SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File
February 28, 1997 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, 1997 was 275,311.
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTIONS>
February 28, November 30,
1997 1996
(Unaudited) (Audited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 265,102 $ 286,188
Investment securities 160,429 166,787
Accounts receivable - less allowance
for doubtful accounts of $2,000 12,594 11,304
Inventories 53,088 59,118
Prepaid expenses 20,066 22,154
Prepaid income taxes 1,032 843
Total current assets 512,311 546,394
Property, plant and equipment - at cost 954,156 949,718
Less accumulated depreciation 778,656 770,800
175,500 178,918
Other assets
Investment securities 516,923 516,483
Other investments - at cost 99,000 99,000
Security deposit 1,700 1,700
Total other assets 617,623 617,183
Total $1,305,434 $1,342,495
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities
Accounts payable and accrued expenses $ 103,728 $ 167,016
Customer deposits 3,365 15,286
Income taxes payable 10,012 3,725
Total current liabilities 117,105 186,027
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 593,800 531,789
1,761,611 1,699,600
Less treasury stock - at cost - 213,999
shares and 200,599 shares, respectively 573,282 543,132
Total stockholders' equity 1,188,329 1,156,468
Total $1,305,434 $1,342,495<PAGE>
</TABLE>
<PAGE>
<TABLE>
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three months ended
February 28, February 29,
1997 1996
<S> <C> <C>
Sales and other income
Net sales $ 541,795 $ 578,610
Investment income 26,290 13,309
Gain on sale of equipment - 10,200
568,085 602,119
Costs and expenses
Cost of sales 197,032 207,111
Selling, general and administrative 298,594 332,836
Recovery of bad debts (1,651) -
493,975 539,947
Income before provision for
income taxes 74,110 62,172
Provision for income taxes 12,099 6,909
Net income $ 62,011 $ 55,263
Earnings per common share $ .22 $ .19
Weighted average number of common shares
outstanding 281,900 298,081
</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 28, February 29,
1997 1996
<S> <C> <C>
Cash flows from operating activities
Net income $ 62,011 $ 55,263
Items not requiring the current use of cash
Gain on sale of equipment - (10,200)
Depreciation 7,856 8,688
Amortization of goodwill - 256
Deferred compensation - (3,414)
Recovery of bad debts (1,651) -
Changes in items affecting operations
Investment in trading securities 8,009 (48,742)
Accounts receivable (1,290) 6,066
Inventories 6,030 117
Prepaid expenses 2,088 2,130
Prepaid income taxes (189) 1,435
Accounts payable and accrued expenses (63,288) (64,951)
Customer deposits (11,921) (14,164)
Income taxes payable 6,287 6,374
Net cash provided (used) by
operating activities 13,942 (61,142)
Cash flows from investing activities
Amortization of bond (discount) premium (440) 702
Proceeds from sale of equipment - 10,200
Payment for purchase of equipment (4,438) (7,305)
Net cash provided (used) by
investing activities (4,878) 3,597
Cash flows from financing activities
Acquisition of common stock for treasury (30,150) -
Net cash used by financing activities (30,150) -
Net decrease in cash and
cash equivalents (21,086) (57,545)
Cash and cash equivalents - beginning 286,188 332,467
Cash and cash equivalents - end $ 265,102 $ 274,922
</TABLE>
Supplemental Cash Flow Information
Cash payments for income taxes $ 6,001 $ 1,065
Supplemental Schedule of Noncash Operating Activity
During the quarter ended February 28, 1997, the Company received, in lieu
of cash, investment securities with a value of $1,651 to satisfy an accounts
receivable.
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1997
(NOTE A) - 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 28, 1997, and
results of operations and cash flows for the quarters ended February 28, 1997
and February 29, 1996. The operating results for the periods are not
necessarily indicative of the results to be expected for the entire year.
(NOTE B) - The following is a summary of held-to-maturity securities, all of
which mature at November 30, 1998:
Gross Unrealized Estimated
Description Cost Gains Losses Fair Value
Held-to-Maturity
U S Government
securities $ 516,923 $ - $ - $ 516,923
Included in short-term investment securities at February 28, 1997 are the
following:
Estimated Carrying
Description Cost Fair Value Amount
Trading equity securities $ 159,006 $ 160,429 $ 160,429
The change in net unrealized holding gain on trading securities that has
been included in earnings during the period amount to a loss of $2,373 (1997)
and a gain of $1,004 (1996).
(NOTE C) - An analysis of inventories is as follows:
February 28, November 30,
1997 1996
Raw materials $ 27,921 $ 30,408
Work-in-process 23,590 7,166
Finished goods 1,577 21,544
$ 53,088 $ 59,118
(NOTE D) - The provision for income taxes consists solely of state and local
taxes.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Financial Condition and Liquidity
The Company's liquidity (current assets minus current liabilities) increased
by $34,839 to $395,206 at February 28, 1997, as compared to $360,367 at
November 30, 1996. Cash provided by operating activities amounted to $13,942,
resulting primarily from net income of $62,011, a decrease in the value of
trading securities of $8,009, depreciation (a non-cash charge) of $7,856, and
an increase in income taxes payable of $6,287, which were offset in part by
decreases in accounts payable and accrued expenses of $63,288, and in customer
deposits of $11,921. The Company purchased treasury stock in the amount of
$30,150, the consideration for which was substantially below book value.
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. The Company carries no long-term debt.
Results of Operations Total sales for the quarter ended February 28, 1997 (the
"1997 Quarter") were $541,795, representing a decrease in sales of $36,815
compared to the Company's total sales of $578,610 in the quarter ended
February 29, 1996 (the "1996 Quarter"). Sales volume was down in the Company's
subsidiary, Department Store Photography, while sales at the Kelly Color
subsidiary were approximately the same as in the 1996 quarter.
Cost of sales as a percentage of sales increased slightly to 36.4% in the 1997
Quarter from 35.8% in the 1996 Quarter due in part to inflationary factors.
Selling, general and administrative expenses net of recovery of bad debts
improved to 54.8% of sales in the 1997 Quarter as compared to 57.5% in the
1996 Quarter primarily due to reductions in payroll and other expenses in the
Department Store subsidiary.
The Company showed net income of $62,011 in the 1997 Quarter as compared to
$55,263 in the 1996 Quarter. Despite lower sales, profitability improved.
Provision for income taxes in the 1997 Quarter consists of state and local
taxes. Income per share was $.22 in the 1997 Quarter, as compared to $.19 in
the 1996 Quarter.
<PAGE>
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
A. EXHIBITS
27.1 Financial Data Schedule
B. REPORTS ON FORM 8-K
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act,
the Registrant caused this report to be signed on its behalf
of the undersigned thereunto duly authorized.
Dated: April 11, 1997
WALKER INTERNATIONAL
INDUSTRIES, INC.
By:/s/ Peter Walker
Peter Walker
President
By:/s/ Richard Norris
Richard Norris
Vice President
(Principal Financial and
Accounting Officer)
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> FEB-28-1997
<CASH> 265102
<SECURITIES> 160429
<RECEIVABLES> 12594
<ALLOWANCES> (2000)
<INVENTORY> 53088
<CURRENT-ASSETS> 512311
<PP&E> 954156
<DEPRECIATION> (778656)
<TOTAL-ASSETS> 1305434
<CURRENT-LIABILITIES> 117105
<BONDS> 0
<COMMON> 48931
0
0
<OTHER-SE> 1139398
<TOTAL-LIABILITY-AND-EQUITY> 1305434
<SALES> 541795
<TOTAL-REVENUES> 568085
<CGS> 197032
<TOTAL-COSTS> 493975
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 74110
<INCOME-TAX> 12099
<INCOME-CONTINUING> 62011
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62011
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
