<PAGE> 1
FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
(Mark One)
(X) ANNUAL REPORT UNDER SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended April 30, 1996
or
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from
---------------------------------
Commission File Number 0 3928
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WELLINGTON HALL, LIMITED
------------------------
(Name of small business issuer in its charter)
NORTH CAROLINA 56-0815012
-------------- ----------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
ROUTE 1, U.S. HIGHWAY 29 AND 70, LEXINGTON, N.C. 27292
- - ------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 704-249-4931
Securities registered under section 12 (b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK (NO PAR VALUE)
---------------------------
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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.
Yes X No
----- -----
Check if there is no disclosure of delinquent filers in response to item
405 of regulation 5-b contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment. (X)
Items 6 and 7 omitted pursuant to Rule 126-25
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State issuer's revenues for its most recent fiscal year: $ 5,992,422
State the aggregate market value of the voting stock held by
non-affiliates, computed by reference to the price as which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days. (See definition of affiliate in Rule 12b-2 of the
Exchange Act): Approximately $296,322 as of July 8, 1996.
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable dated: 1,689,887 shares of Common
Stock (No Par) as of July 15, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Company's Annual Report to Shareholders for the fiscal year
ended April 30, 1996, are incorporated by reference into Part II.
2. Portions of the Company's Proxy Statement for the 1996 Annual Meeting of
Shareholders are incorporated by reference into Part III.
Transitional Small Business Disclosure Form (Check One)
Yes ( ) No ( X )
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PART I
Item 1. Description of Business
Wellington Hall, Limited, a North Carolina corporation organized in
1964 (the "Company") is engaged in the business of manufacturing high quality
wooden home furniture. The Company's principal office is located at Route 1,
U.S. Highway 29 and 70 North, Lexington, North Carolina. The manufacturing
operation generally involves the machining, sanding, assembling and finishing
of components and other raw materials supplied to the Company. The Company's
wholly-owned subsidiary, Wellington Hall Caribbean Corporation, serves as a
sales and distribution company for the Company's lumber processing mill and
furniture manufacturing facility located in San Pedro Sula, Honduras, Central
American (the "Honduran Facilities"). WHCC is a North Carolina corporation
organized in December, 1988 and is located in Lexington, North Carolina.
Muebles Wellington Hall, S.A ("MWH"), the Company's Honduran subsidiary,
located in San Pedro Sula, manages and operates the Honduran Facilities.
PRODUCTS, MARKETS AND SALES
The Company's products include occasional living room tables, dining room,
and bedroom furniture, modular wall systems, entertainment cabinets (for
storage of televisions, stereo equipment and video cassette recorders),
bar/server cabinets, console tables, mirrors, and other occasional pieces. The
product line generally represents an eclectic collection of reproductions or
renderings of 18th century English and French styles, and a limited offering of
Oriental designs. Most of the Company's 18th century English and French
reproduction and Oriental designs are offered exclusively by the Company.
The Company imports certain of its designs for finishing where the
domestic production costs for such designs are prohibitive. The Company's
imported line includes dining chair frames, solid mahogany occasional items and
bedroom pieces, specially-carved poster beds, which are assembled in San Pedro
Sula, Honduras, Central America and finished in the Company's Lexington, North
Carolina facility. Sales of imported designs have increased over time as a
result of the Company's acquisition of the Honduran Facilities. SEE ITEM 2.
"Description of Property". During fiscal 1996 imported designs accounted for
approximately 45% of the Company's consolidated sales.
The Company's products are distributed nationally through full-service
retail stores and unaffiliated trade showrooms which service the professional
interior designer. The Company employs 16 independent, commissioned sales
representatives who sell and service retail stores and trade showrooms in the
U.S. and Canada. The Company generally sells its products on a net 30-day
basis. The Company maintains a showroom in High Point, North Carolina to
display its product line during the semiannual International Furniture Market
held in High Point, North Carolina in the Fall and Spring of each year.
The Company maintains an ongoing effort to upgrade and reformat its
furniture catalogs
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and sales aids in order to promote and enhance the quality of it products to
consumers and to the interior designer market. The Company, to a limited extent
has advertised nationally to improve name recognition.
While neither the Company nor WHCC has a full-time employee or facility
devoted to research and development, the Company's President, in consultation
with a design firm, devotes substantial time to the design and development of
new products. The competition in and the fashion orientation of the home
furnishings market requires that the Company's product line be continually
updated by the introduction of new products. Because of the nature of the
Company's designs, many of its products can remain marketable for a significant
period of time.
WHCC markets three categories of non-finished products manufactured by
the Honduran Facilities to the U.S. furniture industry (including the Company)
(i) raw materials in the form of wooden dimension stock (rough parts); (ii)
unfinished assembled items for furniture such as occasional tables and dining
chair frames; and (iii) components (turnings and carvings) utilized in domestic
production. The majority of sales utilize mahogany but, the Company also uses
laurel chairs, components and dimension stock primarily for production of its
French designs. Previously, domestic hardwoods had been purchased for this
purpose, thus greater integration of the Honduran Facilities was achieved by
use of the laurel wood from Honduras.
WHCC markets directly to the retail trade a bedroom, dining room and
occasional table group fully produced in the Honduran Facilities. By assembling
and finishing group in Honduras, significantly greater advantage of plentiful,
less costly labor and lower overheads can be realized. Therefore, the price of
the group (as well as other Honduran-produced products), in combination with
the utilization of solid "Honduran Mahogany" recognized by the world trade as
the premier selection of hardwoods, gives the Company a competitive edge.
In the spring of 1995, WHCC began marketing a bedroom group made of pine
which is plentiful and readily available to the Honduran Facilities. The
acceptance of this product has been moderate.
WHCC employs one commissioned sales representatives for products sold to
U.S. furniture manufacturers (other than the Company) covering two eastern
states in which the majority of the U.S. furniture industry is located. WHCC
utilizes the Company's independent representatives for product finished in the
Honduran Facilities and marketed directly to the retail trade.
SOURCES AND AVAILABILITY OF RAW MATERIALS
The Company's principal raw materials are wood which is purchased in the
form of dimension stock (rough parts), components (turnings and carvings) and
plywood. Plywood is generally available in adequate supply from domestic
resources. Dimension stock and components are generally supplied by the
Company's Honduran Facilities. These same raw materials are available from
domestic sources but generally at higher prices and lower quality.
The loss of the Honduran Facilities as the Company's primary source of
wood and as its
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sole supplier of the Company's proprietary line of assembled items of furniture
would have a significant adverse effect on the Company's operations, financial
condition, competitiveness and future prospects.
Though large quantities of mahogany have been harvested in Honduras over
the years and the agency of the Honduran government responsible for forest
resources in Honduras is not able to provide an accurate inventory of the
supply of mahogany or other species available in Honduras, the Company believes
based upon all available information that an adequate supply of
mahogany is available and will be available for many years to come. In addition
to mahogany, the Company is utilizing laurel, pine and San Jaun Areno and
Spanish cedar and continually researches other species of wood available in
commercial quantities for manufacturing in order to expand the resource base
Over the last several years, the Company has investigated becoming directly
involved in the implementation of a Sustainable Management (Reforestation
program in an assined segment of Honduran forest. Presently the Honduran
government is establishing the programs such that all timber harvested is in
areas under Sustainable Management. All these programs are being established
with the involvement of local or indigenous population and the Goverment. The
use of the timber harvested is being designated for consumption by the Honduran
wood working industry including the company's Honduras facility.
SEASONALITY
As is typical in the furniture industry, the Company's greatest volume of
incoming orders is received in the Spring and Fall of each. year. This is due
primarily to the International Furniture Market held each April and October in
High Point, North Carolina. Careful scheduling of production minimizes the
effects of such seasonality on the Company's production and shipments. Orders
are generally shipped within 30 to 90 days of receipt.
BACKLOG
The Company's firm backlog of orders on April 30, 1996 was $ 1,853,400
versus $2,015,631 at the end of the previous year. The backlog included
$1,340,510 of domestically-manufactured product versus $1,683,041 last year,
reflecting the general slow down in the economy and in the home furnishings
industry in particular. The backlog for WHCC and Honduran produced product,
less inter company orders, was $512,990 on April 30, 1996 versus $332,590 last
year. While the backlog is always subject to cancellation, the Company expects
to ship substantially all of the backlog during fiscal 1997.
COMPETITION
The furniture industry is highly competitive and no one company dominates
the industry. The Company, while unranked in any known comparative study of the
industry, competes with many nationally recognized manufacturers of quality
furniture. Many furniture manufacturers have substantially larger production
capabilities and distribution networks as well as greater financial
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resources than the Company. The Company's principal method of competing is by
product design (including items or categories of items not available from other
manufacturers), product quality (including high-grade hardwoods and other
materials used in construction and quality-constructed cabinetry and finish)
and price. Most of the Company's designs are offered exclusively by the
Company. The Company believes its pricing structure, product design and product
quality to be competitive with those of its competitors.
The furniture industry is a segmented industry whereby design, quality and
price place each manufacturer into a competitive market niche. The Company
competes in the medium-high price market, which normally requires a larger
number of items comprising the product line, smaller production lot sizes and
higher inventory requirements to maintain a competitive delivery cycle. The
Company estimates that there are approximately 12 to 15 furniture manufacturers
directly competing with the Company in the medium to high-priced market for
case goods. The Company's limited financial resources restrict its ability to
compete effectively in its market niche.
ENVIRONMENTAL CONTROL FACILITIES
The manufacturing and finishing of wooden furniture involves the use and
disposal of certain solvents, lacquers, thinners and filters statutorily
designated as hazardous waste. The Company's handling of these materials is
subject to government inspection and regulations. Compliance with federal,
state and local laws regulating discharge of hazardous materials into, and
otherwise providing protection to, the environment has not had any material
effect on the Company's capital expenditures, earnings or competitive position
to date.
The Company has an ongoing program to comply with the pertinent
environmental and OSHA regulations. The Company does not anticipate making
significant capital expenditures during fiscal 1997 to comply with these
regulations.
EMPLOYEES
The Company has approximately 375 employees, including approximately 300
people currently employed at the Honduran Facilities. Approximately 325 of the
Company's employees are full time employees.
Item 2. Description of Property
The Company owns and operates one plant housing its United States
production facilities and general offices located on 17 acres of land in
Lexington, North Carolina. The 82,500 square foot facility is of brick, steel,
concrete and concrete block construction and is well maintained and in adequate
condition. The Company's manufacturing facilities generally operate on a
40-hour week. Substantially all of the Company's physical properties located in
Lexington, North Carolina are pledged as collateral under the Company's
long-term loan agreements with Lexington State Bank of North Carolina ("LSB"),
the Company's primary bank lender.
See Notes 5 and 6 to the Company's Consolidated Financial Statements.
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The Company's Honduran Facilities consist of seven and one-half acres of
land located in San Pedro Sula, Honduras, a 21,120 square-foot, equipped
dimension mill, a 7,840 square-foot wood resaw operation, two dry kilns and
boilers and related processing equipment, two buildings for dry lumber storage,
and a 6,408 square-foot building for "green" lumber storage. In July, 1990, the
Company completed construction of a 45,000 square-foot addition to the
manufacturing facility and a 2,600 square-foot office building.
The Company believes its properties are generally suitable and adequate to
meet their intended uses and, in the opinion of management, they are adequately
covered by insurance.
The Honduran Facilities are pledged to secure a loan from the Overseas
Private Investment Corporation ("OPIC") with a principal balance of $1,021,968
at April 30, 1996. The loan proceeds were used to finance completion of the
Honduran capital improvement program. In addition, Banchasa, the Company's
Honduran bank lender, holds a second mortgage on the assets of the Honduran
Facilities (see note 5 to the Company's Financial Statements).
The lumber dimension mill, as well as the furniture manufacturing
operations of the Honduran Facilities, operate on a 44-hour work week (a
standard work week in Honduras). The Company believes that the mill and
furniture manufacturing facilities are in adequate condition and suitable for
their intended uses.
The Company leases a 8,800 square-foot showroom located in High Point,
North Carolina. The space is utilized to display the Company's products,
particularly new product introductions, during the semi-annual International
Furniture Markets. The Company believes the showroom is in good condition and
suitable for its intended use. See Note 11 of Notes to Consolidated Financial
Statements for the fiscal year ended April 30, 1996, included in the Company's
Annual Report to Shareholders (attached hereto as Exhibit 13).
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to Vote of Security Holders.
None
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The information required by Item 5 of Form 10-KSB appears under the
caption "Market Prices, Dividends and Related Shareholder Matters" in the
Company's Annual Report to Shareholders for fiscal year ended April 30, 1996,
reference to which is hereby made and the information there is incorporated
herein by reference.
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Item 6. Management's Discussion and Analysis or Plan of Operation
The information required by Item 6 of Form 10-KSB appears under the
heading "Management's Discussion and Analysis" in the Company's Annual Report
to Shareholders for fiscal year ended April 30, 1996, reference to which is
hereby made and the information there is incorporated herein by reference.
Item 7. Financial Statements
The information required by Item 7 of From 10-KSB appears in the Company's
Annual Report to Shareholders for the year ended April 30, 1996, at page _
through __, reference to which is hereby made and the information therein
incorporated herein by reference.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The information required by Item 9 of Form 10-KSB appears in the Company's
Proxy Statement for the 1996 Annual Meeting of Shareholders under the caption
"Election of Directors", reference to which is hereby made and the information
there is incorporated herein by reference.
Item 10. Executive Compensation
The information required by Item 10 of Form 10-KSB appears in the
Company's Proxy Statement for the 1996 Annual Meeting of Shareholders under the
caption "Executive Compensation", reference to which is hereby made and the
information there is incorporated herein by reference.
Item 11. Security Ownership of certain Beneficial Owners and Management
The information required by Item 11 of Form 10-KSB appears in the
Company's Proxy Statement for the 1996 Annual Meeting of Shareholders under the
caption "Voting Securities and Principal Shareholders" and "Election of
Directors", reference to which is hereby made and the information there is
incorporated herein by reference.
Item 12. Certain Relationships and Related Transactions
None
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Item 13. Exhibits, Lists and Reports on Form 8-K
(a) The following Financial Statements, Financial Statement Schedules and
Exhibits are filed as part of this report:
(1) Financial Statements:
The following consolidated financial statements of the Company, included
in the Annual Report to Shareholders for the year ended April 30, 1996, are
incorporated herein by reference to the pages indicated:
Consolidated Balance Sheets - April 30, 1996, and 1995
(page )
Consolidated Stockholders' Equity - Years Ended April 30, 1996 and 1995
(page )
Consolidated Statements of Income - Years Ended April 30, 1996 and 1995
(page )
Consolidated Statements of Cash Flows - Years Ended April 30, 1996 and
1995 (page )
Notes to Consolidated Financial Statements (Pages )
Independent Auditors' Report (page )
(Financial Statements to Be Filed by Amendment Pursuant to Rule 12b-25)
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions, are inapplicable or the required
information is given in the financial statements including the notes thereto,
and therefore, have been omitted.
(3) EXHIBITS FILED
Exhibit No.
3.1 Amended and Restated Charter of Wellington Hall, Limited. *
3.2 Bylaws of Wellington Hall, Limited, as amended. *
10.1 Wellington Hall Executive Stock Plan. **
10.2 Employment Agreement and Executive Deferred Compensation Agreement
between the Company and Hoyt M. Hackney, Jr., effective January 1,
1987 and May 8, 1987, respectively. *
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10.3 Note - Security Agreement, dated April 23, 1986, between the Company
and Lexington State Bank is incorporated herein by reference to
Exhibit 4.2 to the Company's Annual Report on Form 10-K for the
fiscal year ended April 30, 1987.
10.4 Loan Agreement, dated April 15 1987, between the Company and
Lexington State Bank is incorporated herein by reference to Exhibit
4.2 to the Company's Annual Report on Form 10-K for the fiscal year
ended April 30, 1987.
10.5 Note - Security and Note Modification Agreements dated April 26,
1988, between the Company and Lexington State Bank is incorporated
herein by reference to Exhibit 4.3 to the Company's Annual Report on
Form 10-K for fiscal year ended April 30, 1988.
10.6 Loan Agreement between Wellington Hall Caribbean Corporation and the
Overseas Private Investment Corporation, dated December 22, 1989 as
amended on July 19, 1990. ***
10.7 Subordination Agreement, dated December 22, 1989, between Wellington
Hall Limited, Wellington Hall Caribbean Corporation, Muebles
Wellington Hall, S.A.., and the Overseas Private Investment
Corporation. ***
10.9 Amendment to Loan Agreement, dated February 1, 1991, between the
Company and Lexington State Bank is incorporated herein by
reference to Exhibit 10.14 to the Company's Annual Report on Form
10-K for the fiscal year ended April 30, 1991.
10.10 Loan Agreement, dated August 20, 1991, between Muebles Wellington
Hall S.A. and Banco de Honduras, S.A.. is incorporated herein by
reference to Exhibit A to the Company's Quarterly Report on Form
10-Q for the quarter ended July 31, 1991.
10.11 Amendment to Loan Agreement, dated April 10, 1992 between the
Company and Lexington State Bank. ****
10.12 Promissory Note, dated January 23, 1992 between the Company and
Hoyt M. Hackney, Jr. ****
10.13 Amendment to Executive Deferred Compensation Agreement, dated
January 23, 1992, between the Company and Hoyt M. Jackney, Jr. ****
10.14 Loan Agreement, dated June 28, 1993 between the Company and
Lexington State Bank. *****
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10.15 Lease Agreement dated November 1, 1993 by and between North Hamilton
Corporation and the Company, is incorporated herein by reference
to the Company's Annual Report on Form 10-K for the fiscal year
ended April 30, 1994.
10.16 Amendment to the Loan Agreement, dated September 1, 1994, between
Wellington Hall Caribbean Corporation and the Overseas Private
Investment Corporation. ******
11 Earnings Per Share Computation
13 Annual Report to Shareholders of Wellington Hall, Limited for the
year ended April 30, 1996, portions of which are incorporated by
reference into this report.
22 Subsidiaries of the Company
* Incorporated herein by reference to the identically-numbered exhibits
to the Company's Annual Report on Form 10-K for the fiscal year
ended April 30, 1987.
** Incorporated herein by reference to the identically-numbered exhibits
to the Company's Annual Report on Form 10-K for the fiscal year
ended April 30, 1986.
*** Incorporated herein by reference to the identically-numbered exhibits
to the Company's Annual Report on form 10-K for the fiscal year
ended April 30, 1990.
**** Incorporated herein by reference to the identically-numbered exhibits
to the Company's Annual Report on Form 10-K for the fiscal year
ended April 30, 1992
***** Incorporated herein by reference to the identically- numbered
exhibits to the Company's Annual Report on Form 10-KSB for the year
ended April 30, 1993.
****** Incorporated herein by reference to the identically-numbered
exhibits to the Company's Annual Report on Form 10-KSB for the
year ended April 30, 1995.
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the
fourth quarter of the fiscal year ended April 30, 1996.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
WELLINGTON HALL, LIMITED
Date: July 25, 1996 By: /s/ Hoyt M. Hackney, Jr.
-------------------------
Hoyt M. Hackney, Jr.
President, (Principal Executive
Officer, Principal Accounting
Officer)
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated:
Name and Signature Position Date
- - ------------------ -------- -----
/s/ Hoyt M. Hackney, Jr. President (Chief 7/25/96
- - ------------------------ Executive Officer
Hoyt M. Hackney, Jr. and Chief Financial
Officer), Treasurer
/s/ Ernst B. Kemm Executive Vice 7/25/96
- - ------------------------ President and Director
Ernst B. Kemm
/s/ Donald W. Leonard Chairman of the Board 7/25/96
- - ------------------------
Donald W. Leonard
/s/ William W. Woodruff Secretary and Director 7/25/96
- - ------------------------
William W. Woodruff
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EXHIBIT INDEX
TO
ANNUAL REPORT ON FORM 10-KSB
OF
WELLINGTON HALL, LIMITED
FOR
YEAR ENDED APRIL 30, 1996
Exhibit Description
3.1 Amended and Restated Charter of Wellington Hall Limited. *
3.2 Bylaws of Wellington Hall, Limited, as amended. *
10.1 Wellington Hall Executive Stock Plan. **
10.2 Employment Agreement and Executive Deferred Compensation
Agreement between the Company and Hoyt M. Hackney Jr.,
effective January 1, 1987 and May 8, 1987, respectively. *
10.3 Note - Security Agreement, dated April 23, 1986, between
the Company and Lexington State Bank is incorporated
herein by reference to Exhibit 4.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended
April 30, 1987.
10.4 Loan Agreement, dated April 15, 1987, between the Company
and Lexington State Bank is incorporated herein by
reference to Exhibit 4.2 to the Company's Annual Report
on Form 10-K for the fiscal year ended April 30, 1987.
10.5 Note - Security and Note Modification Agreements, dated
April 26, 1988, between the Company and Lexington State
Bank is incorporated herein by reference to Exhibit 4.3
to the Company's Annual Report on Form 10-K for fiscal
year ended April 30, 1988.
10.6 Loan Agreement between Wellington Hall Caribbean
Corporation and the Overseas Private Investment
Corporation, dated December 22, 1989, as amended on
September 1, 1990. ***
10.7 Subordination Agreement, dated September 1, 1994, between
Wellington Hall, Limited, Wellington Hall Caribbean
Corporation, Muebles Wellington Hall, S.A. and the
Overseas Private Investment Corporation. ***
10.9 Amendment to Loan Agreement, dated February 1, 1991,
between the company and Lexington State Bank is
incorporated herein by reference to
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Exhibit 10.14 to the Company's Annual Report on Form 10-K
for the fiscal year ended April 30, 1991.
10.10 Loan Agreement, dated August 20, 1991, between Muebles
Wellington Hall, S.A. and Banco de Honduras, S.A. is
incorporated herein by reference to Exhibit A to the
Company's Form 10-Q for the quarter ended July 31, 1991.
10.11 Amendment to Loan Agreement, dated April 10, 1992
between the Company and Lexington State Bank. ****
10.12 Promissory note, dated January 23, 1992 between the
Company and Hoyt M. Hackney, Jr. ****
10.13 Amendment to Executive Deferred Compensation Agreement ,
dated January 23, 1992, between the Company and Hoyt M.
Hackney Jr. ****
10.14 Loan Agreement, dated June 28, 1993, between the Company
and Lexington State Bank. *****
10.15 Lease Agreement dated November 1, 1993 between North
Hamilton Corporation and the Company, is incorporated
herein by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended April 30, 1994.
10.16 Amendment to the Loan Agreement, dated September 1, 1994
between Wellington Hall Caribbean Corporation and the
Overseas Private Investment Corporation.******
11 Earnings Per Share Computation
13 Annual Report to Shareholders of Wellington Hall, Limited
for the year ended April 30, 1996, portions of which are
incorporated by reference into this report.
22 Subsidiaries of the Company
* Incorporated herein by reference to the identically-
numbered exhibits to the Company's Annual Report on Form
10-K for the fiscal year ended April 30, 1987.
** Incorporated herein by reference to the identically-
numbered exhibits to the Company's Annual Report on Form
10-K for the fiscal year ended April 30, 1986.
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*** Incorporated herein by reference to the identically-
numbered exhibits to the Company's Annual Report on Form
10-K for the fiscal year ended April 30, 1990.
**** Incorporated herein by reference to the identically-
numbered exhibits to the Company's Annual Report on Form
10-K for the fiscal year ended April 30, 1992.
***** Incorporated herein by reference to the identically-
numbered exhibits to the Company's Annual Report on Form
10-KSB for the year ended April 30, 1993.
****** Incorporated herein by reference to the identically-
numbered exhibits to the Company's Annual Report on Form
10-KSB for the year ended April 30, 1995.
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WELLINGTON HALL, LIMITED AND SUBSIDIARIES
EXHIBIT 11 - EARNINGS PER SHARE COMPUTATION
<TABLE>
<CAPTION>
Years Ended April 30
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Primary
Average shares outstanding 1,689,887 1,689,887 1,689,887
Net effect of dilutive stock
options and stock purchase
awards, based on the treasury
stock method using average
market price __________ __________ __________
Total Shares 1,689,887 1,689,887 1,689,887
========== ========== ===========
Net Income (loss) 73,574 222,655 384,398
========== ========== ===========
Per share amount $ .04 $ .13 $ .23
========== ========== ===========
Fully diluted:
Average shares outstanding 1,689,887 $1,689,887 1,689,887
Net effect of dilutive stock
options and stock purchase
awards, based on the treasure
stock method using the year-
end market price if higher
than average market price __________ __________ ___________
Total Shares 1,689,887 1,689,887 1,689,887
========== ========== ===========
Net Income (loss) 140,370 222,655 384,398
========== ========== ===========
Per share amount $ . 08 $ .13 $ .23
</TABLE>
<PAGE> 1
EXHIBIT 13
1996
ANNUAL REPORT
WELLINGTON HALL, LIMITED
Lexington, North Carolina
<PAGE> 2
TO THE SHAREHOLDERS OF WELLINGTON HALL, LIMITED
Sales for fiscal year 1996 ended April 30,1996 were $5,989,959, down about
17% from the $7,260,461 recorded for the previous fiscal year. Profit fell to
$73,574 from $222,635 reported for fiscal year 1995. The decline in sales and
profits is mostly the result of a recession which persisted in the furniture
segment of the national economy.
As one means to correcting the situation the Company, late in 1995,
employed a marketing consultant to effectively serve as a marketing manager, to
bring new ideas and approaches, to better manage and motivate the sales force,
and, most importantly, to execute a plan to expand the distribution or dealer
base for the Company's products. Accomplishing this goal is certainly no small
task given both the slow furniture segment of the economy and a notable decline
in the available distribution over the last ten to fifteen years, a situation
which has accelerated over the last twelve to eighteen months when
bankruptcies, liquidations, and closures have occurred at an increasing pace.
However, we are experiencing some very favorable marketing results though
at a pace somewhat behind our projected schedule. For example, during premarket
week early in April, the Company received a commitment from a national trade
showroom to distribute the Wellington Walls segment of the domestic product
line. At the April furniture market held in High Point N.C., the Company
received a commitment from another national trade showroom to expand its
displays of all the Wellington Hall products, except the Wellington Walls, in
ten of its showrooms across the country thus re-establishing them as a major
distributor of the Company's products. These two entities could contribute
significantly to the sales of, particularly, the Company's domestically
produced products.
Also at the April 1996 furniture market, approximately twenty new items in
the occasional table category were introduced. Many of these pieces employed
leather and a more casual look, the leather reflecting our efforts to further
exploit the Company's Honduras connection and the more casual look reflecting
current consumer taste. These introductions were well received and the
Company's results were the best we have had in two years and should reflect in
sales during the second fiscal quarter of fiscal 1996 ending in October.
Some of the success realized at the April market reflects a vigorous
effort prior to market to improve our attendance especially from dealers who
had never visited our space or had not visited our space during recent markets.
In January, all of the Company salesmen were asked to come to Lexington for a
sales meeting. The first day was devoted to identifying where we were, what was
wrong and how we arrived. We analyzed our product offering, sales aids,
delivery, sales service, quality, distribution, and communications. The second
day was devoted to solutions and the development of new approaches and the
longer term directio we needed to pursue. Of the many things that came out of
those meetings, one were specific lists of "target accounts" for each sales
territory including old and new distribution that we believed represented
stocking dealers that could utilize the line. The initial purpose of the
target account lists was to coordinate the efforts of the marking consultant,
management, and the area representative to securing the dealers attendance to
our space during the April market. Its estimated that we realized about a 70%
success rate which is
<PAGE> 3
largely responsible for the success of the new products, possibly twenty new
dealers and approximately $1,900,000 in orders which the Company booked for
the three months of April through June.
In conjunction with selling the target accounts, it also became obvious
that the Company needed to better understand what competition the larger
manufacturers were offering dealers and develop a program for dealers that
would be attractive and that would give the Company more integrity as it
related to being a serious vendor. Discussion with dealers and feed back from
our multi-line representatives, has made it clear that we must be prepared to
be flexible since each dealer seems to require or desires differ elements in
his program. The more notable elements which must be available are discounted
floor stock, dating of payment terms, assured delivery with factory reserved
inventories, semiannual promotions, in store education, in store sales
representation, factory sponsored sales contests, high quality sales aids
available in quantities, factory freight contracts to assure minimum freight
cost without freight damages, and others.
Having developed and finalized the program, the Company made its first
presentation early in July of 1996 to a large retailer and has received a
favorable commitment which should result in an expanded presence in four stores
and a large order for shipment late in the Company's fiscal second quarter.
Just as important as the order is the fact that the exercise allowed the
Company to investigate the various elements, establish its plans and now be in
a position to approach other dealers in a knowledgeable, professional manner.
We are scheduled to present similar programs to a number of additional dealers.
Practically all of the above referenced marketing successes address and
will affect the sales volume of both the domestic and foreign products
manufactured by the Company. All the new products successfully introduced at
the April Market are domestic products but since all the components or
assemblies come from the Honduras facility, that operation benefits as well.
This is particularly important since the Company's domestic operation has
always been the biggest consumer/customer of the Honduras products. During
fiscal year ended 4-30-96 the domestic operation consumed approximately
one-half the volume that had been utilized in years past and seriously
diminished the Honduran operations. Since the Company's margins are the
highest in those materials, it is essential that that volume be restored.
The products presently being developed for the next market in October of 1996
will be aimed at further restoration of domestic operations consuming a larger
share of the Honduran products.
It should also be noted that the Company, as part of it marketing effort,
has retained a new product designer to bring fresh concepts to the products
offered.
In addition to the marketing efforts and success discussed above, a
renewed effort is in place to re-establish or expand the wood component sales
to other manufacturers. We are on pace to add an additional $500,000 in sales
this year. These orders are generally CBD and offer a quick, profitable turn on
sales.
Predicting the sales results for the next fiscal year is still somewhat
clouded by the poor
<PAGE> 4
furniture segment of the national economy but, as noted above, I believe we
have the intensity and focus in our marketing effort to certainly improve on
fiscal 1996 results as we progress into the year. Given our record of good
operating profits, profits should also be expected to improve on increased
volume.
Sincerely,
Hoyt Hackney, Jr.
President
Upon written request directed to the Secretary of the Company at P.O. Box 1354,
Lexington, North Carolina 27293-1354, Shareholders will be furnished a copy of
the Company's Annual Report on form 10-KSB without charge.
<PAGE> 5
MARKET PRICES, DIVIDENDS AND
RELATED SHAREHOLDER MATTERS
The Common Stock of the Company trades on the NASDAQ Over-the-Counter
market system. According to the information furnished by McDaniel Lewis and
Co., a market maker in the Company's Common Stock, the high and low bid
quotations for each quarterly period within the last two fiscal years is as
follows:
<TABLE>
<CAPTION>
Quarter Ending High Low
-------------- ---- ------
<S> <C> <C>
July 1994 1.75 1.750
October 1994 1.625 1.625
January 1995 1.250 1.250
April 1995 1.00 1.00
July 1995 1.250 1.00
October 1995 .75 .625
January 1996 .50 .50
April 1996 .3125 .3125
</TABLE>
These market quotations represent inter-dealer prices, without retail
mark-up, mark-down or commission, and do not necessarily represent actual
transactions.
As of July 15, 1996, there were approximately 894 holders of record of
the Company's Common Stock.
The Company has not paid any dividends during the past two fiscal years.
Pursuant to the terms of its line of credit and long-term loan agreements with
Lexington State Bank, the Company may not pay any dividends, purchase, redeem
or otherwise retire any of its capital stock or otherwise make any other
distribution of its assets resulting in the reduction of its capital without
the prior written consent of Lexington State Bank. See Note 8 of Notes to
Consolidated Financial Statements for fiscal year ended April 30, 1996.
<PAGE> 6
Management's Discussion and Analysis or plan of operation (omitted pursuant to
Rule 12b-25)
Financial Statements of Wellington Hall, Limited and Subsidiaries (omitted
pursuant to Rule 12b-25)
OFFICERS AND DIRECTORS
----------------------
OFFICERS
--------
Hoyt M. Hackney, Jr. Ralph L. Eskelson, Jr.
President and Treasurer General Manager
Muebles Wellington Hall, S.A.
Ernst B. Kemm William W. Woodruff
Executive Vice President Secretary
DIRECTORS
----------
Donald W. Leonard William W. Woodruff
Chairman of the Board President of Woodruff
Shoe Store
Hoyt M. Hackney, Jr. Ernst B. Kemm
President and Treasurer Executive Vice President
TRANSFER AGENT
--------------
Wachovia Bank and Trust Company
<PAGE> 1
EXHIBIT 22
SUBSIDIARIES OF WELLINGTON HALL, LIMITED
Name of Subsidiary Jurisdiction of Incorporation
------------------ -----------------------------
1. Wellington Hall Caribbean Corporation North Carolina
2. Muebles Wellington Hall, S.A. Honduras, Central America
Both of the above-listed subsidiaries do business under their full corporate
names.
<PAGE> 1
WELLINGTON HALL, LIMITED
Route 1, U.S. Highway No. 29 and No. 70
Post Office Box 1354
Lexington, North Carolina 27293-1354
(704) 249-4931
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on September 18, 1996
To the Shareholders of Wellington Hall, Limited:
Notice is hereby given that the Annual Meeting of Shareholders of
Wellington Hall, Limited ("the Company") will be held on September 18, 1996, at
10:00 A.M. Eastern Time, at the offices of Turlington and Company, the
Company's independent auditors, located at 509 East Center Street, Lexington,
North Carolina for the following purposes:
1. To elect a Board of five directors to serve until the next Annual
Meeting of the Shareholders and until their successors are elected and
qualified.
2. To ratify the selection by the Board of Directors of Turlington and
Company as independent auditors of the Company for fiscal year ending
April 30, 1997..
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on August 9, 1996,
as the record date for the determination of shareholders entitled to notice of,
and to vote at the meeting and any adjournment or adjournments thereof.
The Company's Proxy Statement is submitted herewith along with the Annual
Report for the year ended April 30, 1996.
Lexington, North Carolina
August 19, 1996
By Order of The Board of Directors
William W. Woodruff, Secretary
<PAGE> 2
WELLINGTON HALL, LIMITED
Route 1, U.S. Highway No. 29 and No. 70
Post Office Box 1354
Lexington, North Carolina 27293-1354
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
Wellington Hall, Limited (the "Company") and is to be used at the Annual
Meeting of Shareholders to be held at the offices of Turlington and Company,
the Company's independent auditors, located at 509 East Center Street,
Lexington, North Carolina on September 18, 1996, at 10:00 A.M. Eastern Time,
and at any adjournments thereof. Any shareholder submitting the accompanying
proxy may revoke it at any time before it is voted by: (a) giving written
notice to the Secretary of the Company before the Annual Meeting; (b) attending
the Annual Meeting and announcing at the meeting that he elects to revoke his
proxy and to vote in person; or (c) delivering a proxy bearing a later date to
the Company before the Annual Meeting.
Proxies will be solicited by mail. Proxies may also be solicited
personally or by telephone by employees of the Company who will not be
additionally compensated therefor, or by the Company's transfer agent. The cost
of such solicitation will be borne by the Company. The Company intends to mail
copies of the Proxy Statement and the accompanying proxy card to the
shareholders on or soon after August 19, 1996.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Only shareholders of record at the close of the business on August 9,
1996, are entitled to notice of and to vote at the meeting. The shares
represented by all properly executed proxies which are received in time for the
meeting will be voted in accordance with the directions given thereon. If no
directions are given on a proxy, the shares represented by such proxy will be
voted "FOR" proposal 2 and "FOR" the five nominees for election as Directors
named herein. Shareholders will be entitled on vote each share of Common Stock
held on the record date. As of August 9, 1996, there were 1,689,887 shares of
the Company's Common Stock, no par value (the "Common Stock"), issued and
outstanding.
The following table sets forth certain information as to the only persons,
as of August 9, 1996 known by the Company to own beneficially more than 5% of
the outstanding Common Stock of the Company:
Name and Address Amount and Nature Percent
of Beneficial of Beneficial of
Owner Ownership
Hoyt M. Hackney, Jr. 226,958 13.4%
409 Edgedale Drive
High Point, N.C. 27262
<PAGE> 3
Ernst B. Kemm 234,780 13.9%
1211 Lancaster Place
High Point, N.C. 27260
______________________________________________________________________________
To the best of the Company's knowledge, all persons listed above have sole
voting and investment power over the shares which they own directly.
Formerly under Section 55-7-28 of the North Carolina Statutes, a
shareholder or proxy holder had the right to elect directors by cumulative
voting. As a result of recent amendments to Section 55-7-28, the shareholders
of the Company no longer have the right to elect directors by cumulative
voting.
The requisite quorum for the Annual Meeting will be a majority of the
outstanding shares of Common Stock entitled to vote. The directors will be
elected by a plurality of the shares voted at the Annual Meeting.
Abstentions and broker non-votes will not be treated as a vote for or
against any particular nominee and will not affect the outcome of the election
of directors.
ELECTION OF DIRECTORS
The Company's Bylaws provides that a minimum of three and a maximum of
nine directors shall serve on the Board of Directors, with the exact
number of directors within such limitations to be fixed by resolution of the
Board prior to the annual meeting at which directors are to be elected. The
Board of Directors has fixed the number of directors to be elected at the
Annual Meeting of Shareholders at five. It is intended that Proxies received in
response to this solicitation will be voted to elect five directors to hold
office until the next Annual Meeting and until their successors are elected and
qualified. The enclosed Proxy can not be voted for more than five persons.
Management knows of no reason why any of the five nominees will be unable
or unwilling for good cause to serve; but if that should occur, it is the
intention of those persons named in the Proxy to vote for such other person or
persons as the Board of Directors may recommend. Unless otherwise directed, the
enclosed Proxy will be voted in favor of the five nominees for election as
Directors.
<PAGE> 4
The following table sets forth certain information, as of August 9, 1996
concerning (i) the five persons nominated by the Board to serve as Directors,
(ii) the Company's executive officers and (iii) all executive officers and
Directors as a group:
<TABLE>
<CAPTION>
Amount and
Percent of
Shares of
Principal Occupation Common Stock
Name and and Present Position Beneficially
Address of with the Company Director Owned
Beneficial Since
Owner Age
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Donald W. Leonard 77 Chairman of the Company's 1965 26,862
105 Westover Board of Directors since (1.6%)
Lexington, N.C.. 1978; Private Investor
27292 (1) (2)
Hoyt M. Hackney Jr. 58 President and Treasurer 1978 226,958
409 Edgedale of the Company since (13.4%)
High Point, N.C. 1978
27262
Ernst B. Kemm 60 Executive Vice President 1978 234,780
1211 Lancaster of the Company since (13.9%)
High Point, N.C. 1978
27260
William W. Woodruff 72 Secretary of the Company 1977 16,000
320 Maegeo since 1982; Employedfull (.9%)
Lexington, N.C. time as President and Owner
27292 (1) (2) of Woodruff Shoe Store
since 1947
Arthur F. Bingham 41 Sales Representative 14,199
515 3rd Ave N.W. For Lexington Furniture (.8%)
Hickory, N.C. Industries
28601 (3)
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
Ralph L 50 General Manager and N/A None
Eskelsen, Jr. Director of Muebles
San Pedro Sula Wellington Hall, S.A.,
Honduras (subsidiary of the Company)
since July 1989, Plant
Manager of Contessa
Industrial, S.A. (Honduran
furniture company) from
1977 to 1989
All executive officers 518,799
and Directors as a (30.7%)
Group (6 Persons)
- - -----------------------------
</TABLE>
To the best of the Company's knowledge, all persons listed above have
sole voting and investment power over the shares which they own directly.
(1) Member of the Company's compensation committee which implements
the Company's Executive Stock Plan and recommends to the Board
the salaries to be paid to the executive officers.
(2) Messrs. Leonard and Woodruff are related by marriage
(3) Mr. Bingham's shares include 437 owned by Mr. Bingham's mother, Mrs.
Evelyn W. Bingham, 8,327 owned by Mrs. Bingham as custodian of
her daughter, Anne B. Philpott and Son, William L. Bingham, and 437
shares owned by Mr. Bingham's brother, William L. Bingham
The executive officers are elected by the Board of Directors to serve
until the next annual meeting of the Board and until their successors have
been elected and qualified.
The Board of Directors of the Company met four times during the year ended
April 30, 1996. The Compensation Committee met once during fiscal 1996. The
Board does not have standing audit, nominating or other committees performing
similar functions. All Directors attended at least 75% of the total number of
the meetings of the Board of Directors and committees on which they served
during fiscal 1996.
<PAGE> 6
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid to
the Chief Executive Officer of the Company's during the last three fiscal
years.
<TABLE>
<CAPTION>
All Other
------------
Fiscal Annual Compensation Compensation
------ ------------------------- ------------
Name/Position Year Salary($) Bonus($) (1)
- - ------------- ------ --------- -------- ---
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hoyt M. Hackney, Jr. 1996 128,878 0 26,577
President,
Treasurer 1995 166,918 37,728 27,203
Chief Executive
Officer, Chief 1994 160,285 36,712 25,104
Financial Officer
</TABLE>
(1) The amounts reported in this column consists of the Company's matching
contributio under its 401(k) plan and deferred compensation plan.
Non-salaried directors are paid $100 for each meeting of the Board of
Directors they attend and a $1,000 annual directors fee. The Company does not
pay Directors any additional amounts for committee participation.
Effective January 1, 1987. the Company entered into a 5-year employment
agreement with Mr. Hackney (the "Employment Agreement") that will automatically
be extended for successive one-year terms unless and until either party to the
Employment Agreement gives written notice of termination. Throughout the term of
the Employment Agreement, Mr. Hackney is to serve as President, Chief Executive
Officer and Chief Financial Officer of the Company, is to be nominated for
election as a Director of the Company and is to devote his full time and
attention to the Company's business affairs. If for any reason (other than his
"for cause" termination) Mr. Hackney does not continue in these positions, Mr.
Hackney may elect to terminate the Employment Agreement and receive as severance
compensation an amount equal to one and one-half times his then annual
compensation. Under the Employment Agreement, Mr. Hackney may be terminated only
"for cause", which is defined to mean (1) willful material breach of his
obligations under the Employment Agreement; (2) willful gross misconduct in the
course of his employment that is substantially injurious to the Company; or (3)
conviction in any court of a felony which results in incarceration for more
than 90 consecutive days.
In conjunction with the execution of the Employment Agreement, the Company
and Mr. Hackney entered into a executive deferred compensation agreement,
effective May 8, 1987 (the "Deferred Compensation Agreement"), which provides
for the payment of $50,000 per year for a period of 10 years payable in equal
monthly installments, upon Mr. Hackney's retirement at age 62. The monthly
installment payments shall be paid to Mr. Hackney's beneficiary if he dies
prior to retirement or after retirement but prior to the expiration of the
ten-year payout period. $24,000 in deferred payments were accrued pursuant to
the Deferred Compensation Agreement for the
<PAGE> 7
benefit of Mr. Hackney during fiscal 1996.
If the Company is (1) merged, liquidated, consolidated or otherwise
combined with any other company, or (2) if substantially all the assets or
shares of stock of the Company are acquired by any other person or entity (1 and
2 above hereinafter a "Change of Control Event"), the Employment Agreement will,
pursuant to its terms, automatically remain in full force and effect until the
end of the two-year period immediately following the date of the Change of
Control Event. If the Employment Agreement is extended beyond December 31, 1991
due to the occurrence of a Change of Control Event, Mr. Hackney is to be paid an
annual salary of $155,000 throughout the term of extension. Upon the occurrence
of a Change of Control Event. the Company or its successor in interest may
terminate the Employment Agreement upon the payment to Mr. Hackney of a cash
amount equal to 1 1/2 times his then annual compensation. The Company or its
successor may terminate the Deferred Compensation Agreement following the
occurrence of a Change of Control event upon the payment to Mr. Hackney of (a)
$100,000 in cash or (b) a cash amount for each share of the Company stock then
owned by Mr. Hackney equal to or greater than the lesser of (i) four times the
book value per share of such stock or (ii) 15 times the net after tax profits
per share of such stock, computed as of the Company's most recent fiscal year
end in accordance with Generally Accepted Accounting Principles.
Bonus Plan
On June 28, 1990, the Board of Directors of Wellington Hall Caribbean
Corporation (WHCC), the Company's wholly-owned subsidiary adopted an Incentive
Bonus Plan (the "Plan") to provide a bonus to selected Executives and Managers
of WHCC and Muebles Wellington Hall, S.A. (MWH) based on those corporations'
consolidated annual pre-tax profit and depreciation. The plan provides for
reserving a portion of the total of consolidated (WHCC and MWH) pre-tax profits
plus depreciation of the subsidiaries for bonuses according to the following
schedule:
<TABLE>
<CAPTION>
Percentage to Apply
Pre-Tax Profit to total amount based on
and Depreciation range the total falls in
- - --------------------------------------------------------------------------------
<S> <C>
$ 1 to 45,000 5.0%
$ 45,001 to 90,000 7.5%
$ 90,001 to 180,000 10.0%
$ 180,001 to 540,000 15.0%
$ 540,000 to 1,000,000 $81,000 plus 7.5% of amount
over $540,000
$1,000,001 to 1,500,000 $115,500 plus 8.0% of amount
over $1,000,000
$1,500,001 to 2,000,000 $155,500 plus 10.0% of
amount over $1,500,000
No bonus was accrued at April 30, 1996
</TABLE>
<PAGE> 8
SELECTION OF INDEPENDENT AUDITORS
Subject to ratification by the shareholders, the Board of Directors has
selected Turlington and Company, an independent public accounting firm, to
audit the accounts of the Company for the fiscal year ending April 30, 1997.
Turlington and Company has acted as auditors for the Company since 1978. A
representative of Turlington and Company is expected to be present at the
Annual Meeting, will have the opportunity to make a statement and will be
available to respond to appropriate questions..
The Board of Directors recommends a vote FOR ratifying the selection of
Turlington and Company as auditors for the Company for fiscal year ending April
30, 1997.
SHAREHOLDERS PROPOSALS
Any shareholder desiring to present a proposal for action at the next
annual meeting of shareholders must submit his proposal in writing to the
Secretary of the Company in Lexington, North Carolina by April 14, 1997, if a
description of such proposal is to be included in the Proxy Statement issued by
the Company.
OTHER MATTERS
No business other than that set forth herein is expected to come before
the meeting, but should any other matters requiring a vote of the shareholders
arise, including a question of adjourning the meeting, the persons names in the
accompanying Proxy will vote thereon according to their best judgment in the
interests of the Company.
Where a choice is specified on any Proxy as to the vote on any matter to
come before the meeting, the Proxy will be voted in accordance with such
specifications. If no specification is made by the Proxy is properly signed,
the shares represented thereby will be voted in favor of each proposal set
forth herein.
Order of the Board of Directors
William W. Woodruff
Secretary
August 19, 1996
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING, YOU ARE URGED TO SIGN,
DATE AND MAIL THE ENCLOSED PROXY PROMPTLY. IF YOU ATTEND THE MEETING, YOU CAN
VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE> 9
APPENDIX A
WELLINGTON HALL, LIMITED
ROUTE 1, U.S. HIGHWAY NO. 29 AND NO. 70
POST OFFICE BOX 1354
LEXINGTON, NORTH CAROLINA 27293-1354
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 18, 1996
The undersigned hereby appoints DONALD W. LEONARD, HOYT M. HACKNEY, JR. AND
WILLIAM W. WOODRUFF, and each of them, as Proxies, each with full power of
substitution, and hereby authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of Wellington Hall, Limited
held of record by the undersigned on August 9, 1996 at the Annual Meeting of
shareholders to be held in Lexington, N.C. on September 18, 1996 or at any
adjournments thereof. The following proposals to be brought before the meeting
are more specifically described in the accompanying Proxy Statement.
(1) ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked to contrary all nominees listed
below) below ( )
(INSTRUCTIONS: To withhold authority to vote for any individual
nominees strike a line through the nominee's name in the list below.)
Hoyt M. Hackney Jr., Ernst B. Kemm, Donald W. Leonard,
William W. Woodruff, Arthur F. Bingham
(2) To ratify the selection of Turlington and Company, independent public
accountants, as auditors of the Company for the fiscal year ending
April 30, 1997.
VOTE FOR ( ) VOTE AGAINST ( ) ABSTAIN ( )
(3) In their discretion, the Proxies are authorized to vote upon such
other matters as may properly come before the meeting.
Continued and to be signed on Reverse side
<PAGE> 10
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder.
If no direction is made, this proxy will be voted FOR proposals 1 and 2
Please date and sign exactly as name appears
hereon, Joint Owners should each sign personally.
Trustees, custodians, executors, and others -------------------------
signing in a representative capacity should Signature
indicate the capacity in which they sign.
-------------------------
PLEASE MARK, SIGN, DATE AND RETURN Signature
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE, WHETHER OR NOT
YOU PLAN TO BE PRESENT AT THE 1996
MEETING. IF YOU ATTEND THE ----------------------
MEETING YOU CAN VOTE EITHER IN DATE:
PERSON OR BY YOUR PROXY.
