<PAGE>
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 ACT OF 1934
For the three months ending June 30, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d)
OF THE EXCHANGE ACT
For the transition period from ______________ to ______________
Commission file number 0-7267
WEB PRESS CORPORATION
_________________________________________________________________
_
(Exact name of registrant as specified in its charter)
Washington 91-0851298
_______________________________ ________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22023 68th Avenue S., Kent, Washington 98032
_________________________________________________________________
_
(Address of principal executive offices)
Registrant's telephone number, including area code (206) 395-3343
Check whether the issuer (1) 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 ninety
(90) days Yes X No
__
All reports during the preceding 12 months have been filed.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date
(applicable only to corporate issuers): Common Stock, $.025 par
value per share; 3,105,413 shares outstanding as of August 10,
1995
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Page 1 of 11 pages in this document
<PAGE>
INTRODUCTORY REMARKS
The condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company
believes that the disclosures are adequate to make the
information presented not misleading.
The information furnished reflects all adjustments which are, in
the opinion of management, necessary to a fair statement of the
results for the interim period.
It is suggested that these condensed financial statements be read
in conjunction with the financial statements and the notes
therein included in the Company's latest annual report on Form 10-
KSB.
<PAGE>
PART I
FINANCIAL INFORMATION
WEB PRESS CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
ASSETS June 30, 1995
Current Assets:
Cash......................... $ 29
Accounts receivable, less
allowance for doubtful
accounts of $16............. 2,419
Federal income taxes
refundable................. 66
Inventories.................. 2,820
Deferred tax assets.......... 61
Prepaid expenses............. 103
______
Total Current Assets........... 5,498
Machinery and Leasehold
Improvements, at cost:
Machinery and equipment...... 2,919
Leasehold improvements....... 195
------
3,114
Less accumulated depreciation
and amortization...... 2,338
------
Machinery and Leasehold
Improvements (Net)........... 776
------
Total Assets................... $6,274
------
------
The above figures are unaudited. The accompanying notes are an
integral part of the balance sheet.
<PAGE>
WEB PRESS CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY June 30, 1994
-------------
Current Liabilities:
Note payable to bank..................... $ 521
Accounts payable......................... 547
Customer deposits........................ 342
Accrued expenses......................... 576
Current portion of long-term debt........ 400
------
Total Current Liabilities.................. 2,386
Long-Term Debt, less current portion....... 1,079
Deferred taxes on income................... 340
Stockholders' Equity:
Common stock, par value $.025 per share:
Authorized, 4,000,000 shares
Issued, 3,436,513 shares................ 86
Paid-in capital.......................... 320
Retained earnings........................ 2,160
------
2,566
Treasury stock, 331,100 shares at cost... (97)
------
Total Stockholders' Equity................. 2,469
------
Total Liabilities and
Stockholders' Equity...................... $6,274
------
------
The above figures are unaudited. The accompanying notes are an
integral part of the balance sheet.
<PAGE>
WEB PRESS CORPORATION
Consolidated Statements of Operations
For the three and six months ending June 30,
(Dollars in Thousands Except Earnings Per Share)
THREE MONTHS SIX MONTHS
------------ ----------
1995 1994 1995 1994
---- ---- ---- ----
Sales....................... $3,875 $1,073 $4,972 $2,143
Cost of sales............... 2,726 838 3,653 1,649
------ ------ ------ ------
1,149 235 1,319 494
Selling, general and
administrative expenses... 439 407 771 829
------ ------ ------ ------
710 (172) 548 (335)
Interest expense............ 68 82 136 152
------ ------ ------ ------
Earnings (loss) before taxes 642 (254) 412 (487)
Taxes (benefit) on
income (loss)............. 213 (92) 140 (166)
------ ------ ------ ------
Net earnings (loss)......... $ 429 $ (162) $ 272 $ (321)
------ ------ ------ ------
------ ------ ------ ------
Earnings (loss) per share... $.14 $(.05) $.09 $(.10)
---- ----- ---- -----
---- ----- ---- -----
The above figures are unaudited. The accompanying notes are an
integral part of these statements of earnings.
<PAGE>
WEB PRESS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ending June 30,
(Dollars in Thousands)
1995 1994
---- ----
Cash flows from operating activities:
Net earnings (loss)................... $ 272 $ (321)
Adjustments to reconcile net
earnings (loss) to net cash provided
(used) by operating activities:
Depreciation and amortization....... 122 126
Provision for losses on accounts
receivable........................ 6 6
Deferred taxes on income............ 140 (166)
Inventory valuation reserve......... (38)
Retirement of plant assets.......... 2
Increase (Decrease) in cash from
changes in operating accounts:
Accounts receivable.............. (1,655) 713
Inventory......................... 1,195 (417)
Prepaid expenses.................. (24) (58)
Accounts payable.................. (73) 185
Customer deposits................. 295 (20)
Accrued expenses.................. (89) (82)
Other assets...................... 24
------ -----
Total adjustments (121) 313
------ -----
Net cash provided (used) by
operating activities.............. 151 (8)
Cash flows from investing activities:
Capital expenditures................. (7) (111)
------ -----
Cash Flows from financing activities:
Proceeds from issuance of
long-term debt...................... 349
Payments on long-term debt............ (178) (366)
Net borrowings under line of credit... (28) 106
------ ------
Net cash provided (used) by
financing activities................ (206) 89
------ ------
Net decrease in cash.................... (62) (30)
Cash at beginning of period............. 91 52
------ ------
Cash at end of period................... $ 29 $ 22
------ ------
------ ------
Supplemental disclosures of cash
flow information:
Cash was paid during the year for:
Interest............................. $143 $173
The above figures are unaudited. The accompanying notes are an
integral part of these statements of cash flows.
<PAGE>
WEB PRESS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDING JUNE 30, 1994
Note 1 - Summary of Significant Accounting Policies:
Principles of consolidation
---------------------------
The accompanying consolidated financial statements include the
accounts of Web Press Corporation and Web Leader International,
Inc., its wholly owned Domestic International Sales Corporation
(DISC). All significant inter-company accounts and transactions
have been eliminated in consolidation.
Inventories
-----------
Raw materials, work-in-progress and finished goods inventories
are stated at the lower of average cost or market. Used presses
and other related press equipment are stated at the lower of
cost (specific identification basis) or market. Inventory costs
include material, labor, and manufacturing overhead.
Inventories were classified as follows:
(Dollars in Thousands)
June 30, 1995
----------------------
Raw materials and parts
(including subassemblies).... $1,150
Work-in-progress.............. 478
Finished goods................ 416
Used equipment................ 776
------
$2,820
------
------
Machinery and leasehold improvements
------------------------------------
Machinery and equipment are depreciated on the straight-line
method, for financial statement purposes, based upon useful
lives of three to twelve years. Leasehold improvements are
amortized over their useful lives or the term of the lease,
whichever is shorter. For income tax purposes, accelerated
methods are used for all eligible assets.
Maintenance and repairs are charged directly to costs or
expenses as incurred. Equipment of only nominal value and
renewals and betterments that do not appreciably extend the life
of the asset are charged directly to costs or expenses.
Fully depreciated or fully amortized assets which are no longer
in use or are not identifiable are written off by charges to the
allowance for accumulated depreciation and amortization. When
assets are retired or disposed of, the costs and accumulated
depreciation of such assets are removed from the accounts and
the difference between the net depreciated cost and the amount
received is recorded in the statements of operatinos.
Revenue recognition
-------------------
Revenue from sales of manufactured products under firm contracts
is recognized generally at the time equipment is available for
shipment. All freight and installation costs are accrued at the
time revenue is recognized. Estimated costs related to product
warranties are provided at the time of sale. Proceeds received
on contracts prior to recognition as a sale are recorded as
deposits.
<PAGE>
Income taxes
------------
Income taxes are provided on income for financial reporting
purposes without regard to the period in which such taxes are
payable. Deferred taxes are provided for all significant items
which are reported for tax purposes in different periods than
the consolidated statements of earnings. Investment tax credits
are recorded as a reduction of Federal income taxes in the year
available.
Earnings per share
------------------
Earnings per share calculations are based on the weighted
average number of shares outstanding.
Note 2 - Financing:
The Company has a line of credit with a commercial bank for
borrowing up to $700 thousand. The interest rate charged is 2.5
percent above the bank's prime rate. Borrowings against this
line were $521 thousand on June 30, 1995. Accounts receivable,
firm orders in production, inventories, and values in excess of
the long-term financing on equipment are pledged as collateral.
Long-term debt consists of the following:
(Dollars in Thousands)
June 30, 1995
---------------------
Term note, 2.5% above prime rate,
due in monthly installments of $32,307
including interest. Final payment
estimated at $710,928 due January, 1977.... $1,129
Note payable for equipment, 10.75%,
due in monthly installments of
$8,903 including interest. Final
payment due in September, 1997............. 213
Note payable for equipment and
leasehold improvements, 12%, due
in monthly installments of $2,262
including interest. Final payment
due in October 1998........................ 74
Note payable for equipment, 10%,
due in monthly installments of
$1,039 including interest. Final
payment due in November, 1998.............. 36
Note payable for equipment, 7.65%,
due in monthly installments of
$714 including interest. Final
payment due February, 1999................. 27
------
1,479
Less current portion....................... 400
------
$1,079
------
------
Equipment with original cost of $680 thousand is pledged as
collateral under the notes payable for equipment and the
equipment purchase contracts.
<PAGE>
Note 3 - Common Stock:
The Company's Stock Option Plan permits issuance of stock
options to key employees at prices not less than 100% of market
price at the date of grant. An aggregate of 600,000 shares of
common stock is reserved in connection with this Plan. As of
June 30, 1995, no options had been granted under this Plan.
Note 4 - Guarantees:
As of June 30, 1995, the Company had contingent liabilities for
certain indebtedness of others amounting to $102 thousand. The
collateral for these guarantees is certain equipment
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Operating Results
-----------------
Sales:
------
Sales for the second quarter of 1995 totaled $3.875 million,
more than triple those for the second quarter of 1994 which were
$1.073 million. Sales for the first half of 1995 were $4.972
million, more than twice those for the first half of 1994 which
were $2.143 million. The backlog of orders believed to be firm
on August 10, 1995 was $1.966 million. It was $1.615 million on
that date in 1994. Changes in the volume of printing press
sales customarily lag changes in the general economy. It
appears as though press sales have finally caught up with the
recovery of the economy.
Cost of Sales:
--------------
Selling, general and administrative expenses for the first half
of 1995 were 7% below those for the same period of 1994. Such
expenses for the second quarter of 1995 were 8% higher than
those for the same period of 1994 primarily because of
increased incentive compensation for the higher volume of sales
in that period. Travel, advertising and legal expense were all
lower, while other categories of administrative expenses
remained essentially the same.
Debt:
-----
Total debt was reduced by $234 thousand during the first half
of 1995. Bank debt was reduced by $149 thousand during that
period.
The Company restructured its bank debt in December of 1994. Its
total bank debt was divided into a $1.250 million term loan and
a line of credit.
While Web's average short-term borrowings were significantly
lower in 1995 than in 1994, the applicable interest rates, like
all interest rates, were significantly higher than for the same
periods in 1994. Second quarter 1995 average short-term
borrowings were $657 thousand and the applicable interest rate
was 11.5%. Those amounts for 1994 were $2.247 million and
8.6%, respectively. First half of 1995 average short-term
borrowings were $665 thousand and the applicable interest rate
was 11.4%. Those amounts for 1994 were $2.251 million and 8%,
respectively.
Total interest expense was $68 thousand for the second quarter
and $136 thousand for the first half of 1995, compared to $82
thousand and $152 thousand for the respective periods in 1994.
Earnings:
---------
Operating profit for the second quarter of 1995 was $642
thousand and net earnings after taxes were $429 thousand. In
the same period of 1994, Web sustained an operating loss of $254
thousand and a net loss of $162 thousand.
Operating profit for the first half of 1995 was $412 thousand
and net earnings after taxes were $272 thousand. In the same
period of 1994, Web sustained an operating loss of $487 thousand
and a net earnings loss of $321 thousand.
The primary reason for the change was higher sales. Higher
gross profit margins and the containment of selling and
administrative expenses also contributed to the improved profit
performance.
<PAGE>
The Company's operating results for the first six months are not
necessarily indicative of results to be expected for the full
year, particularly because of the high value of each order for
the Company's equipment and their irregular timing. Due to
increased and sustained demand for advertising in the first half
of 1995, the Company believes newspapers will continue to have
strong earnings during the remainder of the year. Sales of the
Company's equipment in the second half of 1995 should continue
to improve if buyers perceive that advertising revenues will
remain strong in the future.
Liquidity
---------
On June 30, 1995, working capital was $3.112 million as compared
to $2.783 million on June 30, 1994, an increase of $329
thousand. The ratio of current assets to current liabilities
was 2.3 to 1 in 1995 compared to 1.5 to 1 in 1994. Changes in
working capital components included an increase of $1.655
million in accounts receivable and $295 thousand in customer
deposits. Inventories were reduced by $1.195 million and
deferred taxes decreased by $140 thousand.
Funds provided by operations are the Company's primary source of
liquidity. In addition, the Company uses short-term debt under
a revolving line of credit with a commercial bank to finance
fluctuating working capital requirements. On June 30, 1995, the
Company had additional borrowing capacity of $179 thousand under
this line.
Capital Resources
-----------------
Long-term debt and deferred income taxes (net of deferred tax
assets) as a percentage of total capitalization was 35% on June
30, 1995. The Company believes that its borrowing capacity is
sufficient to provide for orderly operations.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Reports on Form 8-K -- There are no reports on Form 8-K
filed for the three months ending June 30, 1995.
SIGNATURE
---------
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.
WEB PRESS CORPORATION
---------------------
(Registrant)
August 10, 1995
_______________________________ \S\
Date Wayne R. Marcouiller, President
August 10, 1995
_______________________________ \S\
Date William F. Carmody
Secretary/Treasurer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 29
<SECURITIES> 0
<RECEIVABLES> 2,435
<ALLOWANCES> 16
<INVENTORY> 2,820
<CURRENT-ASSETS> 5,498
<PP&E> 3,114
<DEPRECIATION> 2,338
<TOTAL-ASSETS> 6,274
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<BONDS> 0
<COMMON> 86
0
0
<OTHER-SE> 320
<TOTAL-LIABILITY-AND-EQUITY> 6,274
<SALES> 4,972
<TOTAL-REVENUES> 4,972
<CGS> 3,653
<TOTAL-COSTS> 3,653
<OTHER-EXPENSES> 771
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 136
<INCOME-PRETAX> 412
<INCOME-TAX> 140
<INCOME-CONTINUING> 272
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 272
<EPS-PRIMARY> 09
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</TABLE>
