SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
Amended Quarterly Report Under Section 13 or 15 (d) of
the Securities Exchange Act of 1934
FOR QUARTER ENDED January 31, 1998
COMMISSION FILE NO. 0-8190
WILLIAMS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0899518
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2849 MEADOW VIEW ROAD, FALLS CHURCH, VIRGINIA 22042
(Address of Principal Executive Offices) (Zip Code)
(703) 560-5196
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former names, former address and former fiscal year,
if changes since last report)
Indicate by check mark whether the registrant (1) has 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 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
2,917,835
Number of Shares of Common Stock Outstanding at January 31, 1998
</PAGE>
<PAGE>
Introductory Note.
This Amendment on Form 10-Q/A amends the Registrant's
Quarterly
report on Form 10-Q, as filed on March 13, 1998, and is being
filed
to reflect the restatement of the Registrant's condensed
consolidated financial statements (the "Restatement"). The
Restatement reflects a reduction of earnings to defer a portion
of
the gain recognized on the sale of property to a non-affiliated
third party. In connection with the sale, a portion of the
property
was leased back by the Registrant. The Company's Form 10-K for
the
year ended July 31, 1998, reflects the restatement, and its Form
10-
Q for the quarter ended April 30, 1998, has also been amended to
reflect the Restatement.
</PAGE>
<PAGE>
<TABLE>
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
January 31, July 31,
1998 1997
(As Restated
- See Note 14)
<S> <C> <C>
ASSETS
Cash and cash equivalents 1,289,030 1,867,144
Restricted Cash 13,619 252,412
Accounts and notes receivable 8,953,765 10,322,033
Inventories 2,234,699 2,727,814
Costs and estimated earnings in
excess of billings on
uncompleted contracts 1,054,248 845,325
Investments in unconsolidated affiliates 936,369 1,770,940
Property and equipment, net of
accumulated depreciation and
amortization of $8,952,708
and $9,387,155 9,723,267 10,686,243
Prepaid expenses and other assets 1,900,819 1,217,808
Deferred income taxes 1,793,000 1,800,000
TOTAL ASSETS 27,898,816 31,489,719
LIABILITIES
Notes payable 10,953,726 12,638,056
Accounts payable 3,722,204 4,842,837
Accrued compensation, payroll taxes
and amounts withheld from employees 432,562 694,634
Billings in excess of costs and
estimated earnings on uncompleted
contracts 2,218,792 2,972,587
Other accrued expenses 3,889,554 3,531,599
Income taxes payable 152,000 108,000
Total Liabilities 21,368,838 24,787,713
Minority Interests 186,311 170,237
STOCKHOLDERS' EQUITY
Common stock - $0.10 par value,
10,000,000 shares authorized:
2,917,835 and 2,839,756 shares
issued and outstanding 291,784 283,976
Additional paid-in capital 15,848,086 15,705,430
Retained deficit (9,796,203) (9,457,637)
Total stockholders' equity
(deficiency in assets) 6,343,667 6,531,769
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY IN ASSETS) 27,898,816 31,489,719
</TABLE>
See notes to condensed consolidated financial statements.
</PAGE>
<PAGE>
<TABLE>
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
January 31, January
31,
1998 1997 1998 1997
(As Restated (As Restated
- See Note 14) - See Note 14)
<S> <C> <C> <C> <C>
REVENUE
Construction 3,353,201 5,578,513 7,041,071
10,953,017
Manufacturing 2,060,127 2,504,730 4,926,093
4,875,818
Other 219,053 188,106 449,167
847,664
Total Revenue 5,632,381 8,271,349 12,416,331
16,676,499
DIRECT COSTS
Construction 2,152,236 3,522,141 4,107,818
6,918,292
Manufacturing 1,679,297 1,648,964 3,940,641
3,308,304
Total Direct
Costs 3,831,533 5,171,105 8,048,459
10,226,596
GROSS PROFIT 1,800,848 3,100,244 4,367,872
6,449,903
OTHER INCOME 204,056 60,065 204,056
60,065
EXPENSES
Overhead 746,803 923,894 1,471,002
1,704,275
General and
Administrative 1,160,565 1,382,457 2,146,739
3,126,105
Depreciation 304,556 249,161 611,056
502,829
Interest 285,476 353,346 620,852
716,317
Total Expenses 2,497,400 2,908,858 4,849,649
6,049,526
(LOSS) PROFIT BEFORE
INCOME TAXES, EQUITY
EARNINGS AND MINORITY
INTERESTS (492,496) 251,451 (277,721)
460,442
INCOME TAX (BENEFIT)
PROVISION (19,000) 30,800 59,400 68,000
(LOSS) PROFIT BEFORE EQUITY
IN EARNINGS AND
MINORITY
INTERESTS (473,496) 220,651 (337,121)
392,442
Equity in (loss)
earnings of
unconsolidated
affiliates (799,971) (6,040) (789,871) 5,310
Minority interest
in income of
consolidated
subsidiaries (11,155) (13,690) (20,574)
(28,584)
(LOSS) PROFIT BEFORE
EXTRAORDINARY ITEM (1,284,622) 200,921 (1,147,566)
369,168
EXTRAORDINARY ITEM
Gain on
extinguishment
of debt 809,000 - 809,000 -
NET (LOSS) PROFIT (475,622) 200,921 (338,566)
369,168
(LOSS) PROFIT PER
COMMON SHARE-BASIC
(Loss) Profit before
extraordinary item (0.44) 0.08 (0.40)
0.14
Extraordinary item 0.28 - 0.28 -
PROFIT PER COMMON
SHARE-BASIC (0.16) 0.08 (0.12)
0.14
PROFIT PER COMMON SHARE-
ASSUMING DILUTION
(Loss) Profit before
extraordinary item (0.44) 0.08 (0.40)
0.14
Extraordinary item 0.28 - 0.28 -
PROFIT PER COMMON SHARE-
ASSUMING DILUTION (0.16) 0.08 (0.12)
0.14 </TABLE>
See notes to condensed consolidated financial statements.
</PAGE>
<PAGE>
<TABLE>
WILLIAMS INDUSTRIES, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended
January 31, January 31,
1998 1997
(As Restated
- See Note 14)
<S> <C> <C<
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) profit (338,566) 369,168
Adjustments to reconcile net cash
used in operating activities:
Depreciation and amortization 611,056 502,829
Gain on extinguishment of debt (809,000) -
Gain on disposal of property,
plant and equipment (777,045) (50,998)
Minority interests in earnings 20,574 28,584
Equity in earnings (loss) of
unconsolidated affiliates 789,871 (5,310)
Changes in assets and liabilities:
Decrease in accounts and notes
receivable 1,368,268 818,282
Decrease (increase) in inventories 493,115 (401,589)
Increase in costs and estimated
earnings related to billings
on uncompleted contracts (net) (962,718) (109,705)
Increase in prepaid expenses and
other assets (683,011) (468,376)
Decrease in deferred income taxes 7,000 -
Decrease in accounts payable (417,774) (1,088,443)
Decrease in accrued compensation,
payroll taxes, and amounts
withheld from employees (262,072) (130,726)
Increase in other
accrued expenses 357,955 467,123
Increase in income taxes payable 44,000 6,585
NET CASH USED IN OPERATING ACTIVITIES (558,347) (62,576)
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property,
plant and equipment (386,002) (718,356)
Proceeds from sale of property,
plant and equipment 1,859,159 231,000
Decrease in restricted cash 238,793 -
Minority interest dividends (4,500) (6,889)
Dividends from unconsolidated
affiliate 44,700 50,288
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 1,752,150 (443,957)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 1,457,917 1,191,578
Repayments of notes payable (3,280,298) (960,996)
Issuance of common stock 50,464 49,950
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (1,771,917) 280,532
NET DECREASE IN CASH AND CASH
EQUIVALENTS (578,114) (226,001)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,867,144 1,300,867
CASH AND CASH EQUIVALENTS,
END OF PERIOD 1,289,030 1,074,866
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for:
Income taxes 8,400 61,415
Interest 615,874 820,060
</TABLE>
See notes to condensed consolidated financial statements.
</PAGE>
<PAGE>
WILLIAMS INDUSTRIES, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The accompanying condensed consolidated financial statements
have been prepared in accordance with rules established by the
Securities and Exchange Commission. Certain financial
disclosures
required to present the financial position and results of
operations
in accordance with generally accepted accounting principles are
not
included herein. The reader is referred to the financial
statements
included in the annual report to shareholders for the year ended
July 31, 1997. The interim financial information included herein
is
unaudited. However, such information reflects all adjustments,
consisting solely of normal recurring adjustments which are, in
the
opinion of management, necessary for a fair presentation of the
financial position as of January 31, 1998 and the results of
operations for the three and six months ended January 31, 1998
and
1997, and cash flows for the six months ended January 31, 1998
and
1997.
Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during
the reporting period. Actual results could differ from those
estimates.
Basis of Consolidation - The condensed consolidated
financial
statements include the accounts of the Company and all of its
majority-owned subsidiaries, which are as follows:
<TABLE>
<CAPTION>
Subsidiary Percent
Owned
<S> <C>
John F. Beasley Construction Company 100
Greenway Corporation 100
Williams Bridge Company 100
Williams Enterprises, Inc. 100
Williams Equipment Corporation 100
WII Realty Management, Inc. 100
Williams Steel Erection Company, Inc. 100
Williams Industries Insurance Trust 100
Capital Benefit Administrators, Inc. 90
Construction Insurance Agency, Inc. 64
Insurance Risk Management Group, Inc. 100
Piedmont Metal Products, Inc. 80
</TABLE>
All material intercompany balances and transactions have
been
eliminated in consolidation.
2. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
During the Quarter Ended January 31, 1998, the Company
reduced
the value of its investment in Atlas Machine & Iron Works by
approximately $800,000. This is shown on the Condensed
Consolidated
Statements of Operations as a loss in equity earnings of
unconsolidated affiliates.
A previous reduction in the Company's investment in Atlas,
which was carried on the Company's books by the cost method of
accounting since the Company was unable to exert any significant
influence over Atlas's operations and financial policies,
occurred
in Fiscal 1997.
The Company's decision to reduce the balance of the
Company's
investment was based on the facts that Atlas has filed for
bankruptcy protection and its assets are being liquidated by its
senior creditor. The Company believes it may not recover any of
its
investment.
3. ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable consist of the following:
<TABLE>
<CAPTION>
January 31, July 31,
1998 1997
<S> <C> <C>
Accounts Receivable:
Contracts:
Open accounts $6,730,136 $ 7,940,532
Retainage 381,822 563,730
Trade 1,367,171 1,642,121
Contract claims 534,025 534,025
Other 414,999 188,567
Allowance for doubtful
accounts ( 656,655) ( 758,141)
Total accounts receivable 8,771,498 10,110,834
Notes Receivable 182,267 211,199
Total Accounts and Notes
Receivable $8,953,765 $10,322,033
</TABLE>
Included in the above amount at January 31, 1998 is
approximately $674,000 that is not expected to be received within
one year.
4. NOTES PAYABLE
A. CIT: The Company's primary credit facility is with CIT
Group/Credit Finance, Inc., under a Loan and Security Agreement
for
a line of credit of approximately $3 million. This loan requires
monthly principal payments as well as interest at prime plus
2.5%.
The loan has a three year term and is due March 2000. This loan
is
secured by the Company's equipment and receivables as well as
subordinate deeds of trust on certain real estate.
As of January 31, 1998, approximately $1,789,000 was owed
under
the terms of this agreement.
B. NationsBank: The Company has a loan with NationsBank,
secured
by first deeds of trust on all the Company's real property (with
the
exception of the Richmond facility encumbered by the Industrial
Revenue Bond), and by certain other collateral. The loan bears
interest at a fixed annual rate of 11%, and requires payments
based
on a 20 year amortization. The loan is due and payable in full
by
April 30, 1998.
On January 28, 1998, the Company closed on the sale of its 2
1/4 acre headquarters property in Fairfax County for $1,430,000
to a
non-affiliated third party. The net proceeds of the sale were
used
to reduce the Company's obligation to NationsBank. The balance
owed
to NationsBank, as of January 31, 1998, was approximately
$890,000.
The Company has an agreement from another local bank to refinance
this note.
C. Pribyla: The Company continues to make $8,000 monthly
payments
under a promissory note in the face amount of $744,000, which
does
not bear interest but allows a prepayment discount at a 10%
annual
rate. The "present value" of the note if it were paid off as of
January 31, 1998 was approximately $487,000. Payments are due on
the first of each month, $8,000 for the next 27 months, $9,000
for
the next 24 months through April 2002, and $10,000 for the last
24
months through April 2004. This note is secured by a subordinate
deed of trust on the Company's Prince William real estate.
D. Industrial Revenue Bond
Central Fidelity Bank has renewed their Letter of Credit
which
serves as collateral for the Industrial Revenue Bond issue. As
of
January 31, 1998, approximately $1,265,000 was owed. This
obligation is secured by the real estate in the City of
Richmond.
Principal payments are due in increasing amounts through the
maturity of the bonds in 2007. A portion of the property covered
by
the Industrial Revenue Bond is leased by a non-affiliated third
party.
5. GAIN ON EXTINGUISHMENT OF DEBT/ACCOUNTS PAYABLE
During the Quarter Ended January 31, 1998, the Company
recognized a "Gain on Extinguishment of Debt" in the amount of
$809,000 arising from the ongoing liquidation of its subsidiary
John
F. Beasley Construction Company, under the auspices of the U.S.
Bankruptcy Court for the Northern District of Texas. This amount
represents accounts and notes payable which will not be paid
under
the Chapter 11 Plan confirmed by the Court in that proceeding.
The
finalization of that proceeding, which is expected to occur
within
the current fiscal year, is not expected to have any further
material impact on the Company's financial position, results of
operations, or cash flows.
6. INVENTORIES
Inventory of equipment held for resale is valued at cost,
which
is less than market value, as determined on a specific
identification basis.
The costs of materials and supplies are accounted for as
assets
for financial statement purposes. These costs are written off
when
incurred for Federal income tax purposes. The items are taken
into
account in the accompanying statements as follows:
<TABLE>
<CAPTION>
January 31, July 31,
1998 1997
<S> <C> <C>
---------- ----------
Equipment held for resale $ 783,950 $ 761,565
Materials, structural steel, metal
decking, and steel cable at
lower of cost or estimated
market value 1,070,727 1,551,742
Supplies at lower of cost or
estimated market value 380,022 414,507
$2,234,699 $2,727,814
</TABLE>
7. CONTRACT CLAIMS
The Company maintains procedures for review and evaluation
of
performance on its contracts. Occasionally, the Company will
incur
certain excess costs due to circumstances not anticipated at the
time the project was bid. These costs may be attributed to
delays,
changed conditions, defective engineering or specifications,
interference by other parties in the performance of the
contracts,
and other similar conditions for which the Company claims it is
entitled to reimbursement by the owner, general contractor, or
other
participants. These claims are recorded at the estimated net
realizable amount after deduction of estimated legal fees and
other
costs of collection.
8. RELATED-PARTY TRANSACTIONS
Certain shareholders owning 11.25% of the outstanding and
committed stock of the Company, computed on a diluted basis
assuming
the conversion of all outstanding debentures, own 67.49% of the
outstanding stock of Williams Enterprises of Georgia, Inc.
Billings
to this entity and other affiliates were approximately $214,000
and
$394,000 for the three and six months ended January 31, 1998.
Billings to this entity and other affiliates were approximately
$600,000 in both the three and six months ended January 31,
1997.
Certain shareholders owning 9.4% of the outstanding and
committed stock of the Company, computed on a diluted basis
assuming
the conversion of all outstanding debentures, own 100% of the
stock
of Williams and Beasley Company. Billings from this entity
during
the three and six months ended January 31, 1998 were
approximately
$0 and $57,000. Billings from this entity during the three and
six
months ended January 31, 1997 were $196,000 and $371,000.
9. COMMITMENTS/CONTINGENCIES
Industrial Revenue Bond
On September 1, 1997, the Company entered into an agreement
with Central Fidelity National Bank for a three-year renewal of
the
Letter of Credit which is the collateral for the Industrial
Revenue
Bond (IRB) issue on the Company's Richmond manufacturing
facility.
All obligations under the IRB are current and the Company is in
compliance with the covenants contained in the agreement. As of
January 31, 1998, the debt was approximately $1,265,000 and is
secured by the Company's real estate in the City of Richmond.
Principal payments are due in increasing amounts through 2007. A
portion of the property covered by the Industrial Revenue Bond is
leased to a non-affiliated third party.
Precision Components Corp.
The Company received a favorable decision in this case,
which
was heard during the Quarter Ended January 31, 1998. The Company
had been party to a suit by Industrial Alloy Fabricators, Inc.
and
Precision Components Corp. against Williams Industries, Inc. and
IAF
Transfer Corporation, filed in the Circuit Court for the City of
Richmond, Law No. 96B02451, seeking $300,000 plus interest and
fees
arising from a product liability claim against the Company. On
February 3, 1998, the Circuit Court Judge issued a favorable
decision and subsequently entered judgment in the Company's
favor.
The plaintiff has the right to appeal, but management believes
the
ultimate outcome will not have a material adverse impact on the
Company's financial position, results of operations or cash flows.
Foss Maritime
This case was settled during the Quarter Ended January 31,
1998
with no cash or other consideration paid by the Company. A
Company
subsidiary, Williams Enterprises, Inc., had been named a third
party
defendant in a suit in the U.S. District for the Western District
of
Washington, Foss Maritime v. Salvage Assn. v. Williams
Enterprises &
Etalco, #C95-1835R and was also party to an appeal with the U.S.
Court of Appeals for the Ninth Circuit.
Koppleman
The Company is a defendant in an action filed in the Circuit
Court for the City of Baltimore, Maryland, by the estate of
Joseph
Koppleman. The suit seeks in excess of $2 million in damages for
fraud and other asserted causes of action. The case results from
an
injury award in favor of Koppleman against Harbor Steel Erectors,
Inc. and Arthur Phillips & Company, Inc. (the "Original Judgment
Debtors") in the amount of $270,600, entered in 1995. The claim
resulted from an injury to Mr. Koppleman in 1989. The claim
falls
within the deductible of the applicable insurance policy.
Because
of the plaintiff's failure to collect their judgment against the
Original Judgment Debtors, this action has been filed, naming as
defendants the Company, numerous present and former subsidiaries,
the insurance carrier, and the insurance broker who were involved
in
the creation of the insurance arrangement.
Subsequent to the end of the quarter, the Company entered
into
a Mutual Release and Settlement Agreement under which the Company
and the insurance carrier will make payments to the plaintiff,
and
the case will be dismissed with prejudice. The settlement
requires
a $130,000 payment in cash, $50,000 of which will be paid by
CIGNA.
The Company will also issue a $110,000 note payable to be paid as
follows: $60,000 on June 27, 1998; $25,000 by August 27, 1998;
and
$25,000 by February 27, 1999, which amounts have been accrued as
of
January 31, 1998. The settlement will not have a material adverse
impact upon the Company's financial position, results of
operations,
or cash flows. Final settlement is pending review of legal
documents.
CIGNA Insurance
The Company maintained certain policies of insurance with
members of the CIGNA group of insurance companies during the
period
from 1986 through 1991. Certain of those policies provided for
what
are known as "retrospective premium adjustments" which depend
upon
the claims made under the policies. In February 1997, the
Company
received an invoice for $1.1 million which was disputed, as was
another invoice for $82,000 received in January 1998. Pursuant
to
prior litigation between the Company and CIGNA, which was settled
in
January 1993, the parties agreed to arbitrate future disputes.
An
arbitration proceeding was commenced regarding the referenced
invoices.
Subsequent to the Quarter Ended January 31, 1998 the Company
agreed to enter into a settlement encompassing the February 1997
invoice, the January 1998 invoice, and any possible future
liability. Under the settlement, the Company's total obligation
has been reduced to $900,000. The settlement provides that CIGNA
will retain the approximate $300,000 which it has on deposit from
the Company. In addition, the Company will pay $100,000 in cash
and
issue a $500,000 promissory note, which will be paid monthly on a
ten year amortization at 9% interest. A balloon payment of
approximately $400,000 is due in three years. Final settlement
is
pending review of legal documents and the Company obtaining a
Surety
Bond to secure the note.
Falls Church Property
At the time of the sale of this property, as disclosed in
Note
4 (B), the Company entered into a lease-back arrangement for
three
buildings in the complex. Maximum future lease payments for the
leased property are $131,220, $133,844, and $136,521 for the
twelve months ending January 31, 1999, 2000, and 2001, and
$23,208
for the two months ending March 31, 2001.
General
The Company is also party to various other claims arising in
the ordinary course of its business. Generally, claims exposure
in
the construction services industry consists of workers
compensation,
personal injury, products' liability and property damage. The
Company believes that its insurance accruals, coupled with its
excess liability coverage, is adequate coverage for such claims.
10. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board
(FASB)
issued SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information". The Company will apply this statement
beginning in Fiscal 1999 and reclassify its financial statements
for
earlier periods provided for comparative purposes.
SFAS 131 established standards for the way that public
business
enterprises report information about operating segments in annual
financial statements and requires that those enterprises report
selected information about operating segments in interim
financial
reports to issued shareholders. It also establishes standards
for
related disclosures about products and services, geographic
areas,
and major customers. This Statement supersedes SFAS Statement
No.
14, "Financial Reporting for Segments of a Business Enterprise,"
but
retains the requirement to report information about major
customers.
It amends FASB No. 94, "Consolidation of All Majority-Owned
Subsidiaries," to remove the special disclosure requirements for
previously unconsolidated subsidiaries.
At this point, the Company is evaluating the impact of
adopting
SFAS 131.
11. SUPPLEMENTAL CASH FLOW INFORMATION
During the six months ended January 31, 1998, the Company
entered into several financing agreements to acquire assets with
a
cost of approximately $344,000.
Also during the six months ended January 31, 1998, First
Tennessee Equipment Finance Corporation converted a $100,000
debenture into 69,931 shares of the Company's stock.
12. EARNINGS PER SHARE
SFAS 128 "Earnings per Share", which became effective for
financial statement periods ending after December 15, 1997,
requires
that a reconciliation of the numerators and the denominators of
the
basic and diluted per-share computations for income from
continuing
operations be presented for each period for which the income
statement is presented. The Company had a loss before
extraordinary
item for the three and six months ended January 31, 1998,
therefore,
the after-tax amounts of interest recognized and incremental
shares
from the assumed conversion of convertible debentures have been
excluded from the computation of diluted earnings per share, as
they
were anti-dilutive. Reconciliations for the three months and
six months ended January 31, 1997 are presented herein.
<TABLE>
<CAPTION>
For the Three Months Ended
January 31, 1997
<S> <C> <C> <C>
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- --------
Income before extraordinary
item $200,921
Basic EPS
Income available
to common stockholders 200,921 2,581,314 $0.08
----------- ------------ -------
Effect of Dilutive Securities
Convertible debentures 2,500 69,931
----------- ------------ -------
Diluted EPS
Income available to common
stockholders + assumed
conversions $203,421 2,651,245 $0.08
</TABLE>
<TABLE>
For the Six Months Ended
January 31, 1997
<S> <C> <C> <C>
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- --------
Income before extraordinary
item $369,168
Basic EPS
Income available
to common stockholders 369,168 2,578,665 $0.14
----------- ------------ -------
Effect of Dilutive Securities
Convertible debentures 5,000 69,931
----------- ------------- --------
Diluted EPS
Income available to common
stockholders + assumed
conversions $374,168 2,648,596 $0.14
----------- ------------ -------
</TABLE>
Convertible securities at January 31, 1997 represented a
$100,000 debenture to First Tennessee Equipment Finance
Corporation.
This debenture, which earned interest at a rate of the greater of
10% per annum or prime plus 1.5%, was converted into 69,931
shares
on the Company's common stock during the Quarter Ended 10/31/97.
During 1997, the Company issued one convertible debenture to
NationsBank and two convertible debentures to the Federal Deposit
Insurance Corporation. Collectively these notes were convertible
into 867,326 shares at January 31, 1998. In January 1998, the
Company notified its lenders of its intent to extinguish two of
these notes. In February 1998, NationsBank exercised the
conversion
feature of its debenture as discussed in Note 13. The FDIC did
not
convert its debenture into shares of common stock and was repaid
the
principal balance of the note plus accrued interest on March 2,
1998. As of March 9, 1998 one convertible debenture remained.
The
remaining debenture can be converted into 110,294 shares of
common
stock.
13. SUBSEQUENT EVENTS
During the Quarter Ended January 31, 1998, NationsBank, N.A.
gave the Company proper legal notice that it wished to convert
its
$410,000 Convertible Debenture into the previously agreed upon
16.4%
of the Company's common stock outstanding at the time of
conversion.
On February 6, 1998, a certificate for 77,596 unrestricted shares
and a certificate for 543,170 restricted shares of the Company's
stock was delivered to NationsBank. There are legal stipulations
restricting the transfer of the bank's shares.
On March 2, 1998, the Company redeemed its outstanding
$90,000
Convertible Debenture with the Federal Deposit Insurance
Corporation
(FDIC) at its face value. The FDIC did not give notice of
conversion for the debenture, which would have converted into
3.6%
of the Company's common stock outstanding or approximately
136,000
shares. Any accounting impact from this transaction will be
shown
in the results for the quarter ending April 30, 1998.
On March 6, 1998, the Company entered into a contract to
sell
the approximately 1 acre in the City of Baltimore, Maryland owned
by
its inactive subsidiary, Arthur Phillips & Co., Inc., to an
unaffiliated buyer. The contract price is $135,000. After
expenses
of the sale, the Company will realize a gain of approximately
$75,000, if and when the sale closes. The proceeds will be used
to
pay secured debt. The sale is anticipated to close before the
end
of the current Fiscal Year.
14. Restatement of Gain on Sale of Real Property
Subsequent to the issuance of the Company's January 31,
1998,
unaudited financial statements, the Company's management
determined
that approximately $360,000 of the $560,000 gain recognized on
the
sale of real property, located in Fairfax County, Virginia,
should
have been deferred in accordance with SFAS 98, "Accounting for
Leases/Sale-Leaseback Transactions Involving Real Estate," to be
recognized over the remaining lease term of thirty eight months.
As a result, the unaudited financial statements for the quarterly
period ended January 31, 1998, have been restated from the
amounts
previously reported.
A summary of the significant effects of the restatement
follows:
At January 31, 1998:
<TABLE>
<S> <C> <C>
As Previously
Restated Reported
---------- ----------
Other accrued expenses $ 3,889,554 $ 3,529,559
Total Liabilities 21,368,838 21,008,843
Retained deficit (9,796,203) (9,436,208)
</TABLE>
For the three and six month periods ended January 31, 1998:
<TABLE>
Quarter Ended Six Months Ended
January 31, 1998 January 31, 1998
<S> <C> <C> <C> <C>
As Previously As
Previously
Restated Reported Restated Reported
---------- ---------- ----------
- ----------
OTHER INCOME $ 204,056 $ 564,051 $ 204,056 $
564,051
(LOSS) PROFIT BEFORE
INCOME TAXES, EQUITY
EARNINGS AND MINORITY
INTERESTS (492,496) (132,501) (277,721)
82,274
(LOSS) PROFIT BEFORE EQUITY
IN EARNINGS AND
MINORITY
INTERESTS (473,496) (113,501) (377,121)
22,874
(LOSS) PROFIT BEFORE
EXTRAORDINARY ITEM (1,284,622) (924,627) (1,147,566)
(787,571)
NET (LOSS) PROFIT (475,622) (115,627) (338,566)
21,429
(LOSS) PER
COMMON SHARE-BASIC
(Loss) before
extraordinary item (0.44) (0.32) (0.40)
(0.27)
(LOSS) PROFIT PER
COMMON SHARE-BASIC (0.16) (0.04) (0.12)
0.01
(LOSS) PROFIT PER COMMON
SHARE-ASSUMING DILUTION
(Loss) Profit before
extraordinary item (0.44) (0.24) (0.40)
(0.20)
(LOSS) PROFIT PER COMMON
SHARE-ASSUMING DILUTION (0.16) (0.03) (0.12) 0.01
</TABLE>
Item 2. Management's Discussion and Analysis
Financial Condition and Results of Operations
Safe Harbor for Forward Looking Statements
The Company is including the following cautionary statements
to
make applicable and take advantage of the safe harbor provisions
within the meaning of Section 27A of the Securities Act of 1933
and
Section 21E of the Securities Exchange Act of 1934 for any
forward-
looking statements made by, or on behalf of, the Company in this
document and any materials incorporated herein by reference.
Forward looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance and
underlying assumptions and other statements which are other than
statements of historical facts. Such forward-looking statements
may
be identified, without limitation, by the use of the words
"anticipates," "estimates," "expects," "intends," and similar
expressions. From time to time, the Company or one of its
subsidiaries individually may publish or otherwise make available
forward-looking statements of this nature. All such
forward-looking
statements, whether written or oral, and whether made by or on
behalf of the Company or its subsidiaries, are expressly
qualified
by these cautionary statements and any other cautionary
statements
which may accompany the forward-looking statements. In addition,
the Company disclaims any obligation to update any
forward-looking
statements to reflect events or circumstances after the date
hereof.
Forward-looking statements made by the Company are subject
to
risks and uncertainties that could cause actual results or events
to
differ materially from those expressed in, or implied by, the
forward-looking statements. These forward-looking statements may
include, among others, statements concerning the Company's
revenue
and cost trends, cost reduction strategies and anticipated
outcomes,
planned capital expenditures, financing needs and availability of
such financing, and the outlook for future construction activity
in
the Company's market areas. Investors or other users of forward-
looking statements are cautioned that such statements are not a
guarantee of future performance by the Company and that such
forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from those
expressed in, or implied by, such statements. Some, but not all
of
the risks and uncertainties, in addition to those specifically
set
forth above, include general economic and weather conditions,
market
prices, environmental and safety laws and policies, federal and
state regulatory and legislative actions, tax rates and policies,
rates of interest and changes in accounting principles or the
application of such principles to the Company.
General
On March 5, 1998 at the opening of the stock market,
Williams
Industries, Inc., commenced trading on the Nasdaq National Market
System under the symbol WMSI, which the Company has maintained
since
becoming publicly traded more than two decades ago. Management
sees
the Nasdaq National Market listing as an independent validation
of
the Company's restructuring program that has spanned more than
four
years and involved massive debt restructuring, curing prior
defaults
of debt covenants, settlements of old litigation and the overall
simplification of the Company's structure and operating entities.
The streamlined Williams Industries of today is composed of
five
core subsidiaries; Greenway Corporation, Piedmont Metal Products,
Inc., Williams Bridge Company, Williams Equipment Corporation,
and
Williams Steel Erection Company, Inc. These operations
specialize
in a wide range of services to the industrial, commercial and
institutional construction markets, as well as bridge
construction,
repair and rehabilitation. The Company's manufacturing
subsidiaries
are expected to benefit from the March 2, 1998 announced
intention
by the U.S. Senate to increase highway spending by $26 billion in
the next six years.
The Company's current configuration is viewed as a strong
base
from which the core, either through revenue growth or strategic
acquisitions, can grow and enhance future financial results.
Financial Condition
A number of unique or non-recurring transactions occurred
during the second quarter of Fiscal 1998. These transactions
included: The reduction of approximately $800,000 of the
Company's
investment in an unconsolidated affiliate, Atlas Machine and Iron
Works; a $809,000 Gain on Extinguishment of Debt from the
reversal
of accounts payable due to a bankruptcy proceeding in a
subsidiary;
a net increase of approximately $500,000 in reserves for
litigation
settlements; and a gain of approximately $560,000 (of which
approximately $360,000 was deferred over the thirty eight month
term
of the Company's lease-back of a portion of the property) from
the
sale of the Company's real estate in Fairfax County, Virginia.
Each
of these transactions is described in detail in the Notes to
Condensed Consolidated Financial Statements.
While the impact of these transactions on the financial
results
for the quarter are obvious, the following long-term implications
are more subtle.
The settlements, described in detail in Legal Proceedings,
and
the close-out of the John F. Beasley bankruptcy proceeding also
allow the Company the benefit of removing any future exposure on
these items. The Company also had substantial legal expenses in
connection with the cases which were settled and the additional
cases which were litigated and won during the quarter. For
comprehensive details, see Legal Proceedings.
Additional reserves and legal expenses incurred during the
quarter ended January 31, 1998 were approximately $600,000 and
are
included in Direct Costs in the Condensed Consolidated Statements
of
Operations.
Management believes that these settlement transactions were
beneficial to the Company as it allowed the Company to control
and
recognize negotiated fixed liabilities and structured cash
payments.
If the Company had proceeded with litigation and lost, exposure,
both to legal costs and to potential judgments, may have
increased
substantially over the amounts settled.
The sale of the Company's Fairfax County real estate and the
subsequent lease-back of a portion of the property, described in
Commitments and Contingencies in the Notes to the Condensed
Consolidated Financial Statements provides the Company a gain on
the sale of the asset in addition to the ability to physically
consolidate its operations into smaller, more cost efficient
space.
The Company has received a commitment from a local bank to
refinance the balance of the note. It is expected that this
refinancing transaction will close in April.
While the Company's financial foundation is better than it
has
been in years, for the three months ended January 31, 1998, the
Company showed the first loss it has experienced in more than
fourteen reporting periods. The Company had a net loss of
$475,622
or $0.17 per share. This compares to $200,921 or $0.08 per share
profit for the comparable quarter in Fiscal 1997.
As of January 31, 1998, the Company is in compliance with
all
of its debt covenants and all debt service payments on its notes
are
current. Non-revenue producing debt continues to decline.
Bonding
The Company's ability to furnish payment and performance
bonds
has improved along with its financial condition. Historically,
essentially all Company projects have been obtained without
providing bonds. However, as the Company expands its geographic
range for providing goods and services, it will be necessary to
provide bonds to clients unfamiliar with the Company.
Liquidity
The Company's Condensed Consolidated Statements of Cash
Flows
reflected negative cash flow from operations for the six months
ended January 31, 1998 of $558,347, compared to the negative cash
flow of $62,576 reported for the same period in Fiscal 1997.
Cash flow from operations was impacted by several factors
during the quarter, resulting in an increase in cash used in
operating activities. Adjustments to reconcile net cash largely
offset each other. These include the loss on the Atlas
investment;
the gain on the sale of the Falls Church property; depreciation;
and
the gain on the Beasley debt extinguishment.
The Company's efforts to collect receivables, coupled with
the
decline in revenues, resulted in a reduction of accounts and
notes
receivable. Accounts payable were reduced, prepaid expenses
increased, and there was a substantial reduction in the liability
of
billings in excess of costs and earnings on uncompleted contracts.
The last item, the largest factor in the change in cash used in
operating activities, was a result of the completion of several
projects and other adjustments related to the Company's
percentage-
of-completion accounting method.
While a significant amount of cash was used during the six
months ended January 31, 1998, management believes that
operations
will generate sufficient cash to fund its activities.
However, it is expected that as revenues increase,
operations
will continue to use net cash. Management, therefore, is
focusing
on the proper allocation of resources to ensure stable growth.
Cash flow from investing activities, however, was positive.
The Company received proceeds of $1,859,159 from sales of assets
while only expending $386,000 for new equipment for the six
months
ended January 31, 1998. In total, cash provided by investing
activities increased to $1,752,150, compared to a deficit of
$443,957 for the six months ended January 31, 1998.
The Company continued to reduce debt during the quarter as
reflected in the Cash Used in Financing Activities of $1,771,917
on
the Condensed Consolidated Statements of Cash Flows.
Sale of Assets
The Company closed on its contract with a nonaffiliated
third
party to sell the 2 1/4 acre headquarters property in Fairfax
County
for $1,430,000. The Company has entered into a lease of several
buildings on the property. The transaction resulted in a gain of
approximately $560,000, of which $204,000 is included in "Other
Income" in the Condensed Consolidated Statements of Operations
and
approximately $360,000 has been deferred over the thirty eight
month
term of the Company's lease-back of a portion of the property.
Operations
Overall operational activity in the construction segment was
slow for a combination of reasons. During the second quarter of
Fiscal 1998, the intense rains and resulting unstable ground
throughout much of the Company's traditional market areas made it
impossible for a great deal of work to proceed. While the
Company
has a substantial amount of work in its backlog, the weather
prohibited much of that work from being performed. Several
projects
which had been scheduled to start were delayed both in the first
and
second quarter of Fiscal 1998. These projects are scheduled to
commence as soon as conditions permit.
Revenues in the manufacturing segment also declined for
several
reasons, including the shortage of some materials and the cycle
between major jobs. Fabrication was also put on hold for
several
jobs as construction activity was delayed.
1998 Quarter Compared to 1997 Quarter
The second quarter of Fiscal 1998 was far more difficult
operationally for the Company than the second quarter of Fiscal
1997. In Fiscal 1997, the Company had a number of major projects
simultaneously underway and weather conditions were favorable.
For
the three months ended January 31, 1998, the Company had revenue
of
$5,632,381, compared to $8,271,349 for the three months ended
January 31, 1997. Profits before Income Taxes, Equity Earnings
and
Minority Interests decreased from a profit of $251,451 in the
quarter ended January 31, 1997 to a loss of $492,496 for the
quarter
ended January 31, 1998.
Each of the operating companies experienced a decline in
revenues and pre-tax profits for the quarter, some by almost
fifty
percent.
Williams Steel Erection Company was the hardest hit by the
decline in revenues. Although Williams Steel does have several
major projects pending, start-up dates have slipped as the
drenching
rains continue to delay construction schedules.
Inclement weather was also one reason why the Company's two
crane subsidiaries were unable to perform substantial amounts of
work during the quarter. Both Greenway Corporation and Williams
Equipment Corporation experienced a decline in their revenues and
profits.
The Company's manufacturing subsidiaries, Piedmont Metal
Products and Williams Bridge Company experienced similar problems
to
the construction subsidiaries, but were also faced with the
additional difficulty of raw materials' supply. Costs and
availability of raw materials have recently become a problem
throughout the industry and several major suppliers have
instituted
allocations for their customers based on prior usage. Both of
these
subsidiaries are looking into alternatives for acquiring
materials
on a more competitive basis.
In the case of Williams Bridge, the company is also looking
to
bid more complex projects in an effort to achieve a higher rate
of
return. This is a step away from the company's traditional
approach
but will compliment the type of work being done by other Company
subsidiaries. Management also hopes this will enable the
company
to achieve growth in its present lines of business. Williams
Bridge
is also expanding its marketing efforts into new geographic
regions.
Going forward, profits must be at a level not only to cover
construction and manufacturing obligations, but also the parent
Company operations and debt repayment. Management believes that
the
Company will achieve profitability on a quarterly basis to
accomplish this. However, due to the unpredictability of the
weather, the degree of profitability is always susceptible to
fluctuations from quarter to quarter.
Six Months Ended January 31, 1998 Compared to Six Months
Ended January 31, 1997
Results for the six months ended January 31, 1998 as
compared
to the six months ended January 31, 1997 were similar to those in
the quarterly comparisons. Total revenue declined from
$16,676,499
in 1997 to $12,416,331 in 1998. Profits were also down.
On a per share, diluted basis the Company lost $0.12 during
the six months ended January 31, 1998 as compared to a profit of
$0.14 for the six months ended January 31, 1997. This fluctuation
is
attributable both to the weather-related decline in revenue and
the
non-recurring costs incurred in the six months of 1998 as
compared
to 1997. Some of these costs, however, were off-set by the gain
recognized through the John F. Beasley bankruptcy proceeding.
BACKLOG
The Company's backlog of work under contract or otherwise
believed to be firm as of January 31, 1998 was approximately
$21,800,000, the highest it has been since January 1994, when
Williams Industries was a much larger corporation with more
subsidiaries contributing to the backlog. The improvement is
attributed to several factors, including overall increases in
work
available for bid as well as the Company's increased focus on
sales
and marketing. The backlog primarily represents work at Williams
Steel Erection Company and Williams Bridge Company. Both
Greenway
Corporation and Williams Equipment Corporation perform work on a
rapid response basis. Therefore only a small portion, if any, of
their work is included in the backlog.
Most of the backlog will be completed within the next 12
months
if contract schedules are followed. Management believes that the
level of work is sufficient to allow the Company to have adequate
work for Fiscal Year 1998, with some currently booked work
extending
into Fiscal Year 1999. Management believes that if this backlog
can
be maintained, the Company will be able to achieve consistently
profitable results.
Management
Now that the goal of having the Company listed on the Nasdaq
National Market System has been achieved, management believes
that
the review accompanying the listing process is an independent
validation that many of the Company's restructuring goals have
been
achieved. Debt has been reduced dramatically, many old legal
issues
have been resolved, and the Company has been consolidated to more
manageable operating entities..
Management is now concentrating on consistently improving
consolidated results. Plans for expansion into new markets or
slightly different products or services are receiving focused
attention as part of the development of a new strategic plan.
The
new plan will replace the five-year restructuring document which
has
been the Company's road map for the past several years. The new
plan, already in process, includes long-range goals for growth
and
acquisition, as well as focusing on issues relating to
profitability
in existing activities.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
Precision Components Corp.
The Company received a favorable decision in this case,
which
was heard during the Quarter Ended January 31, 1998. The Company
had been party to a suit by Industrial Alloy Fabricators, Inc.
and
Precision Components Corp. against Williams Industries, Inc. and
IAF
Transfer Corporation, filed in the Circuit Court for the City of
Richmond, Law No. 96B02451, seeking $300,000 plus interest and
fees
arising from a product liability claim against the Company. On
February 3, 1998, the Circuit Court Judge issued a favorable
decision and, on March 4, 1998, entered judgment in the Company's
favor. The plaintiff has the right to appeal, but management
believes the ultimate outcome will not have a material adverse
impact on the Company's financial position, results of operations
or
cash flows.
Foss Maritime
This case was settled during the Quarter Ended January 31,
1998
with no cash or other consideration paid by the Company. A
Company
subsidiary, Williams Enterprises, Inc., had been named a third
party
defendant in a suit in the U.S. District for the Western District
of
Washington, Foss Maritime v. Salvage Assn. v. Williams
Enterprises &
Etalco, #C95-1835R and was also party to an appeal with the U.S.
Court of Appeals for the Ninth Circuit.
Koppleman
The Company has been named a defendant in an action filed in
the Circuit Court for the City of Baltimore, Maryland, by the
estate
of Joseph Koppleman. The suit seeks in excess of $2 million in
damages for fraud and other asserted causes of action. The case
resulted from an injury award in favor of Koppleman against
Harbor
Steel Erectors, Inc. and Arthur Phillips & Company, Inc. (the
"Original Judgment Debtors") in the amount of $270,600, entered
in
1995. The claim resulted from an injury to Mr. Koppleman in
1989.
The claim falls within the deductible of the applicable insurance
policy. Because of the plaintiff's failure to collect their
judgment against the Original Judgment Debtors, this action has
been
filed, naming as defendants the Company, numerous present and
former
subsidiaries, the insurance carrier, and the insurance broker who
were involved in the creation of the insurance arrangement.
Subsequent to January 31, 1998, the Company entered into a
Mutual Release and Settlement Agreement under which the Company
and
the insurance carrier will make payments to the plaintiff, and
the
case will be dismissed without prejudice. The settlement amount
has
been accrued as of January 31, 1998.
CIGNA Insurance
The Company maintained certain policies of insurance with
members of the CIGNA group of insurance companies during the
period
from 1986 through 1991. Certain of those policies provided for
what
are known as "retrospective premium adjustments" which depend
upon
the claims made under the policies. In February 1997, the
Company
received an invoice for $1.1 million which was disputed, as was
another invoice for $82,000 received in January 1998. Pursuant
to
prior litigation between the Company and CIGNA, which was settled
in
January 1993, the parties agreed to arbitrate future disputes.
An
arbitration proceeding was commenced regarding the referenced
invoices.
Subsequent to January 31, 1998, the Company agreed to enter
into a settlement encompassing the February 1997 invoice, the
January 1998 invoice, and any possible future liability. Under
the
settlement, the Company's involvement with CIGNA will be closed
out
and the Company's obligation has been reduced to $900,000. The
settlement provides that CIGNA will retain the approximate
$300,000
which it has on deposit from the Company. In addition, the
Company
will pay $100,000 in cash and issue a $500,000 promissory note,
which will be paid monthly over a ten year amortization at 9%
interest. A balloon payment of approximately $400,000 is due in
three years.
While the Company's financial statements were adversely
impacted by this settlement, management believes that, given the
cost and risk of further litigation, it was prudent to agree to
the
settlement, which the Company has the financial ability to meet.
General
The Company is party to various other claims arising in the
ordinary course of its business. Generally, claims exposure in
the
construction services industry consists of workers compensation,
personal injury, products' liability and property damage. The
Company believes that its insurance accruals, coupled with its
excess liability coverage, is adequate coverage for such claims.
ITEM 2. Changes in Securities
During the quarter, NationsBank, N.A. notified the Company
it
wished to convert its $410,000 debenture into the previously
agreed
upon 16.4% of the Company's common stock outstanding after
conversion. The actual conversion into shares occurred February
5,
1998 and therefore the shares are not reflected in the total
number
of shares issued and outstanding as of January 31, 1998.
The Federal Deposit Insurance Corporation (FDIC), as
receiver
for two commercial banks, did not convert its $90,000 Convertible
Debenture, which would have been convertible into 3.6% of the
Company's common stock or approximately 136,000 shares. The
Company
redeemed this debenture on March 2, 1998.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
On March 3, 1998, the Company received notification that it
had
been accepted for listing on the Nasdaq National Market System.
Trading on Nasdaq commenced on March 5, 1998 at the opening of
the
market.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EX 27 Financial Data Schedule for Six Months
Ended January 31, 1998
(b) Reports on Form 8-K
None.
SIGNATURES
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.
WILLIAMS INDUSTRIES, INCORPORATED
December 8, 1998 /s/ Frank E. Williams, III
Frank E. Williams, III
President, Chairman of the
Board
Chief Financial Officer
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JAN-31-1998
<CASH> 1,302,649
<SECURITIES> 0
<RECEIVABLES> 9,610,420
<ALLOWANCES> (656,655)
<INVENTORY> 2,234,699
<CURRENT-ASSETS> 0
<PP&E> 18,675,975
<DEPRECIATION> (8,952,708)
<TOTAL-ASSETS> 27,898,816
<CURRENT-LIABILITIES> 0
<BONDS> 10,953,726
0
0
<COMMON> 291,784
<OTHER-SE> 6,051,883
<TOTAL-LIABILITY-AND-EQUITY> 27,898,816
<SALES> 0
<TOTAL-REVENUES> 12,416,331
<CGS> 0
<TOTAL-COSTS> 8,048,459
<OTHER-EXPENSES> 3,617,741
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 620,852
<INCOME-PRETAX> (277,721)
<INCOME-TAX> 59,400
<INCOME-CONTINUING> (1,147,566)
<DISCONTINUED> 0
<EXTRAORDINARY> 809,000
<CHANGES> 0
<NET-INCOME> (338,566)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
