FORM 10-Q/a1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to __________________
Commission File No. 0-17757
W-W CAPITAL CORPORATION
(exact name of Registrant as specified in its charter)
Nevada 93-0967457
(State or other jurisdiction of (IRS Employer Identi-
incorporation or organization) fication Number)
11990 Grant Street, Suite 400, Northglenn, CO 80233
(Address of principal executive offices, including zip code)
(303) 452-5000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, address 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 the
filing requirements for the past 90 days. Yes _X_ No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether Registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ___ No ___ NOT APPLICABLE _X_
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Title of Each Class Number of Shares Outstanding
Common stock at November 21, 1996
$0.01 Par Value 5,540,661
W-W CAPITAL CORPORATION
Index
PART I FINANCIAL INFORMATION PAGE NO.
Item 1 Balance Sheets
September 30, 1996 and June 30, 1996 1
Statements of Operations
Three Months Ended
September 30, 1996 and 1995 3
Statements of Cash Flows
Three Months Ended
September 30, 1996 and 1995 4
Notes to Financial Statements 6
Item 2 Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
PART II OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS 13
Item 2 CHANGES IN SECURITIES 13
Item 3 DEFAULTS UPON SENIOR SECURITIES 13
Item 4 SUBMISSION OF MATTERS TO VOTE OF
SECURITY HOLDERS 13
Item 5 OTHER INFORMATION 13
Item 6 EXHIBITS AND REPORT ON FORM 8-K 13
SIGNATURES 14
Part 1-FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
W-W CAPITAL CORPORATION
Balance Sheet
September 30, June 30,
1996 1996
------------ ----------
(Unaudited)
Assets
Current assets:
Cash ........................................... $ 160,708 $ 131,022
Trade accounts receivable ...................... 2,126,501 1,970,549
Less allowance for doubtful accounts ........... 143,632 143,632
Net accounts receivable ..................... 1,982,869 1,826,917
Accounts receivable, other ..................... 23,355 21,240
Accounts receivable, employee .................. 346 --
Accounts receivable, related party ............. 132,221 132,221
Inventories:
Raw materials ................................. 370,382 422,774
Work-in-process ............................... 186,767 206,200
Finished goods ................................ 2,764,811 2,798,534
Total inventories ........................... 3,321,960 3,427,508
Deferred taxes ................................. 99,814 99,814
Prepaid expenses ............................... 70,016 18,567
Current portion of notes receivable ............ 168,240 170,010
Total current assets ........................ 5,959,529 5,827,299
Property and equipment, at cost .................. 4,527,937 4,503,432
Less accumulated depreciation
and amortization ............................... ( 2,001,253 ) ( 1,901,838 )
Net property and equipment .................. 2,526,684 2,601,594
Other Assets:
Long-term notes receivable from
stockholders, net of current portion ........ 2,633 9,372
Long-term notes receivable from
parties, other affiliated entities
and related net of current portion .......... 15,610 15,610
Real Estate held for resale .................... 380,074 379,414
Accounts and notes receivable, other ........... 9,218 9,218
Covenant not to compete, net of
accumulated amortization .................... 1,138 7,964
Other assets ................................... 41,239 43,437
Total other assets .......................... 449,912 465,015
TOTAL ASSETS ................................ $8,936,125 $8,893,908
Continued on following page
See accompanying notes to financial statements.
W-W CAPITAL CORPORATION
Balance Sheet, Continued
September 30, June 30,
1996 1996
-------------------------------------
(Unaudited)
Liabilities
Current Liabilities:
Accounts Payable ............................... $2,279,301 $2,243,753
Revolving credit note payable to Bank .......... 1,734,000 1,734,000
Accrued property taxes ......................... 41,169 27,523
Accrued payroll and related taxes .............. 147,305 135,842
Accrued interest payable ....................... 10,342 13,344
Accrued commissions ............................ 30,000 30,000
Current portion of long-term payables .......... 274,539 283,833
Current portion of notes payable to
related parties ............................... 31,166 32,465
Other current liabilities ...................... 34,622 41,641
Total current liabilities ................... 4,582,444 4,542,401
Other Liabilities:
Accrued Commissions Related Party .............. 150,000 150,000
Long-term note payable to financial
institutions net of current portion ........... 1,616,084 1,655,218
Deferred taxes ................................. 99,814 99,814
Other Long-term liabilities .................... 10,716 22,235
Total other Liabilities ..................... 1,876,614 1,927,267
TOTAL LIABILITIES ........................... 6,459,058 6,469,668
Stockholders' Equity
Common stock: $.01 par value 15,000,000
shares authorized 5,530,661 shares
issued and outstanding at September
30, 1996, and June 30, 1996, respectively ..... 55,306 55,306
Capital in excess of par value ................. 3,304,099 3,304,099
Accumulated Deficit ............................ ( 863,432 ) ( 916,259 )
2,495,973 2,443,146
Less 20,264 shares of treasury stock at
cost .......................................... ( 18,906 ) ( 18,906 )
TOTAL STOCKHOLDERS' EQUITY .................. 2,477,067 2,424,240
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ........................ $8,936,125 $8,893,908
See accompanying notes to financial statements.
W-W CAPITAL CORPORATION
Statements of Operations
(Unaudited)
Three Months Ended
September 30,
____________________________________________
1996 1995
Net Sales ............................. $3,812,848 $4,067,632
Cost of goods sold .................... 3,053,686 3,372,234
Gross profit ........................ 759,162 695,398
Operating expenses:
Selling expenses .................... 278,430 353,561
General and administrative expenses . 358,035 401,224
Total operating expenses ......... 636,465 754,785
Operating (loss) earnings ........ 122,697 ( 59,387 )
Other income (expense):
Interest income ..................... 18,887 35,769
Interest expense .................... ( 95,305 ) ( 101,819 )
Gain (Loss) on sale of assets ....... 386 --
Other income (expense), net ......... 6,162 7,442
Total other income (expense) ..... ( 69,870 ) ( 58,608 )
Earnings (Loss) before income taxes . 52,827 ( 117,995 )
Provision for deferred income taxes ... -- (23,339 )
Net earmomgs (loss) ................. $ 52,827 $ ( 94,656 )
Earnings (loss) per common share: ..... $ .01 $ ( .02 )
Weighted average number of
common shares outstanding ............. 5,530,661 5,530,661
See accompanying notes to financial statements.
W-W CAPITAL CORPORATION
Statement of Cash Flows
(Unaudited)
Three Months Ended
September 30,
__________________________
1996 1995
------- --------
Cash flows from operating activities:
Net earnings (loss) ............................... $ 52,827 $ (94,656)
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization ..................... 100,367 109,300
Loss (Gain) on property and equipment ............. ( 386) --
Interest income added to notes receivable
- affiliates ................................... -- 347
Deferred income taxes ............................. -- ( 23,339 )
Other ............................................. -- ( 3,302 )
Changes in assets and liabilities:
Accounts receivable ............................... ( 155,952 ) ( 618,365 )
Inventories ....................................... 102,548 215,359
Other current and non-current assets .............. ( 52,450 ) 22,013
Accounts payable .................................. 35,548 177,847
Accrued expenses
and other current liabilities .................. 14,258 29,595
Net cash (used in) provided by operating
activities ................................... 96,760 ( 185,201 )
Cash flows from investing activities:
Increase in real estate held for sale ............. ( 660 ) ( 320 )
Purchase of property and equipment ................ ( 25,205 ) ( 20,364 )
Proceeds from other notes receivable .............. 2,347 13,200
Proceeds from stockholders' notes receivable ...... 6,161 5,591
Net cash (used in) provided by investing
activities ................................... (17,357 ) (1,893 )
(Continued on following page)
W-W CAPITAL CORPORATION
Statement of Cash Flows, Continued
(Unaudited)
Three Months Ended
September 30,
__________________________
1996 1995
------- --------
Cash flows from financing activities:
Proceeds from lines of credit ............. $ -- $ 149,000
Payments on notes payable to financial
institutions and government entities ... ( 82,574 ) ( 85,542 )
Payments on notes payable to affiliates ... ( 1,299 ) --
Proceeds from notes payable ............... 34,156 4,700
Net cash provided by (used in) financing
activities ............................. ( 49,717 ) 68,158
Net (decrease) increase in cash .......... 29,686 ( 118,936 )
Cash at beginning of period ............... 131,022 124,458
Cash at end of period .................. $ 160,708 $ 5,522
Supplemental disclosures of cash flow
information:
Cash paid during the period for interest .. $ 98,307 $ 105,942
See accompanying notes to financial statements.
W-W CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements include the accounts of W W
Capital Corporation (the Company) and its three wholly-owned subsidiaries W-W
Manufacturing Co., Inc., Titan Industries, Inc., and Eagle Enterprises, Inc. All
significant intercompany accounts and transactions have been eliminated.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. They do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and changes in cash
flows in conformity with generally accepted accounting principles for full-year
financial statements. However, except as disclosed herein, there has been no
material change in the information disclosed in the notes to W W Capital
Corporation's financial statements included in its Annual Report on Form 10-K
for the year ended June 30, 1996. In the opinion of management, all adjustments
(consisting of normal recurring accrual basis adjustments) considered necessary
for a fair presentation have been reflected in the accompanying financial
statements. Operating results for the three month period ended September 30,
1996, are not necessarily indicative of the result that may be expected for the
year ended June 30, 1997.
NOTE 2 - NET EARNINGS PER SHARE
The net earnings (loss) per share amount included in the accompanying
statement of operations have been computed using the weighted average number of
shares of common stock outstanding and the dilutive effect, if any, of common
stock equivalents existing during the applicable three month periods.
NOTE 3 - RELATED PARTY TRANSACTION
The Company has a number of related party transactions. See the footnotes
to W W Capital Corporation financial statements for the year ended June 30,
1996, included in its Annual Report on Form 10-K for the nature and type of
related party transactions.
A summary of the related party transactions that effect the Company's
statement of operations for the three months ended September 30, 1996, and 1995,
respectively, is as follows:
Three Months Ended
September 30,
Transactions with
- -----------------
Related Parties 1996 1995
- --------------- ----------- -----------
Rent expense $ 15,000 $ 15,000
Interest income $ 739 $ 1,841
Interest expense $ 801 $ 878
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The business of the Company is carried on within two segments by a number
of operating units. The livestock handling equipment segment is composed of W-W
Manufacturing (W-W Manufacturing) and Eagle Enterprises (Eagle), and the water
and environmental product segment is represented by Titan Industries (Titan).
(A) Analysis of Results of Operations
The Company has a net earning of $87,160, for the quarter ended September
30, 1996, as compared to a net loss of $94,656 in 1995.
Net sales decreased to $ 3,812,848 for the three months ended September 30,
1996, compared to $ 4,067,632 for 1995. The following table represents actual
sales by segment group.
Sales by segment group:
Three Months Ended
September 30
------------
1996 1995
----------------------
Livestock Handling Equipment $ 1,937,912 $ 2,269,313
Water and Environmental Products 1,874,936 1,798,319
--------- ---------
Total Net Sales $ 3,812,848 $ 4,067,632
=========== ===========
The decline in livestock handling equipment sales can be attributed to
lower sales of $52,823 by Eagle and $278,578 by W-W Manufacturing. The overall
decrease in sales to Eagle's and W-W Manufacturing's dealers and distributors
were offset by higher sales of "specials". Special sales consist of equipment
sales to fairs, expo centers, rodeos and universities. It is estimated that
special sales comprised approximately $625,000 to $675,000 of the total sales in
the livestock equipment handling segment for the quarter.
During late winter and spring of fiscal 1996, Eagle reintroduced its feed
equipment and W-W Manufacturing introduced its new lower priced line of Wrangler
and Cowhand gates and panels. Sales of these products had not been what
Management had predicted because of production problems and lack of demand from
customers, due to historically low beef prices, weather conditions and record
high grain prices. Special sales of livestock handling equipment has been strong
during the first quarter of fiscal 1997, while traditional sales to dealers and
distributors have been flat. As the beef prices strengthened and market
conditions improved during August and September traditional sales to dealers and
distributors also improved. Overall prices and conditions in the cattle industry
continue to show upward movement during the fall and are expected to hold
through the year. This will continue to effect the traditional sales to dealer
and distributors and along with new products and new product improvements the
Company is expecting sales to improve over 1996 levels.
The Company is presently exploring new products to sell through its dealer
and Distributor network. These products not only will increase sales, but sales
of these products will not be effected, when beef prices decline again. The
Company is introducing water stock tanks, dog kennels and new shelters and barns
for horses. The Company is also negotiating with a high tech company making
ultra-sound equipment for cattle. This product will help the feeder and feed lot
greatly reduce its feeding cost per animal by analyzing the animals back fat
level, therefore, allowing shipment to the packer at the optimal time. If
negotiations are successful, the Company would have exclusive right to sell this
product for an extended period of time before any other companies would be
allowed to offer it for sale.
While sales increased overall by $76,617 in the water and environmental
products segment, sales of water well supplies actually declined. This decline
was offset by increases in sales of manufactured goods such as flush joint PVC
screen casting, and its new product slotted high-density polyethylene pipe for
the horizonal drilling market. The decline in sales of water well supplies is
directly related to wet weather experienced in Nebraska, Kansas and Oklahoma
during the year. Decline in spending by both the Federal and State agencies had
hurt sales of well monitoring equipment. But this decline has been offset by
stronger demand for manufactured products by customers in the private sector and
development of new markets such as the mining industries, and waste treatment
areas, which are realizing new market for Titan. It is anticipated the 1997
sales will improve slightly over 1996 sales levels approximately 2% to 3%.
Gross profit margins increased from 17.09% in 1994 to 20.0% in 1996 on an
overall Company basis. The gross profit margin in the livestock handling
equipment increased from 17.99% in 1995 to 23.0% in 1996. This increase is
principally a result of higher gross profit margin by Eagle during the quarter.
Eagle had a operating profit of $25,447 during the quarter ended September 30,
1996 as compared to an operating loss of $97,452 in corresponding quarter in
1995. Product sales shipped out of the Eagle manufacturing facility totaled
$545,091 in 1996. Management has estimated Eagle's breakeven point to be
approximately $145,000 to $175,000 in shipments per month. This revised
breakeven point takes in account the reduction of labor and other cuts which
management has put into place.
Gross profit margins in the water and environmental product segment
increased from 15.97% in 1995 to 16.79% in 1996. This increase corresponds to
the increase in sales of manufactured products which has a higher profit margin.
The selling expenses as a percent of sales decreased to 7.31% in 1996 as
compared to 8.69% in 1995. The 7.31% in 1996 is comparable to 7.67% for the
quarter ended September 30, 1994. The higher selling expense in the livestock
segment in 1995 can be contributed to the Companies efforts to develop new
dealers and distributors and expand its selling areas to new markets not
presently being covered. The Company spent considerable money on product videos,
new sales books and sales aids. To promote its new products, the Company
increased its advertising and show expense. High cost relative to following up
the over selling of products when the Company was being represented by
Agri-Sales. Sales salaries have remained relatively unchanged, while sales have
been lower due to beef prices.
The 1995 increase in selling expense is a function of the cost of the
establishing sales force in the livestock handling equipment segment, while
sales have declined. The Company has been successful in establishing new dealers
and distributors in areas where the Company has not had a strong presence. It is
anticipated that as cattle prices improve and the new dealers and distributors
reduce their present inventories of products, that they will start stocking W- W
livestock handling equipment.
General and administrative expenses declined $43,189 in 1996 as compared to
1995. This decrease is due to lower legal expenses and a reduction in general
and administrative personnel at the subsidiaries.
(B) Liquidity and Capital Resources
The Company generated $96,760 from operations during the quarter ended
September 30, 1996. This improvement is due to the Company generating a net
operating profit and reduction in inventory levels. As Management continues to
monitor inventory levels, improve receivable collections, reduce cost, and
improve efficiencies the Company should continue to provide cash from operating
activities.
The Company is continuing to negotiate a plan to develop its 95 acres of
real estate in Mansfield Texas. Presently management is finalizing an agreement
with a joint venture partner, who will provide the development plans and funds
and the Company will provide the land. Based on preliminary plans the land would
be divided into 30 2.5 acre parcels selling for approximately $40,000 per lot.
Total development cost is estimated at $300,000 to $350,000. It is anticipated
that completion of the project would be 12 - 18 months from inception. The
Company plans to start the project during third quarter of the current fiscal
year if the Company can finalize it agreement with the joint venture partner.
The Company is currently in the process of renewing its banking
arrangements with its primary lender on modified terms to which is presently in
effect. Currently Eagle and W-W Manufacturing are in violation of certain loan
covenants with both First American National Bank and Bank IV, Kansas due to
prior net operating losses. Management has discussed these violations with the
Banks and neither Bank indicated that they would accelerate payment of the
respective loans.
Management believes with net cash provided from operations, available lines
of credit and the Company's ability to develop its real estate holdings, the
Company will have adequate sources to meet its current obligations.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- -------- --------------------
Not Applicable
ITEM 2. CHANGES IN SECURITIES
- -------- ------------------------
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- -------- ----------------------------------
Not Applicable
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
- -------- -----------------------------------------------------
Not Applicable
ITEM 5. OTHER INFORMATION
- -------- --------------------
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- -----------------------------------
Exhibit 27 Financial Data Schedule
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
W W CAPITAL CORPORATION
(Registrant)
Dated: November 21, 1996 By:________________________________
Robert W. Claar, Chief Financial Officer
Dated: November 21, 1996 By:________________________________
Steve D. Zamzow, President & CEO
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
W W CAPITAL CORPORATION
(Registrant)
Dated: November 21, 1996 By: /s/ Robert W. Claar
Robert W. Claar, Chief Financial Officer
Dated: November 21, 1996 By: /s/ Steve D. Zamzow
Steve D. Zamzow, President & CEO