SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For Quarter Ended Commission File
February 29, 1996 No. 0-5418
WALKER INTERNATIONAL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-2637172
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4 Ken-Anthony Plaza, South Lake Blvd., Mahopac, New York 10541
(Address of principal executive offices) (Zip Code)
(914) 628-9404
Registrant's telephone number, including area code
N/A
(Former name, former 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 such filing
requirements for the past 90 days.
Yes X No
The number of shares of Common Stock outstanding, par value $.10
per share, as of April 10, 1996 was 298,081.
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<TABLE>
PART I - FINANCIAL INFORMATION
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTION>
February 29, November 30,
1996 1995
(Unaudited) (Audited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 274,922 $ 332,467
Investment securities 637,431 589,391
Accounts receivable - less allowance for
doubtful accounts of $4,999 11,569 17,635
Inventories 49,839 49,956
Prepaid expenses 21,449 23,579
Prepaid income taxes 1,072 2,507
Total current assets 996,282 1,015,535
Property, plant and equipment - at cost 946,828 969,211
Less accumulated depreciation 744,446 765,446
202,382 203,765
Other assets
Investment securities 99,000 99,000
Security deposit 1,700 1,700
Intangibles 387 643
Total other assets 101,087 101,343
Total $1,299,751 $1,320,643
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities
Accounts payable and accrued expenses $ 133,488 $ 201,853
Customer deposits 4,095 18,259
Income taxes payable 6,631 257
Total current liabilities 144,214 220,369
Stockholders' equity
Common stock, $.10 par value, authorized
1,000,000 shares, issued 489,310 shares 48,931 48,931
Additional paid-in capital 1,118,880 1,118,880
Retained earnings 511,526 456,263
1,679,337 1,624,074
Less treasury stock - at cost
191,229 shares 523,800 523,800
Total stockholders' equity 1,155,537 1,100,274
Total $1,299,751 $1,320,643
</TABLE>
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<TABLE>
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three months ended
February 29, February 28,
1996 1995
<S> <C> <C>
Sales $ 578,610 $ 606,845
Cost of sales 207,111 210,648
Gross profit 371,499 396,197
Selling, general and administrative expenses 332,836 335,918
38,663 60,279
Other income (deductions)
Gain on trading securities 2,336 8,828
Interest and dividends 10,973 10,912
Gain on sale of assets 10,200 250
23,509 19,990
Income before provision for
income taxes and cumulative
effect of accounting change 62,172 80,269
Provision for income taxes 6,909 3,029
Income before cumulative
effect of accounting change 55,263 77,240
Cumulative effect of accounting change - 10,281
Net income $ 55,263 $ 87,521
Income per common share $ .19 $ .28
Weighted average number of common shares
outstanding 298,081 317,003
</TABLE>
<PAGE>
<TABLE>
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<CAPTION>
Three months ended
February 29, February 28,
1996 1995
<S> <C> <C>
Cash flows from operating activities
Net income $ 55,263 $ 87,521
Items not requiring the current use of cash
Cumulative effect of accounting change - (10,281)
Gain on sale of equipment (10,200) (250)
Depreciation 8,688 5,689
Amortization of goodwill 256 257
Deferred compensation (3,414) (3,029)
Changes in items affecting operations
Investment in trading securities (48,742) (100,050)
Accounts receivable 6,066 (1,601)
Inventories 117 9,119
Prepaid expenses 2,130 1,360
Prepaid income taxes 1,435 1,368
Accounts payable and accrued expenses (64,951) 17,189
Customer deposits (14,164) (12,757)
Income taxes payable 6,374 381
Net cash used by operating
activities (61,142) (5,084)
Cash flows from investing activities
Payment for purchase of investment
holding securities - (124,991)
Amortization of bond premium 702 298
Proceeds from sale of equipment 10,200 250
Payment for purchase of equipment (7,305) (2,067)
Net cash provided (used) by
investing activities 3,597 (126,510)
Cash flows from financing activities
Acquisition of common stock for treasury - (1,500)
Net cash used by financing
activities - (1,500)
Net decrease in cash and cash
equivalents (57,545) (133,094)
Cash and cash equivalents - beginning 332,467 387,211
Cash and cash equivalents - end $ 274,922 $ 254,117
</TABLE>
<PAGE>
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995
Supplemental Cash Flow Information
Net cash provided by operating activities reflects cash payments for income
taxes as follows:
Three months ended
February 29, February 28,
1996 1995
Income taxes paid $ 1,065 $ 1,280
<PAGE>
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 1996
(NOTE 1) - The accompanying consolidated financial statements are prepared on
the basis of generally accepted accounting principles. In the opinion of
the management of Walker International Industries, Inc. and Subsidiaries,
all adjustments are of a normal recurring nature and have been reflected
for a fair presentation of the unaudited balance sheet as of
February 29, 1996, and results of operations and cash flows for the
quarters ended February 29, 1996 and February 28, 1995. The operating
results for the periods are not necessarily indicative of the results
to be expected for the entire year.
(NOTE 2) - On December 1, 1994, the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
Under this statement, trading and available-for-sale debt and equity
securities are reported at market. Held-to-maturity debt securities
are reported at amortized cost. The difference between cost and carrying
value for trading securities is reported in the statement of income.
The difference between carrying value and cost for available-for-sale
securities is carried as a separate component of stockholders' equity.
(NOTE 3) - Included in short-term investment securities at
February 29, 1996 are the following:
Estimated
Description Cost Fair Value Amount
Held-to-Maturity
US Government securities $ 512,106 $ 515,360 $ 512,106
Trading
Equity securities 124,321 125,325 125,325
Total $ 636,427 $ 640,685 $ 637,431
The change in net unrealized holding gain on trading securities
that has been included in earnings during the period amounts to $1,004.
(NOTE 4) - An analysis of inventories in as follows:
February 29, November 30,
1996 1995
Raw materials $ 26,102 $ 19,459
Work-in-process 1,920 8,559
Finished goods 21,817 21,938
Total 49,839 49,956
(NOTE 5) - The provision for income taxes consists solely of state and local
taxes.
<PAGE>
WALKER INTERNATIONAL INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources:
The Company's liquidity (current assets minus current liabilities)
increased by $56,902 to $852,068 at February 29, 1996, as compared to
$795,166 at November 30, 1995. Cash used by operating activities
amounted to $61,142. This resulted primarily from an increase in
investment in trading securities of $48,742 and a decrease in accounts
payable and accrued expenses of $64,951, offset in part by net income
of $55,263.
The Company deems its present facilities and equipment to be adequate
for its immediate needs and it has no material commitments for capital
expenditures. The Company believes its present liquidity is adequate for
its current and long-term needs.
<PAGE>
Results of Operations
Total sales for the quarter ended February 29, 1996 (the "1996 Quarter")
were $578,610, representing a decrease in sales of $28,235 compared to the
Company's total sales of $606,845 in the quarter ended February 29, 1995
(the "1995 Quarter"). Sales volume was down in the Department Store subsidiary,
while sales at Kelly Color were approximately the same as in last year's
comparable quarter.
Cost of sales as a percentage of sales increased slightly to 35.8% in
the 1996 Quarter from 34.7% in the 1995 Quarter due in part to increases
in labor costs. Selling, general and administrative expenses were 57.5%
of sales in the 1996 Quarter as compared to 55.4% in the 1995 Quarter
primarily due to less favorable cost absorption resulting from lower sales.
The Company had net income before the cumulative effect of accounting change
of $55,263 in the 1996 Quarter as compared to $77,240 in the 1995 Quarter.
Lower sales and slight cost increases resulted in reduced profitability.
Provision for income taxes in the 1996 Quarter consists of state and
local taxes. Income per share was $.19 in the 1996 Quarter, as
compared to $.28 in the 1995 Quarter.
On December 1, 1994, the Company adopted FASB Statement No. 115
"Accounting for Certain Investments in Debt and Equity Securities."
Gross unrealized losses on held-to-maturity securities of $10,281
are reflected as the cumulative effect of accounting change in
the 1995 Quarter.
<PAGE>
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
None.
<PAGE>
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 of the
undersigned thereunto duly authorized.
Dated: April 11, 1996
WALKER INTERNATIONAL
INDUSTRIES, INC.
By:/s/ Peter Walker
Peter Walker
President
By:/s/ Richard Norris
Richard Norris
Vice President
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> FEB-29-1996
<CASH> 274922
<SECURITIES> 637431
<RECEIVABLES> 16568
<ALLOWANCES> (4999)
<INVENTORY> 49839
<CURRENT-ASSETS> 996282
<PP&E> 946828
<DEPRECIATION> (744446)
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<COMMON> 48931
0
0
<OTHER-SE> 1106606
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<SALES> 578610
<TOTAL-REVENUES> 602119
<CGS> 207111
<TOTAL-COSTS> 539947
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<INCOME-PRETAX> 62172
<INCOME-TAX> 6909
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<CHANGES> 0
<NET-INCOME> 55263
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
