<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB/A
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 March 31, 1997
-------------------------------------------
[ ] Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from to
-------------------- ---------------------
Commission file number 0-3555
-------------------------------
David White, Inc.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Wisconsin 39-0967642
--------- -----------------------------------
(State or Other (I. R. S. Employer
Jurisdiction of Identification No.)
Incorporation or Organization)
11711 River Lane, Germantown, WI 53022
----------------------------------------
(Address of Principal Executive Offices)
(414) 251-8100
------------------------------------------------
(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 July 15, 1997 Common Stock,
- ------------------------- -------------------------------------------
$3.00 Par Value Per Share 457,323 Shares
X
Transitional small business disclosure format (Check One) ------ ------
Yes No
<PAGE> 2
DAVID WHITE, INC.
----------------
INDEX
-----
Sequential
Page No.
--------
Part I. Financial Information
Consolidated Condensed Balance Sheets -
March 31, 1997 and December 31, 1996 4
Consolidated Condensed Statements of Earnings -
Three Months Ended March 31, 1997 and 1996 5
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996 6
Notes to Unaudited Consolidated Condensed
Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of
Earnings 8 & 9
Part II. Other Information
Exhibits and Reports on Form 8-K 10
Signature 13
Exhibits
27 Financial Data Schedule (filed in
electronic format only) N/A
List of Schedules and Exhibits to Agreement and Plan of Merger
Schedule 3.05(a) Required Consents, Approvals, Authorizations or Permits
Schedule 3.07(c) Material Liability Not Disclosed on 12/31/96 Balance
Sheet
Schedule 3.09(a) Pending or Threatened Litigation, Claims, etc. (See
Schedule 3.21)
Schedule 3.09(b) Continuing Orders, Consent Decrees, Settlement
Agreements, Investigations (See Schedule 3.21)
<PAGE> 3
Schedule 3.10(a) Contracts or Agreements Concerning Partnership or Joint
Venture or Material to Company
1. See Exhibit Index of David White, Inc.'s Form
10-KSB for the period ending 12/31/96, items 10.1-10.19,
incorporated herein by reference.
2. Incentive Stock Option Agreement dated January 29,
1997, to Tony L. Mihalovich for 10,000 shares of common
stock at Seven Dollars and Eighty Seven 1/2 cents ($7.875)
per share.
3. Incentive Stock Option Agreement dated January 29,
1997, to Stephen M. Smith for 2,000 shares of common stock
at Seven Dollars and Eighty Seven 1/2 cents ($7.875) per
share.
4. Incentive Stock Option Agreement dated January 29,
1997, to Larry P. Hutzler for 2,000 shares of common stock
at Seven Dollars and Eighty Seven 1/2 cents ($7.875) per
share.
5. Incentive Stock Option Agreement dated January 29,
1997, to William L. Durkin for 1,000 shares of common stock
at Seven Dollars and Eighty Seven 1/2 cents ($7.875) per
share.
6. Incentive Stock Option Agreement dated January 29,
1997, to James L. Younk for 2,000 shares of common stock at
Seven Dollars and Eighty Seven 1/2 cents ($7.875) per share.
Schedule 3.11 Benefit Plans
Schedule 3.16 Cleary Gull Reiland & McDevitt Inc. Engagement Letter
Schedule 3.17 Description of Real Property
Schedule 3.19 Liens on Personal Property
Schedule 3.21 Environmental Permits, Licenses, Approvals, etc.
Schedule 3.22 Collection Bargaining Agreements/Labor Contracts
Schedule 3.23 Citations Issued by a Government Entity (See Schedule 3.21)
Schedule 3.24 Aging Schedule of Accounts Receivable
Schedule 3.25 Largest Customers/Suppliers
Schedule 3.26 Warranties Provided by Company
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DAVID WHITE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(000'S)
<TABLE>
<CAPTION>
Assets March 31, December 31,
------ 1997 1996
----------- -------------
(Unaudited)
<S> <C> <C>
Current Assets
- --------------
Cash and cash equivalents $ 136 $ 47
Trade accounts receivable, net 3,625 1,315
Inventories 3,192 3,681
Other current assets 168 142
-------- --------
Total current assets 7,121 5,185
Other Assets
- ------------
Technology and patents, net 141 141
Intangible pension asset 107 107
Other 52 54
-------- --------
300 302
Property, plant and equipment, net 1,805 1,816
-------- --------
Total assets $ 9,226 $ 7,303
======== ========
Liabilities and Stockholders' Investment
----------------------------------------
Current Liabilities
- -------------------
Notes payable to bank $ 1,315 $ 0
Trade accounts payable 711 354
Accrued liabilities 578 630
Income taxes 89 0
Current maturities of long-term debt 230 225
-------- --------
Total current liabilities 2,923 1,209
Long-term debt, less current maturities 899 958
Long-term pension liability 133 133
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 2,077 2,077
Additional paid-in capital 1,024 1,024
Retained earnings 4,490 4,222
Additional pension liability (26) (26)
Treasury stock at cost - 234,917 shares (2,294) (2,294)
--------- --------
Total stockholders' investment 5,271 5,003
-------- --------
Total liabilities and stockholders' investment $ 9,226 $ 7,303
======== ========
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
-4-
<PAGE> 5
DAVID WHITE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(000'S) EXCEPT SHARE AND PER SHARE DATA
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1997 1996
-------- --------
<S> <C> <C>
Net sales $ 4,128 $ 3,953
Cost of goods sold 2,962 2,845
-------- --------
Gross margin 1,166 1,108
Selling and administrative expenses 767 737
-------- --------
Earnings from operations before
other income (expenses) and income taxes 399 371
Other income (expenses)
Other income 0 0
Interest expense (42) (86)
--------- --------
Earnings before income taxes 357 285
Income taxes 89 57
-------- --------
Net earnings $ 268 $ 228
======== ========
Net earnings per common share $ .59 $ .50
Average common shares outstanding 457,323 457,323
Dividends per common share outstanding $ .00 $ .00
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
-5-
<PAGE> 6
DAVID WHITE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(000'S)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 268 $ 228
Adjustments to reconcile net earnings to net
cash used in operating activities:
Depreciation 129 129
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable (2,310) (1,103)
Inventories 489 (51)
Prepaid expenses and other assets (24) 78
Increase (decrease) in:
Accounts payable and accrued liabilities 305 172
Income taxes 89 57
------- -------
Net cash used in operating activities (1,054) (1,490)
Cash flows from investing activities:
Additions to property, plant & equipment (118) (70)
-------- -------
Net cash used in investing activities (118) (70)
Cash flows from financing activities:
Principal payments on debt (54) (75)
Net increase in notes payable to bank 1,315 1,635
------- -------
Net cash provided by financing activities 1,261 1,560
Net increase (decrease) in cash and cash equivalents 89 0
Cash and cash equivalents at beginning of year 47 0
------- -------
Cash and cash equivalents at end of period $ 136 $ 0
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 42 86
Income taxes 0 0
</TABLE>
See accompanying notes to unaudited consolidated condensed financial
statements.
-6-
<PAGE> 7
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 in the Company's latest annual report on Form 10-KSB/A.
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 three months ended March 31, 1997 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. Accounting Standard to be Adopted. In February, 1997, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share." Under the accounting and
disclosure requirements promulgated in the statement, the Company must adopt
the provisions in its year ending December 31, 1997. SFAS 128 is effective
for fiscal years ending after December 15, 1997. The Company is currently
evaluating the accounting and disclosure alternatives provided for under the
provisions of the statement.
-7-
<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
March 31,
1997 and 1996
-------------------
Increase (Decrease)
(000's)
<S> <C>
Net sales 175
Cost of goods sold 117
Selling and administrative expenses 30
Other income 0
Interest expense (44)
Earnings before income taxes 72
Income taxes 32
Net earnings 40
</TABLE>
-8-
<PAGE> 9
RESULTS OF OPERATIONS
- ---------------------
FIRST QUARTER 1997 COMPARED TO FIRST QUARTER 1996
- -------------------------------------------------
Sales of $4.13 million for the first quarter of 1997 were up 4% from 1996's
arter sales of $3.95 million. On the higher volume, gross margins also
improved. For the first quarter of 1997, gross margins improved to 28.2% from
28.0% in 1996. Selling and administrative expenses were up 4% or $30,000 on
the 4% increase in sales. Interest expense for the first quarter of 1997 was
down $44,000 due to a significant decrease in bank borrowing. The Company has
reduced inventories $1.5 million since March 31, 1996. Much of this reduction
was the direct result of the installation of a new manufacturing software
package during the second quarter of 1996. Extensive training along with the
new software allowed for an enhanced ability to automatically replenish
inventory, thereby allowing the Company to decrease the size of its inventory.
Net earnings improved from $228,000 for the first quarter of 1996 to $268,000
for the first quarter of 1997.
The working capital at the end of the first quarter 1997 improved to $4.2
from $3.9 million at the end of the first quarter 1996. The Company's current
ratio at the end of the first quarter 1997 improved to 2.4:1 from 1.9:1 at the
end of the first quarter 1996.
LIQUIDITY
- ---------
Each year receivables increase during the first quarter as the Company
offers a deferred payment program to its key distributors. The deferred payment
program allows for shipments from November 1 through the end of February with
payments due as follows: 1/3 due April 1; 1/3 due May 1; and 1/3 due June 1. The
deferred payment program defers between $2,500,000 and $3,000,000 of the
Company's receivables.
The Company currently has available a domestic bank revolving line of
credit to meet its short term borrowing needs. The amount available under the
line of credit is adjusted periodically according to seasonal requirements, and
ranges from $1,750,000 to $2,000,000. Borrowings against the line of credit are
payable on demand with interest payable monthly at the prime rate, which was
8.5% as of March 31, 1997. As of March 31, 1997, the Company had borrowed
$1,315,000 against its line of credit. The Company will be reducing its
outstanding borrowings in the second quarter as the deferred payments described
above are collected.
Because the Company's products are used primarily in the construction
industry, the Company's long-term liquidity is based largely on the construction
industry's expenditures. It is difficult to predict the amount of such
expenditures long-term, because of the seasonal and cyclical nature of the
construction industry. The Company therefore does not project liquidity on a
long-term basis.
CAPITAL RESOURCES
- -----------------
No significant capital commitments were outstanding on March 31, 1997.
KNOWN TRENDS OR UNCERTAINTIES
- -----------------------------
As the Company's products are used primarily in the construction industry,
it is difficult to project trends as the construction industry's expenditures
are subject to variation and have been affected in recent years by recessionary
cycles and changes in interest rates. The outlook for 1997 appears to be stable.
OTHER MATERIAL EVENTS
- ---------------------
On April 30, 1997, the Board of Directors of the Company signed a
definitive agreement for the sale of the Company to Choucroute Partners, a
limited liability company formed by Milwaukee, Wisconsin businessman Robert T.
Foote, Jr. Under the agreement, which is subject to a financing contingency and
approval by the Company's shareholders, Mr. Foote will make a $12 per share cash
offer to shareholders of the Company. The sale is subject to SEC review, and
the closing of the transaction is expected to occur mid-summer.
-9-
<PAGE> 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
2.1 Agreement and Plan of Merger, dated April 30, 1997 (without
schedules or exhibits) [Incorporated by reference to Exhibit 2.1
to the Company's Form 10-QSB for the end of the first quarter of
1997]
3.1 Restated Articles of Incorporation [Incorporated by reference
to Exhibit 3 to the Company's Form 8-K dated May 8, 1992]
3.2 By-Laws, as amended through January 29, 1997 [Incorporated by
reference to Exhibit 3.2 to the Company's Form 10-KSB for the
year ended December 31, 1996]
4.1 Rights Agreement, dated as of August 29, 1988, between Company
and First Wisconsin Trust Company, as Rights Agent
[Incorporated by reference to Exhibit 4 to the Company's Form
8-K dated September 15, 1988]
4.2 Amendment to Rights Agreement, dated as of November 9, 1988,
between Company and First Wisconsin Trust Company, as Rights
Agent [Incorporated by reference to Exhibit 4.1 to the
Company's Form 8-K dated November 10, 1988]
4.3 Amendment No. 2 to Rights Agreement dated as of June 30, 1989
between the Company and First Wisconsin Trust Company, as
Rights Agent [Incorporated by reference to Exhibit 4.2 to the
Company's Form 8-K dated June 30, 1989]
4.4 Amendment No. 3 to Rights Agreement dated as of January 22,
1992, between the Company and First Wisconsin Trust Company,
as Rights Agent [Incorporated by reference to Exhibit 4.3 to
the Company's Form 8-K dated February 7, 1992]
10.1 Form of Key Executive Employment and Severance
Agreement ("KEESA"), dated as of January 25, 1990,
entered into between the Company and each of the
following: Tony L. Mihalovich, Ronald J. Jansen,
James L. Younk, E. Gustav Malm, Larry Clark, Walker
J. Young and Robert L. Underberg. The KEESA with
James L. Younk is the only one that remains in effect
[Incorporated by reference to Exhibit 10.4 to the
Company's Form 10-K for the year ended December 31,
1992]*
10.2 Employment Agreement, dated as of January 1, 1994,
between the Company and Tony L. Mihalovich
[Incorporated by reference to Exhibit 10.5 of the
Company's Form 10-KSB for the year ended December 31,
1993, as amended by Form 8 dated April 20, 1994]*
10.3 Amendment to Employment Agreement, dated as of
December 5, 1995, between the Company and Tony L.
Mihalovich [Incorporated by reference to Exhibit 10.6
to the Company's Form 10-KSB for the year ended
December 31, 1995]*
10.4 Stock Option Agreement, dated as of January 1, 1994,
between the Company and Tony L. Mihalovich.
[Incorporated by reference to Exhibit 10.6 at the
Company's Form 10-KSB for the year ended December 31, 1993]*
-10-
- ---------------
* management contract or compensatory plan or arrangement.
<PAGE> 11
10.5 Amendment to Stock Option Agreement, dated as of
December 5, 1995, between the Company and Tony L.
Mihalovich [Incorporated by reference to Exhibit 10.8
to the Company's Form 10-KSB for the year ended
December 31, 1995]*
10.6 Stock Option Agreement, dated as of January 11, 1990,
between Company and R. Ron Heiligenstein
[Incorporated by reference to Exhibit 10.11 to the
Company's Form 10-K for the year ended December 31,
1989]*
10.7 Form of Indemnity Agreement, dated as of January 24,
1990, entered into between the Company and each of
the following: Charles D. Jacobus, Hans-Rudolf
Ammann, E. Gustav Malm, R. Ron Heiligenstein,
Marshall A. Loewi, Michael S. Ariens and Richard H.
Bromley [Incorporated by reference to Exhibit 10.12
to the Company's Form 10-K for the year ended
December 31, 1989]
10.8 1992 Stock Option Plan [Incorporated by reference to
Exhibit 10.9 to the Company's Form 10-K for the year
ended December 31, 1992]*
10.9 Form of 1992 Incentive Stock Option Agreement
[Incorporated by reference to Exhibit 10.10 to the
Company's Form 10-K for the year ended December 31,
1992]*
10.10 1995 Stock Option Plan [Incorporated by reference to
Exhibit 10.11 to the Company's Form 10-QSB for the
end of the second quarter of 1995]*
10.11 Form of 1995 Incentive Stock Option Agreement,
entered into between the Company and Tony L.
Mihalovich (for 10,000 shares), Steven M. Smith
(for 2,000 shares), Larry P. Hutzler (for 2,000 shares),
William L. Durkin (for 1,000 shares) and James L.
Younk (for 2,000 shares) [Incorporated by reference to
Exhibit 10.11 to the Company's Form 10-QSB for the end
of the first quarter of 1997]*
10.12 Stock Purchase Agreement, dated as of May 31, 1995,
entered into between the Company and Hans-Rudolf
Ammann, Jolanda Ammann, Konrad Bachmaier and Thomas
Ammann [Incorporated by reference to Exhibit 10.12 to
the Company's Form 10-QSB for the end of the second
quarter of 1995]
10.13 License Agreement, dated as of May 31, 1995, entered
into between the Company and Ammann Lasertechnik, AG
[Incorporated by reference to Exhibit 10.13 to the
Company's Form 10-QSB for the end of the second
quarter of 1995]
10.14 Ammann Lasertechnik AG Supply Agreement, dated as of
May 31, 1995, entered into between the Company and
Ammann Lasertechnik, AG [Incorporated by reference
to Exhibit 10.14 to the Company's Form 10-QSB for the
end of the second quarter of 1995]**
10.15 David White, Inc. Supply Agreement, dated as of May
31, 1995, entered into between the Company and Ammann
Lasertechnik, AG [Incorporated by reference to
Exhibit 10.15 to the Company's Form 10-QSB for the
end of the second quarter of 1995]**
10.16 Transfer and Assignment Agreement, dated as of May
31, 1995, entered into between the Company and Ammann
Lasertechnik, AG [Incorporated by reference to
Exhibit 10.16 to the Company's Form 10-QSB for the
end of the second quarter of 1995]
-11-
- ---------------
* management contract or compensatory plan or arrangement.
** Certain information in this Exhibit was omitted pursuant to a request
for confidential treatment. The information and the request were
separately filed with the Commission.
<PAGE> 12
10.17 Pledge Agreement, dated as of May 31, 1995, entered
into between the Company and Hans-Rudolf Ammann,
Jolanda Ammann, Konrad Bachmaier and Thomas Ammann
[Incorporated by reference to Exhibit 10.17 to the
Company's Form 10-QSB for the end of the second
quarter of 1995]
10.18 Summary [English Translation] of German Joint Venture
Ammann Lasertechnik GmbH, March 1991 [Incorporated by
reference to Exhibit 10.8 to the Company's Form 10-K
for the year ended December 31, 1991]
10.19 Offer, Addendum and Accepted Counter-Offer between
Tony L. Mihalovich and the Company regarding the
Purchase of the Company's Germantown, Wisconsin
property by Mr. Mihalovich [Incorporated by reference
to Exhibit 10.21 to the Company's Form 10-QSB for the
end of the third quarter of 1996]
10.20 Lease dated October 31, 1996, entered into between
the Company and Tony L. Mihalovich [Incorporated by
reference to Exhibit 10.22 to the Company's Form
10-QSB for the end of the third quarter of 1996]
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the Company
with the Securities and Exchange Commission during the first quarter
of 1997.
-12-
<PAGE> 13
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: July __, 1997
--------------------------------
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000082414
<NAME> WHITE DAVID, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 136
<SECURITIES> 0
<RECEIVABLES> 3720
<ALLOWANCES> (95)
<INVENTORY> 3192
<CURRENT-ASSETS> 7121
<PP&E> 7689
<DEPRECIATION> (5884)
<TOTAL-ASSETS> 9226
<CURRENT-LIABILITIES> 2923
<BONDS> 899
0
0
<COMMON> 2077
<OTHER-SE> 3194
<TOTAL-LIABILITY-AND-EQUITY> 9226
<SALES> 4128
<TOTAL-REVENUES> 4128
<CGS> 2962
<TOTAL-COSTS> 767
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> 357
<INCOME-TAX> 89
<INCOME-CONTINUING> 268
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 268
<EPS-PRIMARY> .59
<EPS-DILUTED> .59
</TABLE>
