<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 December 30, 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 (847) 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 January 27, 1996 there were 10,389,879 shares of the Registrant's common
stock outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 30, 1995 and September 30, 1995
<TABLE>
<CAPTION>
ASSETS (Amounts in thousands)
Unaudited
CURRENT ASSETS 12/30/95 9/30/95
-------- -------
<S> <C> <C>
Cash and short-term securities $ 3,728 $ 4,202
Accounts receivable 17,047 18,965
Inventories (Note 3) 14,129 12,613
Prepaid expenses 5,245 5,132
-------- -------
Total current assets $40,149 $40,912
-------- -------
OTHER ASSETS $ 918 $ 1,039
PROPERTY, PLANT & EQUIPMENT, at cost $62,358 $61,464
Less - Accumulated depreciation (38,370) (37,429)
-------- -------
Net property, plant and equipment $23,988 $24,035
-------- -------
GOODWILL $ 7,362 $ 7,425
-------- -------
TOTAL ASSETS $72,417 $73,411
-------- -------
-------- -------
LIABILITIES & STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 5,585 $ 7,033
Accrued expenses 10,793 12,509
Income taxes 2,330 1,647
Portion of long-term debt payable within one year 40 69
-------- -------
Total current liabilities $18,748 $21,258
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DEFERRED INCOME TAXES $ 1,769 $ 1,749
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LONG-TERM DEBT $ - $ -
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STOCKHOLDERS' INVESTMENT: (Note 5)
Preferred stock $ - $ -
Common stock 10,386 10,374
Additional paid-in capital 1,444 1,248
Cumulative translation adjustment (100) 140
Retained earnings 40,170 38,642
-------- -------
Total stockholders' investment $51,900 $50,404
-------- -------
TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $72,417 $73,411
-------- -------
-------- -------
</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
-------------------
12/30/95 12/31/94
-------- --------
<S> <C> <C>
NET SALES $29,968 $27,667
COST OF SALES 16,791 15,920
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GROSS PROFIT $13,177 $11,747
% of Net Sales 44.0% 42.5%
OPERATING EXPENSES 9,236 8,301
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INCOME FROM OPERATIONS $ 3,941 $ 3,446
OTHER EXPENSES, NET 432 505
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INCOME BEFORE INCOME TAXES $ 3,509 $ 2,941
PROVISION FOR INCOME TAXES $ 1,306 $ 1,111
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NET INCOME $ 2,203 $ 1,830
------- -------
------- -------
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE (Note 4) $ 0.20 $ 0.17
------- -------
------- -------
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 10,970 10,718
------- -------
------- -------
DIVIDENDS PER SHARE $ 0.065 $ 0.063
------- -------
------- -------
</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>
Three Months Ended
------------------
12/30/95 12/31/94
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income for the period $ 2,203 $ 1,830
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 1,208 1,165
Change in Assets and Liabilities:
Decreases/(Increases) in:
Accounts receivable 1,918 763
Inventories (1,516) (969)
Prepaid expenses (113) (658)
Other assets 11 5
Increases/(Decreases) in:
Accounts payable (1,448) (527)
Accrued expenses (1,716) (1,848)
Income taxes 683 663
Deferred income taxes 20 240
-------- --------
Net cash flows provided by operating activities $ 1,250 $ 664
-------- --------
Cash Flows from Investing Activities:
Purchases of property, plant & equipment $(1,067) $(2,347)
Retirements or sales of property, plant and equipment 36 38
-------- --------
Net cash flows used for investing activities $(1,031) $(2,309)
-------- --------
Cash Flows from Financing Activities:
Payments on short-term debt $ ( 29) $ ( 1)
Proceeds from long-term debt - 6,600
Payments on long-term debt - (4,626)
Sales of stock 208 -
Dividend payments (675) (655)
-------- --------
Net cash flows provided by financing activities $ (496) $ 1,318
-------- --------
Effect of exchange rates $ (197) $ ( 67)
-------- --------
Net (Decrease) Increase in Cash & short-term securities $ (474) $ (394)
-------- --------
-------- --------
Supplemental disclosures of cash flow information:
- --------------------------------------------------
Cash paid during the period for:
Interest $ 12 $ 14
Income taxes $ 546 $ 1,084
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
WOODHEAD INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 30, 1995
(1) The condensed consolidated balance sheets at December 30, 1995, and
September 30, 1995, and the condensed consolidated statements of income and
cash flows for the three-month periods ended December 30, 1995, and
December 31, 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 December 30,
1995, and December 31, 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 December 30, 1995, and September 30, 1995, is
as follows:
<TABLE>
<CAPTION>
(in thousands)
12/30/95 9/30/95
-------- -------
<S> <C> <C>
Raw materials $ 9,340 $ 8,528
Work-in-process and finished goods 9,567 8,729
-------- -------
Inventories before LIFO reserve 18,907 17,257
Less: Reserve to reduce to LIFO (4,778) (4,644)
------- -------
Inventories, net $14,129 $12,613
------- -------
------- -------
</TABLE>
(4) Income per share is based upon the weighted average number of shares
outstanding plus the effect of common stock equivalents during the period
(10,970,000 for the quarter ended December 30, 1995 and 10,718,000 for the
quarter ended December 31, 1994). 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.
(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 December 30, 1995 and September 30,
1995 were 10,386,000 and 10,374,000, respectively.
-5-
<PAGE>
WOODHEAD INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Working capital increased by $1.7 million during the quarter ended December
30, 1995 with a current ratio of 2.1/1 compared with 1.9/1 at the end of the
prior fiscal year. There was no long-term debt at the end of the quarter while
short-term debt declined to $40 thousand for the period ended. The resultant
debt-to-equity ratio was 0.1%. Return on assets rose to 14.1% from 12.8% and
return on equity improved to 20.0% from 18.7% for the comparable 12-month
periods ending December 30, 1995 and December 31, 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
First quarter net sales rose 8.3% to $30.0 million from $27.7 million
reported for the same period last year. Domestic sales increased just 1.4%,
reflecting a moderating U.S. economic climate while international sales grew a
record 28.2% over the first quarter of fiscal 1995 and constituted 30.5% of the
total sales for the quarter just ended. Among the core product leaders this
quarter were molded electrical connectors, tool balancers, and enclosed
continuous electrical bar systems. The backlog of unfilled orders was $8.3
million compared with $7.9 million at fiscal 1995 year-end and $8.3 million
reported one year ago. Selling prices were approximately 1.0% higher than a
year ago.
Gross profit of $13.2 million was $1.5 million or 12.2% greater than the
same quarter of last year. Gross margins increased to 44.0% from 42.5%,
reflecting a richer mix of higher-margin products.
Operating expenses rose 11.3% to $9.2 million from $8.3 million in the
first quarter of fiscal 1995. This increase reflects the Company's continued
commitment to the expansion of its international sales and marketing, combined
with the development of innovative new products that serve the global
marketplace. Other expenses were $.4 million for the current quarter.
Net income surpassed last year's first quarter by 20.4% and on a per share
basis exceeded the same period of fiscal 1995 by 17.6%, rising from $.17 to $.20
per share. This improvement reflects solid sales growth combined with improved
gross profit margins.
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<PAGE>
PART II. OTHER INFORMATION
WOODHEAD INDUSTRIES, INC.
Item 1. Legal Proceedings
The Company is subject to federal and state hazardous substance cleanup laws
that impose liability for the costs of cleaning up contamination resulting from
past spills, disposal or other releases of hazardous substances. In this
regard, the Company has incurred, and expects to incur, assessment, remediation
and related costs at one of the Company's facilities. In 1991, the Company
reported to state regulators a release at that site from an underground storage
tank ("UST"). The UST and certain contaminated soil subsequently were removed
and disposed of at an off-site disposal facility. The Company's independent
environmental consultant has been conducting an investigation of soil and
groundwater at the site with oversight by the state Department of 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 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.
-7-
<PAGE>
Part II - cont'd.
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
(Amounts in thousands, except per share data - 12/30/95
unaudited) --------------------
Fully
Primary Diluted
------- -------
<S> <C> <C>
Net Income $2,203 $2,203
------ ------
Weighted average
common shares 10,380 10,380
Incremental shares issuable
for stock options outstanding
(Treasury stock method) 590 590
--- ---
Common and Common
Equivalent Shares 10,970 10,970
------ ------
------ ------
Earnings per common and common
equivalent shares $ 0.20 $ 0.20
------ ------
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</TABLE>
(b) There were no reports on Form 8-K filed during the quarter ended December
30, 1995.
-8-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WOODHEAD INDUSTRIES, INC.
/s/ Robert G. Jennings 2/9/96
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Robert G. Jennings Date
Vice President - Finance
(Chief Financial Officer)
/s/ Joseph P. Nogal 2/9/96
------------------------- --------
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
INCOME 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> 3-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-END> DEC-30-1995
<CASH> 3,728
<SECURITIES> 0
<RECEIVABLES> 17,047
<ALLOWANCES> 0
<INVENTORY> 14,129
<CURRENT-ASSETS> 40,149
<PP&E> 62,358
<DEPRECIATION> 38,370
<TOTAL-ASSETS> 72,417
<CURRENT-LIABILITIES> 18,748
<BONDS> 0
0
0
<COMMON> 10,386
<OTHER-SE> 41,514
<TOTAL-LIABILITY-AND-EQUITY> 72,417
<SALES> 29,968
<TOTAL-REVENUES> 29,968
<CGS> 16,791
<TOTAL-COSTS> 16,791
<OTHER-EXPENSES> 432
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,509
<INCOME-TAX> 1,306
<INCOME-CONTINUING> 2,203
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,203
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
