<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 March 29, 1997 Commission File Number 0-5971
WOODHEAD INDUSTRIES, INC.
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
(Former name, former address or former fiscal year, if changes since last
reports)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No ____
On April 26, 1997 there were 10,451,562 shares of the Registrant's common stock
outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 29, 1997 and September 28, 1996
ASSETS (Amounts in thousands)
Unaudited
CURRENT ASSETS 3/29/97 9/28/96
------- -------
Cash and short-term securities $ 7,412 $10,050
Accounts receivable 20,267 18,777
Inventories (Note 3) 14,578 12,707
Prepaid expenses 5,240 5,516
----- -----
Total current assets $47,497 $47,050
------- -------
OTHER ASSETS $ 354 $ 557
PROPERTY, PLANT & EQUIPMENT, at cost $69,697 $64,499
Less: Accumulated depreciation (42,835) (40,834)
-------- -------
Net property, plant and equipment $26,862 $23,665
-------- -------
GOODWILL $ 6,943 $ 7,113
-------- -------
TOTAL ASSETS $81,656 $78,385
-------- -------
-------- -------
LIABILITIES & STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 5,537 $ 6,162
Accrued expenses 11,337 11,254
Income taxes 978 1,313
Portion of long-term debt payable within one year - -
-------- -------
Total current liabilities $17,852 $18,729
-------- -------
DEFERRED INCOME TAXES $ 1,897 $ 1,779
-------- -------
LONG-TERM DEBT $ - $ -
-------- -------
STOCKHOLDERS' INVESTMENT: (Note 5)
Preferred stock $ - $ -
Common stock 10,452 10,419
Additional paid-in capital 1,942 1,571
Cumulative translation adjustment (1,115) (616)
Retained earnings 50,628 46,503
-------- -------
Total stockholders' investment $61,907 $57,877
-------- -------
TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $81,656 $78,385
-------- -------
See accompanying notes to condensed consolidated financial statements.
-2-
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WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands except per share data, unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
3/29/97 3/30/96 3/29/97 3/30/96
------- ------- ------- -------
NET SALES $35,503 $31,675 $67,666 $61,643
COST OF SALES 19,494 17,630 37,301 34,421
------- ------- ------- -------
GROSS PROFIT $16,009 $14,045 $30,365 $27,222
% of Net Sales 45.1% 44.3% 44.9% 44.2%
OPERATING EXPENSES 10,614 9,361 20,350 18,597
------- ------- ------- -------
INCOME FROM OPERATIONS $ 5,395 $ 4,684 $10,015 $ 8,625
OTHER EXPENSES, NET 291 570 552 1,002
------- ------- ------- -------
INCOME BEFORE INCOME
TAXES $ 5,104 $ 4,114 $ 9,463 $ 7,623
PROVISION FOR INCOME TAXES $ 2,017 $ 1,499 $ 3,772 $ 2,805
------- ------- ------- -------
NET INCOME $ 3,087 $ 2,615 $ 5,691 $ 4,818
------- ------- ------- -------
------- ------- ------- -------
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
(Note 4) $ 0.28 $ 0.24 $ 0.52 $ 0.44
------- ------- ------- -------
------- ------- ------- -------
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 11,007 10,952 10,965 10,961
------- ------- ------- -------
------- ------- ------- -------
DIVIDENDS PER SHARE $ 0.080 $ 0.065 $ 0.150 $ 0.130
------- ------- ------- -------
------- ------- ------- -------
See accompanying notes to condensed consolidated financial statements.
-3-
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WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Amounts in thousands - unaudited)
SIX MONTHS ENDED
--------------------
3/29/97 3/30/96
------- -------
Cash Flows from Operating Activities:
Net income for the period $ 5,691 $ 4,818
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 2,533 2,479
Change in Assets and Liabilities:
Decreases/(Increases) in:
Accounts receivable (1,490) 983
Inventorie (1,871) (1,040)
Prepaid expenses 276 (256)
Other assets (63) -
Increases/(Decreases) in:
Accounts payable (625) (1,149)
Accrued expenses 83 (1,955)
Income taxes (335) 90
Deferred income taxes 118 20
------- -------
Net cash flows provided by operating activities $ 4,317 $ 3,990
-------- --------
Cash Flows from Investing Activities:
Purchases of property, plant & equipment $(5,699) $(2,878)
Retirements or sales of property, plant and
equipment 40 714
-------- --------
Net cash flows used for investing activities $(5,659) $(2,164)
-------- --------
Cash Flows from Financing Activities:
Payments on short-term debt $ - $ (57)
Sales of stock 404 244
Dividend payments (1,566) 1,350)
-------- --------
Net cash flows used for financing activities $(1,162) $(1,163)
-------- --------
Effect of exchange rates $ (134) $ (259)
-------- --------
Net (Decrease) Increase in Cash & short-term $(2,638) $ 404
securities -------- --------
-------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
- --------------------------------------------------
Cash paid during the period for:
Interest $ 19 $ 21
Income taxes $ 3,504 $ 2,504
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
WOODHEAD INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 29, 1997
(1) The condensed consolidated balance sheets at March 29, 1997, and September
28, 1996, and the condensed consolidated statements of income and cash flow
for the periods ended March 29, 1997, and March 30, 1996, 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 March 29, 1997,
and March 30, 1996, 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 March 29, 1997, and September 28, 1996, is as
follows:
(in thousands)
3/29/97 9/28/96
------- -------
Raw materials $ 9,920 $ 8,917
Work-in-process and finished goods 9,531 8,567
------- -------
Inventories before LIFO reserve 19,451 17,484
Less: Reserve to reduce to LIFO (4,873) (4,777)
------- -------
Inventories, net $14,578 $12,707
------- -------
------- -------
(4) Income per share is based upon the weighted average number of shares
outstanding plus the effect of common stock equivalents during the period
(11,007,000 and 10,965,000 for the quarter and six months ended March 29,
1997, respectively, 10,952,000 and 10,961,000 for the quarter and six
months ended March 30, 1996, 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 March 29, 1997 and September 28, 1996
were 10,452,000 and 10,419,000, respectively.
(6) In February 1997, the Financial Accounting Standards Board issued
Statement No. 128 (SFAS No. 128), "Earnings per Share". SFAS No. 128
replaces the presentation of primary earnings per share with basic
earnings per share which excludes the dilutive effect of common stock
equivalents. The Company's basic earnings per share is not expected to be
materially different from primary earnings per share.
-5-
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WOODHEAD INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Working capital increased by $1.3 million for the first six months of
fiscal 1997 with a current ratio of 2.7/1 compared with 2.5/1 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 14.4%, and return on
equity remained at 20.0% for the comparable 12-month periods ending March 29,
1997 and March 30, 1996, respectively. The Company's financial position
remains strong and significant borrowing capacity is available should the
need arise.
The Company is a party to an environmental matter which obligates it to
investigate, remediate or mitigate the effects on the environment of the release
of certain substances at one of the Company's facilities. For additional
information concerning the environmental matter, see "Item 1. Legal
Proceedings".
OPERATING RESULTS
Second quarter net sales rose 12.0% to $35.5 million from $31.7 million
reported for the same period last year. Domestic sales increased 16.2%
during the quarter with the highest growth rates occurring in the molded
connector and ergonomic workstation product lines, while international sales
grew 2.4% over the second quarter of fiscal 1997 and constituted 27% of the
sales for the quarter just ended. The backlog of unfilled orders was $10.6
million compared with $8.6 million at fiscal 1996 year-end and $8.3 million
reported one year ago. Selling prices increased less than 1.0% when compared
to the same period one year ago.
Gross profit of $16.0 million was $2.0 million or 14.3% greater than the
same quarter of last year. Gross profit margins increased to 45.1% from 44.3%,
reflecting the effect of the introduction of new products and continuous cost
reduction programs.
Operating expenses increased 12.8% to $10.6 million from $9.4 million in
the second quarter of fiscal 1997. As a percent of sales, operating expenses
increased to 29.9% from 29.6% reflecting the Company's continued investment
in marketing and engineering programs and the added costs of operating its
new subsidiary in Japan. Other expenses were $.3 million for the current
quarter.
Net income exceeded last year's second quarter by 18.0% and on a per
share basis surpassed the same period of fiscal 1996 by 16.7% rising to $.28
per share from $.24 per share. This increase reflects the impact of the sales
growth combined with improved gross profit margins offset by a higher
effective tax rate of 39.5% vs. 36.4% in 1996.
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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, and
other compounds. 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 have migrated off-site. The Company is
currently discussing various remediation alternatives for both on-site and
off-site contamination with the DEQ. 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 $800,000 of
investigation and remediation expenses remained to 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 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. At
this time, the Company, however, cannot estimate the time or potential
magnitude of such costs, if any.
-7-
<PAGE>
PART II. OTHER INFORMATION
WOODHEAD INDUSTRIES, INC.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on January 24, 1997.
During the meeting, the following matters were voted upon with the total
number of shares voted as follows:
VOTES CAST FOR VOTES WITHHELD
-------------- --------------
Election of nominees to Board of Directors:
Charles W. Denny 9,498,948 35,979
C. Mark DeWinter 9,493,118 41,809
Sarilee K. Norton 9,498,224 36,813
Alan L. Shaffer 9,497,514 37,413
VOTES CAST FOR VOTES AGAINST VOTES ABSTAINED
-------------- ------------- ---------------
Approval of 1996 Stock
Awards Plan 8,706,860 393,049 274,161
VOTES CAST FOR VOTES AGAINST VOTES ABSTAINED
-------------- ------------- ---------------
Ratification of
appointment of Arthur
Andersen LLP as the
Company's independent
public accountants 9,457,100 29,932 47,895
The number of broker non-votes for each matter voted above was 500.
-8-
<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
(27) Financial data schedule (Electronic filings only)
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter
ended March 29, 1997.
-9-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WOODHEAD INDUSTRIES, INC.
/s/ ROBERT G. JENNINGS 5/12/97
---------------------- --------
Robert G. Jennings Date
Vice President - Finance
(Chief Financial Officer)
/s/ JOSEPH P. NOGAL 5/12/97
---------------------- --------
Joseph P. Nogal Date
Treasurer/Controller
(Chief Accounting Officer)
-10-
<PAGE>
EXHIBIT 11
WOODHEAD INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
(Amounts in thousands, except per share data - unaudited)
Three Months Ended Six Months Ended
3/29/97 3/29/97
------------------ -----------------
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Net Income $ 3,087 $ 3,087 $ 5,691 $ 5,691
-------- -------- -------- -------
-------- -------- -------- -------
Weighted average
common shares 10,445 10,445 10,437 10,437
Incremental shares issuable
for stock options outstanding
(Treasury stock method) 562 574 528 574
-------- -------- -------- -------
Common and Common
Equivalent Shares 11,007 11,019 10,965 11,011
-------- -------- -------- -------
-------- -------- -------- -------
Earnings per common and common
equivalent shares $0.28 $0.28 $0.52 $0.52
-------- -------- -------- -------
-------- -------- -------- -------
-11-
<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> 6-MOS
<FISCAL-YEAR-END> SEP-27-1997
<PERIOD-END> MAR-29-1997
<CASH> 7,412
<SECURITIES> 0
<RECEIVABLES> 20,267
<ALLOWANCES> 0
<INVENTORY> 14,578
<CURRENT-ASSETS> 47,497
<PP&E> 69,697
<DEPRECIATION> 42,835
<TOTAL-ASSETS> 81,656
<CURRENT-LIABILITIES> 17,852
<BONDS> 0
0
0
<COMMON> 10,452
<OTHER-SE> 51,455
<TOTAL-LIABILITY-AND-EQUITY> 81,656
<SALES> 67,666
<TOTAL-REVENUES> 67,666
<CGS> 37,301
<TOTAL-COSTS> 37,301
<OTHER-EXPENSES> 552
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,463
<INCOME-TAX> 3,772
<INCOME-CONTINUING> 5,691
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,691
<EPS-PRIMARY> .52
<EPS-DILUTED> .52
</TABLE>
