<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
OMB Approval
OMB Number: xxxx-xxxx
Expires: Approval Pending
Estimated Average Burden Hours Per Response: 1.0
(Mark One)
/X/ Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended September 30, 1995
------------------------------------
/ / Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from ____________________ to _______________________
Commission file number 0-3555
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David White, Inc.
- ------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Wisconsin 39-0967642
- -------------------------------- ------------------------------------
(State or Other Jurisdiction of (I. R. S. Employer
Incorporation or Organization) Identification No.)
11711 River Lane, Germantown, WI 53022
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(Address of Principal Executive Offices)
(414) 251-8100
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(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or 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
------ -------
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Outstanding at October 31, 1995
- --------------------------------------- ------------------------------------
Common Stock, $3.00 Par Value Per Share 457,323 Shares
<PAGE> 2
DAVID WHITE, INC.
INDEX
Page No.
Part I. Financial Information
Consolidated Condensed Balance Sheets -
September 30, 1995 and December 31, 1994 3
Consolidated Condensed Statements of Operations -
Three Months and Nine Months Ended September 30,
1995 and 1994 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended September 30, 1995 and
1994 5
Notes to Unaudited Consolidated Condensed
Financial Statements 6 & 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 & 9
Part II. Other Information
Signature 10
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DAVID WHITE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(000'S)
<TABLE>
<CAPTION>
Assets September 30, December 31,
------ 1995 1994
----------- --------------
(Unaudited)
<S> <C> <C>
Current Assets
- --------------
Cash and cash equivalents $ 134 $ 892
Trade accounts receivable, net 1,291 1,442
Inventories 4,569 4,645
Other current assets 4 112
-------- --------
Total current assets 5,998 7,091
Other Assets
- ------------
Technology and patents, net 197 245
Intangible pension asset 211 211
Other 302 322
-------- --------
710 778
Property, plant and equipment, net 2,503 2,176
Goodwill, net 0 1,150
-------- --------
Total assets $ 9,211 $ 11,195
======== ========
Liabilities and Stockholders' Investment
-----------------------------------------
Current Liabilities
- -------------------
Notes payable to bank $ 0 $ 413
Trade accounts payable 673 852
Accrued liabilities 535 676
Income taxes 123 173
Current maturities of long-term debt 290 284
-------- --------
Total current liabilities 1,621 2,398
Long-Term Liabilities
- ---------------------
Long-term debt, less current maturities 1,932 2,148
Long-term pension liability 573 573
-------- --------
Total long-term liabilities 2,505 2,727
Minority interest 0 44
Stockholders' Investment
- ------------------------
Preferred stock, par value $1 a share:
Authorized 1,000,000 shares; none issued
Common stock, par value $3 a share:
Authorized 5,000,000 shares; issued 692,240 shares
and 691,940 shares, respectively 2,077 2,077
Additional paid-in capital 1,024 1,024
Retained earnings 4,640 4,747
Additional pension liability <362> <362>
Cumulative translation adjustment 0 83
Treasury stock at cost - 234,917 shares and
164,417 shares, respectively <2,294> <1,537>
-------- --------
Total stockholders' investment 5,085 6,032
-------- --------
Total liabilities and stockholders' investment $ 9,211 $ 11,195
======== ========
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
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DAVID WHITE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(000'S) EXCEPT SHARE AND PER SHARE DATA
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
1995 1994 1995 1994
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net sales $ 3,160 $ 3,768 $ 12,259 $ 12,201
Cost of goods sold 2,320 2,877 9,085 8,965
-------- -------- -------- --------
Gross margin 840 891 3,174 3,236
Loss on sale of subsidiary 0 0 <722> 0
Selling and administrative expenses 613 667 2,295 2,173
-------- -------- -------- --------
Earnings from operations before
other expenses and income taxes 227 224 157 1,063
Other income (expenses)
Other income 1 0 35 0
Interest expense <58> <53> <235> <189>
Amortization of intangible assets 0 <45> <75> <137>
Minority interest 0 <3> 0 <20>
-------- -------- -------- --------
Earnings (loss) before income taxes 170 123 <118> 717
Income taxes (benefit) 34 27 <11> 109
-------- -------- -------- --------
Net earnings (loss) $ 136 $ 96 <107> 608
======== ======== ======== ========
Net earnings (loss) per common share $ .30 $ .18 $ <.22> $ 1.15
Average common shares outstanding 457,323 527,823 496,490 527,624
Dividends per common share outstanding $ .00 $ .00 $ .00 .00
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
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<PAGE> 5
DAVID WHITE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(000's)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ <107> $ 608
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Depreciation 307 323
Amortization of intangible assets 75 137
Minority interest in earnings of subsidiary 0 20
Issuance of common stock - employment agreement 0 3
Loss on sale of subsidiary 722 0
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable 493 <282>
Inventories <659> <607>
Prepaid expenses and other assets <18> 52
Increase (decrease) in:
Accounts payable and accrued liabilities <259> 125
------- -------
Net cash provided by operating activities 554 379
Cash flows from investing activities:
Additions to property, plant & equipment <690> <316>
------- -------
Net cash used in investing activities <690> <316>
Cash flows from financing activities:
Proceeds from issuance of long-term debt 0 2,500
Principal payments on debt <210> 0
Net decrease in notes payable to bank <417> <1,566>
------- -------
Net cash provided by (used in) financing activities <627> 934
Effect of exchange rate changes on cash 5 1
Net increase (decrease) in cash and cash equivalents <758> 998
Cash and cash equivalents at beginning of year 892 41
------- -------
Cash and cash equivalents at end of period $ 134 $ 1,039
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 214 175
Income taxes 165 10
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
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<PAGE> 6
DAVID WHITE, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The condensed financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction with the
audited financial statements and the notes thereto incorporated by
reference in the Company's latest annual report on Form 10-KSB.
2. In the opinion of management, the aforementioned statements reflect
all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results for the interim
periods. The results of operations for the nine months ended
September 30, 1995 are not necessarily indicative of the results to be
expected for the full year.
3. It is not practicable to segregate the amounts of raw materials, work
in progress, finished goods or supplies.
4. During the second quarter of 1995, the Company and its work force
agreed to terminate the union's defined benefit retirement plan at the
end of 1995. Indications are there will be a significant charge to
earnings in the fourth quarter when all the actuarial results are
known. Over 80% of the cash requirements are invested in a trust
account. The equity section of the balance sheet contains an
unrecognized loss of $289,000 to cover the unfunded portion of the
liability. Management estimates the potential fourth quarter charge
will range between $450,000 - $550,000 based upon current interest
rate assumptions.
5. On May 31, 1995, the Company sold its 90% investment in Ammann
Lasertechnik to Hans Ammann from whom it was originally purchased on
June 30, 1989. The following is a schedule of non-cash activities in
connection with the sale of the subsidiary:
<TABLE>
<S> <C>
Net carrying value of assets sold $ <691>
Write-off of goodwill <1,123>
Fair market value of common stock received 757
Other assets - net 335
--------
Loss on sale of subsidiary <722>
Tax benefit 147
--------
Loss on sale of subsidiary - net of taxes $ <575>
========
</TABLE>
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<PAGE> 7
6. On October 23, 1995, the Company entered into an agreement with the
State of Wisconsin to settle a claim that the Company violated state
regulations concerning the operation of an underground storage tank on
the Company's Berlin, Wisconsin property. Pursuant to that agreement,
the Company will pay a $25,000 forfeiture to the State of Wisconsin.
The Company has also agreed to clean up contamination caused by
leakage from the tank. The costs of the clean-up are unknown at this
time.
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<PAGE> 8
DAVID WHITE, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors that have affected the Company's earnings during the periods included
in the accompanying consolidated condensed statements of operations.
A summary of the period to period changes in the principal items included in
the consolidated condensed statements of operations is shown below:
<TABLE>
<CAPTION>
Comparison of
----------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
1995 and 1994 1995 and 1994
------------------- -------------------
Increase (Decrease) Increase (Decrease)
(000's) (000's)
<S> <C> <C>
Net sales <608> 58
Cost of goods sold <557> 120
Selling and administrative expenses <54> 122
Other income 1 35
Loss on sale of subsidiary, net of tax benefit 0 575
Interest expense 5 46
Amortization of intangible assets <45> <62>
Minority interest <3> <20>
Earnings before income taxes 47 <688>
Income taxes 7 27
Net earnings 40 <715>
</TABLE>
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<PAGE> 9
RESULTS OF OPERATIONS
THIRD QUARTER 1995 COMPARED TO THIRD QUARTER 1994
Sales for the three months ended September 30, 1995 of $3.16 million were down
16% or $608,000 from $3.768 million for the same period in 1994. Sales of
$758,000 for the Company's former Swiss subsidiary, Ammann Lasertechnik, were
included for the three months ending September 30, 1994. Ammann Lasertechnik
was sold on May 31, 1995. Sales of David White, Inc. rose 5% over the same
period. As a result of the increased domestic activity, earnings rose 42% from
$96,000 for the quarter ended September 30, 1994 to $136,000 for the three
months ending September 30, 1995. In the third quarter of 1994, the Swiss
subsidiary lost $18,000. Gross margins improved from 24% in 1994 to 27% in
1995 due to the increased plant activity and a better sales mix. Selling and
administrative expenses were lower due to the exclusion of Ammann
Lasertechnik's administrative overhead. Interest expenses were up $5,000 due
to higher debt levels required to support the increase in receivables and
inventories.
FIRST NINE MONTHS 1995 COMPARED TO THE FIRST NINE MONTHS 1994
Sales for the first nine months of 1995 of $12,259,000 are up less than 1% from
the $12,201,000 reported for the first nine months of 1994. David White,
Inc.'s sales were up 12% while Ammann Lasertechnik's sales were included only
through May 31, 1995 when the Company sold the Swiss subsidiary. Domestic
earnings, exclusive of the loss of $575,000 on the sale of Ammann Lasertechnik,
were down $58,000 from 1994 due primarily to higher interest expenses of
$58,000 required to carry the increase in inventories and receivables necessary
to support the higher sales activity. Gross margins of 26% for the first nine
months of 1995 were down less than 1% from 1994's gross margins of 27%.
Selling and administrative expenses were up 6% primarily due to expenses
incurred for the Company's computer conversion. The loss of $575,000 on the
sale of Ammann in the second quarter of 1995, erased the $468,000 profit
through September, 1995. Details of the sale are included in the third quarter
notes to the financial statements.
LIQUIDITY
At the end of the third quarter, the Company had no revolving debt. The debt
covenant enables the Company to borrow at the prime rate. The term note
remaining of $2.2 million is payable in monthly installments of $40,000 through
August, 2001. The interest rate on the term note is fixed at 8.5%. The
current ratio increased from 3.0:1 on September 30, 1994 to 3.7:1 on September
30, 1995.
CAPITAL RESOURCES
Please see footnotes 4 and 6 to the Company's financial statements.
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<PAGE> 10
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.
DAVID WHITE, INC.
---------------------------------
(Registrant)
/s/ Tony L. Mihalovich
---------------------------------
Tony L. Mihalovich
(President)
/s/ James L. Younk
---------------------------------
James L. Younk
(Vice President-Finance)
Date: November 10, 1995
-----------------------------
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<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000082414
<NAME> WHITE DAVID, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 134
<SECURITIES> 0
<RECEIVABLES> 1,386
<ALLOWANCES> (95)
<INVENTORY> 4,569
<CURRENT-ASSETS> 5,998
<PP&E> 8,388
<DEPRECIATION> (5,885)
<TOTAL-ASSETS> 9,211
<CURRENT-LIABILITIES> 1,621
<BONDS> 1,932
<COMMON> 2,077
0
0
<OTHER-SE> 3,008
<TOTAL-LIABILITY-AND-EQUITY> 9,211
<SALES> 12,259
<TOTAL-REVENUES> 12,294
<CGS> 9,085
<TOTAL-COSTS> 2,295
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 235
<INCOME-PRETAX> (118)
<INCOME-TAX> (11)
<INCOME-CONTINUING> (107)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (107)
<EPS-PRIMARY> (.22)
<EPS-DILUTED> (.22)
</TABLE>
