FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarterly Period Ended December 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-17757
W-W CAPITAL CORPORATION
(exact name of Registrant as specified in its charter)
Nevada 93-0967457
(State or other jurisdiction of (IRS Employer Identi-
incorporation or organization) fication Number)
3500 JFK Parkway, Suite 202 Ft. Collins, CO 80525
(Address of principal executive offices, including zip code)
(970) 207-1100
(Registrant's telephone number, including area code)
Not Applicable
(Former name, address and former fiscal year, if changed 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 such shorter period that the Registrant
was required to file such reports), and (2) has been subject to the filing
requirements for the past 90 days. Yes _X_ No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether Registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes No NOT APPLICABLE _X_
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Title of Each Class Number of Shares Outstanding
- -------------------
Common stock at November 10, 1997
--------------------
$0.01 Par Value 5,540,661
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Part 1-FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
- -----------------------------
<PAGE>
<TABLE>
<CAPTION>
W-W CAPITAL CORPORATION
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 3,490,659 $ 3,114,560 $ 7,672,238 $ 6,927,408
Cost of goods sold 2,991,378 2,717,106 6,260,747 5,770,792
---------- ---------- ---------- ---------
Gross profit 499,281 397,454 1,411,491 1,156,616
---------- ---------- ---------- ----------
Operating expenses:
Selling expenses 288,345 265,632 583,485 544,062
General and administrative expenses 354,793 338,382 702,305 696,417
---------- ---------- ---------- ----------
Total operating expenses 643,138 604,014 1,285,790 1,240,479
---------- ---------- ---------- ----------
Operating earnings (loss) ( 143,857 ) ( 206,560 ) 125,701 ( 83,863 )
----------- ------------ --------- ----------
Other income (expense):
Interest income 20,282 17,095 44,444 35,982
Interest expense ( 86,230 ) ( 89,900 ) ( 170,857 ) ( 185,205 )
Gain (loss) on sale of assets ( 71,754 ) 2,624 ( 71,754 ) 3,010
Other income (expense), net 37,104 3,697 58,077 9,859
----------- --------- ----------- ------------
Total other income (expense) ( 100,598 ) ( 66,484 ) (140,090 ) ( 136,354 )
----------- ---------- ---------- ----------
Earnings (loss) before income taxes ( 244,455 ) ( 273,044 ) ( 14,389 ) ( 220,217 )
------------ ----------- -----------
Provision for deferred income taxes - - - -
--------------- ------------- ------------- --------------
Net earnings (loss) $( 244,455 ) $ ( 273,044 ) $( 14,389 ) $ ( 220,217 )
========= ========== ========== ==========
Basic earnings (loss) per common share $ ( .04 ) $ ( .05 ) $ ( .00 ) $ ( .04 )
============ ============ ============= ============
Diluted earnings (loss) per common share $ (.04 ) $ ( .05 ) $ ( .00 ) $ ( .04 )
============= ============= ============== ============
Weighted-average number of
common shares outstanding 5,549,544 5,537,328 5,549,544 5,533,994
========== ========== ========== ===========
</TABLE>
See accompanying notes to financial statements.
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NOTE 3 - RELATED PARTY TRANSACTION
- ----------------------------------
The Company has a number of related party transactions. See the
footnotes to W-W Capital Corporation financial statements for the year ended
June 30, 1997, included in its Annual Report on Form 10-K for the nature and
type of related party transactions.
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A summary of the related party transactions that effect the Company's
statement of operations for the six months ended December 31, 1997 and 1996,
respectively, is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
Transactions with
Related Parties 1997 1996 1997 1996
- --------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Rent expense $ 15,000 $ 15,000 $ 30,000 $ 30,000
Interest income 56 691 267 1,430
Interest expense 629 768 1,293 1,569
</TABLE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
- ------- ----------------------------------------------------------------
Results of Operations.
----------------------
The business of the Company is carried on within two segments by a
number of operating units. The livestock handling equipment segment is composed
of W-W Manufacturing (W-W Manufacturing) and Eagle Enterprises (Eagle), and the
water and environmental product segment is represented by Titan Industries
(Titan).
(A) Analysis of Results of Operations
---------------------------------
The Company incurred net losses of $244,455 and $14,389, for the three
and six month period ended December 31, 1997, as compared to net losses of
$273,044 and $220,217 in 1996. The losses are attributable to the normal
slowdown in orders in all segments for the holiday season, and a $72,354 loss
from the sale of the Texas real estate holding. Without the loss from the sale
of real estate and related taxes, the Company would have had a profit of $79,821
for the six months ended December 31, 1997.
Net sales increased to $7,672,238 for the six months ended December 31,
1997, compared to $6,927,408 for 1996. The following table represents actual
sales by segment group.
<TABLE>
<CAPTION>
Sales by segment group: Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Livestock Handling Equipment $ 2,012,340 $ 1,768,615 $ 4,375,862 $ 3,706,527
Water and Environmental Products 1,478,319 1,345,945 3,296,376 3,220,881
--------- --------- --------- ---------
Total Sales $ 3,490,659 $ 3,114,560 $ 7,672,238 $ 6,927,408
========= ========= ========= =========
</TABLE>
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The sales in the water and environmental product segment increased to $3,296,376
as compared to $3,220,881 for the corresponding period of 1996. The increase of
$75,495 is attributable to strong demand in the fall months of September and
October. Titan experienced its usual slow sales during the holiday period of
late November and December. In addition to the normal holiday slowdown, Titan
has experienced extreme wet and cold weather conditions in major market areas
which had an adverse effect in December and continued into the January and
February selling period. As weather improves and we move toward the spring
selling season, sales are expected to be above normal levels. While these
factors contributed to a decline in sales, Titan has taken steps and will
continue to find markets where sales can be maintained to avoid the losses
generated by the November, December and January selling period. The Company
continues to see strong acceptance of its new products developed and introduced
over the past year. These products include the Titan Combo-Buried Pressure Tank,
Ven-ta-Slot PVC, Enviroflex well screen and slotted high-density polyethylene
pipe. These products have allowed Titan the opportunity to go into
non-traditional water well markets such as horizontal drilling, landfills,
highway construction and various mining applications. These new products, market
improvements and Titan's commitment to quality and service, the Company is
anticipating to see strong sales throughout the spring, summer and fall selling
season. Titan will continue to expand into new markets through its efforts to
establish new distributors and manufactures representation in all areas of the
country. By concentrating expansion in the south, east and on the west coast,
Titan should not be effected by weather and economics so as to eliminate major
impacts on sales.
The increase in livestock equipment sales is attributed to high
distributor/dealer demand for all traditional equipment. Sales increased at
Eagle to $1,129,276 for the first six months ended December 31, 1997 compared to
$957,968 during the same period of 1996. Sales at W-W Manufacturing increased
from $2,726,587 to $3,246,586 or an increase of $519,999 during the six months
ended December 31, 1997. Sales did however decline during the holiday season
from late November though December. As the Company moved into the January
selling season, orders regained strength and are expected to remain strong
throughout the balance of the year. As beef prices and market conditions remain
good, sales in all areas of the livestock and rodeo equipment continue to
increase. The new panel and feed equipment lines continue to improve. Rodeo,
livestock systems and cattle working areas remain strong and hydraulic chute
sales continue to set all time levels. The Company is presently working on
several new products to be introduced during the spring and fall market. As
conditions continue to be strong, the expansion into new markets and products
during the down turn of 1995 and 1996 is proving to be a sound decision. Product
improvements to existing products have been made including systems, squeeze
chutes and headgates which has been another factor adding to increase in sales.
These improvements have allowed the Company to gain acceptance with new
customers and into markets not normally serviced by the Company. The Company is
currently negotiating with several new customers to take on the Company product
line and has seen strong interests at trade shows from new customers not
presently carrying our product line. The east coast market serviced by Eagle
continues to show improvement, as this market continues to accept and appreciate
a higher quality of
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equipment, replacing the lighter weight products previously offered in this
market. The cow/calf operator, which is the largest segment of the eastern
market, has learned the value in having heavy working equipment. With the cattle
market remaining strong, product improvements and market penetration continues
to be good. The Company expects the livestock handling equipment segment to
reach new sales and profit levels throughout the year.
Gross margins continue to show improvement in all companies showing an increase
for the six months ended December 31, 1997, to 19.7% compared to 16.7% in 1996.
The gross profit margin in the livestock handling equipment segment increased
slightly from 18.0% to 18.6%. This increase, while only slight, continues to
improve as Eagle improves production and manufacturing efficiencies. Eagle had
an operating profit of $16,880 and $64,461 for the three and six months ended
December 31, 1997 compared to an operating loss of $58,371 and $32,924 for the
same period of 1996. Operating profits at W-W Manufacturing were $12,290 for the
six months ended December 31, 1997 as compared to an operating loss of 62,733
for the same period of 1996. During the three month period (October through
December) W-W Manufacturing incurred a net loss of $85,069.92 due to shipping
problems, poor production efficiencies and labor shortages. The Company has
taken steps to improve these deficiencies and expects to return to normal during
the first quarter of 1998.
Gross profit margins in the water and environmental segment increased from 14.1%
in 1996, to 17.3% in 1997. This increase is due to the increase in sales of the
manufactured products which are at higher profit margins. Profits in the water
and environmental segment continue to improve showing a profit of $31,274.42 for
the six months ended December 31, 1997, compared to a loss of $51,191.39 for the
same period in 1996. Presently the Company is seeking other high margin products
and reviewing other ways to reduce manufacturing cost to enable margins to
continue to improve on an upward trend.
The water and environmental segment had a net operating profit for the six
months ended of $31,274 as compared to loss of $51,195 for the same period of
1996. During the three months ended December 31, 1997 Titan incurred a net loss
of $58,251 as compared to a net loss of $106,941 for the same period of 1996.
With the normal down turn in sales during the holiday season, Titan usually
experiences losses during the quarter, however this segment has improved profit
margins therefore reducing the losses during this period. Titan is continuing to
develop markets and products that will improve sales during this slow period
therefore allowing the Company to at least break even or be profitable all times
of the year.
The selling expenses as a percent of sales decreased to 7.6% in 1997 as compared
to 7.9% in 1996. The decrease is a result of lower cost as a percentage of sales
in both segments. Both segments of the Company are having success expanding
market share without having to increase the sales staff. The Company has also
cut traveling cost by realigning sales territories and using various
telemarketing techniques to reduce overall travel. Other expenses such as trade
show expense, have been evaluated and the Company has been successful in
lowering costs by having distributors/dealers share in the cost. Management will
continue to
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evaluate selling expense to find ways to keep cost in line, as we continue to
grow with new products and market share.
General administrative expenses increased $5,888 for the six months ended
December 31, 1997. This is due to past real estate school taxes on the Texas
property that had not been reported to the Company and which the Company was
unaware it owed. These taxes amounted to approximately $21,856. If these costs
had not been incurred, then the Company would have lowered general
administrative expense for the six months ended December 31, 1997. The Company
is continually seeking ways of lowering general and administrative expense
through the use of centralization, job realignment and line by line expense
reductions.
Interest expense continues to decline as overall borrowing is reduced. Interest
expense decreased to $170,857 during the six month period ended December 31,
1997 as compared to $185,205 for the comparable period of 1996. The Company
reduced its revolving line of credits $150,000 and paid off other term notes
with the proceeds of the land sold in Texas. As profits continue and cash flow
improves, the Company plans to reduce debt therefore reducing overall interest
expense.
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Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
W W CAPITAL CORPORATION
(Registrant)
Dated: By: /s/ Steve D. Zamzow
-----------------------
Steve D. Zamzow, President & CEO
Dated: By: /s/ Dianne Gano
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Dianne Gano, Controller
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