<PAGE>
F O R M 10 - KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
______________
For the fiscal year ended December 31, 1995
________________________________
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ______________ to _______________
Commission file number O-7267
________________________________________
WEB PRESS CORPORATION
_________________________________________________________________
Washington 91-0851298
_______________________________ ____________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22023 68th Avenue South, Kent, Washington 98032
_________________________________________ ___________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (206) 395-3343
______________
Securities Registered Pursuant to 12(b) of the Act:
Title of each class Name of each exchange on which registered
None
____________________ _________________________________________
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.025
_________________________________________________________________
(Title of Class)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or 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
____ ____
All reports during the preceding 12 months have been filed.
State issuer's revenues for its most recent fiscal year....$8,950,726.
<PAGE>
As of February 23, 1996, 3,105,413 common shares were outstanding,
and the aggregate market value of the common shares (based upon
the sales price of a local market maker) held by non-affiliates
was approximately $264 thousand.
Documents incorporated by reference: Exhibits as described in
Part III, Item 13.
<PAGE>
WEB PRESS CORPORATION
TABLE OF CONTENTS TO ANNUAL REPORT ON FORM 10-KSB
ITEM DESCRIPTION PAGE
PART I
1. BUSINESS....................................... 4
2. PROPERTIES...................................... 6
3. LEGAL PROCEEDINGS.............................. 7
4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS................................ 7
PART II
5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SECURITY HOLDER MATTERS............. 8
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS... 8
7 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..... 12
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.......... 12
PART III
9. DIRECTORS AND EXECUTIVE OFFICERS
OF REGISTRANT................................... 13
10. EXECUTIVE COMPENSATION.......................... 14
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT........................... 15
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.. 15
13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K......................... 16
<PAGE>
ANNUAL REPORT ON FORM 10-KSB
WEB PRESS CORPORATION
PART I
ITEM 1. BUSINESS
(A) General Development of Business
Web Press Corporation (herein referred to as "Web" or "Company")
was founded in late 1967 under the name "Web Press Aid" as a sole
proprietorship. The company was incorporated in November, 1969
under the laws of the State of Washington. Initially, the
Company was involved primarily in the rebuilding and repair of
web-fed printing presses and related equipment. Shortly after
incorporation, the Company undertook the development of a line of
printing press equipment of its own design. During 1972, the
Company commenced production of this equipment. While the
manufacture of new equipment is now the Company's primary
business, it continues to deal in rebuilt and used equipment as
an adjunct to its new press sales. The Company also sells parts
and service for its new equipment. The sale of new and used
presses accounted for approximately 73% and 10%, respectively, of
the Company's revenues in 1995. The Company's presses are
primarily designed to print on absorbent paper such as newsprint.
Products produced by the presses are newspapers (both broadsheet
and tabloid sizes), shoppers, advertising inserts, and paperback
books.
During 1984 and 1985, the Company developed four models of a new
high-speed press and added them to its product line. In 1992,
the Company added a new size cutoff to this line of presses,
increasing the number of models to six.
In 1995, the Company introduced and sold its first integrated
rollstand perfecting unit (IRU). The IRU has a single roll
position under the perfecting unit in place of a free-standing
two-position rollstand.
(B) Financial Information About Segments
See Note 7 of Notes to Consolidated Financial Statements for
information about the Company's operations by segment and
geographic area for the years ended December 31, 1995 and 1994.
(C) Narrative Description of Business
Equipment which Web Press Corporation manufactures consists of
two basic products, the Web Leader and the Atlas. The Atlas is
made in six different models. The principal difference between
the Web Leader and the Atlas is that the Atlas is fifty percent
faster. Each press is composed of standard modules to unwind,
print, cutoff and fold the roll of paper into a finished product.
<PAGE>
Each is arranged to meet the particular printer's requirements
for the number of pages, color, and size of his products.
Following are descriptions of these modules:
PERFECTOR. Web's perfector is a rotary offset perfecting
printing press unit, consisting of two printing couples running
"back-to-back". Each perfector will print four broadsheet-size
newspaper pages, in one color, on each revolution of the printing
couples. Perfectors can be configured to print up to four
colors. They can print up to 32 broadsheet-size pages.
QUADRA-COLOR UNIT. Web's Quadra-Color unit consists of four
printing stations mounted around a common impression cylinder.
This unit prints four colors on two broadsheet-size pages at a
time. It offers better control over color register and thus is
capable of greater accuracy in color printing than conventional,
unit-to-unit methods for color printing. It is used in
conjunction with the Company's other products to provide close
register, four-color capability in the printing system.
FOLDER. Web's folder is used in conjunction with perfecting and
Quadra-Color units to fold the printed paper into a finished
product. The folder cuts the paper off in every plate cylinder
revolution and folds it in standard broadsheet-size newspapers,
tabloid-size papers, and shopping-flyer or magazine-size
products. The Company also produces two folder styles which have
the capability of making a second parallel fold to produce
"digest"-size signatures which are used in printing some books
and pamphlets.
TWO-POSITION ROLL ROLLSTANDS. Web's rollstand supports two, 42-
inch diameter rolls of 36-inch wide paper and is used in
conjunction with the perfector and Quadra-Color units. The
rollstand controls the unwinding of the paper roll and feeds it
to the printing units under controlled tension.
Web Press Corporation markets its products through Company
employed representatives in the United States and Canada.
Foreign sales are made through independent organizations in Latin
America, Asia, Europe, and the Middle East.
The Company's presses are sold in a highly competitive world
market. Competition is based on a combination of price, service,
quality, and the versatility of the equipment. Web's presses are
priced competitively with similar products. The Company believes
that features incorporated in its presses, as well as the
Company's policies of supporting its customers, will allow it to
continue to be very competitive. Web Press Corporation is the
only manufacturer in the United States producing a Quadra-Color
unit for its market.
The primary competitors of the Company are divisions or
subsidiaries of Rockwell International, P.E.C. Corporation (King Press
<PAGE>
Division), and Harris Graphics. Certain of these Companies
have financial resources in excess of the Company's.
The most important materials employed in Web's product line are
steel and aluminum (plate and bar stock), tubing, bearings, and
rubber coverings. All are available through local suppliers.
The Company believes that its sources of supply for these
materials are adequate for its needs and that it is not
substantially dependent upon any one supplier. Lead times of up
to six months are required at some times for certain materials.
Web Press Corporation maintains an ongoing program of product
development and improvement. This program consists primarily of
technical improvements and supplementary developments which have
produced features and capabilities that management believes will
result in competitive marketing advantages for Web's product
line. In 1995, $228 thousand was expended for research and
development compared to $222 thousand in 1994.
Total employment of 63 persons as of December 31, 1995 compares
with approximately 59 at December 31, 1994.
The backlog of orders on February 29, 1996 was approximately $1.1
million. The Company expects to complete all equipment required
for these orders within 1996. The comparable figure was
approximately $1.4 million on March 24, 1995.
Substantially all of the Company's operations are run by electrical
energy purchased from a local utility. The Company has not
experienced energy shortages and does not anticipate any
difficulties in the foreseeable future. Extended shortages of
energy would have an adverse impact on the Company.
Compliance with federal, state and local environmental protection
laws during 1995 had no material effect upon capital
expenditures, earnings, or the competitive position of Web Press
Corporation.
(D) Foreign Operations
The Company's foreign operations consist entirely of export sales
and related services originating at is facilities within the
United States. Export sales accounted for 48.2% of total sales
in 1995 and 55.4% in 1994. Further financial information
relating to foreign operations for the two years ended December
31, 1995, is set forth in Note 7 (Segment Information) of the
Notes to Consolidated Financial Statements.
ITEM 2. PROPERTIES
OFFICE AND MANUFACTURING FACILITIES. The Company presently
occupies approximately 49,000 square feet of leased office and
manufacturing space at 22023 68th Avenue South, Kent, Washington.
The term of the lease is ten years, commencing six months from
<PAGE>
the date of occupancy by the Company in May 1988, with two five-
year renewal options. There are three options for leasing
additional, adjacent space of 8,000 square feet each. There was
no rent for the first six months after the Company occupied the
premises. In addition, the lease required the lessor to finance
$150,000 of leasehold improvements and other costs incurred by
the Company. The total monthly payment, including amortization
of the $150,000 financed, is $14,451.
The Company has arrangements for small offices for each of its
three salesmen who are located in Burlington, Vermont; Lee's
Summit, Missouri and Charlotte, North Carolina.
ITEM 3. LEGAL PROCEEDINGS
LITIGATION. There are no material pending legal proceedings,
other than ordinary legal matters incidental to the Company's
business, to which the Company is a party or in which any of the
Company's property is the subject.
ENVIRONMENTAL PROCEEDINGS. There are no proceedings against the
Company involving federal, state or local statutes or ordinances
dealing with environmental protection.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
PART II
_______
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
(A) Principal Market, Stock Price, and Dividend Information
Although certain dealers regularly provide quotations on the
Company's stock, actual trading activity is limited.
The following table sets forth the high and low bid quotations
per share for the Company's common stock for the periods
indicated. These figures were provided by certain market makers
and may reflect inter-dealer prices, without retail mark-up, mark-
down or commission. They do not necessarily represent actual
transactions.
1995 1994
____ ____
Quarter High Low High Low
_______ ____ ___ ____ ___
First $.25 $.0625 $.344 $.25
Second .1875 .0625 .375 .25
Third .4375 .0625 .375 .25
Fourth .5 .125 .25 .125
The Company has paid no dividends during the two years ended
December 31, 1995.
(B) Approximate Number of Holders of Common Stock
The number of holders of record for the Company's common stock as
of March 8, 1996 was 567.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
________
Web Press operates in a segment of the graphic arts industry.
Its primary business is the manufacture and sale of rotary
offset, web-fed printing presses. These products are designed
for the use in printing newspapers, shoppers, advertising
inserts, paperback books and similar products. The market is
dominated by four domestic manufacturers. Sales in the industry
are sensitive to advertising expenditures, long-term interest
rates and newsprint shortages. The product is labor intensive;
materials shortages are rare; and technical obsolescence has not
been a significant factor.
<PAGE>
OPERATING RESULTS
_________________
1995 Compared with 1994
_______________________
Sales in 1995 were $8.951 million, an increase of $2.044 million
from 1994 sales of $6.907 million. New press sales increased
$2.820 million in 1995 from 1994. Both domestic and
international new press sales were higher, increasing $2.277
million and $543 thousand, respectively. Used press sales
declined $1.023 million in 1995 due to the Company receiving
fewer trade-in presses and having fewer used presses in inventory
to sell. Revenues from the sales of parts and service increased
19.7 percent in 1995 from 1994.
Overall gross profit margins on sales improved to 24.1 percent in
1995 compared to 19.3 percent in 1994. The improved gross margin
is the result of increased sales of new equipment, which have a
higher gross margin than used equipment, as a percentage of total
sales. New equipment accounted for 73% of total sales in 1995,
compared to 54% in 1994. The continued growth in parts sales in
1995 also contributed to the higher gross margin.
Selling, general and administrative expenses decreased 13.9
percent in 1995 from 1994. Selling expenses were lower due to
cost containment programs and restructuring. Payroll costs were
down 16.8 percent; promotional costs declined by 19.2 percent;
travel expenses were lower by 49.8 percent; and communication
expenses were down 34%. Most general and administrative expenses
were approximately the same in 1995 as they were in 1994. The
Company's president received a contractual performance bonus of
$64 thousand in 1995. There was no bonus in 1994.
Interest expense decreased 17.1 percent in 1995 from 1994.
Average short-term borrowings from the bank were $643 thousand in
1995, and $2.084 million in 1994. The Company converted $1.250
million of its short-term borrowings into term debt in December,
1994. The average interest rate on all borrowings was 11.3
percent in 1995 and 9.0 percent in 1994.
Pre-tax operating income in 1995 was $451 thousand compared to a
loss of $667 thousand in 1994. Net earnings were $300 thousand
in 1995, compared to a net loss of $478 thousand in 1994. The
$2.820 million increase in new equipment sales, higher gross
margin due to a more favorable sales mix, and the Company's cost
containment program all contributed to net earnings increasing
$778 thousand in 1995 from 1994.
1994 Compared with 1993
_______________________
Sales in 1994 were $6.907 million, a decrease of $2.088 million
from the $8.995 million reported in 1993. International sales
grew to $3.823 million in 1994, an increase of 8.6 percent from
the 1993 level. Domestic sales of used equipment improved also,
increasing 31 percent in 1994. Domestic sales of new equipment
<PAGE>
declined $3 million in 1994 from 1993, accounting for all of the
decrease in 1994's sales. Revenues from the sales of parts and
service increased 33.6 percent in 1994.
Gross profit margins on sales were 19.3 percent in 1994 compared
to 26.6 percent in 1993. Nineteen ninety-four's gross profit
margin was adversely affected by the purchase of a press the
Company was obligated to buy under terms of a repurchase
agreement. The Company anticipated selling that press at a
profit; however, due to significant abnormal damage to the press,
which the Company had to repair, the Company incurred a $124
thousand negative gross margin on the resale of the press. Had
it not been for this press, the gross margin for 1994 would have
been 25.4 percent, which compares with 26.6 percent for 1993.
However, 1994's gross margin including the repurchased press
transaction was 19.3 percent.
Selling, general and administrative expenses decreased 13.2
percent in 1994 from 1993. Sales commissions, administrative
compensation and legal expenses were lower by 27.7 percent, 13.2
percent and 83.2 percent, respectively in 1994 compared to 1993.
In 1994 the Company incurred a one time charge to expense of $106
thousand for operating advances to a foreign agent which were to
be repaid from sales fees earned by the agent. The Company
terminated the relationship in January 1995. Most other expenses
were unchanged.
Interest expense increased 2.3 percent in 1994 from 1993. The
rate charged for short-term borrowings from the bank increased to
11 percent on December 31, 1994, from 7.5 percent on December 31,
1993. Average short-term borrowings from the bank were $418
thousand lower in 1994 than in 1993. The average interest rate
on short-term borrowings was 9.02 percent in 1994 compared to 7.5
percent 1993.
Nineteen ninety-four resulted in a net loss of $478 thousand,
compared to a net profit of $105 thousand in 1993. The loss is
primarily the result of lower domestic sales of new equipment,
the negative gross margin on the sales of the repurchased press,
and the write-off of operating advances to a foreign agent.
1996
____
Because of the high value of each order for the Company's
equipment and the irregular timing of orders, projections for
particular time periods are very difficult to make.
The Company anticipates moderate growth for both domestic and
international sales in 1996. Additions to the Atlas product line
should help sales both domestically and internationally. The
continued growth in advertising revenues for newspapers, which
are expected to rise by approximately 6 percent in 1996 according
to the Newspaper Association of America, should help sales, too.
Newspaper consolidations have slowed down, resulting in fewer
<PAGE>
used presses coming on the market and increasing the demand for
new equipment. Competition from used equipment has subsided as
used equipment is not readily available.
A recent major development in the industry was the announcement
by Rockwell International that it was attempting to sell its
Graphic Systems subsidiary. That subsidiary includes Goss, which
is the largest manufacturer of presses that compete against the
Company's presses. The impact on the Company if Goss is sold is
uncertain, but should be positive.
LIQUIDITY
_________
The current ratio on December 31, 1995, was 2.5:1 and net working
capital was $3.132 million. Changes in working capital
components include an increase in accounts receivable of $1.230
million; a reduction in total inventories of $1.016 million; a
decrease in accounts payable of $216 thousand; lower net deferred
tax assets of $124 thousand; and a federal tax refund of $66
thousand.
Most of the decrease in inventories was in finished goods, which
were $969 thousand lower in 1995 than in 1994. Used equipment
inventories were reduced by $271 thousand in 1995. Work-in-
progress and raw materials and parts inventories were up slightly
in 1995.
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 December 31, 1995,
the Company had additional borrowing capacity of $33 thousand
under that line.
CAPITAL RESOURCES
_________________
Total assets decreased by $145 thousand in 1995. Stockholders'
equity increased by $300 thousand, working capital increased by
$201 thousand, and noncurrent deferred income taxes increased by
$27 thousand. Long-term debt was reduced by $323 thousand in
1995.
Long-term financing in the form of secured notes or capitalized
leases is used to acquire manufacturing equipment. The Company
incurred no additional long-term debt in 1995. As a percentage
of total capitalization, long-term debt and deferred income taxes
(net of deferred tax assets) was 33 percent on December 31, 1995.
The Company believes that its borrowing capacity is sufficient to
provide for orderly operations.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary data filed as part of this
report are listed in the index appearing in Item 13 to this Form
10-KSB Annual Report.
ITEM 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None.
<PAGE>
PART III
________
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and directors of the Company are:
Name Position Age
____ ________ ___
W. R. Marcouiller President and Director 73
W. F. Carmody Secretary/Treasurer and Director 71
G. C. Sanborn Director 73
C. A. Gath Vice-President of Sales 55
There are no family relationships between any directors or
executive officers of the registrant. Officers are appointed by
the Board of Directors and serve at its will or until they
resign.
BUSINESS EXPERIENCE:
W. R. Marcouiller
_________________
Mr. Marcouiller has had 47 years experience in the graphic arts
equipment industry. For three years prior to joining the
Company, he was the President of Strahn, Inc., Oakbrook,
Illinois, a subsidiary of Strahn & Henshaw, Ltd., a British
printing press manufacturer. For the six years prior to joining
Strahn, Mr. Marcouiller was Vice President-Commercial Press
Marketing of the Goss Division, MGD Graphic Systems, Rockwell
International. Mr. Marcouiller has been a Director and
President since October of 1974.
W. F. Carmody
_____________
Mr. Carmody has been a Director and Secretary/Treasurer of the
Company since June of 1969. He retired in 1990 as president of
Carmody Company, Inc., Seattle, Washington, a dealer and
manufacturer's representative for heavy electrical and
industrial equipment. He is an electrical engineer licensed
professionally in the State of Washington and Oregon. He is not
an employee.
G. C. Sanborn
_____________
Mr. Sanborn has been a Director of the Company since November
1969. He retired in 1978 as Owner and General Manager of
Industrial Products Company, Seattle, Washington, a distributor
of industrial supply equipment. He is now an independent
consultant.
<PAGE>
C. A. Gath
__________
Prior to joining the Company as Vice-President of Sales in May
of 1985, Mr. Gath was Manager of South and Western Operations in
the Cheshire Division of Xerox Corporation, a manufacturer of
addressing and labeling equipment. He started with that
division in 1976 as a sales representative and progressed
through several management positions in sales and marketing.
401(K) PLAN:
Effective January 1, 1988, the Company established a 401(K) plan
under the Internal Revenue Service Regulations. Employees are
eligible to participate after one year of service. Plan
participants self-direct their investments choosing from six
options sponsored by an insurance company. An employee who
elects to participate may contribute in a year up to the lower
of 15% of gross pay or the dollar limit under the regulations,
which in 1995 was $9,240. The Company contributes a matching
amount of 10% of the first $1,000 contributed by an employee in
a year. In addition, the Company may make a discretionary
matching contribution. The total amount is determined by the
Company's Board of Directors and allocated to the participants
based on their contributions. There were no discretionary
contributions in 1995 and 1994.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the aggregate total cash
compensation accrued during the fiscal years ended December 31,
1995, 1994, and 1993 for the chief executive officer of the
Company.
Annual Compensation
___________________
Name/Principal Salary Bonus Long-Term All Other
Position Year ($) ($) Compensation Compensation
______________ ____ ______ _____ ____________ ____________
W.R. Marcouiller 1995 164,145 64,416 0` 0
President/General 1994 159,970 0 0 0
Manager/Director 1993 155,387 86,327 0 0
The registrant entered into a five-year employment agreement with the
President/General Manager effective January 1, 1980. This agreement
provided for annual payments of $75,000 (adjusted for inflation) and a
bonus of 12.5% of earnings before taxes on income. Effective January
1, 1985, January 1, 1990, and January 1, 1995, the agreement was
renewed for another five years under the same terms and conditions.
The President's 1995 base salary was $164,145 per year. This
agreement is filed as an exhibit to this Annual Report on Form 10-KSB.
The Vice-President of Sales is paid commissions equal to 1% of firm
orders accepted. The remainder of the officers and directors are
under no formal compensation agreements.
<PAGE>
During 1995, there were no options outstanding under the Company's
Stock Option Plan.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of March 10, 1996, information
with respect to the beneficial ownership of common stock of the
Company by each person who is known by the Company to have owned
beneficially more than 5% of the Company's common stock, by each
of its officers and directors, and by its officers and directors
as a group:
Percent
Name and Address Shares Owned Of Class
________________ ____________ ________
W. R. Marcouiller
9140 S.E. 54th
Mercer Island, WA 98040 1,837,500 (1) 59.17%
W. F. Carmody
10826 Auburn Ave. So.
Seattle, WA 98178 155,800 (2) 5.02
G. C. Sanborn
17415 Lindgren Ave
Sun City, AZ 85373 50,000 1.61
C. A. Gath
640 Jasmine Pl. N.W.
Issaquah, WA 98027 6,000 (3) .19
All Directors and Officers
as a Group (4 persons) 2,049,300 65.99%
(1) Does not include 214,500 shares (6.91%) owned by Mr.
Marcouiller's children as to which he disclaims beneficial
ownership.
(2) Includes 800 shares held as custodian for Mr. Carmody's
child as to which he disclaims beneficial ownership.
(3) Includes 1,000 shares held as custodian for Mr. Gath's
grandchild as to which he disclaims beneficial ownership.
Except as noted, each person named in the table is believed to
have sole voting and investment power over the shares owned.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No officer, director, nominee or associate of any officer,
director, or nominee was indebted to the Company in an amount in
excess of $60,000 at any time during the fiscal year ended
December 31, 1995.
<PAGE>
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS
ON FORM 8-K
(a) (1) and (2) The response to this portion of Item 13 is
submitted as a separate section of this report.
(a) (3) The following exhibits are incorporated herein by
reference:
(3) Articles of Incorporation and by-laws. Exhibit 1 to
Registrant's Form 10-K for the year ended December 31,
1980, File No. 0-7267.
(10) Material Contracts
(10a) Exhibit 2 to Registrant's Form 10-K for the year
ended December 31, 1980 being an Employment
Agreement between the President/General Manager
and Web Press Corporation dated November, 1980.
(10b) Exhibit 3 to Registrant's Form 10-K for the year
ended December 31, 1980, File No. 0-7267 being
Web Press Corporation's Company Stock Option
Plan.
(10d) being the lease for the Company's new facilities
between Web Press Corporation (lessee) and
William J. Bennett (lessor) dated October 16,
1987.
(10c) being the renewal agreement effective January 1,
1995 of the Employment Agreement between the
President/General Manager and Web Press
Corporation dated November 8, 1980.
(10e) being the Promissory Note for term financing be
tween Web Press Corporation and Key Bank of
Washington dated December 15, 1994.
(10f) being the Business Loan Agreement between Web
Press Corporation and Key Bank of Washington
dated December 15, 1994.
The following exhibits are filed herewith:
(10g) being the Business Loan Modification Agreement
between Web Press Corporation and Key Bank of
Washington dated February 1, 1996.
<PAGE>
(22) Subsidiaries of Registrant
(b) Report on Form 8-K
There have been no reports on Form 8-K filed during the
three months ended December 31, 1995.
SIGNATURES
__________
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
WEB PRESS CORPORATION
March 15, 1996 By: /s/ Wayne R. Marcouiller
________________________
Wayne R. Marcouiller
President
March 15, 1996 By: /s/ W.F. Carmody
_________________________
W.F. Carmody
Secretary/Treasurer
(Principal Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report was signed below by the following persons on
behalf of the Company and in the capacities and on the dates
indicated.
/s/ W. R. Marcouiller March 15, 1996
_____________________
W. R. Marcouiller
President/General
Manager and Director
/s/ W. F. Carmody March 15, 1996
_____________________
W. F. Carmody
Secretary/Treasurer
and Director
<PAGE>
WEB PRESS CORPORATION
FORM 10-KSB
ITEMS 7, 13(a) (1) AND (2)
INDEX OF FINANCIAL STATEMENTS AND SCHEDULES
The following financial statements of the registrant and
its subsidiary required to be included in Item 7 are listed
below:
Page
____
Consolidated Financial Statements:
Independent Auditors' Report............................ 19
Balance Sheet as of December 31, 1995................... 20
Statements of Operations for each of the two
years in the period ended December 31, 1995........... 22
Statements of Stockholders' Equity for each of
the two years in the period ended December 31, 1995... 23
Statements of Cash Flows for each of the two
years in the period ended December 31, 1995........... 24
Notes to Consolidated Financial Statements.............. 26
<PAGE>
Report of Independent Certified Public Accountants
__________________________________________________
Board of Directors and Stockholders
Web Press Corporation
Kent, Washington
We have audited the accompanying consolidated balance sheet of
Web Press Corporation (a Washington corporation) and subsidiary
as of December 31, 1995 and the related consolidated statements
of operations, stockholders' equity, and cash flows for the years
ended December 31, 1995 and 1994. These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referrerd to above
present fairly, in all material respects, the consolidated
financial position of Web Press Corporation and subsidiary as of
December 31, 1995, and the consolidated results of their
operations and their consolidated cash flows for the years ended
December 31, 1995 and 1994, in conformity with generally accepted
accounting principles.
/s/ Grant Thornton LLP
Grant Thornton LLP
Seattle, Washington
February 29, 1996
<PAGE>
WEB PRESS CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
ASSETS December 31, 1995
_________________
Current Assets:
Cash......................................... $ 126
Accounts receivable, less allowance for
doubtful accounts of $32 (Note 3 and 8).... 1,970
Inventories (Notes 2 and 3).................. 2,994
Deferred tax assets (Note 4)................. 77
Prepaid expenses............................. 69
______
Total Current Assets......................... 5,236
Machinery and Leasehold improvements,
at cost (Notes 2 and 3):
Machinery and equipment..................... 2,951
Leasehold improvements...................... 195
______
3,146
Less accumulated depreciation
and amortization............................ (2,452)
______
Machinery and Leasehold Improvements (Net)... 694
______
Total Assets................................. $5,930
______
______
See notes to Consolidated Financial Statements.
<PAGE>
WEB PRESS CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
LIABILITIES AND STOCKHOLDERS' December 31, 1995
EQUITY _________________
Current Liabilities:
Note payable to bank (Note 3)............... $ 667
Accounts payable............................ 404
Customer deposits........................... 13
Accrued expenses............................ 657
Current portion of long-term debt........... 363
______
Total Current Liabilities................... 2,104
Long-Term Debt, less current
portion (Note 3).......................... 962
Deferred tax liabilities (Note 4)........... 367
Commitments (Note 6)
Stockholders' Equity (Note 5):
Common stock, par value $.025
per share:
Authorized, 4,000,000 shares
Issued, 3,436,513 shares 86
Paid-in capital........................... 320
Retained earnings......................... 2,188
______
2,594
Treasury stock, 331,100 shares
at cost................................. (97)
______
Total Stockholders' Equity.................. 2,497
______
Total Liabilities and Stockholders' Equity.. $5,930
______
______
See notes to Consolidated Financial Statements.
<PAGE>
WEB PRESS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Data)
Year Ended December 31,
_______________________
1995 1994
____ ____
Sales (Note 7).................... $8,951 $6,907
Cost of Sales..................... 6,794 5,571
______ ______
2,157 1,336
Selling, general and
administrative expenses......... 1,473 1,710
______ ______
684 (374)
Other income...................... 10
Interest expense.................. (243) (293)
______ ______
(233) (293)
______ ______
Earnings (loss) before taxes
(benefit)....................... 451 (667)
Taxes (benefit) on earnings
(loss)(Note 4).................. 151 (189)
______ ______
Net earnings (loss)............... $ 300 $ (478)
______ ______
Net earnings (loss) per share..... $.10 $(.15)
____ _____
____ _____
See notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
WEB PRESS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands)
<CAPTION>
Common Stock Treasury Paid-in Retained
Shares Amount Stock Capital Earnings
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994 3,436,513 $86 $97 $320 $2,366
Net loss for the year _________ ___ ___ ___ __(478)
Balance, December 31, 1994 3,436,513 86 97 320 1,888
Net earnings for the year 300
_________ ___ ___ ____ ______
Balance, December 31, 1995 3,436,513 $86 $97 $320 $2,188
_________ ___ ___ ____ ______
_________ ___ ___ ____ ______
See notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
WEB PRESS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Year Ended December 31,
_______________________
1995 1994
____ ____
Cash flows from operating activities:
Net earnings (loss)................... $ 300 $ (478)
Adjustments to reconcile net
earnings (loss) to net cash
provided (used) by operating
activities:
Depreciation and amortization...... 235 252
Provision for losses on accounts
receivable....................... 30 26
Inventory valuation reserve........ (33) (69)
Deferred taxes on income........... 151 (107)
Retirement of plant assets......... 1 2
Increase (Decrease) in cash from
changes in operating accounts:
Accounts receivable................ (1,230) 866
Income taxes refundable............ 66 (7)
Inventory.......................... 1,016 (57)
Prepaid expenses................... 10 5
Accounts payable................... (216) 27
Customer deposits.................. (34) 26
Accrued expenses................... (8) 119
Other assets....................... 24
______ ______
Total adjustments.................. (12) 1,107
______ ______
Net cash provided by operating
activities 288 629
Cash flows from investing activities:
Capital expenditures (39) (127)
______ ______
(Continued on following page)
<PAGE>
(Continued from previous page)
Cash Flows from financing activities:
Proceeds from issuance of
long-term debt.................... 1,599
Payments on long-term debt........... (332) (420)
Net borrowings (payments) on line
of credit........................ 118 (1,642)
______ ______
Net cash used by financing
activities........................ (214) (463)
______ ______
Net increase in cash................... 35 39
Cash at beginning of period............ 91 52
______ ______
Cash at end of period.................. $ 126 $ 91
______ ______
______ ______
Supplemental disclosures of cash
flow information:
Cash was paid during the year for:
Interest $241 $302
See notes to Consolidated Financial Statements.
<PAGE>
WEB PRESS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWO YEARS ENDED DECEMBER 31, 1995
Note 1 - Nature of the Company's Business:
The Company manufactures web-fed offset printing presses.
It has two product lines, the Web Leader and the Atlas. The
primary difference between the Web Leader and the Atlas is that
the Atlas is fifty percent faster and is manufactured in three
different broadsheet newspaper page lengths. The Company's
presses are designed to print on absorbent paper such as
newsprint. Among the products produced by the presses are
newspapers (both broadsheet and tabloid sizes), shoppers,
advertising inserts, and paperback books. Each press is
composed of standard modules to unwind, print, cut-off and fold
the roll of paper into a finished product. The equipment is
arranged to meet the particular printer's requirements for the
number of pages, color, and size of products.
The Company markets its presses worldwide. Company
employed sales representatives sell the Company's presses in the
United States and Canada. Foreign sales are made through
independent agents in Central and South America, Asia, Europe,
and the Middle East. Sales are based on a combination of price,
service, quality, and the versatility of the equipment.
Note 2 - 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 are
stated at the lower of average cost or market. Used presses and
other related press equipment are stated at the lower of cost
<PAGE>
(specific identification basis) or market. Inventory costs
include material, labor, and manufacturing overhead.
Inventories were classified as follows at December 31:
(Dollars in Thousands)
1995
____
Raw materials and parts
(including subassemblies)........ $1,126
Work-in-progress................. 761
Finished goods................... 591
Used equipment................... 516
______
$2,994
______
______
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 ten 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 which 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 operations.
Research and development costs
______________________________
Research and development costs are expensed as incurred.
Total research and development costs charged to operations
during the years ended December 31, 1995 and 1994 were $228
thousand and $222 thousand, respectively.
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>
Earnings (loss) per share
_________________________
Earnings (loss) per share calculations are based on the
weighted average number of shares outstanding. The weighted
average number of shares outstanding was 3,105,413 in 1995 and
1994.
Backlog
_______
The Company's backlog at February 29, 1996 was $1.1 million
compared to $1.4 million at March 24, 1995. While the Company's
backlog at any point in time is not sufficient to meet a full
year's operating needs, it is management's belief that
sufficient orders will continue to be received from foreign and
domestic markets, along with the continuation of its line of
credit, to meet liquidity requirements in the upcoming year.
Estimates
_________
The Company makes certain cost estimates when it records a
press sale and uses other estimates and assumptions regarding
certain types of assets, liabilities, revenues, and expenses.
Such estimates primarily relate to unsettled transactions and
events as of the date of the financial statements. All are
reported in conformity with generally accepted accounting
principles. Company management believes the basis for these
estimates are acurately reflected in the financial statements;
however, actual results may differ from estimated amounts.
Note 3 - Financing:
The Company has a financing facility with a commercial bank
consisting of a term note and a line of credit. The balance owing
on the term note was $1.035 million on December 31, 1995, with a
monthly payment, including interest, of $26,831. The term note
matures on January 31, 1997, at which time the Company must make
one irregular payment estimated at $802 thousand. The current
line of credit is for $700 thousand and matures on May 1, 1996.
The interest rate charged on both loans is 2.5 percent above the
bank's prime rate. The rate was 11% on December 31, 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)
December 31, 1995
_________________
Term note, 2.5% above prime rate,
due in monthly installments of $26,831
including interest. Final payment
estimated at $801,996 due January, 1997... $1,035
Note payable for equipment, 10.75%,
due in monthly installments of $8,903
including interest. Final payment due
in September, 1997........................ 170
Note payable for equipment and leasehold
improvements, 12%, due in monthly install-
ments of $2,262 including interest.
Final payment due in October, 1998........ 65
Note payable for equipment, 10%, due in
monthly installments of $1,039 including
interest. Final payment due in
November, 1998............................ 31
Note payable for equipment, 7.65%, due in
monthly installments of $714 including
interest. Final payment due in
February, 1999............................ 24
______
1,325
Less current portion...................... 363
______
$ 962
______
______
Equipment with an original cost of $680 thousand is pledged
as collateral under the notes payable for equipment and the
equipment purchase contracts.
Maturities of the long-term debt for the next five years
are as follows:
(Dollars in Thousands)
1996 $363
1997 920
1998 40
1999 2
<PAGE>
Note 4 - Income Taxes:
The taxes (benefit) on income (loss) consist of the
following:
(Dollars in Thousands)
Year Ended December 31,
_______________________
1995 1994
____ ____
Currently refundable $ $ (82)
Deferred 151 (107)
____ _____
$151 $(189)
____ _____
____ _____
The taxes (benefit) on income (loss) differ from the
federal statutory rate as follows:
(Dollars in Thousands)
Year Ended December 31,
_______________________
1995 1994
____ ____
Taxes (benefit) at statutory rate $153 $(227)
Permanent difference 3 4
AMT credit carryforward (20)
Prior year tax adjustment 15 19
Other 15
____ _____
$151 $(189)
____ _____
____ _____
The components of deferred taxes included in the balance
sheet as of December 31, 1995 are as follows:
(Dollars in Thousands)
______________________
Deferred tax assets:
Gross margin on deferred sales.. $(166)
Inventory valuation reserve..... 73
Tax loss carryforward........... 68
Compensation payable............ 35
AMT credit carryforward......... 20
Other........................... 47
_____
$ 77
_____
_____
Deferred tax liabilities:
Deferred DISC income............ $ 271
Excess tax depreciation......... 78
Other........................... 18
_____
$ 367
_____
_____
The Company has net operating loss carryforwards of $126
thousand and $74 thousand which expire in 2009 and 2010,
respectively. The Company has an alternative minimum tax credit
of $20 thousand which can be carried forward indefinitely to
reduce regular tax liabilities of future years.
<PAGE>
Note 5 - 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
December 31, 1995, no options have been granted under this Plan.
Note 6 - Commitments:
The Company entered into a five-year employment agreement
with the President during 1980. The agreement provided for
annual payments of $75,000 (adjusted for inflation) and a bonus
of 12.5% of earnings before taxes on income. Effective January
1, 1985, January 1, 1990, and January 1, 1995, the Company and
the President agreed to renew the employment agreement. The
agreement now provides for Mr. Marcouiller's employment through
1999.
In October 1987, the Company executed a ten-year lease,
commencing six months from the date of occupancy, for a 49,000
square foot manufacturing and office facility located in Kent,
Washington. The Company moved into this facility in May 1988.
The lease includes three options for leasing additional adjacent
space of 8,000 square feet each and required the lessor to
finance $150,000 of leasehold improvements and other costs
incurred by the Company. The total monthly payment is $14,451.
Rental expense was $150 thousand in 1995 and $152 thousand
in 1994
Remaining minimum rental commitments are as follows:
(Dollars in Thousands)
1996......... $146
1997......... 146
1998......... 122
____
$414
____
____
Note 7 - Market Segment and Concentration Information:
Substantially all of the Company's operations relate to the
manufacture and sale of printing presses and associated equipment.
The Company markets its presses worldwide. International sales
accounted for 48.2% of total sales in 1995 and 55.4% in 1994. The
Company is not dependent on any country or region of the world for
international sales and domestic sales are disseminated throughout
the United States.
<PAGE>
Export sales of equipment by geographical area were as
follows:
(Dollars in Thousands)
Year Ended December 31,
_______________________
1995 1994
____ ____
Asia $ $2,457
Western Hemisphere 1,980 1,013
Europe 1,823 97
______ ______
$3,803 $3,567
______ ______
______ ______
The Company normally has one or more individual press sales
which account for more than 10% of revenues in a given year. It
is uncommon for a customer to place a large order for additional
equipment in the years immediately following purchase of a press.
On an ongoing basis, the Company does not believe it is dependent
on any one customer for a significant portion of its business.
During 1995, the Company had sales to two separate customers
which, as a percentage of total consolidated sales, were 11.1%
and 11.4%. In 1994, the Company had sales to three separate
customers which accounted for 12% to 24% of sales. The total for
the three customers was 53%.
Note 8 - Note Receivable:
In 1985, the Board of Directors approved a loan to W. R.
Marcouiller, President of the Company, of $150 thousand to be
repaid on demand. The unpaid balance of $50 thousand is
included in accounts receivable in the balance sheet for the
year ended December 31, 1995.
Note 9 - Retirement Savings Plan:
The Company has a 401(k) plan covering all employees who
have completed one year of service. Plan participants self-
direct their investments choosing from six options sponsored by
an insurance company. The Company matches up to 10% of the
first $1,000 contributed by the employee in a year. The
Company may also make discretionary contributions to the plan.
Fees paid the insurance company plus the Company's matching
contribution totaled approximately $9 thousand in 1995 and $10
thousand in 1994.
<PAGE>
EXHIBIT (10g) Key Bank Loan Modification Agreement
LOAN MODIFICATION
AGREEMENT
Customer Number 93826
_____
Note Number 11009901
________
WHEREAS, the undersigned did execute a promissory note dated
December 15, 1994 in favor of KEY BANK OF WASHINGTON, Special
Credits Office in the principal amount of $750,000.00, and,
WHEREAS, it is desired by the parties hereto to modify the terms
of said note as set forth below,
NOW, THEREFORE, it is hereby mutually agreed that the terms of
said note are hereby modified as follows.
- Loan maximum is limited to $700,000.00
- Maturity date is extended from Febryary 1, 1996 to May 1, 1996
- Interest rate will be KBWA Prime plus 2.5%.
- Loan fee for the period will be $1,750.00.
In all other respects the terms and conditions of said note shall
remain of full force and effect.
DATED this 1st day of February, 1996.
KEY BANK OF WASHINGTON WEB PRESS CORPORATION
_____________________
(Customer)
By: \s\ Lee Frank By: \s\ Wayne R. Marcouiller
________________________ ________________________
Assistant Vice President President
The undersigned guarantor(s), if any, hereby agree and consent to
this Loan Modification Agreement
DATED this 1st day of February, 1996.
WEB LEADER INTERNATIONAL, INC.
\s\ Wayne R. Marcouiller, Chairman
__________________________________
Guarantor
\s\ Wayne R. Marcouiller
__________________________
Individual Guarantor
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 126
<SECURITIES> 0
<RECEIVABLES> 2,002
<ALLOWANCES> 32
<INVENTORY> 2,994
<CURRENT-ASSETS> 5,236
<PP&E> 3,146
<DEPRECIATION> 2,452
<TOTAL-ASSETS> 5,930
<CURRENT-LIABILITIES> 2,104
<BONDS> 0
<COMMON> 86
0
0
<OTHER-SE> 2,411
<TOTAL-LIABILITY-AND-EQUITY> 5,930
<SALES> 8,951
<TOTAL-REVENUES> 8,961
<CGS> 6,794
<TOTAL-COSTS> 6,794
<OTHER-EXPENSES> 1,473
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 243
<INCOME-PRETAX> 451
<INCOME-TAX> 151
<INCOME-CONTINUING> 300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 300
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
