================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the period ended
September 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from
____________________ To ____________________
Commission File Number: 1-8984
WEDGESTONE FINANCIAL
(Exact Name of Registrant as Specified in its Charter)
Massachusetts 04-26950000
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
5200 N. Irwindale Avenue
Suite 168
Irwindale, California 91706
(818) 338-3555
(Address, including zip code and telephone number, including
area code of registrant's principal executive offices)
---------------------------
Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports and (2) has been subject to filing requirements for the
past 90 days.
[X] Yes [ ] No
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[X] Yes [ ] No
Shares of Beneficial Interest Outstanding as of November 14, 1996: 21,885,668
================================================================================
<PAGE>
WEDGESTONE FINANCIAL & SUBSIDIARIES
Form 10-Q
September 30, 1996
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets - September 30, 1996 (unaudited) and
December 31, 1995........................................................................ 2
Consolidated Statements of Operations (unaudited) for
the Three Months and Nine Months Ended September 30, 1996 and 1995....................... 3
Consolidated Statements of Shareholders' Equity (unaudited) for
the Three Months and Nine Months Ended September 30, 1996 and 1995....................... 4
Consolidated Statements of Cash Flows (unaudited) for
the Three Months and Nine Months Ended September 30, 1996 and 1995....................... 5
Notes to Unaudited Consolidated Financial Statements..................................... 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................................ 8
PART II OTHER INFORMATION
Item 1 Legal Proceedings........................................................................10
Item 2 Changes in Securities....................................................................10
Item 3 Defaults upon Senior Securities..........................................................10
Item 4 Submission of Matters to a Vote of Security Holders......................................10
Item 5 Other Information........................................................................10
Item 6 Exhibits and Reports on Form 8-K.........................................................10
Signatures.................................................................................................11
</TABLE>
<PAGE>
<TABLE>
WEDGESTONE FINANCIAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of September 30, 1996 and December 31, 1995
(Amounts in Thousands - except share data)
<CAPTION>
(Unaudited)
ASSETS 1996 1995
------------- ---------
<S> <C> <C>
Current Assets:
Cash $ 122 $ 242
Accounts and other receivables - (net of allowances of $222 and $196
in 1996 and 1995, respectively) 7,106 5,146
Inventories 5,148 3,021
Prepaid expenses and other assets 413 372
Deferred income taxes 477 476
--------- ---------
Total Current Assets 13,266 9,257
--------- ---------
Notes receivable - net 84 84
Real estate acquired by foreclosure - net 1,086 1,091
Property, plant and equipment - net 3,079 3,248
Goodwill 141 173
Deferred income taxes 2,061 2,114
Net assets of discontinued operations --- 295
Other assets 320 343
--------- ---------
6,771 7,348
--------- ---------
Total Assets $ 20,037 $ 16,605
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 605 $ 1,406
Accounts payable 3,884 2,739
Accrued payroll and related expenses 634 501
Other accrued expenses 1,560 809
--------- ---------
Total Current Liabilities 6,683 5,455
Long-term debt 6,759 5,403
Net liabilities of discontinued operations --- ---
--------- ---------
Total Liabilities 13,442 10,858
Commitments and contingencies
Shareholders' Equity:
Shares of Beneficial Interest-par value
$1.00 per share: authorized - unlimited shares:
issued and outstanding - 21,885,668 shares 21,886 21,886
Additional paid-in capital 31,396 31,396
Accumulated deficit (46,687) (47,535)
--------- ---------
Total Shareholders' Equity 6,595 5,747
--------- ---------
Total Liabilities and Shareholders' Equity $ 20,037 $ 16,605
========= =========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
WEDGESTONE FINANCIAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
(Amounts in Thousands - except per share data)
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 11,441 $ 7,996 $ 33,063 $ 26,925
Cost of sales 7,401 5,559 21,526 18,090
-------- -------- -------- --------
Gross profit 4,040 2,437 11,537 8,835
Selling, general and administrative expenses 3,254 2,201 8,561 6,862
-------- -------- -------- --------
Operating income 786 236 2,976 1,973
Goodwill amortization 11 11 33 33
Interest expense 267 215 719 612
-------- -------- -------- --------
Income before taxes 508 10 2,224 1,328
Provision for income taxes 98 (58) 371 168
-------- -------- -------- --------
Income from continuing operations 410 68 1,853 1,160
Net income (loss) from discontinued operations
(net of income tax benefit of $408 and $135 in
1996 and 1995, respectively) --- 195 (667) (26)
Loss on disposition (net of income tax benefit of $367) --- --- (338) ---
-------- -------- --------- --------
Net income $ 410 $ 263 $ 848 $ 1,134
======== ======== ========= ========
Net income (loss) per share of Beneficial Interest:
Income from continuing operations $ .02 $ --- $ .09 $ .05
Net income (loss) from discontinued operations --- .01 (.05) ---
--------- --------- --------- ---------
Net income $ .02 $ .01 $ .04 $ .05
========= ========= ========= =========
Weighted average number of shares outstanding:
Shares of Beneficial Interest 21,886 21,886 21,886 21,790
========= ========= ========= =========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
WEDGESTONE FINANCIAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
(Amounts in Thousands)
<CAPTION>
Additional
Shares of Beneficial paid-in Accumulated
Interest capital deficit Total
-------------------- ---------- ----------- -----
Shares Amount
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 20,386 $20,386 $32,376 ($49,380) $3,382
Issuance of shares of beneficial interest to
secure third party debt guarantee 1,200 1,200 (840) 360
Issuance of shares of beneficial interest in
exchange for acquisition services 200 200 (140) 60
Issuance of shares of beneficial interest to
to pay off outstanding debt 100 100 100
Net Income 1,134 1,134
------ ------- -------- -------- ------
Balance at September 30, 1995 21,886 $21,886 $31,396 ($48,246) $5,036
====== ======= ======= ========= ======
Balance at December 31, 1995 21,886 $21,886 $31,396 ($47,535) $5,747
Net income 848 848
------ ------- ------- --------- ------
Balance at September 30, 1996 21,886 $21,886 $31,396 ($46,687) $6,595
====== ======= ======= ========= ======
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
WEDGESTONE FINANCIAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
(Amounts in Thousands)
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 410 $ 263 $ 848 $ 1,134
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 198 232 640 627
Net losses (income) on discontinued operations --- (195) 970 26
Losses (income) on disposal of assets (net) (2) --- 1 ---
Deferred income taxes --- --- 52 ---
Changes in operating assets and liabilities:
Accounts and other receivables 85 679 (1,960) (629)
Inventories (1,025) 255 (2,127) 264
Prepaid expenses and other current assets 85 (238) (42) (326)
Accrued payroll and related expenses 93 46 133 26
Other accrued expenses 83 70 76 49
Accounts payable 102 (607) 1,145 (158)
Other assets (35) 22 (36) (106)
-------- -------- --------- --------
Net cash provided by (used in) operating activities (6) 527 (300) 907
-------- -------- --------- --------
Cash Flows from Investing Activities:
Proceeds from sale of equipment 2 --- 217 ---
Proceeds from repayment of mortgage notes
receivable --- --- --- 1
Capital expenditures (249) (290) (596) (1,250)
Investment in real estate --- (32) 4 (84)
------- ------- ------- --------
Net cash used in investing activities (247) (322) (375) (1,333)
------- ------- ------- --------
Cash Flows from Financing Activities:
Borrowings (Repayment) of term debt (697) 50 (982) 80
Deferred financing fees paid --- (7) --- (86)
Net borrowings on revolving debt 616 (202) 1,537 441
------- ------- ------- ---------
Net cash provided by (used in) financing activities (81) (159) 555 435
------- ------- ------- ---------
Net increase (decrease) in cash (334) 46 (120) 9
Cash at beginning of period 456 142 242 179
------- ------- -------- --------
Cash at end of period $ 122 $ 188 $ 122 $ 188
======= ======= ======== ========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
WEDGESTONE FINANCIAL AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months and Six Months Ended September 30, 1996 and 1995
NOTE 1. Background and Basis of Presentation
Background - Wedgestone Financial ("Wedgestone" or the "Company") was
formed in 1980 as a real estate investment trust ("REIT") and, on August 9,
1991, filed for bankruptcy. Wedgestone's plan of reorganization (the "Plan")
became effective on August 3, 1992.
Under the guidance of its current management, Wedgestone operates in
two business segments, Automotive Products and Real Estate and Lending
activities. The automotive segment manufactures and distributes automotive
aftermarket products for the light duty truck market. Its principal products
include rear bumpers; tubular products such as grille guards, push bars, and
step bars; and various other related aftermarket products. The Company's
automotive products are marketed in traditional, original equipment service
parts and retail automotive aftermarkets. The automotive segment manufactures
and sells its products at two locations in California, and one in Minnesota.
Sales are also made from distribution centers in Texas and Utah.
Although its primary focus has shifted toward its Automotive Products
business segment, Wedgestone's Real Estate and Lending business segment has
continued since emerging from bankruptcy in 1992. Wedgestone owns three
properties that were acquired by foreclosure. The aggregate value, net of
reserves, is approximately $1,086,000 as of September 30, 1996. Wedgestone has
outstanding notes receivable on one property, net of reserves, of approximately
$84,000 as of September 30, 1996.
Acquisitions - Since May 1992, Wedgestone has acquired three
manufacturing operations. In June 1992, Wedgestone acquired St. James Automotive
Corp. ("St. James") in exchange for 6,795,220 shares of beneficial interest of
Wedgestone and accounted for this acquisition as a purchase. On November 18,
1994, Wedgestone acquired the Automotive Segment of Standun, Inc. ("Standun"),
which consisted of the Fey Automotive Products Division ("Fey") and Sigma
Plating Co., Inc. ("Sigma") in exchange for 6,795,223 shares of beneficial
interest of Wedgestone and the assumption of approximately $1,104,000 of
outstanding debt due to related parties of both Wedgestone and Standun, and
certain other liabilities. The shareholders of Standun owned, directly or
indirectly, approximately 48% of Wedgestone prior to the acquisition and, as a
result, this acquisition was accounted for as a "put-together" which is similar
to the pooling of interest method of accounting. On January 9, 1995 Wedgestone
acquired substantially all of the assets of Hercules Bumpers, Inc. ("Hercules").
The purchase price for the assets acquired was the assumption of certain debt
and other liabilities approximating $5.1 million. In addition, certain debt was
guaranteed jointly and severally by Charles W. Brady ("Brady"), the former
principal shareholder of Hercules, and Chattahoochee Leasing Corporation
("CLC"), a corporation controlled by Brady. In exchange for this guarantee,
Brady received a promissory note in the amount of $300,000 and 1,200,000 shares
of beneficial interest of Wedgestone. In consideration for an agreement to pay a
liability of Hercules, CLC received a promissory note for $100,000 which was
secured by 100,000 shares of beneficial interest of Wedgestone. In June, 1995,
the Company exercised its right under the CLC Agreement and acquired the note by
issuing these shares to CLC. (See Note 3 -- Discontinued Operations)
Basis of Presentation and Principles of Consolidation - The
accompanying consolidated financial statements include the operations of
Wedgestone and its wholly owned subsidiaries and give retroactive effect to the
discontinued operations of Hercules (see Note 3). All significant intercompany
transactions have been eliminated in consolidation.
The financial statements included in this Form 10-Q have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. 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 such
rules and regulations. These financial statements should be read in conjunction
with the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, and Form 8-K's issued March 5, 1996 and April 18, 1996.
<PAGE>
The results of operations for the interim periods shown in this report
are not necessarily indicative of results to be expected for the fiscal year. In
the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim periods
a fair statement of such operations.
Forward Looking Information - Information contained in this Form 10-Q
contains "forward-looking statements" within the meaning of the private
Securities Litigation Reform Act of 1995, which can be identified by the use of
forward-looking terminology such as "may", "will", "expect", "plan",
"anticipate", "estimate" or "continue" or the negative thereof or other
variations thereon or comparable terminology. There are certain important
factors that could cause results to differ materially from those anticipated by
some of these forward-looking statements. Investors are cautioned that all
forward-looking statements involve risks and uncertainty. The factors, among
others, that could cause actual results to differ materially include: pricing
and merchandising policies from the major automotive manufacturers; the
Company's ability to execute its business plan; the acceptance of the Company's
merchandising strategies by its target customers, particularly dealers;
continuity of a relationship with or sales to major auto dealers; competitive
pressures on sales and pricing; and increases in other costs which cannot be
recovered through improved pricing of merchandise.
Income Per Share of Beneficial Interest - Income per share of
beneficial interest is calculated based on weighted average outstanding shares
of beneficial interest.
NOTE 2. Inventories
Inventories consist of the following: (In Thousands
September 30, December 31,
1996 1995
------------- ------------
Finished goods $ 2,843 $1,480
Work in progress 1,251 893
Raw materials 1,200 785
------- ------
5,294 3,158
Less allowances (146) (137)
------- ------
$ 5,148 $3,021
======= ======
NOTE 3. Discontinued Operations
On March 5, 1996, the Company discontinued operations of its Hercules
manufacturing facility in Pelham, Georgia. Hercules manufactured and sold
bumpers under dealer direct and dealer oriented distributor programs. On April
18, 1996, the Board of Directors authorized and completed the sale of the
Company's stock ownership in Hercules to MBC Corporation for nominal
consideration pursuant to a Stock Purchase Agreement. Both the closure of the
Pelham facility and the subsequent sale of the stock of Hercules have been
recorded as a disposal of a segment of business.
The net assets (liabilities) of discontinued operations have been
segregated in the December 31, 1995 Consolidated Balance Sheets as follows: (In
Thousands)
December 31,
1995
------------
Net Assets (Liabilities)
Current Assets $ 2,480
Current Liabilities (1,749)
Net Property Plant and Equipment 1,447
Other Assets 1,506
Noncurrent Liabilities (3,045)
-------
639
Intercompany Payable
with Wedgestone Automotive Corp (344)
--------
$ 295
========
<PAGE>
Operating results of discontinued operations have been reclassified
from amounts previously reported and have been reported separately in the
consolidated statements of earnings. Net sales from discontinued operations from
January 1, 1996 through the sale date of April 18, 1996, were $1,325,000, and
$8,698,000 for the nine months ended September 30, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Wedgestone Financial (the "Company") is primarily engaged in the
business of manufacturing and distributing automotive products for the light
duty truck aftermarket. The Company has two plants in California and one in
Minnesota. It markets its products under various tradenames including Fey,
Westin and Tuffbar.
On April 18, 1996, the Company sold the stock of Hercules Automotive
Products, Inc. to MBC Corporation, a Minnesota corporation. Hercules, whose
products were primarily marketed through dealer oriented programs, had failed to
meet expectations since being acquired in January 1995. The results of
operations discussed below do not include the results of the discontinued
Hercules business segment for the periods presented.
Results of Operations
The light duty truck market continued to grow in the third quarter of
1996 compared to the same period in 1995. Total Company sales for this period
grew by 43% over the same period in 1995. Growth in the sales of Westin step
bars and grille guards represented 57% of the total sales increase for the
quarter reflecting the market's continued acceptance of the Westin line of
tubular accessories.
Three Months Ended September 30, 1996 compared to Three Months Ended September
30, 1995
Revenues: Net sales from continuing operations increased 43% to
$11,441,000 for the third quarter of 1996 compared to $7,996,000 for the same
period in 1995. Sales of Westin tubular products accounted for 57% or $1,971,000
of this increase.
Gross Profits: Gross profits increased 66% to $4,040,000 or 35% of
sales for the period compared to $2,437,000 or 30% of sales for the same period
in 1995. The increase in margin percentage in 1996 over 1995 is attributable to
production efficiencies resulting from greater sales volumes.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased 48% to $3,254,000 for the period compared to
$2,201,000 in 1995. Distribution and selling costs incurred on additional sales
volumes accounted for 44% or $461,000 of this increase. Advertising and
promotion expenses accounted for $254,000 of the increase and expenditures for
legal, audit, insurance and other management costs accounted for the remainder.
Interest Expense: Interest expense increased 24% to $267,000 for the
period compared to $215,000 in 1995. This increase was due to financing the
growth in working capital required to meet continuing sales growth.
Net Income from Continuing Operations: Net income from continuing
operations increased 503% to $410,000 for the third quarter 1996 compared to
$68,000 for the same period in 1995.
Nine Months Ended September 30, 1996 to Nine Months Ended September 30, 1995
Revenues: Net sales from continuing operations increased 23% to
$33,063,000 for the nine months ended September 30, 1996 compared to $26,925,000
for the same period in 1995. Sales of Westin tubular products accounted for 77%
or $4,719,000 of this increase.
Gross Profits: Gross profits increased 31% to $11,537,000 or 35% of
sales for the nine month period compared to $8,835,000 or 33% of sales for the
same period in 1995. The increase in margin percentage in 1996 over 1995 is
attributable to production efficiencies resulting from greater sales volumes.
<PAGE>
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased 25% to $8,561,000 for the nine month period
compared to $6,862,000 for 1995. Distribution, selling and promotional costs
incurred to achieve rising sales volumes were 72% of this increase or
$1,227,000. Administrative costs totaling $472,000 made up the balance of this
increase. Included in administrative expense increases were audit and legal fees
totaling $120,000. Insurance and other management costs comprise the balance of
the increase in administrative costs.
Interest Expense: Interest expense increased 17% to $719,000 for the
nine month period compared to $612,000 in 1995. This increase was due to
financing the working capital growth required to meet the increase in second
quarter 1996 sales.
Net Income from Continuing Operations: Net income from continuing
operations increased 60% to $1,853,000 for the nine month period compared to
$1,160,000 in 1995. This increase was primarily due to increased volumes and a
more favorable product mix.
Liquidity and Capital Resources
To date, Wedgestone has financed its business activities through cash
flow from operations. Additional debt has been incurred primarily for working
capital and acquisitions.
For the nine months ended September 30, 1996, cash flows from
operations totaling $2,511,000 were supplemented by additional advances from
trade creditors totaling $1,354,000. The Company invested $4,165,000 in working
capital including $1,960,000 in trade receivables and $2,127,000 in inventories.
This resulted in net cash used in operating activities of $300,000. Cash used in
operating activities, additional investments in equipment totaling $596,000 and
repayments of long term debt totaling $982,000 were offset by $1,537,000 in
additional borrowings under the Company's revolving line of credit and proceeds
from the sale of equipment and other property totaling $221,000, resulting in a
net decrease in cash of $120,000 compared to a $9,000 increase for the same
period in 1995.
Wedgestone has borrowings outstanding from a related party totaling
$165,000 (the "Rockaway Loan") as of September 30, 1996, which mature in
December 1996. Under this credit agreement, the borrowings are collateralized by
substantially all of the assets of the Company.
In connection with the acquisition of the Automotive Segment of
Standun, Inc., Wedgestone, through certain wholly-owned subsidiaries, entered
into a $7.5 million revolving credit line with a financial institution which
expires in 1997. The credit line provides for borrowings (minimum borrowings of
$4 million are required) based on a percentage of inventory and accounts
receivable. Interest on the outstanding borrowings accrued at prime, plus 2.5%.
The agreement also includes equipment term loans approximating $1.0 million at
September 30, 1996. The agreement contains certain covenants which require the
maintenance of minimum working capital and equity.
To the extent that Wedgestone expands its operations and makes
additional acquisitions, it will need to obtain additional funding from
institutional lenders and other sources. There is no assurance such funding will
be available to Wedgestone on favorable terms, if at all. Wedgestone's ability
to use equity in obtaining funding may be limited by its desire to preserve
certain tax atributes including its net operating loss carry forwards.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
A complaint was filed against Fey, a wholly-owned subsidiary of
Wedgestone Automotive Corp ("WAC"), on September 10, 1996, in the Superior Court
of Mitchell County in the state of Georgia, by Mitchell Real Estate Partnership,
C. Ray Council, Hal A. Council, Max R. Council, Rex A. Council, June Council
Hunter and Gay Council Moring (collectively, "Mitchell").
In its complaint, Mitchell asserts breach of contract and fraud claims
against the defendants relating to a Marketing Agreement between Mitchell, Fey
and HAP regarding the marketing of Hercules products, alleging among other
things, that Fey has impeded Mitchell's ability to earn commissions under the
Marketing Agreement. Mitchell seeks monetary damages in excess of $4 million.
Fey and the other defendants have removed the case to the United States
District Court for the Middle District of Georgia. Fey and the other defendants
further intend to file shortly a motion to dismiss the case. Mitchell has agreed
to extend the period for filing a responsive pleading pending the resolution of
the procedural issues. Additional named defendants are John C. Shaw, Chairman
and trustee of the Company, Jeffrey S. Goldstein, a trustee and the President of
the Company, James J. Pinto, the President of PFG Corporation, which holds in
excess of 5% of the Company's shares, and David L. Sharp, the Chief Executive
Officer of WAC.
This litigation is in the initial stages and no discovery has taken
place. Fey and the other defendants believe Mitchell's claims are without merit
and intend to vigorously contest the Mitchell complaint and pursue counterclaims
and affirmative defenses. As previously reported in its Form 10-Q for the period
ended June 30, 1996, the Company has taken a reserve for costs arising from or
relating to the closure of the Hercules facility. Management believes that this
reserve should also be sufficient for costs associated with the defense of this
matter.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
<PAGE>
PART II
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Wedgestone Financial
Date: November 14, 1996 By: /s/ Jeffrey S. Goldstein
-------------------------------
President and Treasurer
(Principal Executive and Financial
Officer)
The name "Wedgestone Financial" (Formerly Wedgestone Realty Investors Trust) is
the designation of the Trustees under a Declaration of Trust dated March 12,
1980, as amended, and in accordance with such Declaration of Trust notice is
hereby given that all persons dealing with Wedgestone Financial by so acting
acknowledge and agree that such persons must look solely to the Trust property
for the enforcement of any claims against Wedgestone Financial and that neither
Trustees, Officers, employees, agents nor shareholders assume any personal
liability for claims against the Trust or obligations entered into on behalf of
Wedgestone Financial, and that respective properties shall not be subject to
claims of any other person in respect of any such liability.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000315621
<NAME> WEDGESTONE FINANCIAL
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 122
<SECURITIES> 0
<RECEIVABLES> 7,106
<ALLOWANCES> 222
<INVENTORY> 5,148
<CURRENT-ASSETS> 13,266
<PP&E> 11,173
<DEPRECIATION> 8,094
<TOTAL-ASSETS> 20,037
<CURRENT-LIABILITIES> 6,683
<BONDS> 0
<COMMON> 21,886
0
0
<OTHER-SE> (15,291)
<TOTAL-LIABILITY-AND-EQUITY> 20,037
<SALES> 33,063
<TOTAL-REVENUES> 33,063
<CGS> 21,526
<TOTAL-COSTS> 21,526
<OTHER-EXPENSES> 8,594
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 719
<INCOME-PRETAX> 2,224
<INCOME-TAX> 371
<INCOME-CONTINUING> 1,853
<DISCONTINUED> (1,005)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 848
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
