<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 March 31, 1995
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d)
OF THE EXCHANGE ACT
For the transition period from ______________ to______________
Commission file number 0-7267
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WEB PRESS CORPORATION
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(Exact name of registrant as specified in its charter)
Washington 91-0851298
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22023 68th Avenue S., Kent, Washington 98032
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(Address of principal executive offices)
Registrant's telephone number, including area code (206) 395-3343
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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
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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
May 12, 1995.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Page 1 of 14 pages in this document
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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
10K.
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PART I
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FINANCIAL INFORMATION
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WEB PRESS CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
March 31, 1995
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ASSETS
Current Assets:
Cash............................. $ 28
Accounts receivable, less
allowance for doubtful
accounts of $10................ 410
Federal income taxes
refundable..................... 66
Inventories...................... 4,133
Deferred tax assets.............. 201
Prepaid expenses................. 45
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Total Current Assets................. 4,883
Machinery and Leasehold
Improvements, at cost:
Machinery and equipment.......... 2,918
Leasehold improvements........... 195
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3,113
Less accumulated depreciation
and amortization................. (2,280)
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Machinery and Leasehold
Improvements (Net)............... 833
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Total Assets........................ $5,716
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The above figures are unaudited. The accompanying notes are an
integral part of the balance sheet.
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WEB PRESS CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, 1995
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Current Liabilities:
Note payable to bank...................... $ 695
Accounts payable.......................... 679
Customer deposits......................... 134
Accrued expenses.......................... 320
Current portion of long-term debt......... 398
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Total Current Liabilities................... 2,226
Long-Term Debt, less current portion........ 1,183
Deferred taxes on income.................... 267
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......................... 1,731
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2,137
Treasury stock, 331,100 shares at cost..... (97)
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Total Stockholders' Equity.................. 2,040
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Total Liabilities and
Stockholders' Equity....................... $5,716
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The above figures are unaudited. The accompanying notes are
an integral part of the balance sheet.
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WEB PRESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ending March 31,
(Dollars in Thousands Except Per Share Data)
1995 1994
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Sales.................................. $1,097 $1,070
Cost of Sales.......................... 927 811
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170 259
Selling, general and administrative
expenses............................. 332 422
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(162) (163)
Interest expense....................... 68 70
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Loss before tax benefit................ (230) (233)
Tax benefit from loss.................. 73 74
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Net loss............................... $ (157) $ (159)
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Net loss per share..................... $(.05) $(.05)
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The above figures are unaudited. The accompanying notes
are an integral part of these statements of operations.
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WEB PRESS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ending March 31,
(Dollars in Thousands)
1995 1994
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Cash flows from operating activities:
Net loss............................... $(157) $(159)
Adjustments to reconcile net earnings
(loss) to net cash provided (used) by
operating activities:
Depreciation and amortization........ 62 63
Provision for losses on accounts
receivable........................ 3 3
Deferred taxes on income............. (73) (74)
Increase (Decrease) in cash from
changes in operating accounts:
Accounts receivable................. 357 254
Inventory........................... (156) (460)
Prepaid expenses.................... 34 33
Accounts payable.................... 59 318
Customer deposits................... 87 27
Accrued expenses.................... (345) (13)
Other assets........................ (2)
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Total adjustments..................... 28 149
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Net cash provided (used) by
operating activities.................. (129) (10)
Cash flows from investing activities:
Capital expenditures................. (4) (56)
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Cash Flows from financing activities:
Proceeds from issuance of long-term
debt.................................. 36
Payments on long-term debt.............. (76) (32)
Net borrowings under line of credit..... 146 27
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Net cash provided by
financing activities.................. 70 31
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Net decrease in cash..................... (63) (35)
Cash at beginning of period.............. 91 52
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Cash at end of period.................... $ 28 $ 17
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The above figures are unaudited. The accompanying notes are
an integral part of these statements of cash flows.
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Supplemental disclosures of cash
flow information:
Cash was paid during the year for:
Interest.............................. $73 $90
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WEB PRESS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDING MARCH 31, 1995
Note 1 - Summary of Significant Accounting Policies:
Principles of consolidation
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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
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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)
March 31, 1995
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Raw materials and parts
(including subassemblies).... $1,064
Work-in-progress.............. 703
Finished goods................ 1,563
Used equipment................ 803
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$4,133
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Machinery and leasehold improvements
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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.
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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
operations.
Revenue recognition
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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.
Income taxes
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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.
Earnings per share
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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 $750 thousand. The interest rate charged is 2.5
percent above the bank's prime rate. Borrowings against this
line were $695 thousand on March 31, 1995. Accounts
receivable, firm orders in production, inventories, and values
in excess of the long-term financing on equipment are pledged
as collateral.
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Long-term debt consists of the following:
(Dollars in Thousands)
March 31, 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, 1997... $1,193
Note payable for equipment, 10.75%,
due in monthly installments of $8,903
including interest. Final payment due
in September, 1997........................ 242
Note payable for equipment and leasehold
improvements, 12%, due in monthly
installments of $2,262 including interest.
Final payment due in October 1998........ 79
Note payable for equipment, 10%, due in
monthly installments of $1,039 including
interest. Final payment due in
November, 1998............................ 38
Note payable for equipment, 7.65%, due in
monthly installments of $714 including
interest. Final payment due in
February, 1999............................ 29
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1,581
Less current portion...................... 398
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$1,183
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Equipment with an original cost of $680 thousand is pledged as
collateral under the notes payable for equipment and the
equipment purchase contracts.
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
March 31, 1995 no options had been granted under this Plan.
Note 4 - Guarantees:
As of March 31, 1995, the Company had contingent liabilities
for certain indebtedness of others amounting to $1.532 million.
The collateral for these guarantees is certain equipment.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Operating Results
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First quarter sales of $1.097 million in 1995 were slightly
higher than the $1.070 million reported in the first quarter of
1994. The backlog of orders believed to be firm was
approximately $2 million on May 12, 1995, compared to $2.1
million on May 12, 1994.
Cost of sales as a percentage of sales increased to 84% in the
first quarter of 1995 from 76% in the first quarter of 1994.
The primary reason for the increase was cost overruns due to
electrical problems during field installation of two presses.
Gross profits were $170 thousand and $259 thousand in 1995 and
1994, respectively.
Selling, general and administrative expenses decreased $90
thousand in 1995 compared to 1994. Selling expenses decreased
by 25% in 1995 compared to 1994 due primarily to lower
compensation and travel expenses. Administrative expenses
decreased by 22% in 1995 from 1994. 1994 administrative
expense included the cost of moving a new employee and
significantly higher legal costs. Most other expenses were
approximately the same.
Interest expense was $68 thousand in the first quarter of 1995,
compared to $70 thousand in the first quarter of 1994. The
average interest rate on the Company's short-term borrowing was
11.3% in 1995 and 7.5% in 1994. The average amount of short-
term borrowings outstanding decreased to $681 thousand in 1995
from $2.247 million in 1994. Part of the decrease was the
result of the Company transferring $1.250 million of short-term
borrowings into a term note with the bank in December, 1994.
The net loss was $157 thousand in the first quarter of 1995,
compared to a net loss of $159 thousand in the first quarter of
1994. The low volume of sales is the primary reason for the
loss in both years.
The Company's operating results for the first quarter 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. Prospects
for the sale of the Company's equipment are expanding
significantly, both domestically and internationally. The
Company expects 1995 sales to exceed those of 1994. It expects
to operate profitably for the year.
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Liquidity
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On March 31, 1995, working capital was $2.657 million as
compared with $1.994 million on March 31, 1994, an increase of
$663 thousand. The ratio of current assets to current
liabilities was 2.2:1 in 1995 compared to 1.5:1 in 1994.
Changes in working capital components included a $357 thousand
reduction in accounts receivable, a $345 thousand reduction in
accrued expenses and a $156 thousand increase in inventories.
On December 31, 1994, working capital was $2.931 million and
the current ratio was 2.3:1.
Funds provided by operations are the Company's primary source
of liquidty. 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 March 31,
1995, the Company had additional borrowing capacity of $55
thousand under this line.
Capital Resources
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Long-term debt and deferred income taxes (net of deferred tax
assest) as a percentage of total capitalization was 38 percent
on March 31, 1995. The Company believes that its borrowing
capacity is sufficient to provide for orderly operations.
Item 6. Exhibits and Reports on Form 8-K
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(a) Reports on form 8-K -- There are no reports on Form 8-K
filed for the three months ending March 31, 1995.
<PAGE>
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
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(Registrant)
May 12, 1995 /s/ WAYNE R. MARCOUILLER
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Date Wayne R. Marcouiller, President
May 12, 1995 /s/ WILLIAM F. CARMODY
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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> MAR-31-1995
<CASH> 28
<SECURITIES> 0
<RECEIVABLES> 420
<ALLOWANCES> 10
<INVENTORY> 4,133
<CURRENT-ASSETS> 4,883
<PP&E> 3,113
<DEPRECIATION> 2,280
<TOTAL-ASSETS> 5,716
<CURRENT-LIABILITIES> 2,226
<BONDS> 0
<COMMON> 86
0
0
<OTHER-SE> 320
<TOTAL-LIABILITY-AND-EQUITY> 5,716
<SALES> 1,097
<TOTAL-REVENUES> 1,097
<CGS> 927
<TOTAL-COSTS> 927
<OTHER-EXPENSES> 332
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 68
<INCOME-PRETAX> (230)
<INCOME-TAX> (73)
<INCOME-CONTINUING> (157)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (157)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
