SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or
15(d) of The Securities Act of 1934
Date of Report (Date of earliest event reported): September 30, 1998
WILLIAMS CONTROLS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-18083 84-1099587
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(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
14100 S.W. 72nd Avenue
Portland, Oregon 97224
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(Address of principal executive offices)(Zip Code)
(503) 684-8600
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
Williams Controls, Inc. (the "Registrant") adopted a plan of disposal for
the Agriculture Equipment segment of its business in the fourth quarter of 1998.
The Registrant retained the national investment banking firm of JWGenesis
Capital Markets, LLC as financial advisers to maximize the value to the
Registrant of the disposal in a manner that seeks to preserve the value of the
operation as a going concern for the benefit of the employees, customers,
suppliers and future owners. JWGenesis' New York-based corporate finance
operation will be seeking buyers for the unit, which consists of Hardee, a
manufacturer of agriculture and landscape maintenance equipment, Agrotec, a
manufacturer of agriculture and nursery sprayers and Waccamaw Wheel, a
manufacturer of wheel products primarily used in the agriculture market.
JWGenesis is a publicly-traded, full-service investment bank and a national
leader in middle market divestures and financings.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press released dated December 14, 1998.
SIGNATURES
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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 hereunto duly authorized.
WILLIAMS CONTROLS, INC.
Date: December 14, 1998 By: /s/ Gerard A. Herlihy
Gerard A. Herlihy,
Chief Financial Officer and
Chief Administrative Officer
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Williams Controls, Inc.
News Release Contact: Thomas W. Itin, Chairman and CEO
For Immediate Release Telephone: (248) 851-5651
WILLIAMS CONTROLS ANNOUNCES PLAN TO SELL AGRICULTURE EQUIPMENT SUBSIDIARY
REPORTS FISCAL YEAR END RESULTS
NET EARNINGS FROM CONTINUING OPERATIONS INCREASED 83%
Portland, OR....December 14, 1998.... Williams Controls, Inc. (Nasdaq:
WMCO) reported its results for the fourth quarter and full year ended September
30, 1998 and announced a plan of disposal for its Agriculture Equipment segment,
as the Company continues to focus on growth opportunities in its core
transportation and communication business.
The Company reported net earnings from continuing operations for the
fiscal year ended September 30, 1998 of $4,611,000, an increase of 83% compared
to $2,515,000 for the year ended September 30, 1997. Diluted net earnings per
share from continuing operations were $.23 for the fiscal year ended September
30, 1998, an increase of 64% compared to $.14 diluted earnings per share for the
year ended September 30, 1997 on higher weighted diluted shares outstanding.
Sales from continuing operations for the fiscal year ended September 30, 1998
were $57,646,000 a 24% increase compared to sales from continuing operations of
$46,671,000 in the twelve months ended September 30, 1997.
The Company benefited from an improved gross margin of 30% during
fiscal 1998 compared to a gross margin of 27% in the prior year. The Company's
effective tax rate improved to 34% in 1998 compared to 47% in 1997 because of
lower state tax rates and expected state tax refunds from prior years.
For the fourth quarter, the Company reported net earnings from
continuing operations of $902,000 an increase of 14% compared to net income from
continuing operations of $791,000 in the same period one year ago. Diluted
earnings per share from continuing operations were $.04 in the fourth quarter of
1998 and 1997 based on higher weighted average common shares in the 1998 period.
Sales from continuing operations in the fourth quarter were $14,568,000, an
increase of 19% compared to sales from continuing operations of $12,232,000 in
the same period one year ago.
The Company reported a net loss from discontinued operations of
$4,299,000 and $4,552,000 in 1998 and 1997 respectively. The 1998 loss from
discontinued operations included a net loss on the disposal of the Agriculture
Equipment segment of $2,674,000 that includes an estimated net loss on disposal
and estimated net losses until disposal of $1,403,000. The 1998 loss from
discontinued operations also included a net loss of $1,625,000 on the previously
reported disposal of the Automotive Accessories segment.
The Company adopted a plan of disposal for the Agriculture Equipment
segment in the fourth quarter of 1998. Williams Controls retained the national
investment banking firm of JWGenesis Capital Markets, LLC as financial advisers
to maximize the value to the Company of the disposal in a manner that seeks to
preserve the value of the operation as a going concern for the benefit of the
employees, customers, suppliers and future owners. JWGenesis' New York-based
corporate finance operation will be seeking buyers for the unit, which consists
of Hardee, a manufacturer of agricultural and landscape maintenance equipment,
Agrotec, a manufacturer of agriculture and nursery sprayers and Waccamaw Wheel,
a manufacturer of wheel products primarily used in the agriculture market.
JWGenesis is a publicly-traded, full-service investment bank and a national
leader in middle market divestitures and financings.
The additional loss on the Automotive Accessories segment resulted
primarily from a fourth quarter adjustment to the estimated value of non-voting
preferred stock that the Company had received as partial consideration for the
sale and from additional estimated retained liabilities related to the sale. The
reduction in the estimated value of the preferred stock did not affect the
rights and preferences of the preferred shares.
The Company reported net income of $312,000, or $.00 per diluted share
for the year ended September 30, 1998 compared to a net loss of $2,037,000, or
$.12 per diluted share in the prior year. The Company reported a net loss of
$2,598,000, or $.15 per diluted share for the quarter ended September 30, 1998
compared to net income of $173,000 or $.01 per diluted share in the prior year
quarter.
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Williams Controls Chairman and CEO Thomas W. Itin stated, "Over the
past eighteen months, we expended significant financial and management resources
in an attempt to reach a profitable level of operations in the Agriculture
Equipment segment. With the assistance of managers from around the Williams
Controls organization, we recently completed a strategic and operational review
of this business. Our conclusion was that, with time and additional financial
commitments, we could complete our turnaround plan and achieve profitability.
However, with the substantial commitments we are making to new product and
market development in our core transportation and communication business, and
the more immediate payback that should result in these areas, management made
the decision to sell the Agriculture operations in order to strengthen our focus
on transportation and related initiatives."
Mr. Itin continued, "In addition to serving our traditional truck
market, we continue to make significant investments in new product development
focused on the automotive market. Our integrated approach to this market, which
is many times the size of our traditional markets, is beginning to show results.
We are pleased with the reception given to our team approach to the automotive
and light truck market, combining our proven throttle control technology with an
automotive-experienced management team that we have assembled over the past
fifteen months. We believe there are a number of niche opportunities in this
huge market where our technology can be applied in the near term, and we intend
to actively pursue them, while using these advances to further strengthen our
presence in the heavy truck market."
Williams Controls Chief Financial Officer Gerard A. Herlihy stated,
"The results from our continuing operations over the last year continue to
reflect the strength in our core transportation business, especially in the
manufacture of controls for the heavy truck and equipment market. We continue to
see widespread acceptance of Williams' throttle control technologies in our
traditional markets, as we have maintained or enhanced our market position
throughout the heavy truck industry. Our automotive plastics and lighting
operation has also had some important gains in the market, as it had its first
full quarter of operations from its new state-of-the-art facility in the Detroit
area, and our sensors and communications business in South Florida made similar
progress during the quarter. In addition, this operation has nearly completed
its QS-9000 quality certification process"
Mr. Herlihy continued, "We believe the sale of the Agriculture
Equipment segment will have a number of benefits for Williams Controls.
Principally, it will permit the redirection of capital into businesses that have
the best chance for short and long term returns to our shareholders. Williams
Controls is the preeminent producer of electronic throttle controls ("ETC") in
the truck markets because of our strong engineering design team, high quality
manufacturing and customer service. We are actively bidding on our first
commercial automotive ETC and are receiving excellent feedback about our deep
knowledge of ETC and our creative engineering design approach. The automotive
ETC will involve higher volume manufacturing processes in the future which our
new automotive-experienced management team is fully capable of implementing. Our
research and development expenditures increased 51% in 1998 and we plan to
increase R&D spending further in 1999."
Williams Controls is a leading manufacturer and integrator of
innovative sensors, controls, and communications systems for the transportation
and communication industries. For more information, you can reach the Company at
www.wmco.com on the World Wide Web.
Forward-looking statements in this news release, if any, are made under
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Certain important factors could cause results to differ materially from
those anticipated by the statements, including the impact of changing economic
or business conditions, the impact of competition, the availability of
financing, the success of products in the marketplace, the success of its
Internet selling efforts, other factors inherent in the industry and other
factors discussed from time to time in reports filed by the company with the
Securities and Exchange Commission.
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Williams Controls, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three months Three months Twelve months Twelve months
ended 9/30/98 ended 9/30/97 ended 9/30/98 ended 9/30/97
------------- ------------- ------------- -------------
Net sales .................................... $14,568 $12,232 $57,646 $46,671
Cost of sales ................................ 10,707 8,437 40,129 33,974
Gross margin ................................. 3,861 3,795 17,517 12,697
Operating expenses ........................... 1,911 1,738 8,526 6,305
Earnings before interest and taxes ........... 1,950 2,057 8,991 6,392
Interest and other expenses .................. 742 444 2,014 1,635
Earnings before income taxes ................. 1,208 1,613 6,977 4,757
Income tax expense ........................... 306 822 2,366 2,242
Net earnings from continuing operations ...... 902 791 4,611 2,515
Net loss from discontinued
operations - Agriculture Equipment ........... (2,035) (618) (2,674) (1,380)
Net loss from discontinued
operations - Automotive Accessories .......... (1,465) - (1,625) (3,172)
Net earnings (loss)........................... (2,598) 173 312 (2,037)
Preferred dividends .......................... 150 - 270 -
Net earnings (loss) allocable to
common shareholders........................... $ (2,748) $ 173 $ 42 $ (2,037)
Earnings per share information:
- ------------------------------
Earnings per share from continuing
operations - basic .......................... $.04 $.04 $.24 $.14
Loss per share from discontinued
operations - basic .......................... (.19) (.03) (.24) (.26)
Net earnings (loss) per share - basic ....... (.15) .01 .00 (.12)
Earnings per share from continuing
operations - diluted ........................ .04 .04 .23 .14
Loss per share from discontinued
operations - diluted ........................ (.19) (.03) (.23) (.26)
Net earnings (loss) per share - diluted ..... $(.15) $.01 $.00 $(.12)
Weighted common shares outstanding - basic .. 18,124,037 17,642,040 17,922,558 17,656,900
Weighted common shares outstanding - diluted 21,287,294 18,354,908 19,808,460 18,001,799
The earnings per share computation for 1997 has been restated to reflect the
adoption of SFAS 128.
</TABLE>
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Williams Controls, Inc.
Consolidated Balance Sheets
(Dollars in thousands)
Sept. 30, Sept. 30,
1998 1997
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Assets
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Current Assets:
Cash ........................................... $ 1,281 $ 700
Accounts receivable, net ....................... 11,765 6,726
Inventories .................................... 10,693 11,186
Deferred taxes and other ....................... 2,231 1,539
Net assets held for disposition ................ 5,117 5,005
Total current assets ....................... 31,087 25,156
Property, plant and equipment, net ............. 20,013 14,533
Investment in and note receivable from affiliate 6,140 4,204
Note receivable ................................ 3,200 --
Net assets held for disposition ................ 1,847 3,112
Other assets ................................... 4,072 1,308
Total assets ................................... $66,359 $48,313
Liabilities and Stockholders' Equity
------------------------------------
Current Liabilities:
Accounts payable ........................... $ 4,771 $ 4,619
Accrued expenses ........................... 3,399 2,482
Current portion of long-term debt and leases 1,181 1,427
Estimated loss on disposal ................. 2,550 500
Total current liabilities .............. 11,901 9,028
Other liabilities .......................... 2,201 1,215
Long-term debt and capital leases .......... 27,846 21,235
Stockholders' Equity:
Preferred stock ............................ 1 --
Common stock ............................... 183 179
Additional paid-in capital ................. 17,917 9,822
Retained earnings .......................... 7,444 7,402
Unearned ESOP shares ....................... (73) (191)
Treasury stock (130,200 shares) ............ (377) (377)
Note Receivable ............................ (500) --
Pension liability adjustment ............... (184) --
Total stockholders' equity ............. 24,411 16,835
Total liabilities and stockholders' equity $ 66,359 $ 48,313
The consolidated balance sheet as of September 30, 1997 has been restated to
reflect the Agriculture Equipment segment as a discontinued operation.
