<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
For the Quarter Ended April 1, 1995 Commission File Number 0-5971
WOODHEAD INDUSTRIES, INC.
DELAWARE 36-1982580
- - - - - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
2150 E. LAKE COOK RD., SUITE 400, BUFFALO GROVE, IL. 60089
- - - - - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (708) 465-8300
NO CHANGE
- - - - - --------------------------------------------------------------------------------
(Former name, former address or former fiscal year, if changes since last
reports)
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 Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- -----
On April 29, 1995 there were 6,900,386 shares of the Registrant's common stock
outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
April 1, 1995 and October 1, 1994
<TABLE>
<CAPTION>
ASSETS (Amounts in thousands)
Unaudited
CURRENT ASSETS 4/1/95 10/1/94
------- -------
<S> <C> <C>
Cash and short-term securities $ 94 $ 1,454
Accounts receivable 16,859 16,589
Inventories (Note 3) 11,561 10,402
Prepaid expenses 4,493 3,811
------- -------
Total current assets $33,007 $32,256
------- -------
OTHER ASSETS $ 1,306 $ 1,570
PROPERTY, PLANT & EQUIPMENT, at cost $59,930 $55,035
Less: Accumulated depreciation (35,983) (33,904)
------- -------
Net property, plant and equipment $23,947 $21,131
------- -------
GOODWILL $ 7,398 $ 7,306
------- -------
TOTAL ASSETS $65,658 $62,263
------- -------
------- -------
LIABILITIES & STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 5,244 $ 5,948
Accrued expenses 10,463 10,750
Income taxes 1,362 880
Portion of long-term debt payable within one year 117 106
------- -------
Total current liabilities $17,186 $17,684
------- -------
DEFERRED INCOME TAXES $ 1,749 $ 1,569
------- -------
LONG-TERM DEBT $ 13 $ 63
------- -------
STOCKHOLDERS' INVESTMENT: (Note 5)
Preferred stock $ - $ -
Common stock 7,470 7,470
Additional paid-in capital 5,188 4,987
Cumulative translation adjustment 442 (347)
Retained earnings 38,244 35,521
Less: Treasury stock at cost (569 shares
and 575 shares) (4,634) (4,684)
------- -------
Total stockholders' investment $46,710 $42,947
------- -------
TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $65,658 $62,263
------- -------
------- -------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
WOODHEAD INDUSTRIES, INC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
4/1/95 4/2/94 4/1/95 4/2/94
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET SALES $31,413 $26,938 $59,080 $50,474
COST OF SALES 17,614 15,065 33,534 28,587
------- ------- ------- -------
GROSS PROFIT $13,799 $11,873 $25,546 $21,887
% of Net Sales 43.9% 44.1% 43.2% 43.4%
OPERATING EXPENSES 9,352 8,762 17,653 16,158
------- ------- ------- -------
INCOME FROM OPERATIONS $ 4,447 $ 3,111 $ 7,893 $ 5,729
OTHER EXPENSES, NET 898 369 1,403 618
------- ------- ------- -------
INCOME BEFORE INCOME
TAXES $ 3,549 $ 2,742 $ 6,490 $ 5,111
PROVISION FOR INCOME TAXES $ 1,346 $ 1,108 $ 2,457 $ 2,051
------- ------- ------- -------
NET INCOME $ 2,203 $ 1,634 $ 4,033 $ 3,060
------- ------- ------- -------
------- ------- ------- -------
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
(Note 4) $ 0.31 $ 0.23 $ 0.56 $ 0.43
------- ------- ------- -------
------- ------- ------- -------
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 7,205 7,145 7,176 7,136
------- ------- ------- -------
------- ------- ------- -------
DIVIDENDS PER SHARE $ 0.095 $ 0.085 $ 0.19 $ 0.17
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Amounts in thousands - unaudited)
<TABLE>
<CAPTION>
Six Months Ended
---------------------
4/1/95 4/2/94
------- -------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income for the period $ 4,033 $ 3,060
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 2,351 2,241
Change in Assets and Liabilities:
Decreases/(Increases) in:
Accounts receivable (270) (1,006)
Inventories (1,159) (1,114)
Prepaid expenses (706) 241
Other assets (189) 75
Increases/(Decreases) in:
Accounts payable (704) 94
Accrued expenses (287) (948)
Income taxes 506 (160)
Deferred income taxes 180 (330)
------- -------
Net cash flows provided by operating activities $ 3,755 $ 2,153
------- -------
Cash Flows from Investing Activities:
Purchases of property, plant & equipment $(4,579) $(1,387)
Retirements or sales of property, plant and equipment 107 6
------- -------
Net cash flows used for investing activities $(4,472) $(1,381)
------- -------
Cash Flows from Financing Activities:
Proceeds from short-term debt $ 13 $ -
Payments on short-term debt (2) (504)
Proceeds from long-term debt 14,400 13,500
Payments on long-term debt (14,450) (13,442)
Sales of stock 251 717
Dividend payments (1,310) (1,164)
------- -------
Net cash flows used for financing activities $(1,098) $ (893)
------- -------
Effect of exchange rates $ 455 $ (43)
------- -------
Net (Decrease) Increase in Cash & short-term securities $(1,360) $ (164)
------- -------
------- -------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 66 $ 184
Income taxes $ 2,404 $ 1,849
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
WOODHEAD INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 1, 1995
(1) The condensed consolidated balance sheets at April 1, 1995, and October 1,
1994, and the condensed consolidated statements of income and cash flow
for the periods ended April 1, 1995, and April 2, 1994, reflect, in the
opinion of the company, all adjustments necessary to present fairly the
financial position for such periods. All such adjustments were of a
normal recurring nature. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to S.E.C. rules and regulations, although the company believes
that the disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed consolidated financial
statements be read in conjunction with the consolidated financial
statements and notes thereto included in the company's latest annual
report on Form 10-K.
(2) The results of operations for the three-month periods ended April 1, 1995,
and April 2, 1994, are not necessarily indicative of the results to be
expected for the full year.
(3) It is the company's policy to take an annual physical inventory in
conjunction with the preparation of the annual consolidated financial
statements. The estimated breakdown of raw material, work-in-process, and
finished goods inventories at April 1, 1995, and October 1, 1994, is as
follows:
<TABLE>
<CAPTION>
(in thousands)
4/1/95 10/1/94
------- -------
<S> <C> <C>
Raw materials $ 7,585 $ 7,012
Work-in-process and finished goods 8,554 7,946
------- -------
Inventories before LIFO reserve 16,139 14,958
Less: Reserve to reduce to LIFO (4,578) (4,556)
------- -------
Inventories, net $11,561 $10,402
------- -------
------- -------
</TABLE>
(4) Income per share is based upon the weighted average number of shares
outstanding plus the effect of common stock equivalents during the period
(7,205,000 and 7,176,000 for the quarter and for the six months ended
April 1, 1995, respectively, 7,145,000 and 7,136,000 for the quarter and
six months ended April 2, 1994, respectively).
(5) Authorized stock is 40,000,000 shares consisting of 10,000,000 shares of
preferred stock, par value $.01 per share, and 30,000,000 shares of common
stock, par value $l.00 per share. No shares of preferred stock have been
issued. Common shares outstanding at April 1, 1995 and October 1, 1994
were 6,900,000 and 6,894,000, respectively. Treasury shares totaled
569,000 at April 1, 1995 and 575,000 at October 1, 1994.
-5-
<PAGE>
WOODHEAD INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Working capital increased by $1.2 million for the first six months of
fiscal 1995 with a current ratio of 1.9/1 compared with 1.8/1 at the end of the
prior fiscal year. Long-term debt declined by $2.0 million during the quarter
while short-term debt remained unchanged at $.1 million for the period ended.
The resultant debt to equity ratio was 0.3%. Return on assets rose to 13.4%
from 12.0% and return on equity improved to 19.2% from 17.4% for the comparable
12-month periods ending April 1, 1995 and April 2, 1994, respectively. The
company's financial position remains strong and significant borrowing capacity
is available should the need arise.
The Company is a party to an environmental matter which obligates it to
investigate, remediate or mitigate the effects on the environment of the release
of certain substances at one of the Company's facilities. For additional
information concerning the environmental matter, see "Item 1. Legal
Proceedings".
OPERATING RESULTS
Second quarter net sales rose 17% to $31.4 million from $26.9 million
reported for the same period last year. Both domestic and international sales
were strong; each accounted for 50% of the sales increase. Nearly all core
product groups posted healthy double-digit increases during the quarter,
particularly molded connectors and ergonomic workstations. International sales,
which were 25.5% of total second quarter sales, demonstrated strong unit volume
growth, further aided by the lower U.S. dollar relative to other currencies.
The backlog of unfilled orders was $9.9 million compared with $8.0 million at
fiscal 1994 year-end and $8.3 million reported one year ago. Selling prices
were approximately 1.7% higher than a year ago.
Gross profit of $13.8 million was $1.9 million or 16% greater than the
same quarter of last year. Gross profit margins declined slightly to 43.9% from
44.1%, reflecting the impact of inflation on production costs exceeding selling
price increases.
Operating expenses rose a modest 7% to $9.4 million and dropped to 29.8%
of sales compared with 32.5% in the second quarter of 1994. Despite
inflationary effects on wages and correlative expenses, the Company reduced its
general and administrative expenses, thereby permitting continued investments in
sales and marketing. Other expenses rose $.4 million to $.9 million for the
current quarter due to increases in its reserves for litigation, environmental
and other contingencies.
Net income jumped 35% ahead of last year and on a per share basis was $.31
vs. $.23. This improvement was attributable to the leveraging effects of
increased sales when supported by a comparatively modest increase in operating
expenses.
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<PAGE>
PART II. OTHER INFORMATION
WOODHEAD INDUSTRIES, INC.
Item 1. Legal Proceedings
The Company is subject to federal and state hazardous substance cleanup laws
that impose liability for the costs of cleaning up contamination resulting from
past spills, disposal or other releases of hazardous substances. In this
regard, the Company has incurred, and expects to incur, assessment, remediation
and related costs at one of the Company's facilities. In 1991, the Company
reported to state regulators a release at that site from an underground storage
tank ("UST"). The UST and certain contaminated soil subsequently were removed
and disposed of at an off-site disposal facility. The Company's independent
environmental consultant has been conducting an investigation of soil and
groundwater at the site with oversight by the state Department of Natural
Resources ("DNR"). The investigation indicates that additional soil and
groundwater at the site have been impaired by chlorinated solvents, including
tetrachloroethane and trichloroethylene. In addition, the investigation
indicates that the groundwater contaminants may have migrated off-site.
However, the extent of the contamination has not been fully delineated at this
time. The Company is conducting additional investigations to determine the
extent of contamination at and around the site and to determine the extent of
other sources of contamination in addition to the removed UST.
The Company's consultant estimated that a minimum of $1.3 million of
investigation and remediation expenses will be incurred at the site. The
Company established a reserve for such purposes. The consultant's cost estimate
was based on a review of currently-available data, which is limited, and
assumptions concerning the extent of contamination, geological conditions, and
the costs and effectiveness of certain treatment technologies. The cost
estimate is subject to substantial uncertainty until the extent of contamination
and geological conditions are fully understood, feasible remedial alternatives
are assessed, and the DNR approves a remediation plan. The Company is
continuing to investigate the environmental conditions at the site and will
adjust its reserve if necessary. The Company may incur significant additional
assessment, remediation and related costs at the site and such costs could
materially and adversely affect the Company's consolidated net income for the
period in which such costs are incurred. The Company, however, cannot estimate
the time or potential magnitude of such costs at this time.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on January 27, 1995. During
the meeting, the following matters were voted upon with the total number of
shares voted as follows:
<TABLE>
<CAPTION>
Votes Cast For Votes Withheld
-------------- --------------
<S> <C> <C> <C>
Election of nominees to Board of Directors:
Dale A. Miller 6,366,211 99,650
Richard A. Virzi 6,604,327 11,534
Ward M. Woodhead 6,404,895 10,966
Votes Cast For Votes Against Votes Abstained
-------------- ------------- ---------------
Ratification of appointment of Arthur
Andersen LLP as the Company's independent
public accountants 6,242,329 14,870 158,662
</TABLE>
The number of broker non-votes for each matter voted above was 370,138.
-7-
<PAGE>
PART II. OTHER INFORMATION
WOODHEAD INDUSTRIES, INC.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Computation of earnings per common and
common equivalent share
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
(Amounts in thousands, except 4/1/95 4/1/95
per share data - unaudited) -------------------- --------------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Income $ 2,203 $ 2,203 $ 4,033 $ 4,033
------- ------- ------- -------
------- ------- ------- -------
Weighted average 6,898 6,898 6,896 6,896
common shares
Incremental shares issuable
for stock options outstanding
(Treasury stock method) 307 334 280 334
------- ------- ------- -------
Common and Common
Equivalent Shares 7,205 7,232 7,176 7,230
------- ------- ------- -------
------- ------- ------- -------
Earnings per common and common
equivalent shares $ 0.31 $ 0.30 $ 0.56 $ 0.56
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
(b) There were no reports on Form 8-K filed during the quarter ended April 1,
1995.
-8-
<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.
WOODHEAD INDUSTRIES, INC.
/s/ Robert G. Jennings 5/8/95
------------------------------ ------
Robert G. Jennings Date
Vice President - Finance
(Chief Financial Officer)
/s/ Joseph P. Nogal 5/8/95
------------------------------ ------
Joseph P. Nogal Date
Treasurer/Controller
(Chief Accounting Officer)
-9-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON
PAGES 3 AND 4 OF THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> APR-01-1995
<CASH> 94
<SECURITIES> 0
<RECEIVABLES> 16,859
<ALLOWANCES> 0
<INVENTORY> 11,561
<CURRENT-ASSETS> 33,007
<PP&E> 59,930
<DEPRECIATION> 35,983
<TOTAL-ASSETS> 65,658
<CURRENT-LIABILITIES> 17,186
<BONDS> 0
<COMMON> 7,470
0
0
<OTHER-SE> 5,188
<TOTAL-LIABILITY-AND-EQUITY> 65,658
<SALES> 59,080
<TOTAL-REVENUES> 59,080
<CGS> 33,534
<TOTAL-COSTS> 51,187
<OTHER-EXPENSES> 1,403
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,490
<INCOME-TAX> 2,457
<INCOME-CONTINUING> 4,033
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,033
<EPS-PRIMARY> .56
<EPS-DILUTED> .56
</TABLE>
