligations resulting from sale-leaseback transactions" and
payments made under the lease are being treated as rent expense (at an
effective rate of approximately 9.2%). A sale will be recognized if and when
the Company's lease and related option to repurchase expire or terminate.
The land and building in this transaction are included in property and
equipment as follows:
Balance Balance
January 31, July 31,
2008 2007
-------- --------
Land $ 357 $ 357
Building & improvements 2,097 2,155
Total property at cost 2,454 2,512
Less: Accumulated depreciation (1,541) (1,571)
-------- --------
Property, net $ 913 $ 941
Depreciation on the building and improvements will continue to be charged to
operations until a sale has been recognized.
Future minimum annual payments required under the leaseback, as of
January 31, 2008, are as follows:
For the year ending January 31,
------------ ------------
2009 $252
2010 252
2011 252
2012 63
----------
Total $819
Rent expense relating to this financing agreement was $63,000 and $57,000
for the three months ended January 31, 2008 and 2007, respectively, and
$126,000 and $114,000 for the six months ended January 31, 2008 and 2007,
respectively.
Prior to July 31, 2007, in order to resolve loan and lease defaults,
the Company sold 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. Details
of these transactions have been previously detailed in the Company's 10k
for the year ended July 31, 2007. During the year ended July 31, 2007, the
Company entered into a short-term lease agreement for a crane previously
leased by the Company in contemplation of the sale of the crane on the open
market, providing for the buyout of the crane by FlexLease, with FlexLease
to earn a fee of 3% or to share any proceeds above the appraised value 50/50.
This crane was sold to an unaffiliated third party during the quarter ended
January 31, 2008. The Company received $67,500 on the sale, recording an
immaterial gain, while FlexLease retained a fee of $27,500.
Additionally, during the three months ended January 31, 2008, the
Company entered into a lease/purchase agreement with FlexLease to finance an
additional crane, previously leased by the Company. The negotiated buyout
of the lease was $200,000. The Company agreed to pay FlexLease based on a
capitalized cost of $210,000 with interest at FlexLease's cost of funds +
1%. In connection with financing this transaction, FlexLease negotiated a
lower rate on two cranes previously financed, which is expected to result
in cost savings to the Company of approximately $1,000 per month.
These transactions, which were approved by the Company's independent
directors and offered on better terms than available from unrelated lenders
and lessors, include buy-back provisions, which will allow the Company to
pursue alternate financing. These cranes support the construction activities
of the Company. At January 31, 2008, the Company had lease or financing
arrangements with FlexLease on eight cranes.
The Company cranes, in these transactions, are included in property and
equipment as follows at January 31, 2008 and July 31, 2007 (in thousands):
Balance Balance
January 31, July 31,
2008 2007
-------- --------
Cranes & Heavy Equipment $2,503 $2,475
Less: Accumulated depreciation (1,322) (1,282)
-------- --------
Property, net $1,181 $1,193
Depreciation on the previously owned cranes will continue to be charged to
operations until a sale has been recognized.
7. INCOME TAXES
In June 2006, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 48 - Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109 (FIN 48). This interpretation
applies to all tax positions accounted for in accordance with SFAS No. 109
by defining the criteria that an individual tax position must meet in order
for the position to be recognized within the financial statements and provides
guidance on measurement, de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition of tax
positions. This interpretation is effective for fiscal years beginning
after December 15, 2006, with earlier adoption permitted. The Company
adopted FIN 48 effective August 1, 2007. There were no adjustments from the
adoption of this standard in the three and six months ended January 31, 2008.
The Company is subject to U.S. federal income tax as well as income tax of
multiple state jurisdictions. Currently, no examinations are open in any
jurisdiction.
For federal purposes, tax years 2004-2006 remain open to examination as
a result of earlier net operating losses being utilized in recent years.
The statute of limitation remains open on the earlier years for three years
subsequent to the utilization of net operating losses. For state purposes,
the statute of limitation remains open in a similar manner for states that
have generated net operating losses.
The Company does not anticipate any significant increases or decreases
in unrecognized tax benefits within the next twelve months. In October of
2007, the statute of limitations expired on federal issues related to tax
years 2003 and prior. There was no material impact on the unrecognized tax
benefits related to the expiration of the statute of limitations for tax
years 2003 and prior.
8. COMMON STOCK OPTIONS
The Company applies 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 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 and six months
ended January 31, 2008 and 2007 since no stock based grants were issued
and all prior grants were fully vested. 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, 2007.
At January 31, 2008, the Company had 60,000 stock options outstanding
and exercisable at a weighted average exercise price of $3.86 per share. The
exercise price ranges from $3.55 per share to $4.10 per share. All
unexercised stock options expire by January 20, 2010.
9. SUBSEQUENT EVENTS
The Company is operating under a Forbearance Agreement with its major
lender, United Bank, pursuant to which approximately $2.4 million was
outstanding at January 31, 2008 and is scheduled to be repaid by August 1,
2008. Subsequent to January 31, 2008 the Company paid $500,000 to United
Bank. Under the terms of the Forbearance Agreement, it is anticipated that
United Bank will "term out" the remaining balance, possibly through 2011.
On March 7, 2008, in order to fund the $500,000 payment to United Bank
and for its working capital needs, Williams Bridge Company obtained an
asset-based line of credit of $3.5 million. The line of credit is expected to
enable WBC to manage its operations more efficiently.
As disclosed in the 10-K for the year ended July 31, 2007, a customer
of the Company has asserted a claim for alleged delay damages relating to its
Woodrow Wilson Bridge contract outside of Washington, DC, which the Company
believes is not well founded. The Company's surety had retained an expert
to review the asserted claim, who concluded the claim is without merit. The
Company intends to aggressively defend itself against the claim and will
attempt to recover its expenses resulting from the customer's actions, as
well as collect the $2.6 million the Company is owed under the contract at
January 31, 2008.
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 utilized its available sources of
operating cash and borrowed approximately $3.7 million from its largest
shareholder and his affiliated entities.
The Company is operating under a Forbearance Agreement with its major
lender, United Bank, pursuant to which approximately $2.4 million was
outstanding at January 31, 2008 and is scheduled to be repaid by August 1,
2008. Subsequent to January 31, 2008 the Company paid $500,000 to United
Bank. Under the terms of the Forbearance Agreement, it is anticipated that
United Bank will "term out" the remaining balance, possibly through 2011.
In addition, the Company is in default on 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 there are large risks related to
estimating and performing work and collecting amounts earned.
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.
In view of the Company's liquidity problems and in order to fund the
repayment of the United Bank notes, the Company is pursuing various
financing options, including conventional and asset-based financing, and
exploring its strategic options relative to the sale of individual assets or
subsidiaries. For example, the Company's present use of its land in
Manassas, Virginia may not be its "highest and best" use. Based on the sale
price of the 3-acre parcel sold in June 2006, the value of the Company's
real property in Manassas, Virginia may exceed $15 million. However, due to
recent changes in the real estate market, the value realized from the sale
in June 2006 may not reflect the value that would be realized at the present
time. Management has not ruled out any measure that may be necessary to
protect the Company's assets and preserve shareholder value.
As of this filing, the Company's three manufacturing subsidiaries have
made principal payments to United Bank to release their individual assets
from the Company's corporate financing. Two of the subsidiaries have
obtained high interest, asset-based financing to meet their cash needs,
which may limit their ability to assist the parent company in meeting its
remaining obligations on the United Bank debt. The principal payments made
by the three manufacturing subsidiaries, including a payment made through
the sale/leaseback of the Company's Richmond facility, have aggregated $2.5
million to United Bank.
The Company's manufacturing segment produced an operating profit of
$283,000 for the quarter ended January 31, 2008 compared to an operating
loss of $437,000 for the quarter ended January 31, 2007. The segment
continued to manufacture its product more efficiently with steel prices
remaining constant. However, steel prices have recently escalated
considerably and the suppliers have withdrawn or modified pricing
commitments and predictions upon which the Company depends for bidding.
These developments have and may continue to impact the Company's ability to
perform its contracts in an orderly and efficient way and to realize the
expected margins on certain work in the backlog. While the range of the
possible impact is large, management expects that the direct impact will be
limited to approximately $250,000 or 5% of approximately $5 million of
contracts. Current and future bidding is also affected, but because these
factors are in place across the industry the Company expects that the future
cost of raw materials can be estimated so that new work can be booked.
However, because of the dynamics of public funding of infrastructure
projects, cost escalation does create additional risk of projects not being
awarded because of overall limits on appropriated funds. Management is
reviewing its contracts and may cancel some if reasonable accommodations to
those contracts cannot be made.
The construction segment produced an operating loss of $192,000 for the
quarter ended January 31, 2008 compared to an operating loss of $222,000 for
the quarter ended January 31, 2007. The segment incurred legal and related
consulting costs in excess of $100,000 preparing to defend itself against a
claim on its Woodrow Wilson Bridge contract. Revenues declined as jobs were
delayed.
Material Changes in Financial Condition
- ---------------------------------------
For the six months ended January 31, 2008, the following changes
occurred:
The Company's Cash decreased $564,000. The Company paid $500,000 to
United Bank on its notes payable.
Accounts Receivable increased $423,000 mainly from increased billings
in the Company's manufacturing segment related to its bridge girder
subsidiary.
Inventory increased $856,000 mainly at its bridge girder subsidiary for
contracts about to start. While inventory is adequate for current
manufacturing needs, recent steel price increases and steel mill delivery
delays may impact future production.
Property and Equipment, at Cost decreased $350,000. The Company
capitalized major repairs and purchased other fixed assets of approximately
$200,000; and wrote off costs related to the sale of two leased cranes and
other fully depreciated capital repairs of $550,000.
At January 31, 2008, the Company had approximately $8.4 million in
variable rate notes payable. Total Notes payable decreased $94,000. The
Company borrowed approximately $5.9 million, including $4.7 million financed
by accounts receivable of the Company's stay-in-place decking subsidiary;
$496,000 to finance Company insurance premiums; and $705,000 from related
parties to fund operations. The Company repaid $6 million, which included
payments of $4.5 million on financing secured by Company accounts
receivables; $244,000 on related party debt; $500,000 to United Bank and
$831,000 on other operating notes.
Billings In Excess of Costs and Estimated Earnings on Uncompleted
Contracts net of Costs and Estimated Earnings in Excess of Billings,
decreased $185,000.
Financing obligations resulting from sale-leaseback transactions
decreased $128,000 related to payments on amortizing notes.
Other Liabilities decreased $142,000, mainly related to decreased
payroll related costs on the Company's steel erection subsidiary's contract
on the inner loop of the Woodrow Wilson Bridge project outside of
Washington, D.C.
Stockholders' Equity decreased $887,000 to $1.8 million as the Company
recorded a loss of $887,000 for the period.
For the six months ended January 31, 2008, the Company used net cash of
$564,000. It generated $757,000 in operations and used $57,000 in investing
activities related to fixed asset acquisitions offset by cash received from
sales. Net cash was used in financing activities of $377,000 as the Company
borrowed $5.9 million, repaid $6.1 million on notes payable and recorded
minority interest dividends of $155,000.
Material Changes in Results of Operations
- -----------------------------------------
Three Months Ended January 31, 2008 Compared to
Three Months Ended January 31, 2007
For the quarter ended January 31, 2008, the Company reported a decrease
in revenues and an increase in gross profit. While the Company's loss
increased by $429,000 when compared to the quarter ended January 31, 2007,
included in the prior years loss was a Gain On Land Sale of $1.1 million.
Without the land sale in 2007, the Company's loss declined $707,000 when
comparing the two quarters.
The Company reported a net loss of $572,000, or $0.16 per share, on
total revenue of $8.4 million for 2008 as compared to a net loss of
$143,000, or $.04 per share, on total revenue of $9.5 million for 2007.
While Manufacturing segment revenues decreased $527,000, gross profit
increased approximately $625,000 as gross profit percentages increased from
23% in 2007 to 36% in 2008. Increased labor efficiency and stable steel
pricing continued to contribute to the increased percentages. All
subsidiaries in this segment were profitable for quarter.
Construction segment revenues decreased $458,000 when the two periods
are compared. While gross profit decreased slightly, gross profit
percentages increased from 27% in 2007 to 30% in 2008. Delays by customers
in starting new jobs contributed to the segment's lower revenues. The
segment has reduced its labor force and is working on contracts with higher
gross margins.
Overhead decreased $41,000 on reduced spending for consumables and
supplies used in production.
General and Administrative expenses decreased $182,000 on reduced
professional fees and lower taxes and license fees.
Depreciation expense declined $38,000 on reduced spending on capital
assets.
Interest expense increased $83,000 mainly related to the financing on
accounts receivable at the Company's stay-in-place decking subsidiary.
Six Months Ended January 31, 2008 Compared to
Six Months Ended January 31, 2007
For the six months ended January 31, 2008, the Company reported a
slight decrease in revenues and an increase in gross profit. While the
Company's loss increased by $376,000 when compared to the six months ended
January 31, 2007, included in the prior years loss was a Gain On Land Sale
of $1.1 million. Without the land sale in 2007, the Company's loss declined
$760,000 when comparing the years.
The Company reported a net loss of $887,000, or $0.24 per share, on
total revenue of $19.2 million for 2008 as compared to a net loss of
$511,000, or $.14 per share, on total revenue of $19.5 million for 2007.
While manufacturing segment revenues decreased $300,000, gross profit
increased approximately $1.1 million as gross profit percentages increased
from 26% in 2007 to 35% in 2008. Increased labor efficiency and stable steel
pricing continued to contribute to the increased percentages. All
subsidiaries in this segment were profitable for the six month period.
Construction segment revenues increased $205,000 when the two periods
are compared. Gross profit decreased $263,000 as the segment completed its
Woodrow Wilson Bridge contract, which operated at a loss, and closed out
several older projects. Gross profit percentages decreased from 30% in 2007
to 25% in 2008. While delays by customers in starting new jobs contributed
to the segments lower margins. The segment has reduced its labor force and
is working on contracts with higher gross margins.
Overhead increased $73,000 due to increased labor related costs and
increased rent at the Company's stay-in-place decking subsidiary in
Wilmington, DE.
General and Administrative expenses decreased $299,000 due to reduced
professional fees, lower taxes and license fees and reduced insurance costs.
Depreciation expense decreased $62,000 due to reduced spending on
capital assets.
Interest expense increased $176,000 mainly related to the financing on
accounts receivable at the Company's stay-in-place decking subsidiary.
BACKLOG
At January 31, 2008, the Company's backlog was $22.7 million, a
decrease of approximately $7 million from January 31, 2007 and a decrease of
approximately $0.8 million from July 31, 2007. It is anticipated that
substantially all of the $22.7 million backlog will be completed within the
next twelve months.
Off-Balance Sheet Arrangements
Except as shown below in Aggregate Contractual Obligations and in Note
14, Leases, in the Company's "Notes to Consolidated Financial Statements" of
the Company's Annual Report on Form 10K for July 31, 2007, the Company has
no off balance sheet arrangements.
Aggregate Contractual Obligations
The table below summarizes the payment timetable for certain
contractual obligations of the Company.
(Amounts in thousand $) Payments Due By Period
---------------------------------------
Less Than 1-3 4-5 More Than
Contractual Obligations Total 1 Year Years Years 5 Years
- ----------------------- -------- -------- -------- ------- --------
Long Term Debt $9,539 $9,305 $229 $5 $-
Financing Obligation from
Sale-Leaseback Transactions 1,660 502 948 210 -
Operating Leases 281 159 108 14 -
-------- -------- -------- ------- --------
Total $11,480 $9,966 $1,285 $229 $-
======== ======== ======== ======= ========
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.
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 4T. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
As of the end of the period of this report, under the supervision and with
the participation of management, including our Chief Executive Officer and
Chief Financial Officer, management evaluated the effectiveness of our
controls and procedures, as such term is defined under Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934, as amended. Based on
that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were effective as of
January 31, 2008.
(b) Changes in internal controls over financial reporting.
There have not been any changes in our internal control over financial
reporting during the fiscal quarter ended January 31, 2008 that have
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
(c) Inherent limitations on effectiveness of controls
The Company's management, including its Chief Executive Officer and Chief
Financial officer, believes that its disclosure controls and procedures and
internal control over financial reporting are effective at a reasonable
assurance level. However, the Company's management does not expect that its
disclosure controls and procedures or internal control over financial
reporting will prevent all errors and all fraud. A control system, no matter
how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that these are resource
constraints, and the benefits of controls must be considered relative to
their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurances that all control
issues and instances of fraud, if any, within the company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of a
simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people or by
management override of the controls. The design of any system of controls
also is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions; over time,
controls may become inadequate because of changes in conditions, or the
degree of compliance with policies or procedures may deteriorate. Because of
the inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and not be detected.
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, United Bank, pursuant to which approximately $2.4 million was
outstanding at January 31, 2008 and is scheduled to be repaid by August 1,
2008. Subsequent to January 31, 2008 the Company paid $500,000 to United
Bank. Under the terms of the Forbearance Agreement, it is anticipated that
United Bank will "term out" the remaining balance, possibly through 2011.
As disclosed in the 10-K for the year ended July 31, 2007, a customer
of the Company has asserted a claim for alleged delay damages relating to
its Woodrow Wilson Bridge contract outside of Washington, DC, which the
Company believes is not well founded. The Company's surety had retained an
expert to review the asserted claim, who concluded the claim is without
merit. The Company intends to aggressively defend itself against the claim
and will attempt to recover its expenses resulting from the customer's
actions, as well as collect the $2.6 million the Company is owed under the
contract at January 31, 2008.
The Company's construction segment is in arrears on its payments under
substantially all of its notes payable and leases, although the lenders and
lessors have not taken action to accelerate the indebtedness, foreclose on
collateral or terminate the subject leases.
ITEM 1A. RISK FACTORS
There have been no material changes to the Company's risk factors as
previously disclosed in Item 1A, "Risk Factors", in its Form 10K for the
fiscal year ended July 31, 2007, except that steel price and availability,
which were cited as risk factors, have again begun to experience dislocation
as described elsewhere in this report.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
ITEM 3. Defaults Upon Senior Securities
The Company is operating under a Forbearance Agreement with its major
lender, United Bank, pursuant to which approximately $2.4 million was
outstanding at January 31, 2008 and is scheduled to be repaid by August 1,
2008. Subsequent to January 31, 2008 the Company paid $500,000 to United
Bank. Under the terms of the Forbearance Agreement, it is anticipated that
United Bank will "term out" the remaining balance, possibly through 2011.
In view of the Company's liquidity problems and in order to fund the
repayment of the United Bank notes, the Company is pursuing various
financing options, including conventional and asset-based financing, and
exploring its strategic options relative to the sale of individual assets or
subsidiaries. For example, the Company's present use of its land in
Manassas, Virginia may not be its "highest and best" use. Based on the sale
price of the 3-acre parcel sold in June 2006, the value of the Company's
real property in Manassas, Virginia may exceed $15 million. However, due to
recent changes in the real estate market, the value realized from the sale
in June 2006 may not reflect the value that would be realized at the present
time. Management has not ruled out any measure that may be necessary to
protect the Company's assets and preserve shareholder value.
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None.
ITEM 6. 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 losses
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 13, 2008 Williams Industries, Incorporated
---------------------------------
Registrant
/s/ Frank E. Williams, III
---------------------------
Frank E. Williams, III
Chairman of the Board, President,
Chief Executive Officer,
Chief Financial Officer