<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 28, 1996 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 25, 1997 there were 10,442,179 shares of the Registrant's common
stock outstanding.
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PART I. FINANCIAL INFORMATION
WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 28, 1996 and September 28, 1996
ASSETS (Amounts in thousands)
Unaudited
CURRENT ASSETS 12/28/96 9/28/96
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Cash and short-term securities $ 9,285 $ 10,050
Accounts receivable 19,190 18,777
Inventories (Note 3) 14,623 12,707
Prepaid expenses 5,457 5,516
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Total current assets $ 48,555 $ 47,050
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OTHER ASSETS $ 432 $ 557
PROPERTY, PLANT & EQUIPMENT, at cost $ 66,244 $ 64,499
Less - Accumulated depreciation (41,993) (40,834)
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Net property, plant and equipment $ 24,251 $ 23,665
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GOODWILL $ 7,033 $ 7,113
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TOTAL ASSETS $ 80,271 $ 78,385
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-------- --------
LIABILITIES & STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
Accounts payable $ 6,001 $ 6,162
Accrued expenses 9,771 11,254
Income taxes 2,333 1,313
Portion of long-term debt payable within one year - -
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Total current liabilities $ 18,105 $ 18,729
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DEFERRED INCOME TAXES $ 1,897 $ 1,779
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LONG-TERM DEBT $ - $ -
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STOCKHOLDERS' INVESTMENT: (Note 5)
Preferred stock $ - $ -
Common stock 10,436 10,419
Additional paid-in capital 1,786 1,571
Cumulative translation adjustment (330) (616)
Retained earnings 48,377 46,503
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Total stockholders' investment $ 60,269 $ 57,877
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TOTAL LIABILITIES & STOCKHOLDERS' INVESTMENT $ 80,271 $ 78,385
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-------- --------
See accompanying notes to condensed consolidated financial statements.
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WOODHEAD INDUSTRIES, INC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, unaudited)
Three Months Ended
----------------------
12/28/96 12/30/95
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NET SALES $ 32,163 $ 29,968
COST OF SALES 17,807 16,791
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GROSS PROFIT $ 14,356 $ 13,177
% of Net Sales 44.6% 44.0%
OPERATING EXPENSES 9,736 9,236
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INCOME FROM OPERATIONS $ 4,620 $ 3,941
OTHER EXPENSES, NET 261 432
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INCOME BEFORE INCOME TAXES $ 4,359 $ 3,509
PROVISION FOR INCOME TAXES $ 1,755 $ 1,306
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NET INCOME $ 2,604 $ 2,203
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-------- --------
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE (Note 4) $ 0.24 $ 0.20
-------- --------
-------- --------
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 10,926 10,970
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-------- --------
DIVIDENDS PER SHARE $ 0.070 $ 0.065
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-------- --------
See accompanying notes to condensed consolidated financial statements.
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WOODHEAD INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Amounts in thousands - unaudited)
Three Months Ended
----------------------
12/28/96 12/30/95
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Cash Flows from Operating Activities:
Net income for the period $ 2,604 $ 2,203
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and amortization 1,216 1,208
Change in Assets and Liabilities:
Decreases/(Increases) in:
Accounts receivable (413) 1,918
Inventories (1,916) (1,516)
Prepaid expenses 59 (113)
Other assets 4 11
Increases/(Decreases) in:
Accounts payable (161) (1,448)
Accrued expenses (1,483) (1,716)
Income taxes 1,020 683
Deferred income taxes 118 20
-------- --------
Net cash flows provided by operating activities $ 1,048 $ 1,250
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Cash Flows from Investing Activities:
Purchases of property, plant & equipment $ (1,601) $ (1,067)
Retirements or sales of property, plant and equipment 22 36
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Net cash flows used for investing activities $ (1,579) $ (1,031)
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Cash Flows from Financing Activities:
Payments on short-term debt $ - $ ( 29)
Sales of stock 232 208
Dividend payments (730) (675)
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Net cash flows provided by financing activities $ (498) $ (496)
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Effect of exchange rates $ 264 $ (197)
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Net (Decrease)/Increase in Cash & short-term securities $ (765) $ (474)
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 10 $ 12
Income taxes $ 290 $ 546
See accompanying notes to condensed consolidated financial statements.
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WOODHEAD INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 28,1996
(1) The condensed consolidated balance sheets at December 28, 1996, and
September 28, 1996, and the condensed consolidated statements of income and
cash flows for the three-month periods ended December 28, 1996, and
December 30, 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 December 28,
1996, and December 30, 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 material, work-in-process, and
finished goods inventories at December 28, 1996, and September 28, 1996, is
as follows:
(in thousands)
12/28/96 9/28/96
-------- -------
Raw materials $ 9,912 $ 8,917
Work-in-process and finished goods 9,524 8,567
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Inventories before LIFO reserve 19,436 17,484
Less: Reserve to reduce to LIFO (4,813) (4,777)
-------- -------
Inventories, net $14,623 $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
(10,926,000 for the quarter ended December 28, 1996 and 10,970,000 for the
quarter ended December 30, 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 28, 1996 and September 28,
1996 were 10,436,000 and 10,419,000, respectively.
-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 $2.2 million during the quarter ended December
28, 1996 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 14.5% from 14.1% and return on equity
decreased to 19.7% from 20.0% for the comparable 12-month periods ending
December 28, 1996 and December 30, 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
First quarter net sales rose 7.3% to $32.2 million from $30.0 million
reported for the same period last year. Strong domestic sales, supported by
aggressive marketing programs and new product introductions, rose 9.8%, while
international sales grew a modest 1.7% over the first quarter of fiscal 1996 and
constituted 29% of the total sales for the quarter just ended. The backlog of
unfilled orders was $10.4 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% when compared to the same period one year ago.
Gross profit of $14.4 million was $1.2 million or 8.9% greater than the
same quarter of last year. Gross profit margins increased to 44.6% from 44.0%,
reflecting the effect of richer mix of higher-margin products.
Operating expenses increased 5.4% to $9.7 million from $9.2 million in the
first quarter of fiscal 1996. As a percent of sales, operating expenses
decreased to 30.3% from 30.8% attributable to the company's continued attention
to cost controls while maintaining its planned expansion of international sales
and new product development. Other expenses were $.3 million for the current
quarter.
Net income surpassed last year's first quarter record by 18.2% and on a per
share basis exceeded the like period of fiscal 1995 by 20.0%, rising from $.20
to $.24 per share. This improvement reflects solid sales growth combined with
improved gross profit margins along with a higher effective tax rate.
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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 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.
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<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
(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 December 28, 1996.
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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 2/5/97
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Robert G. Jennings Date
Vice President - Finance
(Chief Financial Officer)
/s/ Joseph P. Nogal 2/5/97
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Joseph P. Nogal Date
Treasurer/Controller
(Chief Accounting Officer)
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<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
12/28/96
--------------------
Fully
Primary Diluted
------- -------
Net Income $ 2,604 $ 2,604
------- -------
------- -------
Weighted average
common shares 10,429 10,429
Incremental shares issuable
for stock options outstanding
(Treasury stock method) 497 515
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Common and Common
Equivalent Shares 10,926 10,944
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------- -------
Earnings per common and common
equivalent shares $ 0.24 $ 0.24
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<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-27-1997
<PERIOD-END> DEC-28-1996
<CASH> 9,285
<SECURITIES> 0
<RECEIVABLES> 19,190
<ALLOWANCES> 0
<INVENTORY> 14,623
<CURRENT-ASSETS> 48,555
<PP&E> 66,244
<DEPRECIATION> 41,993
<TOTAL-ASSETS> 80,271
<CURRENT-LIABILITIES> 18,105
<BONDS> 0
0
0
<COMMON> 10,436
<OTHER-SE> 49,833
<TOTAL-LIABILITY-AND-EQUITY> 80,271
<SALES> 32,163
<TOTAL-REVENUES> 32,163
<CGS> 17,807
<TOTAL-COSTS> 17,807
<OTHER-EXPENSES> 261
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,359
<INCOME-TAX> 1,755
<INCOME-CONTINUING> 2,604
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,604
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
