<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: April 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
------------- -------------
Commission file number 0-15046
--------------
Westerbeke Corporation
----------------------------------------------------------------------
(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
----------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (508) 588-7700
-----------------
No Change
------------------------------------------------------------------------
(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.
<TABLE>
<CAPTION>
Outstanding at
Class April 29, 1995
----- --------------
<S> <C>
Common Stock, $.01 par value 2,061,550
</TABLE>
Page 1 of 13
<PAGE> 2
<TABLE>
WESTERBEKE CORPORATION AND SUBSIDIARY
INDEX
<CAPTION>
Page
<S> <C>
Part I - Financial Information
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets as
of April 29, 1995 and
October 29, 1994 3
Consolidated Statements of
Operations for the three
months ended April 29, 1995
and April 30, 1994 4
Consolidated Statements of
Operations for the six
months ended April 29, 1995
and April 30, 1994 5
Consolidated Statements of
Cash Flows for the six
months ended April 29, 1995
and April 30, 1994 6
Notes to Consolidated
Financial Statements 7-8
Item 2 -
Management's Discussion and
Analysis of Financial Condition
and Results of Operations 9-10
Part II - Other Information 11-12
Signatures 13
</TABLE>
2
<PAGE> 3
<TABLE>
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
April 29, October 29,
1995 1994
------------ -----------------
(Unaudited) (Derived from
ASSETS Audited Financial
Statements)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 857,500 $ 1,727,600
Accounts receivable, net of allowance
for doubtful accounts of $61,300 and
$60,800, respectively 2,392,800 1,568,200
Inventories (Note 2) 4,307,200 3,678,700
Prepaid expenses and other assets 178,300 158,400
Deferred income taxes 271,300 278,600
------------- -------------
Total current assets 8,007,100 7,411,500
Property, plant and equipment, net 1,536,000 1,622,600
Other assets, net 1,213,100 1,068,100
Note receivable - related party 157,200 162,000
------------- -------------
$ 10,913,400 $ 10,264,200
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 21,600 $ 43,900
Current portion of obligations under
capital leases 39,200 51,500
Accounts payable 1,433,200 1,256,900
Accrued expenses and other liabilities 535,800 326,600
------------- -------------
Total current liabilities 2,029,800 1,678,900
------------- -------------
Deferred income taxes 182,100 187,100
Long-term debt, net of current portion 55,900 66,800
Obligations under capital leases - 12,700
------------- -------------
238,000 266,600
------------- -------------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value;
authorized 5,000,000 shares;
issued and outstanding 2,061,550 shares 20,600 20,600
Additional paid-in-capital 5,899,000 5,899,000
Retained earnings 2,726,000 2,399,100
------------- -------------
Total stockholders' equity 8,645,600 8,318,700
------------- -------------
$ 10,913,400 $ 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
-----------------------------
April 29, April 30,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
Net sales $ 5,245,000 $ 3,870,800
Cost of sales 4,029,500 2,956,100
------------ ------------
Gross profit 1,215,500 914,700
Selling, general and administrative expense 656,100 600,000
Research and development expense 212,700 101,300
------------ ------------
Income from operations 346,700 213,400
Interest income, net (9,800) (1,900)
------------ ------------
Income before income taxes 356,500 215,300
Provision for income taxes 143,600 83,900
------------ ------------
Net income $ 212,900 $ 131,400
============ ============
Net income per share $ 0.09 $ 0.06
============ ============
Weighted average common and common
equivalents shares outstanding 2,241,738 2,133,580
============ ============
</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>
Six Months Ended
-----------------------------
April 29, April 30,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
Net sales $ 9,550,400 $ 6,726,300
Cost of sales 7,378,700 5,186,200
----------- ------------
Gross profit 2,171,700 1,540,100
Selling, general and administrative expense 1,267,000 1,098,100
Research and development expense 381,200 200,700
----------- ------------
Income from operations 523,500 241,300
Interest income, net (22,700) (6,300)
----------- ------------
Income before income taxes and cumulative
effect of change in accounting method 546,200 247,600
Provision for income taxes 219,300 96,000
----------- ------------
Income before cumulative effect of change
in accounting method 326,900 151,600
Cumulative effect of change in method of
accounting for income taxes - 201,300
----------- ------------
Net income $ 326,900 $ 352,900
=========== ============
Income per share:
Income before cumulative effect of change
in accounting method 0.15 0.07
Cumulative effect of change in accounting
method - 0.09
----------- ------------
Net income per share $ 0.15 $ 0.16
=========== ============
Weighted average common and common
equivalents shares outstanding 2,246,976 2,145,825
=========== ============
</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>
Six Months Ended
-----------------------------
April 29, April 30,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 326,900 $ 352,900
Reconciliation of net income to net cash
(used) by operating activities:
Depreciation and amortization 206,900 196,500
Deferred income taxes 2,300 (214,300)
Changes in operating assets and liabilities:
Accounts receivable (824,600) (544,900)
Inventories (628,500) (501,800)
Prepaid expenses and other assets (19,900) (90,200)
Recoverable and prepaid income taxes - (54,700)
Other assets - (8,900)
Accounts payable 176,300 520,700
Accrued expenses and other liabilities 209,200 55,600
------------ ------------
Net cash (used) by operating activities (551,400) (289,100)
------------ ------------
Cash flows from investing activities:
Purchase of property, plant and equipment (105,700) (193,600)
Proceeds from payment of note receivable -
related party 4,800 -
Investment in marketable securities (159,600) -
------------ ------------
Net cash used in investing activities (260,500) (193,600)
------------ ------------
Cash flows from financing activities:
Principal payments on long-term debt and capital
lease obligations (58,200) (59,800)
------------ ------------
Net cash used in financing activities (58,200) (59,800)
------------ ------------
Decrease in cash and cash equivalents (870,100) (542,500)
Cash and cash equivalents, beginning of period 1,727,600 1,641,500
------------ ------------
Cash and cash equivalents, end of period $ 857,500 $ 1,099,000
============ ============
Supplemental cash flow disclosures:
Interest paid $ 5,500 $ 9,930
Taxes paid $ 112,700 $ 54,700
</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 April 29, 1995, the results
of their operations for the three and six months ended April 29, 1995 and
April 30, 1994, and the cash flows for the six 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.
Effective October 30, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt
and Equity Securities. Under this statement, the Company's marketable
securities have been classified as "available for sale".
Continued
7
<PAGE> 8
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>
April 29, October 29,
1995 1994
------------ ------------
<S> <C> <C>
Raw materials $ 3,597,900 $ 3,010,500
Work-in-process 335,700 271,600
Finished goods 373,600 396,600
------------ ------------
$ 4,307,200 $ 3,678,700
============ ============
</TABLE>
The Company has estimated both the year-end inventory levels and the
inflation/deflation 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
$50,000, on a pro rata basis, in the LIFO reserve during the first six
months of fiscal 1995. During the first six months of 1994, the Company
recorded, on a pro rata basis, a decrease of $20,000 in the LIFO reserve.
Inventories would have been $1,163,000 higher at April 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.
8
<PAGE> 9
Item 2 - Management's Discussion and Analysis
---------------------------------------------
Of Financial Condition and Results Of Operations
------------------------------------------------
Results of Operations -
- - ---------------------
Net sales increased by $1,374,200, or 36%, during the second quarter of fiscal
1995 and $2,824,100 or 42% for the first six 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 $300,800, or 33% during the second quarter and $631,600
or 41% for the first six months of fiscal 1995 as compared to the same periods
in fiscal 1994. As a percentage of net sales, gross profit decreased to 23%
during the second quarter of fiscal year 1995, as compared to 24% for the
second quarter of fiscal 1994, and was 23% each of the six months ended April
29, 1995 and April 30, 1994. The Company continues to purchase the majority of
its "long-block" engines from Japanese suppliers. Accordingly, the Company's
margins remain sensitive to fluctuations in currency exchange rates between the
U.S. dollar and the Japanese yen.
Operating expenses increased $167,500 or 24% for the second quarter and
$349,400 or 27% in the first six months of fiscal 1995, as compared to the same
periods in fiscal 1994. Research and development costs have increased due to
the addition of personnel and higher consulting costs related to the
development of product enhancements. Selling and administrative expenses have
increased primarily due to higher marketing costs and increased compensation
costs.
Net interest income increased $7,900 during the second quarter and $16,400 for
the first six 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 balances. This is combined with lower interest expenses resulting
from smaller borrowings.
For the second quarter ended April 29, 1995, the Company reported net income of
$212,900, compared to a net income of $131,400 for the same period in fiscal
1994. For the six months ended April 29, 1995, the Company reported net income
of $326,900 as compared to net income of $352,900 for the six-months ended
April 30, 1994. The increase in net income for the second quarter of fiscal
1995 is primarily attributable to the increase in net sales for the period.
The decrease in net income for the six months ended April 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 six month
period ended April 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 six months ended April 29, 1995, increased $175,300 over the
same period in fiscal 1994. This increase is directly attributable to higher
sales volume in the first six months of fiscal 1995 as compared to the same
period in fiscal 1994.
9
<PAGE> 10
WESTERBEKE CORPORATION AND SUBSIDIARY
Liquidity and Capital Resources
- - -------------------------------
During the first six months of fiscal 1995, net cash used by operations was
$551,400, compared to net cash used by operations of $289,100 for the first six
months in fiscal 1994. The decrease in cash flow from operations is primarily
attributable to increases in accounts receivable and inventory for the six month
period ended April 29, 1995, as compared to the same period in fiscal 1994.
The increase in accounts receivable is the result of increased sales volume over
the prior period and the timing of cash receipts from several large customers.
Inventory has increased due to the anticipation of higher sales volume in the
next period.
During the six months ended April 29, 1995, the Company purchased property,
plant and equipment of $105,700. 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 April 29,
1995, the Company had approximately $2,617,100 in unused borrowing capacity
under the Credit Agreement and approximately $382,900 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 six months of fiscal 1995 resulted in cost
increases to the Company.
10
<PAGE> 11
Part II. Other Information
Item 1 Legal Proceedings
------ -----------------
As previously disclosed, on or about July 12, 1994, the Company was
served with a summons and complaint in a Maryland state court
wrongful death action entitled Karen P. Neuhauser, executrix, et al.
v. President Marine Limited, et al. (Kent County Circuit Court
Civil Action No. CV-2787-L) (the "Maryland action"). Additionally,
as previously disclosed, on or about September 12, 1994, the Company
was served with a third-party complaint in an action related to the
Maryland action which was pending in federal court in the Eastern
District of Pennsylvania entitled Karen P. Neuhauser, et al. v.
President Marine, LTD, et al. v. Westerbeke Corporation, et al.
(E.D. Pa. Civil Action No. 93-2739) (the "Pennsylvania action"). In
March 1995, the Company settled the Maryland action and the
Pennsylvania action, without any admission of wrongdoing, for an
aggregate of $75,000 of which $65,000 was paid by the Company's
insurance carrier.
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
------ ----------------------------------------------------
(a) The Annual Meeting of Stockholders (the "Meeting") of the
Company was held March 23, 1995.
(b) Not applicable because:
(I) proxies for the Meeting were solicited pursuant to
Regulation 14 under the Securities Exchange Act of 1934;
(ii) there was no solicitation in opposition to management's nominees as
listed in the Company's proxy statement dated March 1, 1995; and (iii) all
such nominees were elected.
(c) The matters voted upon at the Meeting were as follows:
(i) The election of two Class C directors of the Company.
<TABLE>
<S> <C>
John H. Westerbeke, Jr.
FOR 1,770,442
---------
WITHHOLD AUTHORITY 4,700
---------
John H. Westerbeke, Sr.
FOR 1,767,142
---------
WITHHOLD AUTHORITY 8,000
---------
</TABLE>
(ii) A proposal to ratify the Board of directors' selection
of KPMG Peat Marwick LLP to serve as the Company's independent auditors for the
Company's fiscal year ending October 28, 1995.
<TABLE>
<S> <C>
FOR 1,768,168
---------
AGAINST 3,100
---------
ABSTENTIONS AND
BROKER NON-VOTES 3,874
---------
</TABLE>
11
<PAGE> 12
Part II. Other Information (continued)
Item 5 Other Information
- - ------ -----------------
None to report
Item 6 Exhibits and Reports on Form 8-K
------ --------------------------------
(a) Exhibits
None required
(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 June 12, 1995 /s/ John H. Westerbeke, Jr.
------------- ------------------------
John H. Westerbeke, Jr.
Chairman and President
Dated June 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
SIX MONTHS ENDED APRIL 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> 6-MOS
<FISCAL-YEAR-END> OCT-28-1995
<PERIOD-START> OCT-30-1994
<PERIOD-END> APR-29-1995
<EXCHANGE-RATE> 1
<CASH> 857,500
<SECURITIES> 0
<RECEIVABLES> 2,392,800
<ALLOWANCES> 61,300
<INVENTORY> 4,307,200
<CURRENT-ASSETS> 8,007,100
<PP&E> 4,141,000
<DEPRECIATION> 2,605,000
<TOTAL-ASSETS> 10,913,400
<CURRENT-LIABILITIES> 2,029,800
<BONDS> 0
<COMMON> 20,600
0
0
<OTHER-SE> 8,625,000
<TOTAL-LIABILITY-AND-EQUITY> 10,913,400
<SALES> 9,550,400
<TOTAL-REVENUES> 9,550,400
<CGS> 7,378,700
<TOTAL-COSTS> 7,378,700
<OTHER-EXPENSES> 1,648,200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,200
<INCOME-PRETAX> 546,200
<INCOME-TAX> 219,300
<INCOME-CONTINUING> 326,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 326,900
<EPS-PRIMARY> .15
<EPS-DILUTED> 0
</TABLE>
