UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended August 31, 1999
Commission file number 1-6775
HOWARD B. WOLF, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-0847571
(State of Incorporation) (IRS Employer Identification No.)
3710 Rawlins Street, #970, Dallas, Texas 75219-4238
(Address of principal executive offices) (Zip Code)
(214) 252-0124
(Telephone number)
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 ____.
Common stock, par value $0.33 1/3 per share:
1,056,191 shares outstanding as of
October 8, 1999
<PAGE>
HOWARD B. WOLF, INC.
INDEX
Page
Number
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Net Assets in Liquidation -
August 31, 1999 (Unaudited) and May 31, 1999 3
Consolidated Statement of Changes in Net Assets
in Liquidation for the three months ended August
August 31, 1999 (Unaudited) 4
Consolidated Statement of Operations Retained Earnings
for the three months ended August 31, 1998 (Unaudited) 5
Consolidated Statement of Cash Flows for the
three month period ended August 31, 1998 (Unaudited) 6
Notes to Consolidated Financial Statements (Unaudited) 7
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II. OTHER INFORMATION
Item 9.
Exhibits and Reports on Form 8-K 10
<PAGE>
Part 1. FINANCIAL INFORMATION
Item 1. Financial Statement
<TABLE>
HOWARD B. WOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION
August 31, 1999 May 31, 1999
--------- ---------
<S> <C> <C>
ASSETS
Cash and cash equivalents $4,031,750 $3,771,529
Accounts and note receivable - net 424,679 941,597
Prepaid expenses 36,028 34,199
Refundable federal income tax 676,624 676,624
Property and equipment - net 6,878 13,870
Other assets - 51,957
--------- ---------
Total assets 5,175,959 5,489,776
LIABILITIES
Accounts payable and accrued liabilities 129,130 185,911
--------- ---------
Net assets in liquidation $5,046,829 $5,303,865
========= =========
Note: The Consolidated Statement of Net Assets in Liquidation
at May 31, 1999 has been taken from the Audited financial statements.
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
HOWARD B. WOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
For the three-month period ending August 31, 1999
and the period May 6, 1999 through May 31, 1999
August 31, 1999 May 31, 1999
--------- ---------
<S> <C> <C>
Revenue -
Net sales $ - $ 183,266
Interest income 41,676 16,816
Costs and expenses -
Cost of sales - 281,123
Selling, general
and administrative expenses 297,695 304,693
Provision for bad debt expense - 33,349
Interest expense 1,017 2,843
--------- ---------
298,712 622,008
--------- ---------
Decrease in net assets for the period (257,036) (421,926)
Net assets at the beginning of the period 5,303,865 5,725,791
--------- ---------
Net assets at the end of the period $5,046,829 $5,303,865
========= =========
Note: The Consolidated Statement of Changes in Net Assets in
Liquidation for the period May 6, 1999 through May 31, 1999 has been
taken from the audited financial statements.
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
HOWARD B. WOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
for the three months ended August 31, 1998
<S> <C>
Net sales $3,148,320
Cost and expenses:
Cost of sales 2,156,047
Selling, general and
administrative expenses 955,841
Provision for bad debt expense 27,459
---------
3,139,347
---------
Income from operations 8,883
Other income 14,097
Interest income 3,029
Interest expense (19,700)
---------
Income before federal income tax 6,309
Provision for federal income tax (1,076)
---------
Net income 5,233
Retained earnings - beginning of period 5,433,784
Cash dividends (84,495)
---------
Retained earnings - end of period $5,354,522
Average number of shares outstanding 1,056,191
Basic and diluted earnings per share $.01
Cash dividends per share $.08
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
HOWARD B. WOLF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
for the three months ended August 31, 1998
<S> <C>
Cash flows from operating activities:
Net income $ 5,233
Adjustments to reconcile net income to
net cash used in operating activities -
Depreciation and amortization 48,000
Provision for losses
on accounts receivable 27,459
Change in deferred federal income tax 29,000
Net changes in
operating assets and liabilities -
Accounts receivable 161,611
Inventories 312,343
Prepaid expenses (62,154)
Refundable federal income tax (27,924)
Accounts payable and accrued liabilities (814,376)
-------
Net cash used in operating activities (320,808)
Cash flows from investing activities:
Additions to property, plant and equipment (5,443)
-------
Net cash used in investing activities (5,443)
Cash flows from financing activities:
Cash dividends paid (84,495)
-------
Net cash used in financing activities (84,495)
-------
Net decrease in cash and cash equivalents (410,746)
Cash and cash equivalents
at beginning of period 1,128,991
Cash and cash equivalents
at end of period $ 718,245
See notes to consolidated financial statements
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
On May 6, 1999 the shareholders approved a plan of liquidation and
dissolution and on that date adopted the liquidation basis of
accounting. Under this basis of accounting, assets and liabilities
are stated at their net realizable value and settlement amounts and
estimated costs through the liquidation are provided to the extent
reasonably determinable. The Company will be liquidated and
dissolved, all liabilities and operating costs to carry out the
liquidation will be paid, and all remaining assets will be distributed
to the shareholders.
The consolidated statement of changes in net assets in liquidation
as of August 31, 1999 and the consolidated statement of changes in net
assets in liquidation for the three-month period ended August 31, 1999
have been prepared by the Company without audit. In the opinion of
management, all adjustments necessary to present fairly the net
assets in liquidation and the changes in net assets in liquidation as
of and for the period ended August 31, 1999 have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is
suggested that these consolidated financial statements be read in
conjunction with the financial statements and notes thereto
included in the Company's May 31, 1999 annual report to
shareholders. The changes in net assets in liquidation for the three-
month period ended August 31, 1999 are not necessarily indicative of
the changes for the full year ending May 31, 2000.
<TABLE>
August 31, 1999 May 31, 1999
(Unaudited) (Audited)
---------- ----------
<S> <C> <C>
Cash and cash equivalents consist of:
Cash $ 232,478 $ 383,130
Money market funds 765,753 366,297
Matured funds at factor 4,321 25,791
U.S. Treasury bills 3,029,198 2,996,311
---------- ----------
$ 4,031,750 $ 3,771,529
Allowances for
collection losses are: $ 40,941 $ 39,112
Accounts payable and accrued
liabilities consist of:
Accounts payable - trade $ 6,434 $ 60,001
Accrued compensation - 5,291
Accrued taxes 122,696 119,400
Other accrued liabilities - 1,219
---------- ----------
$ 129,130 $ 185,911
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
On May 6, 1999 at a duly called meeting the shareholders adopted a
Plan of Liquidation and Dissolution ("the Plan") which Plan was mailed
to all shareholders as APPENDIX A in the proxy material dated May 6,
1999. As a result of the adoption of the Plan the Company has not
engaged in any business activities except for completion of its
business and affairs and preserving the value of its assets. All
assets are to be sold under the Plan, and all debts and liabilities,
whether fixed or contingent, will either be paid when due or be
provided for.
For the three-month period ended August 31, 1999 the Company's income
and expenses consisted principally of (i) investment income on cash
and cash equivalents and collection of accounts and note receivable
and (ii) corporate expenses, primarily salaries, professional fees,
office rent and expenses and necessary costs related to winding up the
affairs of the Company.
On September 21, 1999 the Board of Directors authorized the first
liquidation distribution of $4.00 per share to shareholders of record
on October 8, 1999, payable November 23, 1999. At such time as the
Board of Directors has determined that all claims and liabilities have
been identified and paid or provided for, the Board will determine a
record date and issue a final liquidating distribution.
As part of the liquidation and dissolution process under the terms of
the Plan, trading in the Company's common stock will be suspended on
October 12, 1999 by the American Stock Exchange.
The Company did not offer a retirement plan nor offer post retirement
or employment benefits. Accordingly, there is no impact on the
Company due to SFAS 132, "Employers' Disclosure about Pensions and
Other Postretirement Benefits.", which is effective for fiscal years
beginning after December 15, 1997.
<PAGE>
Based on the following estimates the Company believes that its future
investment income and asset liquidations will exceed its operating
expenses and other costs during the liquidating period as shown below.
<TABLE>
Proforma (unaudited)
Fiscal year ending May 31, 2000 2001 2002 Total
--------- ------- ------- ---------
<S> <C> <C> <C> <C>
Beginning cash balances $3,772,000 $339,000 $232,000 $3,772,000
Cash receipts:
Collection of receivables 575,000 75,000 25,000 675,000
Investment income 75,000 25,000 10,000 110,000
Tax refund 677,000 0 0 677,000
Miscellaneous receipts 70,000 0 0 70,000
--------- ------- ------- ---------
Total cash receipts 1,397,000 100,000 35,000 1,532,000
--------- ------- ------- ---------
Total cash available 5,169,000 439,000 267,000 5,304,000
Cash requirements:
Office operations
and expenses 70,000 40,000 32,000 142,000
Professional fees 40,000 25,000 15,000 80,000
Salaries 200,000 60,000 40,000 300,000
Shareholder/SEC/AMEX costs 20,000 10,000 10,000 40,000
Taxes and reserves 275,000 72,000 91,000 438,000
--------- ------- ------- ---------
Total cash requirements 605,000 207,000 188,000 1,000,000
--------- ------- ------- ---------
Cash available
For distribution 4,564,000 232,000 79,000 4,304,000
Distribution to shareholders 4,225,000 0 79,000 4,304,000
--------- ------- ------- ---------
Ending cash balances $ 339,000 $232,000 $ 0 $ 0
========= ======= ======= =========
</TABLE>
The Company is working to resolve the potential impact of the year
2000 on the ability of the Company's computerized information systems
to accurately process information that may be date sensitive. Any of
the Company's programs that recognize a date using "00" as the year
1900 rather than the year 2000 could result in errors or system
failures. Due to the liquidation and dissolution process, the Company
now utilizes only one computer system which is year 2000 compliant and
is obtaining year 2000 certifications from companies upon which it
relies for critical information.
<PAGE>
RESULTS OF OPERATIONS
As a result of the approval of the Plan of Liquidation and Dissolution
by the shareholders on May 6, 1999, the Company has not engaged in any
business activities in the three-month period ended August 31, 1999
except for the completion of its business and affairs, the liquidation
of its assets, paying all claims and liabilities and preserving and
maximizing shareholder value.
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Not applicable
(b) No report on Form 8-K was filed during the three-month
period ended August 31, 1998. One report on Form 8-K was
filed on October 5, 1999.
<PAGE>
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.
HOWARD B. WOLF, INC.
/s/ Eugene K. Friesen
Eugene K. Friesen
Senior Vice President and Treasurer
(Chief Accounting Officer)
/s/ Howard B. Wolf
Howard B. Wolf
Chairman of the Board
October 12, 1999
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-END> AUG-31-1999
<CASH> 4,032
<SECURITIES> 0
<RECEIVABLES> 466
<ALLOWANCES> 41
<INVENTORY> 0
<CURRENT-ASSETS> 5,170
<PP&E> 13
<DEPRECIATION> 6
<TOTAL-ASSETS> 5,176
<CURRENT-LIABILITIES> 129
<BONDS> 0
0
0
<COMMON> 360
<OTHER-SE> 4,687
<TOTAL-LIABILITY-AND-EQUITY> 5,176
<SALES> 0
<TOTAL-REVENUES> 42
<CGS> 0
<TOTAL-COSTS> 298
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1
<INCOME-PRETAX> (257)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> (257)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (257)
<EPS-BASIC> (.24)
<EPS-DILUTED> (.24)
</TABLE>
