<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 July 1, 1995 Commission File Number 0-5971
WOODHEAD INDUSTRIES, INC.
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DELAWARE 36-1982580
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(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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (708) 465-8300
NO CHANGE
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(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
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On July 29, 1995 there were 10,356,579 shares of the Registrant's common stock
outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
July 1, 1995 and October 1, 1994
<TABLE>
<CAPTION>
ASSETS (Amounts in thousands)
Unaudited
7/1/95 10/1/94
CURRENT ASSETS -------- --------
<S> <C> <C>
Cash and short-term securities $ 2,452 $ 1,454
Accounts receivable 16,732 16,589
Inventories (Note 3) 12,326 10,402
Prepaid expenses 4,485 3,811
------- -------
Total current assets $35,995 $32,256
------- -------
OTHER ASSETS $ 1,172 $ 1,570
PROPERTY, PLANT & EQUIPMENT, at cost $60,852 $55,035
Less: Accumulated depreciation (36,907) (33,904)
------- -------
Net property, plant and equipment $23,945 $21,131
------- -------
GOODWILL $ 7,336 $ 7,306
------- -------
TOTAL ASSETS $68,448 $62,263
------- -------
------- -------
LIABILITIES & STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 5,378 $ 5,948
Accrued expenses 11,330 10,750
Income taxes 1,622 880
Portion of long-term debt payable within
one year 100 106
------- -------
Total current liabilities $18,430 $17,684
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DEFERRED INCOME TAXES $ 1,749 $ 1,569
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LONG-TERM DEBT $ - $ 63
------- -------
STOCKHOLDERS' INVESTMENT: (Note 5)
Preferred stock $ - $ -
Common stock 10,352 7,470
Additional paid-in capital 1,133 4,987
Cumulative translation adjustment 358 (347)
Retained earnings 36,426 35,521
Less: Treasury stock at cost (0 shares
and 863 shares) - (4,684)
------- -------
Total stockholders' investment $48,269 $42,947
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TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $68,448 $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 Nine Months Ended
------------------ -----------------
7/1/95 7/2/94 7/1/95 7/2/94
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET SALES $30,329 $27,446 $89,409 $77,920
COST OF SALES 17,228 15,358 50,762 43,945
------- ------- ------- -------
GROSS PROFIT $13,101 $12,088 $38,647 $33,975
% of Net Sales 43.2% 44.0% 43.2% 43.6%
OPERATING EXPENSES 8,861 8,636 26,514 24,794
------- ------- ------- -------
INCOME FROM OPERATIONS $ 4,240 $ 3,452 $12,133 $ 9,181
OTHER EXPENSES, NET 720 318 2,123 936
------- ------- ------- -------
INCOME BEFORE INCOME
TAXES $ 3,520 $ 3,134 $10,010 $ 8,245
PROVISION FOR INCOME TAXES $ 1,215 $ 1,207 $ 3,672 $ 3,258
------- ------- ------- -------
NET INCOME $ 2,305 $ 1,927 $ 6,338 $ 4,987
------- ------- ------- -------
------- ------- ------- -------
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
(Note 4) $ 0.21 $ 0.18 $ 0.59 $ 0.47
------- ------- ------- -------
------- ------- ------- -------
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 10,874 10,718 10,806 10,705
------- ------- ------- -------
------- ------- ------- -------
DIVIDENDS PER SHARE $ 0.065 $ 0.057 $ 0.192 $ 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>
Nine Months Ended
-------------------
7/1/95 7/2/94
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income for the period $ 6,338 $ 4,987
Adjustments to reconcile net income to
net cash flows from operating activities:
Depreciation and amortization 3,506 3,371
Change in Assets and Liabilities:
Decreases/(Increases) in:
Accounts receivable (143) (2,588)
Inventories (1,924) (1,883)
Prepaid expenses (698) 357
Other assets (178) (18)
Increases/(Decreases) in:
Accounts payable (570) 29
Accrued expenses 580 477
Income taxes 766 127
Deferred income taxes 180 (330)
------- -------
Net cash flows provided by operating activities $ 7,857 $ 4,529
------- -------
Cash Flows from Investing Activities:
Purchases of property, plant & equipment $(5,580) $(2,168)
Retirements or sales of property, plant and
equipment 112 11
------- -------
Net cash flows used for investing activities $(5,468) $(2,157)
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Cash Flows from Financing Activities:
Proceeds from short-term debt $ 13 $ -
Payments on short-term debt (19) (499)
Proceeds from long-term debt 16,200 18,800
Payments on long-term debt (16,263) (20,174)
Sales of stock 3,712 721
Dividend payments (5,433) (1,747)
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Net cash flows used for financing activities $(1,790) $(2,899)
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Effect of exchange rates $ 399 $ 210
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Net (Decrease) Increase in Cash & short-term
securities $ 998 $ (317)
------- -------
------- -------
Supplemental disclosures of cash flow information:
--------------------------------------------------
Cash paid during the period for:
Interest $ 93 $ 221
Income taxes $ 3,365 $ 2,780
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
WOODHEAD INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 1, 1995
(1) The condensed consolidated balance sheets at July 1, 1995, and October 1,
1994, and the condensed consolidated statements of income and cash flow for
the periods ended July 1, 1995, and July 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 July 1, 1995,
and July 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 July 1, 1995, and October 1, 1994, is as
follows:
<TABLE>
<CAPTION>
(in thousands)
7/1/95 10/1/94
------- -------
<S> <C> <C>
Raw materials $ 8,002 $ 7,012
Work-in-process and finished goods 9,024 7,946
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Inventories before LIFO reserve 17,026 14,958
Less: Reserve to reduce to LIFO (4,700) (4,556)
------- -------
Inventories, net $12,326 $10,402
------- -------
------- -------
</TABLE>
(4) On May 22, 1995, the company paid a 50% stock dividend to all stockholders'
of record on May 8, 1995. Accordingly, the number of shares and per share
amounts have been adjusted in all periods to reflect the effects of this
dividend. Income per share is based upon the weighted average number of
shares outstanding plus the effect of common stock equivalents during the
period (10,874,000 and 10,806,000 for the quarter and for the nine months
ended July 1, 1995, respectively, 10,718,000 and 10,705,000 for the quarter
and nine months ended July 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 July 1, 1995 and October 1, 1994 were
10,352,000 and 10,341,000, respectively. All treasury shares were canceled
during the quarter thereby totaling 0 at July 1, 1995 versus 863,000 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 $3.0 million for the first nine months of
fiscal 1995 with a current ratio of 2.0/1 compared with 1.8/1 at the end of the
prior fiscal year. There was no long-term debt at the end of the quarter while
short-term debt remained unchanged at $.1 million for the period ended. The
resultant debt to equity ratio was 0.2%. Return on assets rose to 13.5% from
11.7% and return on equity improved to 19.3% from 17.7% for the comparable 12-
month periods ending July 1, 1995 and July 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
Third quarter net sales rose 10.5% to $30.3 million from $27.4 million
reported for the same period last year. Several core product groups posted
healthy double-digit increases during the quarter, particularly ergonomic
workstations, electrical bar systems, and molded connectors. Although some of
the company's traditional electrical products exhibited some weakness in the
domestic market place, the strength of international sales contributed 75% of
the sales increase. International sales, which were 28.3% of total third
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 $9.2 million compared with $8.0 million at fiscal 1994 year-end and $9.8
million reported one year ago. Selling prices were less than 1.0% higher than a
year ago.
Gross profit of $13.1 million was $1.0 million or 8% greater than the same
quarter of last year. Gross profit margins declined slightly to 43.2% from
44.0%, reflecting the impact of inflation on production costs exceeding selling
price increases. Domestic productivity compared unfavorably to the strong
productivity achieved in the prior year's quarter.
Operating expenses rose only 2.6% to $8.9 million and dropped to 29.2% of
sales from 31.5% in the third quarter of 1994. Despite inflationary effects on
wages and correlative expenses, the Company reduced its general and
administrative expenses, thereby permitting continued investments in engineering
and marketing. Other expenses were $.7 million for the current quarter due to
increases in its reserves for litigation, environmental and other contingencies.
Net income exceeded last year's third quarter by 19.6% and on a per share
basis surpassed the same period of fiscal 1994 by 16.7%, rising to $.21 from
$.18 per share. This improvement was attributable to the leveraging effects of
increased sales when supported by a modest increase in operating expenses.
Additionally, the Corporation experienced a lower effective tax rate reflecting
the application of foreign tax credits from prior years.
-6-
<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.
-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 Nine Months Ended
(Amounts in thousands, except per share 7/1/95 7/1/95
data - unaudited) ------------------ -----------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Income $ 2,305 $ 2,305 $ 6,338 $ 6,338
------- ------- ------- -------
------- ------- ------- -------
Weighted average 10,351 10,351 10,347 10,347
common shares
Incremental shares issuable
for stock options outstanding
(Treasury stock method) 523 532 459 531
------- ------- ------- -------
Common and Common
Equivalent Shares 10,874 10,883 10,806 10,878
------- ------- ------- -------
------- ------- ------- -------
Earnings per common and common
equivalent shares $ 0.21 $ 0.21 $ 0.59 $ 0.58
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
(b) Reports on Form 8-K filed during the quarter ended July 1, 1995.
1. April 26, 1995
Item 5. Declaration of 50% common stock dividend.
Item 7. Financial Statements, pro forma financial information
and exhibits.
-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 8/10/95
------------------------ -------
Robert G. Jennings Date
Vice President - Finance
(Chief Financial Officer)
/s/Joseph P. Nogal 8/10/95
------------------------ -------
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 2 AND 3 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> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUL-1-1995
<CASH> 2,452
<SECURITIES> 0
<RECEIVABLES> 16,732
<ALLOWANCES> 0
<INVENTORY> 12,326
<CURRENT-ASSETS> 35,995
<PP&E> 60,852
<DEPRECIATION> 36,907
<TOTAL-ASSETS> 68,448
<CURRENT-LIABILITIES> 18,430
<BONDS> 0
<COMMON> 10,352
0
0
<OTHER-SE> 1,133
<TOTAL-LIABILITY-AND-EQUITY> 68,448
<SALES> 89,409
<TOTAL-REVENUES> 89,409
<CGS> 50,762
<TOTAL-COSTS> 77,276
<OTHER-EXPENSES> 2,123
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,010
<INCOME-TAX> 3,672
<INCOME-CONTINUING> 6,338
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,338
<EPS-PRIMARY> .59
<EPS-DILUTED> .58
</TABLE>
