FORM 10-Q
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 March 31, 2000
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
------------------- at May 30, 2000
Common stock -----------------------
$0.01 Par Value 5,540,661
<PAGE>
W-W CAPITAL CORPORATION
Index
PART I FINANCIAL INFORMATION PAGE NO.
------ --------------------- --------
Item 1 Balance Sheets
------ March 31, 2000 and June 30, 1999 1
Statements of Operations
Three and Nine Months Ended
March 31, 2000 and 1999 3
Statements of Cash Flows
Nine Months Ended
March 31, 2000 and 1999 4
Notes to Financial Statements 6
Independent Accountant's Report 8
Item 2 Management's Discussion and Analysis
------ of Financial Condition and Results
of Operations 9
PART II OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS 13
------
Item 2 CHANGES IN SECURITIES 13
------
Item 3 DEFAULTS UPON SENIOR SECURITIES 13
------
Item 4 SUBMISSION OF MATTERS TO VOTE OF
------ SECURITY HOLDERS 13
Item 5 OTHER INFORMATION 13
------
Item 6 EXHIBITS AND REPORT ON FORM 8-K 13
------
SIGNATURES 14
<PAGE>
Part 1-FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
-----------------------------
W-W CAPITAL CORPORATION
-----------------------
<TABLE>
<CAPTION>
Balance Sheets
March 31, June 30,
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash $ 253,783 $ 311,491
---------- ----------
Trade accounts receivable 2,570,793 2,297,593
Less allowance for doubtful accounts ( 147,500) ( 115,000)
---------- ----------
Net accounts receivable 2,423,293 2,182,593
---------- -----------
Accounts receivable, other 223,506 43,545
Inventories:
Raw materials 708,111 420,494
Work-in-process 326,056 240,573
Finished goods 3,540,484 2,814,682
---------- -----------
Total inventories 4,574,651 3,475,749
---------- -----------
Prepaid expenses 44,366 17,058
Current portion of notes receivable
from related parties 465 465
---------- -----------
Total current assets 7,520,064 6,030,901
---------- -----------
Property and equipment, at cost 4,778,386 4,860,564
Less accumulated depreciation
and amortization (2,910,333) (2,786,645)
---------- -----------
Net property and equipment 1,868,053 2,073,919
---------- -----------
Other Assets:
Long-term notes receivable from
related parties, net of current portion 21,669 22,135
Loan acquisition costs, net of
accumulated amortization of $34,918
at March 31, 2000 and $11,689
at June 30, 1999 49,037 72,266
Other assets 16,174 21,571
---------- ----------
Total other assets 86,880 115,972
---------- ----------
TOTAL ASSETS $9,474,997 $8,220,792
========== ===========
</TABLE>
(Continued on following page)
See accompanying notes to financial statements.
1
<PAGE>
W-W CAPITAL CORPORATION
-----------------------
<TABLE>
<CAPTION>
Balance Sheets, Continued
March 31, June 30,
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Liabilities
-----------
Current Liabilities:
Accounts Payable $ 2,776,621 $ 2,129,501
Accrued property taxes 27,421 23,062
Accrued payroll and related taxes 297,168 216,719
Accrued interest payable 24,025 19,790
Accrued income taxes 100,000 --
Other accrued liabilities 290,736 --
Current portion of long-term notes payable 225,000 227,000
Current portion of capital lease obligations 19,000 17,000
Other current liabilities 1,225 874
--------- ---------
Total current liabilities 3,761,196 2,633,946
--------- ---------
Other Liabilities:
Long-term notes payable, net of current portion 2,675,222 2,898,626
Long-term capital lease obligations, net
of current portion 58,226 73,002
Negative goodwill, net of accumulated
amortization of $222 at March 31, 2000 46,631 --
--------- ---------
Total other liabilities 2,780,079 2,971,628
--------- ---------
TOTAL LIABILITIES 6,541,275 5,605,574
--------- ---------
Stockholders' Equity
Preferred stock: $10.00 par value, 400,000 shares
authorized -- --
Common stock, $0.01 par value, 15,000,000
shares authorized 5,540,661 shares issued
and outstanding at March 31, 2000
and June 30, 1999 55,406 55,406
Capital in excess of par value 3,304,629 3,304,629
Accumulated Deficit ( 377,407) ( 695,911)
--------- ---------
2,982,628 2,664,124
Less 120,264 shares of treasury stock at cost ( 48,906) ( 48,906)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 2,933,722 2,615,218
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 9,474,997 $ 8,220,792
========= =========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
W-W CAPITAL CORPORATION
-----------------------
<TABLE>
<CAPTION>
Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 4,994,361 $ 3,960,721 $14,465,557 $11,801,859
Cost of goods sold 3,901,227 3,211,060 11,631,550 9,780,395
--------- ---------- ---------- ----------
Gross profit 1,093,134 749,661 2,834,007 2,021,464
--------- ---------- ---------- ----------
Operating expenses:
Selling expenses 389,612 361,355 1,128,062 979,449
General and administrative expenses 402,936 301,717 1,121,562 958,253
--------- ---------- ---------- ----------
Total operating expenses 792,548 663,072 2,249,624 1,937,702
--------- ---------- ---------- ----------
Operating earnings 300,586 86,589 584,383 83,762
--------- ---------- ---------- ----------
Other income (expenses):
Interest income 17,405 18,184 48,657 54,190
Interest expense ( 78,259) ( 70,469) ( 226,918) ( 223,731)
Gain (loss) on sale of assets -- 1,500 -- 1,653
Other income (expense), net 6,272 4,075 12,382 19,788
--------- ---------- ---------- ----------
Total other income (expense) ( 54,582) ( 46,710) ( 165,879) ( 148,100)
--------- ----------- ---------- ----------
Earnings (loss) before income taxes 246,004 39,879 418,504 ( 64,338)
Income taxes 100,000 -- 100,000 --
--------- ----------- ---------- ----------
Net earnings (loss) $ 146,004 $ 39,879 $ 318,504 $( 64,338)
========= ========== ========== ==========
Earnings Per Common Share
Basic
Net earnings (loss) .03 .01 .06 ( .01)
Weighted average number of
common shares 5,540,661 5,540,661 5,540,661 5,540,661
Diluted
Net earnings (loss) .03 .01 .06 ( .01)
Weighted average number of
common shares 5,586,004 5,559,681 5,586,004 5,559,681
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
W-W CAPITAL CORPORATION
-----------------------
<TABLE>
<CAPTION>
Statements of Cash Flows
(Unaudited)
Nine Months Ended
March 31,
---------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 318,504 $( 64,338)
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation and amortization 219,512 253,228
Gain on sale of property and equipment -- ( 1,653)
Provision for doubtful accounts receivable 31,932 --
Amortization of negative goodwill ( 222) --
Change in assets and liabilities:
Accounts receivable ( 227,788) 14,483
Inventories ( 729,971) ( 185,919)
Other current and non-current assets ( 87,756) ( 71,808)
Accounts payable 508,301 188,723
Accrued expenses and other current liabilities 212,923 30,589
--------- --------
Net cash provided by operating activities 245,435 163,305
--------- --------
Cash flows from investing activities:
Proceeds from sale of property and equipment -- 3,000
Purchase of property and equipment ( 62,397) ( 74,363)
Increase in other notes receivable -- ( 8,090)
Proceeds from other notes receivable -- 25,268
Proceeds from stockholders' notes receivable 466 428
Cash acquired in acquisition of subsidiary 14,988 --
-------- ---------
Net cash used in investing activities $( 46,943) $( 53,757)
-------- --------
</TABLE>
(Continued on following page)
4
<PAGE>
W-W CAPITAL CORPORATION
-----------------------
<TABLE>
<CAPTION>
Statements of Cash Flows, Continued
(Unaudited)
Nine Months Ended
March 31,
---------
2000 1999
---- ----
<S> <C> <C>
Cash flows from financing activities:
Payments on notes payable, financial
institutions and government entities $(13,291,957) $(4,040,485)
Proceeds from notes payable 13,048,533 3,793,619
Payments on capital leases ( 12,776) ( 13,405)
----------- ----------
Net cash used in financing activities ( 256,200) ( 260,271)
----------- ----------
Net decrease in cash ( 57,708) ( 150,723)
Cash at beginning of period 311,491 281,449
----------- -----------
Cash at end of period $ 253,783 $ 130,726
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 220,059 $ 231,757
Installment loans to acquire property and equipment $ 18,020 $ 178,287
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
W-W CAPITAL CORPORATION
-----------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1 - BASIS OF PRESENTATION
------------------------------
The accompanying unaudited financial statements include the accounts of
W-W Capital Corporation (the Company) and its three wholly-owned subsidiaries
W-W Manufacturing Co., Inc., Titan Industries, Inc., and Eagle Enterprises, Inc.
All significant intercompany accounts and transactions have been eliminated.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. They do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and changes in cash
flows in conformity with generally accepted accounting principles for full-year
financial statements. However, except as disclosed herein, there has been no
material change in the information disclosed in the notes to W-W Capital
Corporation's financial statements included in its Annual Report on Form 10-K
for the year ended June 30, 1999. In the opinion of management, all adjustments
(consisting of normal recurring accrual basis adjustments) considered necessary
for a fair presentation have been reflected in the accompanying financial
statements. Operating results for the three and nine month periods ended March
31, 2000, are not necessarily indicative of the result that may be expected for
the year ended June 30, 2000.
NOTE 2 - NET BASIC EARNINGS PER SHARE
-------------------------------------
The net basic earnings (loss) per share amount included in the
accompanying statement of operations have been computed using the
weighted-average number of shares of common stock outstanding and the dilative
effect, if any, of common stock equivalents existing during the applicable three
and nine month periods.
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, 1999, included in its Annual Report on Form 10-K for the nature and
type of related party transactions.
6
<PAGE>
A summary of the related party transactions that effect the Company's
statement of operations for the three and nine months ended March 31, 2000 and
1999, respectively, is as follows:
Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
Transactions with
Related parties 2000 1999 2000 1999
--------------- ---- ---- ---- ----
Rent expense $ 15,000 $ 15,000 $ 45,000 $ 45,000
Interest expense 259 434 912 1,423
NOTE 4 - FIRE
-------------
On March 17, 2000, W-W Manufacturing suffered a fire at its hydraulic
chute manufacturing plant in Weatherford, Oklahoma. Subsequent to March 31,
2000, the Company received a partial payment of insurance proceeds in the amount
of $180,000, which has been reflected as a receivable in the accompanying
financial statements. Property and equipment has been reduced by the estimated
loss and a liability has been accrued to reflect additional charges expected
resulting from the fire in the amount of recorded proceeds. The Company expects
insurance coverage to be adequate to cover all expenses and replacements
associated with the fire.
NOTE 5 - BUSINESS COMBINATION
-----------------------------
On March 21, 2000, W-W Manufacturing, a wholly owned subsidiary of W-W
Capital Corporation, acquired various assets and assumed various liabilities of
the Adrian J. Paul Company of Duncan, Oklahoma out of bankruptcy. The
transaction was accounted for as a purchase and, accordingly, the excess of the
asset values acquired over liabilities assumed were used first to reduce
long-term assets and the remainder was recorded as negative goodwill of $46,853.
The negative goodwill will be amortized over 20 years on the straight-line
method. The financial statements presented for W-W Capital reflect the
acquisition from the date acquired.
The following unaudited pro forma summary presents the consolidated
results of operations of the Company as if the business combination had occurred
on June 30, 1999.
Revenues $ 15,749,405
Net earnings 367,331
Earnings per share $ .07
The above amounts are based upon certain assumptions and estimates,
which the Company believes are reasonable. The pro forma results do not
necessarily represent results which would have occurred if the business
combination had taken place at the date and on the basis assumed above.
7
<PAGE>
Independent Accountant's Report
-------------------------------
Board of Directors and Stockholders
W-W Capital Corporation
Fort Collins, Colorado
We have reviewed the accompanying balance sheets, statements of
operations, and cash flows of W-W Capital Corporation and consolidated
subsidiaries as of March 31, 2000, and for the three-month and nine-month
periods then ended. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
BROCK AND COMPANY, CPAs, P.C.
Fort Collins, Colorado
May 30, 2000
8
<PAGE>
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, Eagle Enterprises), W-W Paul Scales
(Paul), and the water and environmental product segment is represented by Titan
Industries (Titan).
(A) Analysis of Results of Operations
---------------------------------
The Company incurred net profits of $146,004 and $318,504, for the
three and nine month periods ended March 31, 2000, as compared to a net profit
of $39,879 and a net loss of $(64,338) for the same periods of 1999.
Net sales increased to $14,465,557 for the nine months ended March 31,
2000, compared to $11,801,859 for 1999. The following table represents actual
sales by segment group.
<TABLE>
<CAPTION>
Sales by segment group: Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Livestock Handling Equipment $ 3,031,951 $ 2,401,772 $ 8,432,082 $ 6,673,142
Water and Environmental Products 1,962,410 1,558,949 6,033,475 5,128,717
----------- ----------- ----------- -----------
Total Sales $ 4,994,361 $ 3,960,721 $14,465,557 $11,801,859
=========== =========== =========== ===========
</TABLE>
The sales in the water and environmental product segment increased to $6,033,475
as compared to $5,128,717 for the corresponding period of 1999. The increase of
$904,758 is attributable to strong demand in the new manufactured and custom
fabricated products. Titan experienced its usual slow down during the holiday
season and the cold months of January and February. However, due to steps taken
to avoid this usual slow down and a mild winter season, Titan has experienced
strong sales through the nine months ended March 31, 2000. As weather improves
and we move into the normal strong selling season of spring, Titan is expecting
to see sales reach all time levels. The company continues to see strong
acceptance of its new products developed and introduced over the past several
years. These products include Ver-Ta-Slot PVC, Enviroflex, mega-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. With
these new products, market improvements, and Titan's commitment to quality and
service, the Company is anticipating strong sales throughout the spring, summer
and fall selling seasons. Titan will continue to expand into new markets through
its efforts to establish new distributors and manufacturing representation in
all areas of the country. By continually concentrating expansion in the south,
east, and the west coast, Titan should not be effected by weather and economies
so as to eliminate major impacts on sales.
9
<PAGE>
Sales in the livestock equipment segment increased dramatically to $8,432,082
for the nine months ended March 31, 2000 as compared to $6,673,142 for the same
period of 1999. This increase of $1,758,940 is attributable to strong cattle
prices as well as overall strong conditions in the livestock markets.
Significant increases were realized with the new Champion horse stall, barn
systems, and riding arenas. Sales have also been strong in special products,
expo sales, and rodeo equipment. Sales for the three months ended March 31, 2000
increased $630,179 as compared to an increase of $71,102 for the same period of
1999. Sales increased at the Livingston, Tennessee plant to $2,559,620 for the
nine months ended March 31, 2000 as compared to $2,056,489 for the same period
of 1999. Sales at W-W Manufacturing (Dodge City plant) increased to $5,806,310
from $4,616,653 for the same nine month period ended March 31, 1999. Based on
present conditions, the Company anticipates sales and profits to remain strong
throughout fiscal 1999-2000. The Company is presently working on several new
products to be introduced during the upcoming fall markets. Product improvements
to existing products include squeeze chutes, headgates, rodeo equipment, and
equine equipment which have been another factor in the recent increase in sales.
These improvements and new product introductions 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 interest at trade shows
from new customers not presently carrying our product line. The east coast
market, serviced by the Livingston plant, continues to show improvement, as this
market continues to accept and appreciate a higher quality of 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. The eastern market has seen
the most significant improvements in the rodeo and equine equipment lines based
on present market conditions. The livestock handling equipment segment should
see strong sales and improved profits throughout the balance of the current
fiscal year.
Gross margins improved for the nine months ended March 31, 2000 to 19.6% as
compared to 17.1% for the same period ended March 31, 1999. Gross margins in the
livestock equipment segment improved to 20.7% for the nine months ended March
31, 2000 as compared to 17.8% for the same period of 1999. Margins improved at
both the Dodge City and Livingston (Eagle) plants with the biggest increase at
the Dodge City location. Margins and operating profits continue to improve at
the Eagle plant showing an improved gross profit of $344,504 for the nine months
ended March 31, 2000 as compared to $291,760 for the same period of 1999.
Operating profits improved to $185,358 as compared to $145,350 for the same nine
month period of March 31, 2000 and March 31, 1999. The increase in gross margins
and operating profits is a direct result of improved manufacturing efficiency
and less dependence on the Dodge City plant for parts. Operating profits at the
Dodge City plant improved to $453,317 for the nine months ended March 31, 2000
as compared to $131,619 for the same period of March 31, 1999. This improvement
was due to improved efficiencies in production and the ability of the Dodge City
plant to increase shipments. Overall, gross margins at the Dodge City plant
improved from 19.5% for the nine months ended March 31, 1999 to 23.8% for the
same period of March 31, 2000. The steps taken to combat the labor shortage in
Dodge City by having the Weatherford, Oklahoma plant help with production allows
for the significant increase in shipments therefore, improving gross margins and
profits. The Company anticipates this improvement to continue through the fourth
quarter of the current fiscal year.
Gross margins in the water and environmental segment increased from 15.3% in
1999 to 17.5% in 2000. This increase is due to the Company continuing its
efforts with custom fabricated and manufactured products. With the Company
seeking higher margin products and expanding into new
10
<PAGE>
markets, gross margins are expected to continue to improve. Operating earnings
for the nine months ended March 31, 2000 improved to $243,601 as compared to
$114,577 for the same period of 1999. While Titan normally realizes a downturn
during the third quarter of each fiscal year, the steps taken to reduce this
downturn have helped to maintain at least break-even sales and margin levels for
the quarter. Titan is continuing to develop markets and products that will
improve sales during this slow period, therefore allowing the Company to be
profitable during all periods of the year.
Selling expenses as a percentage of sales decreased from 8.3% in 1999 to 7.8%
for the nine months ended March 31, 2000. The decrease is primarily due to the
significant increase in sales as compared to dollars spent on creating the
sales. The Company has increased its sales and marketing expenses over the last
twelve months and is now realizing the benefits of these efforts. Total dollars
expended on selling expenses has increased to $1,128,062 for the nine months
ended March 31, 2000 as compared to $979,449 for the same period of 1999. this
increase is due to higher expenses being realized in attending trade shows,
travel costs, and general costs of marketing its products. In both segments, the
Company will continue its aggressive marketing plans to gain market share over
the spring and summer months. Management is presently evaluating its entire
marketing plan and will continue to find new ways to market its products.
Overall, general and administrative expenses decreased as a percentage of sales
from 8.1% in 1999 to 7.8% for the corresponding period of 2000. The overall
decrease is due to the significant increase in sales without a corresponding
increase in general and administrative expenses. While there was a decrease in
general and administrative expenses as a percentage of sales, the actual dollar
expended increased $163,309. This increase was due to increased cost at the
various company subsidiaries while expenses at the corporate headquarters
remained constant as compared to 1999. The Company is continually seeking ways
of lowering general and administrative expenses through the use of
centralization, job realignment, and line-by-line expense reduction.
Interest expense increased slightly to $226,918 for the nine months ended March
31, 2000 as compared to $223,731 for the same period of 1999. This change is due
to increased borrowing by the water and environmental segment due to the high
inventory levels being maintained. Also, the increase is due to the present rise
in the prime interest rate. The Company anticipates borrowings to remain fairly
constant over the next several months and interest cost to increase due to the
Federal Reserve continuing its pressure to raise the prime rate.
(B) Liquidity and Capital Resources
-------------------------------
The Company had net income of $318,504 for the nine months ended March 31, 2000
as compared to a net loss of $64,338 for the same period of 1999. Net income for
the three month period ended March 31, 2000 was $146,004 as compared to $39,879
for the same period of 1999. The Company continues to have a positive cash flow
provided by operating activities increasing to $245,435 as compared to $163,305
for the same period of 1999. With a large backlog of orders and entering the
strong spring and summer market, the Company anticipates that profits will hit
all time levels.
During the third quarter, the livestock equipment segment successfully closed a
transaction that acquired the assets of the Adrian J Paul Company. This 46-year
old company is a leader in manufacturing livestock scales that are used in
weighing all types of livestock. The Company acquired the assets out of
bankruptcy at a negotiated purchase price of $296,500. Funds were provided for
the purchase with borrowings on a new line of credit from Wells Fargo Business
Credit
11
<PAGE>
(formerly Norwest Business Credit) and internally generated funds from current
profits. The operations will be reported as a division of the livestock
equipment segment in future reports. The Company and operating statements for
the nine months ended March 31, 2000 reflect operations of this division for an
eleven day period. Sales for the period were $66,152 with a net profit of
$5,173.
The Company used net cash in investing activities for the purchase of property
and equipment. Net cash used in financing activities resulted in a net decrease
in borrowings for the nine months ended March 31, 2000 of $256,200, and the
Company anticipates debt to be reduced in the livestock equipment segment with
borrowing to remain at maximum levels in the water and environmental segment due
to the maintenance of high inventory levels. The Company added to the livestock
equipment segment's line of credit to provide the necessary cash to purchase the
assets of the Adrian J Paul Company. Management believes that the present lines
of credit will be adequate to maintain the present sales growth.
To give W-W Manufacturing the opportunity to grow and eliminate its
manufacturing and labor deficiencies, management has begun construction on a new
75,000 square foot manufacturing facility in Thomas, Oklahoma. It is anticipated
that the facility will be completed in November 2000 for move in and production
set up in December 2000.
On March 17, 2000, the livestock equipment segment suffered a fire at its
hydraulic chute manufacturing plant in Weatherford, Oklahoma. This location was
closed down for a ten-day period and only suffered a slight loss in sales
orders. The Company has moved and set up production in temporary facilities in
Thomas, Oklahoma and will be moved into the new manufacturing facility in
November 2000. The Company has adequate insurance coverage and will not suffer
any monetary loss from the fire. The accompanying financial statements reflect
an estimated cost and related receivables regarding the fire.
Management believes that with net cash provided from cash flow, available lines
of credit, and funds provided from earnings, it will have adequate sources to
meet its current obligations.
12
<PAGE>
PART II
OTHER INFORMATION
-----------------
ITEM 1. LEGAL PROCEEDINGS
------- -----------------
Not Applicable
ITEM 2. CHANGES IN SECURITIES
------- ---------------------
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
------- -------------------------------
Not Applicable
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
------- --------------------------------------------------
Not Applicable
ITEM 5. OTHER INFORMATION
------- -----------------
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
------- --------------------------------
Exhibit 27 Financial Data Schedule
13
<PAGE>
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: May 30, 2000 By:/s/ Steve D. Zamzow
----------------------------
Steve D. Zamzow, President & CEO
Dated: May 30, 2000 By:/s/ Mike Dick
----------------------------
Mike Dick, Controller
14
