UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15D OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ____________________.
Commission File Number: 0-23242
WEBCO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 73-1097133
(State or other jurisdiction of (I.R.S. Employer Identification No)
incorporation or organization)
9101 West 21st Street, SAND SPRINGS, OKLAHOMA 74063
(Address of principal executive offices) (Zip Code)
(918) 241-1000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former 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
such filing requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to distribution of securities under a plan
confirmed by a court.
NOT APPLICABLE [ ] Yes [ ] No
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 practical date: 6,339,000 shares of Common
Stock, $0.01 par value, as of May 1, 1998.
<PAGE>
WEBCO INDUSTRIES, INC.
TABLE OF CONTENTS
Page
Number
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Balance Sheets 3
Statements of Income 4
Statements of Cash Flows 5
Notes to Unaudited Financial Statements 6-7
Report of Review by Independent
Accountants 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9-12
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 a Vote of
Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13-14
SIGNATURES 15
<PAGE>
<TABLE>
WEBCO INDUSTRIES, INC.
BALANCE SHEETS
(Dollars in thousands, except par value)
(Unaudited)
<CAPTION>
April 30, July 31,
1998 1997
<S> <C> <C>
ASSETS
Current assets:
Cash $ 891 $ 466
Accounts receivable, net 18,805 17,159
Inventories 24,344 26,982
Prepaid expenses 381 268
Deferred income tax asset 1,768 1,460
Total current assets 46,189 46,335
Property, plant and equipment:
Land 1,436 1,436
Buildings and improvements 12,181 11,448
Machinery and equipment 54,156 53,305
Furniture and fixtures 3,515 2,628
Construction in progress 9,785 4,896
Less accumulated depreciation
and amortization (27,378) (24,972)
Net property, plant and equipment 53,695 48,741
Notes receivable from related parties 1,620 1,582
Other assets, net 1,507 1,526
Total assets $ 103,011 $ 98,184
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 12,304 $ 11,264
Accrued liabilities 5,820 3,800
Current portion of long-term debt 347 121
Total current liabilities 18,471 15,185
Long-term debt 30,079 34,108
Deferred income tax liability 9,074 6,764
Contingencies (Note 3)
Stockholders' equity:
Common stock, $.01 par value, 12,000,000 shares
authorized, 6,339,000 shares issued
and outstanding 63 63
Additional paid-in capital 35,944 35,944
Retained earnings 9,380 6,120
45,387 42,127
Total liabilities and stockholders' equity $ 103,011 $ 98,184
<FN>
See accompanying notes to unaudited financial statements.
</TABLE>
<PAGE>
<TABLE>
WEBCO INDUSTRIES, INC.
STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales $ 37,859 $ 28,993 $ 104,451 $ 86,114
Cost of sales 30,090 25,226 86,436 74,563
Gross profit 7,769 3,767 18,015 11,551
Selling, general and
administrative expenses 4,470 2,496 10,983 7,301
Special Item: Write-off of Mill 3
Cut-off equipment - - - 884
Income from operations 3,299 1,271 7,032 3,366
Interest expense 536 453 1,770 1,423
Income before income taxes 2,763 818 5,262 1,943
Deferred income tax expense 1,050 311 2,002 739
Net income $ 1,713 $ 507 $ 3,260 $ 1,204
Net income per common share: (Note 4)
Basic $ .27 $ .08 $ .51 $ .19
Diluted $ .27 $ .08 $ .51 $ .19
Weighted average common shares outstanding:
Basic 6,339,000 6,339,000 6,339,000 6,339,000
Diluted 6,432,000 6,339,000 6,397,000 6,339,000
<FN>
See accompanying notes to unaudited financial statements.
</TABLE>
<PAGE>
<TABLE>
WEBCO INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
April 30,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,260 $ 1,204
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,582 2,194
Loss on write-off and disposition of
property, plant and equipment 40 897
Deferred tax expense 2,002 739
(Increase) decrease in:
Accounts receivable (1,646) (2,439)
Inventories 2,638 (6,706)
Prepaid expenses (113) (99)
Increase (decrease) in:
Accounts payable 340 4,801
Accrued liabilities 2,020 462
Net cash provided by operating activities 11,123 1,053
Cash flows from investing activities:
Capital expenditures (7,540) (5,716)
Proceeds from sale of property, plant and equipment - 12
Advances to stockholder (38) (1,226)
Repayments of stockholder advances - 26
Other (124) (70)
Net cash used in investing activities (7,702) (6,974)
Cash flows from financing activities:
Proceeds from long-term debt 100,448 92,315
Principal payments on long-term debt (104,251) (86,178)
Increase (decrease) in book overdrafts 807 (426)
Net cash provided by (used in) financing activities (2,996) 5,711
Net change in cash 425 (210)
Cash, beginning of period 466 508
Cash, end of period $ 891 $ 298
<FN>
See accompanying notes to unaudited financial statements.
</TABLE>
<PAGE>
WEBCO INDUSTRIES, INC.
Notes to Unaudited Financial Statements
Note 1 - General
The accompanying unaudited condensed financial statements of Webco
Industries, Inc. (the "Company") include, in the opinion of management, all
adjustments (which are of a normal recurring nature) necessary for a fair
presentation of financial position at April 30, 1998 and results of operations
for the three months and nine months ended April 30, 1998 and April 30, 1997,
and cash flows for the nine months ended April 30, 1998 and April 30, 1997.
Results for the three months and nine months ended April 30, 1998 are not
necessarily indicative of results which will be realized for the full fiscal
year. The year-end balance sheet was derived from the audited financial
statements but does not include all disclosures required by generally accepted
accounting principles. The unaudited condensed financial statements should be
read in conjunction with the audited financial statements and related notes
thereto for the year ended July 31, 1997, included in the Company's Form 10-K
for the year ended July 31, 1997.
In May 1998 the Company announced that it had signed a letter of intent
to acquire Phillips & Johnston, Inc. ("P&J"), a Chicago based sales
representative organization in exchange for 830,000 shares of Webco common
stock. P&J represents several manufacturers in various types of metal tubing,
including copper and brass. P&J also has three facilities that provide value
added processing and distribution services. The acquisition is subject to the
execution of a definitive agreement and approval by the Board of Directors of
both companies. The Company expects to account for this transaction as a
pooling of interests which accordingly will result in a restatement of the
Company's results of operations and financial position as though the two
entities had always been combined.
Note 2 - Inventory
In fiscal 1997, the Company changed its method of accounting for
inventory from the Last-In First-Out ("LIFO") method to the weighted average
cost method. Accordingly, the prior year financial statements have been
restated for this accounting change. The reader should refer to the Company's
1997 Form 10-K for additional information regarding this matter.
At April 30, 1998 and July 31, 1997, the components of inventory were as
follows:
April 30, 1998 July 31, 1997
Raw materials $13,146,000 $18,666,000
Work-in-process 1,833,000 2,159,000
Finished goods 8,015,000 4,947,000
Maintenance parts
and supplies 1,350,000 1,210,000
Total inventories $24,344,000 $26,982,000
Note 3 - Contingencies
The Company has been identified as a potentially responsible party in the
cleanup of two EPA Superfund cleanup sites. At April 30, 1998 the Company
estimates its remaining potential liability for remediation of the waste
disposal sites and legal costs, related to the Superfund's oversight body, to
be approximately $277,000 which has been recorded as an accrued liability.
<PAGE>
In addition, the Company is a party to various other lawsuits and claims
arising in the ordinary course of business. Management, after review and
consultation with legal counsel, considers that any liability resulting from
these matters would not materially affect the results of operations or the
financial position of the Company.
The reader should refer to the Company's 1997 Form 10-K: Part I, Item 3
"Legal Proceedings" for additional information regarding these matters.
Note 4 - Common Stock and Common Stock Equivalents
In the second quarter of fiscal 1998 the Company adopted Statement of
Financial Accounting Standards No. 128 ("FAS 128"). FAS 128 requires the
restatement of prior periods earnings per share to conform to the new
standard. The effect of adopting FAS 128 is to replace the captions "primary"
and "fully diluted" with "basic" and "diluted", and to simplify the
calculation of weighted average shares outstanding primarily by removing
common stock equivalents from the calculation of "basic" earnings per share.
Presented below is a reconciliation of the differences between actual weighted
average shares outstanding, which are used in computing basic earnings per
share and diluted weighted average shares, which are used in computing diluted
earnings per share.
Three Months Ended Nine Months Ended
April 30, April 30,
1998 1997 1998 1997
Basic EPS:
Weighted average shares
outstanding 6,339,000 6,339,000 6,339,000 6,339,000
Effect of dilutive securities:
Options 93,000 - 58,000 -
Diluted EPS:
Diluted weighted average
shares outstanding 6,432,000 6,339,000 6,397,000 6,339,000
Anti-dilutive options outstanding:
Number of options 9,500 447,700 9,500 447,700
Weighted average exercise
price $ 10.46 $ 7.46 $ 10.46 $ 7.46
<PAGE>
<AUDIT-REPORT>
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors and Stockholders
Webco Industries, Inc.
We have reviewed the accompanying condensed balance sheet of Webco
Industries, Inc. as of April 30, 1998, and the related condensed statements of
income for the three and nine month periods ended April 30, 1998 and 1997 and
cash flows for the nine-month periods ended April 30, 1998 and 1997. 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.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet as of July 31, 1997, and the related
statements of operations, stockholders' equity and cash flows for the year
then ended (not presented herein); and in our report dated September 18, 1997,
we expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying condensed balance sheet
as of July 31, 1997 is fairly stated in all material respects in relation to
the balance sheet from which it has been derived.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
May 28, 1998
</AUDIT-REPORT>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
Webco Industries, Inc. ("Webco" or the "Company"), an Oklahoma
corporation founded in 1969 by F. William Weber, chairman of the board and
chief executive officer, is a specialty manufacturer of high-quality carbon
steel tubing and stainless steel tubing and pipe designed to industry and
customer specifications. Based on the Company's knowledge of the specialty
tube industry, management believes that Webco is the domestic market leader in
the manufacture of welded carbon heat exchanger tubing and welded carbon
boiler tubing, and the leading supplier of certain niche stainless tubing
products. Commencing in fiscal 1996, the Company manufactures and markets,
through its QuikWater division, a patented direct contact water heater with
unique environmental and energy saving advantages for a wide variety of end
use markets. The Company's tubing products are delivered from its three
production facilities in Oklahoma and Pennsylvania and from two distribution
facilities in Oklahoma and Texas to more than 800 customers located primarily
in the continental United States, southern Canada, and northern Mexico. The
Company's QuikWater units are fabricated in its Sand Springs, Oklahoma
production facility.
Results of Operations for the Three Months Ended April 30, 1998 Compared to
the Three Months Ended April 30, 1997
Net sales for the quarter ended April 30, 1998 were $37,859,000, an
increase of 30.6% over the $28,993,000 for the same quarter last year. The
$8,866,000 increase in net sales is primarily the result of higher volumes in
the tonnage of tubing sold coupled with a slight increase in the average net
sales price per ton. The 28.6% increase in the tonnage of tubing sold is a
reflection of improved market penetration primarily in the mechanical market.
In addition, there was a 1.7% increase in the average net sales price per ton
of tubing sold due to continued strength in pricing for most carbon tubing
products. This was partially offset by a continued industry-wide decline in
the sales price per ton of stainless pipe and tube.
Gross profit increased to $7,769,000 for the current period, an increase
of 106.2% over the $3,767,000 for the same quarter of fiscal 1997. Expressed
as a percentage of net sales, gross profit increased to 20.5% for the third
quarter of fiscal 1998 from 13.0% for the same period last year. The increase
in gross profit percentage is largely attributable to a 7.1% decrease in the
average manufacturing cost per ton coupled with the continued favorable price
environment for carbon products and the increase in the tonnage of tubing sold
noted above.
Selling, general and administrative expenses were $4,470,000 for the
third quarter of fiscal 1998 compared to $2,496,000 for the same quarter of
fiscal 1997. The increase in fiscal 1998 is primarily the result of
approximately $1,082,000 of profit sharing and bonuses to employees, a
$250,000 increase in professional fees, a $260,000 increase in sales
commissions due to a higher level of sales, and $100,000 of expense related to
the installation of an enterprise software system.
<PAGE>
Income from operations for the current quarter increased to $3,299,000
(8.7% of net sales) as compared to $1,271,000 (4.4% of net sales) for the same
quarter last year. The increase in operating income for the third quarter of
fiscal 1998 is primarily attributable to the increase in the tonnage of tubing
sold, coupled with the decrease in the average manufacturing cost per ton.
Interest expense for the current period was $536,000 ($681,000 prior to
interest capitalization) as compared to interest expense of $453,000 ($572,000
prior to interest capitalization) for the same quarter last year. The increase
in interest prior to interest capitalization is the result of the average
level of debt under the bank Loan and Security Agreement for the three months
ended April 30, 1998 being $32.3 million as compared to $24.0 million for the
same period last year. The average interest rate decreased to 7.76% in the
third quarter of fiscal 1998 from 8.89% in the third quarter of fiscal 1997.
The recorded income tax expense for the quarter ended April 30, 1998 is
based upon the estimated annual effective federal and state income tax rates.
The after-tax loss attributable to QuikWater in the third quarter of
fiscal 1998 was reduced to $264,000 compared with $287,000 for fiscal 1997, or
$0.04 and $0.05 per diluted share, respectively.
Results of Operations for the Nine Months Ended April 30, 1998 Compared to
the Nine Months Ended April 30, 1997
Net sales for the nine months ended April 30, 1998 increased to
$104,451,000, a 21.3% increase from the $86,114,000 for the same period last
year. This is the result of a 19.0% increase in the tonnage of tubing sold
during the current period, which is a reflection of improved market
penetration primarily in the mechanical market. In addition, the net average
sales price per ton increased by 1.9%, a reflection of higher pricing for most
carbon products.
Gross profit increased 56.0% to $18,015,000 for the first nine months of
fiscal 1998 as compared to $11,551,000 for the same period last fiscal year.
Gross profit expressed as a percentage of net sales increased to 17.2% for
year-to-date fiscal 1998 compared to 13.4% for year-to-date fiscal 1997. A
2.9% decrease in the average manufacturing cost per ton in conjunction with
the increases in the tonnage of tubing sold and the net average sales price
per ton, noted above, resulted in the increase in gross profit.
Selling, general and administrative expenses were $10,983,000 for the
first nine months of fiscal 1998 as compared to $7,301,000 for the same period
of the prior fiscal year. Factors contributing to the increase include
approximately $1,671,000 of profit sharing and bonuses to employees, a
$495,000 increase in sales commission due to a higher level of sales, a
$321,000 increase in professional fees and $167,000 of expense related to the
installation of an enterprise software system. In addition, during the first
quarter of fiscal 1997, selling, general and administrative expenses were
partially offset by a $225,000 insurance recovery on an EPA related claim.
<PAGE>
During the second quarter of fiscal 1997 the Company recorded a special
charge of $884,000 ($548,000 after tax or $0.09 per diluted share) relating to
the replacement and write-off of cutoff equipment.
Income from operations for the nine months ended April 30, 1998 was
$7,032,000 as compared to $3,366,000 for the same period last year. Operating
income expressed as a percentage of net sales was 6.7% for year-to-date
fiscal 1998 compared to 3.9% for year-to-date fiscal 1997. Excluding the
special charge noted above, income from operations for the previous nine-
month period was $4,250,000 or 4.9% of net sales.
Interest expense was $1,770,000 ($2,117,000 prior to interest
capitalization) for the current nine-month period as compared to $1,423,000
($1,695,000 prior to interest capitalization) for the same period in fiscal
1997. The increase in interest prior to interest capitalization is the result
of the average level of debt under the bank Loan and Security Agreement for
the nine month period ended April 30, 1998 being $33.8 million as compared to
$23.1 million for the same period last year. The average interest rate related
to this debt for the comparable nine-month periods decreased to 7.73% in
fiscal 1998 from 8.89% in fiscal 1997.
The recorded income tax expense for the nine months ended April 30, 1998
is based upon the estimated annual effective federal and state tax rates.
Net income for the nine-month period ended April 30, 1998 increased to
$3,260,000, or $0.51 per diluted share. Net income was $1,204,000 or $0.19 per
diluted share for the same nine-month period in the prior fiscal year.
Excluding the special charge in the second quarter of fiscal 1997, after-tax
income was $1,752,000 or $0.28 per diluted share.
The after-tax loss attributable to QuikWater in the first nine months of
fiscal 1998 was $791,000 compared with $710,000 for fiscal 1997, or $0.12 and
$0.11 per diluted share, respectively.
Liquidity and Capital Resources
Net cash provided by operations was $11,123,000 for the nine months ended
April 30, 1998 versus $1,053,000 for the nine-month period ended April 30,
1997. While receivables increased by $1,646,000 and $2,439,000 during fiscal
1998 and 1997 respectively, inventories decreased $2,638,000 during the
current period and increased by $6,706,000 for the same period last year.
Accounts payable increased by $340,000 in fiscal 1998 and $4,801,000 in fiscal
1997. In addition, accrued liabilities increased by $2,020,000 during fiscal
1998. 1998 as compared to an increase of $462,000 during the same period in
1999. fiscal 1997.
Net cash used in investing activities for the nine months ended April 30,
1998 was $7,702,000, which was $728,000 greater than the $6,974,000 used in
investing activities during the same period in fiscal 1997. Capital
expenditures made during the current nine month period related to continued
progress with the expansion of the stainless facility, expansion of the
shipping bay at the Sand Springs facility, expenditures towards the purchase
and installation of new computer software, completion of the building
renovation of the Company's corporate headquarters, as well as other projects
which are expected to increase capacity and improve productivity.
<PAGE>
As of April 30, 1998, the Company had $15.5 million available under its
$20 million line of credit and a long-term debt-to-equity ratio of 66%. The
net reduction of the line of credit of $4.3 million for the nine months ended
April 30, 1998 was primarily from cash provided by operating activities.
The Company has acquired new financial and operational computer systems whose
development and installation is expected to be completed within the next two
years. These new systems are currently expected to replace substantially all
of the Company's existing systems and are designed to be year 2000 compliant.
Management believes that credit line availability and cash flow from
operations will provide the Company with adequate capital to fund its
currently anticipated operations and future growth, including capital
expenditures for at least the year. The Company intends to continue to
vigorously pursue growth opportunities and expects that long-term needs will
be satisfied primarily through borrowings from commercial lenders.
Subsequent Event
In May 1998 the Company announced that it had signed a letter of intent
to acquire Phillips & Johnston, Inc.("P&J"), a Chicago based sales
representative organization in exchange for 830,000 shares of Webco Common
Stock. P&J represents several manufacturers in various types of metal tubing,
including copper and brass. P&J also has three facilities that provide value
added processing and distribution services. The acquisition is subject to the
execution of a definitive agreement and approval by the Board of Directors of
both companies. The Company expects to account for this transaction as a
pooling of interests which accordingly will result in a restatement of the
Company's results of operations and financial position as though the two
entities had always been combined.
Forward Looking Statements
Certain statements in this Form 10-Q, including statements preceded by,
or predicated upon the words "expects" and "believes", constitute "forward
looking" statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors that could cause the actual
results, performance or achievements of the Company, or industry results, to
differ materially from any future results, performance or achievements
expressed or implied herein. Such risks, uncertainties and factors include,
among others: general economic and business conditions, interest rate
fluctuations, the Company's ability to access capital markets, industry
capacity, industry trends, competition, raw material costs and availability,
the loss of any significant customers, the successful implementation of
business strategies, availability of qualified personnel, and changes in, or
the failure or inability to comply with government regulations.
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The Company has been identified as a potentially responsible party in the
cleanup of two EPA Superfund cleanup sites. At April 30, 1998 the Company
estimates its remaining potential liability for remediation of the waste
disposal sites and legal costs to be approximately $277,000, which has been
recorded as an accrued liability.
In August 1997, the Company filed an action, Webco Industries, Inc. vs.
Thermatool Corporation and Alpha Industries, Inc., relating to certain cut-off
equipment sold to the Company and installed on Mill 3, which did not perform
to manufacturer specifications. The case, filed in the United States District
Court for the Northern District of Oklahoma (Case No. 97-CV-708H (W)), seeks
recoveries including, but not limited to, the cost of the equipment, lost
profits, lost market share and other damages suffered by the Company. There
can be no assurance that the Company will prevail in all or in part of its
action, or that if successful, any recoveries will be commensurate with the
damages suffered by the Company.
In addition, the Company is a party to various other lawsuits and claims
arising in the ordinary course of business. Management, after review and
consultation with legal counsel, considers that any liability resulting from
these matters would not materially affect the results of operations or the
financial position of the Company.
The reader should refer to the Company's 1997 10-K: Part I, Item 3:
"Legal Proceedings" for additional information regarding these matters.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 15: Letter Regarding Unaudited Interim Financial Information
<PAGE>
B. Reports on Form 8-K
On March 31,1998 the Company filed a report Form 8-K, Item 5
announcing the execution of a letter of intent to acquire P & J.
<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.
WEBCO INDUSTRIES, INC.
June 12, 1998 /s/F. William Weber
F. William Weber
Chairman
Chief Executive Officer
Director
June 12, 1998 /s/Dana S Weber
Dana S. Weber
President
Chief Operating Officer
Director
June 12, 1998 /s/Michael P. Howard
Michael P. Howard
Treasurer
Chief Financial Officer
Vice President of Finance and Administration
<PAGE>
EXHIBIT 15
WEBCO INDUSTRIES, INC.
LETTER REGARDING UNAUDITED INTERIM FINANCIAL INFORMATION
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Webco Industries, Inc.
Registration on Form S-3 Form S-8
We are aware that our report dated May 28, 1998 on our review of the interim
financial information of Webco Industries, Inc. for the periods ended April
30, 1998 and 1997, and included in this Form 10-Q is incorporated by reference
in the Company's registration statement on Form S-3 (File no. 333-22779) and
Form S-8 (File No.333-49219). Pursuant to Rule 436(c) under the Securities
Act of 1933, this report should not be considered a part of the registration
statement prepared or certified by us within the meaning of Sections 7 and 11
of that Act.
Coopers & Lybrand L.L.P.
Tulsa, Oklahoma
June 12, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> APR-30-1998
<CASH> 891
<SECURITIES> 0
<RECEIVABLES> 18805
<ALLOWANCES> 0
<INVENTORY> 24344
<CURRENT-ASSETS> 46189
<PP&E> 81073
<DEPRECIATION> 27378
<TOTAL-ASSETS> 103011
<CURRENT-LIABILITIES> 18471
<BONDS> 30079
0
0
<COMMON> 63
<OTHER-SE> 45387
<TOTAL-LIABILITY-AND-EQUITY> 103011
<SALES> 104451
<TOTAL-REVENUES> 104451
<CGS> 86436
<TOTAL-COSTS> 86436
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1770
<INCOME-PRETAX> 5262
<INCOME-TAX> 2002
<INCOME-CONTINUING> 3260
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3260
<EPS-PRIMARY> .51
<EPS-DILUTED> .51
</TABLE>
