FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: June 30, 2000
Commission File Number: 0-18393
WINLAND ELECTRONICS, INC.
(Exact name of small business issuer as specified in its charter)
Minnesota 41-0992135
(state or other juris- (I.R.S. Employer
diction of incorporation) Identification No.)
1950 Excel Drive, Mankato, Minnesota 56001
(Address of principal executive offices)(zip code)
Registrant's telephone number, including area code:
(507) 625-7231
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 Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of August 10, 2000 the
issuer had 2,946,464 shares of Common Stock, $.01 par value, outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No x
<PAGE>
PART I-FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
WINLAND ELECTRONICS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS June 30, December 31,
2000 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 49,445 $ 40,017
Accounts Receivable, Net 2,725,733 2,531,872
Income Tax Receivable 15,268 19,000
Inventories 4,019,703 3,453,778
Prepaid Expenses 82,343 58,591
Deferred Taxes 112,800 112,800
------------ ------------
Total Current Assets 7,005,292 6,216,058
------------ ------------
Patent and Trademarks, net of amortization 3,235 3,971
------------ ------------
Property and Equipment, at cost:
Land and Land Improvements 272,901 272,901
Building 2,982,988 2,980,268
Machinery and Equipment 3,354,258 3,234,166
Data Processing Equipment 1,368,403 1,305,425
Office Furniture and Equipment 371,663 367,898
------------ ------------
Total 8,350,213 8,160,658
Less Accumulated Depreciation (2,938,542) (2,522,088)
------------ ------------
Property and Equipment, Net of Depreciation 5,411,671 5,638,570
------------ ------------
TOTAL ASSETS $ 12,420,198 $ 11,858,599
------------ ------------
</TABLE>
<PAGE>
WINLAND ELECTRONICS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY June 30, December 31,
2000 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
Note Payable, Bank $ 1,883,501 $ 1,518,501
Current Maturities of Long Term Debt 677,783 656,671
Accounts Payable 1,552,335 1,091,964
Accrued Expenses:
Compensation 348,723 337,846
Other 62,724 109,583
------------ ------------
Total Current Liabilities 4,525,066 3,714,565
------------ ------------
LONG TERM LIABILITIES:
Deferred Revenue 174,780 202,161
Long Term Debt, Less Current Maturities 2,868,360 3,238,995
Deferred Taxes 166,000 166,000
------------ ------------
Total Long Term Liabilities 3,209,140 3,607,156
------------ ------------
SHAREHOLDERS' EQUITY:
Common Stock 29,465 29,016
Additional Paid-In Capital 2,236,266 2,169,750
Retained Earnings 2,420,261 2,338,112
------------ ------------
Total Shareholders' Equity 4,685,992 4,536,878
------------ ------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $12,420,198 $11,858,599
------------ ------------
</TABLE>
<PAGE>
WINLAND ELECTRONICS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
2000 1999
----------- -----------
<S> <C> <C>
NET SALES $ 5,104,968 $ 4,654,013
COST OF GOODS SOLD 4,082,014 3,658,570
----------- -----------
Gross Profit 1,022,954 995,443
----------- -----------
OPERATING EXPENSES:
General and Administrative 417,167 421,582
Marketing 160,365 99,993
Research and Development 259,860 200,863
----------- -----------
Total Operating Expenses 837,392 722,438
----------- -----------
OPERATING INCOME 185,562 273,005
----------- -----------
INTEREST EXPENSE (105,581) (109,246)
OTHER INCOME (EXPENSE), NET 30,450 32,700
----------- -----------
(75,131) (76,546)
----------- -----------
NET INCOME BEFORE INCOME TAXES 110,431 196,459
----------- -----------
PROVISION FOR INCOME TAXES (44,584) (75,789)
----------- -----------
NET INCOME $ 65,847 $ 120,670
BASIC EARNINGS PER SHARE $ 0.02 $ 0.04
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 2,939,063 2,894,734
DILUTED EARNINGS PER SHARE $ 0.02 $ 0.04
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING, INCLUDING POTENTIALLY
DILUTIVE SHARES 3,007,551 2,992,579
</TABLE>
<PAGE>
WINLAND ELECTRONICS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
------------ ------------
<S> <C> <C>
NET SALES: $ 9,322,658 $ 11,269,061
COST OF GOODS SOLD 7,479,395 8,751,509
------------ ------------
Gross Profit 1,843,263 2,517,552
OPERATING EXPENSES:
General and Administrative 747,510 891,693
Marketing 305,189 190,099
Research and Development 500,873 372,304
------------ ------------
Total Operating Expenses 1,553,572 1,454,096
------------ ------------
OPERATING INCOME 289,691 1,063,456
------------ ------------
OTHER INCOME (EXPENSE), NET 58,687 61,858
INTEREST EXPENSE (212,045) (225,327)
------------ ------------
(153,358) (163,469)
------------ ------------
NET INCOME BEFORE INCOME TAXES 136,333 899,987
------------ ------------
PROVISION FOR INCOME TAXES (54,184) (336,094)
------------ ------------
NET INCOME $ 82,149 $ 563,893
BASIC EARNINGS PER SHARE $ 0.03 $ 0.20
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 2,925,456 2,891,594
DILUTED EARNINGS PER SHARE $ 0.03 $ 0.19
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING, INCLUDING POTENTIALLY
DILUTIVE SHARES 3,025,982 2,989,439
</TABLE>
<PAGE>
WINLAND ELECTRONICS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2000 JUNE 30, 1999
------------ -----------
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $ 82,149 $ 563,893
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and Amortization 417,540 363,997
Loss on Disposal of Equipment 350 --
Deferred Taxes -- (21,400)
Changes in Assets and Liabilities
Accounts Receivable (193,861) 616,957
Income Taxes Recievable 3,732 47,454
Inventories (565,925) (197,789)
Prepaid Expenses (23,752) (13,561)
Accounts Payable 460,371 (191,872)
Accrued Expenses and Deferred Revenue (63,363) 100,513
Income Taxes Payable -- (22,148)
------------ -----------
Net Cash Provided By Operating Activities 117,241 1,246,044
------------ -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of Equipment (190,255) (994,728)
Proceeds from sale of Equipment -- --
------------ -----------
Net Cash Used in Investing Activities (190,255) (994,728)
------------ -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Net Borrowings on Revolving Credit Agreement 365,000 (367,000)
Outstanding Checks in Excess of Cash Balances -- 173,467
Payments on Long Term Borrowings, Including
Capital Lease Obligations (349,523) (323,906)
Proceeds From Long Term Debt -- 226,785
Proceeds From Isuance of Common Stock 66,965 18,682
------------ -----------
Net Cash Provided by (Used In) Financing Activities 82,442 (271,972)
------------ -----------
Net Increase (Decrease) in Cash 9,428 (20,656)
CASH
Beginning 40,017 20,656
------------ -----------
End $ 49,445 $ --
------------ -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Payments For:
Interest $ 106,577 $ 116,082
Income Taxes 50,453 265,241
------------ -----------
Supplemental Schedule of Noncash Investing and Finacing Activities
Capital Lease Obligations Incurred for the Purchase of Equipment $ -- $ 226,785
------------ -----------
</TABLE>
<PAGE>
NOTES TO THE INTERIM FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by the
Company in accordance with generally accepted accounting principles, pursuant to
the rules and regulations of the Securities and Exchange Commission. In
management's opinion all adjustments necessary for a fair presentation of the
results for the interim period have been reflected in the interim financial
statements. The results of operations for any interim period are not necessarily
indicative of the results for a full year. All adjustments to the financial
statements are of a normal recurring nature. Certain information and footnote
disclosures normally included in financial statements have been condensed or
omitted. Such disclosures are those that would substantially duplicate
information contained in the most recent audited financial statements of the
Company, such as significant accounting policies, lease and license commitments
and stock options. Management presumes that users of the interim statements have
read or have access to the audited financial statements included in the
Company's most recent annual report on Form 10-KSB.
NOTE 2 - INVENTORY
Major components of inventory at June 30, 2000 and December 31, 1999 are as
follows:
June 30, December 31,
2000 1999
----------- -----------
Raw Materials $ 3,169,962 $ 2,713,671
Work In Process 350,527 358,956
Finished Goods 547,310 421,289
Obsolescence reserve (48,096) (40,138)
----------- -----------
Total $ 4,019,703 $ 3,453,778
----------- -----------
NOTE 3 - FINANCING ARRANGEMENT
The Company has a $3,500,000 revolving line-of-credit agreement through August
31, 2000. Interest on advances accrues at the bank's reference rate (9.5 percent
at June 30, 2000) and is due monthly. Advances are due on demand, are secured by
substantially all assets of the Company, and are subject to a defined borrowing
equal to 80 percent of qualified accounts receivable and 60 percent of
inventories. In addition, the agreement contains certain reporting and operating
covenants. Advances outstanding on the revolving line-of-credit agreement at
June 30, 2000 and December 31, 1999, were $1,883,501 and $1,518,501,
respectively.
NOTE 4 - STOCK OPTIONS AND WARRANTS
As of June 30, 2000, the Company's 1989 and 1997 Stock Option Plans in aggregate
had options to purchase 419,000 shares of common stock, of which 254,350 shares
were exercisable. At June 30, 2000, the exercise prices of all options range
from $1.75 to $2.938 per share.
NOTE 5 - MAJOR CUSTOMERS AND ENTERPRISEWIDE DISCLOSURES
Major Customers: The Company has customers that accounted for more than 10
percent of net sales for the three and six months ended June 30, 2000 and 1999,
as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, 2000 June 30, 2000 June 30, 1999 June 30, 1999
<S> <C> <C> <C> <C>
Sales percentage:
Customer A 39% 37% 38% 33%
Customer B 17% 21% 14% 16%
Customer C 20% 15% 19% 27%
</TABLE>
Enterprisewide Disclosures: The following table presents three and six month
revenues from external customers for each of the Company's groups of products
and services:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Three Months Ended Six Months Ended
June 30, 2000 June 30, 2000 June 30, 1999 June 30, 1999
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Proprietary microprocessors and mechanically
controlled sensors and alarms $ 686,300 $1,210,866 $ 570,400 $ 1,193,701
Electronic controls and assemblies for
OEM customers 4,418,668 8,111,792 4,083,613 10,075,360
---------- ---------- ---------- -----------
$5,104,968 $9,322,658 $4,654,013 $11,269,061
---------- ---------- ---------- -----------
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
General
Winland Electronics, Inc. is engaged in the design and manufacturing of a
variety of custom electronic controls and assemblies for OEM customers and, in
addition, designs, manufactures, and markets proprietary products. The Company
conducts all engineering, manufacturing, procurement, and administrative
activities in a 58,000 sq. ft., ISO 9001- registered facility in Mankato,
Minnesota.
The services Winland provides its OEM customers range from simple assembly to
full turnkey services, including product design, value engineering,
manufacturing, repair depot, and complete shipping services. In order to
distinguish itself from the large number of competitive contract manufacturers
in the USA and throughout the world, Winland has invested substantially in
plant, equipment, personnel, systems, and technology. The Company also operates
in a highly competitive labor market, particularly in the engineering and
technical segment of the workforce.
The Company's proprietary products include an established family of
environmental security products, a line of DC motor controllers that can be
customized to meet customer requirements, and the SatSource(TM) GPS antenna
product line that provides both standard and custom solutions for users of
global positioning systems technology.
Results of Operations
Three and six months ended June 30, 2000 v.
Three and six months ended June 30, 1999
Net Sales: The Company recorded net sales of $5,104,968 for the second quarter
ended June 30, 2000, an increase of 9.7% from $4,654,013 for the same period in
1999. For the six months ended June 30, 2000, the Company recorded net sales of
$9,322,658 compared to $11,269,061 for the same period in 1999. The increase in
net sales for the three months ended June 30, 2000 is the result of increased
net sales to key OEM customers as well as sales to new OEM customers. The
Company also recorded increased net sales of security/industrial products for
the three months ended June 30, 2000, compared to the same period in 1999. The
increase in net sales of security/industrial products is attributed to increased
sales of established products as well as the introduction of two new product
lines late in 1999.
The decline in net sales during the six months ended June 30, 2000 compared to
the same period in 1999 resulted primarily from a reduction in sales to key OEM
customers. Because the Company recognizes revenue when products are shipped, a
deferment of production schedule or any delay that affects the final shipment
date to a customer for any reason will reduce sales during a reporting period.
All of the decline in net sales during the six months ended June 30, 2000
compared to the same period in 1999 occurred during the first quarter ended
March 31, 2000, and resulted primarily from such a reduction in sales to key OEM
customers. The customer with the most significant reduction in sales elected to
defer its planned first quarter production to enable a more orderly transition
to a new product model later in 2000. Although net sales for this customer were
down for the first quarter of 2000, net sales for the second quarter of 2000
increased over the same period in 1999. Net sales of security/industrial
products increased for the first six months of 2000, compared to 1999.
Also during the six months ended June 30, 2000, as a result of a worldwide
shortage of electronics components, the Company began to experience difficulties
in its ability to procure certain components to meet customer manufacturing and
shipping due dates. According to industry sources, this shortage of electronic
components may continue throughout 2000 and into 2001. This shortage has been
caused, in part, by the electronic industry's production capacity lagging behind
the demand caused by the continued proliferation of wireless devices, internet
hardware, and other consumer products.
<PAGE>
The Company believes that, for the foreseeable future, its sales may be
negatively impacted by delays associated with electronic component shortages.
Winland is exploring procurement strategies with suppliers and parts agreements
with customers that may minimize the negative impact of electronic component
shortages.
Major OEM customers have given the Company firm purchase commitments having an
aggregate value of $9.3 million for delivery during the remainder of 2000. These
purchase commitments are at various stages of completion. The Company also has
several smaller agreements with various OEM customers to be fulfilled in 2000.
The Company has continued to promote itself as a full service designer and
manufacturer of custom controls and assemblies for OEM customers. The loss of
any major OEM customer would likely have an adverse effect on the Company's
short-term, and potentially long-term, results.
Gross Profits: Gross profit was $1,022,954 or 20.0% of net sales for the three
months ended June 30, 2000, compared to $995,443 or 21.4% of net sales for the
same period in 1999. For the six months ended June 30, 2000, gross profit was
$1,843,263, or 19.8%, of net sales, compared to $2,517,552, or 22.3% of net
sales for the same period in 1999. The decline in gross profit is primarily
attributed to increased fixed manufacturing costs and decreased profit margins
on OEM products; and to a lesser degree, decreased profit margins on
security/industrial products during the three and six months ended June 30,
2000, compared to the same periods in 1999. The decline in gross profit margins
on OEM customers is attributed to the introduction of new products with reduced
profit margins as well as increased raw materials costs on other assemblies.
Operating Expenses: General and administrative expense was $417,167 or 8.2% of
net sales for the three months ended June 30, 2000, compared to $421,582 or 9.1%
of net sales for the same period in 1999. For the six months ended June 30,
2000, general and administrative expense was $747,510 or 8.0% of net sales,
compared to $891,693 or 7.9% of net sales, during the same period last year.
Although general and administrative expense, as a percentage of net sales,
increased nominally for the first six months of 2000 compared to the same period
in 1999, actual general and administrative expense declined. The decrease in
general and administrative expense for the first six months of 2000 was
primarily attributed to reduced bonus allowances resulting from lower profits
for the period.
Marketing and customer relations expense was $160,365 or 3.1% of net sales for
the three months ended June 30, 2000, compared to $99,993 or 2.1% of net sales
for the same period in 1999. Marketing and customer relations expense was
$305,189 or 3.3% of net sales for the six months ended June 30, 2000, compared
to $190,099 or 1.7% of net sales for the same period in 1999. During both
periods, the increased marketing and customer relations expense is attributed to
additional customer service staffing, costs associated with additional trade
shows attended, and costs associated with the production of promotional
materials. The Company continues to direct marketing efforts to secure new OEM
customers, as well as to promote the new DC motor controller product line and
the SatSource GPS antenna product line.
Research and development expense was $259,860 or 5.1% of net sales for the three
months ended June 30, 2000, compared to $200,863 or 4.3% of net sales for the
same period in 1999. Research and development expense was $500,873 or 5.4% of
net sales for the six months ended June 30, 2000, compared to $372,304 or 3.3%
of net sales for the same period in 1999. During both periods, the increased
research and development expense was primarily due to the addition of technical
staff in the areas of design engineering, drafting and printed circuit board
layout, as well as increased depreciation expense related to the purchase of
additional test and development equipment. These investments will help expand
the Company's engineering capabilities in order to meet the needs of existing
and new OEM customers, and will aid with the development of new proprietary
products.
<PAGE>
Interest Expense: Interest expense was $105,581 or 2.1% of net sales for three
months ended June 30, 2000, compared to $109,246 or 2.3% of net sales for the
same period in 1999. Interest expense for the first six months of 2000 was
$212,045 or 2.3% of net sales, compared to $225,327 or 2.0% of net sales for the
same period in 1999. The reduction in interest expense is primarily attributed
to a reduction of long term debt for the six months ended June 30, 2000,
compared to the same period in 1999.
Net Income: The Company reported net income of $65,847 or $0.02 per diluted
share for the three months ended June 30, 2000, compared to net income of
$120,670 or $0.04 per diluted share for the same period in 1999. For the first
six months of 2000, the Company reported net income of $82,149 or $0.03 per
diluted share, compared to $563,893 or $0.19 per diluted share. The reduction in
net income is primarily attributed to increased fixed manufacturing costs and a
decline in profit margins associated with the security/industrial products line.
To a lesser extent, the reduction in net income was due to an increase in
operating expenses for the three and six month periods compared to 1999.
Liquidity and Capital Resources The current ratio on June 30, 2000 was 1.6 to 1,
compared to 1.7 to 1 on December 31, 1999. Working capital amounted to
$2,480,226 on June 30, 2000, compared to $2,501,493 on December 31, 1999. The
decrease in working capital is attributed to increases in short term borrowings
on the revolving line of credit and accounts payable which is offset by
increased accounts receivables and increased inventory levels.
Cash provided by operating activities was $117,241 for the first six months of
2000, compared to $1,246,044 for the same period in 1999. The decrease in cash
provided by operations is attributed to the reduction in net income, as well as
a build up of inventory needed, in part, to offset the effects of expected
industry shortages of electronic components. Cash provided by operating
activities was used for the purchase of capital equipment. The reduction of
long-term debt was funded primarily by additional short-term borrowings on the
revolving line of credit and proceeds from the issuance of common stock.
The Company has a revolving credit agreement with the Norwest Bank Minnesota
South N.A. ("Norwest"), with a maximum loan limit of $3,500,000, subject to
additional limitations set forth in the credit agreement. The interest rate is
calculated at prime rate. At June 30, 2000, an outstanding balance of $1,883,501
existed under the line of credit. The agreement expires in August 2000, at which
time the Company anticipates that it will renew its working capital line of
credit on terms similar to its existing line. The Company's management believes
that the capital available through the current credit agreement, together with
cash flows from operations, will be sufficient to meet the Company's capital
needs at least through 2000.
Cautionary Statements: Certain statements made in this quarterly report on Form
10-Q, as well as oral statements made by management of the Company from time to
time, which are prefaced with words such as "intends", "plans", "expects",
"anticipates", "believes", "projects", and similar words and other statements of
similar same are forward-looking statements. As provided for under the Private
Securities Litigation Reform Act of 1995, the Company wishes to caution
investors that the following important factors, among others, in some cases have
affected, and in the future, could affect the Company's actual results of
operations and cause such results to differ materially from those anticipated in
forward-looking statements made in this document and elsewhere by or on behalf
of the Company.
The Company derives a significant portion of its revenues from a small number of
major OEM customers which are not subject to any long-term contracts with the
Company. If any major customer should for any reason stop doing business with
the Company, the Company's business would be adversely affected. Some of the
Company's key customers are not large well-established companies, and the
business of each customer is subject to various risks such as market acceptance
of new products and continuing availability of financing. To the extent that the
Company's customers encounter difficulties, or the Company is unable to meet the
demands of its OEM customers, the Company could be adversely affected.
The Company's operations and financial results are subject to its ability to
obtain raw materials, including high-demand electronic components, that may,
from time to time, be on backorder, in allocation status, or unavailable to the
Company. Under such circumstances, the Company may be required to pay higher
prices for such raw materials or incur higher financial risks through planned
inventory build up.
<PAGE>
The Company's ability to sustain continued increases in revenues and profits is
dependent upon its ability to retain existing customers and obtain new
customers. The Company competes for new customers with numerous independent
contract design and manufacturing firms in the United States and abroad, many of
whom have greater financial resources and a more established reputation than the
Company. The Company's ability to compete successfully in this industry depends,
in part, upon the price at which the Company is willing to manufacture a
proposed product and the quality of the Company's design and manufacturing
services. There is no assurance that the Company will be able to continue to
obtain contracts from existing and new customers on financially advantageous
terms, and the failure to do so could prevent the Company from achieving the
growth it anticipates.
The Company undertakes no obligation to update any forward-looking statements,
but investors are advised to consult any further disclosures by the Company on
this subject in its filings with the Securities and Exchange Commission,
especially on Forms 10-KSB, 10-QSB and 8-K (if any), in which the Company
discusses in more detail various important factors that could cause actual
results to differ from expected or historic results. It is not possible to
foresee or identify all such factors. As such, investors should not consider any
list of such factors to be an exhaustive statement of all risks, uncertainties
or potentially inaccurate assumptions.
The operations and success of the Company depend, in part, upon the experience
and knowledge of W. Kirk Hankins, the Company's Chief Executive Officer and
Chief Financial Officer, and Lorin E. Krueger, the Company's President and Chief
Operating Officer. The loss of either Mr. Hankins or Mr. Krueger would have a
material adverse effect on the Company.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its Annual Meeting on May 17, 2000.
(b) Proxies for the Annual Meeting were solicited pursuant to
Regulation 14A under the Securities Exchange Act of 1934.
There was no solicitation in opposition to management's
nominees as listed in the proxy statement, and all of such
nominees were elected.
The shareholders set the number of directors at seven (7) by a
vote of 2,428,338 shares in favor, with 211,450 shares voted
against and 11,264 shares abstaining. The following persons
were elected to serve as directors of the Company until the
next annual meeting of shareholders with the following votes:
Number of Number of
Nominee Votes For Votes Withheld
W. Kirk Hankins 2,421,838 229,214
Lorin E. Krueger 2,426,638 224,414
Kirk P. Hankins 2,421,038 230,014
S. Robert Dessalet 2,419,838 231,214
Thomas J. de Petra 2,421,638 229,414
David L. Ewert 2,336,038 315,014
James P. Legus 2,423,154 227,898
The shareholders approved an increase of shares from 300,000
to 600,000 under the Company's 1997 Stock Option Plan by a
vote of 1,214,815 shares in favor, with 375,975 shares voted
against, 15,300 shares abstaining and 1,044,962 shares present
for determining the quorum but which lacked authority to vote
on this matter (broker non-votes).
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON 8-K
(a) The exhibit to this report is:
27.1 Financial Data Schedule (included in electronic versions
only).
(b) No reports on Form 8-K were filed during the quarter ended
June 30, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Company has caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
WINLAND ELECTRONICS, INC.
("Company")
Dated: August 14, 2000 /s/ W. Kirk Hankins
W. Kirk Hankins, Chairman, Chief Executive
Officer and Chief Financial Officer
