-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ncmh+eZNXpvWBAJKQDRC3TKQTY6ij1lsb6YmzIqhim/z2F3BIbAODynR85be8Jvx LFhIo/M/iaiHlr1qpB7XJg== 0000107294-01-500024.txt : 20020412 0000107294-01-500024.hdr.sgml : 20020412 ACCESSION NUMBER: 0000107294-01-500024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011031 FILED AS OF DATE: 20011205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILLIAMS INDUSTRIES INC CENTRAL INDEX KEY: 0000107294 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED STRUCTURAL METAL PRODUCTS [3440] IRS NUMBER: 540899518 STATE OF INCORPORATION: VA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08190 FILM NUMBER: 1806421 BUSINESS ADDRESS: STREET 1: P.O. BOX 1770 CITY: MANASSAS STATE: VA ZIP: 20108 BUSINESS PHONE: 703357800 MAIL ADDRESS: STREET 1: 2849 MEADOW VIEW RD CITY: FALLS CHURCH STATE: VA ZIP: 22042 10-Q 1 wq-1001.txt WILLIAMS INDUSTRIES, INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) ($000 Omitted) ASSETS -------- October 31 July 31 2001 2001 CURRENT ASSETS ---------- ---------- Cash and cash equivalents $ 2,072 $ 3,748 Restricted cash 66 49 Certificates of deposit 870 693 Accounts receivable, net 13,970 14,252 Inventory 5,521 3,619 Costs and estimated earnings in excess of billings on uncompleted contracts 3,948 2,493 Prepaid and other expenses 1,376 1,151 -------- -------- Total current assets 27,823 26,005 -------- -------- PROPERTY AND EQUIPMENT, AT COST 19,337 19,228 Accumulated depreciation (11,397) (11,089) -------- -------- Property and equipment, net 7,940 8,139 -------- -------- OTHER ASSETS Deferred income taxes 2,837 3,067 Other 915 531 -------- -------- Total other assets 3,752 3,598 -------- -------- TOTAL ASSETS $ 39,515 $ 37,742 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES Current portion of notes payable $ 1,496 $ 1,638 Accounts payable 5,780 4,684 Billings in excess of costs and estimated earnings on uncompleted contracts 3,828 2,902 Deferred income 118 124 Other liabilities 4,574 4,753 -------- -------- Total current liabilities 15,796 14,101 LONG-TERM DEBT Notes payable, less current portion 6,800 7,049 -------- -------- Total Liabilities 22,596 21,150 -------- -------- MINORITY INTERESTS 234 378 -------- -------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock - 3,587,446 and 3,601,196 issued and outstanding 359 360 Additional paid-in capital 16,402 16,458 Accumulated deficit (76) (604) -------- -------- Total stockholders' equity 16,685 16,214 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 39,515 $ 37,742 ========= ========= See Notes To Condensed Consolidated Financial Statements. WILLIAMS INDUSTRIES, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS ($000 omitted) Three Months Ended October 31, 2001 2000 -------- -------- REVENUE Construction $ 3,588 $ 3,144 Manufacturing 7,177 6,896 Sales and service 2,178 2,736 Other 244 315 -------- -------- Total revenue 13,187 13,091 -------- -------- DIRECT COSTS Construction 2,453 2,180 Manufacturing 4,071 4,497 Sales and service 1,520 1,544 -------- -------- Total direct costs 8,044 8,221 -------- -------- GROSS PROFIT 5,143 4,870 -------- -------- EXPENSES Overhead 1,658 1,166 General and administrative 2,040 2,020 Depreciation 376 381 Interest 173 237 -------- -------- Total expenses 4,247 3,804 -------- -------- EARNINGS BEFORE INCOME TAXES, AND MINORITY INTERESTS 896 1,066 INCOME TAX PROVISION 358 424 -------- -------- EARNINGS BEFORE MINORITY INTERESTS 538 642 Minority interest (10) (62) -------- -------- NET EARNINGS $ 528 $ 580 ======== ======== EARNINGS PER COMMON SHARE- BASIC $ 0.15 $ 0.16 ======== ======== EARNINGS PER COMMON SHARE- DILUTED $ 0.15 $ 0.16 ======== ======== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC 3,595,906 3,591,512 --------- --------- See Notes To Condensed Consolidated Financial Statements WILLIAMS INDUSTRIES, INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ($000 Omitted) Three Months Ended October 31, 2001 2000 -------- -------- NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES $ (619) $ 173 NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (620) (616) NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (437) 534 -------- -------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,676) 91 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,748 2,568 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,072 $ 2,659 ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Income Taxes $ 59 $ 52 ======== ======== Interest $ 176 $ 251 ======== ======== See Notes To Condensed Consolidated Financial Statements. WILLIAMS INDUSTRIES, INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2001 1. INTERIM FINANCIAL STATEMENTS This document includes unaudited interim financial statements that should be read in conjunction with the Company's latest audited annual financial statements. However, in the opinion of management, these financial statements contain all adjustments, consisting only of normal recurring items, necessary for a fair presentation of the Company's financial position as of October 31, 2001, as well as the results of its operations and cash flows for the three months ended October 31, 2001 and 2000. 2. RELATED-PARTY TRANSACTIONS Mr. Frank E. Williams, Jr., who owns or controls approximately 36% of the Company's stock, and is also a director of the Company, also owns a controlling or substantial interest in the outstanding stock of Williams Enterprises of Georgia, Inc., Williams and Beasley Company, and Structural Concrete Products, LLC. Each of these entities did business with the company during the quarter. Net billings to and (from) these entities were approximately $317,000 and 373,000 for the three months ended October 31, 2001 and 2000, respectively. The Company is liable to the Williams Family Limited Partnership under a lease/option agreement. The initial lease term is for five years, beginning February 15, 2000, with an extension option. The Company recognized lease expense for the three months ended October 31, 2001 and 2000 of $14,000 and $37,000, respectively. 3. COMMITMENTS/CONTINGENCIES The Company entered into a lease on October 1, 2001 for a 300,000 square foot plant in Bessemer, AL. The initial term of the lease is for three years at $420,000 per year with a three-year renewal option at $600,000. Rent for the quarter ended October 31, 2001 was $35,000. The Company has the right to terminate the lease after either the initial three-year or additional three-year renewal option with the payment of $500,000 for the purchase of the plant's equipment. The Company has the right to purchase the plant at any time for $6,000,000. 4. SEGMENT INFORMATION Information about the Company's operations in its operating segments for the three months ended October 31, 2001 and 2000 is as follows (in thousands): Three Months Ended October 31, 2001 2000 Revenues: -------- -------- Construction $ 4,191 $ 3,784 Manufacturing 7,258 6,903 Sales & Service 2,213 2,820 Other 402 460 -------- -------- 14,064 13,967 -------- -------- Intersegment revenues: Construction 603 640 Manufacturing 81 7 Sales & Service 35 84 Other 158 145 -------- -------- 877 876 -------- -------- Consolidated revenues: Construction 3,588 3,144 Manufacturing 7,177 6,896 Sales & Service 2,178 2,736 Other 244 315 -------- -------- Total Consolidated Revenues: $13,187 $13,091 ======== ======== Earnings before income taxes And minority interest: Construction $ 261 $ 265 Manufacturing 1,063 854 Sales & Service 28 412 Other (456) (465) -------- -------- Total $ 896 $ 1,066 ======== ======== 5. INVENTORIES Materials inventory consists of structural steel, metal decking, and steel cable. Costs of materials inventory is accounted for using either the specific identification method or average cost. The cost of supplies inventory is accounted for using the first-in, first-out, (FIFO) method. 6. PURCHASE AND SALE OF ASSETS Effective August 1, 2001, the Company purchased the final 2% of the stock of S.I.P., Inc. for approximately $44,000 in cash. The Company now owns 100% of the stock of S.I.P., Inc. This acquisition has been accounted for as a purchase. Effective October 1, 2001, the Company sold its majority interest in Construction Insurance Agency to an employee of the Agency. The sales price was $300,000 and the Company recorded a gain of $83,000, which is included in "Revenue - Other" on the Condensed Consolidated Statements of Earning for the three months ended October 31, 2001. 7. RECLASSIFICATIONS Certain Balance Sheet and Statement of Earnings items for the prior period have been reclassified to conform to the current period classifications. Item 2. Management's Discussion and Analysis Financial Condition and Results of Operations General The Company's operations serve the industrial, commercial and institutional construction markets, primarily in the Mid-Atlantic region of the United States. During the quarter ended October 31, 2001, the Company leased a 300,000-square-foot manufacturing facility in Bessemer, Alabama to serve steel bridge girder fabrication needs in the Southeastern region. Due primarily to increased governmental spending on infrastructure in recent years, the Company, like its overall industry, has experienced increased demand for its products and services. Demand in the commercial construction markets continues to vary, although the Company has benefited from increased institutional spending on schools and medical facilities. For several years, the Company, like others in the construction industry, had experienced difficulties in hiring and retaining qualified personnel. In recent months, however, due to a combination of factors including the addition of personnel accompanying the Bessemer facility as well changes in the nation's economy, the Company's manufacturing and construction segments have both been able to hire additional employees. The Company's manufacturing workforce increased by nearly 60% during the quarter and the construction workforce, which is more fluid, increased 29% as of October 31, 2001. This addition of personnel will allow the Company to reduce overtime expense while simultaneously increasing the amount of work the Company's subsidiaries can produce. The Company's subsidiaries, through the combination of manufacturing, construction, and heavy hauling and lifting capabilities, offer a turnkey approach for customers, thereby increasing its competitiveness on some contracts. Each of the subsidiaries maintains its own customer base, but works to translate individual projects into broader opportunities for the Company to obtain work. Financial Condition For the quarter ended October 31, 2001, the Company's net working capital increased slightly from $11,904,000 at July 31, 2001 to $12,027,000 at October 31, 2001. Despite the Company's increased revenues, Accounts Receivable decreased slightly, due to the Company's more aggressive stance in the collection of accounts. Inventory increased by more than 50%, primarily in anticipation of upcoming work that is already part of the backlog at Williams Bridge Company. Stockholder's Equity also increased. At October 31, 2001, Stockholder's Equity was $16,685,000, an increase of $471,000 from July 31, 2001. The Company's issued and outstanding shares decreased slightly from 3,601,196 shares at July 31, 2001 to 3,587,446 shares at October 31, 2001 due to the Company's repurchase of 13,750 shares during the quarter as part of its announced program to purchase approximately 5% of its stock through open-market transactions. During the quarter ended October 31, 2001, the Company sold its majority interest in Construction Insurance Agency, Inc. (CIA) in order to concentrate on its core lines of business. See Note 6 in the accompanying Notes to Condensed Consolidated Financial Statements and the accompanying financial statements for additional information. Also during the quarter, the Company acquired the remaining two percent of stock outstanding in S.I.P., Inc. of Delaware. This acquisition was done to reduce administrative issues and costs associated with minority owners. The Company now owns 100% of S.I.P., Inc. of Delaware. See Note 6 to the accompanying financial statements for additional information. At October 31, 2001, the Company has about $2 million in variable rate notes payable; therefore the decline in interest rates has reduced the Company's interest expense. Management believes that operations will generate sufficient cash to fund activities. However, as revenues increase, it may become necessary to increase the Company's credit facilities to handle short-term cash requirements, particularly in terms of inventory expansion for major fabrication projects. Management, therefore, is focusing on the proper allocation of resources to ensure stable growth. Three Months Ended October 31, 2001 Compared to Three Months Ended October 31, 2000 The Company reported a slight decline in net income for the quarter ended October 31, 2001. Net income was $528,000 or $0.15 per share on total revenue of $13,187,000. These results compare to net income of $580,000 or $0.16 per share on total revenue of $13,091,000 for the quarter ended October 31, 2000. The Company's sales and service segment experienced a 20% decline in revenues for the quarter ended October 31, 2001 as compared to the quarter ended October 31, 2000. This decline is attributed to start-up delays caused by changes in customer's schedules, delays in manufacturers' equipment deliveries, and the slowdown in the day-to-day rental of the segment's equipment. Because the sales and services segment is a reasonably fixed-cost business, direct costs increased by 14% as percentage of revenue when the quarters are compared. The Company's manufacturing segment continues to benefit from consistent order flow for bridge girders and decking, both components of the federal government's multi- billion dollar infrastructure improvement (TEA 21) program. Manufacturing revenues increased from $6,896,000 for the quarter ended October 31, 2000 to $7,177,000 for the quarter ended October 31, 2001. The trend of manufacturing becoming a larger part of the Company's business began with federal funding increases in Fiscal 1999. The increasing proportion of revenues generated by manufacturing is expected to continue for several years as funding for infrastructure programs is scheduled to continue increasing for at least five years. The addition of the 300,000- square-foot Bessemer, Alabama facility is also expected to increase the Company's manufacturing business. This facility, which is being leased from Arkansas Steel Processing Inc./Alabama, will provide additional capacity and labor to help alleviate prior manpower shortages that had existed in Williams Bridge Company's Manassas and Richmond, Virginia plants. The Company's construction segment also experienced revenue growth when the quarters are compared. Construction revenue went from $3,144,000 for the three months ended October 31, 2000 to $3,588,000 for the three months ended October 31, 2001. The increase in revenue is due primarily to several large projects now under construction, including the following: Hand-setting of interior structural steel flooring systems at the National Institutes of Health Clinical Research Center in Bethesda, Maryland; the renovation of the National Archives in Washington, D.C.; the restoration of the Silver Theater in Silver Spring, Maryland; the construction of an addition to Norfolk International Airport in Norfolk, Virginia; and the renovation of the Bethesda Theater in Bethesda, Maryland. The construction segment also benefited from a significant increase in manpower, which allowed the segment to perform work at more competitive rates in more geographic locations. Overall direct costs, when viewed as a percentage of total revenue, decreased. For the quarter ended October 31, 2000, overall direct costs were 63% of total revenue. At October 31, 2001, this had declined to 61%. The greatest improvement occurred in the Company's manufacturing segment, where overall direct costs were reduced by about eight percent of revenue. This decrease is due to the combination of additional work and economies of scale, as well as strategic purchases of materials. As a percentage of revenue, costs also decreased in the Construction Segment but increased in the Sales and Services segment. The Sales and Services segment is a relatively fixed-cost business; therefore costs do not decline in relation to revenue. In the quarter ended October 31, 2000, the Company had Minority Interest Expense of $62,000. As a consequence of the sale of Construction Insurance Agency and the purchase of the remaining stock in S.I.P., Inc. of Delaware, this expense was reduced to $10,000 in the quarter ended October 31, 2001. BACKLOG At October 31, 2001, the Company's backlog was $43 million, which is an increase of $5 million from October 31, 2000 and a decrease of $3 million from July 31, 2001. The Company's backlog includes a good mix of work for the Construction and Manufacturing segments. Sales and Services work is normally performed as needed and only a small portion of this segment's work is included in the backlog numbers. Most of the backlog will be completed within the next 12 months if contract schedules are followed. Management believes that the level of work is sufficient to allow the Company to have adequate work throughout Fiscal 2002. Safe Harbor for Forward-Looking Statements The Company is including the following cautionary statements to make applicable and take advantage of the safe harbor provisions within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 for any forward-looking statements made by, or on behalf of, the Company in this document and any materials incorporated herein by reference. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historical facts. Such forward-looking statements may be identified, without limitation, by the use of the words "anticipates," "estimates," "expects," "intends," and similar expressions. From time to time, the Company or one of its subsidiaries individually may publish or otherwise make available forward-looking statements of this nature. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company or its subsidiaries, are expressly qualified by these cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward- looking statements to reflect events or circumstances after the date hereof. Forward-looking statements made by the Company are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed in, or implied by, the forward-looking statements. These forward-looking statements may include, among others, statements concerning the Company's revenue and cost trends, cost reduction strategies and anticipated outcomes, planned capital expenditures, financing needs and the availability of such financing, and the outlook for future activity in the Company's market areas. Investors or other users of forward-looking statements are cautioned that such statements are not a guarantee of future performance by the Company and that such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. Some, but not all of the risks and uncertainties, in addition to those specifically set forth above, include general economic and weather conditions, market prices, environmental and safety laws and policies, federal and state regulatory and legislative actions, tax rates and policies, rates of interest and changes in accounting principles or the application of such principles to the Company. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings General The Company is party to various claims arising in the ordinary course of its business. Generally, claims exposure in the construction services industry consists of workers compensation, personal injury, products' liability and property damage. The Company believes that its insurance and other expense accruals, coupled with its primary and excess liability coverage, are adequate coverage for such claims or contingencies. ITEM 2. Changes in Securities None. ITEM 3. Defaults Upon Senior Securities None. ITEM 4. Submission of Matters to a Vote of Security Holders On November 10, 2001, the shareholders of Williams Industries, Inc. elected the Company's board of directors. Elected were: Stephen N. Ashman, William C. Howlett, R. Bentley Offutt, William Sim, Frank E. Williams, Jr., and Frank E. Williams, III. The results of the November 10, 2001 shareholder's election of directors are as follows: Nominee For Abstain Stephen N. Ashman 3,350,091 33,357 William C. Howlett 3,350,091 33,357 R. Bentley Offutt 3,350,091 33,357 William J. Sim 3,359,791 23,657 Frank E. Williams, Jr. 3,349,933 33,515 Frank E. Williams, III 3,312,433 71,015 ITEM 5. Other Information None. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits None. (b) Reports on Form 8-K None. 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. WILLIAMS INDUSTRIES, INCORPORATED December 5, 2001 /s/ Frank E. Williams, III Frank E. Williams, III President, Chairman of the Board Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----