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 MARCH 31, 1995
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. 1-8250
WELLS-GARDNER ELECTRONICS CORPORATION
(Exact name of registrant as specified in its charter)
ILLINOIS
36-1944630
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
2701 NORTH KILDARE AVENUE, CHICAGO, ILLINOIS
60639
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: 312/252-8220
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.
YES X NO
As of March 31, 1995, 3,982,511 shares of the Common Stock,
$1.00 par value of the registrant were outstanding.
WELLS-GARDNER ELECTRONICS CORPORATION
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1995<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Page
Index to Financial Statements
Statement of Operations 3
Balance Sheet 4
Statement of Cash Flows 5
Notes to the Condensed Financial Statements 6
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION
ITEM 5.
Other Information 8
ITEM 6.
Exhibits and Reports on Form 8-K 8
SIGNATURE 8
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
WELLS-GARDNER ELECTRONICS CORPORATION
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended March 31,
1995 1994
<S> <C> <C>
Net Sales $ 6,157,000 $ 7,622,000
Cost of sales 5,704,000 7,304,000
Selling & administrative expenses 677,000 826,000
Special charges --- 762,000
Other (income) expense, net 31,000 (5,000)
Gain on sale of fixed assets (403,000) ---
Total costs 6,009,000 8,887,000
Earnings (loss) before income taxes 148,000 (1,265,000)
Income taxes --- ---
Net earnings (loss) $ 148,000 $ (1,265,000)
Earnings (loss) per share:
Net earnings (loss) per share $ 0.04 $ (0.33)
Weighted average common & common
equivalent shares outstanding 3,982,053 3,859,942
See accompanying notes to condensed financial statements.
</TABLE>
WELLS-GARDNER ELECTRONICS CORPORATION
Balance Sheet
<TABLE>
<CAPTION>
Unaudited Audited
March 31, December 31,
1995 1994
<S> <C> <C> <C> <C>
Assets:
Cash & short-term investments $ 638,000 $ 57,000
Accounts receivable (net) 3,726,000 6,105,000
Recoverable income taxes 329,000 329,000
Inventories:
Raw materials 2,231,000 3,239,000
Work in progress 360,000 435,000
Finished goods 2,242,000 4,833,000 2,157,000 5,831,000
Other current assets 217,000 491,000
Total current assets 9,743,000 12,813,000
Property, plant & equipment, net 2,763,000 2,806,000
Total assets $ 12,506,000 $ 15,619,000
Liabilities:
Notes payable $ --- $ 1,925,000
Accounts payable 1,125,000 1,923,000
Accrued expenses 769,000 1,404,000
Total current liabilities 1,894,000 5,252,000
Total liabilities 1,894,000 5,252,000
Shareholders' Equity:
Common stock-authorized 25,000,000
shares, $1.00 par value; issued
3,982,511 shares (at March 31,
1995) and 3,957,736 shares
(at December 31, 1994) 3,983,000 3,958,000
Additional paid in capital 1,008,000 959,000
Retained earnings 5,962,000 5,814,000
Unearned compensation (341,000) (364,000)
Total shareholders' equity 10,612,000 10,367,000
Total liabilities & shareholders'
equity $ 12,506,000 $ 15,619,000
See accompanying notes to condensed financial statements.
</TABLE>
WELLS-GARDNER ELECTRONICS CORPORATION
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 148,000 $ (1,265,000)
Adjustments to reconcile net earnings (loss)
to cash provided by operating activities:
Depreciation & amortization 114,000 107,000
Net (gain) loss on sale of fixed
assets (401,000) ---
Amortization of unearned compensation 23,000 14,000
Changes in current assets & liabilities:
Accounts receivable 2,379,000 1,443,000
Inventories 998,000 (390,000)
Prepaid expenses & other assets 194,000 177,000
Accounts payable (798,000) 445,000
Accrued expenses (686,000) 733,000
Net cash provided by operating
activities 1,971,000 1,264,000
Net cash provided by (used for) investing activities:
Additions to property, plant &
equipment (140,000) (12,000)
Proceeds from sale of fixed assets 601,000 ---
Net cash provided by (used for) investing 461,000 (12,000)
activities
Net cash (used for) financing activities:
Repayment of notes payable (1,925,000) (1,200,000)
Stock options exercised 74,000 ---
Net cash (used for) financing activities (1,851,000) (1,200,000)
Net decrease in cash & short-term
investments 581,000 52,000
Cash & short-term investments at
beginning of period 57,000 94,000
Cash & short-term investments at
end of period $ 638,000 $ 146,000
Supplemental cash flow disclosure:
Interest paid $ 34,000 $ 12,000
See accompanying notes to condensed financial statements.
</TABLE>
WELLS-GARDNER ELECTRONICS CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited
condensed financial statements contain all adjustments
which are necessary for a fair statement of results for the
periods indicated.
Certain information and footnote disclosures normally
included in the financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted. It is suggested that these condensed
financial statements be read in conjunction with the
financial statements and notes thereto included in the
company's 1994 annual report to shareholders. The results
of operations for the quarter ended March 31, 1995 are not
necessarily indicative of the operating results for the
full year.
2. Earnings (loss) per common and common equivalent shares
were calculated by dividing net earnings (loss) by the
weighted average number of shares of common stock and
common stock equivalents outstanding.
3. Included in the company's net earnings for the quarter
ended March 31, 1995 was a $403,000, or 10 cent per share,
gain on sale of fixed asset. Included in the company's net
loss for the quarter ended March 31, 1994 was a $762,000,
or 20 cents per share, special charge for management
reorganization.
4. The company sold land and a building in the first quarter
of 1995. The sale was closed and title passed on March 30,
1995. The proceeds were put into escrow in the company's
name. The escrow will be released when the company
completes some minor environmental clean-up which the
company expects to be completed by May, 1995. The company
has fully accrued for the clean-up. The proceeds are
included in cash and short-term investments on the
company's March 31, 1995 balance sheet.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
For the first quarter ended March 31, 1995, sales decreased 19.2
percent to $6,157,000 from $7,622,000 in the prior year's
period. This decrease was due to lower shipments to the coin-
operated arcade game segment, caused by an overall decline in
the industry. Gross operating profit, as a percentage of sales,
increased to 7.4 percent, or $453,000, compared to 4.2 percent,
or $318,000, for the same period last year. This increase is
attributed to improved manufacturing productivity, sales of
higher-margin new products and growing refurbished monitor
sales. Net earnings were $148,000, or four cents per share,
compared to a net loss of $1,265,000, or 33 cents per share, for
the comparable 1994 quarter. Included in the 1995 quarter was a
gain on sale of fixed asset of $403,000 or 10 cents per share,
while the 1994 quarter included a $762,000 or 20 cents per share
special charge for management reorganization. The loss before
gain on sale of fixed asset was $255,000, or six cents per
share, as compared to last years loss before special charges of
$503,000, or 13 cents per share. Selling and administrative
expenses decreased 18 percent to $677,000 from $826,000 due to
the lower sales volume and reduced costs attributable to prior
period cost cutting measures.
As of March 31, 1995, cash and short term investments increased
$581,000 from December 31, 1994. Accounts receivable decreased
$2,379,000 to $3,726,000 from $6,105,000 due to lower sales
volume and tighter collection policies. Inventory decreased
$998,000 or 17.1 percent to $4,833,000 from $5,831,000 at year
end 1994 due to economic order quantity purchases and decreased
sales volume.
As of March 31, 1995, notes payable was reduced to zero compared
to $1,925,000 at December 31, 1994. The company has an
unsecured revolving line of credit of $3,500,000, with an
interest rate at prime, from Harris Trust and Savings Bank.
Accounts payable decreased $920,000 to $1,125,000 from
$2,045,000 at year end. Accrued expenses decreased $1,141,000
to $725,000 from $1,866,000 due mainly to the payment of amounts
for a special charge incurred during the first quarter of 1994
relating to management reorganization. Working capital
decreased by $505,000 since year-end 1994, to $7,849,000, while
corporate liquidity continues to be strong as evidenced by a
current ratio of 5.14 to 1.
PART II - OTHER INFORMATION
Item 5. Other Information
The Registrant's 1995 Annual Meeting of Shareholders
was held on April 25, 1995. At this meeting, all nominees for
directors were elected, and the approval to amend the
company's incentive stock plan was ratified.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits:
Exhibit 27 - Financial Data Schedule
B. Reports on Form 8-K:
No reports on Form 8-K were filed during the
quarter ended March 31, 1995
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.
WELLS-GARDNER ELECTRONICS CORPORATION
Date: May 12, 1995 By: /s/ Richard L. Conquest
Richard L. Conquest
Vice President of Finance,
Chief Financial Officer,
Secretary and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains first quarter summary financial information extracted
from Wells-Gardner Electronics Corporation 1995 first quarter Form 10-Q and is
qualified in its entirety by reference to such Form 10-Q filing.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
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0
0
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