<PAGE>
- -------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
Commission file number 0-5971
[ ] TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
WOODHEAD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-1982580
(State or other jurisdiction of (I.R.S. Employer
of incorporation or organization) Identification 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
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $1.00 NASDAQ - NATIONAL
COMMON STOCK PURCHASE RIGHTS MARKET SYSTEM
(Title of Class) (Exchange on which registered)
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 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
---- ----
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of November 25, 1995 was $168,708,784. Shares outstanding as
of November 25, 1995 were 10,382,079.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement dated December 21,
1995, for the annual meeting of stockholders to be held January 26, 1996, and
portions of the Annual Report to Stockholders for the year ended September
30, 1995 are incorporated by reference in Parts I, II, III, and IV.
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<PAGE>
ANNUAL REPORT FORM 10-K
FOR THE YEAR ENDED SEPTEMBER 30, 1995
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
TABLE OF CONTENTS
ITEM NO. PAGE
1. Business . . . . . . . . . . . . . . . . . . . . . . . . 2-4
2. Description of Property. . . . . . . . . . . . . . . . . 4
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 5
4. Submission of Matters to a Vote of Securities Holders. . 5
5. Market for Registrant's Common Equity and Related
Stock Matters. . . . . . . . . . . . . . . . . . . . . 6-7
6. Selected Financial Data. . . . . . . . . . . . . . . . . 7
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . 7
8. Financial Statements and Supplementary Data. . . . . . . 7
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . 7
10. Directors and Executive Officers of the Registrant . . . 8-9
11. Executive Compensation . . . . . . . . . . . . . . . . . 9
12. Security Ownership of Certain Beneficial Owners and
Management. . . . . . . . . . . . . . . . . . . . . . 9
13. Certain Relationships and Related Transactions . . . . . 9
14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K. (Index of Exhibits is on Pages 16-18) . . . 9-13
The term "Company" is used herein to refer to Woodhead
Industries, Inc. (the Registrant) and its subsidiaries
unless the context indicates otherwise.
1
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Woodhead Industries, Inc. was incorporated in Illinois in 1922 and
reincorporated in Delaware in 1978. The corporation and its subsidiaries are
primarily engaged in the manufacture and sale of devices for the control and
distribution of electrical power for industry.
There were no material changes in the manner in which the Company
conducted its business during fiscal 1995.
INDUSTRY SEGMENTS
The Company consists of one business segment which can best be described
as specialty power and signaling devices. That segment accounted for 99% of
the sales and 97% of the earnings in 1995 and during the past five years has
averaged 98% of sales and 96% of earnings. Molded rubber products, an
immaterial business segment and therefore not reported separately, accounted
for the remainder of the sales and earnings.
PRODUCTS
The Company's products are designed for and used primarily in industrial
applications for the distribution of power, for signaling and for motion
control. They can be classified into three groups: electrical specialties,
reels and power systems, and molded rubber products. The electrical
specialty product classification includes, among other items, portable
handlamps, low-voltage safety lights, wiring devices, weatherproof
receptacles, circuit testers, portable power distribution equipment, pendant
push-button enclosures, general-purpose power and control connectors, and
custom copper and fiber optic cable assemblies. Reels and power systems
include such products as electric cord and cable reels, electric cable
festooning systems, collector rings, static discharge reels, tool balancers,
ergonomic workstations, hose reels, and multiple-cable carrier systems.
There is widespread applicability for the Company's products throughout
a broad range of industries such as petro-chemical, automotive, steel,
airline, chemical, food processing, utility, communications, mining, heavy
construction, health care, and recreation. A majority of the products are
used in plant maintenance and production with the balance becoming a
component part of another product.
2
<PAGE>
PART I - CONT'D.
The percent of sales and income for the three product classifications
over the past five years is as follows:
<TABLE>
<CAPTION>
Sales Income
---------------------------- ----------------------------
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Electrical specialties 66 68 68 67 69 81 78 75 87 100
Reels and power systems 33 31 30 31 29 16 18 20 7 (4)
Molded rubber products 1 1 2 2 2 3 4 5 6 4
</TABLE>
DISTRIBUTION
All of the Company's products are of heavy-duty, industrial grade. These
products are sold directly to users, to original equipment manufacturers, and
through selected distributors, mainly in the United States, Canada and Europe
with some sales going to other parts of the world. These distributors are
serviced by manufacturers' agencies whose sales personnel solicit sales for
the Company's products and promote them to the ultimate users. These
agencies also represent other manufacturers whose lines, in general, are
complementary to the Company's products.
AVAILABILITY OF MATERIALS
Parts and materials for the Company's products are readily available
from a variety of suppliers. It has been a practice to develop and use more
than one source of supply for any item considered critical.
PATENTS/TRADEMARKS/LICENSING
On certain of its products, the Company holds patents, trademarks, and
licensing arrangements which, while valuable, are not considered essential to
the maintenance or future growth of the business.
SEASONALITY
The business is not considered to be seasonal.
INVENTORIES
Products of the type manufactured and sold by the Company are also
available through other manufacturers as well. As a result, delivery time as
well as quality and customer service are important to the success of the
business and therefore require that sufficient inventories be maintained to
insure fast turnaround time on orders.
CUSTOMER PROFILE
The Company's sales are broad-based with no single customer accounting
for a significant portion of total sales and no single industry accounting
for a majority of its business.
BACKLOG
On November 25, 1995, there were unshipped orders totalling
approximately $8.7 million. Last year's backlog at approximately the same
date was $8.7 million.
3
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PART I - CONT'D.
COMPETITION
Products similar to those sold by the Company are manufactured and sold
by other companies as well, resulting in a very competitive environment.
However, the Company feels its ability to manufacture high quality products
that serve specialized needs of industry through its highly efficient
distribution channels differentiates the Company from its competitors.
RESEARCH AND DEVELOPMENT
For the years ended September 30, 1995, October 1, 1994, and October 2,
1993, the Company expended approximately $2,404,000, $2,148,000, and
$2,105,000, respectively, on the development of new products and the
improvement of existing products. These expenditures included the
compensation of engineers, designers, and drafters who were engaged in
product development.
EMPLOYEES
The company has approximately 1,126 full-time employees.
FOREIGN AND EXPORT BUSINESS
See footnote 8, page 31 of the Annual Report to Stockholders for the
year ended September 30, 1995 which is incorporated herein by reference and
filed as an exhibit to this report.
ITEM 2. DESCRIPTION OF PROPERTY
The Company owns facilities in the following locations:
Land Owned Plant Floor Area
Northbrook, Illinois 4.7 acres 119,000 sq. ft.
Kalamazoo, Michigan 39.1 acres 116,000 sq. ft.
Franklin, Massachusetts 6.6 acres 60,000 sq. ft.
El Paso, Texas 5.0 acres 50,000 sq. ft.
Belvidere, Illinois 3.5 acres 36,000 sq. ft.
Juarez, Mexico .8 acres 36,000 sq. ft.
Netherlands 1.3 acres 30,000 sq. ft.
Wales, U.K. 4.5 acres 25,000 sq. ft.
Uxbridge, Massachusetts 3.5 acres 20,000 sq. ft.
All of the above properties are owned in fee except the land in Wales,
U.K. which is held under a lease expiring in 2105.
The Company also leases approximately 20,000 square feet in Ontario,
Canada; 20,000 square feet in Remchingen, Germany; 9,000 square feet in Grand
Rapids, Michigan; 7,000 square feet in Buffalo Grove, Illinois; 3,400 square
feet in Thorigny sur Marne, France; and 2,000 square feet in Singapore. All
plants are considered to be well-equipped and well-maintained. They are of
masonry or steel construction. In the judgment of management, sufficient
capacity is available at the above locations to cover the Company's needs at
least through fiscal 1996.
4
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PART I - CONT'D.
ITEM 3. 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 Environmental Quality ("DEQ"). The investigation indicates
that additional soil and groundwater at the site have been impaired by
chlorinated solvents, including tetrachloroethane and trichloroethylene.
Also, the company learned that a portion of the site had been used as a
disposal area by the previous owners of the site. The Company's consultant
is investigating and has begun to remediate this area and believes that it is
an additional likely source of contamination of soil and groundwater. In
addition, the investigation of the site 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 and the above-referenced
disposal area, including the possible presence of ongoing dumping activities
by others in the vicinity around the Company's facilities.
The Company's consultant has estimated that a minimum of $1.5 million of
investigation and remediation expenses will be incurred at the site. The
Company has a reserve for such purposes and has notified the previous owners
of the site and various insurers of possible claims by the Company relating
to the remediation of the site. 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 DEQ 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
There were no matters submitted to a vote of the security holders
either through solicitation of proxies or otherwise during the fourth
quarter of the fiscal year ended September 30, 1995.
5
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK MATTERS
(a) The Company's common stock trades on the NASDAQ stock market
under the symbol WDHD. The daily quotations as reported by
NASDAQ are published in the Wall Street Journal and other
leading financial publications.
On April 26, 1995, the board of directors declared a three-for-
two stock split effected in the form of a 50% common stock dividend,
payable May 22, 1995, to holders of record on May 8, 1995. On
January 22, 1993, the board of directors declared a two-for-one stock
split effected in the form of a 100% stock dividend, payable March 1,
1993, to holders of record on February 12, 1993. All share and per
share amounts in this filing have been adjusted to give retroactive
effect to these stock splits.
Common Stock Purchase Rights have been distributed to stockholders and
deemed to be attached to the shares of Common Stock of the Registrant.
If and when the rights become exercisable, the holders initially would
be entitled to purchase one share of Common Stock at a purchase price
of $13.33 (both the number of shares and the purchase price are
subject to adjustment). See footnote 5, page 29 of the Annual Report to
Stockholders for the year ended September 30, 1995, for further
explanation. This footnote is incorporated herein by reference and
filed as an exhibit to this report.
The range in the market price per share of the common stock during the
past two years was as follows:
1995 1994
------------------------------ ------------------------------
Fiscal Fiscal
Quarter High Low Quarter High Low
1st 10 13/16 9 5/16 1st 10 11/16 8 15/16
2nd 13 5/16 10 1/2 2nd 12 1/4 8 13/16
3rd 15 12 11/16 3rd 10 13/16 8 13/16
4th 14 3/4 12 1/2 4th 10 11/16 9 11/16
(b) The number of holders of record of the Company's securities
as of December 15, 1995, was as follows:
Title of Class Number of Stockholders
Common Stock 584
Common Stock Purchase Rights 584
6
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PART II - CONT'D.
(c) The cash dividends declared for the past two years were as
follows:
1995 1994
-------------------------------- ------------------------------
Fiscal Quarter Rate Fiscal Quarter Rate
1st $0.063 1st $0.057
2nd $0.065 2nd $0.057
3rd $0.065 3rd $0.057
4th $0.065 4th $0.063
------ ------
Total $0.258 Total $0.234
------ ------
------ ------
ITEM 6. SELECTED FINANCIAL DATA
The "Financial Profile" appearing on pages 18 and 19 of the Annual
Report to Stockholders for the year ended September 30, 1995, is
incorporated herein by reference and filed as an exhibit to this
report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
"Management's Discussion of Operations and Financial Position"
appearing on pages 16 and 17 of the Annual Report to Stockholders for
the year ended September 30, 1995, is incorporated herein by reference
and filed as an exhibit to this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The "Report of Independent Public Accountants" included on page 15
and the consolidated financial statements with accompanying footnotes
appearing on pages 20 through 32 of the Annual Report to Stockholders
for the year ended September 30, 1995, are incorporated herein by
reference and filed as an exhibit to this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
7
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Information appearing under the heading "Nominees and
Continuing Directors" on pages 1 through 3 of the Registrant's
definitive proxy statement dated December 21, 1995, for the annual
meeting of stockholders to be held on January 26, 1996, is hereby
incorporated herein by reference and made a part hereof.
(b) The following information is provided with respect to the
executive officers of the Company:
Position Held
Name of Officer Age Position Since
C. Mark DeWinter 53 President and Chief July, 1993
Executive Officer
Robert G. Jennings 57 Vice-President, Finance and July, 1987
Chief Financial Officer
Robert J. Tortorello 46 Vice-President, General January, 1991
Counsel and Corporate
Secretary
Robert A. Moulton 46 Vice-President, Human May, 1987
Resources
Joseph P. Nogal 40 Treasurer/Controller and July, 1993
Assistant Secretary
All officers are elected each year at the Annual Meeting of the
Board of Directors which is held immediately following the annual
meeting of stockholders. The next Annual Meeting of the Board of
Directors will be held on January 26, 1996.
(c) Not applicable.
(d) Not applicable.
(e) The business experience of those executive officers who are not
directors or nominees is as follows:
Mr. Robert G. Jennings joined the Company in July 1987. He
previously had served as Vice President, Finance and Treasurer for
MagneTek, Inc. from 1984 to 1987 and was Vice President, Treasurer
and Controller for Louis Allis Division, Litton Industries
from 1973 to 1984.
Mr. Robert J. Tortorello became the Company's General Counsel
and Corporate Secretary in June 1987. He was elected a
Vice-President of the Company in January, 1991. Before joining the
Company he served as Senior Attorney and Assistant Vice President for
Beatrice Companies, Inc. from 1986 to 1987. Prior to that he had
been a Senior Attorney at Beatrice since 1978.
8
<PAGE>
PART III - CONT'D.
Mr. Robert A. Moulton joined the company in October 1986 as
Manager, Human Resources and was elected Vice President in May
1987. He was formerly a Director, Personnel at G. D. Searle
and Company from 1981 to 1986.
Mr. Joseph P. Nogal became the Company's Treasurer/Controller
in January 1991. He was elected the Assistant Secretary of
the Company in July, 1993. From 1986 to 1990, he had served as
Controller of the Company's Canadian Operations. Prior to 1986,
he had held various positions within the Company since he joined
it in 1978.
(f) Not applicable.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the headings "Directors' Compensation" on
page 5 and "Executive Compensation" on pages 8 through 17 of the Company's
definitive proxy statement dated December 21, 1995, for the annual meeting of
stockholders to be held January 26, 1996, is incorporated herein by reference
and made a part hereof.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table and footnotes appearing under the heading "Stock Ownership
of Management and Certain Beneficial Owners" appearing on pages 6 and 7
of the Registrant's definitive proxy statement dated December 21, 1995,
for the annual meeting of stockholders to be held January 26, 1996, are
hereby incorporated by reference and made a part hereof.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the heading "Nominees and Continuing
Directors" appearing on pages 1 through 3 of the Company's definitive proxy
statement dated December 21, 1995, for the annual meeting of stockholders to
be held January 26, 1996, is incorporated by reference and made a part hereof.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Report:
1. Financial Statements (filed herewith as part of Exhibit 13):
Consolidated Balance Sheets - at September 30, 1995, October 1,
1994, and October 2, 1993.
9
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PART IV - CONT'D.
Consolidated Statements of Income - for the years ended September
30, 1995, October 1, 1994, and October 2, 1993.
Consolidated Statements of Stockholders' Investment - for the
years ended September 30, 1995, October 1, 1994, and October 2,
1993.
Consolidated Statements of Cash Flow - for the years ended
September 30, 1995, October 1, 1994, and October 2, 1993.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
The following consolidated financial information for the years
ended September 30, 1995, October 1, 1994, and October 2, 1993,
is submitted herewith:
Page
Report of Independent Public Accountants on Schedules
and Supplementary Notes 13
Schedule II Valuation and Qualifying Accounts 11
Supplementary Notes to Consolidated
Financial Statements 12
All other schedules have been omitted because they are not
applicable, not required, or the information is included elsewhere
in the financial statements or notes thereto.
Separate financial statements of the Registrant have been omitted
since the Registrant is primarily a holding company and its
subsidiaries, included in the consolidated financial statements,
are wholly-owned subsidiaries.
3. The Exhibits are listed in the index of exhibits required by
Item 601 of Regulation S-K included at pages 16, 17, and 18,
which are incorporated herein by reference and made a part
hereof.
(b) No reports on Form 8-K were filed during the three months ended
September 30, 1995.
(c) Reference is made to Item 14(a)(3) above.
(d) Reference is made to Item 14(a)(2) above.
10
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED SEPTEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
--------------------------
CHARGED TO
BALANCE AT CHARGED TO OTHER BALANCE
BEGINNING COSTS AND ACCOUNTS DEDUCTIONS AT END
DESCRIPTION OF PERIOD EXPENSES -DESCRIBE -DESCRIBE OF PERIOD
- ------------------------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Reserve for excess and
obsolete inventory:
Year ended September 30, 1995 $ 1,119 $ 402 - $ (425)(1) $ 1,076
(20)(2)
Year ended October 1, 1994 $ 1,304 $ 306 - $(602)(1) $ 1,119
24 (2)
87 (3)
Year ended October 2, 1993 $ 1,296 $ 226 - $(373)(1) $ 1,304
(8)(2)
163 (3)
</TABLE>
- -----------------------
(1) Represents write-offs less recoveries.
(2) Foreign currency translation adjustment.
(3) Business acquired.
11
<PAGE>
SUPPLEMENTARY NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
ACCRUED EXPENSES
Accrued expenses at September 30, 1995, October 1, 1994, and October 2, 1993
consisted of the following:
(in thousands)
1995 1994 1993
------ ------ ------
Payroll $3,386 $3,050 $2,849
Pension and profit sharing 1,399 1,580 983
Environmental 1,519 1,310 -
Litigation & related expenses 936 1,022 1,217
Commissions 780 687 655
Insurance 474 461 521
Other 4,015 2,640 2,855
------- ------- ------
$12,509 $10,750 $9,080
------- ------- ------
------- ------- ------
12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SCHEDULES AND SUPPLEMENTARY NOTES
To Woodhead Industries, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of Woodhead Industries, Inc. and
subsidiaries included in the Woodhead Industries, Inc. Annual Report to
Stockholders for the year ended September 30, 1995 incorporated by reference
in this Form 10-K, and have issued our report thereon dated November 14,
1995. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedules and supplementary notes included
on pages 11 through 12 of this Form 10-K are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not
part of the basic financial statements. These schedules and notes have been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois
November 14, 1995
13
<PAGE>
INDEMNIFICATION UNDERTAKING
For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933 (the
"Act"), the undersigned registrant hereby undertakes as follows, which
undertaking shall be incorporated by reference into registrant's Registration
Statement on Form S-8 No. 33-40414 (filed May 6, 1991):
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BY /s/ Robert G. Jennings BY /s/ Joseph P. Nogal
------------------------- -----------------------
Robert G. Jennings Joseph P. Nogal
Vice President, Finance Treasurer/Controller
(Chief Financial Officer) (Principal Accounting Officer)
Date 12/14/95
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by all of the following directors on behalf of
the Registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Alan Reed Chairman 12/18/95
- ---------------------------
Alan Reed
/s/ C. Mark DeWinter President and C.E.O. 12/14/95
- ---------------------------
C. Mark DeWinter
/s/ Richard A. Virzi Director 12/18/95
- ---------------------------
Richard A. Virzi
/s/ Ward M. Woodhead Director 12/26/95
- ---------------------------
Ward M. Woodhead
15
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------------------
(3) Articles of incorporation and bylaws
(a) Certificate of Incorporation including amendments through
January 22, 1993, are hereby incorporated by reference to
Exhibit (4)a of Registrant's Form S-8 filed April 22, 1994,
as Registration #33-77968.
(b) Company by-laws are hereby incorporated herein by reference to
Exhibit 4(b) of Registrant's Form S-8 filed April 22, 1994,
as Registration #33-77968.
(4) Instruments defining the rights of security holders, including indentures
(a) Credit Agreement between Registrant and Harris Trust and
Savings Bank dated October 29, 1993, providing for a revolving
credit line not exceeding $15,000,000.
The above document described in this paragraph (4a) is not
filed herewith by Registrant, but Registrant undertakes to
furnish copies thereof to the Securities and Exchange Commission
upon request.
(b) The Common Stock Purchase Rights Plan adopted May 16, 1986, as
amended and restated on July 25, 1990, as set forth in
Exhibits 1 and 2 of Form 8-K filed August 13, 1990, and as
adjusted pursuant to Section 12 of said Rights Plan as set
forth in the Form 8-K filed January 26, 1993, is incorporated
herein by reference and made a part hereof.
(10) Material contracts
(a) The 1981 Incentive Stock Compensation Plan, as amended, as
set forth in Exhibit 4(b) of Registrant's Form S-8 filed
September 26, 1988, as Registration #33-24737, is incorporated
herein by reference and made a part hereof.
(b) The 1987 Stock Compensation Plan as set forth in Exhibit A of
Registrant's definitive proxy statement dated December 21,
1987, for the annual meeting of stockholders held January 22,
1988, which is incorporated herein by reference and made a
part hereof.
(c) The 1990 Stock Awards Plan as set forth in Exhibit A of
Registrant's definitive proxy statement dated December 19, 1990
for the annual meeting of stockholders held January 25, 1991,
which is incorporated herein by reference and made a part hereof.
16
<PAGE>
EXHIBIT INDEX (cont'd.)
Exhibit
Number Description
- ------- -----------------------
(10) (d) Amendments to: The 1981 Incentive Stock Compensation
Plan, the 1987 Stock Compensation Plan, and the 1990 Stock
Awards Plan, all as set forth in Exhibit C of Registrant's
definitive proxy statement dated December 22, 1993, for the
annual meeting of stockholders held January 28, 1994, which
is incorporated herein by reference and made a part hereof.
(e) The 1993 Stock Awards Plan as set forth in Exhibit A of
Registrant's definitive proxy statement dated December 22,
1993, for the annual meeting of stockholders held January 28,
1994, which is incorporated herein by reference and made a part
hereof.
(f) The 1990 Directors Stock Option Plan for non-employee
Directors as set forth in Exhibit B of Registrant's definitive
proxy statement dated December 19, 1990, for the annual meeting of
stockholders held January 25, 1991, which is incorporated herein
by reference and made a part hereof.
(g) The 1993 Directors Stock Option Plan for non-employee Directors
as set forth as Exhibit B of Registrant's definitive proxy
statement dated December 22, 1993 for the annual meeting of
stockholders held January 28, 1994, which is incorporated herein
by reference and made a part hereof.
(h) The Management Incentive Plan effective for fiscal 1996 as
described on page 16 of the Registrant's definitive proxy statement
dated December 21, 1995, for the annual meeting of stockholders
to be held January 26, 1996, which page is incorporated herein by
reference and made a part hereof.
(i) The Plan of Compensation for Outside Directors, as set forth
in Item (10) of the exhibits to the Form 10-K Annual Report for the
year ending September 18, 1985, which is incorporated herein by
reference and is made a part hereof.
(j) The 1990 Supplemental Executive Retirement Plan ("SERP") as
set forth on page 15 of Registrant's definitive proxy statement
dated December 21, 1995, for the annual meeting of stockholders
to be held January 26, 1996, which page is incorporated herein
by reference and made a part hereof.
17
<PAGE>
EXHIBIT INDEX (cont'd)
Exhibit
Number Description Page
- ------- -------------------- ------
(10) (k) Severance Agreement as set forth in Item (10) of the
exhibits to Form l0-K Annual Report for the year
ending October 1, 1994, which is incorporated herein
by reference and is made a part hereof, with C. Mark
DeWinter dated September 7, 1989. Robert G. Jennings,
Robert A. Moulton, Joseph P. Nogal, Terry L. Spandet,
and Robert J. Tortorello have substantially identical
contracts.
(11) Statement regarding computation of per share earnings 19
(13) The following items incorporated by reference herein from the
Annual Report to Stockholders for the year ended September 30,
1995 (the "1995 Annual Report"), are filed as Exhibits to this
report:
(a) Information under the footnote entitled "Information about
the Company's Operations in Different Geographic Areas"
set forth on Page 31 of the 1995 Annual Report;
(b) Information under the footnote entitled "Capital Stock"
set forth on Page 29 of the 1995 Annual Report;
(c) Information under the section entitled "Financial Profile"
set forth on Pages 18-19 of the Annual Report;
(d) Information under the section entitled "Management's
Discussion of Operations and Financial Position" set forth
on Pages 16-l7 of the 1995 Annual Report;
(e) Report of Independent Public Accountants set forth on Page
15 of the 1995 Annual Report;
(f) Consolidated Financial Statements set forth Pages 20-23 of
the 1995 Annual Report; and
(g) Notes to Consolidated Financial Statements set forth on
Pages 24-32 of the 1995 Annual Report.
(21) Subsidiaries of the Registrant 20
(23) Consent of Arthur Andersen LLP 21
(27) Financial Data Schedule for the year ended September 30, 1995.
18
<PAGE>
COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
For the years ended
---------------------------------------------------------
1995 1994 1993
----------------- ----------------- -----------------
Fully Fully Fully
Primary Diluted Primary Diluted Primary Diluted
------- ------- ------- ------- ------- -------
Net Income $ 9,228 $ 9,228 $ 7,250 $ 7,250 $ 5,803 $ 5,803
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Weighted average
common shares
outstanding 10,351 10,351 10,284 10,284 10,119 10,119
Incremental shares
issuable for stock
options outstanding
(Treasury Stock
Method) 465 532 382 382 348 439
------- ------- ------- ------- ------- -------
Common and common
equivalent shares 10,816 10,883 10,666 10,666 10,467 10,558
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Earnings per share $ .85 $ .85 $ .68 $ .68 $ .55 $ .55
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
19
<PAGE>
SUBSIDIARIES OF THE REGISTRANT
The subsidiaries of the Company at September 30, 1995 were:
Name of Subsidiary State or Other Jurisdiction
in Which Organized
AI/FOCS, Inc. State of Delaware
FOCS Midwest, Inc. State of Delaware
Aero-Motive Company State of Michigan
Aero-Motive (U.K.) Limited United Kingdom
Woodhead France S.A.R.L. France
Elitec S.A. France
Central Rubber Company State of Illinois
Daniel Woodhead Company State of Delaware
H. F. Vogel GmbH Electrotechnische Fabrik Germany
Woodhead Asia Pte. Ltd. Singapore
Woodhead Canada Ltd. Province of Ontario
Woodhead de Mexico S.A. de C.V. Mexico
Woodhead Industries (The Netherlands) B.V. The Netherlands
Akapp Electro Industrie B.V. The Netherlands
W.I.S. Corp. U.S. Virgin Islands
20
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated November 14, 1995 incorporated by reference in
this Form 10-K, into the previously filed Woodhead Industries, Inc.
Registration Statement on Form S-8 (Registration #33-77968).
ARTHUR ANDERSEN LLP
Chicago, Illinois
December 21, 1995
21
<PAGE>
Woodhead Industries Inc. 1995 Annual Report
REPORT OF MANAGEMENT
- -------------------------------------------------------------------------------
The management of Woodhead Industries, Inc. is responsible for the integrity
of the information presented in this Annual Report, including the Company's
financial statements. These statements have been prepared in conformity with
generally accepted accounting principles and include, where necessary,
informed estimates and judgments by management.
The Company maintains systems of accounting and internal controls designed to
provide assurance that assets are properly accounted for as well as to insure
that the financial records are reliable for preparing financial statements.
The systems are augmented by qualified personnel and are reviewed on a
periodic basis.
Our independent auditors, Arthur Andersen LLP, conduct annual audits of our
financial statements in accordance with generally accepted auditing
standards, which include the review of internal controls for the purpose of
establishing audit scope, and issue an opinion on the fairness of such
financial statements.
The Audit Committee of the Board of Directors, which is composed solely of
outside Directors, meets periodically with management and the independent
auditors to review the manner in which they are performing their
responsibilities and to discuss auditing, internal accounting controls, and
financial reporting matters. The independent auditors periodically meet
alone with the Audit Committee and have free access to the Audit Committee at
any time.
C. MARK DEWINTER ROBERT G. JENNINGS
President and Vice President and
Chief Executive Officer Chief Financial Officer
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------------------------------
To Woodhead Industries, Inc.:
We have audited the accompanying consolidated balance sheets of WOODHEAD
INDUSTRIES, INC. (a Delaware corporation) AND SUBSIDIARIES as of September
30, 1995, October 1, 1994, and October 2, 1993, and the related consolidated
statements of income, stockholders' investment, and cash flows for the years
then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of WOODHEAD INDUSTRIES, INC.
AND SUBSIDIARIES as of September 30, 1995, October 1, 1994, and October 2,
1993, and the results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Chicago, Illinois
November 14, 1995
15
<PAGE>
MANAGEMENT'S DISCUSSION OF OPERATIONS AND FINANCIAL POSITION
FISCAL 1995 RESULTS COMPARED WITH 1994
- -------------------------------------------------------------------------------
SALES
Fiscal 1995 sales of $120.0 million were 13.5% ahead of the $105.7 million
reported for 1994. International sales accounted for 54.7% of this year's
sales increase and were equal to 27.1% of total sales. The higher unit
volumes in Asia, Canada and Europe were augmented by a weak U.S. dollar.
Strong domestic sales reflect improvements in core product lines, including
connectors and workstation products. Price increases during the year netted
less than 1%.
The backlog of unfilled orders was $7.9 million at year end compared with
$8.0 million at the close of fiscal 1994.
GROSS PROFIT
- -------------------------------------------------------------------------------
Gross Profit of $52.5 million was $5.9 million or 12.5% greater than in 1994.
The reduced rate of 43.7% versus 44.1% in 1994 was due to strong
international price pressures which held price increases to a minimum. In
fiscal 1995, inflationary increases in the cost of sales were somewhat offset
by the benefit of a devaluation in the Mexican peso which occurred during the
year. The Company continued to invest in its manufacturing processes to
reduce costs and improve productivity.
OPERATING EXPENSES
- -------------------------------------------------------------------------------
Operating expenses for 1995 totaled $35.3 million, representing an 8.3%
increase over the 1994 total of $32.6 million. The increase was driven by
the Company's continued investment in new product development and marketing
programs. Overall, operating expenses declined as a percent of net sales to
29.4% from 30.8% in 1994 primarily due to limited increases in administrative
expenses.
OTHER EXPENSE/INCOME
- -------------------------------------------------------------------------------
Other expenses increased $.3 million to $2.8 million in fiscal 1995. During
1995 the Company increased its reserve for litigation, environmental and
other contingencies. For additional information regarding the environmental
matter, see footnote #6 concerning Contingent Liabilities.
NET INCOME
- -------------------------------------------------------------------------------
Net income increased $2.0 million to $9.2 million in 1995. The earnings
improvement was achieved by leveraging sales increases with controlled
overhead spending and administrative expenses. The Company's effective tax
rate also declined from 37.1% in 1994 to 35.7% in 1995 primarily due to
utilization of foreign tax credits.
FINANCIAL POSITION
- -------------------------------------------------------------------------------
Working capital increased to $19.7 million at the close of 1995 representing
an increase of $5.1 million over the 1994 year end level. The current ratio
also increased slightly to 1.9/1 in 1995 from 1.8/1 in 1994. The Company's
$15 million revolving credit line was unused at year end. Looking forward,
projected cash flow is expected to exceed the operating requirements of the
Company in fiscal year 1996.
<PAGE>
Woodhead Industries Inc. 1995 Annual Report
FISCAL 1994 RESULTS COMPARED WITH 1993
- -------------------------------------------------------------------------------
The Company's sales of $105.7 million exceeded fiscal 1993 results by $15.8
million or 17.6%. The full year results of prior year acquisitions coupled
with increased unit demand worldwide drove the improvement. International
sales increases were recorded at all subsidiaries with significant
improvements coming from Asia, Canada, and the United Kingdom. Strong
domestic sales were supported through gains in the Company's core electrical
specialty products. Price increases during the year netted slightly less
than 2%.
The backlog of unfilled orders grew 27% over the prior year and ended fiscal
1994 at $8.0 million.
- -------------------------------------------------------------------------------
The gain in gross profit amounted to $7.0 million and was primarily due to
the higher level of sales. Although price increases were limited, the
Company continued to invest in tooling and product redesigns which increased
manufacturing productivity and generated cost reductions. These investments
allowed the Company to maintain its gross profit rate at 44.1% for fiscal
1994.
- -------------------------------------------------------------------------------
As a percent of net sales, operating expenses fell to 30.8% from 32.7% in
1993. Operating expenses of $32.6 million in fiscal 1994 were $3.2 million or
10.9% ahead of the prior year. Increased spending resulted mainly from the
first full year of expenses incurred by companies acquired in the prior year,
as well as higher levels of commissions due to increased volume. Also, in
1994 the Company continued to invest in engineering for new products as well
as in efforts to achieve ISO 9000 certification.
- -------------------------------------------------------------------------------
Other expenses increased to $2.5 million in fiscal 1994 from $.7 million in
1993. The increase in 1994 was primarily attributable to two charges, one
for $.6 million to effect the reorganization and combination of the Company's
Advanced Interconnect, Inc. and FOCS subsidiaries. In addition, the Company
took a $.9 million charge pertaining to an ongoing assessment and remediation
of an environmental matter at one of its subsidiaries. For additional
information regarding the environmental matter, see #6 concerning Contingent
Liabilities.
- -------------------------------------------------------------------------------
Net income of $7.3 million was 24.9% greater than 1993 primarily due to the
increase in sales volume coupled with a lower rate of spending in operating
expenses. The total effect of these improvements was offset in part by the
charges incurred in other expenses. During the year, the Company's effective
tax rate declined from 38.9% to 37.1% due to the utilization of tax credits.
- -------------------------------------------------------------------------------
There was a $4.1 million increase in working capital during 1994 which
brought the total to $14.6 million and raised the current ratio from 1.7/1 to
1.8/1. Strong cash flow allowed the Company to reduce total long-term debt
from $2.7 million to $.2 million. The Company's $15 million revolving credit
line was unused at year end.
COMMON STOCK PRICE RANGE BY QUARTER
(AMOUNTS IN DOLLARS)
- -------------------------------------------------------------------------------
The Compay's common stock trades on the NASDAQ Stock Market under the symbol
WDHD. The daily quotations as reported by NASDAQ are published in the Wall
Street Journal and other leading financial publications. The range in the
market price per share of the stock and dividends paid during the past two
years were as follows:
<TABLE>
<CAPTION>
Price
FY 1995 High Low Dividends
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
1ST 10 13/16 9 5/16 $.063
2ND 13 5/16 10 1/2 .063
3RD 15 12 11/16 .065
4TH 14 3/4 12 1/2 .065
- -------------------------------------------------------------------------------
Price
FY 1994 High Low Dividends
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
1ST 10 11/16 8 15/16 $.057
2ND 12 1/4 8 13/16 .057
3RD 10 13/16 9 13/16 .057
4TH 10 11/16 9 11/16 .057
- -------------------------------------------------------------------------------
</TABLE>
ALL PERIODS HAVE BEEN ADJUSTED FOR A THREE-FOR-TWO STOCK SPLIT EFFECTED IN
THE FORM OF A STOCK DIVIDEND IN MAY 1995, AND THE STOCK PRICES HAVE BEEN
ROUNDED TO THE NEAREST SIXTEENTH.
17
<PAGE>
FINANCIAL PROFILE
OPERATIONS
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE, EMPLOYEES, AND STOCKHOLDERS) 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $120,003 $105,689 $89,864 $79,518
Cost of sales 67,541 59,070 50,238 43,756
Gross profit 52,462 46,619 39,626 35,762
% of net sales 43.7% 44.1% 44.1% 45.0%
Operating and other expenses 38,110 35,096 30,125 28,007
% of net sales 31.8% 33.2% 33.5% 35.2%
Income before income taxes 14,352 11,523 9,501 7,755
% of net sales 12.0% 10.9% 10.6% 9.8%
Provision for income taxes 5,124 4,273 3,698 3,000
Net income 9,228 7,250 5,803 4,755
% of net sales 7.7% 6.9% 6.5% 6.0%
% of average assets 13.6% 12.2% 11.1% 10.3%
Return on stockholders' average investment 19.8% 18.2% 16.6% 15.2%
Earnings per common and common
equivalent share $ .85 $ .68 $ .55 $ .47
Dividends per share .26 .23 .23 .23
Common and common equivalent shares 10,816 10,666 10,467 10,040
Memo: Interest expense (income) 97 178 39 (138)
% of net sales .1% .2% .0% (.2)%
Depreciation and amortization 4,475 4,199 3,777 3,229
% of net sales 3.7% 4.0% 4.2% 4.1%
Engineering and development 2,404 2,148 2,105 2,041
% of net sales 2.0% 2.0% 2.3% 2.6%
YEAR END POSITION
- ----------------------------------------------------------------------------------------------------------
Total assets $ 73,411 $ 62,263 $ 56,360 $ 48,564
Total liabilities 23,007 19,316 19,700 15,460
Working capital 19,654 14,572 10,538 14,129
Current ratio 1.9 to 1 1.8 to 1 1.7 to 1 2.1 to 1
Stockholders' investment 50,404 42,947 36,660 33,104
Long-term debt -- 63 2,047 500
Book value per share $ 4.86 $ 4.15 $ 3.57 $ 3.31
Number of employees 1,126 1,079 947 764
Number of stockholders 571 598 634 640
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
<PAGE>
Woodhead Industries Inc. 1995 Annual Report
<TABLE>
<CAPTION>
FINANCIAL PROFILE
1991 1990 1989 1988 1987 1986 1985
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $73,499 $72,168 $71,443 $71,178 $69,887 $63,929 $59,723
Cost of sales 41,753 41,034 42,070 42,015 42,325 38,908 35,941
Gross profit 31,746 31,134 29,373 29,163 27,562 25,021 23,782
% of net sales 43.2% 43.1% 41.1% 41.0% 39.4% 39.1% 39.8%
Operating and other expenses 26,552 22,708 22,195 22,993 21,805 20,305 19,680
% of net sales 36.1% 31.5% 31.1% 32.3% 31.2% 31.8% 33.0%
Income before income taxes 5,194 8,426 7,178 6,170 5,757 4,716 4,102
% of net sales 7.1% 11.7% 10.0% 8.7% 8.2% 7.4% 6.9%
Provision for income taxes 2,374 3,406 2,878 2,490 2,591 2,139 1,822
Net income 2,820 5,020 4,300 3,680 3,166 2,577 2,280
% of net sales 3.8% 7.0% 6.0% 5.2% 4.5% 4.0% 3.8%
% of average assets 6.6% 12.6% 10.3% 8.2% 6.8% 5.3% 5.0%
Return on stockholders' average investment 9.7% 18.4% 17.7% 17.1% 12.9% 9.1% 8.1%
Earnings per common and common
equivalent share $ .29 $ .52 $ .45 $ .39 $ .29 $ .23 $ .21
Dividends per share .23 .21 .20 .20 .20 .20 .20
Common and common equivalent shares 9,615 9,672 9,492 9,387 10,740 11,103 11,091
Memo: Interest expense (income) 43 (299) 543 1,107 824 1,055 669
% of net sales .1% (.4)% .8% 1.6% 1.2% 1.7% 1.1%
Depreciation and amortization 3,062 2,461 2,362 2,335 2,328 2,113 1,921
% of net sales 4.2% 3.4% 3.3% 3.3% 3.3% 3.3% 3.2%
Engineering and development 1,749 1,577 1,377 1,574 1,524 1,622 1,555
% of net sales 2.4% 2.2% 1.9% 2.2% 2.2% 2.5% 2.6%
YEAR END POSITION
- --------------------------------------------------------------------------------------------------------------------
Total assets $43,709 $41,216 $38,534 $44,720 $44,806 $48,754 $49,200
Total liabilities 14,147 12,638 12,530 22,187 24,327 20,172 21,053
Working capital 11,443 15,542 13,245 17,029 16,614 19,835 18,423
Current ratio 2.0 to 1 2.5 to 1 2.3 to 1 2.6 to 1 2.4 to 1 2.8 to 1 2.3 to 1
Stockholders' investment 29,562 28,578 26,004 22,533 20,479 28,582 28,147
Long-term debt 500 -- 153 9,394 10,821 7,723 5,613
Book value per share $ 3.05 $ 2.98 $ 2.68 $ 2.40 $ 2.18 $ 2.57 $ 2.53
Number of employees 816 788 732 810 840 830 860
Number of stockholders 710 751 822 920 980 1,112 1,262
</TABLE>
19
<PAGE>
CONSOLIDATED FINANCIAL
CONSOLIDATED BALANCE SHEETS
as of September 30, 1995, October 1, 1994, and October 2, 1993.
ASSETS
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS) 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Current Assets:
Cash and short-term securities $ 4,202 $ 1,454 $ 1,155
Accounts receivable, less allowances
of $572 in 1995, $674 in 1994,
and $730 in 1993 18,965 16,589 12,837
Inventories (Note 1) 12,613 10,402 8,671
Prepaid expenses 5,132 3,811 3,629
Total current assets $40,912 $32,256 $26,292
Other Assets $ 1,039 $ 1,570 $ 2,092
Property, Plant and Equipment (Note 1) $61,464 $55,035 $50,692
Less: Accumulated depreciation 37,429 33,904 30,156
Net property, plant and equipment $24,035 $21,131 $20,536
Goodwill (Note 1) $ 7,425 $ 7,306 $ 7,440
TOTAL ASSETS $73,411 $62,263 $56,360
LIABILITIES AND STOCKHOLDERS' INVESTMENT
- -------------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 7,033 $ 5,948 $ 5,248
Accrued expenses 12,509 10,750 9,080
Income taxes payable 1,647 880 822
Portion of long-term debt
payable within one year (Note 2) 69 106 604
Total current liabilities $21,258 $17,684 $15,754
Deferred Income Taxes (Note 3) $ 1,749 $ 1,569 $ 1,899
Long-term Debt, less portion payable
within one year shown above (Note 2) $ -- $ 63 $ 2,047
Stockholders' Investment (Notes 1,2,5 and 7):
Preferred stock $ -- $ -- $ --
Common stock at par, (Shares issued - 10,374) 10,374 7,470 7,470
Additional paid-in capital 1,248 4,987 4,667
Cumulative translation adjustment 140 (347) (914)
Retained earnings 38,642 35,521 30,601
Less: Treasury stock at cost,
(Shares held 1994 - 575, 1993 - 634) -- (4,684) (5,164)
Total stockholders' investment $50,404 $42,947 $36,660
TOTAL LIABILITIES AND
STOCKHOLDERS' INVESTMENT $73,411 $62,263 $56,360
- -------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
<PAGE>
Woodhead Industries Inc. 1995 Annual Report
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the years ended September 30, 1995,
October 1, 1994, and October 2, 1993.
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $120,003 $105,689 $ 89,864
Cost of Sales 67,541 59,070 50,238
Gross Profit $ 52,462 $ 46,619 $ 39,626
Percent of net sales 43.7% 44.1% 44.1%
Operating Expenses:
Engineering and product development $ 2,404 $ 2,148 $ 2,105
Marketing and sales 19,764 17,504 15,442
General and administrative 13,121 12,930 11,841
Total operating expenses $ 35,289 $ 32,582 $ 29,388
Percent of net sales 29.4% 30.8% 32.7%
Income from Operations $ 17,173 $ 14,037 $ 10,238
Percent of net sales 14.3% 13.3% 11.4%
Other Expense (Income):
Interest expense $ 97 $ 178 $ 39
Other, net 2,724 2,336 698
Net other expenses $ 2,821 $ 2,514 $ 737
Income Before Income Taxes $ 14,352 $ 11,523 $ 9,501
Percent of net sales 12.0% 10.9% 10.6%
Provision for Income Taxes (Note 3) 5,124 4,273 3,698
Net Income $ 9,228 $ 7,250 $ 5,803
Percent of net sales 7.7% 6.9% 6.5%
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE (NOTE 1) $ .85 $ .68 $ .55
- -------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
21
<PAGE>
CONSOLIDATED FINANCIAL
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
For the years ended September 30,1995,
October 1, 1994, and October 2, 1993.
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------------------------------------------------
Additional Cumulative Total
Common Paid-in Translation Retained Treasury Stockholders'
Stock Capital Adjustment Earnings Stock Investment
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance October 3, 1992 $ 3,735 $5,053 $ (10) $30,828 $(6,502) $33,104
Net income for the year -- -- -- 5,803 -- 5,803
Translation adjustment -- -- (904) -- -- (904)
Cash dividends, $.34 per share -- -- -- (2,295) -- (2,295)
Stock option plans -- (386) -- -- 1,338 952
Two-for-one stock split (Note 5) 3,735 -- -- (3,735) -- --
Balance October 2, 1993 $ 7,470 $4,667 $(914) $30,601 $(5,164) $36,660
Net income for the year -- -- -- 7,250 -- 7,250
Translation adjustment -- -- 567 -- -- 567
Cash dividends, $.34 per share -- -- -- (2,330) -- (2,330)
Stock option plans -- 320 -- -- 480 800
Balance October 1, 1994 $ 7,470 $4,987 $(347) $35,521 $(4,684) $42,947
Net income for the year -- -- -- 9,228 -- 9,228
Translation adjustment -- -- 487 -- -- 487
Cash dividends, $.257 per share -- -- -- (2,657) -- (2,657)
Stock option plans 23 326 -- -- 50 399
Retirement of treasury stock (569) (4,065) -- -- 4,634 --
Three-for-two stock split (Note 5) 3,450 -- -- (3,450) -- --
BALANCE SEPTEMBER 30, 1995 $10,374 $ 1,248 $ 140 $38,642 $ -- $50,404
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
<PAGE>
Woodhead Industries Inc. 1995 Annual Report
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the years ended September 30, 1995,
October 1, 1994, and October 2, 1993.
(AMOUNTS IN THOUSANDS) 1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income for the year $ 9,228 $ 7,250 $ 5,803
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization 4,475 4,199 3,777
(Increase) decrease in:
Accounts receivable (1,361) (3,752) (82)
Inventories (1,938) (1,731) 847
Prepaid expenses (1,224) (158) 217
Other assets (147) (66) (7)
Increase (decrease) in:
Accounts payable 511 700 373
Accrued expenses 1,576 1,670 857
Income taxes payable 486 34 (457)
Deferred income taxes 180 (330) (10)
Net cash flows from operating activities $11,786 $ 7,816 $11,318
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant & equipment $(6,620) $(3,928) $(4,037)
Payments for businesses acquired (599) -- (11,203)
Retirements or sales of property, plant & equipment 260 24 80
Net cash used for investing activities $(6,959) $(3,904) $(15,160)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease)increase in short-term debt $ (37) $ (498) $ 497
(Decrease)increase in long-term debt (63) (1,984) 1,304
Sales of stock 399 800 952
Dividend payments (2,657) (2,330) (2,295)
Net cash (used for) provided by financing activities $(2,358) $(4,012) $ 458
EFFECT OF EXCHANGE RATES $ 279 $ 399 $ (691)
NET INCREASE (DECREASE) IN CASH AND
SHORT-TERM SECURITIES $ 2,748 $ 299 $ (4,075)
Cash and short-term securities at beginning of year 1,454 1,155 5,230
Cash and short-term securities at end of year $ 4,202 $ 1,454 $ 1,155
SUPPLEMENTAL CASH FLOW DATA
Cash paid during the year for:
Interest $ 97 $ 167 $ 181
Income taxes 5,179 3,787 4,101
- --------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF ACCOUNTING POLICIES
(AMOUNTS IN THOUSANDS, EXCEPT SHARES AND PER SHARE, IN ALL TABLES)
- --------------------------------------------------------------------------------
CONSOLIDATION
The consolidated financial statements include the accounts of all subsidiaries,
each of which is wholly owned. Revenue is recognized when products are shipped.
All significant intercompany transactions have been eliminated in consolidation.
The Company follows the practice of ending its fiscal year on the Saturday
closest to September 30.
INVENTORIES
The Company values its inventory at the lower of cost or market, cost being
determined using first-in first-out (FIFO) or last-in first-out (LIFO) method.
The total inventories at the balance sheet dates were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Inventories valued using FIFO $ 5,727 $ 4,637 $ 3,457
Inventories valued using LIFO:
At FIFO cost $ 11,530 $ 10,321 $ 10,123
Less: Reserve to reduce to LIFO 4,644 4,556 4,909
LIFO inventories $ 6,886 $ 5,765 $ 5,214
TOTAL INVENTORIES $ 12,613 $ 10,402 $ 8,671
- --------------------------------------------------------------------------------
Inventory composition at FIFO:
Raw materials $ 8,528 $ 7,012 $ 5,651
Work-in-process and finished goods 8,729 7,946 7,929
TOTAL $ 17,257 $ 14,958 $ 13,580
- --------------------------------------------------------------------------------
</TABLE>
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Depreciation is computed
using the straight-line method for financial accounting purposes. The estimated
useful lives are as follows:
Asset Description Asset Life
- --------------------------------------------------------------------------------
Buildings and improvements 20 to 40 years
Machinery and equipment 3 to 12 years
Dies and molds 4 to 5 years
Furniture and office equipment 3 to 10 years
The cost of property retired or otherwise disposed of is removed from the
property accounts, the accumulated depreciation is removed from the related
reserves, and the net gain or loss is reflected in income. Maintenance and
repairs are charged to expense as incurred. Major renewals and betterments
are capitalized.
The details of property, plant and equipment at the balance sheet dates were as
follows:
1995 1994 1993
- --------------------------------------------------------------------------------
Land $ 1,358 $ 876 $ 873
Buildings and improvements 14,816 12,757 12,053
Machinery and equipment 16,180 14,364 13,252
Dies and molds 15,654 14,548 13,913
Furniture and office equipment 13,456 12,490 10,601
$ 61,464 $ 55,035 $ 50,692
- --------------------------------------------------------------------------------
<PAGE>
Woodhead Industries Inc. 1995 Annual Report
1. SUMMARY OF ACCOUNTING POLICIES (CONT.)
- --------------------------------------------------------------------------------
GOODWILL
Goodwill is the cost of acquired businesses in excess of the fair value of their
identifiable net assets and is amortized over a period not exceeding 40 years.
The Company regularly reviews the individual components of goodwill and
recognizes, on a current basis, any diminution in value.
INCOME PER COMMON AND COMMON SHARE EQUIVALENT
Income per share is computed on the basis of the weighted average number of
shares outstanding plus the effect of common stock equivalents. The weighted
average shares used in the computations were 10,816,000 in 1995, 10,666,000 in
1994, and 10,467,000 in 1993.
CASH FLOWS
For purposes of reporting cash flows, cash on hand and short-term securities are
combined. Short-term securities may include certificates of deposit, Euro-
dollars and commercial paper which must be held for three months or less in
order to be considered short-term for cash flows.
RESTATEMENTS
All share and per share amounts have been adjusted for a three-for-two stock
split effected in the form of a stock dividend in May, 1995 and a two-for-one
stock split effected in the form of a stock dividend in March, 1993. In
addition, certain other fiscal 1994 balances have been reclassified to
conform to the fiscal 1995 presentation.
2. LONG-TERM DEBT AND SHORT-TERM BORROWING
- --------------------------------------------------------------------------------
Long-term debt consisted of the following:
1995 1994 1993
- --------------------------------------------------------------------------------
Bank Revolving Credit Agreement $ - $ - $1,900
Other 69 169 751
Total $ 69 $ 169 $2,651
Less: Portion of long-term debt
payable within one year 69 106 604
NET LONG-TERM DEBT $ - $ 63 $2,047
- --------------------------------------------------------------------------------
The Company has a Revolving Credit Agreement (the "Agreement") with a bank that
provides for borrowings of up to $15,000,000 at the bank's prime rate or offered
rate. This Agreement expires on October 31, 1996. The average amount owing to
the bank was $811,000 in 1995, $1,964,000 in 1994, and $2,064,000 in 1993, at
weighted average interest rates of 6.9%, 4.2%, and 3.7%, respectively. Under
the Agreement, the Company is required, among other things, to maintain
consolidated tangible net worth, as defined, of not less than $22,263,000 and a
minimum current ratio of 1.5 to 1. In addition, there are some restrictions on
the creation or assumption of any lien or security interest upon any of its
assets.
Short-term borrowing averaged $6,000 in 1995, $3,000 in 1994, and $0 in 1993, at
weighted average interest rates of 9.3%, 6.2%, and 0.0%, respectively.
3. INCOME TAXES
- --------------------------------------------------------------------------------
Effective October 3, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 (SFAS 109), "Accounting for Income Taxes." SFAS 109 requires,
among other things, the application of current statutory income tax rates to
deferred income tax balances. In the first quarter of fiscal 1994, the company
recognized the cumulative effect, through October 3, 1993, of the accounting
change, reflecting the difference between current statutory tax rates and the
generally higher rates that were used to establish the deferred income tax
balances, resulting in no material effect to the Company's financial condition.
25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INCOME TAXES (CONT.)
- --------------------------------------------------------------------------------
THE PROVISION FOR INCOME TAXES FOR 1995, 1994, AND 1993 CONSISTED OF THE
FOLLOWING:
1995 1994 1993
- -------------------------------------------------------------------------------
U. S. federal income tax $ 3,529 $ 3,217 $ 2,642
State income taxes 608 593 488
Foreign income taxes 987 463 568
$ 5,124 $ 4,273 $ 3,698
Current provision $ 5,467 $ 5,010 $ 3,709
Deferred provision (343) (737) (11)
$ 5,124 $ 4,273 $ 3,698
- -------------------------------------------------------------------------------
A RECONCILIATION OF THE FEDERAL STATUTORY RATE TO THE EFFECTIVE TAX
RATE IS AS FOLLOWS:
1995 1994 1993
- -------------------------------------------------------------------------------
Federal statutory rate 34.0% 34.0% 34.0%
State income taxes, net of federal benefit 2.8 3.4 3.4
Difference between U.S. and foreign rates 1.3 2.1 2.8
Other, net (2.4) (2.4) (1.3)
35.7% 37.1% 38.9%
- -------------------------------------------------------------------------------
THE COMPONENTS OF INCOME BEFORE INCOME TAXES CONSISTED OF THE FOLLOWING:
1995 1994 1993
- -------------------------------------------------------------------------------
Domestic $ 11,980 $ 10,866 $ 8,611
Foreign 2,372 657 890
$ 14,352 $ 11,523 $ 9,501
- -------------------------------------------------------------------------------
THE COMPONENTS OF THE DEFERRED TAX PROVISIONS CONSISTED OF THE FOLLOWING:
1995 1994 1993
- -------------------------------------------------------------------------------
Excess of tax over book depreciation
and amortization $ (14) $ 121 $ -
Inventory reserves (10) 10 44
Litigation reserves 90 (301) (12)
Environmental reserves (219) (362) -
Other reserves (190) (205) (43)
$ (343) $ (737) $ (11)
- -------------------------------------------------------------------------------
THE SIGNIFICANT DEFERRED TAX ASSETS AND LIABILITIES AT SEPTEMBER 30, 1995,
OCTOBER 1, 1994, AND OCTOBER 2, 1993 WERE AS FOLLOWS:
1995 1994 1993
- -------------------------------------------------------------------------------
Deferred tax liabilities:
Accelerated depreciation & amortization $ 1,749 $ 1,569 $ 1,899
Total Deferred Liabilities $ 1,749 $ 1,569 $ 1,899
Less deferred tax assets:
Accounts receivable reserves $ 160 $ 221 $ 213
Inventory reserves 378 432 520
Litigation reserves 356 787 485
Environmental reserves 561 438 86
Employee benefit reserves 730 865 642
Other reserves 461 (807) 60
Total Deferred Assets $ 2,646 $ 1,936 $ 2,006
NET DEFERRED TAX ASSETS $ 897 $ 367 $ 107
- -------------------------------------------------------------------------------
<PAGE>
Woodhead Industries Inc. 1995 Annual Report
4. PENSION AND OTHER EMPLOYEE BENEFITS
- -------------------------------------------------------------------------------
The Company has defined benefit, defined contribution and government mandated
plans covering eligible, non-bargaining unit employees. Pension benefits are
fully vested after five years and are based upon years of service and highest
five-year average compensation. It is the Company's policy to fund its pension
costs by making annual contributions based upon the minimum funding provisions
of the "Employee Retirement Income Security Act of 1974". The total pension
expense of Company sponsored plans was $297,000 in 1995 and was $290,000 and
$394,000 in 1994 and 1993, respectively.
NET PERIODIC PENSION COST FOR THE NON-UNION PLANS FOR 1995, 1994 AND 1993
INCLUDED THE FOLLOWING COMPONENTS:
1995 1994 1993
- -------------------------------------------------------------------------------
Service cost-benefits earned during the year $ 244 $ 278 $ 340
Interest cost on projected benefit obligation 443 452 470
Actual (gain) loss on plan assets (835) 21 (530)
Net amortization and deferral 635 (189) 215
$ 487 $ 562 $ 495
- -------------------------------------------------------------------------------
ASSUMPTIONS USED IN ACCOUNTING FOR THE PENSION PLANS ARE AS FOLLOWS:
1995 1994 1993
- -------------------------------------------------------------------------------
Discount rate 8.0% 8.0% 7.5%
Rate of increase in compensation levels 6.0% varied varied
by age by age
Expected long-term rate of return on assets 7.5% 7.5% 8.0%
- -------------------------------------------------------------------------------
THE FOLLOWING TABLE RECONCILES THE PLANS' FUNDED STATUS AND THE AMOUNT
RECOGNIZED IN THE COMPANY'S BALANCE SHEETS AT SEPTEMBER 30, 1995, OCTOBER 1,
1994, AND OCTOBER 2, 1993, FOR ITS NON-UNION PLANS:
1995 1994 1993
- -------------------------------------------------------------------------------
Actuarial present value of benefit obligations
Vested benefits $ 4,059 $ 4,723 $ 4,926
Non-vested benefits 355 198 198
Accumulated benefit obligation $ 4,414 $ 4,921 $ 5,124
Effect of projected future
compensation levels 979 873 750
Projected benefit obligation $ 5,393 $ 5,794 $ 5,874
Plan assets at fair value 5,240 5,195 5,483
Under funded status $ 153 $ 599 $ 391
Unrecognized prior service cost (128) (203) (230)
Unrecognized net loss (379) (269) (11)
Unrecognized net asset (obligation)
at date of application 16 33 (158)
(Prepaid) accrued pension cost included
in balance sheet $ (338) $ 160 $ (8)
- -------------------------------------------------------------------------------
In fiscal 1990, a supplemental retirement benefit plan was approved for certain
key executive officers which will provide supplemental payments upon retirement,
disability, or death. The obligations are not funded apart from the Company's
general assets. The Company charged to expense $205,000 in 1995, $299,000 in
1994, and $115,000 in 1993 under the plan.
Most of the Company's union employees are covered by union-sponsored,
collectively-bargained multi-employer pension plans. The Company contributed
and charged to expense $154,000 in 1995, $130,000 in 1994, and $91,000 in 1993,
for such plans. These contributions are determined in accordance with the
provisions of negotiated labor contracts and generally are based on the number
of man-hours worked. Information from the plan's administrators is not
available to permit the Company to determine its share of unfunded vested
benefits.
27
<PAGE>
Woodhead Industries Inc. 1995 Annual Report
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. PENSION AND OTHER EMPLOYEE BENEFITS (CONT.)
- -------------------------------------------------------------------------------
The annual profit sharing contributions which are the lesser of (a) a percentage
of income as defined in the plans or (b) 15% of the aggregate compensation paid
to participants during the year, were $698,000 in 1995, $634,000 in 1994, and
$505,000 in 1993.
The Company makes matching contributions of 50% of employees' contributions
up to 4% of compensation. Matching contributions were $214,000 in 1995, and
were $206,000 and $227,000 in 1994 and 1993, respectively.
Plan assets of Company-sponsored plans are invested primarily in common stocks,
corporate bonds, and government securities. Although the Company has a right to
improve, change or terminate the plans, they are intended to be permanent.
OTHER POSTRETIREMENT BENEFITS
The Company provides an optional retiree medical program to a majority of its
U.S. salaried and non-union retirees. All retirees are required to contribute
to the cost of their coverage. These postretirement benefits are unfunded.
During the quarter ended January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 106 (SFAS No. 106), "Employer's Accounting
for Postretirement Benefits other than Pensions," on a prospective basis.
Adopting this new standard resulted in a cumulative catch-up adjustment of
approximately $1,098,000 (pre-tax) which will be amortized over 20 years. On an
on-going basis, the annual incremental expense, including $55,000 amortization
of the $1,098,000, will be approximately $181,000 (pre-tax).
IN FISCAL YEARS 1995 AND 1994, THE COMPONENTS OF COST OF THESE POSTRETIREMENT
BENEFITS, PRINCIPALLY HEALTHCARE,
WERE AS FOLLOWS:
1995 1994
- -------------------------------------------------------------------------------
Service Cost $ 44 $ 45
Interest Cost 87 81
Amortization of transition obligation 54 55
$ 185 $ 181
- -------------------------------------------------------------------------------
THE FUNDED STATUS OF THESE BENEFITS FOR THE FISCAL YEARS ENDED SEPTEMBER 30,
1995 AND OCTOBER 1, 1994 WERE AS FOLLOWS:
1995 1994
- -------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Retirees $ 424 $ 428
Eligible active employees 298 282
Other active employees 471 396
Accumulated postretirement benefit obligation $ 1,193 $ 1,106
Plan assets at fair value - -
Under funded status $ 1,193 $ 1,106
Unrecognized transition obligation (989) (1,044)
Unrecognized net gain 118 119
Accrued postretirement benefit cost
included in balance sheet $ 322 $ 181
- -------------------------------------------------------------------------------
<PAGE>
Woodhead Industries Inc. 1995 Annual Report
4. PENSION AND OTHER EMPLOYEE BENEFITS (CONT.)
- -------------------------------------------------------------------------------
ASSUMPTIONS USED IN THE ACCOUNTING WERE:
1995 1994
- -------------------------------------------------------------------------------
Discount rate 8.0% 7.5%
Health care trend rate in first year 11.0% 12.0%
Gradually declining to a trend rate of 6.0% 6.0%
in the year 2000 2000
- -------------------------------------------------------------------------------
THE EFFECT OF A ONE PERCENTAGE POINT INCREASE IN THE ASSUMED HEALTH CARE TREND
RATE ON:
1995 1994
- -------------------------------------------------------------------------------
Aggregate of service and interest cost $ 25 $ 24
Accumulated postretirement benefit obligation 202 177
- -------------------------------------------------------------------------------
POSTEMPLOYMENT BENEFITS
The Company provides certain postemployment benefits to former or inactive
employees after employment but before retirement.
If the Company had adopted Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits", the effect of the change
would have been immaterial. The Company will, on an annual basis, reevaluate
its liability under SFAS No. 112 to verify that it remains immaterial.
5. CAPITAL STOCK
- -------------------------------------------------------------------------------
The total 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 $1.00 per share. No shares of preferred stock have
been issued to date.
In May, 1986, the Company declared a dividend distribution of one common
stock purchase right ("Right") for each share of common stock outstanding.
The plan authorizing these Rights was subsequently amended in July, 1990 and
January, 1993. Each Right entitles the holder thereof, until May 29, 1996,
to buy one share of common stock at an exercise price of $13.33. The
exercise price and the number of shares of common stock issuable upon the
exercise of the Rights are subject to adjustment in certain cases to prevent
dilution. The Rights are evidenced by the common stock certificates and are
not exercisable, or transferable apart from the common stock, until ten days
after a person acquires or makes a tender offer for 15% or more of the common
stock or the Board of Directors determines that such person has become an
Adverse Person as that term is defined in the plan. In the event the Company
is acquired in a merger or other business combination transaction (including
one in which the Company is the surviving corporation), it is provided that
each Right will entitle its holder to purchase, at the then current exercise
price of the Right, that number of shares of common stock of the surviving
company which at the time of such transaction would have a market value of
two times the exercise price of the Right. The Rights do not have any voting
rights and are redeemable, at the option of the Company, at a price of $.0167
per Right at any time until ten days after the person acquires beneficial
ownership of at least 15% of the common stock. The Rights expire on May 29,
1996. So long as the Rights are not separately transferable, the Company
will issue one Right with each new share of common stock issued.
On April 26, 1995, the board of directors declared a three-for-two stock
split effected in the form of a 50% common stock dividend, payable May 22,
1995, to holders of record on May 8, 1995. On January 22, 1993, the board of
directors declared a two-for-one stock split effected in the form of a 100%
common stock dividend, payable March 1, 1993, to holders of record on
February 12, 1993. All share and per share amounts have been adjusted to
give retroactive effect to these stock splits.
29
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. CONTINGENT LIABILITIES
- -------------------------------------------------------------------------------
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 Environmental Quality ("DEQ"). The investigation indicates
that additional soil and groundwater at the site have been impaired by
chlorinated solvents, including tetrachloroethane and trichloroethylene.
Also, the company learned that a portion of the site had been used as a
disposal area by the previous owners of the site. The Company's consultant
is investigating and has begun to remediate this area and believes that it is
an additional likely source of contamination of soil and groundwater. In
addition, the investigation of the site 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 and the above-referenced
disposal area, including the possible presence of ongoing dumping activities
by others in the vicinity around the Company's facilities.
The Company's consultant estimates that a minimum of $1.5 million of
investigation and remediation expenses will be incurred at the site. The
Company has a reserve for such purposes and has notified the previous owners
of the site and various insurers of possible claims by the Company relating
to the remediation of the site. 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 DEQ 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.
<PAGE>
Woodhead Industries Inc. 1995 Annual Report
7. STOCK OPTION PLANS
- -------------------------------------------------------------------------------
Under the Company's stock option plans, options to purchase common shares may
be granted to directors, officers and key employees at a price not less than
the market value at date of grant. As of September 30, 1995, 1,369,950
unissued common shares are reserved under all stock option plans which
includes 288,900 shares available for future grants. The following grants
are outstanding and exercisable:
Fiscal Year Number of Option Price Expiration
of Grant Shares Per Share Date
- -------------------------------------------------------------------------------
1987 27,000 $ 3.77-5.21 1997
1988 9,500 3.17 1998
1989 45,100 3.58-4.58 1999
1990 156,600 4.75 2000
1991 174,600 4.25 2001
1992 117,900 5.17 2002
1993 244,350 6.98-8.42 2003
1994 152,400 10.33 2004
1995 153,600 9.33 2005
1,081,050
- -------------------------------------------------------------------------------
THE FOLLOWING SUMMARIZES THE OPTIONS GRANTED, EXERCISED AND EXPIRED DURING
THE LAST THREE FISCAL YEARS:
Option Price Number of Shares*
Per Share* 1995 1994 1993
- -------------------------------------------------------------------------------
Granted $ 14.00-21.50 106,700 115,900 106,600
Exercised 3.17-15.50 29,300 85,400 120,850
- - - -
- -------------------------------------------------------------------------------
Subsequent to September 30, 1995, stock options were granted for 134,100
shares at an average price of $14.31 per share.
*Option prices and shares from periods prior to the May 1995 3-for-2 stock
split and the March 1993 2-for-1 stock split have been presented at their
respective historical amounts to reflect actual activity.
8. INFORMATION ABOUT THE COMPANY'S OPERATIONS IN DIFFERENT GEOGRAPHIC AREAS
- -------------------------------------------------------------------------------
United States Foreign Consolidated
- -------------------------------------------------------------------------------
1995
SALES TO UNAFFILIATED CUSTOMERS $ 90,324 $ 29,679 $ 120,003
NET INCOME 7,867 1,361 9,228
IDENTIFIABLE ASSETS AT
SEPTEMBER 30, 1995 53,152 20,259 73,411
- -------------------------------------------------------------------------------
1994
Sales to unaffiliated customers $ 83,652 $ 22,037 $ 105,689
Net income 7,056 194 7,250
Identifiable assets at
October 1, 1994 47,322 14,941 62,263
- -------------------------------------------------------------------------------
1993
Sales to unaffiliated customers $ 73,794 $ 16,070 $ 89,864
Net income 5,481 322 5,803
Identifiable assets at
October 2, 1993 44,106 12,254 56,360
31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. SUMMARY OF QUARTERLY DATA (UNAUDITED)
- -------------------------------------------------------------------------------
Net Gross Net Net Income
Sales Profit Income Per Share
- -------------------------------------------------------------------------------
1995
FIRST QUARTER $ 27,667 $ 11,747 $ 1,830 $ .17
SECOND QUARTER 31,413 13,799 2,203 .20
THIRD QUARTER 30,329 13,101 2,305 .21
FOURTH QUARTER 30,594 13,815 2,890 .27
TOTAL $ 120,003 $ 52,462 $ 9,228 $ .85
- -------------------------------------------------------------------------------
1994
First Quarter $ 23,536 $ 10,014 $ 1,426 $ .13
Second Quarter 26,938 11,873 1,634 .15
Third Quarter 27,446 12,088 1,927 .18
Fourth Quarter 27,769 12,644 2,263 .21
Total $ 105,689 $ 46,619 $ 7,250 $ .68
- -------------------------------------------------------------------------------
1993
First Quarter $ 18,677 $ 8,318 $ 1,136 $ .11
Second Quarter 22,316 9,973 1,353 .13
Third Quarter 24,670 10,545 1,582 .15
Fourth Quarter 24,201 10,790 1,732 .16
Total $ 89,864 $ 39,626 $ 5,803 $ .55
- -------------------------------------------------------------------------------
10. ACQUISITIONS
- -------------------------------------------------------------------------------
On September 29, 1995, the Company acquired all of the stock of Elitec S.A.
for $1,138,000. Located outside of Paris, France, Elitec is a distributor of
industrial connectors and sensors that serve the automation and
computer-control needs of many industries.
On January 1, 1993, the Company completed the purchase of H. F. Vogel GmbH, a
manufacturer of specialty connectors located near Stuttgart, Germany.
Effective April 1, 1993, the Company acquired all of the assets of FOCS, Inc.
in Marlborough, MA. FOCS manufactures fiber optic cable assemblies and
systems.
On April 19,1993, the Company acquired all of the stock of AKAPP Electro
Industrie B.V. located in Barneveld, the Netherlands. AKAPP is a
manufacturer of continuous multi-conductor electrical bar systems for the
transmission of power.
The combined purchase price paid for the three companies acquired in fiscal
1993 was $11,203,000 in cash. Goodwill represents $5,182,000 of this total
purchase price and is being amortized on a straight-line basis over 40 years.
Pro forma net sales for fiscal year 1993 would have been $96,360,000,
assuming all three acquisitions had occurred at the beginning of the year.
Pro forma net income and earnings per share, however, would not have been
materially different.
All four acquisitions have been accounted for under the purchase method, and
their net assets and results of operations are included in the Company's
Consolidated Financial Statements from the dates of acquisition.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME SECTIONS
FOUND IN EXHIBIT 13 OF THE COMPANY'S 10K 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> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 4,202
<SECURITIES> 0
<RECEIVABLES> 19,537
<ALLOWANCES> 572
<INVENTORY> 12,613
<CURRENT-ASSETS> 40,912
<PP&E> 61,464
<DEPRECIATION> 37,429
<TOTAL-ASSETS> 73,411
<CURRENT-LIABILITIES> 21,258
<BONDS> 0
<COMMON> 10,374
0
0
<OTHER-SE> 40,030
<TOTAL-LIABILITY-AND-EQUITY> 73,411
<SALES> 120,003
<TOTAL-REVENUES> 120,003
<CGS> 67,541
<TOTAL-COSTS> 67,541
<OTHER-EXPENSES> 2,724
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 97
<INCOME-PRETAX> 14,352
<INCOME-TAX> 5,124
<INCOME-CONTINUING> 9,228
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,228
<EPS-PRIMARY> .85
<EPS-DILUTED> .85
</TABLE>
