U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
Commission File No. 0-5418
WALKER INTERNATIONAL INDUSTRIES, INC.
(Exact name of Small Business Issuer 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
Issuer's telephone number, including area code
N/A
(Former name, former address and former fiscal year
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act 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 14, 2000 was 241,071.
Transitional Small Business Disclosure Format (check one):
Yes No X
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<TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTION>
February 29, November 30,
2000 1999
(Unaudited) (Audited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 484,558 $ 512,490
Trading securities - at market - 1,151
Accounts receivable - less allowance for doubtful
accounts of $1,000 18,951 29,670
Inventories 56,096 76,994
Prepaid expenses 25,522 21,698
Prepaid income taxes 6,080 5,348
U.S. Government securities 58,204 523,158
Total current assets 649,411 1,170,509
Property, plant and equipment - at cost 1,023,306 1,011,338
Less accumulated depreciation 840,506 830,981
182,800 180,357
Other assets
U.S. Government securities 414,008 -
Available-for-sale securities 9,000 9,000
Security deposit 1,700 1,700
Total other assets 424,708 10,700
Total $1,256,919 $1,361,566
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities
Accounts payable and accrued expenses $ 88,621 $ 113,049
Customer deposits 3,390 26,657
Income taxes payable - 368
Total current liabilities 92,011 140,074
Stockholders' equity
Common stock, $.10 par value, authorized
1,000,000 shares, issued 477,810 shares 47,781 47,781
Additional paid-in capital 1,082,843 1,082,843
Retained earnings 656,561 693,147
Unrealized gain on marketable
equity securities 9,000 9,000
1,796,185 1,832,771
Less treasury stock - at cost - 234,039
and 226,767 shares, respectively 631,277 611,279
Total stockholders' equity 1,164,908 1,221,492
Total $1,256,919 $1,361,566
</TABLE>
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<TABLE>
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
<CAPTION>
Three months ended
February 29,
2000 1999
<S> <C> <C>
Net sales $ 230,977 $ 225,998
Costs and expenses
Cost of sales 180,146 152,148
Selling, general and administrative 110,724 108,794
290,870 260,942
Operating loss (59,893) (34,944)
Investment income 23,307 25,385
Loss before provision for income taxes (36,586) (9,559)
Provision for income taxes - 2,180
Net loss (36,586) (11,739)
Other comprehensive income, net of income
tax on unrealized holding gains - -
Comprehensive loss $ (36,586) $ (11,739)
Loss per common share $ (.14) $ (.05)
Weighted average number of common shares
outstanding 247,767 254,447
</TABLE>
<PAGE>
<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,
2000 1999
<S> <C> <C>
Cash flows from operating activities
Net loss $ (36,586) $ (11,739)
Items not requiring the current use of cash
Depreciation 9,525 8,584
Amortization of bond premium and discount (90) 1,156
Gain on sale of assets - (8,256)
Changes in items affecting operations
Investment in trading securities 1,151 128,075
Accounts receivable 10,719 10,453
Inventories 20,898 18,737
Prepaid expenses (3,824) (1,035)
Prepaid income taxes (732) 3,689
Accounts payable and accrued expenses (24,428) (83,194)
Customer deposits (23,267) (16,634)
Income taxes payable (368) 500
Net cash provided (used) by
operating activities (47,002) 50,336
Cash flows from investing activities
Maturity of held to maturity securities 465,000 -
Purchase of held to maturity securities (413,964) -
Proceeds from sale of assets - 12,500
Payments for purchase of equipment (11,968) (41,996)
Net cash provided (used) by
investing activities 39,068 (29,496)
Cash flows from financing activities
Acquisition of common stock for treasury (19,998) (24,598)
Net cash used by financing activities (19,998) (24,598)
Net decrease in cash and
cash equivalents (27,932) (3,758)
Cash and cash equivalents - beginning 512,490 389,846
Cash and cash equivalents - end $ 484,558 $ 386,088
Supplemental Cash Flow Information
Cash payments (refunds) for income taxes$ 1,100 $ (2,009)
</TABLE>
<PAGE>
WALKER INTERNATIONAL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 29, 2000
(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 29, 2000, and
results of operations and cash flows for the quarters ended February 29, 2000
and 1999. The operating results for the periods are not necessarily
indicative of the results to be expected for the entire year.
(NOTE B) - INVESTMENT SECURITIES
Included in held-to-maturity securities are the following:
Gross
Unrealized Estimated
Description Cost Losses Fair Value
Held-to-Maturity
U.S. Government securities -
maturing January 31, 2002 $ 414,008 $ 1,407 $ 412,601
U.S. Government securities -
maturing October 12, 2000 58,204 431 57,773
$ 472,212 $ 1,838 $ 470,374
Included in available-for-sale securities are the following:
Carrying
Description Cost Fair Value Amount
Charter Pacific Bank Warrants $ - $ 9,000 $ 9,000
(NOTE C) - An analysis of inventories is as follows:
February 29, November 30,
2000 1999
Raw materials $ 33,055 $ 20,185
Work-in-process 1,589 2,687
Finished goods 21,452 22,791
$ 56,096 $ 45,663
(NOTE D) - The provision for income taxes consists solely of state and local
taxes.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition and Liquidity
The Company's liquidity (current assets minus current liabilities) decreased
by $473,035 to $557,400 at February 29, 2000, as compared to $1,030,435 at
November 30, 1999. This decrease is primarily the result of the purchase of
U.S. Government securities with a maturation period of more than one year.
These securities are reflected in Other Assets, whereas the securities they
replaced, which matured in January, 2000, were reflected in Current Assets.
Net cash used by operating activities amounted to $47,002. This resulted
primarily from a net loss of $36,586, a decrease in accounts payable and
accrued expenses of $24,428, and a decrease in customer deposits of $23,267,
offset primarily by a decrease in inventories of $20,898 and a decrease in
accounts receivable of $10,719. The Company purchased stock for its treasury
in the amount of $19,998 and equipment in the amount of $11,968.
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.
Results of Operations
Net sales for the period ended February 29, 2000 ("Fiscal 2000") were $230,977
representing an increase of $4,979 from sales in the comparable period in 1999
("Fiscal 1999"). This increase resulted from a slight sales volume increase in
Kelly Color sales.
In Fiscal 2000, cost of sales as a percentage of sales ("COS") was 78.0%, as
compared to COS of 67.3% in Fiscal 1999, due in part to higher labor and
materials costs. There were also increases in fixed components of overhead
that were not absorbed by the small sales increase. In Fiscal 2000, selling,
general and administrative expenses were 47.9% as a percentage of sales as
compared to 48.1% in Fiscal 1999. The Company earned investment income of
$23,307 in Fiscal 2000 as compared to $25,385 in Fiscal 1999.
In Fiscal 2000, the Company had a loss before provision for income taxes of
$(36,586) as compared to $(9,559) in Fiscal 1999, due primarily to factors
previously mentioned. Provision for income taxes in Fiscal 1999 consists
solely of state and local taxes. In Fiscal 2000, net loss per share was $(.14)
compared to $(.05) in Fiscal 1999.
<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 of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: April 14, 2000
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-30-2000
<PERIOD-END> FEB-29-2000
<CASH> 484558
<SECURITIES> 423008
<RECEIVABLES> 19951
<ALLOWANCES> (1000)
<INVENTORY> 56096
<CURRENT-ASSETS> 649411
<PP&E> 1023306
<DEPRECIATION> (840506)
<TOTAL-ASSETS> 1256919
<CURRENT-LIABILITIES> 92011
<BONDS> 0
<COMMON> 47781
0
0
<OTHER-SE> 1117127
<TOTAL-LIABILITY-AND-EQUITY> 1256919
<SALES> 230977
<TOTAL-REVENUES> 254284
<CGS> 180146
<TOTAL-COSTS> 290870
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (36586)
<INCOME-TAX> 0
<INCOME-CONTINUING> (36586)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36586)
<EPS-BASIC> (.14)
<EPS-DILUTED> (.14)
</TABLE>
