<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended: July 29, 1995
-------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-15046
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Westerbeke Corporation
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(Exact name of registrant as specified in its charter)
Delaware 04-1925880
------------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
Avon Industrial Park, Avon, Massachusetts 02322
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (508) 588-7700
--------------
No Change
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(Former name, former address and former fiscal year if changed since last
report)
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 to file such reports.) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class July 29, 1995
----- -------------
Common Stock, $.01 par value 2,064,650
Page 1 of 13
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<TABLE>
WESTERBEKE CORPORATION AND SUBSIDIARY
INDEX
<CAPTION>
Page
<S> <C>
Part I - Financial Information
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets as
of July 29, 1995 and
October 29, 1994 3
Consolidated Statements of
Operations for the three
months ended July 29, 1995
and July 30, 1994 4
Consolidated Statements of
Operations for the nine
months ended July 29, 1995
and July 30, 1994 5
Consolidated Statements of
Cash Flows for the nine
months ended July 29, 1995
and July 30, 1994 6
Notes to Consolidated
Financial Statements 7-9
Item 2 -
Management's Discussion and
Analysis of Financial Condition
and Results of Operations 10-11
Part II - Other Information 12
Signatures 13
</TABLE>
2
<PAGE> 3
<TABLE>
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
July 29, October 29,
1995 1994
----------- -----------------
(Unaudited) (Derived from
ASSETS Audited Financial
Statements)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,187,200 $ 1,727,600
Accounts receivable, net of allowance
for doubtful accounts of $60,500 and
$60,800, respectively 1,857,800 1,568,200
Inventories (Note 2) 4,411,000 3,678,700
Prepaid expenses and other assets 182,500 158,400
Deferred income taxes 274,300 278,600
------------- -------------
Total current assets 7,912,800 7,411,500
Property, plant and equipment, net 1,570,200 1,622,600
Other assets, net 946,200 966,200
Investment in marketable securities (Note 1) 403,100 101,900
Note receivable - related party 154,200 162,000
------------- -------------
$ 10,986,500 $ 10,264,200
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 21,800 $ 43,900
Current portion of obligations under
capital leases 26,200 51,500
Accounts payable 1,253,000 1,256,900
Accrued expenses and other liabilities 542,400 326,600
------------- -------------
Total current liabilities 1,843,400 1,678,900
------------- -------------
Deferred income taxes 180,800 187,100
Long-term debt, net of current portion 50,400 66,800
Obligations under capital leases - 12,700
------------- -------------
231,200 266,600
------------- -------------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value;
authorized 5,000,000 shares;
issued and outstanding 2,064,650 shares at
July 29, 1995 and 2,061,550 at October 29,
1994. 20,600 20,600
Additional paid-in-capital 5,902,100 5,899,000
Unrealized gain on marketable securities (Note 1) 63,300 -
Retained earnings 2,925,900 2,399,100
------------- -------------
Total stockholders' equity 8,911,900 8,318,700
------------- -------------
$ 10,986,500 $ 10,264,200
============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 4
<TABLE>
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended
-----------------------------
July 29, July 30,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
Net sales $ 4,879,200 $ 4,371,700
Cost of sales 3,792,300 3,290,200
------------ ------------
Gross profit 1,086,900 1,081,500
Selling, general and administrative expense 607,600 607,100
Research and development expense 155,900 160,900
------------ ------------
Income from operations 323,400 313,500
Interest income, net 11,300 1,800
------------ ------------
Income before income taxes 334,700 315,300
Provision for income taxes 134,800 125,700
------------ ------------
Net income $ 199,900 $ 189,600
============ ============
Net income per share $ 0.09 $ 0.08
============ ============
Weighted average common and common
equivalents shares outstanding 2,249,284 2,245,600
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
<TABLE>
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Nine Months Ended
-----------------------------
July 29, July 30,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
Net sales $ 14,429,500 $ 11,098,000
Cost of sales 11,171,200 8,476,400
------------- ------------
Gross profit 3,258,300 2,621,600
Selling, general and administrative expense 1,874,200 1,705,100
Research and development expense 537,100 361,600
------------ ------------
Income from operations 847,000 554,900
Interest income, net 34,000 8,000
------------ ------------
Income before income taxes and cumulative
effect of change in accounting method 881,000 562,900
Provision for income taxes 354,200 221,700
------------ ------------
Income before cumulative effect of change
in accounting method 526,800 341,200
Cumulative effect of change in method of
accounting for income taxes - 201,300
------------ ------------
Net income $ 526,800 $ 542,500
============ ============
Income per share:
Income before cumulative effect of change
in accounting method 0.23 0.15
Cumulative effect of change in accounting
method - 0.09
------------ ------------
Net income per share $ 0.23 $ 0.24
============ ============
Weighted average common and common
equivalents shares outstanding 2,251,265 2,214,257
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE> 6
<TABLE>
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Nine Months Ended
------------------------------
July 29, July 30,
1995 1994
------------- ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 526,800 $ 542,500
Reconciliation of net income to net cash
provided (used) by operating activities:
Depreciation and amortization 303,700 294,500
Deferred income taxes (2,000) (218,600)
Changes in operating assets and liabilities:
Accounts receivable (289,600) (334,400)
Inventories (732,300) (607,900)
Prepaid expenses and other assets (24,100) 49,600
Recoverable and prepaid income taxes - (142,600)
Other assets - (8,200)
Accounts payable (3,900) 789,200
Accrued expenses and other liabilities 215,800 282,300
------------- -------------
Net cash provided (used) by operating activities (5,600) 646,400
------------- -------------
Cash flows from investing activities:
Purchase of property, plant and equipment (231,300) (386,400)
Note receivable-related party - (128,900)
Proceeds from payment of note receivable -
related party 7,800 -
Investment in marketable securities (237,900) (23,400)
------------ ------------
Net cash used in investing activities (461,400) (538,700)
------------ ------------
Cash flows from financing activities:
Exercise of stock options 3,100 22,700
Principal payments on long-term debt and capital
lease obligations (76,500) (78,400)
------------ ------------
Net cash used in financing activities (73,400) (55,700)
------------ ------------
Increase (decrease) in cash and cash equivalents (540,400) 52,000
Cash and cash equivalents, beginning of period 1,727,600 1,641,500
------------ ------------
Cash and cash equivalents, end of period $ 1,187,200 $ 1,693,500
============ ============
Supplemental cash flow disclosures:
Interest paid $ 4,200 $ 14,200
Taxes paid $ 166,200 $ 142,600
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE> 7
WESTERBEKE CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies:
-------------------------------------------
A. Financial Statements
--------------------
The condensed consolidated financial statements included herein have been
prepared by Westerbeke Corporation ("the Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. While 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, the Company believes that the disclosures made
herein are adequate to make the information presented not misleading. It
is recommended that these condensed statements be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended October 29,
1994.
In the opinion of the Company, all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position
of Westerbeke Corporation and Subsidiary as of July 29, 1995, the results
of their operations for the three and nine months ended July 29, 1995 and
July 30, 1994, and the cash flows for the nine months then ended, have
been included.
B. Basis of Presentation
---------------------
The condensed consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary, Westerbeke International,
Inc. (a Foreign Sales Corporation). All significant intercompany
transactions and accounts have been eliminated. Westerbeke International,
Inc., has been inactive since fiscal year 1987.
Marketable investment securities at July 29, 1995 consist of equity
securities in various mutual funds. The Company adopted the provisions of
Statement of Financial Accounting Standards No. 115, Accounting for
Certain Investments in Debt and Equity Securities (Statement 115) at
October 30, 1994. Under Statement 115, the Company classifies its
marketable equity securities in one of two categories: trading or
available-for-sale. Trading securities are bought and held principally for
the purpose of selling them in the near term. All other securities not
included in trading are classified as available-for-sale.
Trading and available-for-sale securities are recorded at fair value.
Unrealized holding gains and losses on trading securities are included in
earnings. Unrealized holding gain and losses, net of the related tax
effect, on available-for-sale securities are excluded from earnings and
are reported as a separate component of stockholders' equity until
realized. Transfers of securities between categories are recorded at fair
value at the date of transfer. Unrealized holding gain and losses are
recognized in earnings for transfers into trading securities.
7
<PAGE> 8
Continued
A decline in the market value of any available-for-sale security below
cost that is deemed other than temporary is charged to earnings
resulting in the establishment of a new cost basis for the security.
Dividend and interest income are recognized when earned. Realized gains
and losses for securities classified as available-for-sale are included
in earnings and are derived using the specific identification method for
determining the cost of securities sold.
Marketable investment securities at July 29, 1995 include equity
securities, principally mutual funds for which the Company has both intent
and ability to hold. Equity securities are stated at the lower of
aggregate cost or market value. The total cost of the marketable
investment securities at July 29, 1995 was $339,800. Gross unrealized
holding gains and gross unrealized holding losses in investment securities
at July 29, 1995 were $65,200 and $1,900, respectively.
8
<PAGE> 9
WESTERBEKE CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
2. Inventories
-----------
The Company uses the last-in, first-out (LIFO) method to value inventory.
<TABLE>
Inventories are comprised of the following:
<CAPTION>
July 29, October 29,
1995 1994
------------ ------------
<S> <C> <C>
Raw materials $ 3,531,100 $ 3,010,500
Work-in-process 284,900 271,600
Finished goods 595,000 396,600
------------ ------------
$ 4,411,000 $ 3,678,700
============ ============
</TABLE>
The Company has estimated both the year-end inventory levels and the
inflation which will occur during the fiscal year.
The Company anticipates an increase in its LIFO valuation account as of
October 28, 1995. Accordingly, the Company has recorded an increase of
$100,000, on a pro rata basis, in the LIFO reserve during the first nine
months of fiscal 1995. During the first nine months of 1994, the
Company recorded, on a pro rata basis, a decrease of $30,000 in the LIFO
reserve. Inventories would have been $1,213,000 higher at July 29, 1995
and $1,113,000 higher as of October 29, 1994, if the weighted-average
first-in, first-out (FIFO) method had been used. Inventory cost
determination on the FIFO method approximates replacement or current cost.
9
<PAGE> 10
Item 2 - Management's Discussion and Analysis
---------------------------------------------
Of Financial Condition and Results Of Operations
------------------------------------------------
Results of Operations -
-----------------------
Net sales increased by $507,500, or 11.6%, during the third quarter of fiscal
1995 and $3,331,500 or 30.0% for the first nine months of fiscal 1995 as
compared to the same periods in fiscal 1994. The increase in net sales is
attributable to higher unit volume of the Company's marine generator and diesel
propulsion engine products. The increased volume is primarily the result of
more favorable economic conditions benefiting the pleasure boat industry.
Gross profit increased $5,400, or 0.5% during the third quarter and $636,700 or
24.3% for the first nine months of fiscal 1995 as compared to the same periods
in fiscal 1994. As a percentage of net sales, gross profit decreased to 22.3%
during the third quarter of fiscal year 1995, as compared to 24.7% for the
third quarter of fiscal 1994, and decreased to 22.6% for the nine months ended
July 29, 1995, as compared to 23.6% for the nine months ended July 30, 1994.
The Company continues to purchase the majority of its "long-block" engines
from Japanese suppliers. Accordingly, the Company's margins have been
adversely affected by the weakening of the U.S. dollar against the Japanese yen
throughout fiscal 1995.
Operating expenses decreased $4,500 or 0.6% for the third quarter and increased
$344,600 or 16.7% in the first nine months of fiscal 1995, as compared to the
same periods in fiscal 1994. Research and development costs have increased
during the first nine months of fiscal 1995 due to the addition of personnel
and higher consulting costs related to the development of product enhancements.
Selling and administrative expenses have increased during the first nine months
of fiscal 1995 primarily due to higher marketing costs and increased
compensation costs.
Net interest income increased $9,500 during the third quarter and $26,000 for
the first nine months of fiscal 1995, as compared to the same periods in fiscal
1994. The increase is due to improved interest income related to higher
invested cash balances. This is combined with lower interest expenses
resulting from decreased borrowings.
For the third quarter ended July 29, 1995, the Company reported net income of
$199,900, compared to a net income of $189,600 for the same period in fiscal
1994. For the nine months ended July 29, 1995, the Company reported net income
of $526,800 as compared to net income of $542,500 for the nine-months ended
July 30, 1994. The increase in net income for the third quarter of fiscal 1995
is primarily attributable to the increase in net sales for the period. The
decrease in net income for the nine months ended July 29, 1995 is primarily
attributable to the cumulative effect of change in method of accounting for
income taxes recorded in the same period of fiscal 1994. The change in method
of accounting for income taxes resulted in a gain of $201,300 for the nine
month period ended July 30, 1994 and is reported as a separate line item in the
Consolidated Statement of Operations. Income before the change in method of
accounting for the nine months ended July 29, 1995, increased $185,600 over the
same period in fiscal 1994. This increase is directly attributable to higher
sales volume in the first nine months of fiscal 1995 as compared to the same
period in fiscal 1994.
10
<PAGE> 11
WESTERBEKE CORPORATION AND SUBSIDIARY
Liquidity and Capital Resources
-------------------------------
During the first nine months of fiscal 1995, net cash used by operations was
$5,600, compared to net cash provided by operations of $646,400 for the first
nine months in fiscal 1994. The decrease in cash flow from operations is
primarily attributable to increases in inventory and accounts receivable for
the nine month period ended July 29, 1995, as compared to the same period in
fiscal 1994. Inventory has increased due to the anticipation of higher sales
volume in the next period. The increase in accounts receivable is the result
of increased sales volume over the prior period.
During the nine months ended July 29, 1995, the Company purchased property,
plant and equipment of $231,300. The Company has no plans for large capital
expenditures during the remainder of fiscal 1995.
On June 4, 1992, the Company entered into a $3,000,000 line of credit
agreement (the "Credit Agreement") with State Street Bank and Trust Company,
collateralized by all inventory and receivables of the Company. At July 29,
1995, the Company had approximately $2,717,000 in unused borrowing capacity
under the Credit Agreement and approximately $187,700 committed to cover the
Company's reimbursement obligations under certain letters of credit. The
Credit Agreement expires on March 31, 1996.
Management believes cash flow from operations and borrowings available under
the Credit Agreement will provide for working capital needs, principal payments
on long-term debt, and capital and operating leases through fiscal 1995.
Domestic inflation is not expected to have a material impact on the Company's
operations.
The cost of engine blocks and other components is subject to foreign currency
fluctuations (primarily the Japanese yen). The weakening U.S. dollar relative
to the Japanese yen in the first nine months of fiscal 1995 resulted in cost
increases to the Company.
11
<PAGE> 12
Part II. Other Information
Item 1 Legal Proceedings
------ -----------------
None to report
Item 2 Changes in Securities
------ ---------------------
None to report
Item 3 Default Upon Senior Securities
------ ------------------------------
None to report
Item 4 Submissions of Matters to a Vote of Security Holders
------ ----------------------------------------------------
None to report
Item 5 Other Information
------ -----------------
None to report
Item 6 Exhibits and Reports on Form 8-K
------ --------------------------------
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
period covered by this report.
12
<PAGE> 13
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.
WESTERBEKE CORPORATION
(Registrant)
Dated September 12, 1995 /s/ John H. Westerbeke, Jr.
--------------------- ------------------------------
John H. Westerbeke, Jr.
Chairman and President
Dated September 12, 1995 /s/ Carleton F. Bryant III
--------------------- ------------------------------
Carleton F. Bryant III
Executive Vice President
and Principal Financial
and Accounting Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF WESTERBEKE CORPORATION FOR THE
NINE MONTHS ENDED JULY 29, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-28-1995
<PERIOD-START> OCT-30-1994
<PERIOD-END> JUL-29-1995
<EXCHANGE-RATE> 1
<CASH> 1,187,200
<SECURITIES> 0
<RECEIVABLES> 1,857,800
<ALLOWANCES> 60,500
<INVENTORY> 4,411,000
<CURRENT-ASSETS> 7,912,800
<PP&E> 4,266,600
<DEPRECIATION> 2,696,400
<TOTAL-ASSETS> 10,986,500
<CURRENT-LIABILITIES> 1,843,400
<BONDS> 0
<COMMON> 20,600
0
0
<OTHER-SE> 8,911,900
<TOTAL-LIABILITY-AND-EQUITY> 10,986,500
<SALES> 14,429,500
<TOTAL-REVENUES> 14,429,500
<CGS> 11,171,200
<TOTAL-COSTS> 11,171,200
<OTHER-EXPENSES> 2,411,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,000
<INCOME-PRETAX> 881,000
<INCOME-TAX> 354,200
<INCOME-CONTINUING> 526,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 526,800
<EPS-PRIMARY> .23
<EPS-DILUTED> 0
</TABLE>
