<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 June 29, 1996 Commission File Number 0-5971
WOODHEAD INDUSTRIES, INC.
- --------------------------------------------------------------------------------
DELAWARE 36-1982580
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
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
- --------------------------------------------------------------------------------
(Former name, former address or former fiscal year,
if changes since last reports)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
--- ---
On July 27, 1996 there were 10,416,479 shares of the Registrant's common stock
outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 29, 1996 and September 30, 1995
ASSETS (Amounts in thousands)
Unaudited
CURRENT ASSETS 6/29/96 9/30/95
-------- --------
Cash and short-term securities $ 6,258 $ 4,202
Accounts receivable 17,763 18,965
Inventories (Note 3) 13,569 12,613
Prepaid expenses 4,883 5,132
-------- --------
Total current assets $42,473 $40.912
-------- --------
OTHER ASSETS $ 690 $ 1,039
PROPERTY, PLANT & EQUIPMENT, at cost $64,061 $61,464
Less: Accumulated depreciation (40,277) (37,429)
-------- --------
Net property, plant and equipment $23,784 $24,035
-------- --------
GOODWILL $ 7,161 $ 7,425
-------- --------
TOTAL ASSETS $74,108 $73,411
-------- --------
-------- --------
LIABILITIES & STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 4,771 $ 7,033
Accrued expenses 11,034 12,509
Income taxes 814 1,647
Portion of long-term debt payable within one year - 69
-------- --------
Total current liabilities $16,619 $21,258
-------- --------
DEFERRED INCOME TAXES $ 1,769 $ 1,749
-------- --------
LONG-TERM DEBT $ - $ -
-------- --------
STOCKHOLDERS' INVESTMENT: (Note 5)
Preferred stock $ - $ -
Common stock 10,390 10,374
Additional paid-in capital 1,478 1,248
Cumulative translation adjustment (428) 140
Retained earnings 44,280 38,642
-------- --------
Total stockholders' investment $55,720 $50,404
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $74,108 $73,411
-------- --------
-------- --------
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
WOODHEAD INDUSTRIES, INC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands except per share data, unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------- ----------------------
6/29/96 7/1/95 6/29/96 7/1/95
-------- ------- ------- ------
<S> <C> <C> <C> <C>
NET SALE $30,557 $30,329 $92,200 $89,409
COST OF SALES 16,829 17,228 51,250 50,762
-------- ------- ------- ------
GROSS PROFIT $13,728 $13,101 $40,950 $38,647
% of Net Sales 44.9% 43.2% 44.4% 43.2%
OPERATING EXPENSES 9,277 8,861 27,874 26,514
-------- ------- ------- ------
INCOME FROM OPERATIONS $ 4,451 $ 4,240 $13,076 $12,133
OTHER (INCOME)/EXPENSES, NET (163) 720 839 2,123
-------- ------- ------- ------
INCOME BEFORE INCOME
TAXES $ 4,614 $ 3,520 $12,237 $10,010
PROVISION FOR INCOME TAXES $ 1,717 $ 1,215 $ 4,522 $ 3,672
-------- ------- ------- ------
NET INCOME $ 2,897 $ 2,305 $ 7,715 $ 6,338
-------- ------- ------- ------
-------- ------- ------- ------
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
(Note 4) $ 0.26 $ 0.21 $ 0.70 $ 0.59
-------- ------- ------- ------
-------- ------- ------- ------
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 10,947 10,874 10,954 10,806
-------- ------- ------- ------
-------- ------- ------- ------
DIVIDENDS PER SHARE $ 0.070 $ 0.065 $ 0.200 $ 0.192
-------- ------- ------- ------
-------- ------- ------- ------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE>
WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Amounts in thousands - unaudited)
Nine Months Ended
--------------------
6/29/96 7/1/95
-------- --------
Cash Flows from Operating Activities:
Net income for the period $ 7,715 $ 6,338
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 3,689 3,506
Change in Assets and Liabilities:
Decreases/(Increases) in:
Accounts receivable 1,202 (143)
Inventories (956) (1,924)
Prepaid expenses 249 (698)
Other assets - (178)
Increases/(Decreases) in:
Accounts payable (2,262) (570)
Accrued expenses (1,475) 580
Income taxes (833) 766
Deferred income taxes 20 180
-------- --------
Net cash flows provided by operating activities $ 7,349 $ 7,857
-------- --------
Cash Flows from Investing Activities:
Purchases of property, plant & equipment $(3,849) $(5,580)
Retirements or sales of property, plant and equipment 714 112
-------- --------
Net cash flows used for investing activities $(3,135) $(5,468)
-------- --------
Cash Flows from Financing Activities:
Proceeds from short-term debt $ - $ 13
Payments on short-term debt (69) (19)
Proceeds from long-term debt - 16,200
Payments on long-term debt - (16,263)
Sales of stock 246 3,712
Dividend payments (2,077) (5,433)
-------- --------
Net cash flows used for financing activities $(1,900) $(1,790)
-------- --------
Effect of exchange rates $ (258) $ 399
-------- --------
Net (Decrease) Increase in Cash & short-term securities $ 2,056 $ 998
-------- --------
-------- --------
Supplemental disclosures of cash flow information:
- -------------------------------------------------
Cash paid during the period for:
Interest $ 32 $ 93
Income taxes $ 4,413 $ 3,365
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
WOODHEAD INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 29, 1996
(1) The condensed consolidated balance sheets at June 29, 1996, and September
30, 1995, and the condensed consolidated statements of income and cash flow
for the periods ended June 29, 1996, and July 1, 1995, 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 June 29, 1996,
and July 1, 1995, 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 materials, work-in-
process, and finished goods inventories at June 29, 1996, and September
30, 1995, is as follows:
(in thousands)
6/29/96 9/30/95
------- -------
Raw materials $ 9,081 $ 8,528
Work-in-process and finished goods 9,301 8,729
------- -------
Inventories before LIFO reserve 18,382 17,257
Less: Reserve to reduce to LIFO (4,813) (4,644)
------- -------
Inventories, net $13,569 $12,613
------- -------
------- -------
(4) Income per share is based upon the weighted average number of shares
outstanding plus the effect of common stock equivalents during the period
(10,947,000 and 10,954,000 for the quarter and nine months ended June 29,
1996, respectively, 10,874,000 and 10,806,000 for the quarter and nine
months ended June 29, 1996, respectively). All shares 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 June 29, 1996 and September 30, 1995
were 10,390,000 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 $6.2 million for the first nine months of
fiscal 1996 with a current ratio of 2.6/1 compared with 1.9/1 at the end of the
prior fiscal year. There was no long-term or short-term debt at the end of the
quarter. Return on assets rose to 14.9% from 13.5% and return on equity
improved to 20.4% from 19.3% for the comparable 12-month periods ending June 29,
1996 and July 1, 1995, 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 increased 0.8% to $30.6 million from $30.3 million
reported for the same period last year. Domestic sales decreased by 2.4%
reflecting the soft manufacturing sector of the U.S. economy, while
international sales increased 8.6% compared with the third quarter of fiscal
1995 and constituted 31% of the total sales for the quarter just ended. The
backlog of unfilled orders was $8.4 million compared with $7.9 million at fiscal
year-end and $9.2 million reported one year ago. Selling prices were less than
1.0% higher than a year ago.
Gross profit of $13.7 million was $.6 million or 4.8% greater than the same
quarter of last year. Gross profit margins increased to 44.9% from 43.2%, due
to cost reductions and increased manufacturing productivity.
Operating expenses rose 4.7% to $9.3 million and increased as a percent of
sales to 30.4% from 29.2% in the third quarter of 1995. Other
(income)/expenses, of $(.2) million were $.8 million less than the same period a
year ago. The favorable comparison was due to higher interest income and an
accrual reversal of $.8 million (pre-tax) resulting from a 1991 jury verdict
which was overturned in the Company's favor upon appeal.
Net income exceeded last year's third quarter by 25.7% and on a per share
basis surpassed the same period of fiscal 1995 by 23.8%, rising to $.26 from
$.21 per share.
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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 improve 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 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. 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 6/29/96 6/29/96
data - unaudited) ---------------------- ----------------------
Fully Fully
PRIMARY DILUTED PRIMARY DILUTED
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Income $ 2,897 $ 2,897 $ 7,715 $ 7,715
------- ------- ------- -------
------- ------- ------- -------
Weighted average 10,391 10,391 10,386 10,386
common shares
Incremental shares issuable
for stock options outstanding
(Treasury stock method) 556 556 568 568
------- ------- ------- -------
Common and Common Equivalent Shares 10,947 10,947 10,954 10,954
------- ------- ------- -------
------- ------- ------- -------
Earnings per common and common
equivalent shares $ 0.26 $ 0.26 $ 0.70 $ 0.70
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
(b) Reports on Form 8-K filed during the quarter ended June 29, 1996.
-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 8/8/96
------------------------------------- -----------
Robert G. Jennings
Vice President - Finance
(Chief Financial Officer)
/s/ Joseph P. Nogal 8/8/96
------------------------------------- -----------
Joseph P. Nogal
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> 9-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-END> JUN-29-1996
<CASH> 6,258
<SECURITIES> 0
<RECEIVABLES> 17,763
<ALLOWANCES> 0
<INVENTORY> 13,569
<CURRENT-ASSETS> 42,473
<PP&E> 64,061
<DEPRECIATION> (40,277)
<TOTAL-ASSETS> 74,108
<CURRENT-LIABILITIES> 16,619
<BONDS> 0
0
0
<COMMON> 10,390
<OTHER-SE> 45,330
<TOTAL-LIABILITY-AND-EQUITY> 74,108
<SALES> 92,200
<TOTAL-REVENUES> 92,200
<CGS> 51,250
<TOTAL-COSTS> 51,250
<OTHER-EXPENSES> 839
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 12,237
<INCOME-TAX> 4,522
<INCOME-CONTINUING> 7,715
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,715
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
</TABLE>
