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: January 25, 1997
----------------
OR
[X] 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
- --------------------------------------------------------------------------------
(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 March 6, 1997
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<S> <C>
Common Stock, $.01 par value 2,078,550
</TABLE>
Page 1 of 13
<PAGE> 1
WESTERBEKE CORPORATION AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <S> <C>
Part I - Financial Information
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets as of January 25, 1997
and October 26, 1996 3
Consolidated Statements of Operations for the three
months ended January 25, 1997 and January 27, 1996 4
Consolidated Statements of Cash Flows for the three
months ended January 25, 1997 and January 27, 1996 5
Notes to Consolidated Financial Statements 6-7
Item 2 -
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
Part II - Other Information 10
Signatures 11
</TABLE>
<PAGE> 2
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
January 25, October 26,
1997 1996
------------ -----------------
(Unaudited) (Derived from
Audited Financial
Statements)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 55,400 $ 200,500
Accounts receivable, net of allowance for doubtful
accounts of $62,800 and $60,700, respectively 2,448,100 2,318,500
Inventories (Note 2) 6,310,100 5,428,000
Prepaid expenses and other assets 197,600 249,000
Deferred income taxes 439,400 439,400
-------------------------------
Total current assets 9,450,600 8,635,400
Property, plant and equipment, net 1,963,700 1,782,300
Other assets, net 1,402,700 1,204,600
Investment in marketable securities 1,040,700 922,300
Note receivable - related party 133,300 136,600
-------------------------------
$ 13,991,000 $ 12,681,200
===============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 123,800 $ 123,400
Current portion of capital leases 24,600 --
Revolving demand note payable 650,000 --
Accounts payable 2,076,200 1,630,300
Accrued expenses and other liabilities 461,700 557,400
Accrued income taxes 13,300 8,900
-------------------------------
Total current liabilities 3,349,600 2,320,000
-------------------------------
Deferred income taxes 123,900 123,900
Deferred compensation 84,900 --
Obligations under capital leases 139,700 --
Long-term debt, net of current portion 363,200 396,300
-------------------------------
711,700 520,200
-------------------------------
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value; authorized 5,000,000
shares; issued 2,122,950 shares at January 25, 1997
and October 26, 1996 21,200 21,200
Additional paid-in-capital 5,959,800 5,959,800
Unrealized gain on marketable securities 159,800 159,100
Retained earnings 3,922,100 3,834,100
-------------------------------
10,062,900 9,974,200
Less - Treasury shares 44,400 at cost 133,200 133,200
-------------------------------
Total stockholders' equity 9,929,700 9,841,000
-------------------------------
$ 13,991,000 $ 12,681,200
===============================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 3
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
January 25, January 27,
1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Net sales $ 5,194,600 $ 3,929,700
Cost of sales 4,101,900 3,221,800
----------------------------
Gross profit 1,092,700 707,900
Selling, general and administrative expense 732,900 532,100
Research and development expense 233,700 166,800
----------------------------
Income from operations 126,100 9,000
Interest income, net (35,100) (45,600)
----------------------------
Income before income taxes 161,200 54,600
Provision for income taxes 73,200 23,000
----------------------------
Net income $ 88,000 $ 31,600
=============================
Income per share:
Net income per share $ 0.04 $ 0.01
=============================
Weighted average common and common equivalents shares
outstanding 2,257,040 2,267,269
============================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 4
WESTERBEKE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
January 25, January 27,
1997 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 88,000 $ 31,600
Reconciliation of net income to net cash provided (used)
by operating activities:
Depreciation and amortization 109,600 99,100
Deferred income taxes -- (24,900)
Changes in operating assets and liabilities:
Accounts receivable (129,600) 20,500
Inventories (882,100) (1,040,700)
Prepaid expenses and other assets 51,400 (25,200)
Other assets (203,500) --
Accounts payable 445,900 474,500
Accrued expenses and other liabilities (95,800) (308,600)
Deferred compensation 84,900 --
Income taxes payable 4,400 --
-------------------------
Net cash used by operating activities (526,800) (773,700)
-------------------------
Cash flows from investing activities:
Purchase of property, plant and equipment (110,500) (66,200)
Proceeds from payment of note receivable - related party 3,300 3,100
Investment in marketable securities (117,800) (116,900)
-------------------------
Net cash used in investing activities (225,000) (180,000)
-------------------------
Cash flows from financing activities:
Net borrowings under revolving demand note 650,000 --
Principal payments on long-term debt and capital lease
obligations (43,300) (12,900)
-------------------------
Net cash provided (used) in financing activities 606,700 (12,900)
-------------------------
Decrease in cash and cash equivalents (145,100) (966,600)
Cash and cash equivalents, beginning of period 200,500 1,322,200
-------------------------
Cash and cash equivalents, end of period $ 55,400 $ 355,600
=========================
Supplemental cash flow disclosures:
Interest paid $ 16,000 $ 400
Income taxes paid $ 68,700 $ 282,800
Supplemental disclosures of cash flow items:
Increase (decrease) in unrealized gains on marketable
securities $ 700 $ (6,200)
Equipment purchase under capital lease $ 175,000 --
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE> 5
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 26,
1996.
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 January 25, 1997, the
results of their operations for the three months ended January 25, 1997
and January 27, 1996, and the cash flows for the three 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.
Continued
<PAGE> 6
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.
Inventories are comprised of the following:
<TABLE>
<CAPTION>
January 25, October 26,
1997 1996
----------- -----------
<S> <C> <C>
Raw materials $ 5,194,000 $ 4,563,900
Work-in-process 577,000 354,100
Finished goods 539,100 510,000
--------------------------
$ 6,310,100 $ 5,428,000
==========================
</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 25, 1997. Accordingly, the Company has recorded an increase of
$15,000, on a pro rata basis, in the LIFO reserve during the first three
months of fiscal 1997. During the first three months of 1996, the Company
recorded, on a pro rata basis, an increase of $15,000 in the LIFO reserve.
Inventories would have been $1,160,600 higher at January 25, 1997 and
$1,145,600 higher as of October 26, 1996, if the first- in, first-out
(FIFO) method had been used. Inventory cost determination on the FIFO
method approximates replacement or current cost.
<PAGE> 7
Item 2 - Management's Discussion and Analysis
Of Financial Condition and Results Of Operations
--------------------------------------------------
Results of Operations -
- -----------------------
Net sales increased by $1,264,900, or 32.2%, during the first quarter of fiscal
1997 as compared to the same period in fiscal 1996. The increase in net sales
was primarily attributable to higher unit volume of the Company's diesel
propulsion engine products, generator sets and higher spare parts revenues.
Gross profit increased $384,800, or 54.4% during the first quarter of fiscal
1997 as compared to the same period in fiscal 1996. As a percentage of net
sales, gross profit increased to 21.0% during the first quarter of fiscal year
1997, as compared to 18.0% for the first quarter of fiscal year 1996. The
increase in gross profit margin is primarily the result of a more favorable
product mix.
Operating expenses increased $267,700 or 38.3% for the first quarter of fiscal
1997, as compared to the same period in fiscal 1996. The increase in operating
expenses is primarily the result of higher research and development,
advertising, marketing, warranty and personnel costs.
For the quarter ended January 25, 1997, the Company reported net income of
$88,000, compared to a net income of $31,600 for the same period in fiscal 1996.
The increase in net income for the first quarter of fiscal 1997 is primarily
attributable to higher sales volume in the first quarter of fiscal 1997 compared
to the same period in fiscal 1996.
<PAGE> 8
WESTERBEKE CORPORATION AND SUBSIDIARY
Liquidity and Capital Resources
- -------------------------------
During the first three months of fiscal 1997, net cash used by operations was
$526,800, compared to net cash used by operations of $773,700 for the first
three months in fiscal 1996.
During the three months ended January 25, 1997, the Company purchased property,
plant and equipment of $285,500, of which $175,000 is under a capital lease. The
Company plans to incur capital expenditures of approximately $215,000 for
machinery and equipment during the remainder of fiscal 1997.
The Company has a $3,000,000 Credit Agreement with State Street Bank and Trust
Company, collateralized by inventory, accounts receivable and general
intangibles. At January 25, 1997, the Company had approximately $1,841,800 in
unused borrowing capacity under the Credit Agreement. At January 25, 1997, the
Company had $650,000 in outstanding borrowings under the Credit Agreement and
approximately $508,200 committed to cover the Company's reimbursement
obligations under certain letters of credit.. The Credit Agreement expires on
March 31, 1997. Management is in the process of renewing the Credit Agreement
and anticipates bank approval, although there can be no assurance that the
facility will be renewed..
On January 23, 1996, the Company entered into a $500,000 revolving line of
credit agreement (the "Revolving Line of Credit") and term loan facility (the
"Term Loan") with State Street Bank and Trust Company, collateralized by various
emission testing and product development equipment and subject to working
capital and equity covenants. On July 31, 1996, the Revolving Line of Credit
terminated and automatically converted into a five year Term Loan in the
principal amount of $491,600 bearing a fixed interest rate of 8.96%. At January
25, 1997, the outstanding principal amount was approximately $450,000.
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 1997.
Domestic inflation is not expected to have a material impact on the Company's
operations.
The costs of engine blocks and other components are subject to foreign currency
fluctuations (primarily the Japanese yen). Exchange rates have had a minimal
impact on the Company during the first fiscal quarter of 1997.
<PAGE> 9
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) Exhibit 27 Financial Data Schedule for the three months ended
January 25, 1997
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
period covered by this report.
<PAGE> 10
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 March 7, 1997 /s/ John H. Westerbeke, Jr.
------------------- -----------------------------------------
John H. Westerbeke, Jr.
Chairman of the Board, President and
Principal Executive Officer
Dated March 7, 1997 /s/ Carleton F. Bryant III
------------------- -----------------------------------------
Carleton F. Bryant III
Executive Vice President, Chief Operating
Officer and Principal Financial and
Accounting Officer
<PAGE> 11
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000796502
<NAME> WESTERBEKE CORP.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-25-1997
<PERIOD-END> JAN-25-1997
<CASH> 55,400
<SECURITIES> 0
<RECEIVABLES> 2,448,100
<ALLOWANCES> 62,800
<INVENTORY> 6,310,100
<CURRENT-ASSETS> 9,450,600
<PP&E> 5,240,700
<DEPRECIATION> 3,277,000
<TOTAL-ASSETS> 13,991,000
<CURRENT-LIABILITIES> 3,349,600
<BONDS> 0
0
0
<COMMON> 21,200
<OTHER-SE> 9,908,500
<TOTAL-LIABILITY-AND-EQUITY> 13,991,000
<SALES> 5,194,600
<TOTAL-REVENUES> 5,194,600
<CGS> 4,101,900
<TOTAL-COSTS> 4,101,900
<OTHER-EXPENSES> 966,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,300
<INCOME-PRETAX> 161,200
<INCOME-TAX> 73,200
<INCOME-CONTINUING> 88,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 88,000
<EPS-PRIMARY> .04
<EPS-DILUTED> 0
</TABLE>
