<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 28, 1997 Commission File Number 0-5971
WOODHEAD INDUSTRIES, INC.
- --------------------------------------------------------------------------------
DELAWARE 36-1982580
- --------------------------------------------------------------------------------
(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
- --------------------------------------------------------------------------------
(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 26, 1997 there were 10,503,112 shares of the Registrant's common stock
outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 28, 1997 and September 28, 1996
<TABLE>
<CAPTION>
ASSETS (Amounts in thousands)
Unaudited
CURRENT ASSETS 6/28/97 9/28/96
--------- ---------
<S> <C> <C>
Cash and short-term securities............................. $ 8,331 $10,050
Accounts receivable........................................ 19,714 18,777
Inventories (Note 3)....................................... 16,171 12,707
Prepaid expenses........................................... 4,827 5,516
--------- ---------
Total current assets..................................... $49,043 $47,050
--------- ---------
OTHER ASSETS................................................. $ 314 $ 557
PROPERTY, PLANT & EQUIPMENT, at cost......................... $71,930 $64,499
Less: Accumulated depreciation............................ (43,709) (40,834)
--------- ---------
Net property, plant and equipment.......................... $28,221 $23,665
--------- ---------
GOODWILL..................................................... $ 6,841 $ 7,113
TOTAL ASSETS................................................. $84,419 $78,385
--------- ---------
--------- ---------
LIABILITIES & STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable........................................... $ 5,203 $ 6,162
Accrued expenses........................................... 12,526 11,254
Income taxes............................................... 234 1,313
Portion of long-term debt payable within one year.......... - -
--------- ---------
Total current liabilities............................... $17,963 $18,729
--------- ---------
DEFERRED INCOME TAXES........................................ $ 1,896 $ 1,779
--------- ---------
LONG-TERM DEBT............................................... $ - $ -
--------- ---------
STOCKHOLDERS' INVESTMENT: (Note 5)
Preferred stock............................................ $ - $ -
Common stock............................................... 10,499 10,419
Additional paid-in capital................................. 2,136 1,571
Cumulative translation adjustment.......................... (1,048) (616)
Retained earnings.......................................... 52,973 46,503
--------- ---------
Total stockholders' investment........................... $64,560 $57,877
--------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT................. $84,419 $78,385
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-2-
<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
------------------------ -------------------------
6/28/97 6/29/96 6/28/97 6/29/96
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
NET SALES..................................................... $35,495 $30,557 $103,161 $92,200
COST OF SALES................................................. 19,581 16,829 56,882 51,250
--------- --------- ---------- ---------
GROSS PROFIT.................................................. $15,914 $13,728 $46,279 $40,950
% of Net Sales............................................. 44.8% 44.9% 44.9% 44.4%
OPERATING EXPENSES............................................ 10,384 9,277 30,734 27,874
--------- --------- ---------- ---------
INCOME FROM OPERATIONS.................................... $ 5,530 $ 4,451 $15,545 $13,076
OTHER (INCOME)/EXPENSES, NET.................................. 273 (163) 825 839
--------- --------- ---------- ---------
INCOME BEFORE INCOME TAXES................................. $ 5,257 $ 4,614 $14,720 $12,237
PROVISION FOR INCOME TAXES.................................... $ 2,076 $ 1,717 $ 5,848 $ 4,522
--------- --------- ---------- ---------
NET INCOME.................................................... $ 3,181 $ 2,897 $ 8,872 $ 7,715
--------- --------- ---------- ---------
--------- --------- ---------- ---------
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE (Note 4).... $ 0.29 $ 0.26 $ 0.81 $ 0.70
--------- --------- ---------- ---------
--------- --------- ---------- ---------
COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING............... 11,054 10,947 10,979 10,954
--------- --------- ---------- ---------
--------- --------- ---------- ---------
DIVIDENDS PER SHARE........................................... $ 0.080 $ 0.070 $ 0.230 $ 0.200
--------- --------- ---------- ---------
--------- --------- ---------- ---------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE>
WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Amounts in thousands - unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
----------------------
6/28/97 6/29/96
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income for the period.................................. $ 8,872 $ 7,715
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization............................ 3,795 3,689
Change in Assets and Liabilities:
Decreases/(Increases) in:
Accounts receivable.................................... (937) 1,202
Inventorie............................................. (3,464) (956)
Prepaid expenses....................................... 689 249
Other assets........................................... (62) -
Increases/(Decreases) in:
Accounts payable....................................... (959) (2,262)
Accrued expenses....................................... 1,272 (1,475)
Income taxes........................................... (1,079) (833)
Deferred income taxes.................................. 117 20
--------- ---------
Net cash flows provided by operating activities............... $ 8,244 $ 7,349
--------- ---------
Cash Flows from Investing Activities:
Purchases of property, plant & equipment................... $(8,275) $(3,849)
Retirements or sales of property, plant and equipment...... 43 714
--------- ---------
Net cash flows used for investing activities.................. $(8,232) $(3,135)
--------- ---------
Cash Flows from Financing Activities:
Payments on short-term debt................................ $ - $ (69)
Sales of stock............................................. 645 246
Dividend payments.......................................... (2,402) (2,077)
--------- ---------
Net cash flows used for financing activities.................. $(1,757) $(1,900)
--------- ---------
Effect of exchange rates...................................... $ 26 $ (258)
--------- ---------
Net (Decrease) Increase in Cash & short-term securities....... $(1,719) $ 2,056
--------- ---------
--------- ---------
Supplemental disclosures of cash flow information:
- --------------------------------------------------
Cash paid during the period for:
Interest................................................... $ 30 $ 32
Income taxes............................................... $ 6,374 $ 4,413
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
WOODHEAD INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 28, 1997
(1) The condensed consolidated balance sheets at June 28, 1997, and
September 28, 1996, and the condensed consolidated statements of
income and cash flow for the periods ended June 28, 1997, and
June 29, 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 June
28, 1997, and June 29, 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 June 28,
1997, and September 28, 1996, is as follows:
(in thousands)
6/28/97 9/28/96
------- -------
Raw materials........................ $10,753 $ 8,917
Work-in-process and finished goods... 10,331 8,567
------- -------
Inventories before LIFO reserve.... 21,084 17,484
Less: Reserve to reduce to LIFO...... (4,913) (4,777)
------- -------
Inventories, net..................... $16,171 $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 (11,054,000 and 10,979,000 for the quarter
and nine months ended June 28, 1997, respectively, 10,947,000 and
10,954,000 for the quarter and nine months ended June 29, 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 June 28, 1997 and September 28, 1996 were
10,499,000 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-
<PAGE>
WOODHEAD INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Working capital increased by $2.8 million for the first nine
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 remained
at 14.9%, and return on equity decreased to 19.7% from 20.4% for the
comparable 12-month periods ending June 28, 1997 and June 29, 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
Third quarter net sales rose 16.0% to $35.5 million from $30.6
million reported for the same period last year. Domestic sales
increased 20.8% during the quarter with the highest growth rates
occurring in the molded connector and ergonomic workstation product
lines, while international sales grew 5.6% over the third quarter of
fiscal 1996 and constituted 28% of the sales for the quarter just
ended. The backlog of unfilled orders was $10.1 million compared with
$8.6 million at fiscal 1996 year-end and $8.4 million reported one
year ago. Selling prices increased less than 1.0% when compared to
the same period one year ago.
Gross profit of $15.9 million was $2.2 million or 16.0% greater
than the same quarter of last year. Gross profit margins decreased
slightly to 44.8% from 44.9%, reflecting the effect of material and
labor cost increases partially offset by on-going cost reduction
programs.
Operating expenses increased 11.8% to $10.4 million from $9.3
million in the third quarter of fiscal 1997 due to the Company's
continued investment in marketing and engineering programs and the
added costs of operating its new subsidiary in Japan. As a percent of
sales, operating expenses decreased to 29.3% from 30.4%.
Other (income)/expenses of $.3 million were $.5 million more than
the same period a year ago. The increase was due to the recognition
of a favorable non-recurring adjustment last year of $.8 million.
This adjustment resulted from a 1991 jury verdict being overturned in
the Company's favor upon appeal.
Net income exceeded last year's third quarter by 9.8% and on a
per share basis surpassed the same period of fiscal 1996 by 11.5%
rising to $.29 per share from $.26 per share. This increase reflects
the impact of the sales growth offset by the adjustment to 0ther
(income)/expenses and a higher effective tax rate of 39.5% vs. 37.2%
in 1996.
-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 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 has investigated and has remediated the soils in this area
and believes that it is an additional source of contamination of
groundwater, both on-site and off-site. In addition, the
investigation of the site indicates that the groundwater contaminants
have migrated off-site. The Company is implementing a groundwater
remediation system for the on-site contamination. The Company is
currently discussing various remediation alternatives for the off-site
groundwater 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 estimates that a minimum of $859,000 of
investigation and remediation expenses remain to be incurred, both
on-site and off-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. 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 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 June 28, 1997.
-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 8/11/97
-------------------------- ---------
Robert G. Jennings Date
Vice President - Finance
(Chief Financial Officer)
/s/ Joseph P. Nogal 8/11/97
-------------------------- ---------
Joseph P. Nogal Date
Treasurer/Controller
(Chief Accounting Officer)
-9-
<PAGE>
EXHIBIT 11
WOODHEAD INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
(Amounts in thousands, except per share data - unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
6/28/97 6/28/97
------------------ -----------------
Fully Fully
Primary Diluted Primary Diluted
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Income............................ $ 3,181 $ 3,181 $ 8,872 $ 8,872
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average
common shares....................... 10,474 10,474 10,450 10,450
Incremental shares issuable
for stock options outstanding
(Treasury stock method)............. 580 643 529 643
-------- -------- -------- --------
Common and Common
Equivalent Shares................... 11,054 11,117 10,979 11,093
-------- -------- -------- --------
-------- -------- -------- --------
Earnings per common and common
equivalent shares................... $0.29 $0.29 $0.81 $0.80
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
-10-
<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-28-1997
<PERIOD-END> JUN-28-1997
<CASH> 8,331
<SECURITIES> 0
<RECEIVABLES> 19,714
<ALLOWANCES> 0
<INVENTORY> 16,171
<CURRENT-ASSETS> 49,043
<PP&E> 71,930
<DEPRECIATION> 43,709
<TOTAL-ASSETS> 84,419
<CURRENT-LIABILITIES> 17,963
<BONDS> 0
0
0
<COMMON> 10,499
<OTHER-SE> 54,061
<TOTAL-LIABILITY-AND-EQUITY> 84,419
<SALES> 103,161
<TOTAL-REVENUES> 103,161
<CGS> 56,882
<TOTAL-COSTS> 56,882
<OTHER-EXPENSES> 825
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,720
<INCOME-TAX> 5,848
<INCOME-CONTINUING> 8,872
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,872
<EPS-PRIMARY> .81
<EPS-DILUTED> .80
</TABLE>
