10
This document is done in CGTimes - Use PortNew Printer.
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to _______________
Commission file number 1-3329
WILSON BROTHERS
(Exact name of registrant as specified in its charter)
ILLINOIS 36-1971260
(State or other jurisdiction of (I.R.S. Employee
incorporation or organization) Identification No.)
902 South Main Street
Point Marion, PA 15474
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (412) 725-
5231
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 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
There were 3,321,039 shares of Common Stock ($1.00 par
value) outstanding at May 15, 1997.
Part I. Financial Information, Item 1. Financial Statements
Wilson Brothers and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1997 1996
Assets (In thousands)
Current assets
Cash and equivalents $ 174 $ 170
Receivables, less allowance of $146,000 in 1997
and $160,000 in 1996 567 1,059
Inventories 504 332
Other 219 74
Total current assets 1,464 1,635
Properties, at cost 2,290 2,285
Less accumulated depreciation (1,935) (1,922)
355 363
Note receivable, less valuation reserve of $490,000 in 1997
and 1996 - -
$ 1,819 $1,998
Liabilities and Stockholders' Deficiency
Current liabilities:
Short-term borrowings $ 218 $ 140
Accounts payable 691 705
Accrued salaries and other employee costs 328
259
Environmental reserve 820 820
Accrued interest due affiliates 441 415
Accrued interest due to others 88 84
Due to affiliates 1,230 1,230
Other current liabilities 99 217
Total current liabilities 3,915 3,870
Note payable to affiliates 1,244 1,244
Note payable to others 256 256
Other liabilities 639 639
2,139 2,139
Commitments and Contingencies
Stockholders' deficiency:
Preferred stock, $1 par value; authorized 5,000,000
shares; none issued -
-
Common stock, $1 par value; authorized 10,000,000
shares; issued and outstanding 3,321,039 shares 3,321
3,321
Capital in excess of par value 7,464 7,464
Minimum pension liability (23) (23)
Accumulated deficit (14,997) (14,773)
Total stockholders' deficiency (4,235) (4,011)
$1,819 $1,998
See accompanying notes to consolidated financial statements.
Wilson Brothers and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(Unaudited)
For the Three Months
Ended March 31,
1997 1996
(In thousands except per share amounts)
Net sales $1,017 $1,165
Cost of sales 870 955
Selling, general and administrative expenses 354 308
1,224 1,263
Loss from operations (207) (98)
Other expense (income):
Interest expense - affiliates 25 30
Interest expense 10 7
Other, net (18) (9)
17 28
Loss from operations before
provision for income taxes (224) (126)
Provision for income taxes - -
Net loss (224) (126)
Accumulated deficit - beginning (14,773) (14,715)
Accumulated deficit - ending $(14,997) $(14,841)
Loss per share $(0.07) $(0.04)
See accompanying notes to consolidated financial statements.
Wilson Brothers and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months
Ended March 31,
1997 1996
(In thousands except per share
amounts)
Cash flows from operating activities:
Net loss $ $ (224) $
(126)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 13 15
Decrease in receivables, net 492 110
Increase in inventories (172) (87)
Increase in other current assets (145) (69)
Decrease in accounts payable (14) (46)
Decrease in accrued salaries and
other current liabilities (19) (71)
Net cash used in operating activities (69) (274)
Cash flows used in investing activities:
Capital expenditures (5) (9)
Net cash used in investing activities (5) (9)
Cash flows from financing activities:
Repayment of long-term debt - (1)
Increase in short-term borrowings 78 46
Net cash provided by financing activities 78
45
Net increase (decrease) in cash and equivalents 4
(238)
Cash and equivalents at beginning of period 170 428
Cash and equivalents at end of period $ 174$ 190
See accompanying notes to consolidated financial statements.
(1) Summary of Significant Accounting Policies
Basis of Presentation
The consolidated information included herein has been
prepared by Wilson Brothers (the "Company") without audit
for filing with the Securities and Exchange Commission
pursuant to the rules and regulations of the Commission.
The financial information presented herein, while not
necessarily indicative of results to be expected for the
year, reflects all normal and recurring adjustments, which
in the opinion of the Company are necessary for fair
presentation of the financial results for the periods shown.
This financial information should be read in conjunction
with the consolidated financial statements included in the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
Wilson Brothers (the "Company") is a holding company whose
business is conducted through its wholly-owned subsidiary
Houze Glass Company ("Houze"). Houze operates in the
specialty advertising business and engages in the decoration
of glass and ceramic items. Houze's products are primarily
distributed throughout the United States through sales
representatives.
Principles of Consolidation
The consolidated financial statements include the accounts
of the Company and its subsidiaries, all of which are wholly-
owned. All significant intercompany items and transactions
have been eliminated in consolidation.
Loss per Share
Loss per share has been computed using only the weighted
average number of outstanding shares of common stock
(3,321,039 shares in each period), since the inclusion of
common stock equivalents (shares issuable upon conversion of
the note referred to in Note 6) would be antidilutive.
The Financial Accounting Standards Board has issued a new standard,
"Earnings per Share" (SFAS 128"). SFAS 128 provides for revisions to the
current method of calculating earnings per share and for the
disclosure of certain information about the capital
structure of the reporting entity. SFAS 128 will become
effective on December 15, 1997; early adoption is not
permitted. The Company does not believe that the new
pronouncement will impact its present calculation of
earnings per share.
(2) Note Receivable
On September 28, 1993, the Company's Board of Directors authorized the
sale or liquidation of its wholly-owned subsidiary Northern Engineering
Corporation ("Northern"), the Company's crane business
segment. On May 12, 1994, the Company sold all of the outstanding
shares of Northern to a corporation controlled by a former director of
the Company.
In consideration for the sale of the Northern shares, the
Company received $10,000, plus a secured promissory note
(the "Note") in the principal amount of $750,000 repayable
on or before May 1, 1999, which bears interest payable
quarterly at 8 percent per annum. Such note is
collateralized by certain real property of Northern (the
"Mortgaged Property"). The
Mortgaged Property was not appraised in connection with the
transaction. If the Mortgaged Property is sold, all of the
principal and interest is immediately due and payable.
Effective October 28, 1994, the Company agreed to reduce the
percentage from 50 percent to 30 percent of the amount that
the Company shall be entitled to receive if the Mortgaged
Property is sold in excess of $750,000. In exchange, the
purchaser made a partial prepayment of the principal of the
Note in the amount of $150,000 which was paid by November 7,
1994, and has made an additional $150,000 partial prepayment
on January 15, 1995. The purchaser had the option to prepay
the remaining principal balance of the Note by June 30,
1995. Such prepayment was not made, and therefore, the
purchaser was to additionally compensate the Company $50,000
by July 15, 1995, of which $10,000 has been paid. As a
result, the Company believes that the principal amount of
the Note and accrued interest thereon may not be
collectible, and therefore has made a full valuation reserve
in the March 31, 1997 and December 31, 1996 financial
statements in the amount of $490,000 for principal, plus
$6,000 for accrued interest. The Company intends to pursue
all opportunities for collection, including repossession and
liquidation of the Mortgaged Property.
(3) Inventories
Inventories, stated at the lower of cost (first-in, first-
out basis) or market, consisting of materials, labor and
overhead, are as follows:
March 31, December 31,
1997 1996
Raw materials $ 468,000 $313,000
Work in process 8,000 -
Finished goods 28,000 19,000
$504,000 $332,000
(5) Short-term Borrowings
On March 4, 1994, Houze entered into an agreement with a
bank for a revolving line of credit facility in an amount
not to exceed $400,000. Advances on such line of credit
bear interest at the lending bank's prime rate plus 3.5%.
In addition, the bank is entitled to reimbursement of fees
for auditing Houze's accounts receivable during the term of
the commitment. Advances are collateralized by accounts
receivable, inventory and an assignment of a $50,000
Certificate of Deposit from Fay Penn Economic Development
Council and $100,000 Certificates of Deposit from the
Company, and are guaranteed by the Company and Mr. Sanford,
the Company's Chief Executive Officer. The revolving line
of credit facility maturity was extended from December 31,
1995 to December 31, 1997 with a limit of $500,000. No
assurances can be given as to the success of obtaining an
extension or refinancing subsequent to December 31, 1997. A
failure by Houze to renegotiate such credit facility would
have a material adverse effect on the Company.
(6) Note Payable to Affiliates and Others
Notes payable to majority owners as of March 31, 1997 and
December 31, 1996 in the aggregate amount of $1,500,000
bears interest at the prime rate and is convertible to
956,937 shares of the Company's common stock. In December
1994, Warren B. Kanders made a gift of his 25% interest in
the Note to a charitable foundation of 239,234 shares of the
Company's Common Stock issuable upon conversion of its
interest in the Note. On April 18, 1995, John Sanford, the
Company's then Vice President and Chief Financial Officer,
acquired a $362,500 interest in such convertible note. As a
result, Mr. Sanford may be deemed the beneficial owner of
231,259 shares issuable to him upon his election to convert
his interest in the notes. Conversion by the majority
owners would be dilutive of their individual percentage
ownership of the Company's aggregate outstanding common
stock. On April 21, 1996, Mr. Bruce Paparella, the
Company's President, Chief Executive Officer and a Director
died from cancer. On September 6, 1996, in a private
transaction, the Estate of Mr. Paparella sold to Mr. Sanford
a 37.5% interest in such Note in the principal sum of
$562,500, which is convertible into 358,852 shares of the
Company's Common Stock. On November 22, 1996, in a private
transaction, Mr. Sanford made gifts to a non-affiliated
person of $56,250 principal amount and accrued interest of
the Convertible note which is convertible into 35,886 shares
of the Company's Common Stock. On February 13, 1997, in a
private transaction, Choate Rosemary Hall Foundation, Inc.
sold to Mr. Sanford pursuant to a Note and Accounts
Receivable Purchase Agreement (i) their interest of
$375,000 principal amount of the Convertible Note, which is
convertible into 239,234 shares of the Company's Common
Stock, and (ii) their interest in the Accounts Receivable
for an aggregate purchase price of $200,000. As a result of
the above transaction, Mr. Sanford is the beneficial holder
of (i) $1,243,750 of the Convertible Note convertible at any
time into 793,460 shares of Common Stock, and (ii) 1,544,653
shares of the Company's Common Stock, constituting
approximately 56.8 percent of the Company's outstanding
Common Stock.
(7) Commitments and Contingencies
The Company has incurred losses from operations and as of
March 31, 1997, the Company had a stockholders' deficiency
of $4.2 million and a consolidated working capital deficit
of $2.5 million.
The Company's ability to meet its cash requirements in the
next year is dependent upon substantial improvement in the
results of operations and cash flows, maintaining and
renewing its financing from its bank or others. If these
conditions are not satisfactorily achieved, the
Company may be unable to generate sufficient cash flow to
meet its requirements, including payments of amounts which
may be expended for environmental remediation described
below, and therefore, may be unable to continue operations.
The financial statements have been prepared on a going
concern basis, and accordingly, do not include any
adjustments relating to the recoverability and
classification of recorded asset amounts nor the amounts and
classification of liabilities that might be necessary should
the Company be unable to continue in existence or be
required to sell its assets.
The Company has become aware that certain of the products of
Houze may have concentrations of lead and cadmium at levels
which might constitute hazardous waste. While after
testing, it was ascertained that products currently being
produced are within acceptable levels, certain products,
generally those produced prior to 1980, had unacceptable
levels of lead and cadmium. These products had been
disposed of in a disposal site located on the property of
the decorative glass segment. The Pennsylvania Department
of Environmental Regulation ("PDER") and the Company agreed
to a consent order on September 22, 1994, which outlines a
plan for Houze to remove and encapsulate all of the
hazardous waste and thereby comply with residual waste pile
closure requirements. The Company intends to fully comply
with the requirements of the consent order. On February 11,
1997, PDER granted Houze an extension in the consent order
until June 30, 1997. The estimated cost of the Company's
original plan of remediation was increased during 1993 by
$700,000 from $200,000, based on advice from its outside
consultant. The additional costs were provided for in the
1993 consolidated financial statements. At March 31, 1997
the reserve balance was $820,000.
While the Company believes that the total cost of the plan
agreed to by the PDER in the consent order discussed above
will not exceed the amount reserved, the Company is unable
at this time to make a final determination of the cost of
implementation, and therefore, has not adjusted such
reserve. During the years ended December 31, 1996, 1995 and
1994, $25,000, $41,000 and $14,000, respectively, was
charged to the reserve for costs incurred in connection with
the Company's compliance with the PDER's plan to encapsulate
all of the hazardous waste.
In addition to the litigation noted above, the Company is
from time to time involved in other routine litigation
incidental to its business, the outcome of which in the
opinion of management will not have a material adverse
effect on the Company's consolidated financial position or
results of operations.
(8) Subsequent Events
On April 9, 1997, the Company entered into a stock purchase
agreement with G&L Consultants, Inc. to purchase 90 percent
ownership, represented by 171,000 shares of the outstanding
common stock of LM Plastics, Inc., a North Carolina
corporation with its principal office in Shelby, North
Carolina. The purchase price for the common stock consisted
of the payment of $1, plus a personal indemnity by Mr.
Sanford to G&L Consultants, Inc. for the payment of a
promissory note from LM Plastics, Inc. to a bank in the
original principal amount of $70,000. The Company has the
option to purchase at any time, or after 3 years is obliged
to purchase at the request of G&L Consultants, Inc., the
remaining 10 percent outstanding shares for the amount of
$10,450, with such price increasing at an annual rate of 20
percent for each month after April 9, 1997. The acquisition
will be accounted for using the purchase method of
accounting, of which the purchase price over net assets
acquired is expected to be insignificant. The pro forma
effect on prior periods' results of operations is not
material.
On April 30, 1997, Numo Manufacturing Acquisition, Inc.
("Numo") a newly formed wholly-owned subsidiary of the
Company, purchased certain assets and assumed certain
liabilities of Numo Manufacturing Company, Inc. and its
wholly-owned subsidiary Diamond Cap Company, Inc. (the
"Seller"), each of which has principal offices in Mesquite,
Texas. The aggregate purchase price for the acquired assets
of both companies and covenants not to compete given by the
Seller and their shareholders, was $1,100,000 consisting of
$45,000 paid in cash and the execution and delivery of
promissory notes ("Purchase Notes") in the aggregate
principal amount of $855,000 and $200,000 payable pursuant
to non-compete agreements, described as follows. The
Purchase Notes and amounts payable under the non-compete
agreements bear interest initially at the rate of 8% per
annum subject to adjustment on each April 1 and October 1,
with the first adjustment to occur on October 1, 1997. On
the first adjustment date (October 1, 1997), the interest
rate will be increase by an amount equal to 50% of the
increase, if any, between the prime rate published in The
Wall Street Journal on October 1, 1997 and May 1, 1997. On
each adjustment date thereafter, the interest rate shall be
increased or decreased (but not below 8% per annum or above
11% per annum) by an amount equal to 50% of the difference
between the prime rate published by The Wall Street Journal
on the adjustment date in question and the immediately
preceding adjustment date. Principal and interest payable
on the Purchase Notes and under the non-compete agreements
will be paid on the first day of each January, April, July
and October, commencing on July 1, 1997. The entire unpaid
principal balance on all such obligations shall be due and
payable April 1, 2004. The Purchase Notes are secured by a
pledge of substantially all of the acquired assets. In
addition, payment of the Purchase Notes is guaranteed by the
Company. Numo also entered into consulting agreements with
the two shareholders of the Seller for a term of one year
pursuant to which Numo paid each of such consultants the sum
of $224,000 on May 1, 1997.
In order to finance the cash portion of the purchase price
and the consulting fees paid at the time of the closing, the
Company borrowed $550,000 from an entity which is wholly-
owned by members of the family of John Sanford, the
Company's President, of which Mr. Sanford is a less than 1%
owner. The loan bears interest at the annual rate of 10%
and interest is payable quarterly. The loan is due and
payable in full on demand at any time after August 15, 1997
with interest. The Company paid an origination fee to the
lender in the amount of $3,500 and an additional loan
origination fee in the amount of $30,000 is payable on or
before May 1, 1998. At the option of the lender exercisable
before May 1, 1998, in lieu of receiving payment of the
$30,000 additional origination fee, the lender shall have
the right to purchase the number of shares of Common Stock
of the Company equal to 3% of the Company's fully diluted
shares of Common Stock at the time of such election or a
cash fee of $10,000 and 2% of the Company's fully diluted
shares of Common Stock at the time of such election or a
cash fee of $20,000 and 1% of the Company's fully diluted
shares of Common Stock at the time of such election,
provided the Company has sufficient shares of Common Stock
which are then authorized and unissued available for
purchase by the lender. As collateral security for the
loan, the Company has assigned to the lender all of its
interest in a promissory note in the original principal
amount of $750,000 issued by Northern Engineering
Corporation and the mortgage on real property located in
Detroit, Michigan securing such note. In addition, payment
of the loan is personally guaranteed by John Sanford. The
Company advanced the full amount of the proceeds of such
loan to Numo. In addition, Numo entered into a lease
agreement with one of the selling entities for a
manufacturing facility located at 700 Hickory Tree Road,
Mesquite, Texas for a term of 7 years at an annual base rent
of $76,000.
Numo will carry-on the pre-existing business activities of
Numo Manufacturing Company, Inc. and Diamond Cap Company,
Inc. at the same premises in Mesquite, Texas. Numo's
primary business activity is custom manufacturing, sewing
and decorating of a variety of cloth and vinyl bags and
related accessories and visor style caps. Similarly to
Houze Glass Corporation, Numo's sales are made through sales
representatives and are generally for advertising
specialties, premiums, souvenirs and the retail trade.
The acquisition will be accounted for using the purchase
method of accounting. The amounts paid in connection with
consulting agreements of $450,000 will be amortized over the
terms of such agreements which is 12 months. The amounts
paid for covenants not to compete of $224,000 will be
amortized over the terms of those agreements which is 7
years. The Company will allocate a portion of the remaining
purchase price over net assets acquired to goodwill which is
being amortized over 20 years, which is approximately
$96,000. Acquisition costs incurred in connection with this
purchase transaction which consist principally of
professional and borrowing fees, are not expected to be
material. The following table sets forth the unaudited pro
forma combined condensed results of operations for the year
ended December 31, 1996 and for the three months ended March
31, 1997, and assumes that the foregoing purchase
transaction had been consummated as of January 1, 1996 and
1997, respectively. These pro forma results are not
necessarily indicative of the results that would have been
achieved had these acquisitions occurred on the dates
indicated or that may occur in the future.
3 months ended Year ended
March 31, 1997December 31, 1996
Revenues $ 1,807 $9,315
Loss before extraordinary items $(541) $(621)
Net loss $(541) $(621)
Loss per share $(0.16) $(0.19)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition and Liquidity
Forward-Looking Statements
The following discussion contains certain forward-looking
statements with respect to anticipated results which are subject
to a number of risks and uncertainties. From time to time, the
Company may publish forward-looking statements relating to such
matters as anticipated financial performance, business prospects,
technological developments, new products, research and
development activities and similar matters. The Private
Securities Litigation Reform Act of 1995 provides safe harbor for
forward-looking statements. In order to comply with the terms of
the safe harbor, the Company notes that a variety of factors
could cause the Company's actual results and experience to differ
materially from the anticipated results or other expectations
expressed in the Company's forward-looking statements. The risks
and uncertainties that may effect the operations, performance,
development and results of the Company's business include, among
other things, the following: business conditions and growth in
the Company's industry; general economic conditions; the addition
or loss of significant customers; the loss of key personnel;
product development; competition; fluctuations in foreign
currency exchange rates; rising costs of raw materials and the
unavailability of sources of supply; the timing of orders placed
by the Company's customers; failure by the Company's subsidiary,
Houze, to renegotiate its credit facility beyond the current
expiry date of December 31, 1997; and other risk factors listed
from time to time in the Company's quarterly reports.
The following discussion and analysis of financial condition
pertains primarily to Houze, which represents the principal
business of the Company.
As previously reported in the Company's Annual Report on Form 10-
K, on March 11, 1994, Houze entered into an agreement with a bank
for a revolving line of credit facility in an amount not to
exceed $400,000. The line of credit has since been increased to
$500,000 and extended to December 31, 1997. Advances on such
line of credit bear interest at the lending bank's prime rate
plus 3.5%. In addition, the bank is entitled to reimbursement of
fees for auditing Houze's accounts receivable during the term of
the commitment. Advances are collateralized by accounts
receivable, inventory and an assignment of a $50,000 Certificate
of Deposit from Fay Penn Economic Development Council and
$100,000 Certificate of Deposit from the Company, and are
guaranteed by the Company and Mr. Sanford, the Company's Chief
Executive Officer. No assurances can be given as to the success
of obtaining an extension or refinancing subsequent to December
31, 1997. A failure by Houze to renegotiate such credit facility
beyond December 31, 1997 would have a material adverse effect on
the Company.
In order to finance the cash portion of the purchase price of
certain assets of Numo Manufacturing Company, Inc. and Diamond
Cap Company, Inc. and amounts for covenants not to compete and
the consulting fees paid at the time of the closing, the Company
borrowed $550,000 from an entity which is wholly-owned by members
of the family of John Sanford, the Company's President, of which
Mr. Sanford is a less than 1% owner. The loan bears interest at
the annual rate of 10% and interest is payable quarterly. The
loan is due and payable in full on demand at any time after
August 15, 1997 with interest. The Company paid an origination
fee to the lender in the amount of $3,500 and an additional loan
origination fee in the amount of $30,000 is payable on or before
May 1, 1998. At the option of the lender exercisable before May
1, 1998, in lieu of receiving payment of the $30,000 additional
origination fee, the lender shall have the right to purchase the
number of shares of Common Stock of the Company equal to 3% of
the Company's fully diluted shares of Common Stock at the time of
such election or a cash fee of $10,000 and 2% of the Company's
fully diluted shares of Common Stock at the time of such election
or a cash fee of $20,000 and 1% of the Company's fully diluted
shares of Common Stock at the time of such election, provided the
Company has sufficient shares of Common Stock which are then
authorized and unissued available for purchase by the lender. As
collateral security for the loan, the Company has assigned to the
lender all of its interest in a promissory note in the original
principal amount of $750,000 issued by Northern Engineering
Corporation and the mortgage on real property located in Detroit,
Michigan securing such note. In addition, payment of the loan is
personally guaranteed by John Sanford. The Company advanced the
full amount of the proceeds of such loan to Numo. In addition,
Numo entered into a lease agreement with one of the selling
entities for a manufacturing facility located at 700 Hickory Tree
Road, Mesquite, Texas for a term of 7 years at an annual base
rent of $76,000.
As previously reported in the Company's Annual Report on Form 10-
K, the Company's ability to meet its cash requirements in the
next year is dependent upon substantial improvement in the
results of operations and cash flows, maintaining and obtaining
new financing from banks or others, as well as the ultimate
collection of the Note Receivable. If these conditions are not
satisfactorily achieved, the Company may be unable to generate
sufficient cash flow to meet its requirements, including payments
of amounts which may be expended for environmental remediation,
and therefore, may be unable to continue operations.
The financial statements have been prepared on a going concern
basis, and accordingly, do not include any adjustments relating
to the recoverability and classification of recorded asset
amounts nor the amounts and classification of liabilities that
might be necessary should the Company be unable to continue in
existence or be required to sell its assets.
Results of Operations
Three Months Ended March 31, 1997 Compared with the
Three Months Ended March 31, 1996
Net sales decreased $148,000 in the three months ended March 31,
1997 as compared to the three months ended March 31, 1996. The
decrease in net sales was due to a decrease in volume of mug unit
sales of approximately 20,000 coupled with a decreased average
sales price per unit of approximately $.17. Decreased cost of
sales was primarily due to decreased units sold.
The increase in selling, general and administrative expenses for
the three months ended March 31, 1997 compared to March 31, 1996
is primarily due to increased marketing personnel salaries.
Cash used by operations during the three months ended March 31,
1997 was financed principally by collections of accounts
receivable and by additional short term borrowings.
Wilson Brothers and Subsidiaries
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
The Registrant did not file any reports on Form 8-K during
the three months ended March 31, 1997.
Wilson Brothers and Subsidiaries
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Wilson Brothers
Date: May 31, 1997 By: _____/s/ John
Sanford______________
John Sanford
President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 174
<SECURITIES> 0
<RECEIVABLES> 713
<ALLOWANCES> 146
<INVENTORY> 504
<CURRENT-ASSETS> 1,464
<PP&E> 2,290
<DEPRECIATION> 1,935
<TOTAL-ASSETS> 1,819
<CURRENT-LIABILITIES> 3,915
<BONDS> 0
<COMMON> 3,321
0
0
<OTHER-SE> (7,556)
<TOTAL-LIABILITY-AND-EQUITY> (4,235)
<SALES> 1,017
<TOTAL-REVENUES> 1,017
<CGS> 870
<TOTAL-COSTS> 1,224
<OTHER-EXPENSES> (18)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35
<INCOME-PRETAX> (224)
<INCOME-TAX> 0
<INCOME-CONTINUING> (224)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (224)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
