U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACTOF 1934
For the quarterly period ended November 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from ___________________ to _______________
COMMISSION FILE NUMBER 1-132963
WESTOWER CORPORATION
(Name of small business issuer in its charter)
Washington 1623 91-1825860
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization)Classification Code Number)Identification Number)
Westower Corporation
7001 NE 40th Avenue
Vancouver, Washington 98661
(360) 750-9355
(Address and telephone number of principal executive
offices and principal place of business)
Check whether the issuer:
(1) 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 / /
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
5,035,000 as of December 1, 1997
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WESTOWER CORPORATION
INDEX
Page
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Consolidated Balance Sheets of Westower Corporation
at November 30, 1996 and 1997 (unaudited) 3
Consolidated Statements of Earnings of Westower Corporation
for the three and nine-month periods ended
November 30, 1996 and 1997 (unaudited) 4
Consolidated Statements of Cash Flows of Westower Corporation
for the nine-month periods ended November 30, 1996
and 1997 (unaudited) 5
Notes to the Consolidated Financial Statements of Westower Corporation
as of November 30, 1996 and 1997 (unaudited) 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION 7
PART II - OTHER INFORMATION 8
ITEM 1 - LEGAL PROCEEDINGS
ITEM 2 - CHANGES IN SECURITIES
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
ITEM 4 - SUBMISSION OF MATTTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5 - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
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WESTOWER CORPORATION
CONSOLIDATED BALANCE SHEETS
November 30, 1996 and 1997
(Unaudited)
1996 1997
ASSETS
CURRENT ASSETS
Cash $ 891,733 $ 7,677,859
Accounts receivable, net 2,473,628 4,386,870
Costs and estimated earnings in excess of
billings on uncompleted contracts 324,891 1,009,923
Inventory (Note 2) 439,605 760,221
4,129,857 13,834,873
PROPERTY, AND EQUIPMENT, net 1,601,871 1,857,948
Other assets, net 57,238 255,333
Total assets $ 5,788,966 $15,948,154
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 2,500,106 $ 2,376,635
Billings in excess of costs and estimated
earnings on uncompleted contracts 156,179 206,356
Current portion of long-term debt 471,017 410,473
Deferred income taxes 480,000 1,831,384
Total current liabilities 3,607,302 4,824,848
LONG-TERM DEBT 78,682 43,872
NOTES PAYABLE TO RELATED PARTIES 572,211
Total liabilities 4,258,195 4,868,720
REDEEMABLE PREFERRED STOCK 450,000 450,000
STOCKHOLDERS' EQUITY
Capital stock 30,000 7,554,585
Foreign currency translation adjustment 31,333 26,777
Retained earnings 1,019,438 3,048,072
Total stockholders' equity 1,080,771 10,629,434
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 5,788,966 $15,948,154
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WESTOWER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended For the Nine Months Ended
November 30 November 30
1996 1997 1996 1997
Revenues Earned $ 4,279,272 $6,241,224 $12,066,720 $16,487,201
Cost of Revenues Earned 3,278,722 4,554,838 9,310,104 12,179,315
Gross Profit 1,000,550 1,686,386 2,756,616 4,307,886
Selling, General and
Administrative
Expenses 530,250 410,117 1,265,086 1,267,207
Operating Income 470,300 1,276,269 1,491,530 3,040,679
Other Income (Expense)
Interest expense (15,289) 10,026 (45,406) (37,599)
Interest income 34,303 34,303
Gain on sale of
property 123,598 123,598
Income Before Income Taxes 455,011 1,424,144 1,446,124 3,160,981
Income Taxes 150,000 550,000 500,000 1,250,000
Net Income $ 305,011$ 874,144$ 946,124$ ,910,981
Earnings per Share $ .08$ .20$ .25$ .47
Weighted Average Common Shares 3,835,000 4,035,727 3,855,000 4,035,727
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WESTOWER CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended November 30, 1996 and 1997
(Unaudited)
1996 1997
---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 946,124 $ 1,910,981
Depreciation 77,332 150,162
Gain on sale of property (123,598)
Net change in non-cash operating assets and
liabilities 71,244 (1,898,821)
Net cash flows from operating activities 1,094,700 38,724
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of property 484,762
Purchase of property and equipment (89,162) (557,395)
Net cash flows from investing activities (89,162) (72,633)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (273,555)
Net proceeds on public offering of common
shares 7,554,585
Payment of notes payable to related parties (585,298)
Net cash flows from financing activities (273,555) 6,969,287
NET INCREASE IN CASH 731,983 6,935,378
CASH - Beginning of Period 159,750 742,481
CASH - End of Period $ 891,733 $ 7,677,859
SUPPLEMENTAL DISCLOSURE
Interest Paid $ 65,003 $ 37,599
Taxes Paid $ 89,549 $ 144,714
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WESTOWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1996 and 1997
(Unaudited)
Note 1 - Basis of Presentation
The consolidated financial statements and notes thereto at November 30, 1996 and
1997 and for the three and nine-month periods ended November 30, 1996 and 1997
reflect the acquisition of Western Telecom Construction Ltd., an Alberta
corporation which designs, fabricates and constructs wireless transmitting and
receiving facilities and shelters for communications equipment. The Company
issued 835,000 shares of its common stock for all the common shares of Western
Telecom Construction Ltd. The acquisition was structured as a merger and
accounted for as a pooling of interests. Accordingly, the consolidated financial
statements and notes thereto at November 30, 1996 and 1997, and for the three
and nine-month periods ended November 30, 1996 and 1997 are presented as if the
acquisition of Western Telecom Construction Ltd. had occurred at the beginning
of all periods presented.
The notes to the consolidated financial statements do not present all
disclosures required under generally accepted accounting principles, but
instead, as permitted by the Securities and Exchange Commission regulations,
presume that user of the interim financial statements have read or have access
to the February 28, 1997 audited consolidated financial statements and that the
adequacy of additional disclosure needed for a fair presentation may be
determined in that context.
The financial information included herein reflects all adjustments (consisting
of normal recurring adjustments) which are, in the opinion of management,
necessary to a fair presentation of the results for interim periods. The results
of operations for the three and nine-month periods ended November 30, 1996 and
1997 respectively are not necessarily indicative of the results to be expected
for the full year.
Note 2 - Inventory
Inventory is stated at the lower of cost and estimated net realizable value
using the first-in, first-out method. Inventory consists of materials purchased
for future construction not associated with specific jobs.
Note 3 - Public Offering
On October 15, 1997, the Company issued 1,200,000 shares of common stock and
1,380,000 warrants to purchase common stock in a public offering. The Company
received proceeds, net of costs, of $7,524,585.
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WESTOWER CORPORATION
ITEM 2 - MANAGEMENT DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
FOR THE THREE-MONTH PERIODS ENDED NOVEMBER 30, 1996 AND 1997
Revenues for the third quarter increased 46% or $1,961,952 from the third
quarter in the previous year due to continued buildup of PCS networks.
Gross profit for the quarter ended November 30 increased to $1,686,386 in fiscal
1998, a 69% increase over $1,000,550 in the same period in fiscal 1997. This
$685,386 increase is attributable to the 46% increase in net sales, and in
improvement in gross profit margins from 23.3% to 27.0%, reflecting improved
purchasing abilities due to size growth and continued strong demand.
Selling, general and administrative expenses for the quarter ended November 30,
1997 decreased by approximately 23% or $120,133 to $410,117 in 1997 as compared
to $530,250 for the same quarter in 1997. This decrease reflects staffing to
manage the growth in sales offset by a provision for management bonuses for the
third quarter of 1997 of $211,762.
Operating income improved from $470,300 in the third quarter of fiscal 1997 to
$1,276,269 for the same period in 1998. Net income for the first quarter of 1998
improved $569,133 from $305,011 in 1997 to $874,144 in 1998. Of this increase,
$73,598 is attributable to an after-tax gain on the sale of property and the
balance due to increased sales, improved margins and reduced selling, general
and administrative expenses.
The Company owns six communications towers that it leases to a telephone
company. Due to immateriality, revenue and expenses associated with this
activity have been included in contract revenues and costs.
FOR THE NINE-MONTH PERIODS ENDED NOVEMBER 30, 1996 AND 1997
Revenues for the first nine months increased 37% or $4,420,481 from the third
quarter in the previous year due to continued buildup of PCS networks.
Gross profit for the nine months ended November 30 increased to $4,307,885 in
fiscal 1998, a 69% increase over $2,756,616 in the same period in fiscal 1997.
This $1,551,271 increase is attributable to the 37% increase in net sales, and
in improvement in gross profit margins from 22.8% to 26.1%, reflecting improved
purchasing abilities due to size growth and continued strong demand.
Selling, general and administrative expenses for the nine months ended November
30, 1997 were virtually unchanged at $1,267,207 in 1997 as compared to
$1,265,086 for the same period in 1997. This status reflects staffing to manage
the growth in sales offset by a provision for management bonuses for the first
nine months of 1997 of $635,286.
Operating income improved from $1,491,530 in the first nine months of fiscal
1997 to $3,040,679 for the same period in 1998. Correspondingly, net income for
the first nine months of 1998 improved $964,857 from $946,124 in 1997 to
$1,910,981 in 1998, an increase of 102%. Of this increase, $73,598 is
attributable to an after-tax gain on the sale of property and the balance due to
increased sales, improved margins and reduced selling, general and
administrative expenses.
The Company owns six communications towers that it leases to a telephone
company. Due to immateriality, revenue and expenses associated with this
activity have been included in contract revenues and costs.
<PAGE>
WESTOWER CORPORATION
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None
ITEM 2 - CHANGES IN SECURITIES
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUMBISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
None
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
Exhibits None
Reports on Form 8-K None
Signature: /s/Calvin Payne____________________
Signature: /s/ Roy Jeffrey____________________
Signature: /s/Peter Lucas _________________
Westower Corporation
Registrant
Date: Decemberr 14, 1995_________________
