<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 September 30th, 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 November 10,
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 10-
KSB.
<PAGE>
PART I
FINANCIAL INFORMATION
WEB PRESS CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
ASSETS September 30, 1995
__________________
Current Assets:
Cash......................... $ 227
Accounts receivable, less
allowance for doubtful
accounts of $12............ 1,916
Federal income taxes
refundable................. 66
Inventories.................. 2,901
Deferred tax assets.......... 111
Prepaid expenses............... 83
______
Total Current Assets........... 5,304
Machinery and Leasehold
Improvements, at cost:
Machinery and equipment...... 2,925
Leasehold improvements....... 195
______
3,120
Less accumulated depreciation
and amortization............. (2,395)
______
Machinery and Leasehold
Improvements (Net)........... 725
______
Total Assets................... $6,029
______
______
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 September 30, 1995
__________________
Current Liabilities:
Note payable to bank..................... $ 677
Accounts payable......................... 433
Customer deposits........................ 239
Accrued expenses......................... 579
Current portion of long-term debt........ 404
______
Total Current Liabilities.................. 2,332
Long-Term Debt, less current portion....... 985
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........................ 2,063
______
2,469
Treasury stock, 331,100 shares at cost... (97)
______
Total Stockholders' Equity................. 2,372
______
Total Liabilities and
Stockholders' Equity...................... $6,029
______
______
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 and nine months ending September 30th,
(Dollars in Thousands Except Earnings Per Share)
THREE MONTHS NINE MONTHS
____________ ___________
1995 1994 1995 1994
____ ____ ____ ____
Sales.................... $1,796 $1,607 $6,768 $3,750
Cost of sales............ 1,581 1,200 5,234 2,849
______ ______ ______ ______
215 407 1,534 901
Selling, general and
administrative
expenses............... 302 368 1,073 1,197
______ ______ ______ ______
(87) 39 461 (296)
Interest expense......... 59 67 195 219
______ ______ ______ ______
Earnings (loss) before
taxes.................. (146) (28) 266 (515)
Taxes (benefit) on
income (loss).......... (49) (9) 91 (175)
______ ______ ______ ______
Net earnings (loss)...... $ (97) $ (19) $ 175 $ (340)
______ ______ ______ ______
______ ______ ______ ______
Earnings (loss) per
share.................. $ (.03) $ (.01) $ .06 $ (.11)
______ ______ ______ ______
______ ______ ______ ______
The above figures are unaudited. The accompanying notes are an
integral part of these statements of earnings.
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WEB PRESS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ending September 30th,
(Dollars in Thousands)
1995 1994
____ ____
Cash flows from operating activities:
Net earnings (loss)................... $ 175 $ (340)
Adjustments to reconcile net
earnings (loss) to net cash provided
(used) by operating activities:
Depreciation and amortization....... 179 190
Provision for losses on accounts
receivable........................ 9 9
Deferred taxes on income............ 90 (159)
Inventory valuation reserve......... (36)
Retirement of plant assets.......... 2
Increase (Decrease) in cash from
changes in operating accounts:
Accounts receivable............... (1,155) 725
Income taxes refundable........... 59
Inventory......................... 1,112 (273)
Prepaid expenses.................. (4) (34)
Accounts payable.................. (187) 75
Customer deposits................. 192 232
Accrued expenses.................. (86) (126)
Other assets...................... 24
______ ______
Total adjustments 114 724
______ ______
Net cash provided (used) by
operating activities.............. 289 384
Cash flows from investing activities:
Capital expenditures.................. (13) (121)
______ ______
Cash Flows from financing activities:
Proceeds from issuance of
long-term debt...................... 349
Payments on long-term debt............ (268) (392)
Net borrowings under line of credit... 128 (58)
______ ______
Net cash provided (used) by
financing activities................ (140) (101)
______ ______
Net increase in cash.................... 136 162
Cash at beginning of period............. 91 52
______ ______
Cash at end of period................... $ 227 $ 214
______ ______
______ ______
<PAGE>
Supplemental disclosures of cash
flow information:
Cash was paid during the year for:
Interest............................. $201 $241
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 NINE MONTHS ENDING SEPTEMBER 30, 1995
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)
September 30th, 1995
____________________
Raw materials and parts
(including subassemblies)..... $1,413
Work-in-progress.............. 222
Finished goods................ 561
Used equipment................ 706
______
$2,902
______
______
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
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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.
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 $677 thousand on September 30th, 1995. Accounts
receivable, firm orders in production, inventories, and values
in excess of the long-term financing on equipment are pledged as
collateral.
<PAGE>
Long-term debt consists of the following:
(Dollars in Thousands)
September 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.... $1,069
Note payable for equipment, 10.75%,
due in monthly installments of
$8,903 including interest. Final
payment due in September, 1997............. 191
Note payable for equipment and
leasehold improvements, 12%, due
in monthly installments of $2,262
including interest. Final payment
due in October, 1998....................... 70
Note payable for equipment, 10%,
due in monthly installments of
$1,039 including interest. Final
payment due in November, 1998.............. 34
Note payable for equipment, 7.65%,
due in monthly installments of
$714 including interest. Final
payment due February, 1999................. 25
______
1,389
Less current portion....................... 404
______
$ 985
______
______
Equipment with 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
September 30th, 1995, no options had been granted under this
Plan.
<PAGE>
Note 4 - Guarantees:
As of September 30th, 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 first nine months of 1995 were $6.768 million,
compared to $3.750 million for the first nine months of 1994.
Third quarter sales were $1.796 million in 1995 and $1.607
million in 1994. Domestic sales improved significantly during
the first nine months of 1995, increasing 157% from the same
period in 1994. The backlog of orders believed to be firm on
November 10th, 1995, was $2.744 million. The backlog was $2.773
million on November 11th, 1994.
Cost of Sales:
______________
Cost of sales as a percentage of sales was 88% in the third
quarter of 1995. It was 75% in the same period of 1994.
Several factors contributed to the high percentage in the third
quarter of 1995. Three used presses that were ordered in the
second quarter were reconditioned in the third at significantly
higher costs than estimated. A new press order was sold at a
lower than normal gross profit. Parts sales normally fluctuate
but those in the third quarter were significantly below normal.
Selling, General & Administrative Expenses:
___________________________________________
Selling, general and administrative expenses for the third
quarter of 1995 were 18% below those for the same period of
1994. Those for the first nine months of 1995 were 10% below
those for the first nine months of 1994. The lower costs in
1995 were due to reductions in advertising and promotion
expenses, travel expenses, and legal expenses. Most other
selling, general and administrative expenses did not change
significantly.
Interest Expense:
_________________
Interest expense for the third quarter of 1995 was 12% below
that for the same period of 1994 even though the average
interest rate was 2% higher. Interest expense for the first
nine months of 1995 was 11% below that for the same period of
1994 even though the average interest rate was 2.9% higher.
Average short-term borrowings from the bank were $649 thousand
for the third quarter of 1995 and $673 thousand for the first
nine months of 1995. In December of 1994 the Company
restructured its bank line of credit, transferring $1.25 million
into a term note. The average short-term borrowings for the
third quarter of 1995 were $2.12 million. Those for the nine
month period of 1994 were $2.231 million.
<PAGE>
Net Earnings:
_____________
The Company sustained a net loss of $97 thousand in the third
quarter of 1995 compared to a net loss of $19 thousand in the
third quarter of 1994. For the nine-month period ended
September 30th, 1995, net profits were $175 thousand compared to
a net loss of $340 thousand in 1994.
Company Operating Results:
__________________________
The company's operating results for the first nine-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 printed advertising during
the first nine-months of 1995, the Company believes newspapers
will continue to have strong earnings during the remainder of
1995 and 1996. Such increased earnings customarily translate
into higher press sales.
Liquidity:
__________
On September 30th, 1995, working capital was $2.972 million as
compared with $1.796 million on September 30th, 1994. The ratio
of current assets to current liabilities was 2.3:1 in 1995
compared to 1.5:1 in 1994. Changes in working capital
components include a $1.155 million increase in accounts
receivable; a reduction of $1.112 million in inventory; a
reduction of $187 thousand in accounts payable; and a $192
thousand increase in customer deposits. On December 31st, 1994,
working capital was $2.931 million and the current ratio was
2.3:1.
Capital Resources:
__________________
Long-term debt and deferred income taxes (net of deferred tax
assets) as a percentage of total capitalization was 34% on
September 30th, 1995. The company believes that its borrowing
capacity is sufficient to provide for orderly operations.
<PAGE>
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 September 30th, 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)
November 13th, 1995 /S/ WAYNE R, NARCOUILLER
___________________ _______________________________
Date Wayne R. Marcouiller, President
November 13th, 1995 /S/ WILLIAM F. CARMODY
___________________ _______________________________
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> SEP-30-1995
<CASH> 227
<SECURITIES> 0
<RECEIVABLES> 1,994
<ALLOWANCES> 12
<INVENTORY> 2,901
<CURRENT-ASSETS> 5,304
<PP&E> 3,120
<DEPRECIATION> 2,395
<TOTAL-ASSETS> 6,029
<CURRENT-LIABILITIES> 2,332
<BONDS> 0
<COMMON> 86
0
0
<OTHER-SE> 2,286
<TOTAL-LIABILITY-AND-EQUITY> 6,029
<SALES> 6,768
<TOTAL-REVENUES> 6,768
<CGS> 5,234
<TOTAL-COSTS> 5,234
<OTHER-EXPENSES> 1,073
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 195
<INCOME-PRETAX> 266
<INCOME-TAX> 91
<INCOME-CONTINUING> 175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 175
<EPS-PRIMARY> .06
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